Woodbury v. Res–Care Premier, Inc.

• Court: Court of Appeal of Michigan
• Writing for the Court: PER CURIAM.
• Citation: Woodbury v. Res–Care Premier, Inc., 295 Mich.App. 232, 814 N.W.2d 308 (Mich. App. 2012)
• Decision Date: 19 January 2012
• Docket Number: Docket No. 297819.
• Parties: WOODBURY v. RES–CARE PREMIER, INC.

295 Mich.App. 232

814 N.W.2d 308

WOODBURY

v.RES–CARE PREMIER, INC.

Docket No. 297819.

Court of Appeals of Michigan.

Submitted Jan. 11, 2012, at Lansing.

Decided Jan. 19, 2012, at 9:00 a.m.

Cobert, Shaw, Essad & Tucciarone, P.L.L.C., (by Joshua O. Booth), and Shinners & Cook, P.C., Saginaw (by Thomas A. Basil, Jr.), for Scott and Jeanne Woodbury and Center Woods, Inc.

Miller, Canfield, Paddock and Stone, P.L.C., (by LeRoy L. Asher, Jr., Carolyn P. Cary, Saginaw, and Joseph G. Vernon, Detroit), for Res–Care Premier, Inc.

Before: SAWYER, P.J., and WHITBECK and M.J. KELLY, JJ.

PER CURIAM.

In this property action, defendant Res–Care Premier, Inc., appeals as of right the trial court's grant of summary disposition to plaintiffs, Scott and Jeanne Woodbury and Center Woods, Inc., after concluding that Center Woods had the right of first refusal to purchase the property known as # 2 Center Woods and that defendant Ruth Averill failed to provide sufficient notice of the sale to Center Woods, as certain building and use restrictions require. The trial court's decision thereby voided the sale between Averill and Res–Care. We reverse and remand.

I. FACTS

A. THE PARTIES

Res–Care is a state-licensed operator of adult-foster-care facilities. Its name is short for “Respect and Care,” and its mission is “to assist people to reach their highest level of independence.” Res–Care provides rehabilitation and residential services to individuals with mental or developmental disabilities.

Defendant Ruth Averill purchased the property commonly known as # 2 Center Woods (the property) in 1991 and subsequently sold it to Res–Care on September 25, 2009. That sale is at the heart of this litigation.

Plaintiffs Scott and Jeanne Woodbury are the owners of the property commonly known as # 3 Center Woods, which is next door to the property.

Plaintiff Center Woods was incorporated as a nonprofit corporation in 1941. It was automatically dissolved under MCL 450.2922 in 1993 when it failed to file its annual report and failed to pay the annual filing fee for the second consecutive year. On October 13, 2009, the same day this action was filed, Center Woods filed renewal-of-existence papers with the state of Michigan.

B. THE ARTICLES OF AGREEMENT

In 1941, articles of agreement were entered into by the owners of the properties in the Center Woods Subdivision and filed in the property records. The articles provided, in relevant part, as follows:

NOW, THEREFORE, IT IS AGREED by and between the parties hereto that all land in Center Woods, a subdivision ... consisting of Lots One (1) to Twelve (12), inclusive, shall be subject to the following restrictions and covenants:

These covenants are to run with the land and shall be binding on all parties and all persons claiming under them and shall remain in full force and effect until such time as they shall be modified or repealed by agreement entered into by the owners of at least seventy-five per cent (75%) of the lots contained in said plat.

If the parties hereto, or any of them, or their heirs or assigns shall violate, or attempt to violate, any of the covenants herein, it shall be lawful for any other person or persons owning any real property situated in Center Woods Subdivision to prosecute any proceedings at law or in equity against the person or persons violating, or attempting to violate, any such covenant.

Invalidation of any one of these covenants, or any part of any covenant, by judgment or court order shall in no way invalidate any of the other provisions which shall remain in full force and effect.

1. Center Woods shall be maintained as residential property only and no property shall be used for any trade, commercial, industrial, or any other use whether or not herein specified, except for single family dwellings.

* * *

12. All property owners in Center Woods shall be members of Center Woods, Inc., a non-profit corporation, organized to provide for the improvement and maintenance of Center Woods as a desirable residential community.

* * *

15. No property in Center Woods may be sold, assigned, mortgaged or conveyed to or let, leased, rented or occupied by Hewbrews, [sic] or by any persons other than those of the Caucasian (white) race.

16. No property in Center Woods shall be sold without first giving Center Woods, Inc., thirty (30) days notice thereof and first opportunity to purchase said property at a price equal to a bonafide offer.

C. THE TRANSACTION

On July 10, 2009, Averill entered into a contract with Moshen H. Zadeh for the purchase of the property for $170,000. Closing was set for August 15, 2009. Zadeh was an investor of Res–Care. On July 20, 2009, Averill sent a memo addressed to Jack Short, the head of the homeowner's association, and “Center Woods Association,” which provided:

My home is scheduled for “closing” of sale: August 14, 2009[.] And I expect to [be] moving on that date.

Since I have NOT received notification of three previous sales in The Woods ... I assume this stipulation is no longer necessary.

I do not know the buyer, ... my realtor is Mary Klein, and the buyer's realtor is Keller Wms (Flint office)[.]

Thank you for all your TLC of The Woods ... it has been a delightful place to live for eight years.

No one contacted Averill or her realtor regarding the pending sale. Zadeh was unable to obtain financing, so Res–Care decided to purchase the property on its own without Zadeh under the exact same terms as the Zadeh offer. Closing was scheduled to be on or before September 30, 2009, and actually occurred on September 25, 2009.

On October 7, 2009, Averill sent another memo to Short and Center Woods Association, but this time also addressed it to Suzanne Short and the Woodburys. The memo provided, in relevant part:

Subject: The sale of my home was delayed until September 18th[.] I am scheduled to move Monday, October 12th.

New Owner: ResCare Premier, Inc.....

Local Manager: Laura L. Smith....

When the identity of the buyers was revealed I talked personally with both Ron Lee and Tim Braun regarding zoning. They told me that “group homes” are exempt from the law and cannot be refused or discriminated from a neighborhood.

Tim Braun has enacted a Saginaw Township registry of rental homes to keep aware of the percentage of non-owners. I have sent him the names of the people who are responsible for the property and the maximum of six residents, who will have 24[-]hour supervision. They must comply with State mandated safety measures which have been installed.

During inspection, Laura emphasized that they expect to be “good neighbors”, and plan to invite neighbors to an open house when they are settled. Best Wishes.

When Jeanne Woodbury received the letter, she researched Res–Care on the Internet. Concerned that the home would be occupied by “troubled youth/sex offenders,” she sent an e-mail to Smith at the address provided in the second notice. Two days later, an “emergent” meeting of the homeowners in Center Woods and a board of directors meeting for Center Woods were held. Averill was not invited. At the meeting, the board was authorized to take steps to prevent “this improper use,” and the board authorized Woodbury to be “a committee of one, to meet with” a real estate specialist attorney, with legal action expected to be filed “within a day or two.”

On October 12, 2009, the board's counsel sent a letter to Averill claiming that she violated paragraph 16 of the articles of agreement and requesting the details of the transaction “so [Center Woods] may consider exercising its right to purchase the property.” The letter also stated:

This correspondence also confirms that subsequent to your July 20, 2009 correspondence to Jack Short on your previous potential sale, which did not ultimately close, you were instructed that the Building and Use Restrictions were still in effect and you were required to provide Center Woods, Inc., formal notice and the terms and conditions of the bonafide offer.

This is apparently a reference to a conversation that Short testified that he had with Averill. According to Short, Averill called him and asked “if she had to do the right of first refusal,” and he told her “that if it was me and I was selling my house, I would want to make sure that everything was done properly.” Averill testified that this conversation never occurred and that she never spoke with Short.

The following day, on October 13, 2009, plaintiffs filed suit against Res–Care and Averill, alleging two counts of breach of “building and use restrictions,” one for the right of first refusal and one for noncommercial use, and requesting a permanent injunction preventing Res–Care from occupying the property. Plaintiffs also requested a temporary restraining order and preliminary injunction. Res–Care filed an answer that included several affirmative defenses, including that Center Woods waived the right to enforce the right of first refusal, that Center Woods's failure to maintain corporate status deprived it of standing, that the articles of agreement were clearly discriminatory and, therefore, invalid under state and federal law, and that Res–Care's use of the property was a valid residential use not in violation of any restrictions, even assuming that they were enforceable.

On November 9, 2009, the trial court held a hearing on the request for a preliminary injunction. Res–Care argued that, although it was a for-profit company, it was providing the home through a contract with the county, which rendered it essentially a not-for-profit entity. In addition, counsel stated that the residents intending to occupy the property “have no criminal record. They have no history of violence. They have no history of sexually predatory behavior, which is apparently what's, in part, driving this.” Counsel also indicated that Res–Care had provided the Woodburys with an opportunity to “sit down and meet and talk” and it had provided some information about the residents without violating...