Preview:

STATE OF MICHIGAN
COURT OF APPEALS


GARY R. LEIGH, Plaintiff-CounterdefendantAppellee, v RICHARD L. LAMBERT, Defendant-CounterplaintiffAppellant.

UNPUBLISHED March 23, 2001

No. 214076 Wayne Circuit Court LC No. 96-624274-CZ

Before: Collins, P.J., and Jansen and Zahra, JJ. PER CURIAM. Defendant appeals as of right the judgment entered pursuant to a jury verdict in favor of plaintiff. We affirm in part and remand for entry of an amended judgment. This case involves a contract dispute arising out of an unsuccessful investment venture entered into by three parties: defendant, plaintiff, and Mitchell Jaworski, a named, but non-served and, therefore, dismissed defendant. In 1989, the three partners invested in a struggling company named ACU/CAM, which they believed could become profitable with the proper management. ACU/CAM went into bankruptcy proceedings shortly after the partners began investing time and loan money, but the partners continued working to turn the company around. The partners signed a loan participation agreement (LPA) that set forth the parties' rights and obligations with regard to one another and provided that each partner was responsible for one third of any losses sustained in the event that ACU/CAM could not repay the loans made by the participants to ACU/CAM. Plaintiff filed this action on April 26, 1996, seeking recovery from defendant of moneys plaintiff paid in excess of his contractually required one-third amount. Defendant first argues that the trial court erred in denying his motions for summary disposition and directed verdict. Defendant brought both motions on the basis that plaintiff's action was barred by the statute of limitations. This Court reviews de novo the question whether the statute of limitations bars a cause of action. McKiney v Clayman, 237 Mich App 198, 201; 602 NW2d 612 (1999). The statute of limitations on a breach of contract claim is six years from the time the claim first accrues. MCL 600.5807(8); MSA 27A.5807(8); Sparta v State Bank v Covell, 197 Mich App 584, 587; 495 NW2d 817 (1992). A claim of breach of contract accrues

-1

when the promisor fails to perform under the contract. Cordova Chemical Co v Dep't of Natural Resources, 212 Mich App 144, 153; 536 NW2d 860 (1995). In his suit, plaintiff sought, pursuant to the parties' agreement, reimbursement for payments he made beyond his pro rata one-third amount on three loans that served as sources of funds loaned to ACU/CAM: (1) a promissory note for $125,000 executed to Republic Bank on September 29, 1989; (2) a promissory note for $175,000 executed to Arthur Hughett on October 6, 1989; and (3) a promissory note for $100,000 executed to Jerry Gitre on December 22, 1989. These loans are referenced in the parties' LPA as the "underlying loans." The parties' LPA reads in pertinent part as follows: 3. Adjustment of Participation Where Repayments Required *** [W]here (1) a Participant has provided more than one/third [sic] of the total funds for the ACU/CAM refinancing and (2) such Participant shall be required to repay a loan that was a source for his ACU/CAM contribution, then such Participant shall be entitled to require the other Participants to purchase part of his share of the ACU/CAM loan receivable. That repurchase shall be made at the full face amount of such part of the ACU/CAM loan receivable and shall be of a sufficient portion to generate the funds needed for the loan repayment, including interest. *** 4. Equal Sharing of Losses from Transaction All losses which may be sustained by Participants as a result of the nonpayment by ACU/CAM of its loan obligations shall be borne equally among Participants. At such time as it reasonably appears that the loan amounts owing from ACU/CAM to Participants is uncollectable, then any Participant may enforce the provisions of this paragraph requiring any equalization of the losses among Participants. If the ACU/CAM loans become uncollectible [sic], a Participant whose loss (in the form of principal and interest paid on underlying loans) is greater than one/third [sic] of the total loss suffered by all Participants is entitled to receive moneys from the other Participants until the losses of all Participants have been made equal through such adjusting payments. For purpose of applying this paragraph to require adjusting payments among Participants, the ACU/CAM loans may be regarded as uncollectible [sic] (1) if the ACU/CAM loans are more than 90 days past due and the effort to raise capital for ACU/CAM shall not have achieved success within five months from the date of this Agreement or (2) if Participants sooner reach agreement among themselves that the ACU/CAM loans are uncollectible. Defendant maintains that, pursuant to

Download GARY R LEIGH V RICHARD L LAMBERT.pdf

Michigan Law