Contract enforcement; Breach of contract; Patel v FisherBroyles, LLP; Claim preclusion; Release & res judicata; Adair v Michigan; Conversion; Insurance proceeds; Treble damages

The court held that defendants breached the 2004 development and loan agreement, wrongfully converted insurance proceeds in which plaintiff-city held a contractual ownership interest, and were not protected by the 2021 nuisance-abatement stipulated order or res judicata. The city loaned defendant-Eastside $1,428,000 for a senior low-income housing project secured by a mortgage, and the loan documents required city consent before any transfer, named the city as an additional insured and loss payee, and assigned insurance proceeds to the city for repayment of the loan. After the property was destroyed by fire in 2019, defendants received $8.3 million in insurance proceeds, failed to remit any of those funds to the city, and instead used the money on other projects. The court held that the 2021 nuisance-abatement case did not bar this action because that earlier suit concerned blight, nuisance abatement, demolition, and unpaid property taxes, while this case arose from defendants’ breaches of the loan agreement and their retention of insurance proceeds. It explained that the two matters did not arise from the same transaction and did not form a convenient trial unit. The court next held that defendants were liable for common-law and statutory conversion because the loan documents gave the city an ownership interest in $1,428,000 of the insurance proceeds, defendants failed to pay that amount after demand, and they deposited and used the proceeds for their own purposes. It also upheld the award of treble damages, concluding that the trial court did not abuse its discretion in awarding them. Affirmed.