Mrg Lake Villa LLC v. Arrowood Home Rentals LLC
329180
| Mich. Ct. App. | Jan 24, 2017Background
- Lake Villa Oxford Associates owned a 700+ lot mobile home park; Equity First held the mortgage and foreclosed, placing the property in receivership.
- Plaintiff contracted to purchase Equity First’s foreclosure rights; a Mobile Home Purchase and Settlement Agreement (the agreement) was executed by Equity First, Lake Villa Oxford Associates, Kenneth Burnham (Guarantor), and seven "Borrower Affiliate Parties."
- Schedule 1 of the agreement listed 115 mobile homes being transferred to Lender and included a catchall: "all other mobile or manufactured homes owned by Borrower or any Borrower Affiliate Party... located on the Property as of the date of this Agreement."
- Arrowood owned four mobile homes on the park before the agreement and was not listed as a Borrower Affiliate Party nor a signatory to the agreement; plaintiff attempted to prevent Arrowood from removing the four homes.
- Trial court found Arrowood was an "affiliate" of the Borrower/Borrower Affiliate Parties (because Burnham controlled those entities and Arrowood) and granted summary disposition to plaintiff, concluding the four homes transferred under the catchall.
- The Court of Appeals agreed the agreement’s affiliate definition could include Arrowood, but held summary disposition was premature because the record lacked evidence whether a non-signatory affiliate (Arrowood) could be bound by the agreement under ordinary contract-related theories (e.g., agency, estoppel, alter ego).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the catchall in Schedule 1 transferred Arrowood’s four homes to plaintiff | The catchall includes all mobile homes owned by Borrower or any Borrower Affiliate Party; Arrowood is an affiliate, so homes transferred to plaintiff | Arrowood is not a signatory; title/possession requirements (§4.9) prevent transfer; non-signatory cannot be bound | Court: §4.9’s title/possession conditions do not preclude ownership; affiliate definition unambiguously includes Arrowood given common control, so catchall would cover the homes, but transfer to a non-signatory is unresolved and requires further factfinding |
| Whether failure to deliver certificates of title under §4.9 precludes plaintiff ownership | §4.9 merely delays formal title/possession; ownership can pass absent title transfer under vehicle law | Defendants rely on §4.9’s text to show title/possession must pass to Lender | Held: Motor-vehicle law permits ownership transfer without title; possession is not dispositive — lack of delivered certificates does not automatically preclude ownership |
| Whether Arrowood is an "Affiliate" under the agreement | Plaintiff: "Affiliate" is broadly defined; common control by Burnham makes Arrowood an affiliate | Defendants: Arrowood is separate and unsigned; not a Borrower Affiliate Party | Held: Unambiguously an affiliate under the agreement because Burnham controlled Arrowood and the Borrower/Borrower Affiliate Parties |
| Whether summary disposition for plaintiff was appropriate | Plaintiff: No genuine issue of material fact; entitled to judgment | Defendants: Disputed ownership and binding of non-signatory; summary disposition improper | Held: Summary disposition premature — the record lacks evidence on contract-related doctrines binding non-signatory affiliates; remand for further proceedings |
Key Cases Cited
- Peters v. Dep’t of Corrections, 215 Mich. App. 485 (discusses standard of review for summary disposition)
- Ajax Paving Indus., Inc. v. Vanopdenbosch Constr. Co., 289 Mich. App. 639 (principles of contract interpretation)
- Latham v. Barton Malow Co., 480 Mich. 105 (MCR 2.116(C)(10) standard explained)
- Maiden v. Rozwood, 461 Mich. 109 (C(10) testing factual sufficiency; nonmoving party must present specific facts)
- Franchino v. Franchino, 263 Mich. App. 172 (when moving party is entitled to judgment as a matter of law)
- Campbell v. Kovich, 273 Mich. App. 227 (definition of genuine issue of material fact)
- Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459 (contract interpretation requires giving effect to all words)
- Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41 (ambiguity is a question of fact; more than one reasonable interpretation)
- South Macomb Disposal Auth. v. Mun. Risk Mgt. Auth., 207 Mich. App. 475 (inartful wording may still admit only one interpretation)
- AFSCME Council 25 v. Wayne Co., 292 Mich. App. 68 (non-signatory may be bound by contract under ordinary doctrines)
- Waffle House, Inc. v. EEOC, 534 U.S. 279 (principle that contracts generally do not bind nonparties)
- Botsford General Hosp. v. Citizens Ins. Co., 195 Mich. App. 127 (ownership of vehicle need not follow certificate of title)