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e-Journal Summary
Opinion Date: 01/19/2012
e-Journal Date: 01/23/2012
Full Text Opinion

Practice Area(s):   Contracts
Real Property

Issues: Whether defendant-Averill ought to have provided notice of the pending sale of her property to anyone other than the corporation (plaintiff-Center Woods) based on the plain language of the Articles of Agreement (the Agreement); Contract interpretation; In re Rudell Estate; Quality Prod. & Concepts Co. v. Nagel Precision, Inc.; Michigan Nat'l Bank v. Laskowski; Whether Center Woods was entitled to notice of the sale between Averill and defendant-Res-Care; Effect of Center Woods' failure to maintain its corporate status; MCL 450.2801(1)(f); MCL 450.2922(1); Gilliam v. Hi-Temp Prod.; MCL 450.2925; Middlebrooks v. Wayne Cnty.; Bergy Bros., Inc. v. Zeeland Feeder Pig, Inc.; Stott v. Stott Realty Co.; United Steelworkers v. Forestply Indus., Inc. (WD MI); Flint Cold Storage v. Department of Treasury
Court: Michigan Court of Appeals (Published)
Case Name: Woodbury v. Res-Care Premier, Inc.
e-Journal Number: 50699
Judge(s): Per Curiam – Sawyer, Whitbeck, and M.J. Kelly

The court held that the trial court erred in ruling that defendant-Averill ought to have provided notice of the pending sale of her property to anyone other than the plaintiff-Center Woods based on the plain language of the Agreement, and erred in holding that Center Woods was entitled to notice of the sale between Averill and defendant-Res-Care where Center Woods did not exist at that time. Thus, the court reversed the trial court's decision voiding the sale between Averill and Res-Care and remanded for entry of summary disposition for the defendants. The trial court granted summary disposition to Center Woods and plaintiffs-Woodburys, holding that Center Woods had the right of first refusal to purchase the property, and that Averill failed to provide sufficient notice to Center Woods, as certain building and use restrictions required. The Woodburys are the owners of the property next door to Averill's property. Center Woods was incorporated as a non-profit corporation in 1941. It was automatically dissolved under MCL 450.2922 in 1993 when it failed to file its annual report and failed pay the annual fee for the second consecutive year. On 10/13/09, the same day this action was filed, Center Woods filed renewal of existence papers with the State. On 7/10/09, Averill entered into a contract with Z for the purchase of the property. Closing was set for 8/15/09. Z was an investor of Res-Care. On 7/20/09, Averill sent a memo addressed to JS, the head of the homeowner's association, and Center Woods. No one contacted Averill or her realtor about the pending sale. Z was unable to obtain financing, so Res-Care decided to purchase the property on its own without Z under the exact same terms as Z's offer. Closing occurred on 9/25/09. On 10/7/09, Averill sent another letter to JS and Center Woods, but this time also addressed it to SS and the Woodburys. On 10/12/09, counsel sent a letter to Averill claiming that she violated ¶ 16 of the Agreement and requesting the details of the transaction "so [Center Woods] may consider exercising its right to purchase the property." Plaintiffs filed this suit the next day. The court held that the trial court's determination that Averill ought to have notified someone other than Center Woods was without merit. The Agreement provided - "No property in Center Woods shall be sold without first giving Center Woods thirty (30) days notice thereof and first opportunity to purchase sole property at a price equal to a bonafide offer." The provision only required notice to "Center Woods, Inc." There was no reference or requirement for notice to homeowners or a generic reference to the homeowners association. The next issue was whether Center Woods was entitled to notice from Averill. There was no question that at the time of the sale, Center Woods did not exist. Center Woods did not dispute that it failed to file its annual reports and pay the required fees, such that it was automatically dissolved under MCL 450.2801(1)(f) and MCL 450.2922(1). Plaintiffs contended that the result of Center Woods' reinstatement pursuant to MCL 450.2925, hours before filing the suit, was that the dissolution essentially never took place. The court concluded that neither Stott nor Bergy was precisely on point. Neither case provided "guidance in answering the question of whether a party who is required to provide notice of some event to the corporation, which has ceased to exist for 16 years, could be deemed to have failed to properly give notice on the grounds that, sometime in the future, the corporation might seek reinstatement." The court held that it "is not reasonable to require persons to give notice to a non-existent corporation on the contingent basis that at some unknown time in the future, some unknown person might elect to reinstate it. Simply because someone can reinstate a corporation under MCL 450.2925 does not mean anyone will. And the law certainly should not require people to assume otherwise." Further, plaintiffs incorrectly asserted that the homeowners' association's continued collection of monies and exercise of obligations gave it a de facto existence after dissolution.

Full Text Opinion

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