Breach of contract; Whether contractual agreements were enforceable; AFT MI v Michigan; Consideration independent of the sale of the business; General Motors Corp v Department of Treasury; SNJ Enterprises, Inc. (SNJ)

Concluding that “the trial court failed to address whether the contractual agreements were of any import and supported by consideration independent of an ultimate sale of the business,” the court vacated the judgment of no cause of action on the breach of contract claims and remanded. The trial court’s factual findings as to the parties’ purported agreement to purchase and sell plaintiff-Samir’s company, SNJ, were central to the appeal. Plaintiffs asserted it “clearly erred when it found the Agreements to be for the purpose of selling SNJ because the Agreements evidence a loan, not a sale.” This argument had merit. The agreements did “not reference the larger agreement the trial court found to exist for the sale of SNJ.” Thus, on their face, they appeared “to simply evidence an indebtedness to plaintiffs in the amount of $510,000.” But plaintiffs never denied an agreement to “sell SNJ to defendants once plaintiffs’ ‘investment’ in SNJ was paid back.” Thus, the trial court did not clearly err in holding that “the agreement between the parties included the eventual sale of SNJ to defendants. However, the trial court did not adequately explain the purpose of the Promissory Note and Security Agreement, if the only agreement between the parties was for the purchase and sale of SNJ. By concluding the sale of SNJ to be the only agreement between the parties, the trial court effectively ignored the plain language of the Agreements that clearly evidenced an additional promise by defendants under which they became indebted to plaintiffs.” The court noted that “the trial court did not explain why defendants became indebted to plaintiffs, including pledging a security interest in” defendant-TBI (co-owned by defendants-Joanna and Nibras), “all for the right to purchase SNJ by” 5/1/15. The trial court “did not address why the letter agreement expressly set forth that the documents would not be recorded in the absence of a default by the borrower. Thus, while the trial court did not clearly err when it concluded there was an agreement between plaintiffs and defendants for the sale of SNJ, the trial court did not adequately explain how the Agreements fit into the sale agreement. Specifically, by failing to adequately address the purpose of the Security Agreement and Promissory Note, the trial court did not consider whether additional promises and, therefore, additional consideration, supported the Agreements.”