Lansing Parkview LLC v. K2m Group LLC
328507
| Mich. Ct. App. | Mar 23, 2017Background
- In 2006 Lansing Parkview (plaintiff) and K2M Group/Don Keskey (defendants) executed a written 18‑month lease for a commercial building plus an option to purchase for $1,250,000; defendants paid $250,000 as non‑refundable option money and agreed to pay operating expenses.
- The parties executed multiple written addenda and extensions to the lease and option, ultimately extending the option deadline to December 31, 2010; addenda contained integration and no‑extension‑except‑in‑writing clauses.
- Defendants later fell into payment default, became month‑to‑month tenants after the 2010 lease expired, were served a notice to quit in 2012, and vacated in September 2012.
- Plaintiff gave written notices of default under the promissory note, lease, and guarantee and sued in July 2013 for unpaid principal, rent, interest, fees, costs, and attorney fees; the trial court entered judgment for plaintiff for roughly $173,496 plus fees and costs.
- Defendants counterclaimed asserting the transaction was really a sale (not a lease/option) and pleaded fraud in the inducement, promissory estoppel, unjust enrichment, contribution, tortious interference, and breach of good faith; the trial court granted summary disposition for plaintiff on all counterclaims except promissory estoppel, and a bench trial produced a directed verdict for plaintiff on promissory estoppel.
- Defendants also challenged disqualification of Keskey as trial counsel and denial of leave to file a second amended complaint; the trial court excluded Keskey as attorney‑advocate (he was a witness) and denied untimely amendment one day before trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of statute of frauds to the option | Option does not create an interest in land and thus is not barred by statute of frauds | Option claims are not barred by statute of frauds | Court agreed with plaintiff: option not an interest in land; statute of frauds not the barrier relied on by defendants |
| Promissory estoppel | Written option/agreements govern the subject and integration clauses preclude equitable enforcement | Plaintiff made promises (extensions and amortization) that induced reliance and purchase‑like expectations | Directed verdict for plaintiff: express written contract governs; promissory estoppel unavailable |
| Equitable claims (fraud, unjust enrichment, partial performance, contribution, interference) | Various equitable remedies should apply given defendants’ payments and conduct | Express written lease/option controls obligations; defendants received lease consideration and had contract remedies | Summary disposition for plaintiff on all equitable claims: contract governs; defendants failed to plead or support claims or abandoned issues |
| Disqualification of attorney (Keskey) and prejudice | Defendants: excluding Keskey caused hardship and prejudice | Plaintiff: MRPC 3.7 permits exclusion when lawyer is likely a necessary witness; no prejudice shown | Exclusion upheld as harmless error: no demonstrated prejudice to defendants |
| Denial of leave to amend (day before trial) | Defendants sought to add claims late | Plaintiff and court: motion unduly delayed, prejudicial on eve of trial | Denial affirmed: court reasonably found undue delay and potential prejudice |
Key Cases Cited
- Oshtemo Twp v Kalamazoo, 77 Mich. App. 33 (treats option as agreement distinct from an interest in land)
- Marina Bay Condominiums, Inc v Schlegel, 167 Mich. App. 602 (statute of frauds analysis for interests in land)
- James v Alberts, 464 Mich. 12 (standard of review for questions of law applying doctrines like promissory estoppel)
- Crown Technology Park v D & N Bank, FSB, 242 Mich. App. 538 (elements of promissory estoppel)
- Martin v East Lansing Sch Dist, 193 Mich. App. 166 (equitable relief unavailable when express contract governs)
- Tkachik v Mandeville, 487 Mich. 38 (discussion of contribution and equitable remedies)