Michigan law has different statutes of limitations for different causes of actions. For example, lawsuits for breach of contract have six-year limits, while lawsuits for personal injury cases must be brought within three years. Additionally, contracts for the sale of goods contain a four-year statute of limitations.

In a recent case, Fisher Sand and Gravel Co. v. Neal A. Sweebe, Inc., the Michigan Court of Appeals had to determine whether the six-year statute of limitations or the four-year statute of limitations applied to an open account for the sale goods. An open account is an account that is left open for ongoing debit and credit entries and that ahs a fluctuating balance until one party settles and closes the account, at which time there is only one liability. Generally, an open account is a contract separate from the underlying contract for goods or services.

In Fisher Sand and Gravel, the plaintiff filed its claim after four years of the breach of contract. The underlying contract was for the sale of goods. As a result, the Court of Appeals had to determine whether the four-year statute of limitations under the UCC or the six-year statute of limitations for contract actions applied. The plaintiff argued that the six-year statute of limitations applied because an open account is a separate and distinct contract than the underlying contract for the sale of goods.

The Court of Appeals rejected the plaintiff’s argument and held that the four-year statute of limitations applied, despite the open agreement being a separate contract. The court reasoned that the open account existed “solely to facilitate [the] sale of goods.” In other words, the open agreement was so closely related to the sale of goods, that the UCC applies. Additionally, the statutes setting the limitations periods must be read together. When there is a conflict between them, the more specific statute governs.  In this case, the UCC was the more specific statute and therefore it governed the transaction.

The Court of Appeals also noted that its ruling was consistent with court cases from other states and that the UCC’s purpose of promoting uniformity among states with respect to transactions in goods was met.

In a recent opinion, the Sixth Circuit Court of Appeals (available at http://www.law.justia.com/cases/federal/appellate-courts/ca6/10-1498/11a0580n-06-2011-08-18.html) ruled that proceeds from a tax sale of property held as tenants by the entirety between a husband and wife should, presumptively, be split 50-50. Under a tenancy by the entirety, a husband and wife hold joint title with a right of survivorship. This form of ownership is only available to married couples and does not allow one spouse to sell or transfer the property without the other spouse’s consent.

In US v. Barczyk, the Internal Revenue Service sought foreclosure of a home owned by a married couple in tenancy by the entirety. The married couple filed individual tax returns under the status of “married filing separately,” and the husband owed over $500,000 in back taxes. The house was worth approximately $200,000 and litigation ensued between the wife and the United States to determine two issues. First, the court had to determine whether the federal government had the authority to sell the property when the Barczyk’s holding the property as tenants by the entirety. Second, if the United States could foreclose on the property, to what percentage of the property was Mrs. Barczyk entitled.

In reaching the first issue, the Sixth Circuit had to determine whether the peculiarities of the tenancy by entirety prevented attachment of a tax lien. After noting that federal tax liens attach to property held as tenants by the entirety, the court ruled, that the United States had the authority to foreclose on the property under IRC § 7403, despite Michigan law.

After determining that the federal government could foreclose on, and sell the property, the court then considered what percentage of the house the woman owned. The Sixth Circuit determined that there is a presumption that a husband and wife each have an equal ownership interest in property held as tenants by the entirety. Mrs. Barczyk argued that she had a greater interest in the property based on actuarial evidence. The court rejected this argument by noting that the Mr. and Mrs. Barczyk were only five years a part in age and that both were in comparable health. As a result, Mrs. Barczyk was entitled to half of the proceeds acquired after the foreclosure sale of the property.

Although a significant property right is undercut by this ruling, it should be noted that the scope of the ruling is quite narrow. The ruling applies only to the federal government. Michigan law still protects property held jointly by husband and wife against creditors other than the federal government.

In a recently decided case, Township of Blair v. Lamar OCI North Corp., (available at: http://milawyersweekly.com/fulltext-opinions/2011/11/01/township-of-blair-v-lamar-oci-north-corp-michigan-court-of-appeals-unpublished/)  the Michigan Court of Appeals discussed whether improvements may be made to a non-conforming use without destroying the protection from having to comply with the current regulations. In that case, a billboard violated the zoning laws in three ways. First, the billboard’s surface area was too large. Second, the billboard was too close to other billboards. Finally, the billboard was too tall. The owner of the billboard made changes to the height and surface area of the billboard, bringing them in conformity with the zoning laws. However, the billboard still violated the zoning regulation concerning distance between other billboards.  In other words, two of the three violations had been eliminated by the modifications.

After the modifications were made, the Township brought suit against the owners of the billboards to compel their removal. Even though the owner of the billboard fixed two of three non-conformities, the Court of Appeals ruled that the billboard still violated the current zoning regulations and ruled for the Township. Although this might seem unfair—after all, the billboard was in better conformity after the changes—it is important to note that the purpose of allowing non-conforming uses are for fairness. Once any changes have been made, it is expected that those changes will make bring the property into full compliance with applicable regulations.

Because of the quirks and intricacies of zoning laws, it is important for those who have been granted variances for non-conforming uses to seek legal advice prior to making improvements or changes to their property. Without help, those with non-conforming use variances might end up unintentionally losing those rights.

The Attorney General first concluded that the Smoking Ban does not apply to marihuana. The Smoking Ban does not apply because the Smoking Ban applies only to tobacco products and marihuana is not a tobacco product. After dismissing the notion that the Smoking Ban applies to marihuana, the Attorney General concluded that the MMMA does ban the smoking of marihuana in the public areas of food service establishments, hotels, and apartments. Next, the Attorney General concluded that the MMMA does not prevent an owner of a food service establishment, hotel, or apartment complex from prohibiting either the smoking of or growing of marihuana within on the property.

Although the Attorney General has released this opinion, it is important to note that his opinions are neither legally binding nor are they precedent. As a result, the Michigan courts may come to other conclusions. That said, the Attorney General’s position is well stated and supported by the case law and statutes.

As a business owner, depending on your goals and concerns, it is important to realize that prohibiting just the smoking and growing of marihuana does not guarantee that marihuana will not be consumed on your property. It is important to understand that marihuana may be consumed in other manners. For example, marihuana may be consumed in food and through beverages as well as ingested via vaporizer. Thus, it is important to develop policies that regulate marihuana used via these other methods.

In Price v. High Pointe Oil Company (available at: http://coa.courts.mi.gov/documents/OPINIONS/FINAL/COA/20110825_C298460_35_298460.OPIN.PDF) the plaintiff homeowner sued the defendant oil company after her home was flooded with oil. The plaintiff had previously used the defendant to fill up her oil-burning furnace. After some time, the plaintiff purchased a new, non oil-burning furnace and discontinued purchasing oil from the defendant. After purchasing the new furnace, the plaintiff sold her old furnace and the oil tank to a third party. After a clerical error, the oil company set up an oil delivery. The oil company began to pump oil into the line that used to be connected to the oil tank. Because the oil tank was no longer in place the oil pumped directly in the plaintiff’s basement. In all, just under 400 gallons of oil were pumped into the basement.

As a result of the oil company’s negligence, the plaintiff’s home had to be demolished and the plaintiff lost a number of personal items. In addition to economic damages the defendant was depressed over the loss of her home. She felt great shame, embarrassment and humiliation in moving into her parents’ house. The plaintiff was awarded $100,000 in non-economic damages and the defendants challenged the award.

In Price, the Michigan Court of appeals ruled that non-economic plaintiffs may seek non-economic damages in negligence actions for the destruction of real property. The court’s decision turned on the historical and theoretical differences between personal property and real property. One of the most important distinctions between real property and personal property (generally) is that the former is completely unique. No piece of land is exactly the same. While Michigan courts have refused to allow non-economic damages for the destruction personal property (like a dog, car, or bicycle), the court failed to extend those prior holdings to real property.

In addition to each parcel of land’s unique characteristics, the court noted that homes have a unique value “which often provides as much if not more feelings of emotion and memories as it does shelter.” Moreover, the court noted that property allows special remedies for the breach of contracts for the sale of land such as specific performance.

This case is just one of many that highlights the special importance that land plays in our society. The implications of this case remain unclear, although it could often be cited for the enduring proposition that real property, above all else, holds a special place under the law.

For those not familiar the intricacies of the legal world, legal jargon may seem like a foreign language (and in some cases it is). One of the more difficult subject areas of law is contract law. Contract law, at its essence, seeks to protect the expectations of the parties to the contract and to reach fair results.

Even where no contract exists between parties, the law has developed doctrines meant to provide for fair and equitable results. One such doctrine, called unjust enrichment, seeks to protect the party that conferred a benefit upon another party. Unjust enrichment is a substitute for damages. It may apply where either no contract between the parties existed, or where the benefit conferred was outside the scope of any contract that did exist between the parties. Unjust enrichment is unavailable when there is an express contract between the parties, because damages are available under the express contract, and the court is not supposed to re-write the deal that the parties themselves have negotiated.

In a recent case, Hosford Bros. Concrete, Inc. v. Premer (available at www.michbar.org/opinions/appeals/2011/072611/49429.pdf), the Michigan Court of Appeals discussed the principle that unjust enrichment is not available where an express contract exists. The parties had two express contracts for the lending of money to purchase land and the land contract entered into as a result of the loan. The plaintiff in Premer sought payment for unjust enrichment following work they completed in developing a subdivision. Due to the real estate market collapse, they were unable to fully develop the land and the land was foreclosed on by the defendants. The plaintiffs sought payment for the improvements they made to the land.

The court noted that although there were two express agreements in the case, an unjust enrichment claim was still actionable because the improvements to the land were outside the scope of the two express land sale contracts. Next, how the defendant was unjustly enriched by the improvements to the land needed to be determined and calculated.

To be eligible for a catering permit, the licensee must be a “specially designated distributor, specially designated merchant, or holder of a public on-premises license,” AND must also be a licensed “food service establishment or retail food establishment.”  For example, the following types of businesses might be eligible for a catering permit: a restaurant, hotel, or banquet facility that caters offsite events; or a grocery store that sells liquor and provides catering.

A catering permit holder may use the permit at multiple events and locations simultaneously, and there is no limit on the number of catering permits issued in a particular city or county.  A permit holder must complete an MLCC server training program before beginning to use the permit.  The catering permit application fee is $70 and the annual permit fee is $100.

This new law was originally part of the Sunday liquor sales law that went into effect late in 2010, but Governor Granholm vetoed the catering permit section from that law.  It was recently reintroduced and quickly became law.

For additional analysis of the new law, see the Michigan House and Senate analysis.

“Smoking” is defined as “the burning of a lighted cigar, cigarette, piper or any matter or substance that contains a tobacco product.” There is a ban on smoking in “public places.” A “public place” includes areas owned and operated by the government; areas not owned or operated by the government, but used by the general public for certain specified purposes; and (unless otherwise exempt) a place of employment. The third one covers almost all of the businesses in the State. A “place of employment” is an enclosed indoor area that contains a work area for one or more people.

Business owners are expected to take steps to reasonably prevent customers, employees, or other people from smoking on their premises. Business owners are expected to do ALL of the following:

1. Clearly and conspicuously post no smoking signs (or the international no smoking symbol) at the entryway and in all buildings where smoking is prohibited.
2. Remove all ashtrays or other smoking paraphernalia from any place smoking is prohibited under the Act.
3. Inform individuals smoking in violation of the Act that they are in violation of state law and are subject to penalties.
4. Refuse to serve an individual smoking in violation of the Act.
5. Ask an individual smoking in violation of the Act to refrain from smoking, and ask them to leave if they refuse to stop.

If owners do all of the preceding things, they have an affirmative defense against any prosecution against them for a violation of the Act. This means that the business owner can be exempt from penalties under the Act, but only if all of the preceding conditions are met.

The Act includes a few exceptions. Casinos in existence before the Act can allow smoking in gaming areas only. Casinos built later cannot allow smoking. (The term casino in the bill does not include a casino operated under the Indian Gaming Regulatory Act. Thus, the smoking ban does not apply to these casinos.) An existing separate specialty tobacco shop may allow smoking. Cigar bars may also allow smoking (but only the smoking of cigars, not other tobacco products).  The ban also does not apply to motor vehicles.

Overall, business owners should be proactive in preventing smoking in their place of business by following the five requirements described above.

Download a copy of the Bill in PDF format by clicking here.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

Click here to download a PDF.

This article was written by Stephen J. Dunn, Of Counsel to Demorest Law Firm.

On January 9, 2009, the State Real Estate Transfer Tax Act (MCL 207.521, et seq.) was amended to impose the state real estate transfer tax (“SRETT”) on transfers of a “controlling interest” in an entity, if the entity has 90% or more of its value in real estate. “Controlling interest” is defined to include ownership of 80% of the stock of a corporation, or 80% of the membership interests of a limited liability company.

The amended Act includes the same exemptions as the original SRETT statute, but adds new exemptions for (i) transfers made to effectuate a dissolution of the corporation, limited liability company, partnership or trust, and (ii) transfers from an entity to another where the ownership remains the same.

The amendments do not apply to the county property transfer tax. Therefore, an entity purchase still does not trigger an obligation to pay the county transfer tax.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.