Hartwick v. Luna
| Decision Date | 20 April 2023 |
| Docket Number | 360956,361535 |
| Parties | SHANNON M. HARTWICK, Plaintiff-Appellee, v. CLARISSA DE LUNA, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Ingham Circuit Court LC No. 20-000193-CH
Before: O'Brien, P.J., and Murray and Letica, JJ.
In this consolidated[1] appeal, defendant appeals as of right the trial court's order granting plaintiff summary disposition under MCR 2.116(C)(10). Defendant raises procedural challenges to the trial court's jurisdiction arguing that the court was divested of jurisdiction when it entered its May 24, 2022, order, and further argues that the trial court improperly resolved factual questions in the context of a motion under MCR 2.116(C)(10). Defendant also contends that the trial court erred by finding that defendant converted the realty subject to the underlying land contract and further erred by granting specific performance. For the reasons discussed below, we affirm in part, reverse in part and remand for further proceedings consistent with this opinion.
This case arises from a land contract entered between the parties on November 29, 2018, where defendant agreed to sell real estate to plaintiff for $47,000. The land contract required plaintiff to pay an initial $3,000 down payment, and after that, plaintiff was to make monthly payments on the principal of the loan plus 10% per annum interest, with a final balloon payment of the remaining outstanding balance due after two years, with a minimum term of 13 months after the land contract was signed. The agreement included a due on sale clause, which provided that in the event of a sale or transfer of the property by plaintiff, defendant had the right to declare the full balance immediately payable.
The dispute arose in January of 2020 when plaintiff attempted to refinance the property through Union Home Mortgage. To effectuate the mortgage, the mortgage lender, plaintiff, and plaintiff's counsel contacted defendant requesting the payoff balance under the agreement. However, defendant refused to provide the requested payoff and, in response to the requests, asserted that plaintiff had breached the due on sale clause by way of attempted refinancing of the property. The record shows that it was not until after plaintiff instituted this action that defendant provided plaintiff with the payoff balance.
Plaintiff commenced this action on March 27, 2020, alleging breach of contract and entitlement to injunctive relief and an accounting of the amount owed under the land contract, and later amended her complaint to add claims for common law and statutory conversion. The record shows that plaintiff began escrowing the monthly payments in April of 2020.[2] On April 21, 2020, defendant emailed plaintiff the requested accounting, which included over $12,000 in fees, including costs for legal fees, accounting, administrative fees, return on investment, and billable hours. Later that year, defendant transferred the real property by quit claim deed to Clear Moon Production, LLC (Clear Moon), an entity owned by defendant, for the consideration of $1.
On April 29, 2021, defendant filed her motion for summary disposition under MCR 2.116(C)(10),[3] arguing, in relevant part, that plaintiff's breach of contract claim was barred by the doctrine of first breach, on the basis that plaintiff breached the land contract in January of 2020 by violating the contract's due on sale clause and the related statute, MCL 445.1623. Specifically, defendant averred that plaintiff was statutorily required under MCL 445.1623 to give defendant written notice or receive written consent before refinancing the property, and that her failure to do so permitted defendant to declare the full balance under the land contract immediately due and payable. According to defendant, plaintiff forfeited the land contract and extinguished her rights to the property by repeatedly breaching the terms of the agreement. Additionally, defendant alleged that plaintiff anticipatorily breached when she announced her intentions to stop the monthly payments in March of 2020, and further breached when she stopped paying the monthly dues from April of 2020 until the contract term ended in November of 2020.
Plaintiff subsequently moved for summary disposition pursuant to MCR 2.116(C)(10), arguing that she was entitled to summary disposition on all counts of her amended complaint and requested that the court issue a mandatory injunction requiring defendant to convey the deed to plaintiff.[4] Plaintiff argued that defendant breached the land contract by failing to provide an accurate payoff balance within a reasonable time even though plaintiff only sought to mortgage the property after the land contract's 13-month minimum term had expired. Plaintiff asserted that because defendant breached the land contract, she sustained substantial damages, including the expenses associated with applying for a mortgage, such as obtaining a credit check and an appraisal of the property, and other damages resulting from her inability to close on the loan, such as the cost to maintain additional housing for her residence in Canada and the reduced interest rate she would have received by refinancing. Defendant's failure to provide the requested payoff excused plaintiff's subsequent breach of failing to pay the balloon payment under the contract. Plaintiff further alleged that she was entitled to summary disposition on her claims for common-law and statutory conversion, citing MCL 600.2919a(1)(a), because defendant converted plaintiff's equitable interest in the title to the property for her own use when defendant exercised wrongful control over plaintiff's equity interest by refusing to provide an accurate payoff and denying plaintiff access to her equity either through refinancing or sale of the underlying property.
Plaintiff also sought injunctive relief, specifically requesting that the court provide an equitable accounting reflecting the amount plaintiff owed under the land contract in the form of an order that could be recorded with the register of deeds. Additionally, plaintiff requested that the trial court enter a mandatory injunction requiring defendant to convey the deed to plaintiff upon her fulfillment of the court's order. Plaintiff cited MCL 566.34 for the proposition that defendant's fraudulent conveyance of the property to her entity, Clear Moon, was an avoidable transfer and that defendant was statutorily required by MCL 565.361 to provide plaintiff with the property deed upon payment of the land contract.
In response, defendant restated the allegations made in her prior motion for summary disposition and additionally argued that she was not obliged by the land contract to provide plaintiff with an accounting. Defendant contended that plaintiff's attempt to secure an accounting was outside the scope of the land contract and constituted a unilateral modification of the contract's terms. Defendant argued that plaintiff's claims for tort conversion failed as a matter of law because realty could not be converted. According to defendant, plaintiff was not entitled to injunctive relief because plaintiff forfeited the land contract and extinguished her rights therein. Defendant further alleged that plaintiff's new request for a mandatory injunction, requiring defendant to transfer the deed to plaintiff, was neither raised nor addressed in plaintiff's complaint or amended complaint.
Following oral arguments on the parties' cross-motions for summary disposition, the trial court entered its January 28, 2022 order, where the court denied defendant's and granted plaintiff's motions for summary disposition. The trial court granted plaintiff's motion in its entirety and entered a judgment in favor of plaintiff in the amount of $96,894.51, subject to set-off against the judgment for the balance owed under the land contract and amount escrowed by plaintiff, as detailed in the court's accounting. The court also granted plaintiff's request for a mandatory injunction, and ordered that defendant, as the manager and sole member of Clear Moon, execute a deed conveying the property from Clear Moon back to defendant, and following that conveyance, defendant was to deliver the deed to plaintiff. The order further permitted plaintiff to record the court's order and executed deed with the register of deeds, establishing a full conveyance of defendant's rights, title, and interest in the property to plaintiff. The court indicated in the order that an opinion containing its explanation for its rulings would be issued at a later date. On February 7, 2022, defendant filed her motion for reconsideration of the trial court's January judgment.
The trial court entered an order on March 31, 2022, which contained the promised explanation for its summary disposition ruling embodied in the January order, but did not address defendant's prior motion for reconsideration of the January order. The trial court found that plaintiff was entitled to summary disposition on all counts of her complaint, ruling that defendant materially breached the land contract by failing to provide plaintiff with the payoff under the land contract. The court explained that defendant's failure to provide the requested payoff denied plaintiff access to her equity through refinancing or sale of the property and excused plaintiff from making the balloon payment under the contract. The court rejected defendant's contentions that plaintiff breached the due on sale clause under the land contract, reasoning that the record was devoid of a material breach by plaintiff, considering plaintiff neither sold, transferred, nor encumbered the property in any way.
The trial court also found that defendan...
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