Nino Salvaggio Inv. Co. v. William Beaumont Hosp.

Docket Number362212
Decision Date03 August 2023
PartiesNINO SALVAGGIO INVESTMENT COMPANY LTD., Plaintiff-Appellant, v. WILLIAM BEAUMONT HOSPITAL, INC., Defendant-Appellee.
CourtCourt of Appeal of Michigan (US)

UNPUBLISHED

Oakland Circuit Court LC No. 2020-182616-CB

Before: GADOLA, P.J., and MURRAY and MALDONADO, JJ.

PER CURIAM.

Plaintiff Nino Salvaggio Investment Company Ltd., appeals as of right the trial court's order granting defendant William Beaumont Hospital, Inc.'s motion for summary disposition under MCR 2.116(C)(10) (no genuine issue of material fact). We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I. BACKGROUND

This matter stems from the parties' failed negotiations concerning plaintiff, a specialty grocer, leasing a concession space at Beaumont Hospital in Royal Oak and a grocery space adjacent to the hospital within Woodward Corners Development, also owned by defendant. At all relevant times, Carolyn Wilson was defendant's Chief Operating Officer, and plaintiff was owned in part by Leonard Salvaggio.

In 2016, Arkan Jonna, owner of Tower Construction (which is affiliated with defendant), approached Michael McInerney, an attorney and owner of MKM Consulting, Inc., which represents plaintiff. According to McInerney, Jonna wanted to discuss plaintiff becoming defendant's "anchor grocer tenant at its yet-to-be developed Woodward Corners [Development] space." Tower Construction was "to build the core and shell for all the buildings on the property," while Hobbs + Black Architects would design the Woodward Corner Market building. David Schostak, the President and Chief Executive Officer for Schostak Brothers and Company, and Jonna were "essentially the leasing agents" for defendant.

Leonard and plaintiff's other owners agreed they would pursue the opportunity with defendant. At some later point, the parties began negotiating the terms of a letter of intent (LOI) and reviewing design concepts for the Woodward Corner Market building. Additionally, plaintiff "insisted on, and [defendant] agreed, that [plaintiff] would [also] . . . be the exclusive tenant for [a] concession space across the street at the Beaumont Hospital...." According to plaintiff's representatives, they were repeatedly assured by defendant's representatives that plaintiff was the selected grocer, which prompted Leonard to approve the creation of a commissary. The commissary would serve to "centralize certain functions within the stores and to create capacity for the two operations" within Woodward Corner Market and the hospital concession space.

On February 2, 2018, Ronald Henry, defendant's then Vice President of Real Estate, Design, and Construction, sent an e-mail to Justine O'Brien and Thomas Litzler, who worked for Schostak Brothers. David and Jonna were cc'ed on the e-mail, which stated:

This email is official notification that [defendant] has approved [plaintiff] as the Grocer for Woodward Corners at Beaumont. The lease rate shall be $15/[square foot]. Please proceed with finalizing the[] LOI and let me know when you are ready to engage outside counsel or [defendant's] counsel . . . to begin lease negotiations. Also, please notify the design and construction team so they can begin detailed design documents for the . . . building. On a similar yet separate note, we will also need to begin discussions with [plaintiff] for leasing the space currently occupied by Papa Joe's in the near future. Once the [plaintiff's] schedule is defined and we have an idea on when the store will be completed we can then work to determine timing on the work required in the South Tower to allow [plaintiff] time for renovation.

Henry forwarded the February 2, 2018, e-mail to McInerney. A short time later, on February 28, 2018, a confidentiality and nondisclosure agreement (NDA) was executed, which provided that neither party could identify the other party "in any announcement, publication, publicity, promotional, or advertising material concerning the existence or terms of this Agreement without the express prior written consent of that other party." Negotiations concerning the LOI continued, and although it is disputed who was to blame for the delay in the execution of the LOI, it was ultimately executed on June 21, 2018. It contained several terms concerning the Woodward Corner Market lease, but the parties agreed those terms were not binding and were contingent upon defendant's approval of plaintiff's financial information and execution of a lease. The LOI also contained a clause entitled "CONCESSION LEASE EXCLUSIVITY" (exclusivity clause), which stated:

[Plaintiff] shall have the exclusive right to negotiate and enter into a lease with [defendant] to provide a food and beverage concession within Beaumont Hospital-Royal Oak North Tower ("Concession Lease Exclusivity"). The Concession Lease Exclusivity shall begin upon the execution date of this letter and expire on the 90th day following the execution date of the lease for the Premises ("Concession Lease Exclusivity Period"). Upon expiration of the Concession Lease Exclusivity Period, [defendant] shall have no further obligation to [plaintiff] for space within Beaumont Hospital-Royal Oak North Tower location.

It was further agreed the terms of the LOI were "subject to" the NDA, and that the exclusivity clause concerning the concession space was binding.

After the LOI was executed, Wilson wanted to announce the deal publicly. Plaintiff's representatives declined because of a concern that plaintiff's reputation would be harmed if the deal was not completed. The parties began negotiating the terms of the lease agreement for the Woodward Corner Market building and discussed changes to the building's size and design. Although defendant's representatives wanted to execute a lease by July or August 2018, plaintiff's representatives elected to move at a "reasonable pace," and were concerned that they were not being provided with necessary cost information to complete the lease agreement for the Woodward Corner Market building.

A meeting was held on September 6, 2018, to address the lack of progress and the parties' concerns. During the meeting, Leonard expressed frustration and a desire to re-negotiate certain terms in the LOI and potentially re-open the planned unit development (PUD) with respect to the Woodward Corner Market building. Two weeks later, "an all hands meeting" was held. Leonard, who was present, found the tone of defendant's representatives to be "insulting," and he knew "something wasn't right." At the meeting, it was agreed plaintiff would accept "a smaller footprint" so defendant's representatives could avoid the timely re-submission of the PUD to Royal Oak officials. This concession was based on certain design changes to the Woodward Corner Market building. Plaintiff's representatives were also provided with additional cost information.

Although some progress had been made, Wilson decided to negotiate with Meijer Inc., which defendant had previously considered for the grocer at Woodward Corner Market. According to Henry, Wilson instructed him to "negotiate and expedite . . . with Meijer[]," and to not inform plaintiff about this. Henry was instructed to "drag [plaintiff] along" in the event the negotiations with Meijer were unsuccessful. Wilson told Henry to tell plaintiff that defendant was "still reviewing" matters if he was asked for updates. Henry testified he complied with Wilson's instructions, even though doing so made him "very uncomfortable" because he knew plaintiff was "purchasing advanced long lead items" in anticipation of reaching an agreement with defendant. Henry told his staff, Litzler, Jonna, and David about Wilson's instructions. Meanwhile, in October 2018, plaintiff's representatives met with representatives from Hobbs + Black Architects to discuss the building design. Plaintiff also completed the commissary, at an alleged total cost of $943,735.83.

Wilson terminated Henry's employment in January 2019. Thereafter, Meijer and defendant executed a lease agreement for Woodward Corner Market, which was publicly announced one month later. Although defendant's representatives had gone "radio silent" in the time leading up to the announcement, Leonard was still surprised.

Plaintiff subsequently filed suit against defendant, alleging (1) breach of contract with respect to the exclusivity clause and the NDA, (2) fraudulent misrepresentation, (3) silent fraud, (4) negligent and innocent misrepresentation, and (5) promissory estoppel.

After the close of discovery, defendant moved for summary disposition under MCR 2.116(C)(10). In relevant part, defendant argued that: (1) the exclusivity clause lacked material terms and was unenforceable; (2) plaintiff could not present substantively admissible evidence to support breach of the NDA; (3) plaintiff's alleged reliance on statements made by defendant's representatives was unreasonable; (4) it did not owe plaintiff a duty to disclose that it was negotiating with Meijer, and (5) plaintiff's promissory estoppel claim failed because defendant did not make definite and clear promises to plaintiff. Plaintiff opposed the motion, arguing genuine issues of material fact existed for trial.[1] The trial court waived oral arguments and granted summary disposition in favor of defendant under MCR 2.116(C)(10). This appeal followed.

II. STANDARDS OF REVIEW AND RELEVANT AUTHORITY

We review "de novo a trial court's decision on a motion for summary disposition." Bailey v Antrim Co 341 Mich.App. 411, 421; 990 N.W.2d 372 (2022) (quotation marks and citation omitted). "De-novo review means that we review the legal issue independently, without deference to the lower court." Bowman v Walker, 340 Mich.App. 420, 425; ...

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