Van Buren Charter Twp. v. Visteon Corp.

• Decision Date: 16 May 2017
• Docket Number: No. 331789,331789
• Parties: VAN BUREN CHARTER TOWNSHIP, Plaintiff–Appellant, v. VISTEON CORPORATION, Defendant–Appellee.
• Court: Court of Appeal of Michigan — District of US

319 Mich.App. 538

904 N.W.2d 192

VAN BUREN CHARTER TOWNSHIP, Plaintiff–Appellant,

v.VISTEON CORPORATION, Defendant–Appellee.

No. 331789

Court of Appeals of Michigan.

Submitted November 2, 2016, at Detroit.

Decided May 16, 2017, 9:05 a.m.

Clark Hill PLC (by Kaveh Kashef and Jennifer K. Green ) and Gasiorek Morgan Greco McCauley & Kotzian, PC (by Patrick B. McCauley), for plaintiff.

Dickinson Wright PLLC (by Phillip J. DeRosier, Michael C. Hammer, Robert F. Rhoades, and Doron Yitzchaki ) for defendant.

Before: Stephens, P.J., and Saad and Meter, JJ.

Stephens, P.J.Plaintiff, Van Buren Charter Township, appeals as of right an order granting summary disposition under MCR 2.116(C)(4) (lack of jurisdiction) and (C)(8) (failure to state a claim) in favor of defendant, Visteon Corporation, on plaintiff's request for a declaratory judgment and claim of breach of contract. We affirm.

I. BACKGROUND

This case arises from a Settlement Agreement and Mutual Release (the Agreement) entered in 2010 between plaintiff, a charter township in Wayne County, and defendant, a publicly traded global automobile parts supplier, in the midst of defendant's then-ongoing bankruptcy proceedings. Pertinent here, the Agreement dictated defendant's obligations to plaintiff for a shortfall in payments on bonds defendant received from plaintiff in 2003 for the purpose of financing the development and construction of defendant's national headquarters (Visteon Village, of "the Village") in plaintiff's township. Sometime in 2013, plaintiff engaged Public Financial Management, Inc. (PFM) to conduct a cash-flow analysis for the township. PFM returned a report on September 6, 2013, presenting 15 different cash-flow scenarios, each of which resulted in a shortfall. With regard to "Future Cash Shortfall," the drafter of the report stated, "Since the current Taxable Values within [plaintiff's township] are significantly lower than the original projections in 2003, a cash shortfall is inevitable if new revenues are not introduced." The estimated amount of the shortfall ranged from $23.7 million to $36.4 million, and the shortfall was projected to occur sometime between 2017 and 2019.

Plaintiff forwarded a copy of the PFM Report to defendant, along with a demand letter requesting that defendant engage in immediate negotiations to determine defendant's payment obligation under the Agreement with respect to the projected shortfall. Defendant agreed to meet with plaintiff but disputed any obligation to engage in negotiations until after plaintiff actually experienced a bond-payment shortfall. On the basis of this dispute, plaintiff brought a two-count complaint against defendant, alleging breach of contract for defendant's failure to negotiate in good faith and anticipatory repudiation of its obligation to pay any amount of the bond-payment shortfall, and requesting a declaratory judgment determining the rights and obligations of both parties pursuant to Paragraph 3 of the Agreement.

The trial court granted defendant's motion for summary disposition under MCR 2.116(C)(4) and (C)(8), deciding that:

(1) the parties' disagreement over the meaning of a term in their agreement did not present a justiciable issue,

(2) plaintiff's breach-of-contract and declaratory-judgment claims were not ripe for adjudication because the actual damages to plaintiff from the payment shortfall were only "hypothetical" in nature, and

(3) plaintiff's breach-of-contract and declaratory-judgment claims were not ripe for adjudication because the payment shortfall was not expected to occur until a future date.

II. STANDARD OF REVIEW

"This Court reviews de novo a trial court's decision on a motion for summary disposition in an action for a declaratory judgment." Lansing Sch. Ed. Ass'n, MEA/NEA v. Lansing Bd. of Ed. (On Remand), 293 Mich.App. 506, 512–513, 810 N.W.2d 95 (2011). "Questions regarding ripeness are also reviewed de novo." King v. Mich. State Police Dep't, 303 Mich.App. 162, 188, 841 N.W.2d 914 (2013). Finally, this Court reviews de novo "[q]uestions involving the proper interpretation of a contract or the legal effect of a contractual clause." McDonald v. Farm Bureau Ins. Co., 480 Mich. 191, 197, 747 N.W.2d 811 (2008).

In this case, defendant sought summary disposition pursuant to MCR 2.116(C)(4) and (C)(8). The trial court indicated that it was granting defendant's motion under both subrules. However, on appeal, the parties contest the propriety of dismissal under MCR 2.116(C)(4). Although we acknowledge inconsistencies among published decisions of this Court and more recent unpublished decisions regarding whether Subrule (C)(4) supports dismissal for failure of justiciability grounds such as ripeness,¹ we need not address the conflict in this case. Morales v. Parole Bd., 260 Mich.App. 29, 32, 676 N.W.2d 221 (2003) ("[T]his Court does not reach moot questions or declare principles or rules of law that have no practical legal effect in [a] case....") (quotation marks and citation omitted). Both parties concede that summary disposition for lack of ripeness is properly considered under MCR 2.116(C)(10). Even if the trial court erroneously granted defendant's motion for summary disposition under Subrule (C)(4) on ripeness grounds, this Court will not reverse when summary disposition is nonetheless appropriate under a different subrule. Rental Prop. Owners Ass'n of Kent Co. v. Kent Co. Treasurer, 308 Mich.App. 498, 526–527, 866 N.W.2d 817 (2014) ("Even if the trial court erred by granting summary disposition under a particular subrule, this Court will not reverse if the error was harmless...."). Because the trial court's dismissal of plaintiff's claims as unripe was appropriate under MCR 2.116(C)(10), any error in granting defendant's motion for summary disposition under a separate subrule was harmless.

Additionally, as plaintiff concedes, because the trial court considered evidence beyond the pleadings to decide defendant's motion, this Court must treat the trial court's decision with respect to Subrule (C)(8) as though it were made only pursuant to Subrule (C)(10). See Sharp v. Lansing, 238 Mich.App. 515, 518, 606 N.W.2d 424 (1999), aff'd 464 Mich. 792, 629 N.W.2d 873 (2011). Summary disposition is proper under MCR 2.116(C)(10) if "there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law." West v. Gen. Motors Corp., 469 Mich. 177, 183, 665 N.W.2d 468 (2003). This Court considers the affidavits, pleadings, depositions, admissions, and other documentary evidence in the light most favorable to the nonmoving party. Maiden v. Rozwood, 461 Mich. 109, 120, 597 N.W.2d 817 (1999). The same is considered to determine whether "reasonable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party." Allison v. AEW Capital Mgt., LLP, 481 Mich. 419, 425, 751 N.W.2d 8 (2008).

III. ANALYSIS

Plaintiff argues that the trial court erred when it granted defendant's motion for summary disposition because:

(1) the trial court's conclusion that plaintiff's request for declaratory relief was not ripe was erroneous, as the parties' dispute over the interpretation of Paragraph 3 of the Agreement is clearly an existing and ongoing disagreement necessitating resolution,

(2) the trial court's conclusion that plaintiff's future damages, in the form of an inevitable bond-payment shortfall, were only "hypothetical" in nature was factually unsupported and legally impermissible, and the conclusion that the contract claims were not ripe was based on this erroneous determination, and

(3) the trial court failed to recognize that defendant breached the contract when it declined to negotiate in good faith and committed an anticipatory breach when it argued it was not required to pay the amount of the bond shortfall.

We address each claim of error in turn.

A. DECLARATORY JUDGMENT

On appeal, plaintiff asserts that, because the parties disagree in their interpretation of Paragraph 3 of the Agreement, an actual controversy exists and plaintiff is entitled to a declaration of its legal rights under that contractual provision. We disagree.

MCR 2.605 governs a trial court's power to enter a declaratory judgment. The court rule provides, in pertinent part, that "[i]n a case of actual controversy within its jurisdiction, a Michigan court of record may declare the rights and other legal relations of an interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted." MCR 2.605(A)(1). The language in this rule is permissive, and the decision whether to grant declaratory relief is within the trial court's sound discretion. P.T. Today, Inc. v. Comm'r of Office Fin. & Ins. Servs., 270 Mich.App. 110, 126, 715 N.W.2d 398 (2006).

When there is no actual controversy, the court lacks jurisdiction to issue a declaratory judgment. Citizens for Common Sense in Gov't v. Attorney General, 243 Mich.App. 43, 55, 620 N.W.2d 546 (2000). Thus, "the existence of an ‘actual controversy’ is a condition precedent to the invocation of declaratory relief." P.T. Today, Inc., 270 Mich.App. at 127, 715 N.W.2d 398. An actual controversy exists when a declaratory judgment is necessary to guide the plaintiff's future conduct in order to preserve the plaintiff's legal rights. Shavers v. Attorney General, 402 Mich. 554, 588–589, 267 N.W.2d 72 (1978). "It is not necessary that ‘actual injuries or losses have occurred’; rather than ‘plaintiffs plead and prove facts which indicate an adverse interest necessitating a sharpening of the issues raised.’ " Kircher v. City of Ypsilanti, 269 Mich.App. 224, 227, 712 N.W.2d 738 (2005), quoting Shavers, 402 Mich. at 589, 267 N.W.2d 72.

Plaintiff claims that a disagreement exists regarding the application of a provision in the Agreement obligating defendant to assist plaintiff in the form of nontax payments in the event of a shortfall. The provision, Section 3 of the Agreement, reads as...