Nash v. Kerti

1

DEBRA NASH, Plaintiff-Appellee, v. DAVID KERTI and AMY VANSTON, Defendants-Appellants.

No. 358494

Court of Appeals of Michigan

March 9, 2023

UNPUBLISHED

Oakland Circuit Court LC No. 2021-185536-AV

Before: RICK, P.J., and M. J. KELLY and RIORDAN, JJ.

PER CURIAM.

Defendants David Kerti and Amy Vanston appeal by delayed leave granted^[1] the circuit court's order affirming the district court's order awarding possession of the subject property to plaintiff Debra Nash.

Plaintiff and her then-husband, Jamie Nash, leased a home that they owned in Lake Orion to defendants in August 2016 by a written lease obligating defendants to pay plaintiff and Nash $1,500 a month. Defendants claim that there was an understanding among the parties at the time that they would be purchasing the subject property by a land contract. Plaintiff and Nash divorced in March 2020, and plaintiff was awarded the subject property in the divorce. At about the same time, defendants ceased making the $1,500 monthly payments to plaintiff, so she sought to evict them as tenants. Defendants, however argued that they were actually vendees of an implied-in-fact land contract. The district court agreed with plaintiff and evicted defendants by summary proceedings. The circuit court affirmed.

On appeal, defendants argue that the summary proceedings violated procedural due process because they were not allowed a realistic time period to present fact-specific evidence showing that the parties' relationship was governed by an implied-in-fact land contract, not the written lease. Relatedly, defendants argue that the district court abused its discretion by refusing to adjourn the hearing to allow them more time to present evidence in that regard. Finally, defendants argue that the evidence would have showed that they partially performed on the implied-in-fact land contract between 2016 and 2020, thus rendering it enforceable notwithstanding the statute of frauds.

We conclude that any procedural error by the district court was harmless because the parties' relationship was governed by the written lease, not the alleged implied-in-fact land contract. Therefore, we affirm the circuit court.

I. FACTS

On August 8, 2016, plaintiff and Nash, as owners of the subject property, entered into a "Lease Agreement" with defendants to lease the subject property. The lease provided, in relevant part, as follows:

1. Tenant will lease the house and detached garage with lot on Long Lake for the period leading up to a Land Contract Agreement. Land Contract Agreement will be executed and a closing within 60 days of signed Lease Agreement. If for any reason currently unknown by either party a Land Contract Agreement cannot be reached the Tenant agrees to Lease the Property for a minimum term of 12 months.

2. The monthly lease payment shall be One Thousand Five hundred dollars ($1,500.00) per month .... If at anytime tenant is behind on lease payment 15 days or more Landlord has the right to evict and request all belongs [sic] to be removed from the property within 15 days.

3. Security deposit of Fifteen Thousand dollars ($15,000.00) to be paid upon signed lease agreement. Security deposit of $15,000.00 to be deducted from purchase price upon closing of Land Contract Agreement.

On about March 6, 2020, plaintiff served a notice to quit possession of the subject property on defendants. It was filed in the district court on July 17, 2020. Also on July 17, 2020, plaintiff filed her complaint to recover possession of the subject property in the district court. The complaint indicated that defendants owed rent from March 2020 to July 2020.

On October 23, 2020, the district court issued a notice to appear to the parties, indicating that a trial was scheduled for November 2, 2020. Defendants received the summons, complaint, and notice to appear on October 26, 2020.

On October 30, 2020, defendants moved to adjourn the trial/hearing. The motion stated, in relevant part, as follows:

3. Defendants' attorneys received notice from Defendants . . . on October 27, 2020, four days before the scheduled hearing contrary to Michigan motion practice.

4. Defendants' attorneys received no notice from opposing counsel from the Plaintiff's attorney whatsoever.

5. Defendants' attorneys in the interest justice [sic] and Michigan Court Rules must be given appropriate time to prepare for such a hearing.

7. During the special circumstances affecting this Honorable Court, discussions touched and concerned the existence of a land contract dispute between the Plaintiff and the Defendants that has been recharacterized by the Plaintiff as a lease pursuant to a divorce judgment wherein the Plaintiff received the Premises in question as part of the Divorce Judgment.

11. Defendants' respectfully demand time to prepare a counter suit to the Plaintiff's action as the result of the Plaintiff's blatant disregard and respect for this Honorable Court and its governing rules as well as respect for the rights of the Defendants and the rule of law.

The district court conducted a virtual hearing on November 2, 2020, as originally scheduled. At the hearing, plaintiff's counsel introduced her case as follows:

The renters, the tenants, have been in possession since August of 2016. They stopped paying rent as of February 2020. So they owe rent from March through November, current date, in the amount of $1,500 per month. The lease agreement, which was attached to my complaint, also provides for $50 per month late fee, which would also be added to that.

Defendants' counsel responded as follows:

Yes. We've provided the Court with a brief. Not only were we not given notice, at least for the dialogue that your Honor can review that suggests that there's been discussions with regard to the defendants and the characterization of their relationship, the arrangement, as being a land contract as opposed to a lease, and we believe that in terms of the divorce action that there was an arrangement between the plaintiffs, Jamie and Debra Nash, that devolved to their benefit. Meaning there was a land contract arrangement as with Jamie that was disallowed after the divorce, and the entire matter as has been brought forward by the plaintiff, by Debra Nash, now is in excess of the jurisdictional limits and, in fact, should have been brought in the circuit court.

The district court clarified with defendants' counsel that he was seeking a change of venue because the amount in controversy exceeded $25,000, notwithstanding that such an argument was not raised in his motion. When the district court explained that it had exclusive jurisdiction over landlord-tenant cases, defendants' counsel then complained that "the notice was defective." The district court responded by explaining that the complaint appeared to properly reflect defendants as the parties.

Defendants' counsel reverted back to his argument that jurisdiction was not proper in the district court because this case involved a land contract. Plaintiff's counsel responded "[t]his is a lease agreement," and the parties "never entered into a land contract."

The district court then clarified with the parties that defendants had not filed a "CDC eviction moratorium declaration," and it ruled that plaintiff properly provided defendants with notice of the proceedings. After doing so, the district court asked defendants' counsel to "tell me what your defense is to this case and with legal authority," and he explained as follows:

The amount in controversy, your Honor, and what you will say is you have your (inaudible). We would argue that that would be appealed. We also would argue that there is an anomaly in the lease. There is a $15,000 amount for damages, which is totally beyond avail. I would ask your Honor if you've ever seen that kind of damages that appear in that lease. Moreover, it's a one-page lease.

In addition, your Honor, there have been improvements that have been made on the property to the tune of about $40,000.

There are improvements that were made on the property in reliance of the land contract. That amount is in excess of $40,000. That takes it out of small claims for sure.

What happened was that the lease was signed because Jamie Nash was involved in a divorce. He obligated himself and Debra Nash, and the defendants relied upon that. And so what you find is a short-term lease contract with $15,000 (inaudible). That's a little unusual, one would say.

And so what we really need, your Honor, is a hearing on the matter.

The district court replied that defendants were presently receiving a hearing on the matter, and it indicated that it would review the written submissions and issue a decision after the hearing.

On November 30, 2020, the district court issued its seven-page opinion and order. The district court first concluded that there was no land contract between the parties because "[t]here is no evidence that Defendants executed the option to purchase timely in accordance with the language of paragraph 1 of the subject lease.... The Court finds that Defendants did not comply with the terms within the time specified, therefore, the Court finds that there is no land contract." Second, the district court concluded that the $15,000 "security deposit" referenced in the lease was actually "a down payment for a land contract that was never executed," and as a result, plaintiff had to return that money to defendants. Third, the district court concluded that defendants had sufficient notice of the trial under MCR 4.201(C)(1) and MCL 600.5735(2)(b). Consequently, the district court awarded possession of the subject property to plaintiff, as well as damages of $13,950, which represented outstanding rent of $12,000 and $1,950 in late fees.

Plaintiff moved for...