v No Tuscola Circuit Court Plaintiff appeals by right the trial court s order granting summary disposition in favor of defendant. We affirm.

Transcription

1 S T A T E O F M I C H I G A N C O U R T O F A P P E A L S CARO TRANS OPPORTUNITIES LLC, Plaintiff-Appellant, UNPUBLISHED June 14, 2018 v No Tuscola Circuit Court MOBILE MEDICAL RESPONSE, INC., LC No CK Defendant-Appellee. Before: GLEICHER, P.J., and BOONSTRA and TUKEL, JJ. PER CURIAM. Plaintiff appeals by right the trial court s order granting summary disposition in favor of defendant. We affirm. I. PERTINENT FACTS AND PROCEDURAL HISTORY On July 8, 2014, plaintiff and defendant entered into a commercial lease agreement. Defendant agreed to lease from plaintiff the property located at 1796 West Caro Road in Caro, Michigan, and plaintiff agreed to build out the premises on the property as described in an exhibit attached to the lease. Defendant intended to operate an ambulance facility at the property and to house related office space. The lease agreement provided for a base rent amount and further provided that, as additional consideration, defendant is conveying to plaintiff property located at 1162 North Caro Road (the location at which plaintiff was then operating its ambulance facility). That conveyance would result in a rent credit that would be applied to the base rent. On May 15, 2015, the parties entered into a new lease agreement in lieu of the July 8, 2014 lease agreement with substantially identical terms, except that defendant agreed to lease from plaintiff the property located at 1800 West Caro Road (rather than 1796 West Caro Road). Like the earlier lease agreement, the 2015 lease agreement provided that defendant is conveying to plaintiff the same property located at 1162 North Caro Road as additional -1-

2 consideration. 1 Also like the earlier lease agreement, the 2015 lease agreement contained a provision that allowed defendant a partial rent credit to be applied to its first 60 rent payments (i.e., for the first five years of the lease) in return for defendant s conveyance to plaintiff of the 1162 North Caro Road property. And like the earlier lease agreement, the 2015 lease agreement did not specify when defendant was to convey that property to plaintiff. Defendant took occupancy of the leasehold premises in early August 2015, 2 before the county building inspector had issued a certificate of occupancy. Defendant contended that it did so based on plaintiff s representations that the premises were ready for occupancy even though a certificate of occupancy had not yet been issued. The building inspector issued a certificate of occupancy soon thereafter. From the beginning of its occupancy, defendant discovered substantial safety and health defects in the premises, including roof leaks, electrical issues, holes in the siding, defective insulation, and improper septic field drainage. Plaintiff admits that shortly after taking possession defendant began to complain of problems with the premises, and had complained of such issues by no later than August 13, 2015, when defendant s regional manager requested that plaintiff provide an update on the status of repairs addressing the issues. Defendant s regional manager also contacted a local building inspector regarding these issues. The building inspector investigated and found several problems with the building that rendered it uninhabitable. On September 15, 2015, the inspector revoked the certificate of occupancy and ordered defendant to vacate the premises. Defendant did so and notified plaintiff that it was rescinding the lease. A new certificate of occupancy was issued on October 1, 2015 after plaintiff had made repairs to the property; however, that certificate was also revoked on November 9, 2016, over a year after defendant had vacated the premises. Plaintiff filed suit, alleging breach of contract, unjust enrichment, and promissory estoppel. Plaintiff argued in part that defendant had breached the lease agreement by failing to convey the property located at 1162 North Caro Road. Defendant denied liability, asserting that plaintiff had breached the lease first, and that it therefore was not obligated to perform under the 1 Defendant never conveyed the 1162 North Caro Road property in conjunction with the 2014 lease agreement; nor did plaintiff ever seek to enforce the conveyance under that agreement or claim that the failure to convey the property at that time constituted a breach of the 2014 lease agreement. 2 The lease agreement provided that the rent was due and payable in advance on the first day of each calendar month, commencing on the Commencement Date. The Commencement Date is May 15, Defendant does not argue, however, that rent was in fact due on the Commencement Date, or on the first day of the month before or after the Commencement Date, or indeed at any time before the first day of the month after possession. Defendant took possession in early August 2015, and made its first rent payment in September Plaintiff does not contend that the first rent payment was late, or that defendant breached the lease agreement by not making the first rent payment earlier. Indeed, the record reflects, as confirmed by the parties conduct, an understanding that the first rent payment was due (and first setoff amount therefore would be applied) on the first day of the month following possession. -2-

3 lease. After discovery, defendant moved for summary disposition under MCR 2.116(C)(10) on the ground that plaintiff was the first to materially breach the lease, and that it had done so by failing to maintain the premises in a habitable condition, resulting in the revocation of the certificate of occupancy and defendant s forced vacation from the premises. Defendant asserted that plaintiff s breach barred it from claiming damages from defendant s rescission of the lease. Plaintiff countered with its own motion for partial summary disposition asserting that, notwithstanding any issues with the habitability of the premises leased to defendant, defendant s failure to convey the property located at 1162 North Caro Road constituted the first material breach of the lease agreement. The trial court held that plaintiff had materially breached the lease first and consequently could not maintain claims against defendant arising out of its rescission of the lease. The trial court therefore granted defendant s motion for summary disposition and denied plaintiff s motion. This appeal followed. II. STANDARD OF REVIEW We review de novo a trial court s grant or denial of summary disposition. Spiek v Dep t of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998). A motion brought under MCR 2.116(C)(10) tests the factual support of a plaintiff s claim, and is reviewed by considering the pleadings, admissions, and other evidence submitted by the parties in a light most favorable to the nonmoving party. Latham v Barton Malow Co, 480 Mich 105, 111; 746 NW2d 868 (2008). Summary disposition is proper if there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. Id. A genuine issue of material fact exists when reasonable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party. Allison v AEW Capital Mgt, LLP, 481 Mich 419, 425; 751 NW2d 8 (2008). We consider only the evidence that was properly presented to the trial court in deciding the motion. Peña v Ingham Co Rd Comm, 255 Mich App 299, 310; 660 NW2d 351 (2003). The interpretation of a contract is a question of law we review de novo, including whether the language of a contract is ambiguous. Reed v Reed, 265 Mich App 131, 141; 693 NW2d 825 (2005). III. ANALYSIS Plaintiff contends that the trial court erred by granting summary disposition in favor of defendant because defendant s failure to convey the real property located at 1162 North Caro Road constituted the first material breach of the parties lease, and that as a result plaintiff was released from its remaining obligations under the lease. Plaintiff further argues that the trial court should have granted partial summary disposition in its favor because the lease required defendant to transfer the property at the outset of the lease. We disagree. If the language of the contract is unambiguous, this Court construes and enforces the contract as written. Id. We give the language of the parties contract its ordinary, plain meaning; and avoid technical, constrained constructions. Bianchi v Automobile Club of Mich, 437 Mich 65, 71 n 1; 467 NW2d 17 (1991). Inartfully worded or clumsily arranged contract terms do not render a contract ambiguous if it fairly admits of one interpretation. Mich Twp Participating Plan v Pavolich, 232 Mich App 378, 382; 591 NW2d 325 (1998). If the contract is not ambiguous, trial courts may not substitute their own judgment for the intent of the parties. -3-

4 Grosse Pointe Park v Mich Muni Liability & Prop Pool, 473 Mich 188, ; 702 NW2d 106 (2005). Courts must construe contracts as a whole, giving effect to all provisions, Turner v Bituminous Cas Co, 397 Mich 406; 244 NW2d 873 (1976), and avoiding interpretations that would render any part of the contract surplusage or nugatory. Klapp v United Ins Group Agency, Inc, 468 Mich 459, ; 663 NW2d 447 (2003). Courts must also if possible seek an interpretation that harmonizes potentially conflicting terms. Id. Further, where a contract contains both specific and general terms, the specific terms control over the general. Royal Prop Group, LLC v Prime Ins Syndicate, Inc, 267 Mich App 708, 719; 706 NW2d 426 (2005). The absence of an explicitly stated time for performance or payment does not render a contract invalid or unenforceable. [W]hen a contract is silent as to time of performance or payment, absent any expression of a contrary intent, the law will presume a reasonable time. Jackson v Green Estate, 484 Mich 209, 217; 771 NW2d 675 (2009) (YOUNG, J., concurring), quoting Duke v Miller, 355 Mich 540, ; 94 NW2d 819 (1959). It is a general rule of law that where no time is stipulated, a reasonable time will be presumed. Reasonable time depends upon the facts and circumstances of each case. Id., quoting Pierson v Davidson, 252 Mich 319, 324; 233 NW2d 329 (1930). One party s substantial breach of a contract may relieve the other party of its obligation to perform under the contract. Alpha Capital Management, Inc v Rentenbach, 287 Mich App 589, 613; 792 NW2d 344 (2010). Our Supreme Court stated that a substantial breach may be found in cases where the breach has effected such a change in essential operative elements of the contract that further performance by the other party is thereby rendered ineffective or impossible, such as the causing of a complete failure of consideration or the prevention of further performance by the other party. [McCarty v Mercury Metalcraft Co, 372 Mich 567, 574; 127 NW2d 340 (1964) (citations omitted.] Therefore, determination of whether a breach of contract is "substantial" hinges on whether the nonbreaching party obtained the benefit of its contractual bargain. Able Demolition v Pontiac, 275 Mich App 577, 585; 739 NW2d 696 (2007). A material breach affecting a substantial or essential part of the contract may warrant rescission, Omnicom of Michigan v Giannetti Investment Co, 221 Mich App 341, 348, 561 NW2d 138 (1997), as may a failure to perform a substantial part of a contract or one of its essential terms, see Rosenthal v Triangle Development Co, 261 Mich 462, 463; 246 NW2d 182 (1933). A mere technical breach, however, will not justify rescission by the nonbreaching party. See id. at 464. A lease gives the tenant the possession of the property leased and the exclusive use or occupation of it for all purposes not prohibited by the terms of the lease. De Bruyn Produce Co v Romero, 202 Mich App 92, 98; 508 NW2d 150 (1993). Leaseholders have a right to beneficial enjoyment of the land for the purpose for which the premises are rented, at least to the extent disclosed to the lessor at the making of the lease. Grinnell Bros v Asiuliewicz, 241 Mich 186, 188; 216 NW 388 (1927). A breach of the covenant of quiet enjoyment occurs when a landlord -4-

5 obstructs, interferes with, or takes away from the tenant in a substantial degree the beneficial use of the leasehold. Slatterly v Madiol, 257 Mich App 242, 258; 668 NW2d 154 (2003). 3 In this case, the lease agreement provided that defendant would be entitled to take possession of the premises once plaintiff had completed the build-out, and it obligated defendant to pay monthly rent. Paragraph 5b of the lease provided a modified rent payment structure for the first five-year term: b. MMR Rent Credit. As additional consideration for this lease agreement, Tenant is conveying by warranty deed, property located at 1162 N. Caro Rd, Caro, MI ( Conveyed Property ) to Landlord. The parties agree that the Conveyed Property is deemed to have a fair market value of $65,000 and that Tenant shall receive a rent credit of $1, per month during the term of the lease until the credit has been fully expended after 60 months. In the event of a default, abandonment or termination of the lease by Tenant, there will be no cash value rebated to Tenant for any unused portion of the rent credit. Closing costs for revenue stamps/transfer taxes and title insurance policy in the name of Landlord shall be paid by Tenant. Therefore, defendant s conveyance of the 1162 North Caro Road property to plaintiff would have entitled it to a reduction in its monthly rent payments. The lease, however, did not specify the timing for that conveyance. Consequently, defendant had to fulfill that obligation within a reasonable time, depending on the facts and circumstances of the case. Jackson, 484 Mich at 217. As plaintiff acknowledges, the lease agreement does not itself purport to convey the property; rather, the property was to be conveyed by separate warranty deed. Despite the use in the lease of the present-tense phrase tenant is conveying by warranty deed, we see nothing in the lease, or in the facts or circumstances of this case, that supports the inference advanced by plaintiff that the conveyance necessarily had to occur at the outset of the agreement. Both the 2014 and 2015 lease agreements contained the is conveying language, yet plaintiff never sought to enforce the conveyance under the 2014 lease. And both leases contained language indicating that the lease was contingent upon certain zoning approvals. In sum, we discern no basis for inferring that the agreement contemplated that the conveyance would occur contemporaneously with the parties execution of the 2015 lease agreement. Indeed, we discern no basis upon which to infer that the parties intended the conveyance to occur at any time before, or even contemporaneously with, defendant s occupation of the property. Plaintiff itself appears to have had no issue with defendant occupying the premises before the conveyance occurred. And, as clarified at oral argument, the 1162 North Caro Road property was defendant s previous 3 This covenant of quiet enjoyment is made explicit in paragraph 21 of the lease agreement in this case. -5-

6 place of business simply put, defendant had to move out of the property (and into the new premises) before it could convey the property to plaintiff. 4 Nonetheless, plaintiff contends that its interpretation of the lease as requiring conveyance no later than the time of possession is bolstered by the fact that the rent credit was to be immediately applied to defendant s base rent, and that defendant in fact applied the rent credit to its first month s rent payment. However, plaintiff acknowledges that defendant s first month s rent was paid by defendant on September 11, 2015, 5 and by that time defendant had already suffered the effects of plaintiff s breach. At the time that defendant occupied the leasehold in early August 2015, plaintiff was contractually obliged to provide defendant with habitable premises and uninterrupted quiet enjoyment of the leased property s beneficial use. Asiuliewicz, 241 Mich at 188. The trial court record indicates that plaintiff failed to do so. The evidence presented to the trial court established that upon taking possession of the property, defendant discovered serious defects, including roof leaks, electrical hazards, and a malfunctioning toilet and septic system. Substantial building code violations led to the building inspector s investigation and revocation of the certificate of occupancy after he declared the premises uninhabitable. Consequently, the building inspector ordered defendant to vacate the premises just one month after it took occupancy. Further, plaintiff failed to rectify the numerous health and safety issues; at the time of the summary disposition hearing, the certificate of occupancy had been revoked again. The trial court did not err by concluding that plaintiff had failed to deliver on its promises and obligations under the lease. We conclude from the evidence that plaintiff obstructed, interfered with, and substantially failed to provide defendant the beneficial use of the leasehold. Slatterly, 257 Mich App at 258. Accordingly, plaintiff s initial material breach of the lease agreement justified defendant s rescission of the lease and terminated its contractual obligations. IV. RESPONSE TO DISSENT The dissent asserts that we have usurped the role of the jury in determining who breached first, and cites Jackson for the proposition that [d]etermining what constitutes a reasonable amount of time... is necessarily a factual question properly decided by the jury. 4 We therefore reject plaintiff s alternate position that [a]t the very least, this language unequivocally demonstrates that [defendant] was to transfer the property upon taking possession of the premises Paragraph 18 of the lease agreement provided certain remedies to plaintiff in the event that defendant failed to pay sums due and did not cure the default within 10 days. As noted earlier in this opinion, the record reflects an understanding that the first rent payment was due on September 1, Although defendant did not make the first rent payment until September 11, 2015, it acted to cure that default within the 10-day time period allowed under Paragraph 18 of the lease agreement. Plaintiff does not contend otherwise. -6-

7 Jackson, 484 Mich at 217 (YOUNG, J., concurring) (emphasis added). 6 Although the dissent accuses the majority of omitting necessary language from Jackson (although we note that our citation to Jackson is limited to Jackson s citation of earlier Supreme Court decisions), it is the dissent that elides, by way of an ellipsis, the context of Justice Young s statement in Jackson, which was that [d]etermining what constitutes a reasonable amount of time for repayment of a loan is necessarily a factual question properly decided by the jury. Id. at 217 (emphasis added). We do not believe that this statement by Justice Young would require that in all situations the imputation of a reasonable time for performance under a contract is a question for the jury. In any event, we have not made a determination of what a reasonable time for performance would be in this case; we simply conclude that, in the circumstances presented, plaintiff presented no evidence that would allow reasonable minds to differ about whether defendant was required to convey the property before plaintiff s breach. See Allison, 481 Mich at 425. The dissent also cites Paragraph 14 of the lease agreement, 7 and opines that plaintiff should have had a reasonable time to effect needed repairs. However, the record shows that plaintiff received written notice of the defects no later than August 13, 2015 and that, despite this notice, defendant was forced to vacate the premises in September because unremedied conditions in the building had led to the revocation of the certificate of occupancy, and that even after a new certificate of occupancy was issued, numerous issues remained with the building. We conclude that reasonable minds could not differ about whether plaintiff made repairs in a reasonable time such that it could be deemed not to have substantially breached the lease agreement. See Allison, 481 Mich at We note that neither party contends that the issue before us should have been decided by a jury; rather, both parties maintain that summary disposition should have entered in their favor. 7 Although, as the dissent points out, Paragraph 14 of the lease agreement indicated defendant s acknowledgment that the premises were in acceptable condition, we note that the language was quite specific about the temporal limitation of this acknowledgement: The Tenant s execution of this Lease shall constitute an acknowledgement by Tenant that the Premises are then in acceptable condition. The parties executed the lease on May 15, Defendant was not precluded by this paragraph from reporting issues that arose with the property later as stated, defendant did not take possession of the property immediately upon execution of the lease, nor did plaintiff immediately demand payment of rent. -7-

8 V. CONCLUSION Because plaintiff substantially breached the lease agreement first, the trial court did not err by granting summary disposition in favor of defendant. Omnicom, 221 Mich App at 348. Affirmed. As the prevailing party, defendant may tax costs. MCR 7.219(A). /s/ Mark T. Boonstra /s/ Jonathan Tukel -8-

9 S T A T E O F M I C H I G A N C O U R T O F A P P E A L S CARO TRANS OPPORTUNITIES LLC, Plaintiff-Appellant, UNPUBLISHED June 14, 2018 v No Tuscola Circuit Court MOBILE MEDICAL RESPONSE, INC., LC No CK Defendant-Appellee. Before: GLEICHER, P.J., and BOONSTRA and TUKEL, JJ. GLEICHER, J. (dissenting). Two parties signed a lease. Each maintains that the other breached a provision of the lease. Both sought summary disposition, insisting that the other committed the first breach. The majority holds that one party, plaintiff Caro Trans Opportunities LLC, breached first because its conduct obstructed, interfered with, and substantially failed to provide... the beneficial use of the leasehold. This conclusion incorporates two intrinsically factual determinations: that Caro Trans committed the initial transgression and that its breach qualified as substantial. Finding facts is forbidden in summary disposition analysis. Because this case is replete with genuine issues of material fact, I respectfully dissent. I Caro Trans agreed to build out premises for Mobile Medical Response, Inc. (MMR) to use as an ambulance facility. As consideration for the build-out, Caro Trans agreed to rent the premises to MMR for five years at a base rate of $2, per month. As additional consideration, the 2015 lease provides, MMR is conveying by warranty deed a separate piece of property on Caro Road. The conveyance resulted in a rent credit of $1, per month, lowering the monthly base rent to $1, The specific language of this provision states: 5b. MMR Rent Credit. As additional consideration for this lease agreement, Tenant is conveying by warranty deed, property located at 1162 N. Caro Rd, Caro, MI ( Conveyed Property ) to Landlord. The parties agree that the Conveyed Property is deemed to have a fair market value of $65,000 and that Tenant shall receive a rent credit of $1, per month during the term of the lease until the credit has been fully expended after 60 months. In the event of a default, abandonment or termination of the lease by Tenant, there will be no cash value rebated to Tenant for any unused portion of the rent credit. -1-

10 Closing costs for revenue stamps/transfer taxes and title insurance policy in the name of Landlord shall be paid by Tenant. [Emphasis added.] Paragraph 14 of the lease provides, The Tenant s execution of this Lease shall constitute an acknowledgement by Tenant that the Premises are then in acceptable condition. 1 The parties agree that MMR moved in on a date early in August. Before moving in, MMR did not convey the Caro Road property. Nor did it convey the property after embarking on its tenancy. On August 28, 2015, the Tuscola County building inspector issued a certificate of occupancy for the premises. He agreed at his deposition that on that date, the premises were good to go and it could be occupied. MMR paid the first month s rent on September 11, 2015, and deducted the rent credit for the Caro Road property. But it still did not convey the Caro Road property. Before the certificate of occupancy was issued but after MMR had moved in, MMR began to complain about defects on the premises a leaky roof, a defective garage door, faulty breakers, a leaky water heater line, and improper septic system drainage. Ultimately these complaints and others led the building inspector to revoke the certificate of occupancy on September 15. By then, MMR had occupied the premises for approximately six weeks. Caro Trans made repairs to the building and the inspector reissued the certificate of occupancy two weeks later, on October 1, MMR did not move back into the building and did not transfer the Caro Road property. Instead, it unilaterally rescinded the lease. Caro Trans filed this action asserting breach of contract and equitable claims. Following discovery, both parties moved for summary disposition, claiming the other had committed the first breach. The circuit court found that Caro Trans had materially breached the lease and had unclean hands, thereby barring it from enforcing the provision of the lease requiring a transfer of the Caro Road property. II According to the majority, Caro Trans committed the first breach of the lease, which justified MMR s rescission and its unilateral termination of its contractual obligations. In reaching this conclusion, the majority specifically acknowledges and relies on two legal 1 This case arises from the 2015 lease, not the 2014 lease. The majority finds significance in the fact that the 2014 lease contained the same paragraph, but Caro Trans never sued to enforce it. The parties mutually decided that Caro Trans would build out and rent a different structure. The majority has not explained why Caro Trans decision to forbear legal enforcement of a provision in a contract that the parties agreeably invalidated has any relevance. I know of no legal principle equating forbearance from suit under one contract with a waiver of a subsequent breach under another, and the majority has not proposed one. And in any case, our Supreme Court has firmly rejected such a notion: Mere forbearance does not of itself constitute a waiver. Singer v Hoffman Cake Co, 281 Mich 371, 374; 275 NW 177 (1937). -2-

11 principles: (1) unless a time is stated in the contract, a reasonable time for performance is implied, and (2) a party s substantial breach of a contractual obligation may warrant rescission. Both principles guide an analysis of who breached first, the central question in this case. Both turn on factual determinations that must be made by a jury, and not on summary disposition. 2 The first principle governs our interpretation of the lease paragraph concerning transfer of the Caro Road property As additional consideration for this lease agreement, Tenant is conveying by warranty deed, property located at 1162 N. Caro Rd, Caro, MI... to Landlord. The parties dispute whether this language required MMR to transfer the property at the time the lease was signed, or at some later point. The majority correctly recites that when a contract is silent as to the time of a term s performance, the law presumes that the parties intended a reasonable time. This bedrock principle of contract law is well established in Michigan s jurisprudence. Our Supreme Court first acknowledged it in 1863: And when no time is specified for the performance of such act or contract in the agreement itself, the law steps in and requires it to be performed within a reasonable time. Byram v Gordon, 11 Mich 531, (1863). Almost 100 years later, the Supreme Court reaffirmed the principle: [W]hen a contract is silent as to time of performance or payment, absent any expression of a contrary intent, the law will presume a reasonable time. Duke v Miller, 355 Mich 540, 543; 94 NW2d 819 (1959). Equally well established is that determining a reasonable time inherently involves finding facts. As a general proposition, the reasonableness of a party s conduct presents a jury question. That principal governs reasonable time judgments in contract cases. Justice Campbell highlighted the factually intense nature of the inquiry in 1868: When a contract is to be performed within a reasonable time, the law implies that the parties contract in view of all the pertinent facts that may be mutually known to them, and it requires them to exercise such reasonable diligence as under all then and subsequently existing circumstances might be fairly expected. When a court or jury is called upon to decide whether they have complied with what might have been reasonably expected, there must be proof of such facts as will show what ought to have been done. [Stange v Wilson, 17 Mich 342, 348 (1868).] Nothing has changed in the interim. What constitutes a reasonable time under the terms and circumstances of a contract is a question of fact. Walter Toebe & Co v Dep t of State Highways, 144 Mich App 21, 31; 373 NW2d 233 (1985). See also Justice Young s concurring opinion in Jackson v Green Estate, 484 Mich 209, 217; 771 NW2d 675 (2009), which involved, analogously, the time for repayment of a loan under a contract, also governed by a reasonable time standard: Determining what constitutes a reasonable amount of time to request payment of a loan is necessarily a factual question properly decided by the jury. Id. (emphasis added). 3 2 Both parties demanded a jury trial. 3 The majority mentions without further elucidation that both parties requested summary disposition, and that neither contends that a fact question exists. This means that when evaluating each motion, we construe the facts and reasonable inferences in the light most -3-

12 The majority and I agree that MMR was required to transfer the Caro Road property to Caro Trans within a reasonable time after signing the lease. But how much time was reasonable? Should the transfer have occurred on signing? The word is in the conveyance sentence would seem to point in that direction. Or does that sentence mean that the transfer was to occur at the moment of initial occupancy? Perhaps a reasonable time was when MMR made its first discounted rent payment. MMR s deduction of the rent credit supports an argument that the land transfer should have been made by then, at the latest. The point is that the timing of MMR s duty to transfer the property revolves around the concept of reasonableness, and reasonableness determinations are inherently fact specific. Here, the facts suggest several points in time at which the property transfer would have been reasonable. The majority denies that it has engaged in fact-finding, claiming that plaintiff presented no evidence that would allow reasonable minds to differ about whether defendant was required to convey the property before plaintiff s breach. But summary disposition is appropriate only when the evidence is so one-sided that the moving party must prevail as a matter of law. This is far from such a case. Viewed in the light most favorable to Caro Trans, it conveyed habitable premises that MMR occupied for six weeks, paying a reduced rental price for property that it failed to transfer. Sometime during those six weeks, I suggest, it would have been reasonable for MMR to convey the warranty deed, as it had promised to do in exchange for the lease agreement. The majority ignores this rational view of the evidence. Its decision inherently and improperly encapsulates findings of fact that (1) Caro materially breached the contract, despite the certificate of occupancy that had been issued before MMR took possession, (2) the breach was material, despite that the conditions were rectified in short order, and (3) Caro s breach occurred before the reasonable time afforded MMR for performance. The majority s unwillingness to own up to its fact-finding does not erase the portions of the record the majority finds inconvenient. Determining a reasonable time for MMR s performance under the lease is favorable to the nonmoving party, crediting that party s evidence without weighing it. This is not a semantic exercise, but a key component of our role. Had the parties truly agreed that no fact questions existed, they would have so stipulated. MCR 2.116(A). See also BF Goodrich Co v US Filter Corp, 245 F3d 587, 593 (CA 6, 2001): It was not necessary for the district court to resolve the case at summary judgment solely because the parties filed cross-motions for summary judgment and presented a Joint Statement of Undisputed Material Facts. When parties file cross-motions for summary judgment, the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist. 10A [Wright, Miller & Kane, Federal Practice & Procedure, 2720 (3d ed, 1998).] A trial court may conclude, when reviewing the undisputed material facts agreed upon by the parties and drawing all inferences, in turn, for the non-moving party, that a genuine issue exists as to those material facts, in which case the court is not permitted to resolve the matter, but rather, must allow the case to proceed to trial. -4-

13 critical to the rest of the case, because MMR s defense rests on the argument that Caro Trans breached first. In other words, MMR excuses its failure to abide by paragraph 5b of the lease on the ground that Caro Trans s initial breach excused MMR s nonperformance. Sitting as jurors, the majority finds that Caro Trans committed the first breach, positing, The evidence presented to the trial court established that upon taking possession of the property, [MMR] discovered serious defects, including roof leaks, electrical hazards, and a malfunctioning toilet and septic system. I respectfully disagree that the evidence established this proposition, or that these defects were substantial as a matter of law. The record facts conflict regarding when MMR discovered the defects and whether those defects rendered further performance under the lease impossible. And whether the existence of the defects preceded a reasonable time for transfer of the Caro Road property is a material and disputed fact. The first substantial breach rule provides, He who commits the first substantial breach of a contract cannot maintain an action against the other contracting party for a subsequent failure on his part to perform. McCarty v Mercury Metalcraft Co, 372 Mich 567, 573; 127 NW2d 340 (1964) (quotation marks and citation omitted). A substantial breach is one that effect[s] such a change in essential operative elements of the contract that further performance by the other party is thereby ineffective or impossible, such as the causing of a complete failure of consideration or the prevention of further performance by the other party. Id. at 574 (citations omitted). But a partial failure to comply with the terms of a contract is not necessarily a substantial breach. Rosenthal v Triangle Dev Co, 261 Mich 462, 463; 246 NW 182 (1933). And whether a substantial breach changes the essential operative elements of the contract thereby making performance impossible is question for a fact-finder. Baith v Knapp-Stiles, Inc, 380 Mich 119, ; 156 NW2d 575 (1968) (quotation marks and citation omitted). The federal Court of Appeals for the Sixth Circuit has observed, Michigan case law indicates that the determination of which breaches are substantial is inextricably tied to the particular facts of the case. Chrysler Int l Corp v Cherokee Export Co, 134 F3d 738, 742 (CA 6, 1998). Did Caro Trans substantially breach the lease? Answering this question requires factfinding. As a starting point, the record conflicts as to whether the defects MMR claimed were actually substantial. Given that the defects were rapidly repaired and a new certificate of occupancy issued within two weeks after MMR moved out, it is at least arguable that the defects were not substantial. Certainly Caro Trans has the right to argue to a jury that the defects identified by MMR did not render MMR s performance under the contract ineffective or impossible. McCarty, 372 Mich at 574. Although the majority claims that upon taking possession of the premises MMR discovered significant defects rendering the building uninhabitable, the record simply does not support his claim. The first certificate of occupancy was issued on August 28, at least two weeks after MMR moved in. Two weeks after that, MMR made a rent payment. These facts establish a material question as to when Caro Trans breached on delivery of the premises, or later, by failing to timely repair once defects were brought to its attention. The same facts give rise to an inference (and therefore a material question) regarding whether the defects were substantial. And what about the lease provision stating, The Tenant s execution of this Lease shall constitute an acknowledgement by Tenant that the Premises are then in acceptable condition? Does the fact that MMR signed the lease mean that when it took possession, the premises were in -5-

14 habitable condition? If so, the breach that followed involved a failure to repair. In that circumstance, the law assumes that the lessor would have a reasonable time to remedy any defects. See Karpp v Royer, 362 Mich 64, 68; 106 NW2d 244 (1960). Whether the lease was breached, by whom and when, are subject to reasonable debate in this case. [I]f reasonable minds could disagree about the conclusions to be drawn from the facts, a question for the factfinder exists. Henderson v State Farm Fire & Cas Co, 460 Mich 348, 353; 596 NW2d 190 (1999). A judge evaluating summary disposition is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial. Anderson v Liberty Lobby, Inc, 477 US 242, 249; 106 S Ct 2505; 92 L Ed 2d 202 (1986). In deciding which breaches could have been remedied and which could not, and in determining whether a breach was substantial, the majority has usurped the fact-finder s role. I would reverse and remand for a trial. /s/ Elizabeth L. Gleicher -6-