Debra Nash v. David Kerti ( 2023 )

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
DEBRA NASH, UNPUBLISHED
March 9, 2023
Plaintiff-Appellee,
v No. 358494
Oakland Circuit Court
DAVID KERTI and AMY VANSTON, LC No. 2021-185536-AV
Defendants-Appellants.
Before: RICK, P.J., and M. J. KELLY and RIORDAN, JJ.
PER CURIAM.
Defendants David Kerti and Amy Vanston appeal by delayed leave granted1 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
1
Nash v Kerti, unpublished order of the Court of Appeals, entered February 10, 2022 (Docket No.
358494).
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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.
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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
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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
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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 reconsideration to change the damages award, and the district court
granted the motion and increased the award from $13,950 to $15,450. In addition, in January
2021, the district court ordered defendants to pay $1,500 a month to the court’s escrow account,
pending resolution of the case.
After some procedural confusion, on February 9, 2021, defendants filed an application for
leave to appeal in the circuit court. In the supporting brief, defendants argued that the district court
erred because they “had insufficient notice of the trial date from the Court to prepare for their sole
opportunity to present their case and preserve their legal property rights.” Defendants explained
that under the doctrine of partial performance, they were land-contract vendees, not tenants.
Specifically, defendants explained as follows:
Appellants currently and have always occupied the Property. Moreover, Appellants
have made significant improvements to the Property in the expectation that they
would ultimately own the Property. . . .
Lastly, Appellants have been paying all property-related expenses, as the
true owner would. More specifically, Appellants paid the homeowners insurance,
property taxes, and water bills for the Property. Should this Court grant Appellants’
request to remand for a new trial, Appellants could present evidence of the same to
the Court. Above all and most importantly, in contemplation of the Contract,
Appellants paid Appellee and Nash $15,000.00 to move into the Property (as shown
in the Order.)
Lastly, Appellants have invested tens of thousands of dollars in the Property
as it was, and still is, their intention to make the Property their retirement home.
Had Appellants not been prejudiced by the District Court’s failure to issue their
timely Trial Order or by the Court’s refusal to honor Appellant’s request for the
trial’s adjournment, Appellants would have been able to prove the existence of a
land contract. They will also be able to demonstrate that the Appellee filed the
wrong complaint in the trial court, as this is a question of a land contract forfeiture
action and not a mere eviction.
In support of their argument that the parties had a land contract, defendants attached as
Exhibit A the following August 5, 2016 e-mail from Nash to defendant Vanston:2
Amy,
2
The right side of the e-mail is cut off, presumably due to an error in printing. The cutoff points
are represented as ellipses.
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I have attached a Lease Agreement to get you moved in until we get the Land
Contract finalized and a closing. Please review and let me know if it lo . . .
I have also attached my comments or counter offer on the Land contract document
you had provided to me. I did not plan to sell the house on a land . . .
Deb and I do. After reviewing some land contract sales and documents I do believe
I am being fair with my changes. Please review and give me you . . .
When we come to an agreement on price & terms I will have a lawyer review for
both of our benefits and we can make it final.
Jamie Nash
In her response brief, plaintiff argued that the parties never had a land contract and that
defendants were tenants subject to the lease. Plaintiff also argued that notice was proper under
MCR 4.201 and MCL 600.5735, and that the doctrine of partial performance does not apply
because there was no land contract in the first instance.
The circuit court held oral argument on May 12, 2021. After the parties mostly rested on
their respective briefs, the circuit court affirmed the district court, reasoning as follows:
Okay. I – I do question, I have to say, the – the timing of notices. Uh, I
acknowledge that that was not ideal. However, uh, I have no evidence before me
that what the district court did in terms of her ruling based on the evidence that was
in front of her was incorrect in any way. Uh, I – based on the evidence that’s before
me and was before her, I think her ruling was proper. I think the notice issue was
harmless error at this point. And for those reasons, I am affirming, uh, the district
court judge and granting possession to the appellee with the back, uh, rent due.
After the ruling, defendants’ counsel briefly noted that “we’re not disputing the back rent
owed.”
Shortly thereafter, in June 2021, plaintiff filed a motion in the district court to immediately
evict defendants, and defendants filed a “CDC Declaration” to halt the eviction. In a six-page
opinion and order, the district court granted plaintiff’s motion, reasoning that the CDC eviction
moratorium does not apply when a tenant engages in criminal activity, and in this case, defendants
violated state law by performing substantial repairs on the subject property without properly hiring
a “residential builder.” Thus, the district court ordered defendants to vacate the subject property
by July 9, 2021.
On September 11, 2021, defendants filed a delayed application for leave to appeal in this
Court. We granted the application. Nash v Kerti, unpublished order of the Court of Appeals,
entered February 10, 2022 (Docket No. 358494).
II. DUE PROCESS
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Defendants argue that the district court violated their procedural due-process rights by
holding trial only seven days after service of the relevant documents, given that the disputed
existence of an implied-in-fact land contract required more time to prepare and present evidence.
We conclude that any error was harmless because, for the reasons explained below, the parties’
relationship was governed by the written lease.
We first note that this issue is arguably waived because it was not raised in the district court
or the circuit court. See People v Metamora Water Serv, Inc, 276 Mich App 376, 382-383; 741
NW2d 61 (2007). Ordinarily, however, this Court reviews de novo whether a party was afforded
procedural due process. In re Sanborn, 337 Mich App 252, 268; 976 NW2d 44 (2021). “Our
review of a circuit court’s review of a district court’s order is also de novo.” Noll v Ritzer, 317
Mich App 506, 510; 895 NW2d 192 (2016).
“[D]ue process of law requires that deprivation of life, liberty, or property by adjudication
must be preceded by notice and an opportunity to be heard.” Bonner v City of Brighton, 495 Mich
209, 235; 848NW2d 380 (2014). “To comport with these procedural safeguards, the opportunity
to be heard must be granted at a meaningful time and in a meaningful manner.” Id. (quotation
marks and citation omitted). Courts generally consider the following three factors to determine
whether procedural due process is satisfied:
First, the private interest that will be affected by the official action; second, the risk
of an erroneous deprivation of such interest through the procedures used, and the
probable value, if any, of additional or substitute procedural safeguards; and finally,
the Government’s interest, including the function involved and the fiscal and
administrative burdens that the additional or substitute procedural requirement
would entail. [Mathews v Eldridge, 424 US 319, 325; 96 S Ct 893; 47 L Ed 2d 18(1976).]
Most claims of a violation of procedural due process are subject to a harmless-error
analysis. See PT Today, Inc v Comm’r of Office of Fin and Ins Servs, 270 Mich App 110, 145;
715 NW2d 398 (2006) (declining to award the plaintiffs relief for an alleged procedural due-
process violation because the trial court would have granted summary disposition on different
grounds); Verbison v Auto Club Ins Ass’n, 201 Mich App 635, 641; 506 NW2d 920 (1993)
(declining to award the plaintiff relief because “an opportunity to confront adverse witnesses or to
present witnesses, evidence, and arguments would have made no difference” in the case).
In Lindsey v Normet, 405 US 56; 92 S Ct 862; 31 L Ed 2d 36 (1972), the U.S. Supreme
Court considered the constitutionality of “Oregon’s judicial procedure for eviction of tenants after
nonpayment of rent.” Id. at 58. The procedure provided that the landlord may bring an action for
possession upon the failure of the tenant to pay rent, and “[s]ervice of the complaint on the tenant
must be not less than two nor more than four days before the trial date.” Id. at 63. In addition, “a
tenant may obtain a two-day continuance, but grant of a longer continuance is conditioned on a
tenant’s posting security for the payment of any rent that may accrue . . . .” Id.3 The issue before
the Court, in relevant part, was whether “the requirement of a trial no later than six days after
3
There were other statutory provisions discussed in Lindsey that are not relevant to this case.
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service of the complaint unless security for accruing rent is provided” violated procedural due
process. Id. at 64. The Court held that this requirement did not violate procedural due process,
reasoning as follows:
In those recurring cases where the tenant fails to pay rent or holds over after
expiration of his tenancy and the issue in the ensuing litigation is simply whether
he has paid or held over, we cannot declare that the Oregon statute allows an unduly
short time for trial preparation. Tenants would appear to have as much access to
relevant facts as their landlord, and they can be expected to know the terms of their
lease, whether they have paid their rent, whether they are in possession of the
premises, and whether they have received a proper notice to quit, if one is
necessary. Particularly where, as here, rent has admittedly been deliberately
withheld and demand for payment made, claims of prejudice from an early trial
date are unpersuasive. . . . Of course, it is possible for this provision to be applied
so as to deprive a tenant of a proper hearing in specific situations, but there is no
such showing made here, and possible infirmity in other situations does not render
it invalid on its face. [Id. at 64-65.]
It added that “it is permissible to segregate an action for possession of property from other
actions arising out of the same factual situation that may assert valid legal or equitable defenses or
counterclaims.” Id. at 67.
In Michigan, summary proceedings for the possession of real property are governed by
MCL 600.5701 et seq. It applies to both leases, see MCL 600.5714(1), and “executory contract[s]
for the purchase of the premises,” see MCL 600.5726. MCL 600.5735 provides, in relevant part,
as follows:
(1) The court in which a summary proceeding is commenced shall issue a
summons, which may be served on the defendant by any officer or person
authorized to serve process of the court. The summons shall command the
defendant to appear for trial in accordance with the provisions of subsection (2) . .
..
(2) A summons issued under this section shall command the defendant to
appear for trial as follows:
(a) Within 30 days of the issuance date of the summons in proceedings
under [MCL 600.5726], in which event the summons shall be served not less than
10 days before the date set for trial.
(b) Within 10 days of the issuance date of the summons in all other
proceedings, in which event the summons shall be served not less than 3 days before
the date set for trial.
Relatedly, MCR 4.201(C)(1) provides that a summons in a summary proceeding “must
command the defendant to appear for trial in accord with MCL 600.5735(2).”
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“The remedy provided by summary proceedings is in addition to, and not exclusive of,
other remedies, either legal, equitable or statutory.” MCL 600.5750. “That provision evidences
the Legislature’s intent that summary proceedings for possession of property be handled
expeditiously. Plainly the Legislature took these cases outside the realm of the normal rules
concerning merger and bar in order that attorneys would not be obliged to fasten all other pending
claims to the swiftly moving summary proceedings.” JAM Corp v AARO Disposal, Inc, 461 Mich
161, 168-169; 600 NW2d 617 (1999). Thus, for example, a district court may decide the issue of
possession in summary proceedings, and the losing party may maintain a separate action for unjust
enrichment notwithstanding that the separate action would ordinarily be barred by res judicata.
See id. at 166, 170. Moreover, a district court may bifurcate a counterclaim for monetary damages
from the initial request for possession. See MCL 600.5739(1).
In the matter before us, the notice was within 10 days as required by MCL 600.5735(2)(b),
and the summons was served more than three days before the trial date as required by the same
statutory provision. Thus, plaintiff and the district court complied with the statute and court rule
governing notice in summary proceedings for violation of a lease.4 The question remains whether
the expedited proceedings—including both the notice a few days before trial and the district court’s
refusal to adjourn the hearing—violated procedural due process.
We initially note that plaintiff alleged at the start of this case, and defendants did not
dispute, that they ceased paying $1,500 a month in March 2020 despite the fact that they were
required to do so. In fact, defendants conceded in the circuit court that they were responsible for
the missed payments. Thus, if the parties had a lease requiring rent payments of $1,500 a month,
defendants presumably lost the right to possession of the subject property through summary
proceedings because they failed to pay rent. See MCL 600.5714(1)(a). On the other hand, if the
parties had an implied-in-fact land contract requiring mortgage payments of $1,500 a month, then
defendants presumably lost the right to possession of the subject property through either forfeiture
or foreclosure.5 In other words, because defendants ceased the $1,500 monthly payments in March
4
The notice was insufficient under MCL 600.5735(2)(a), which governs summary proceedings for
breach of a land contract, because it was served “less than 10 days” before trial. To that extent,
the notice was insufficient under MCR 4.201(C)(1) as well. However, defendants do not argue on
appeal that the notice violated the statute or the court rule. Instead, defendants only argue that the
notice and accompanying expedited proceedings violated procedural due process.
5
When a vendee of a land contract breaches that contract, the vendor has two possible options—
forfeiture or foreclosure. With regard to forfeiture, MCL 600.5726 provides that a vendor of a
breached land contract may institute summary proceedings “but only if the terms of the contract
expressly provide for termination or forfeiture, or give the vendor the right to declare a forfeiture,
in consequence of the nonpayment of any moneys required to be paid under the contract or any
other material breach of the contract.” Further, MCL 600.5750 provides that “a judgment for
possession after forfeiture of an executory contract for the purchase of premises shall merge and
bar any claim for money payments due or in arrears under the contract at the time of trial.” Thus,
when a land contract is forfeited, the vendor regains possession of the property but is not entitled
to “money payments due or in arrears.”
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2020, they presumably lost the right to possession of the subject property regardless of whether
the parties had a landlord-tenant relationship under a lease or a vendor-vendee relationship under
a land contract. However, defendants seem to assume that if they can successfully show an
implied-in-fact land contract, then they will be entitled to possession of the subject property, as
well as an ultimate purchase of the subject property at some point in the future. That assumption
is questionable.
With that in mind, we acknowledge that defendants have a reasonable argument that the
expedited proceedings violated procedural due process. While the seven-day period complied with
the relevant statutes and court rules, that may not be sufficient time to prepare evidence, witnesses,
and so forth to determine whether the parties had an implied-in-fact land contract. As defendants
note, for example, resolution of this question might depend on the extent to which they improved
the subject property, which would likely require multiple billing statements and testimony in
support.
The U.S. Supreme Court’s reasoning in Lindsey, 405 US 56, is distinguishable from the
case before this panel because the six-day trial period upheld in Lindsey was based upon the
Court’s general assumption that “[i]n those recurring cases where the tenant fails to pay rent or
holds over after expiration of his tenancy and the issue in the ensuing litigation is simply whether
he has paid or held over, we cannot declare that the Oregon statute allows an unduly short time for
trial preparation.” Id. at 64-65. This case, in contrast, allegedly involves a far more fact-specific
question of whether the parties had an implied-in-fact land contract. Again, procedural due process
does not simply require notice and an opportunity to be heard, but that the proceedings do so with
“a meaningful time and in a meaningful manner.” Bonner, 495 Mich at 235 (quotation marks and
citation omitted). It is arguable that defendants in this case did not have an opportunity to be heard
on the issue of an implied-in-fact land contract “in a meaningful manner.”
The problem for defendants here, however, is that they do not explain how this arguable
violation of procedural due process would entitle them to relief. As noted above, even assuming
that defendants are correct that the parties had an implied-in-fact land contract, defendants
undisputedly ceased making the required mortgage payments in March 2020. As a result,
defendants presumably lost the right to possession of the subject property, and the best-case
scenario would be either a court-ordered sale of the subject property with any surplus proceeds
being paid to defendants, or a ruling from the district court that the subject property had to be
forfeited to plaintiff, and defendants would not be liable to plaintiff for the lack of $1,500 monthly
payments between March 2020 and November 2020. But again, defendants do not argue or even
mention either possibility.
With regard to foreclosure, a vendor of a breached land contract may file an action for foreclosure
in circuit court, see MCL 600.3101, the circuit court then sells the property, see MCL 600.3115,
and the vendee remains liable to the vendor if the sale proceeds are insufficient but retains any
surplus proceeds, see MCL 600.3135. Thus, when a land contract is foreclosed, there is a court-
ordered sale of the property, and the vendor is not entitled to any surplus proceeds but may pursue
a deficiency against the vendee.
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In any event, as explained below, defendants fail to show that an implied-in-fact land
contract would be enforceable. Simply put, defendants’ fact-specific arguments are beside the
point because the terms of the written lease control. Further, to the extent that defendants claim
that they spent $40,000 improving the subject property in reliance on that implied-in-fact land
contract, defendants may maintain a separate action for unjust enrichment. Accordingly, any
possible violation of procedural due process was harmless error. See PT Today, 270 Mich App at
145; Verbison, 201 Mich App at 641.
III. MOTION TO ADJOURN HEARING
Defendants argue that the district court abused its discretion by refusing to adjourn the
hearing because they needed additional time to prepare and present evidence concerning the
existence of the alleged implied-in-fact land contract. We again conclude that any error was
harmless because the terms of the written lease controlled the parties’ relationship.
This Court reviews a lower court’s decision on a motion for an adjournment for an abuse
of discretion. See In re Utrera, 281 Mich App 1, 8; 761 NW2d 253 (2008).
MCR 4.201(J) provides that the district court, in summary proceedings, may adjourn the
trial for up to 56 days:
When the defendant appears, the court may try the action, or, if good cause
is shown, may adjourn trial up to 56 days. If the court adjourns trial for more than
7 days, an escrow order may be entered . . . .
“[I]n order for a trial court to find good cause for an adjournment, a legally sufficient or
substantial reason must first be shown.” In re Utrera, 281 Mich App at 11 (quotation marks and
citation omitted).
In light of defendants’ presentation of arguments in the district court, we doubt that the
district court abused its discretion by denying defendants’ motion to adjourn the hearing. The
written motion itself appeared to be exclusively based upon the alleged lack of notice which, as
the district court correctly noted, was a meritless argument. While the written motion did briefly
reference a “land contract,” it did not include any context or explanation, and that motion cannot
be reasonably understood as requesting an adjournment for additional time to gather evidence for
the alleged implied-in-fact land contract. Moreover, defendants’ counsel was unclear about his
position during oral argument in the district court. He occasionally changed between clearly
meritless arguments, such as insufficient notice and lack of jurisdiction because defendants had a
possible $40,000 counterclaim, and somewhat more reasonable arguments, such as the need for
additional time to prepare and present evidence about an implied-in-fact land contract. Given this
presentation of arguments, it is understandable that the district court refused to adjourn the hearing.
On the other hand, by the end of oral argument, the district court was aware that defendants’
position was that they had an implied-in-fact land contract. The district court’s understanding in
this regard was reflected by the fact that it addressed and decided this issue in its subsequent written
opinion and order. Moreover, as previously explained, seven days is insufficient to prepare and
present the variety of evidence that may be needed to show the existence of an implied-in-fact land
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contract over several years. Thus, it is at least arguable that the district court abused its discretion
by refusing to adjourn the hearing.
In any event, as with the procedural due-process issue, any error was harmless because the
terms of the written lease control the parties’ relationship. An adjournment of the hearing to allow
defendants to gather evidence about such facts as the extent of the home improvements would not
have changed the outcome of the case. Thus, the district court’s refusal to adjourn the hearing was
harmless error. See MCR 2.613(A).6
IV. STATUTE OF FRAUDS
Defendants argue that the evidence would have shown that the parties had an oral land
contract for sale of the subject property that was not barred by statute of frauds due to partial
performance, had the district court allowed defendants to present evidence in that regard. 7 We
conclude that defendants’ argument is meritless because a contract cannot be implied in fact when
there is an express contract covering the same subject matter.
The lower court’s finding regarding the existence of an implied-in-fact context is reviewed
for clear error. In re Lewis Estate, 168 Mich App 70, 74; 423 NW2d 600 (1988). “A finding of
fact is clearly erroneous when although there is evidence to support it a reviewing court on the
entire evidence is left with a definite and firm conviction that a mistake has been committed.” Id.The statute of frauds generally requires that land contracts be in writing. See MCL 566.106
and MCL 566.108. “To satisfy the statute of frauds, a writing need not contain all the terms of the
agreement to be enforceable, and the writing may be considered with the admitted facts and
extrinsic evidence showing the surrounding circumstances.” Barclae v Zarb, 300 Mich App 455,
470; 834 NW2d 100 (2013).
Partial performance of an agreement may remove it from the statute of frauds. Giordano
v Markovitz, 209 Mich App 676, 679; 531 NW2d 815 (1995). In addition, “[p]ossession and
improvements in regard to the property may remove it from the statute.” Zaborski v Kutyla, 29
6
Defendants briefly argue that the refusal to adjourn the hearing was prejudicial because they did
not have time to prepare the CDC eviction declaration. This is meritless. Notwithstanding that
the CDC eviction moratorium only applied to “tenant[s],” not land-contract vendees, we judicially
notice that the relevant document was simple and required only minutes to prepare. See
https://rentalassistancepbc.org/pdf/CDC_Moratorium.pdf, accessed February 15, 2023.
Regardless, defendants cannot be awarded any relief at this time because the CDC eviction
moratorium is no longer in effect.
7
Defendants’ brief on appeal is a bit imprecise. Defendants state in the discussion of this issue
that the parties had “a valid oral land contract.” However, the essence of defendants’ argument is
that the parties had an implied-in-fact contract. The difference between these two contracts is that
an oral contract is an express agreement that is not memorialized in writing, whereas an implied-
in-fact contract is an implied agreement that is suggested through actions. See generally, Rowe v
Montgomery Ward & Co, Inc, 437 Mich 627, 636-637; 473 NW2d 268 (1991).
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Mich App 604, 607; 185 NW2d 586 (1971). With regard to partial performance of land contracts,
our Supreme Court has explained as follows:
Partial payment of the purchase price alone is not sufficient to take the case out of
the statute [of frauds]. Possession alone is insufficient, but where there is partial
payment and possession accompanied by acts of ownership of the vendee changing
the character of the freehold, and lessening its value, a court of equity may award a
decree for specific performance. [Pearson v Gardner, 202 Mich 360, 362; 168 NW
485 (1918).]
However, it is a longstanding principle of contract law that a contract cannot be implied in
fact when there is an express contract on the matter. See Miller v Stevens, 224 Mich 626, 632; 195
NW 481 (1923) (“Where there is no express contract a contract may be implied in fact . . . .”);
Tustin Elevator & Lumber Co v Ryno, 373 Mich 322, 330; 129 NW2d 409 (1964) (quoting same).
See also 1 Williston on Contracts § 4:21 (4th ed) (“There can be no implied in fact if there is an
express contract covering the subject matter involved. Thus, the existence of an express contract
precludes the possibility of an implied contract of a different or contradictory nature.”) (citations
omitted); Chanay v Chittenden, 115 Ariz 32, 35; 563 P2d 287 (1977) (“There can be no implied
contract where there is an express contract between the parties in reference to the same subject
matter.”).
In this case, it is clear that the parties never entered into a written land contract. The parties
were apparently close to doing so in August 2016, when Nash wrote to defendant Vanston that
“[w]hen we come to an agreement on price & terms . . . we can make it final.” But defendants
have never suggested that it actually became finalized by a written agreement. Instead, defendants
offer several facts indicating that the parties understood that they had a land contract, such as the
fact that defendants paid a $15,000 “security deposit,” which is better understood as a down
payment; that the subject property’s status on Zillow was changed to “Pending Sale” in about
August 2016; that defendants made improvements exceeding $40,000 to the subject property,
which were completed in anticipation of eventually owning the subject property; and that Nash
had conversations with defendants in May and July 2019 concerning mortgage loans for the subject
property.
Certainly, these facts show that the parties engaged in serious negotiations for a land
contract and that defendants believed that they would eventually assume ownership of the subject
property. Otherwise, they would not have performed such extensive improvements. However, the
August 2016 written lease between the parties contemplates the possibility that they would not be
able to agree upon the terms of a land contract, and in that case, the parties would simply have a
landlord-tenant relationship. Specifically, the lease states that “[i]f for any reason currently
unknown to either party a Land Contract Agreement cannot be reached the Tenant agrees to Lease
the Property for a minimum of 12 months.” The preceding sentence of the lease refers to a “Land
Contract Agreement” being “executed.” Taken together, these two sentences indicate that a land
contract is “reached” when it is “executed,” and that when a land contract is not “executed,” it is
not “reached” and the parties instead have an ordinary lease. The latter situation is what occurred
here.
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Finding that the parties had an implied-in-fact land contract that replaced the terms of the
written lease would be contrary to the principle of contract law that a contract cannot be implied
in fact when there is an express contract covering the same subject matter. Therefore, the district
court did not clearly err by finding that the parties did not have an implied-in-fact land contract,
and the circuit court did not err by affirming this finding.
For these reasons, we conclude that the parties’ relationship was governed by the written
lease and that a contract for a sale of the subject property cannot be implied in fact. Defendants’
arguments about improvements to the subject property, conversations with Nash, Zillow status,
and so forth, are beside the point because defendants do not even suggest that the parties had a
written land contract that replaced the written lease. To the extent that defendants argue that it
would be unfair for plaintiff to retain the benefits of the alleged $40,000 improvements to the
subject property, as stated supra, they may maintain a separate action for unjust enrichment. See
JAM Corp 461 Mich at 166, 170. See also Ollig v Eagles, 347 Mich 49, 60-61; 78 NW2d 553(1956) (explaining that a party may maintain an action for unjust enrichment when he or she
mistakenly but in good faith improves the real property of another).
V. CONCLUSION
The parties’ relationship was governed by the terms of the written lease, and a land contract
cannot be implied in fact because doing so would conflict with that written lease. Therefore, any
procedural error that occurred as a result of defendants’ inability to present fact-specific evidence
concerning the alleged implied-in-fact land contract was harmless error. Accordingly, we affirm.
/s/ Michelle M. Rick
/s/ Michael J. Kelly
/s/ Michael J. Riordan
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