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STATE OF MICHIGAN COURT OF APPEALS

GUMBA PROPERTIES, INC., Plaintiff-Appellant, v MAREK KOLYNICZ and DAUNTA1 KOLYNICZ, Defendants-Appellees.

UNPUBLISHED December 15, 2009

No. 287589 Wayne Circuit Court LC No. 07-713219-CH

Before: Servitto, P.J., and Fort Hood and Stephens, JJ. PER CURIAM. Plaintiff appeals as of right from the trial court's order granting defendants' motion for summary disposition. We affirm. On May 16, 2007, plaintiff filed a complaint alleging that defendants defaulted in the terms of the land contract executed between the parties. The land contract was executed on May 23, 2003, between plaintiff, a Michigan corporation, and defendants, a husband and wife. Under the terms of the land contract, defendants made a down payment of $20,000 with a balance of $155,000. Defendants were required to make monthly payments of not less than $2400 with the first payment due by June 1, 2003. The entire unpaid principal and accrued interest was due and payable on May 23, 2007. According to the terms of the land contract, plaintiff had a duty to convey, upon payment of all sums owing, "a good and sufficient warranty deed conveying title to the land . . . but free from all other encumbrances, except such as may be herein set forth or shall have accrued or attached since the date hereof through the acts or omissions of persons other than Sellers or assigns." With regard to defendants' responsibilities, the land contract provided that defendants were "[t]o pay all taxes and special assessments hereafter levied on said land before any penalty for nonpayment attaches thereto ...."

The spelling of this defendant's first name is inconsistent in the lower court record. This defendant is also referred to as "Danuta" as set forth in the land contract. We will utilize "Daunta" because it is referenced on the final order closing the case.

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Plaintiff alleged that defendants breached the land contract by failing to make the September 2006 payment and all payments through May 2007, at which time the complaint was filed. Plaintiff requested damages in the amount of $117,246.64 for the amount due and owing on the land contract. Further, plaintiff sought, in lieu of a return of the subject property, that the property be sold and that the net proceeds be paid to plaintiff in satisfaction of or in partial satisfaction of the total indebtedness due and owing. Defendants filed an answer to the complaint, asserting that the land contract was void and returned through election of a forfeiture action filed in district court and that plaintiff first breached the contract by failing to pay taxes that were due and owing on the property prior to the execution of the land contract with defendants. On December 7, 2007, plaintiff filed an amended complaint to include a count for waste and to allege that defendants owed $7,691.41 for back taxes on the property for the 20002002 years "per the terms of the land contract." On June 17, 2008, plaintiff filed its motion for summary disposition pursuant to MCR 2.116(C)(10). Therein, plaintiff alleged that defendants admitted breaching the contract by failing to make payments from September 2006 to May 2007. Because the breach continued for more than 45 days, defendants were in default and plaintiff was entitled to foreclose upon the land contract. In support of the motion, plaintiff submitted an affidavit from Stanley B. Dickson, the president of plaintiff, attesting that defendants had not made payments on the land contract since September 2006. Additionally, Dickson asserted that "[p]ursuant to the Land Contract and a previous lease, Defendants were responsible for all property taxes associated with the Property."2 On July 10, 2008, defendants filed a response in opposition to plaintiff's dispositive motion and a counter-motion for summary disposition pursuant to MCR 2.116(C)(10). Defendants alleged that plaintiff first committed a material breach of the contract by violating its obligation to pay for delinquent water and tax liens placed on the property before the execution of the land contract. Defendants alleged that they managed a retail grocery business specializing in products from Poland or products utilized by Polish-Americans. The property at issue was used solely as a warehouse for temporary storage of non-perishable goods and seasonal items. No employees worked at the subject premises, and defendants never turned the water on at the warehouse. Defendants were current in their monthly payments and payment of taxes through September 2006. In September 2006, defendants learned that there was an outstanding tax delinquency and outstanding water bills that had accrued prior to the execution of the May 2003 land contract. Consequently, defendants sought assurances that the property would not be lost in a foreclosure sale. Instead of providing assurances, plaintiff repudiated all liability for the delinquent tax bills. It was asserted that this material breach of the contract by plaintiff entitled defendants to summary disposition. In support of the counter-motion for summary disposition,

The land contract involved in the dispute was attached to the complaint. Despite the amendment to the complaint asserting that a prior lease indicated that defendants were responsible for back taxes, this prior lease was not attached to the amended complaint or to the motion for summary disposition. The other documentary evidence submitted with the motion included plaintiff's answers to defendants' request for admissions and a copy of the land contract.

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defendants submitted an affidavit, delinquent tax bills, letters and emails exchanged between the parties regarding the delinquency, documents from the court cases, and answers to requests for admissions. On July 18, 2008, the trial court heard oral argument regarding the motions and questioned the parties' failure to produce the lease. Plaintiff could not recall if the lease was oral or written. Defendants asserted that there was no written lease. The trial court held that a factual issue precluded summary disposition, concluding: Plaintiff initially breached the Agreement or Land Contract when Mr. Dickson indicated on December 4, 2006 that his interpretation of the Land Contract was that Plaintiff had no responsibility for taxes. Clearly Mr. Dickson was wrong. Under the Land Contract, . . . there's no provision to indicate that he was not responsible for taxes that accrued prior to the Land Contract. And in fact, the Land Contract indicates that the Defendants are only responsible for taxes that accrued after the date of the Land Contract. Under MCL 211.78g(1) a forfeiture had occurred. If Defendants continued to make Land Contract payments, Plaintiff could not provide a title without any encumbrances. This was a substantial breach. In addition, Mr. Dickson's affidavit indicates that Defendants were responsible for taxes under a previous lease. Upon questioning of Plaintiff's counsel, I wanted to know whether there was a written lease or not. And he couldn't tell me. [Defense counsel] says there was no lease, no written lease. It was an oral lease. If there's a written lease, obviously Mr. Dickson cannot present parol evidence in an affidavit indicating what the terms of the lease are because that would violate the best evidence rule. MRE 1002. If there's an oral lease, there's a disputed issue of fact. And consequently, I must deny the motion for summary disposition of both parties on that issue because there apparently is an oral lease and there's a dispute under the oral lease as to who is responsible for the taxes. On July 28, 2008, defendants filed a motion for reconsideration, asserting that plaintiff had misled the trial court regarding the status of the lease. Defendants asserted that they were not parties to the oral lease. Rather, the prior oral lease was between Polish Market Co., d/b/a Euro Club, and Williamston Foods, Inc. The individual defendants were not parties. Furthermore, a merger clause in the land contract integrated any prior written or oral agreements. Therefore, the issue of tenant responsibility to pay taxes under the prior lease was immaterial and moot. Defendants presented documentary evidence to support the assertions contained in the motion for reconsideration. Plaintiff filed a response to the motion for reconsideration, alleging that defendants failed to demonstrate a palpable error. On August 15, 2008, the trial court heard oral argument regarding the motion for reconsideration and ruled as follows: This Court granted Defendants' . . . motion for reconsideration from a denial of Defendants' motion for summary disposition on July 18, 2008. This -3-

Court ruled there was an issue of fact whether Defendants were responsible for tax payments based upon an oral lease that was entered into prior to the land contract. Defendants filed a motion for reconsideration raising two issues. First, that the parties to the oral lease were not the Plaintiff . . . or the Defendants. . . . Also attached to Defendants' motion for reconsideration were invoices showing that Euro Club paid the rent on the premises to Williamston Foods, Inc. The second issue raised by Defendants was that the merger clause in the land contract merged any prior agreements including the oral lease agreement. In response, Plaintiff does not respond to the argument that the prior oral lease agreement involved other parties. Rather, Plaintiff raises new issues arguing that, in fact, Plaintiff paid the 2005 property taxes and he entered into an Escrow Agreement on August 8, 2008 to place $25,000 in escrow for payment toward past due property taxes and water bills. Plaintiffs further argue that Defendants should be estopped from denying the validity of the land contract and did not properly rescind the land contract. The new issues raised by Plaintiff will not be considered. They should have been raised in the original motion and no reconsideration has been granted on those issues. Rehearing was granted with respect to the two issues discussed above [and] raised by Defendants. The undisputed evidence establishes that the oral lease agreement did not involve the Plaintiff and the Defendants to this

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