e-Journal Summary

e-Journal Number : 62065
Opinion Date : 02/23/2016
e-Journal Date : 03/17/2016
Court : Michigan Court of Appeals
Case Name : WNC Hous., LP v. Shelborne Dev. Co., LLC
Practice Area(s) : Business Law Litigation
Judge(s) : Per Curiam – Hoekstra, Meter, and M.J. Kelly
Full PDF Opinion
Issues:

Removal of the defendants as general partners from development projects; MCL 449.1206(6); Enforcing clear contractual language as written; Quality Prods. & Concepts Co. v. Nagel Precision, Inc.; Whether defendant-Makino was individually liable, jointly & severally; Whether Makino was individually liable for case-evaluation sanctions; Appropriate measure of damages; Award of case-evaluation sanctions; Rafferty v. Markovitz; Kusmierz v. Schmitt; MCR 2.403(O)(4); Award (as costs) of the fees paid to the case-evaluation administrator & to the facilitative mediator; MCR 2.411(D)(4); MCR 2.625(A); MCL 600.2405(2); Claim that the plaintiffs’ counsel’s law firm should have been disqualified due to a conflict of interest; MRPC 1.12(c); Lamont Cmty. Church v. Lamont Christian Reformed Church; Effect of notice that was not “prompt”; MCR 2.613(A); Kubiak v. Hurr; Amount awarded for a water bill; Failure to award unpaid property taxes

Summary

Finding that the applicable contract procedures were followed, the court upheld the trial court’s grant of partial summary disposition and declaratory relief to remove the defendants as general partners from development projects. While defendant-Makino was individually liable, jointly and severally, for an amount relating to a debt purchase and for case-evaluation sanctions, there was not a sufficient basis to hold her individually liable for a water bill. The court upheld the case-evaluation sanctions award, and rejected defendants’ claim that a law firm should have been disqualified. On cross-appeal, it agreed with plaintiffs that the total amount of the water bill should have been assessed against defendant-Shelborne Development, which also should have been held liable for the entire tax bill related to a property. The trial court permitted the removal of the three corporate defendants (and their principal, Makino) as the general partners of six Limited Dividend Housing Association partnerships, and “awarded various damages and attorney fees related to the mishandling of the partnerships by the general partners.” The partnership agreements allowed for removal of the general partner in § 13.2, which provided that “written notice must be provided to the general partner,” who “must be given a certain period to cure any deficiencies.” Further, removal “shall become effective upon approval of a majority” at a “Partner’s meeting held in accordance with Section 17.2 of this Agreement.” The gist of defendants’ argument was that because plaintiffs, on 11/15/11, “filed Certificates of Amendment with the state indicating that defendants had been removed as general partners” of the development projects, “plaintiff violated the partnership agreement because no partners’ meeting had been held before” 11/15/11. However, they did “not dispute that, disregarding what they themselves characterize as the ‘premature filing of these Certificates,’ the removal was conducted properly, in accordance with the terms of the partnership agreements.” They pointed to “no action taken in reliance upon the prematurely filed certificates.” Affirmed in part, reversed in part, and remanded for entry of an amended judgment.

Full PDF Opinion