Frederick L Kubik Revocable Trust v. the Home Apartments LLC
332958
| Mich. Ct. App. | Dec 19, 2017Background
- Plaintiff sold apartment complexes to Sagi’s entity (Sharon Apartments, LLC) by land contract; taxes and insurance went unpaid and plaintiff defaulted on a bank note, prompting a receiver’s appointment.
- Receiver negotiated a sale to The Home Apartments, LLC (THA, owned by Sagi) on Nov. 4, 2013; closing paid plaintiff cash but the deed did not reference the note/mortgage and the note was not delivered to plaintiff.
- A stipulated order and addendum contemplated plaintiff receiving cash at closing and a promissory note from THA obligating $1,500/month and a balloon; parties later disputed whether plaintiff’s post-closing interest survived.
- Plaintiff sued for monetary relief, foreclosure, reformation/rescission and sought receivership; after bench trial the court found plaintiff retained an interest, defendants were in default, and ordered sale by bidding under receiver authority.
- Defendants repeatedly sought removal and reconsideration; they appealed trial orders approving the receiver’s reports/fees, final accounting/distribution and earlier rulings challenging appointment, sale procedures, evidentiary rulings, and merger.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appointment of receiver | Receiver was needed to preserve property, collect rents and prevent waste; defendants were not maintaining property or paying taxes | Appointment was unwarranted; statutory/factors not satisfied | Court affirmed appointment as proper equitable exercise under MCL 600.2926/2927; no abuse of discretion |
| Sale without foreclosure/redemption period | Sale by receiver was proper and defendants had opportunities to redeem or bid | Sale should have been by foreclosure with statutory redemption period; mortgage required foreclosure | Error to omit redemption was plain but did not affect substantial rights; sale stands and defendants failed to show prejudice |
| Relief beyond complaint (sale by bidding) | Complaint requested foreclosure, sale and other appropriate relief; sale remedied plaintiff’s interest | Court exceeded complaint scope by authorizing sale at bid | Sale fall within pleaded relief (including catchall); no appellate relief warranted |
| Evidentiary/parol evidence & statute of frauds | Extrinsic evidence and written documents (stipulated order/addendum/notes) show note/mortgage were intended; exceptions to parol rule apply | Court should have enforced integrated written closing documents only; statute of frauds bars oral land promises | Court properly considered extrinsic evidence under parol-evidence exceptions; agreement was in writing so statute of frauds not violated |
| Merger doctrine | Deed did not fully perform purchase agreement; unpaid note obligations survived closing | Deed merged and extinguished mortgage/claims | Deed was partial performance; merger did not bar enforcement of unperformed note/mortgage obligations |
Key Cases Cited
- Arbor Farms, LLC v. GeoStar Corp., 305 Mich. App. 374 (Mich. Ct. App.) (trial court has broad equitable jurisdiction to appoint receivers)
- Reed v. Reed, 265 Mich. App. 131 (Mich. Ct. App.) (receiver appointment appropriate where facts justify preservation of property)
- Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98 (Mich.) (prejudice required to set aside sale for statutory irregularities)
- Hamade v. Sunoco, Inc., 271 Mich. App. 145 (Mich. Ct. App.) (parol-evidence rule and exceptions for partial integration)
- Chapdelaine v. Sochocki, 247 Mich. App. 167 (Mich. Ct. App.) (deed merges contract unless deed constitutes only partial performance)