Smith Living Trust v. Erickson Ret. Cmtys.

Decision Date30 October 2018
Docket NumberNo. 338638,338638
Citation326 Mich.App. 366,928 N.W.2d 227
Parties SMITH LIVING TRUST and Estate of Reginald Smith, by David Smith, as Trustee and Personal Representative, and on behalf of all others similarly situated, Plaintiff-Appellant, v. ERICKSON RETIREMENT COMMUNITIES, Henry Ford Village, Inc., Redwood-ERC Management, LLC, doing business as Erickson Living Management, Life Care Services, Senior Campus Services, LLC, and Senior Campus Living, Inc., Defendants-Appellees.
CourtCourt of Appeal of Michigan — District of US

Mantese Honigman, PC (by David Honigman, Troy, Krista Hosmer, Southfield, and Jordan Segal) for plaintiff.

Dykema Gossett PLLC (by Jill M. Wheaton, Ann Arbor and Dennis M. Haffey, Bloomfield Hills) for Henry Ford Village, Inc.

Blake Kirchner Symonds Larson Kennedy & Smith (by Richard P. Smith ), Detroit, for Redwood-ERC Management, LLC.

Plunkett Cooney (by Jeffrey C. Gerish and Patrick C. Lannen ), Bloomfield Hills, for Life Care Services, LLC.

Before: Murray, C.J., and Borrello and Ronayne Krause, JJ.

Ronayne Krause, J.Acting as personal representative and successor trustee, respectively, of the estate and trust of his deceased father Reginald Smith (decedent), plaintiff, David Smith, appeals as of right the trial court’s order granting defendants summary disposition under MCR 2.116(C)(10)1 of all claims in this action. We affirm.

I. FACTUAL BACKGROUND
A. INTRODUCTION

Decedent resided in a unit at the Henry Ford Village Continuing Care Retirement Community (the retirement community) in the years immediately preceding his death. The retirement community is owned by defendant Henry Ford Village, Inc. (HFV), and it was managed, at various times, by the other defendants. Decedent was required to pay a "refundable entrance deposit" for his unit. The entirety of this deposit was "refundable" to decedent’s estate or trust as of decedent’s death in 2013, subject to several conditions precedent and minus certain fees that plaintiff does not challenge. HFV refunded most, but not all, of the remainder of decedent’s entrance deposit, pursuant to an agreement with plaintiff, which, in turn, was pursuant to a provision of decedent’s contract with HFV. The gravamen of this case is plaintiff’s contention that HFV should have refunded the entirety of decedent’s deposit, notwithstanding the terms of decedent’s contract with HFV or plaintiff’s agreement with HFV. At oral argument, plaintiff conceded that HFV violated none of the terms of its contract with decedent or its agreement with plaintiff, as those documents are actually written.

One of the conditions precedent to a refund was reoccupancy of decedent’s unit by a new resident, including the payment of a new entrance deposit. Decedent’s unit remained unoccupied approximately nine months after it was vacated. HFV suggested to plaintiff that, because of the decline in the real estate market, the unit was priced too high at $152,000. Plaintiff agreed to a reduction in the unit’s entrance deposit. In 2016, decedent’s unit was reoccupied for an entrance deposit of $136,000. Under the agreement and one of the contractual provisions in the Residence and Care Agreement (the RCA), if a unit’s reoccupancy entrance deposit is reduced, any refund of the original deposit will be likewise reduced. Consequently, HFV issued a check to plaintiff in the amount of $126,861.93, reflecting the reduced entrance depositand the subtraction of the unchallenged fees. Plaintiff asserts that, notwithstanding the agreement to the lesser amount, $16,000 of decedent’s entrance deposit refund remains outstanding.

B. CONTRACTS AND DOCUMENTS EXECUTED BY DECEDENT

Several contracts and other documents are at issue in this matter. On May 22, 2006, decedent executed a "Refund of Entrance Deposit Form," which, in relevant part, stated that "the Resident" (i.e., decedent) was

entitled to a refund of the Entrance Deposit ... under certain specified conditions during Resident’s lifetime or upon Resident’s death based upon termination of the applicable Care Agreement. The conditions for the refund of the Entrance Deposit are set forth in the Care Agreement.

The form further expressly advised the Resident to "review this Refund Form with an attorney or other estate planning professional prior to execution ...." Finally, the form provided, immediately above the signature line, that "Resident hereby acknowledges that he or she has read the following preliminary statements and instructions, reviewed the attached options for a refund of the Entrance Deposit, and understands the purpose and consequences of this Refund Form ." Decedent nominated himself, as trustee of his revocable living trust (the trust), as sole beneficiary of any refund of his entrance deposit.

On June 8, 2006, decedent executed several more documents. One of those was a single-page document entitled "Helpful Information Regarding Your Refund of Entrance Deposit and Your Residence and Care Agreement." This document described itself as "a brief and general overview of some sections from the Residence and Care Agreement," but cautioned that it "is not meant to replace the Residence and Care Agreement nor supercede [sic] any of its terms...." It stated, in relevant part, that "[i]n general, in the event of death of a resident, the entrance deposit will be refunded within 30 days of their apartment being re-settled (a new entrance deposit has been placed on that apartment)." The document did not mention any reduction in the entrance deposit. It concluded by stating that "[y]our Residence and Care Agreement is designed to offer you many protections" and inviting the resident to discuss any questions about the RCA with HFV’s marketing office.

The same day, decedent executed another single-page document entitled "Receipt of Disclosure Statement." In relevant part, decedent acknowledged that he had received and had sufficient time to review2 a disclosure statement required by the Living Care Disclosure Act (LCDA), MCL 554.801 et seq . —specifically by MCL 554.819.3 The disclosure statement itself, which included a table of contents, provided, in relevant part:

REQUIRED DISCLOSURES
1. YOU HAVE THE RIGHT TO CANCEL YOUR PURCHASE AND RECEIVE A FULL REFUND WITHIN SEVEN (7) DAYS AFTER YOU HAVE EITHER MADE A DEPOSIT AND RECEIVED A COPY OF THIS DISCLOSURE STATEMENT OR EXECUTED THE RESIDENCE AND CARE AGREEMENT AND RECEIVED A COPY OF
THIS DISCLOSURE STATEMENT. YOU CANNOT BE REQUIRED TO MOVE INTO THE FACILITY BEFORE THE EXPIRATION OF THIS 7 DAY PERIOD.
2. THE SIGNING OF A LIFE INTEREST OR LONG TERM LEASE IS AN INVESTMENT THAT MAY INVOLVE A HIGH DEGREE OF RISK AND YOU SHOULD SEEK ADVICE FROM AN ATTORNEY OR OTHER FINANCIAL ADVISOR INDEPENDENT OF THE FACILITY.
3. THIS DISCLOSURE STATEMENT IS REQUIRED BY LAW TO CONTAIN ALL MATERIAL FACTS REGARDING THE OFFERING MADE HEREBY. THE MICHIGAN OFFICE OF FINANCIAL ANDINSURANCE SERVICES HAS NOT PASSED UPON THE ACCURACY OF THIS DISCLOSURE STATEMENT, NOR HAS THE OFFICE APPROVED OR DISAPPROVED THE OFFERING DESCRIBED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL AND SHOULD BE REPORTED....
4. NO PERSON IS AUTHORIZED TO MAKE ANY PROMISES IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED
IN THIS DISCLOSURE STATEMENT.
* * *
SECTION 5—ENTRANCE DEPOSITS (SUMMARY)
The one-time refundable Entrance Deposit must be paid by the resident of each Living Unit, with 10 percent due upon signing a Residence and Care Agreement and the remainder due prior to occupancy. A list of the current Entrance Deposits is attached as Exhibit 2. The Entrance Deposit is determined by the size of and amenities available in the living unit. The Entrance Deposit is 100% refundable in accordance with the terms of the Residence and Care Agreement.
* * *
SECTION 7—OTHER SERVICES AND CHARGES
* * *
Residents have no further financial obligations to Henry Ford Village other than those described in the Residence and Care Agreement, attached as Exhibit 6.
* * *
SECTION 11—CANCELLATIONS AND REFUNDS
* * *
C. Termination After Six Months of Occupancy: A Resident is entitled to a full refund of the Entrance Deposit if the Resident terminates or all Joint Residents terminate the Residence and Care Agreement more than six months after taking occupancy. The Resident must give Henry Ford Village 90 days [sic] notice in writing. The Resident shall be entitled to a full refund of the Entrance Deposit, less the applicable Monthly Service Package, if previously not paid, the Vacancy Fee, the Marketing Fee, and all other outstanding charges. The unearned portion of such refund shall be refunded within 45 days after the Notice is given or upon re-occupancy of the Unit, whichever occurs first. The earned portion of the Entrance Deposit shall be paid within 30 days of the date that a new qualified Resident pays a new Entrance Deposit in full.[4]
* * *
SECTION 12—DIVORCE, DEATH OF SPOUSE, MARRIAGE
A. Death of a Single Resident: If a single Resident dies during residency at Henry Ford Village, the Residence and Care Agreement is automatically terminated.
The refund of the Entrance Deposit will be made within thirty (30) days of fulfillment of the following conditions: the Resident’s or the Resident’s representative’s vacating the living unit, removing all possessions, paying all outstanding charges, and a new, qualified Resident paying a new Entrance Deposit in full.

Plaintiff’s counsel admitted in the trial court that a copy of the RCA was attached to the disclosure statement.

Finally, also on June 8, 2006, decedent executed the RCA itself. With its attached schedules and table of contents, the RCA was 29 pages in length. Its table of contents listed the title and page of each of its sections and subsections. In pertinent part, the RCA provided:

Section 7. REFUNDABLE ENTRANCE DEPOSIT
7.1 Payment of Refundable Deposit. Resident shall pay to HENRY FORD VILLAGE a total Entrance Deposit, as indicated in Schedule I, attached and incorporated hereto, on or before
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