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STATE OF MICHIGAN COURT OF APPEALS

SPRUCE RUN, LLC, and 600 FOWLERVILLE RD., LLC, Plaintiffs-Appellants, v FIRST NATIONAL BANK IN HOWELL, Defendant-Appellee.

UNPUBLISHED March 15, 2011

No. 296754 Livingston Circuit Court LC No. 09-024509-CZ

Before: FITZGERALD, P.J., and O'CONNELL and METER, JJ. PER CURIAM. Plaintiffs appeal as of right from a grant of summary disposition to defendant under MCR 2.116(I)(2). We affirm. Plaintiff companies each consisted of two component members: plaintiff Spruce Run consisted of Blue Spruce Grove, LLC, and Gottschalk & Black Investments Limited (G&B), and plaintiff Fowlerville consisted of SSC Fowlerville, LLC, and G&B. Dale Cooper was the manager of Blue Spruce Grove, LLC, and SSC Fowlerville, LLC. The operating agreements for plaintiffs indicated that no mortgages involving substantially all the property of the companies were to be entered into "by any Manager on behalf of the Company, except by the unanimous consent of all Members . . . ." Plaintiffs filed this lawsuit after G&B mortgaged the real-estate assets of each plaintiff in order to obtain two separate loans from defendant and after defendant initiated foreclosure proceedings. Plaintiffs contended that G&B had no authority to encumber the properties under the terms of the operating agreements. Defendant contended that G&B held itself out as having the authority to encumber the properties. It argued, among other things, that equitable estoppel precluded the invalidation of the mortgages. The trial court ruled that defendant, in making the encumbrances, had received adequate proof of the consent of plaintiffs. Accordingly, the court denied the motion for partial summary disposition that plaintiffs had filed under MCR 2.116(C)(10) and granted summary disposition to defendants under MCR 2.116(I)(2). Plaintiffs contend that the trial court should have granted their motion. We review de novo a trial court's decision regarding a motion for summary disposition. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Summary disposition may be granted under MCR 2.116(C)(10) when "there is no genuine issue as to any material fact, and the moving party is -1-

entitled to judgment . . . as a matter of law." MCR 2.116(I)(2) states: "If it appears to the court that the opposing party, rather than the moving party, is entitled to judgment, the court may render judgment in favor of the opposing party." As noted in Adams v Detroit, 232 Mich App 701, 708; 591 NW2d 67 (1999), "[e]quitable estoppel arises where one party has knowingly concealed or falsely represented a material fact, while inducing another's reasonable reliance on that misapprehension, under circumstances where the relying party would suffer prejudice if the representing or concealing party were subsequently to assume a contrary position." With respect to the Spruce Run transaction, defendant had a "limited liability company authorization resolution," dated December 29, 2004, stating that either G&B or Blue Spruce Grove, LLC, could mortgage the property of plaintiff Spruce Run. Dale Cooper's signature is on this resolution. This resolution provided the basis for equitable estoppel. Defendant accepted the representations made in the resolution and relied on them to make an $800,000 loan. Prejudice would result to defendant if the mortgage were to be invalidated after plaintiff Spruce Run's then-managers, Dennis Gottschalk and Jay Black, made material representations relating to it. Plaintiffs contend that this resolution should not be relied on in the present appeal because it was superseded by another resolution that was not signed by Cooper. We disagree. This second Spruce Run resolution stated that it was superseding a "resolution dated 12-23-04." Defendant's representative, Dennis Gehringer, indicated that he did not know of a "12-23-04" resolution, and no party has identified one.1 We will not require defendant to have assumed that the later resolution was intended to supersede the resolution signed by Cooper and dated December 29, 2004, not December 23, 2004. Plaintiffs also contend that the original resolution should not be relied on in the present appeal because Gehringer admitted that Gottschalk, a manager of G&B, made alterations to the document that were not expressly assented to by Cooper. However, the alterations were immaterial to the question of G&B's authority to enter into the mortgage. Even without the alterations referred to by plaintiff, the resolution still plainly indicated that either Blue Spruce Grove, LLC, or G&B could mortgage the property of plaintiff Spruce Run. Accordingly, plaintiffs' reliance on the alterations is misplaced. Defendant relied on the representations made to it in order to make the loan at issue. Plaintiffs are equitably estopped from invalidating the mortgage.2

At any rate, even if the later resolution were applied to the transaction, we would still find no basis for reversal. The same analysis as applied to the Fowlerville transaction, infra, would apply. Plaintiffs may possibly have a cause of action against G&B for acting improperly, but we express no opinion concerning that subject. -22

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With regard to the Fowlerville property, a resolution similar to the original Spruce Run resolution was signed by Gottschalk and Cooper. However, defendant admits that while it relied on this resolution to make two loan modifications with regard to the Fowlerville loan, in making the original loan it relied on a different resolution

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Michigan Law