City of Detroit Downtown Dev. Auth. v. Lotus Indus.
| Decision Date | 26 August 2021 |
| Docket Number | 350351 |
| Parties | CITY OF DETROIT DOWNTOWN DEVELOPMENT AUTHORITY and CITY OF DETROIT, Plaintiffs/Counterdefendants-Appellees, v. LOTUS INDUSTRIES LLC doing business as CENTRE PARK BAR, Defendant/Counterplaintiff/Third-Party Plaintiff, and GWENDOLYN L. WILLIAMS, CHRISTOPHER WILLIAMS, and KENNETH SCOTT BRIDGEWATER, Defendants/Counterplaintiffs/Third-Party Plaintiffs-Appellants, and WAYNE CIRCUIT JUDGE, Third-Party Defendant, and ANDREW A. PATERSON, Appellant. |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Wayne Circuit Court LC No. 17-011066-CH
Before: Cavanagh, P.J., and O'Brien and Redford, JJ.
Defendants/Counterplaintiffs/third-party plaintiffs, Gwendolyn L. Williams, Christopher Williams, and Kenneth Scott Bridgewater, and non-party appellant, attorney Andrew A. Paterson, appeal by right the trial court's order granting defendant Detroit Downtown Development Authority's (the DDA) motion for summary disposition of its claims against Gwendolyn and Bridgewater, and grant of summary disposition of their counterclaim and third-party complaint, and other orders decided adversely to defendants. For the reasons stated in this opinion, we affirm.
On August 19, 2013, defendant, Lotus Industries, LLC (Lotus) entered a five-year lease agreement (the Lease) with the City of Detroit Downtown Development Authority (the DDA) of a portion of a commercial property located at 1407 Randolph, in downtown Detroit, for use as a restaurant and bar with liquor sales not to exceed 40% of the gross sales generated on the premises. Lotus agreed to pay an annual base rent of $78, 870 to be paid in monthly installments of $6, 572.50, to increase annually according to a set formula in the Lease. The Lease also required Lotus to pay monthly estimated additional rent consisting of its proportionate share of the building's common area maintenance and operating expenses, taxes, and insurance, which the DDA reconciled at the end of the year based upon such actual expenses incurred by the DDA. The Lease prohibited Lotus from using the premises as a nightclub, dance hall, disco, or for any other use inconsistent with the specified designated use, and prohibited Lotus from permitting any person to use the premises in a manner inconsistent with applicable laws ordinances, and regulations. The Lease permitted the DDA on prior written notice to conduct a complete audit of Lotus's records to assess its gross sales and percentage of gross sales from the sale of alcoholic beverages. Under the terms of the Lease, the DDA could terminate it and take possession of the premises upon the occurrence of any event of default including Lotus's nonpayment of rent, failure to perform its obligations, violation of applicable tenant rules and regulations, or filing of a bankruptcy petition.
In consideration of and to induce the DDA to enter the Lease with Lotus, Gwendolyn executed a personal guaranty on August 15, 2013, under which she unconditionally guaranteed the payment of all gross rent and charges under the lease performance of all lease obligations, and payment of actual costs and attorney fees related to enforcement of the Lease. Bridgewater executed an identical personal guaranty on the same date.
Lotus commenced doing business as the Centre Park Bar and Restaurant in April 2014. Around 2015, the DDA sought to redevelop areas of Detroit's downtown and requested development proposals. Defendants submitted a proposal but the DDA rejected it as untimely. Defendants unsuccessfully attempted to resolve the matter and communicated with redevelopment officials and Detroit's mayor's office. Defendants then publicly complained about the process and ultimately sued Detroit's mayor, the DDA, and others, in federal court alleging several claims. The DDA sought to assert counterclaims in that action but the federal court declined to exercise supplemental jurisdiction over those claims.[1] On July 24, 2017, therefore, plaintiffs brought this action against defendants alleging that Lotus d/b/a Centre Park Restaurant and Bar defaulted under the terms of the Lease by failing to pay the rent, by failing to produce documents and records in response to an audit request, by violating the defined use of the premises because more than 40% of its gross sales were from alcohol sales, by operating as a nightclub, by violating a local ordinance that prohibited making loud noise between 10:00 p.m. and 7:00 a.m causing a nuisance, and because Lotus violated Detroit's outdoor café permit. Plaintiffs alleged that Lotus's conduct triggered the DDA's right to terminate the lease. Plaintiffs alleged counts for unpaid rent, breach of the Lease, breaches by Gwendolyn and Bridgewater of their respective personal guaranties, unjust enrichment, and sought a declaratory judgment that Lotus's option to extend the lease terminated automatically because of its numerous defaults of the Lease. Further, plaintiffs asserted a claim for nuisance and abatement.
Plaintiffs sought a preliminary injunction on the ground that Lotus breached the Lease's use restriction by causing loud noise late at night that interfered with the Hilton Garden Inn Downtown Detroit's guests causing the hotel financial losses. The hotel had filed a complaint with the city which the DDA investigated after learning about the complaint and it found evidence that defendants were having large parties with excessive noise. Lotus's Centre Park Bar's Facebook page advertised itself as a nightclub featuring photo galleries of parties hosted at the bar with disc jockeys playing music outdoors which plaintiffs considered violations of the Lease's use prohibitions. Plaintiffs argued that such activities constituted a nuisance requiring abatement and entry of a preliminary injunction. The trial court ordered defendants to appear at a hearing to show cause.
Defendants filed what they characterized as a counterclaim against plaintiffs seeking the trial court's declaration that they were not in violation of the Lease and that they had fulfilled their Lease obligations. Defendants also sued the presiding judge, Wayne Circuit Chief Judge Robert J. Colombo Jr., alleging that the circuit court's assignment of plaintiffs' lawsuit to Judge Colombo pursuant to the local administrative order[2] governing civil case judicial assignments, violated their due-process rights by not randomly assigning the case to another judge, and they alleged that Judge Colombo held bias and prejudice for Detroit's mayor and the city, and against defense counsel, Andrew Paterson.
The day before the scheduled preliminary injunction hearing, defendants moved to disqualify Judge Colombo on the grounds that he held bias against defendants and Paterson for a number of reasons and that Judge Colombo had political ties to Detroit's mayor which they believed that Judge Colombo might not be able to remain impartial. Plaintiffs opposed defendants' motion. Judge Colombo considered but denied the motion after explaining that defendants' allegations for his disqualification were all false. Pursuant to MCR 2.003(D)(3)(a)(ii), the State Court Administrative Office assigned the de novo review of Judge Colombo's denial of the motion to Wayne County Chief Probate Judge Freddie G. Burton, Jr. Shortly thereafter defendants filed an emergency motion to disqualify Judge Burton in which they argued that Judge Burton lacked impartiality and held bias toward them. Judge Burton reviewed de novo defendants' motion for disqualification of Judge Colombo and issued an opinion denying the motion because defendants failed to demonstrate that Judge Colombo held actual personal prejudice against them or for another party, or that any appearance of bias existed that would disable the judge from properly conducting the proceedings.
Judge Burton also considered defendants' motion to disqualify himself. Judge Burton explained that the State Court Administrative Office appointed him to preside over the de novo review of the trial court's denial of defendants' motion to disqualify Judge Colombo pursuant to MCR 2.003(D)(3)(a)(ii). Judge Burton found defendants' motion procedurally defective because their supporting affidavit of Christopher failed to set forth any grounds for Judge Burton's disqualification as required under MCR 2.003(D)(1)(a) or MCR 2.119(B)(1), and merely recited alleged grounds for disqualification of Judge Columbo. Judge Burton further explained in detail how defendants' allegations that he harbored bias for Detroit's mayor and against Paterson were unfounded.
Judge Burton stated that defendants failed to overcome the presumption that a judge lacks bias because they presented no evidence that he had a pecuniary interest in the outcome, that he had been the target of abuse or criticism by the party before him, that he was enmeshed in matters involving defendants, or that he might have prejudice against them because of prior participation as an accuser, investigator, fact-finder, or initial decision-maker. Judge Burton concluded that defendants' disqualification motions indicated Paterson's intent to forum shop to find a judge who would never disagree or rule against defendants. Judge Burton also addressed plaintiffs' request for sanctions. Judge Burton stated that, based upon his conclusion that defendants' motion to disqualify him lacked factual and legal merit, sanctions against defendants were warranted and he permitted plaintiffs to submit a request for costs and fees which they did in the time allotted.[3]
Just before the trial court held a two-day evidentiary hearing on plaintiffs' motion for preliminary injunction, defendants moved to adjourn the hearing and Paterson moved to withdraw as defendants' counsel because defendants and Paterson...
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