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Opinion Date: 09/29/2011
e-Journal Date: 10/18/2011
Full Text Opinion

Practice Area(s):   Negligence & Intentional Tort
Real Property

Issues: Whether the trial court properly held that defendants-Meng and MP locked out the plaintiff-JFI's business (the LAN Lounge); The Anti-Lockout Statute (MCL 600.2918(1) and (2)); Deroshia v. Union Terminal Piers; Shaw v. Hoffman; McIntyre v. Murphy; Ramirez v. Baran (OK); Whether JFI defaulted on the lease by failing to pay rent; Whether JFI first breached the lease and relinquished any right to seek breach of contract damages; Whether the evidence supported the trial court's finding that Meng converted JFI's property; Whether the trial court properly relied on JFI's uncontroverted testimony as to the value of the property converted; Head & Phillips Camper Sales & Rentals, Inc.; Foremost Ins. Co. v. Allstate Ins. Co.; Gum v. Fitzgerald; Prosser & Keeton, Torts (5th ed.), § 15, p. 93; Bernhardt v. Ingham Reg'l Med. Ctr.; Elman v. Libralter Plastics, Inc.; Willis v. Ed Hudson Towing, Inc.; Whether the trial court correctly imposed on JFI the duty to demand return of the property; Damages; Conversion as a strict liability tort; Poggi v. Scott (CA)
Court: Michigan Court of Appeals (Unpublished)
Case Name: J. Franklin Interests, L.L.C. v. Meng
e-Journal Number: 49846
Judge(s): Per Curiam – Talbot, Gleicher, and M.J. Kelly

The court held that the trial court properly determined that the landlord (defendants-Meng and MP) unlawfully locked out the tenant (plaintiff-JFI) by barring the access door, changing the locks, and placing a sign in the window stating that the tenant's business was closed. The trial court also correctly held that the landlord converted a portion of the tenant's belongings by holding them as security against overdue rent and other debts. The court affirmed the trial court's ruling that the landlord locked out the tenant and converted the tenant's property, but vacated the award of damages and remanded for a recalculation of damages. Defendants own the office building at issue. JFI entered into a 3-year lease with defendants. The lease recited that JFI would use the premises to operate a computer gaming business and Internet access center, named the LAN Lounge. Meng operated a computer business (AFD Solutions) located in the same building. Plaintiff's principal (Franklin) testified that he invested $60,000 in developing the LAN Lounge. JFI hired AFD to assemble the computers and to configure the LAN Lounge computer network. AFD invoiced the LAN Lounge $7,586.25 for this service. A notation on the invoice indicated that Franklin personally guaranteed payment "based on 10% of net quarterly profits." The lease recited that JFI would pay $750 monthly rent beginning 7/16/07. Franklin made a $1,500 security deposit with a check to Meng personally, rather than to MP. Later, Franklin wrote 8 $750 checks payable to AFD, noting on the checks that they were for "rent." Franklin claimed that Meng told him to make the rent checks payable to AFD and claimed that because the LAN Lounge failed to generate any profits, he made no payments on the computer service invoices after tendering the $750 "down payment." Meng denied directing Franklin to draw the rent checks payable to AFD and insisted that the $750 payments applied to Franklin's invoiced debt. On 2/19/08, Franklin arrived at the LAN Lounge and found the parking lot unplowed and inaccessible. He voiced his unhappiness to Meng, who told him the lot would be plowed later that day. Franklin consulted an attorney. That afternoon, he terminated the lease by delivering a letter to Meng. Franklin claimed that he told Meng of his intent to vacate the premises in 30 days. An AFD employee said that Franklin threatened to sue Meng and Meng asked whether he would return to the premises. Franklin said that Meng would not get another penny from him. Meng asserted Franklin's words signaled his intent to permanently abandon the LAN Lounge. Later, Franklin returned to retrieve personal items and tried to enter the LAN Lounge, but discovered the door was barred from being opened. A sign was in the window that said "Closed for business. Property belongs to Meng's Properties. Any questions please call . . . ." Franklin's attorney sent Meng a second letter, which Franklin delivered to Meng. The door to the LAN Lounge was barricaded and Meng admitted that he had changed the locks and alarm code. Plaintiff sued alleging, inter alia, violation of the Anti-Lockout Statute and common law and statutory conversion. The trial court held that Meng's actions locked out Franklin, but because he failed to make a reasonable effort to recover his assets exceeding $11,235 in value, his conversion claim was limited. The trial court trebled the damages resulting in an award of $35,455 for JFI, and determined that Meng was "personally liable" along with MP. The court vacated only that part of the judgment awarding JFI damages against Meng and MP, and remanded for recalculation of those damages consistent with the opinion. The court affirmed the trial court's judgment in all other respects.

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