Ecp Commercial II LLC v. Famj Investments Company ( 2022 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
ECP COMMERCIAL II, LLC, UNPUBLISHED
September 8, 2022
Plaintiff-Appellee,
v No. 356940
Macomb Circuit Court
FAMJ INVESTMENTS COMPANY, TOWN LC No. 2016-003932-CB
CENTER DEVELOPMENT COMPANY, INC.,
Defendants-Appellants,
and
TOWN CENTER FLATS, LLC, and TOMA
FAMILY,
Appellants,
and
KUS RYAN & ASSOCIATES, PLLC,
Appellee.
Before: RIORDAN, P.J., and BORRELLO and LETICA, JJ.
PER CURIAM.
Defendants appeal as of right the trial court’s order awarding $20,075 in legal fees to
defendants’ former legal counsel in this action, Kus Ryan & Associates, PLLC (Kus Ryan).
Defendants also challenge the propriety of the trial court’s decision to appoint a receiver in
connection with enforcing a settlement agreement that resolved the underlying litigation. The
claims and disputes involved in the underlying litigation are not at issue in this appeal; instead we
are only presented with disputes involving the enforcement of the parties’ settlement agreement
and postjudgment matters. For the reasons set forth in this opinion, we affirm.
I. BACKGROUND
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Plaintiff and defendants entered into a settlement agreement to resolve the underlying
lawsuit between them. In the settlement agreement, defendants agreed to pay plaintiff “the
principal sum of $2,000,000, plus whatever interest, expenses and costs are set forth in this
Agreement.” The settlement provided a schedule of deadlines by which defendants were to sell
certain parcels of land and convey the proceeds to plaintiff until the settlement amount of
$2,000,000 plus interest, expenses, and costs had been satisfied. The agreement provided that
defendants would be in default if they failed to make any payment when due, breached any of the
terms or conditions of the agreement, failed to maintain any of their property, or failed to pay real
property taxes when due.
Under the terms of the settlement agreement, plaintiff was “entitled to immediate payment
of the Settlement Amount” if defendants defaulted, and plaintiff was further entitled in such
circumstances to “recover its costs and expenses, including reasonable attorneys’ fees, incurred in
enforcing its rights under this Agreement.” The settlement agreement further authorized plaintiff
to marshal defendants’ assets to pay the settlement amount if defendants defaulted; in general
terms, the agreement allowed for certain real property assets to be sold and stock to be liquidated
to satisfy the settlement amount.
Subsequently, plaintiff moved for the appointment of a receiver to preserve and manage
assets and to ensure defendants’ performance under the settlement agreement. Plaintiff alleged
that defendants were in default of the settlement agreement, having failed to comply with
numerous terms of the agreement. Plaintiff explained that defendants had failed to effectuate the
necessary real estate sales and had failed to make $1,000,000 in payments to plaintiff that were
past due under the settlement agreement. Further, after having committed these defaults,
defendants failed to appoint an auctioneer to sell certain real estate properties and failed to pay the
entire settlement amount as provided under the terms of the settlement agreement in case of default.
Plaintiff also alleged that defendants failed to surrender other assets and produce documents as
required under the terms of the parties’ agreement. Defendant also failed to respond to plaintiff’s
requests to correct an issue with the legal description in the deed to one of the real properties to be
sold. Plaintiff argued that the trial court’s inherent equitable powers and MCL 600.2926
authorized the court to appoint a receiver and that a receiver was warranted in this case because
defendants had demonstrated their inability to comply with the terms of the settlement agreement
and there was no viable alternative means for accomplishing the necessary sale and disposition of
assets to satisfy the amount owed to plaintiff.
At a hearing on the motion, defendants admitted on the record that they were in default of
the settlement agreement by failing to make the required $1,000,000 payment. However,
defendants objected to the appointment of a receiver because there was nothing in the settlement
agreement that provided for appointing a receiver in case of default. After hearing oral argument
from the parties, the trial court ruled that it would appoint a receiver for the purpose of carrying
out the parties’ settlement agreement. The court reasoned that a receiver was warranted based on
the parties’ continuous disagreements and inability to complete the property sales. The court
further stated that the receiver would be obligated to maximize the value of the property.
On January 11, 2021, the trial court entered an order to terminate the receivership and
resolve outstanding issues. This order indicated that the receiver’s final report and accounting had
been approved. The order further provided that an issue regarding attorney fees defendants owed
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to their former counsel, Kus Ryan, had been resolved by stipulation of the parties on the record.
Nonetheless, defendants’ former counsel subsequently moved to enforce this agreement, alleging
that defendants had failed to tender a final payment of $20,075 as agreed. After holding a hearing
on the motion, the trial court entered a written opinion and order granting the motion and awarding
Kus Ryan a money judgement of $20,075 against defendants.
Defendants now appeal. Further facts necessary to the resolution of the issues on appeal
will be included below.
II. APPOINTMENT OF RECEIVER
Defendants first appear to argue that the trial court abused its discretion by appointing a
receiver, and that this order should never have been entered, because the appointment of a receiver
was not a remedy specifically provided for in the parties’ settlement agreement. Defendants
contend that the trial court rewrote the parties’ settlement agreement by appointing a receiver.
“An agreement to settle a pending lawsuit is a contract and is to be governed by the legal
principles applicable to the construction and interpretation of contracts.” Kloian v Domino’s Pizza
LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006) (quotation marks and citation omitted). We
review the interpretation of a contract de novo as a question of law. Id. This Court reviews a trial
court’s decision to appoint a receiver for an abuse of discretion. Arbor Farms, LLC v GeoStar
Corp, 305 Mich App 374, 390; 853 NW2d 421 (2014); Ypsilanti Charter Twp v Kircher, 281 Mich
App 251, 273; 761 NW2d 761 (2008). “An abuse of discretion occurs when the court’s decision
falls outside the range of reasonable and principled outcomes.” Ypsilanti Charter Twp, 281 Mich
App at 273.
“Circuit court judges in the exercise of their equitable powers, may appoint receivers in all
cases pending where appointment is allowed by law.” MCL 600.2926. This Court has held that
MCL 600.2926 provides a “circuit court [with] ‘broad jurisdiction’ to appoint a receiver in
appropriate cases.” Arbor Farms, 305 Mich App at 390 (citation omitted). Furthermore,
[MCL 600.2926] has been interpreted as authorizing a circuit court to appoint a
receiver when specifically allowed by statute and also when no specific statute
applies but the facts and circumstances render the appointment of a receiver an
appropriate exercise of the trial court’s equitable jurisdiction. The purpose of
appointing a receiver is to preserve property and to dispose of it under the order of
the court. In general, a receiver should only be appointed in extreme cases. But a
party’s past unimpressive performance may justify the trial court in appointing a
receiver. [Id. at 390-391 (quotation marks and citation omitted; alteration in
original).]
Here, the trial court appointed a receiver for purposes of preserving assets, maximizing the
value of assets, and effectuating the sale of certain assets in order to secure funds to pay the debt
defendants owed to plaintiff after defendants admitted to being in default of the settlement
agreement. The trial court specifically indicated that the purpose of appointing a receiver was to
facilitate the completion of terms outlined in the settlement agreement. “A court-appointed
receiver is a ministerial officer of the court, charged with the task of preserving property and assets
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during ongoing litigation.” Ypsilanti Fire Marshal v Kircher (On Reconsideration), 273 Mich App
496, 528; 730 NW2d 481 (2007). A receiver is appointed “to protect and benefit both parties
equally,” and “a receiver’s possession of assets and property is tantamount to possession by the
court itself.” Id.Contrary to defendants’ argument, the trial court was not prohibited from appointing a
receiver merely because the settlement agreement did not specifically provide that plaintiff could
move for the appointment of a receiver; the trial court possessed the authorization to appoint a
receiver pursuant to the court’s equitable powers. MCL 600.2926; Arbor Farms, 305 Mich App
at 390-391. “[T]he circuit court may not delegate the power to appoint a receiver to a private party.
The power to appoint a receiver belongs exclusively to the circuit court.” Ypsilanti Fire Marshal,
273 Mich App at 528. Defendants have not demonstrated on appeal that the trial court abused its
discretion by appointing a receiver under the facts and circumstances of this case. Arbor Farms,
305 Mich App at 390-391; Ypsilanti Charter Twp, 281 Mich App at 273.
To the extent defendants raise other complaints about the procedures followed by the trial
court in granting the order to appoint a receiver, such as the alleged failure to order the receiver to
post a bond, defendants have failed to sufficiently develop or explain any cogent legal theory on
which they could potentially be entitled to any appellate relief. These arguments are therefore
abandoned. “An appellant may not simply announce a position on appeal and leave it to this Court
to rationalize the basis for that claim. Defendant’s failure to properly address the merits of his
assertion of error constitutes an abandonment of this issue on appeal.” Ypsilanti Charter Twp, 281
Mich App at 287 (citation omitted). It is not the role of this Court to develop defendants’ argument
for them. Ypsilanti Fire Marshal, 273 Mich App at 530 n 13.
Next, defendants argue that the trial court erred by not terminating the receivership
immediately after September 25, 2020, when the settlement amount was paid to ECP. Defendants
argue that the receiver’s actions after this date were void.
It appears that defendants contend that the receivership should have terminated
automatically by operation of law and that the trial court had no discretion in defining the
termination of the receivership. This is an incorrect understanding of the law. We “review for an
abuse of discretion a trial court’s decision to discharge a receiver and to terminate the
receivership.” Ypsilanti Fire Marshal, 273 Mich App at 523. “Equity courts have inherent power
to appoint a receiver, and it is a matter of discretion whether a receivership shall be continued or
discontinued.” Singer v Goff, 334 Mich 163, 167; 54 NW2d 290 (1952) (citation omitted).
The statutory provision relied on by defendants in their appellate brief, MCL 554.1032(4),
is not to the contrary; that provision states in relevant part that the “court may discharge a receiver
and terminate the court’s administration of the receivership property if the court finds that
appointment of the receiver was improvident or that the circumstances no longer warrant
continuation of the receivership.” Furthermore, under MCL 600.2926, the “court may terminate
any receivership and return the property held by the receiver to the debtor whenever it appears to
be to the best interest of the debtor, the creditors and others interested.” “In general, a receiver
should be discharged and the receivership terminated when the initial reasons for the receivership
cease to exist.” Ypsilanti Fire Marshal, 273 Mich App at 540.
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Here, the trial court appointed the receiver initially for the purpose of carrying out the terms
of the parties’ settlement agreement. The settlement agreement specifically provided that plaintiff
was entitled to recover its expenses, costs, and reasonable attorney fees incurred in enforcing its
rights under the agreement. The court’s receivership orders1 defining the receiver’s powers and
duties provided for payment of the receiver’s compensation, as well as the fees for legal counsel
or other professionals engaged to assist the receiver, from the receivership estate. The receiver
was also granted exclusive control over managing the receivership assets, which included deposit
accounts and “all rents, income, monies, fees, revenues, proceeds, and profits now existing or
hereafter generated from the collection, sale or other disposition of [certain real property
interests].” The receiver was further granted the power to perform obligations and exercise rights
under existing agreements between defendant FAMJ Investments and any third parties, and the
receiver was authorized to “negotiate with any creditors and contract counterparties of FAMJ for
the purpose of compromising or settling any claim.”
As defendants admit on appeal, after September 25, 2020, the parties continued to argue
about matters pertaining the terms of selling real property and other claims against the receivership
estate. The trial court denied defendants’ motion to terminate the receivership on December 21,
2020, because of outstanding issues to be resolved under receivership order. On appeal, defendants
do not explain how these outstanding issues did not warrant the continuation of the receivership.
Defendants merely assert that the receivership should have been terminated because—according
to defendants—there was nothing left for the receiver to do. Defendants do not develop any cogent
argument based on legal authority to support their assertion. Accordingly, defendants have failed
to demonstrate that the trial court abused its discretion with respect to the termination of the
receivership. Singer, 334 Mich at 167; Ypsilanti Fire Marshal, 273 Mich App at 523.
Finally, to the extent defendants appear to further challenge the trial court’s decisions with
respect to certain “developer’s rights” and the cost of the receivership, defendants have
“abandoned the issues by failing to specifically raise them in [their] statement of the questions
presented.” Ypsilanti Fire Marshal, 273 Mich App at 543.
III. ATTORNEY FEES
Defendants additionally challenge the trial court’s order regarding attorney fees to be paid
to defendants’ former counsel in this litigation, Kus Ryan.
At the December 21, 2020 hearing, defendants through different counsel explicitly stated
on the record that they had agreed, and would not further contest, the payment from the
receivership estate of $180,619.88 in attorney fees to defendants’ former counsel, Kus Ryan.
Further, defendant’s counsel stated, “we’ve decided to settle our differences with regard to the
objections of [former counsel’s] invoice.” Defendant’s counsel also acknowledged that the
$180,619.88 might not fully cover former counsel’s attorney fees. Defendant’s former counsel
subsequently explained at the hearing that there had been agreement on the amount of the
“shortfall” and that she and defendant’s current counsel had “memorialized it over the weekend in
1
We refer to both the original receivership order and the receivership order as subsequently
amended.
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e-mails.” Defendant’s former counsel further explained, “It’ll be paid by check today in the
manner we discussed in our e-mail. So, with that, with the payment from the receiver and the
payment from [defendants], my claim is discharged.” Defendant’s current counsel did not object
to this explanation, and the trial court concluded that the matter had been resolved. This agreement
between the parties was subsequently memorialized in orders entered by the trial court.
Defendants’ former counsel later moved to enforce this agreement, alleging that defendants
had failed to tender the additional payment by check as agreed. Defendants’ former counsel
requested that the trial court order defendants to immediately submit this payment, which
amounted to $20,075. Following a hearing on the motion, the trial court entered a written opinion
and order granting the motion and awarding Kus Ryan a money judgement of $20,075 against
defendants. The trial court ruled that defendants’ argument that the $20,075 represented fees for
services Kus Ryan provided to another client that was not a party to the instant case was without
merit because “Defendants failed to provide any evidence to substantiate” this claim. The trial
court also ruled that the record, including the e-mail exchanged between defendants’ current and
former counsel, established that defendants had agreed to pay Kus Ryan $20,075 by check in
addition to the amount distributed to Kus Ryan from the receivership estate.
In challenging these rulings on appeal, defendants fail to address the actual bases for the
trial court’s decisions, instead opting to attempt to relitigate the issue as if this Court were the trial
court. An appellant bears the burden of demonstrating an error by the trial court, and an appellant
abandons an assertion of error by failing to address the trial court’s actual decision when arguing
for appellate relief. See Redmond v Heller, 332 Mich App 415, 435 n 9, 449; 957 NW2d 357(2020). Although defendants raise a host of general complaints about their former counsel and the
trial judge in this matter, defendants ultimately concede in their appellate brief that they only
challenge the order requiring defendants to pay $20,075 to Kus Ryan. Defendants appear to base
their challenge on the allegation that this amount represented fees billed to a nonparty entity.
However, as they did in the trial court, defendants merely assert this allegation without explaining
how the evidence that was before the trial court actually supports this contention or why the trial
court’s reasoning was erroneous. Defendants do not cite any specific billing charge that can be
demonstrated to represent a bill to a different entity. Defendants fail to address that when the trial
court explicitly asked defendant’s counsel on the record at the January 19, 2021 hearing to point
to the evidence substantiating their claim that the $20,075 was attributable to fees owed by a
different entity, defendants’ counsel was unable to do so. Thus, defendants have abandoned this
claim on appeal and failed to demonstrate any error on this basis. Id. Defendants may not simply
announce their position and leave it to this Court to develop their argument. Ypsilanti Charter
Twp, 281 Mich App at 287; Ypsilanti Fire Marshal, 273 Mich App at 530 n 13.
To the extent defendants appear to maintain there was no agreement with Kus Ryan
regarding these fees, defendants merely assert their characterization of the evidence without
providing a cogent legal analysis of the trial court’s actual reasons for concluding to the contrary.
Thus, this argument is also abandoned. Redmond, 332 Mich App at 435 n 9, 449.
With respect to the remainder of the fees that were paid to Kus Ryan out of the receivership
estate, defendants admitted on the record in the trial court that any dispute regarding this amount
was settled and that they were not contesting it. “A party may not take a position in the trial court
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and subsequently seek redress in an appellate court that is based on a position contrary to that taken
in the trial court.” Kloian, 273 Mich App at 455 n 1 (quotation marks and citation omitted).
Affirmed.
/s/ Michael J. Riordan
/s/ Stephen L. Borrello
/s/ Anica Letica
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