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STATE OF MICHIGAN
COURT OF APPEALS


GRAND RAPIDS HOUSING COMMISSION and MT. MERCY HOUSING CORPORATION, Plaintiffs-Appellees, v OHIO FARMERS INSURANCE COMPANY, Defendant-Appellant.

UNPUBLISHED February 7, 2008

No. 273513 Kent Circuit Court LC No. 05-007189-CK

Before: Davis, P.J., and Murphy and White, JJ. PER CURIAM. Defendant Ohio Farmers Insurance Company (OFIC) appeals as of right the circuit court's order granting summary disposition to plaintiffs Grand Rapids Housing Commission (GRHC) and Mt. Mercy Housing Corporation (MMHC). OFIC also challenges the circuit court's order denying its motion for reconsideration. We reverse. I In December 2003, Cycon Enterprises, Inc. (Cycon), contracted with the GRHC and Mt. Mercy Limited Partnership (MMLP) to be the general contractor for Assisted Living Mt. MercyPhase II (the Project). Two months later, OFIC, as surety, issued a performance bond on behalf of Cycon, the principal. The performance bond listed GRHC as the obligee and owner of the bond. OFIC also issued two obligee riders, which listed MMHC and Fifth Third Bank as obligees. In December 2004, Mt. Mercy Limited Partnership II (MMLP II) unilaterally terminated Cycon as general contractor of the project, believing that Cycon failed to perform in accordance with the contract. MMLP II then commenced this action against OFIC seeking to recover the amount that it spent above the contract price to finish the project. Thereafter, GRHC and MMHC, who were the obligees under the performance bond, were substituted as plaintiffs. Cycon instituted arbitration proceedings against MMLP II and GRHC, claiming that its termination from the project was improper. A counterclaim was asserted based on the completion damages. While the arbitration was pending, OFIC sought summary disposition in the instant action on the limited basis that it could not be liable to GRHC or MMHC under the performance bond because the plaintiff obligees suffered no damages. Rather, OFIC asserted, assuming Cycon did, in fact, breach the contract, only MMLP II, an entity that was not an obligee under the bond, incurred the additional completion expenses. -1-


Plaintiffs responded to the substance of OFIC's motion, addressing the issue whether plaintiffs suffered compensable losses. Plaintiffs' response included the following: Under MCR 2.116(C)(10), a moving party is entitled to Summary Disposition only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. [Citation omitted]. In ruling on such a motion, the Court must consider the pleadings as well as any depositions, affidavits, admissions, or other documentary evidence submitted by the parties MCR 2.116(G)(5). "If it appears to the Court that the opposing party, rather than the moving pary, is entitled to judgment, the Court may render judgment in favor of the opposing party." MCR 2.116(I)(2). OFIC's Motion for Summary disposition must be denied. The attached evidence that GRHC has paid all Completion Contractors after Cycon's termination precludes the conclusion that GHRC [sic] has not been injured by Cycon's termination from the Project. Since OFIC now represents that no factual issues exist, Summary Disposition should be entered in favor of GRHC and MMHC against OFIC for $1,061.506, plus costs, interest and attorney fees. [Emphasis in original.] OFIC filed a reply to plaintiffs' response to OFIC's motion for summary disposition in which it argued that the affidavit attached to plaintiffs' response supported OFIC's position that MMLP II was obligated to reimburse GRHC for the additional expenditures, and so GRHC and MMHC, the plaintiff obligees suffered no compensable losses. At argument on OFIC's motion, counsel for OFIC began by identifying the parties and their relationships. Defense counsel continued: They [Cycon] were defaulted. This case doesn't deal with the propriety of that and who is right and who is wrong, but they were in December of `04

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