PER CURIAM.
In this property action, defendant Res-Care Premier, Inc., appeals as of right the trial court's grant of summary disposition to plaintiffs, Scott and Jeanne Woodbury and Center Woods, Inc., after concluding that Center Woods had the right of first refusal to purchase the property known as #2 Center Woods and that defendant Ruth Averill failed to provide sufficient notice of the sale to Center Woods, as certain building and use restrictions require. The trial court's decision thereby voided the sale between Averill and Res-Care. We reverse and remand.
Res-Care is a state-licensed operator of adult-foster-care facilities. Its name is short for "Respect and Care," and its mission is "to assist people to reach their highest level of independence." Res-Care provides rehabilitation and residential services to individuals with mental or developmental disabilities.
Defendant Ruth Averill purchased the property commonly known as #2 Center Woods (the property) in 1991 and subsequently sold it to Res-Care on September 25, 2009. That sale is at the heart of this litigation.
Plaintiffs Scott and Jeanne Woodbury are the owners of the property commonly known as #3 Center Woods, which is next door to the property.
Plaintiff Center Woods was incorporated as a nonprofit corporation in 1941. It was automatically dissolved under MCL 450.2922 in 1993 when it failed to file its annual report and failed to pay the annual filing fee for the second consecutive year. On October 13, 2009, the same day this action was filed, Center Woods filed renewal-of-existence papers with the state of Michigan.
In 1941, articles of agreement were entered into by the owners of the properties in the Center Woods Subdivision and filed in the property records. The articles provided, in relevant part, as follows:
On July 10, 2009, Averill entered into a contract with Moshen H. Zadeh for the purchase of the property for $170,000. Closing was set for August 15, 2009. Zadeh was an investor of Res-Care. On July 20, 2009, Averill sent a memo addressed to Jack Short, the head of the homeowner's association, and "Center Woods Association," which provided:
On October 7, 2009, Averill sent another memo to Short and Center Woods Association, but this time also addressed it to Suzanne Short and the Woodburys. The memo provided, in relevant part:
When Jeanne Woodbury received the letter, she researched Res-Care on the Internet. Concerned that the home would be occupied by "troubled youth/sex offenders," she sent an e-mail to Smith at the address provided in the second notice. Two days later, an "emergent" meeting of the homeowners in Center Woods and a board of directors meeting for Center Woods were held. Averill was not invited. At the meeting, the board was authorized to take steps to prevent "this improper use," and the board authorized Woodbury to be "a committee of one, to meet with" a real estate specialist attorney, with legal action expected to be filed "within a day or two."
On October 12, 2009, the board's counsel sent a letter to Averill claiming that she violated paragraph 16 of the articles of agreement and requesting the details of the transaction "so [Center Woods] may consider exercising its right to purchase the property." The letter also stated:
This is apparently a reference to a conversation that Short testified that he had with Averill. According to Short, Averill called him and asked "if she had to do the right of first refusal," and he told her "that if it was me and I was selling my house, I would want to make sure that everything was done properly." Averill testified that this conversation never occurred and that she never spoke with Short.
The following day, on October 13, 2009, plaintiffs filed suit against Res-Care and Averill, alleging two counts of breach of "building and use restrictions," one for the
On November 9, 2009, the trial court held a hearing on the request for a preliminary injunction. Res-Care argued that, although it was a for-profit company, it was providing the home through a contract with the county, which rendered it essentially a not-for-profit entity. In addition, counsel stated that the residents intending to occupy the property "have no criminal record. They have no history of violence. They have no history of sexually predatory behavior, which is apparently what's, in part, driving this." Counsel also indicated that Res-Care had provided the Woodburys with an opportunity to "sit down and meet and talk" and it had provided some information about the residents without violating their right to privacy. However, the Woodburys elected to get counsel and file suit. Counsel also noted a long history of cases that have held that group homes were not considered a commercial use of residential property.
Ultimately, the trial court granted the preliminary injunction preventing Res-Care from occupying the property. However, the trial court indicated that it would grant an expedited trial. Res-Care then filed counterclaims against plaintiffs, claiming tortious interference with a contract, abuse of process, and violations of the federal Fair Housing Act
At the hearing on Res-Care's objections, the trial court indicated that it would set trial for January 5 and that summary disposition motions would be heard on December 21 and had to be filed by December 14. Although it is not entirely clear, it appeared that the trial date related solely to plaintiffs' complaint but there was an indication that the trial court would also consider Res-Care's motion for summary disposition on its counterclaims. An amended preliminary injunction order was entered that also included a scheduling order setting forth these dates and reiterating that the trial was to address plaintiffs' complaint only.
Res-Care filed its first motion for summary disposition, alleging plaintiffs' claims failed because the "building and use restrictions" were extinguished under the marketable record title act (MRTA),
Plaintiffs also moved for summary disposition, arguing that Averill and Res-Care both had constructive and actual knowledge of the "building and use restrictions" and that Center Woods had acted within 30 days of when it received notice of the sale. They noted that there were some factual disputes, but contended that none of them prevented summary disposition. They argued that the lack of 30-days' notice and a failure to include a selling price rendered Averill's notice ineffective as a matter of law. They argued that the discriminatory restriction was severable and, therefore, did not automatically render the right of first refusal invalid. Finally, they argued that Center Woods was statutorily deemed to be in existence at the time of the sale and, thus, was entitled to notice.
Plaintiffs also filed a combined response to defendants' three motions for summary disposition, reiterating most of the same arguments. However, they provided no evidence or argument to refute Res-Care's allegations that discriminatory intent voided the right to exercise the right of first refusal.
Res-Care filed a response to plaintiffs' motion for summary disposition and argued that the right of first refusal expired for failure to contain a definite time period and that plaintiffs had waived their right to notice because of their failure to enforce that right. Res-Care also noted that plaintiffs had failed to argue anything regarding the commercial use of the property and contended that plaintiffs had abandoned that argument. The hearing on the parties' motions took place December 22, 2009.
The trial court issued its opinion in February 2010. It began by indicating that it was not addressing any civil-rights claims, but was only addressing the enforceability of the 30-day-notice provision, the propriety of the notice given, and the related issue of Center Woods's corporate status. It concluded that the MRTA did not extinguish the "building and use restrictions" contained in the articles of agreement because they had been sufficiently rerecorded by reference in the deeds found in Averill's chain of title. It concluded that the right of first refusal had not expired and that any determination of a time period for the duration of the right would be arbitrary and capricious and that the only unreasonable time period was that suggested by defendants—the lifetime of the signatories.
The trial court acknowledged that the notice provision had not been enforced, but found that that was not an abandonment of the right, but simply proof that there were times plaintiffs elected not to exercise their right of enforcement. The trial court concluded that the notice provided by Averill was insufficient because it was not for the sale to Res-Care, but for the proposed sale to Zadeh, and that 30 days' notice was not given. The trial court concluded that Center Woods's status as a corporation did not excuse Averill's failure to give notice, if not to the individual homeowners, then to someone involved with the day-to-day operations of Center Woods.
Finally, the trial court concluded that any discussion of defendants' discrimination claims was premature because the right of first refusal had not yet been exercised and it was possible for plaintiffs to exercise the right in a nondiscriminatory manner. The trial court set aside the sale between Res-Care and Averill and ordered that, if they renewed their agreement, they had to provide 30-days' notice to Center Woods, who would have 30 days from receipt of the notice to exercise its right of first refusal.
Res-Care then moved for rehearing, reconsideration, or clarification of the judgment related to its unaddressed discrimination counterclaims. On April 12, 2010, the trial court entered an amended judgment that expressly stated that the judgment rendered the counterclaims moot and that the judgment was entered without prejudice to Res-Care's right to renew those claims. Res-Care now appeals.
Res-Care argues that the trial court erred by failing to find that Center Woods's failure to maintain its corporate status prevents it from seeking to enforce the articles of agreement. This Court reviews de novo a trial court's decision on a motion for summary disposition.
The facts related to Center Woods's corporate status are not in dispute. It failed to file annual statements and pay annual filing fees in 1992 and 1993, which automatically dissolved the corporation, pursuant to MCL 450.2922. In October 2009, Center Woods reinstated itself under MCL 450.2925 before filing the instant litigation. The trial court did not make any determinations regarding the implications of Center Woods's reinstatement. Instead, it concluded:
First, the trial court's determination that Averill ought to have notified someone other than Center Woods is without merit. The articles of agreement is a contract that must be interpreted according to its plain language.
The articles of agreement provide, "No property in Center Woods shall be sold without first giving Center Woods, Inc., thirty (30) days notice thereof and first opportunity to purchase said property at a price equal to a bonafide offer." The provision requires notice only to "Center Woods, Inc." There is no reference or requirement for notice to homeowners or a generic reference to the homeowners association. Therefore, only Center Woods, Inc., was entitled to notice, and the trial court's conclusion to the contrary was in error.
The next question, then, is whether Center Woods was entitled to notice from Averill. Here, there is no question that Center Woods did not exist at the time of the sale. Center Woods does not dispute that it failed to file its annual reports and pay the required fees, so that it was automatically dissolved under MCL 450.2801(1)(f)
Plaintiffs contend that the result of Center Woods's reinstatement pursuant to MCL 450.2925, hours before filing the lawsuit in October 2009, was that the dissolution essentially never took place. Thus, they assert that "Res-Care's conclusion that Mrs. Averill was not required to provide notice to Center-Woods, Inc., is based on a false premise, i.e., that Center Woods, Inc., `did not exist.'"
Res-Care argues that plaintiffs did not argue the implications of reinstatement before the trial court and that this Court should not consider them here. However, it appears that plaintiffs did argue reinstatement. But, even if they had not, because statutory interpretation is a question of law, and the effect of the reinstatement statute could result in an affirmance of the trial court's decision on other grounds, this Court will consider the issue.
MCL 450.2925 provides as follows:
There are no cases that have interpreted MCL 450.2925.
Plaintiffs rely on Bergy Bros., Inc. v. Zeeland Feeder Pig, Inc.,
The trial court and this Court had both held that the defendant corporation had lost even de facto existence when its charter was forfeited in 1971.
Stott, the case cited by the Supreme Court, involved the plaintiff shareholders filing suit alleging the corporate charter was void for failure to pay fees for two consecutive years and requesting a receiver be appointed to wind up the affairs.
The Court continued, noting that the appellant stockholder, after the filing of the lawsuit, "attended a stockholders' meeting, voted for directors, participated in a directors' meeting, took part in an election of officers, and was himself elected vice-president" so that his own conduct recognized "the company as a functioning corporation. . . ."
Neither Stott nor Bergy Bros. is precisely on point. Stott involved a stockholder suit attempting to force the corporation to wind-up where the appellant stockholder's own actions belied his belief that the corporation had ceased to exist.
It is not reasonable to require persons to give notice to a nonexistent corporation on the contingent basis that at some unknown time in the future, some unknown person might elect to reinstate the corporation. Simply because someone can reinstate a corporation under MCL 450.2925 does not mean anyone will. And the law certainly should not require people to assume otherwise. Indeed, some corporations that dissolve automatically never seek reinstatement, even when they continue to do business.
Further, plaintiffs incorrectly assert that the homeowners' association's continued collection of monies and exercise of obligations gave it a de facto existence after dissolution. In Flint Cold Storage, this Court reiterated that corporations continue to exist beyond their date of dissolution in order to wind up their affairs, but only for a reasonable amount of time.
The type of legal, de facto existence created by MCL 450.2925 and Bergy Bros. is based on the idea that corporations that are reinstated pursuant to the statute should be granted the benefits of corporate status—such as no individual liability. It is reasonable to give such corporations the benefits of the contracts they entered into and whatever rights they acquired.
In sum, based on the plain language of the articles of agreement, the trial court erred by holding that Averill ought to have provided notice to anyone other than the corporation. And the trial court further erred by holding that Center Woods was entitled to notice of the sale between Averill and Res-Care because Center Woods did not exist at that time. Because our resolution of this issue is dispositive, we decline to address Res-Cares's remaining arguments.
We reverse the order granting summary disposition to plaintiffs and remand for entry of an order granting summary disposition to defendants. We do not retain jurisdiction.
SAWYER, P.J., and WHITBECK and M.J. KELLY, JJ., concurred.