Joelle 98 LLC v. Stone Central LLC
328339
| Mich. Ct. App. | Nov 22, 2016Background
- In 2009 Joelle 98, LLC (Joelle) entered a land contract with Stone Central, LLC (Stone Central) controlled by Najib Atisha to buy an industrial property; the contract erroneously recited 48 monthly payments though the parties agreed payoff required 36.
- Joel Cars (operated by the same owner as Joelle) made the monthly installment payments; property taxes went unpaid and led to tax foreclosure proceedings, but those tax claims were later dismissed from this dispute.
- Joelle/Joel Cars claimed they made extra payments (disputed number: 8–10 overpayments) and sought recovery of overpayments and other damages; defendants argued late fees/interest and that Atisha (not Stone Central) was not in privity.
- Trial court allowed amendment to add Joel Cars as plaintiff, found multiple LLCs were commingled, pierced the corporate veil, rejected offset for late fees/interest, and awarded Joel Cars $16,778.96 for overpayments.
- Defendants appealed, challenging the amendment, veil-piercing, and liability for the overpayments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court properly allowed amendment to add Joel Cars | Amendment required to prevent defendants keeping windfall; Joel Cars actually made payments | Amendment prejudiced defendants (lack of discovery); Joelle lacked standing because Joel Cars wrote checks | Court affirmed amendment; no undue prejudice and justice required adding Joel Cars |
| Whether trial court properly pierced the corporate veil to hold Atisha individually liable | Atisha used multiple LLCs interchangeably, commingled funds, directed payments to other entities, and left Stone Central assetless | Stone Central is separate entity; no basis to pierce veil absent substantial abuse or fraud | Court affirmed veil piercing: entity was an instrumentality used to subvert justice; Atisha personally liable |
| Whether plaintiffs were entitled to recover overpayments | Joelle/Joel Cars overpaid contract amount and are entitled to refund | Defendants contended late fees/interest and that Joelle lacked standing because another entity paid | Court held overpayments occurred (8 payments, $16,778.96) and must be refunded; breach of contract, not conversion |
| Whether defendants could offset overpayments with late fees/interest | Plaintiffs: no offset because defendants never charged or communicated fees | Defendants: owed late fees/interest due to late payments | Court rejected offset: Atisha never informed Hodroj of late fees/interest, so no offset applied |
Key Cases Cited
- Diem v. Sallie Mae Home Loans, 307 Mich. App. 204 (amendment to pleadings reviewed for abuse of discretion)
- PCS4LESS, LLC v. Stockton, 291 Mich. App. 672 (abuse of discretion standard)
- Foodland Distributors v. Al-Naimi, 220 Mich. App. 453 (corporate form may be disregarded to prevent injustice)
- SCD Chemical Distributors, Inc. v. Medley, 203 Mich. App. 374 (three-part test for piercing corporate veil)
- Dep’t of Consumer & Indus. Servs. v. Shah, 236 Mich. App. 381 (corporations generally distinct from shareholders)
- Teran v. Rittley, 313 Mich. App. 197 (clear-error review for factual findings supporting equitable relief)
- In re RCS Engineered Prods. Co., 102 F.3d 223 (veil piercing is an equitable doctrine, not an independent cause of action)