Flathead-Michigan I, LLC v. Penninsula Development L.L.C., The et al
Filing
194
ORDER granting 158 Motion for Summary Judgment. Signed by District Judge David M. Lawson. (DTof)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
FLATHEAD-MICHIGAN I, LLC,
Plaintiff,
Case Number 09-14043
Honorable David M. Lawson
v.
THE PENNINSULA DEVELOPMENT L.L.C.,
MARCUS W. YONO, FRANCIS F. YONO,
THE PENINSULA HOMEOWNERS
ASSOCIATION, JOHN SCHAEFER’S
BOBCAT & CEMENT SERVICES, INC.,
M.C. GUTHERIE LUMBER CO., GFCOLD,
LLC, and JOHN A. LATESSA, JR.,
ORDER GRANTING
DEFENDANT, CROSS-, AND
COUNTER-CLAIMANT M.C.
GUTHERIE LUMBER CO.’S
MOTION FOR SUMMARY
JUDGMENT
Defendants,
and
M.C. GUTHERIE LUMBER CO.
Cross-Claimant,
v.
THE PENINSULA HOMEOWNERS ASSOCIATION,
BIG SHOOTER, INC., JOHN SCHAEFER’S
BOBCAT & CEMENT SERVICES, INC., M.C.
GUTHERIE LUMBER CO., PLUMBING CONCEPTS,
LLC, GFCOLD, LLC, THE PENNINSULA DEVELOPMENT L.L.C., MARCUS W. YONO, and FRANCIS F. YONO,
Cross-Defendants,
and
M.C. GUTHERIE LUMBER CO.
Counter-Claimant,
v.
FLATHEAD-MICHIGAN I, LLC,
Counter-Defendant.
______________________________________/
OPINION AND ORDER GRANTING DEFENDANT, CROSS- AND COUNTERCLAIMANT M.C. GUTHERIE LUMBER CO.’S MOTION FOR SUMMARY JUDGMENT
I.
The disputes among the parties in this case arise from a failed residential real estate
development in Brighton, Michigan. Defendant The Peninsula Development LLC (Peninsula) and
Fifth Third Bank entered into a construction loan agreement for a condominium development project
on August 25, 2005. The loan was secured by a mortgage and guaranty agreements. Peninsula and
Fifth Third Bank later entered into a loan modification and promissory note, again secured by a
mortgage on one parcel of the property. Plaintiff Flathead-Michigan I, LLC acquired the entire loan
portfolio from Fifth Third Bank on December 31, 2008. The plaintiff alleges that Peninsula
breached the mortgages and defaulted on its obligations by executing a quit claim deed to defendant
GFCOLD, LLC that purported to transfer Peninsula’s rights, failing to pay taxes, and failing to pay
contractors. The plaintiff alleges that the indebtedness has been accelerated and is due now, and it
seeks to foreclose the mortgage.
Defendant, cross-, and counter-claimant M.C. Gutherie Lumber Company is a subcontractor
who supplied lumber for the general contractor on the project. Gutherie has sued to enforce its
construction lien. Although Gutherie obtained a consent judgment from the general contractor and
fixed the amount owed, a dispute remains over the priority of the liens on the property, which is not
worth enough in the present market to cover all the secured obligations. Gutherie filed a motion
for summary judgment on September 29, 2010. No other party has responded to the motion, and the
time for doing so has long passed. E.D.Mich. LR 7.1(e)(2)(B). The Court has reviewed the
pleadings and motion papers and finds, despite the plaintiff and cross-defendants’ failure to respond,
that the papers adequately set forth the relevant facts and law and oral argument will not aid in the
-2-
disposition of the motion. Therefore, it is ORDERED that the motion be decided on the papers
submitted. See E.D. Mich. LR 7.1(f)(2).
The Court has considered the pleadings and the documents submitted by Gutherie, and
determines that summary judgment for defendant and cross-plaintiff M.C. Gutherie Lumber Co. is
appropriate.
II.
The standards for evaluating a motion for summary judgment are well known but bear
repeating here. As the Sixth Circuit explained:
Both claimants and parties defending against a claim may move for summary
judgment “with or without supporting affidavits.” Fed. R. Civ. P. 56(a), (b) [(2009)].
Such a motion presumes the absence of a genuine issue of material fact for trial. The
court must view the evidence and draw all reasonable inferences in favor of the
non-moving party, and determine “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986). The party bringing the summary judgment motion has the initial
burden of informing the district court of the basis for its motion and identifying
portions of the record that demonstrate the absence of a genuine dispute over
material facts. Mt. Lebanon Personal Care Home, Inc. v. Hoover Universal, Inc.,
276 F.3d 845, 848 (6th Cir. 2002). Once that occurs, the party opposing the motion
then may not “rely on the hope that the trier of fact will disbelieve the movant’s
denial of a disputed fact” but must make an affirmative showing with proper
evidence in order to defeat the motion. Street v. J.C. Bradford & Co., 886 F.2d
1472, 1479 (6th Cir. 1989).
Alexander v. CareSource, 576 F.3d 551, 557-58 (6th Cir. 2009). In addition, when “‘reviewing a
summary judgment motion, credibility judgments and weighing of the evidence are prohibited.
Rather, the evidence should be viewed in the light most favorable to the non-moving party. . . .
Thus, the facts and any inferences that can be drawn from those facts[] must be viewed in the light
most favorable to the non-moving party.’” Biegas v. Quickway Carriers, Inc., 573 F.3d 365, 374
(6th Cir. 2009) (quoting Bennett v. City of Eastpointe, 410 F.3d 810, 817 (6th Cir. 2005) (citations
-3-
omitted)); see also Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003) (“In evaluating the
evidence, [the district court] ‘draw[s] all reasonable inferences therefrom in a light most favorable
to the non-moving party.’”) (quoting PDV Midwest Ref., LLC v. Armada Oil & Gas Co., 305 F.3d
498, 505 (6th Cir. 2002)).
Under Federal Rule of Civil Procedure 56(e)(2) and (3), “[i]f a party . . . fails to properly
address another party’s assertion of fact as required by Rule 56(c), the court may . . . (2) consider
the fact undisputed for purposes of the motion; (3) grant summary judgment if the motion and
supporting materials — including the facts considered undisputed — show that the movant is
entitled to it.” Fed. R. Civ. P. 56(e)(2)(3). Even prior to the recent amendment to Rule 56, the Sixth
Circuit warned:
Rule 56(e)(2) leaves no doubt about the obligation of a summary judgment opponent
to make her case with a showing of facts that can be established by evidence that will
be admissible at trial. Fed.R.Civ.P. 56(e)(2) [(2009)] (“When a motion for summary
judgment is properly made and supported, an opposing party may not rely merely on
allegations or denials in its own pleading; rather, its response must — by affidavits
or as otherwise provided in this rule — set out specific facts showing a genuine issue
for trial.”). In fact, “[t]he failure to present any evidence to counter a
well-supported motion for summary judgment alone is grounds for granting the
motion.” Everson v. Leis, 556 F.3d 484, 496 (6th Cir. 2009) (citing Skousen v.
Brighton High School, 305 F.3d 520, 528 (6th Cir. 2002)).
Alexander, 576 F.3d at 558 (emphasis added). In responding to a motion for summary judgment,
the non-moving party cannot rest merely on the pleadings alone. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Instead, the non-moving party has an
obligation to present “significant probative evidence” to show that “there is [more than] some
metaphysical doubt as to the material facts.” Moore v. Philip Morris Cos., 8 F.3d 335, 340 (6th
Cir.1993). To reiterate, if the non-moving party fails to present such evidence to counter a well-
-4-
supported summary judgment motion, the Court may grant the motion on those grounds alone.
Everson, 556 F.3d at 496.
This case is before this Court on the basis of diversity jurisdiction and involves no federal
issues. 28 U.S.C. § 1132. Therefore, this Court must apply the law of the forum state’s highest
court. Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). If the state’s highest court has not decided
an issue, then “the federal court must ascertain the state law from ‘all relevant data.’” Garden City
Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir.1995) (quoting Bailey v. V. & O Press
Co., 770 F.2d 601, 604 (6th Cir.1985)). “Relevant data includes the state’s intermediate appellate
court decisions, as well as the state supreme court’s relevant dicta, restatements of the law, law
review commentaries, and the majority rule among other states.” Ososki v. St. Paul Surplus Lines,
156 F. Supp. 2d 669, 674 (E.D. Mich. 2001) (internal quotation marks and citation omitted).
Under Michigan law, the Construction Lien Act governs the creation and satisfaction of
construction liens. Mich. Comp. Laws § 570.1101 et seq.. The Michigan Supreme Court has stated
that the purpose of the Act is “to protect the interests of contractors, workers, and suppliers through
construction liens, while protecting owners from excessive costs,” and that “[t]he act is to be
liberally construed to effectuate these purposes.” Vugterveen Systems, Inc. v. Olde Millpond Corp.,
454 Mich. 119, 121, 560 N.W.2d 43, 44 (1997).
The Construction Lien Act provides that “[a] construction lien arising under this act shall
take priority over all other interests, liens, or encumbrances which may attach to the building,
structure, or improvement, or upon the real property on which the building, structure, or
improvement is erected when the other interests, liens, or encumbrances are recorded subsequent
-5-
to the first actual physical improvement.” Mich. Comp. Laws § 570.1119(3). Actual physical
improvement is defined as:
actual physical change in, or alteration of, real property as a result of labor provided,
pursuant to a contract, by a contractor, subcontractor, or laborer which is readily
visible and of a kind that would alert a person upon reasonable inspection of the
existence of an improvement. Actual physical improvement does not include that
labor which is provided in preparation for that change or alteration, such as
surveying, soil boring and testing, architectural or engineering planning, or the
preparation of other plans or drawings of any kind or nature. Actual physical
improvement does not include supplies delivered to or stored at the real property.
Mich. Comp. Laws § 570.1103(1). Actual physical improvement has been interpreted to required
“visible, on-site construction work” on the property. M.D. Marinich, Inc. v. Michigan Nat. Bank,
193 Mich.App. 447, 454, 484 N.W.2d 738, 741 (1992).
For a party’s construction lien to take priority over other interests recorded subsequent to the
first actual improvement, it is not necessary that the party seeking to enforce the construction lien
have been the one who made the first actual physical improvement. Michigan courts have held that
liens created under the act “‘attach as of the date of the commencement of the building, erection, or
other improvement, regardless of the time when, or the person by whom, the particular work was
done or the materials furnished for which a lien is claimed.’” M.D. Marinich, 193 Mich. App. at 452,
456, 484 N.W.2d at 740-41, 756 (quoting Kay v. Towsley, 113 Mich. 281, 283 71 NW 490 (1897);
see also First Community Bank v. Mountainaire, L.L.C., No. 293005, 2010 WL 4137525 at *3-4
(Mich. App. Oct. 21, 2010); Abonmarch Consultants, Inc. v. Macatawa Bank Mortg. Co., No.
285281, 285283, 2009 WL 3930020 at *3 (Mich. App Nov. 19, 2009).
Gutherie states in its motion that visible improvements were made to the property prior to
the recording of the first mortgage, including grading and clearing the property, installation of storm
cellars, a water main, and concrete curbs, excavation of the building area of Building C (which
-6-
contained Units 50-52), and installation of fire hydrants. The defendant supports these statements
with an affidavit by Daniel Warner, the owner of Warner Excavating, Inc., which made the
improvements. In his affidavit, Warner states that these improvements took place after a contract
was signed on May 28, 2003, and that all of the improvements were completed before August 2005,
when the first mortgage was signed.
Gutherie also presents the contract between Warner
Excavating, Inc. and cross-defendant Peninsula Development LLC. No other party has responded
to these assertions. The Court therefore will accept these assertions as undisputed. Fed. R. Civ. P.
56(e)(2).
Gutherie argues that because actual physical improvements to the property were made before
the first mortgage was placed on the property, and because Gutherie’s lien therefore relates back to
the date of those improvements pursuant to M.D. Marinich, 193 Mich. App. at 456, 484 N.W.2d at
756, the Gutherie’s construction lien has priority over the plaintiff’s mortgage. The Court concludes
that the improvements described by Gutherie constitute the sort of “visible, on-site construction
work” that qualifies as actual physical improvement under the Construction Lien Act. Because it
is undisputed that those improvements took place prior to the first mortgage on the property and
because Gutherie’s priority relates back to the date of those improvements under Michigan law, the
Court concludes that Gutherie is entitled to summary judgment on its claim.
III.
The Court finds that Gutherie’s motion for summary judgment is well-supported, and the
cross-defendants and counter-defendant have failed to respond to the motion. The Court therefore
concludes that no genuine issue of material fact exists as to defendant, cross-, and counter-claimant
Gutherie’s claim, and Gutherie is entitled to judgment in its favor as a matter of law.
-7-
Accordingly, it is ORDERED that the motion for summary judgment by defendant, cross-,
and counter-claimant M.C. Gutherie Lumber Company [dkt. # 158] is GRANTED.
s/David M. Lawson
DAVID M. LAWSON
United States District Judge
Dated: September 29, 2011
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on September 29, 2011.
s/Deborah R. Tofil
DEBORAH R. TOFIL
-8-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?