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 Miller-Davis, the plaintiff, a general contractor, filed a breach of contract claim against the defendant, a subcontractor who was hired to rebuild the roof of a YMCA swimming pool. The Plaintiff alleged that the defendant’s work failed to conform to the contract’s specifications. The plaintiff did not file a tort claims against the subcontractor. The problems with the roof were so severe that the roof had to be replaced, which is how the problem was identified.

Because the lawsuit was filed over six years after the work had been performed, there was an argument as to whether the statute of limitations for breach of contract, or the statute of repose applied. The subcontractor argued that Michigan’s statute of repose protected it from actions “to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death arising out of the defective and unsafe condition of an improvement to real property. …” Under the statute of repose, all claims must be filed within six years after occupancy. The plaintiff argued that the statute of repose did not apply because the claims were for breach of contract, not claims in tort.

Even though both statutes have six-year limitation periods, there is a significant difference between the two. Under the statute of repose, a claim accrues at the time of “occupancy of the completed improvement, use or acceptance of the improvement.” However, the statute of limitations for a breach of contract claim begins to run at the time the claim accrues.

The Michigan Supreme Court ruled that the statute of limitations for breach of contract applied because the claim was not a tort claim. The court noted that MCL 600.5839 “does not apply to a claim against an engineer or contractor for a defect in an improvement when the nature and origin of the claim is the breach of a contract.” The court ruled that the statute of repose applied only to tort actions.

The Supreme Court ruled that the claim did not fall under the statute of repose because:

There was no allegation that the roof deck system caused any “injury to property” or “bodily injury or wrongful death.” Nor was there any allegation of a “defective and unsafe condition.” Rather, plaintiff claimed that, because defendant failed to build the roof to the agreed-upon specifications, plaintiff was forced to expend money repairing it.

This case is significant because it narrows the scope of Michigan’s statute of repose exclusively to tort actions.

The law allows property owners who have established a new principal residence to retain a Principal Residence Exemption on property once exempt as the owner’s principal residence for up to three years if (1) the property is not occupied (2) the property is for sale, (3) the property is not leased and, (4) the property is not used for any business or commercial purposes.

In order to take advantage of this law, one must file a Conditional Rescission of Principal Residence Exemption (Form 4640) to the assessor for the city or township where the property is located on or before May 1 of the first year of the claim. For example, in order to qualify for the 2012 exemption a property owner must file the form by May 1, 2012. This exemption is available for up to three years so long as all the above requirements are met. In addition to the May 1 filing requirement, the owner must annually submit form 4640 on or before December 31 verifying to the assessor that the property for which the Principal Residence Exemption meets the above requirements. In the example above, if the conditional rescission was approved for 2012, the owner would have to submit a new form by December 31, 2012 to verify qualifications for the 2013 tax year.

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.

Home Improvement/Appliance Credit

The credit is equal to 10% of EPA energy star certified appliances; the maximum credit is $75 for single taxpayers and $150 for married tax payers. This credit can be claimed on Michigan form 4764.

Energy Cost Recovery Surcharge Credit:

This non-refundable credit is available to both homeowners and renters who pay electric bills and is capped at $9 per meter in 2009. This credit can be claimed on Michigan Schedule 2.

For more information on these credits, including eligibility and income limitations please visit click here to visit the Michigan.gov taxes page.

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.

“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.

In Schimke v Liquid Dustlayer, Inc., the plaintiff owned less than 1/3 of the stock of the corporation.  The two other shareholders, who were also in control of the board of directors, planned to have their own stock in the corporation redeemed (purchased by the corporation), but the minority shareholder’s stock would not be redeemed.  The plan was never completed.  The circuit court ordered that the corporation must redeem (purchase) the stock owned by the minority shareholder as a remedy for the actions of those in control of the corporation.

The defendant majority shareholders argued that the corporation should not be required to purchase the stock of the minority shareholder, because their plan was not actually carried out.  The Court of Appeals ruled that the circuit court may intervene before an action is finalized, and may order a corporation to purchase a plaintiff’s shares of stock as a result of the defendants attempt to take an unfair and oppressive action.

The defendants also argued that they did not violate the rights of the minority shareholder because there was not a “continuing pattern of oppressive conduct.”  The Court of Appeals ruled that a pattern of conduct was not necessary for the minority shareholder to bring a claim.  Rather, “a single ‘significant action’ is sufficient to show willful and oppressive conduct.”

This decision expands the rights of minority shareholders to make claims of minority shareholder oppression, and makes it easier for minority shareholders to force the corporation to purchase their shares of stock.

Click to Download Case from Michigan Court of Appeals in PDF Format

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

If the employer does not follow standard eviction procedures, he or she could be liable for violating Michigan’s Anti-Lock Out Statute, which states that the wrongly evicted employee “shall be entitled to recover the amount of his actual damages or $200.00, whichever is greater, for each occurrence and, where possession has been lost, to recover possession.” In other words, the employer would be responsible for paying damages and giving the property back (at least until the correct eviction procedure has been followed).

To avoid this liability, the employer should provide the discharged or resigned employee with a notice to quit. If the former employee does not leave after the notice to quit is provided, then the next step is to file a complaint for possession of the premises in the local District Court.

It is essential that new businesses have all of their ducks in a row so that they are protected personally from the debts and liabilities of their new ventures, they take the best advantage of tax laws, and so that they are prepared for future success.

We advise contacting an attorney, as opposed to going it alone.  Demorest Law Firm, PLLC provides these services and can help you start your new company, and then help it to grow.

Excerpt from Freep.com Blog

11:42 a.m. | According to several business and academic leaders at the summit this morning, now is the time to start that business you’ve always dreamed about.

“Entrepreneurism is going to be the key to the economic recovery not just in this country but in the world,” James Turley, CEO of Ernst & Young LLP, declared at a town hall this morning.

Nearly a decade after the dot com bust, becoming your own boss is hip again.

Mary Sue Coleman, president of the University of Michigan, boasted to the audience that 15% or 6,000 of the students recently admitted to the school had started a business during high school.

“We’re in the perfect time in the history of this country to encourage this,” she said. “Let them loose.”

U-M now provides 100 courses that are in some way engaged in entrepreneurism, Coleman said.

What exactly does being entrepreneurial mean?

One panelist, Eva Chen, CEO of Internet security firm Trend Micro Inc., had the perfect Twitter-like response: “Using limited resources to create something that you want.”

By Katherine Yung

via Leader: Ford ready to compete | Freep.com | Detroit Free Press.

The current economic downturn has led to increased public scrutiny of lending practices.  Michigan usury laws offer important protection to borrowers by capping the interest rate that lenders can charge.  Whether one is a lender or a borrower, it is important to become familiar with the basic law and its many exceptions.

Violation of the usury laws has important consequences for borrowers and lenders alike. First, MCL 438.32 provides that any seller or lender who enters into a contract that charges an interest rate in excess of the maximum allowed by law is barred from the recovery of any interest at all.  The lender is also barred from collection charges, attorney fees and court costs.  In fact, the borrower or buyer, on the other hand, may recover his or her attorney fees and court costs from the usurious seller or lender.  Second, of particular interest to lenders, is Michigan’s criminal usury statute (MCL 438.41) which makes it a crime for any person to charge interest at a rate exceeding 25% per annum.

Michigan’s baseline usury statute, MCL 438.31, states that, “The interest of money shall be at the rate of $5.00 upon $100.00 for a year […],” but allows parties to stipulate in writing to an interest rate up to 7% per year.  The law, however, has many exceptions and explicitly states that it “shall not apply to the rate of interest…regulated by any other law of this state, or of the United States….”

For business loans, MCL 438.61 provides that a state or national chartered bank, savings bank, savings and loan association, credit union, insurance carrier, finance subsidiary of a manufacturing corporation, or a related entity may charge any rate of interest if the parties agree in writing, not subject to the normal 25% criminal usury cap.

An individual or company that is not a regulated lender may make business loans with a rate of interest not to exceed the 25% criminal usury cap.

There are three important tips for making sure that your loan documents comply with Michigan usury law: (1) If the borrower is an individual, rather than a corporation, LLC, partnership, or other entity, a sworn business purpose affidavit should be obtained by the lender for the borrower.  (2) Since the usury laws are complicated, it is important that the lender check the legal maximum rate for each specific loan transaction.  (3) Loan documents should contain a provision that if the interest rate specified in the agreement is higher than that permitted by law, the parties agree that the interest rate will be reduced to the highest rate permitted by law under the circumstances.

For a chart detailing the various interest rate limits in Michigan, click here (PDF).