Illiria Inc v. Pinebrook Plaza LLC ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
ILLIRIA, INC., UNPUBLISHED
October 25, 2018
Plaintiff/Counterdefendant-
Appellant,
v Nos. 338666; 338671
Macomb Circuit Court
PINEBROOK PLAZA, LLC, and KANAAN LC No. 2015-002888-CB
FAMILY TRUST,
Defendants/Cross-Defendants-
Appellees,
and
MIKHAIL PLAZA, LLC,
Defendant/Third-Party
Plaintiff/Counterplaintiff/Cross-
Plaintiff-Appellee,
and
TITLE CONNECT, LLC, and FIRST
AMERICAN TITLE COMPANY,
Third-Party Defendants.
Before: MURRAY, C.J., and BORRELLO and RONAYNE KRAUSE, JJ.
PER CURIAM.
These consolidated appeals arise from the same lower court file. In Docket No. 338666,
plaintiff/counterdefendant, Illiria, Inc. (plaintiff), appeals as of right a stipulated order of
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dismissal without prejudice. In Docket No. 338671, plaintiff appeals by delayed leave granted1
an opinion and order granting summary disposition to defendant/third-party
plaintiff/counterplaintiff/cross-plaintiff, Mikhail Plaza, LLC (Mikhail Plaza), regarding Count III
of plaintiff’s complaint. This Court consolidated the appeals, Illiria, Inc v Pinebrook Plaza,
LLC, unpublished order of the Court of Appeals, entered June 21, 2017 (Docket No. 338671),
and plaintiff has filed a single brief on appeal encompassing both of these consolidated appeals
and challenging the trial court’s grant of summary disposition to Mikhail Plaza regarding Count
III of plaintiff’s complaint. For the reasons set forth in this opinion, we affirm.
I. BACKGROUND
This case arises out of a dispute related to a February 18, 2010 commercial lease by
which defendant/cross-defendant Pinebrook Plaza, LLC (Pinebrook Plaza), rented property
located in a plaza to plaintiff, which operated a restaurant at the location. An addendum to the
lease executed on the same date as the lease provided that the term of the lease continued until
February 28, 2015. Additionally, ¶ k of the addendum also granted to plaintiff a right of first
refusal concerning the purchase of the property on which plaintiff’s restaurant was located,
stating as follows:
Tenant shall be entitled to a right of first refusal should Landlord decide to
sell the premises. Tenant shall be permitted reasonable notice and a reasonable
opportunity to respond to such notice, without unreasonably hindering or delaying
Landlord.
Plaintiff claims to have sent an October 25, 2014 notice to Pinebrook Plaza of plaintiff’s
intent to renew the lease in accordance with a renewal provision in the lease, but Pinebrook Plaza
denied receiving that notice. In August 2015, the property was sold to Mikhail Plaza. Plaintiff
commenced this action. In Count III of its complaint, plaintiff sought specific performance of
the lease to allow plaintiff to purchase the property and an order requiring Mikhail Plaza to
convey the property to plaintiff. Plaintiff moved for summary disposition in its favor regarding
Count III, Mikhail Plaza requested summary disposition in its favor, and the trial court granted
summary disposition to Mikhail Plaza regarding Count III. These appeals ensued.
II. ANALYSIS
On appeal, plaintiff presents arguments challenging the trial court’s summary disposition
ruling, specifically ¶ k of the addendum, and the issue of whether ¶ k remained in effect at the
time that the property was sold to Mikhail Plaza. For the reasons explained below, we conclude
that the trial court properly granted summary disposition to Mikhail Plaza with respect to Count
III of plaintiff’s complaint. Under the language of the lease, plaintiff’s multiple late rent
payments deprived it of the option to renew the lease, and the right of first refusal provided in the
lease addendum did not extend to the period in which plaintiff was a holdover tenant.
1
Illiria, Inc v Pinebrook Plaza, LLC, unpublished order of the Court of Appeals, entered June
21, 2017 (Docket No. 338671).
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A trial court’s decision on a motion for summary disposition is reviewed de novo. Dell v
Citizens Ins Co of America, 312 Mich App 734, 739; 880 NW2d 280 (2015).
In reviewing a motion under MCR 2.116(C)(10), this Court considers the
pleadings, admissions, affidavits, and other relevant documentary evidence of
record in the light most favorable to the nonmoving party to determine whether
any genuine issue of material fact exists to warrant a trial. Summary disposition
is appropriate if there is no genuine issue regarding any material fact and the
moving party is entitled to judgment as a matter of law. A genuine issue of
material fact exists when the record, giving the benefit of reasonable doubt to the
opposing party, leaves open an issue upon which reasonable minds might differ.
[Bank of America, NA v Fidelity Nat’l Title Ins Co, 316 Mich App 480, 488; 892
NW2d 467 (2016) (quotation marks and citations omitted).]
The proper interpretation of a contract presents a question of law that is reviewed de novo. In re
Smith Trust, 480 Mich 19, 24; 745 NW2d 754 (2008).
Plaintiff initially claims that the lease was successfully renewed, arguing that plaintiff
and Pinebrook Plaza engaged in a course of dealing that waived or modified the renewal option
provision of the lease. Paragraph 5a of the lease contained the following provision concerning
plaintiff’s option to renew the lease for a second five-year term: “As long as Tenant has Paid rent
in a timely manner (Not late more than 3 time [sic] in the 5 year period) Tenant may exercise an
option period of Five (5) additional years at the rate of Twenty Five Hundred ($2,500.00) dollars
per month. Tenant must Notify the Landlord in writing Ninety (90) days prior to the end of the
initial term if Tenant wants to exercise this option.” In particular, plaintiff contends that the
lease was renewed and remained in effect because Pinebrook Plaza’s acceptance of late rent
payments in amounts less than that required by the lease served to modify or waive the language
in ¶ 5a requiring plaintiff to pay rent in a timely manner in order to exercise its option to renew
the lease. According to plaintiff, the trial court should have granted summary disposition in
favor of plaintiff or, at a minimum, denied Mikhail Plaza’s motion for summary disposition
because a genuine issue of material fact existed concerning the effect of the course of dealing
between plaintiff and Pinebrook Plaza under the lease.
When interpreting the language of a contractual lease agreement, this Court generally
applies ordinary principles of contract interpretation. Id. at 24. Thus, we “determine the intent
of the parties by examining the language of the contract according to its plain and ordinary
meaning,” and we enforce unambiguous contractual language as written. Id. A party claiming
breach of contract “must establish (1) that there was a contract, (2) that the other party breached
the contract, and (3) that the party asserting breach of contract suffered damages as a result of the
breach.” Doe v Henry Ford Health Sys, 308 Mich App 592, 601; 865 NW2d 915 (2014).
“[S]pecific performance is an equitable remedy[,]” Zurcher v Herveat, 238 Mich App 267, 297;
605 NW2d 329 (1999), and “contracts involving the sale of land are generally subject to specific
performance[,]” In re Smith Trust, 480 Mich at 26.
An option to purchase or lease property is a preliminary contract for the privilege of
purchasing or leasing property at a fixed price within a specified timeframe. See Johnson Family
Ltd Partnership v White Pine Wireless, LLC, 281 Mich App 364, 393; 761 NW2d 353 (2008);
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Oshtemo Twp v Kalamazoo, 77 Mich App 33, 37; 257 NW2d 260 (1977). Although a lease itself
can constitute an interest in real property, a mere option to lease is not such an interest. Johnson
Family Ltd Partnership, 281 Mich App at 393. “Because an option is essentially an offer that
requires strict compliance, it does not create an interest in land until the conditions of the offer
are met.” Id. As our Supreme Court has explained:
An option is but an offer, strict compliance with the terms of which is required;
acceptance must be in compliance with the terms proposed by the option both as
to the exact thing offered and within the time specified; otherwise the right is lost.
[Le Baron Homes v Pontiac Housing Fund, 319 Mich 310, 313; 29 NW2d 704
(1947) (quotation marks and citation omitted).]
The “[h]older of an option seeking specific performance has burden of showing his compliance
with its terms.” Id. at 315 (quotation marks and citation omitted).
Furthermore, “[t]he law of contracts recognizes that some agreements are not binding at
the outset with respect to a right to performance, entailing conditions precedent to performance.”
Wells Fargo Bank, NA v SBC IV REO, LLC, 318 Mich App 72, 93; 896 NW2d 821 (2016). “A
condition precedent . . . is a fact or event that the parties intend must take place before there is a
right to performance. If the condition is not satisfied, there is no cause of action for a failure to
perform the contract.” Harbor Park Market, Inc v Gronda, 277 Mich App 126, 131; 743 NW2d
585 (2007) (quotation marks and citation omitted).
In this case, ¶ 5a of the lease made plaintiff’s timely payment of rent a condition
precedent of plaintiff’s option to extend the lease for a second five-year period, and timely
payment was specifically defined as not being late in paying rent more than three times in the
five-year period of the lease. Plaintiff’s manager, Robert Prekaj, admitted that plaintiff was late
in paying rent more than five times, rendering the failure to comply with the condition precedent
breach undisputed. Also, Prekaj testified that when he mailed the October 25, 2014 letter
purportedly notifying Pinebrook Plaza of plaintiff’s intent to renew the lease for an additional
five year period, a check for three months of back rent was placed in the envelope. Because
plaintiff failed to perform the condition precedent of making timely rent payments as defined
within the renewal option provision and accordingly failed to strictly comply with the terms of
the option provision, plaintiff did not accept the offer for a renewed lease in conformance with
the terms proposed in the lease agreement and had no enforceable right to renew the lease. Le
Baron Homes, 319 Mich at 313; Harbor Park, 277 Mich App at 131.
Nonetheless, according to plaintiff, such a finding does not preclude recovery for plaintiff
as it argues that Pinebrook Plaza agreed to waive or modify the language in the lease requiring
plaintiff not to be late in paying rent more than three times in order to exercise the option to
renew the lease. Parties to a contract may “enter into new contracts or modify their existing
agreements.” Quality Prod & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 370-371; 666
NW2d 251 (2003). “However, the freedom to contract does not authorize a party to unilaterally
alter an existing bilateral agreement. Rather, a party alleging waiver or modification must
establish a mutual intention of the parties to waive or modify the original contract.” Id. at 372.
“The mutuality requirement is satisfied where a modification is established through clear and
convincing evidence of a written agreement, oral agreement, or affirmative conduct establishing
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mutual agreement to waive the terms of the original contract.” Id. at 373. “[W]hen a course of
conduct establishes by clear and convincing evidence that a contracting party, relying on the
terms of the prior contract, knowingly waived enforcement of those terms, the requirement of
mutual agreement has been satisfied.” Id. at 374. “[W]aiver requires an intentional and
voluntary relinquishment of a known right . . . .” Id. at 379. Although affirmative conduct,
especially when combined with oral or written representations, can constitute a waiver, mere
knowing silence is generally insufficient. See id. at 365, 376-379.
In this case, plaintiff relies on the fact that Pinebrook Plaza did not seek to evict plaintiff,
provide plaintiff with a termination notice, or hold plaintiff in default for paying rent late.
Plaintiff argues that because Pinebrook Plaza allowed plaintiff to remain on the premises and
accepted plaintiff’s tardy rent payments in amounts less than that called for by the lease, the
lease continued in effect past the expiration of the lease term on February 28, 2015. Plaintiff’s
argument confuses the issue by conflating Pinebrook Plaza’s potential remedies for plaintiff’s
default with the question whether plaintiff maintained a right to exercise its option to renew the
lease. The fact that Pinebrook Plaza chose not to seek plaintiff’s eviction for paying its rent late
does not establish that Pinebrook Plaza agreed to waive or modify the requirements of the
separate provision of the lease establishing the condition precedent for plaintiff’s option to renew
the lease. Paragraph 5a of the lease specifically addresses the effect of plaintiff’s multiple late
payments of rent by conditioning plaintiff’s option to renew on not having been late in paying
rent more than three times. Simply stated, how Pinebrook Plaza chose to address plaintiff’s late
rent payments during the term of the lease does not waive or modify the language of ¶ 5a
regarding the effect of the late rent payments on plaintiff’s option to renew.2
Plaintiff also suggests that a waiver or modification occurred because Pinebrook Plaza
never objected to plaintiff’s continued presence on the property after the expiration of the lease
term on February 28, 2015. But the lease expressly provided for the possibility of plaintiff
remaining on the property as a month-to-month holdover tenant following the expiration of the
lease term, which suggests that the parties contemplated a situation where plaintiff would remain
in possession of the property without having renewed the lease. Hence, plaintiff fails to explain
how Pinebrook Plaza’s declination to object to plaintiff’s continued presence constituted a
waiver or modification of the requirements of the lease renewal provision. Rather, plaintiff’s
argument that Pinebrook Plaza waived or modified the requirements of the lease renewal based
on the silence of Pinebrook Plaza is a legally insufficient basis to establish that the renewal
2
Plaintiff’s reliance on Park Forest of Blackman v Smith, 112 Mich App 421; 316 NW2d 442
(1982), is misplaced. In Park Forest, this Court held that a landlord had waived strict
compliance with the timely payment provision of a lease by accepting late rental payments, such
that just cause to terminate the tenancy was not established. Id. at 428-429. But the issue in
Park Forest concerned the landlord’s waiver of its right to seek termination of the tenancy, not
the landlord’s modification or waiver of a separate provision of the lease establishing the
requirements that must be satisfied in order for the tenant to exercise an option to renew the
lease. Id. The holding in Park Forest is thus not pertinent to the issue presented in the instant
case.
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option provision of the lease was modified by mutual agreement or waived by a course of
conduct. Quality Prod, 469 Mich at 365, 372-373, 376-379.
Plaintiff makes a related argument that Pinebrook Plaza failed to provide notice that it
considered plaintiff to be in default, that plaintiff was thus deprived of an opportunity to cure the
default, and that the lease and its provision giving plaintiff a right of first refusal to purchase the
subject property therefore remained in effect. Plaintiff refers to the language of ¶ 23.B of the
lease, which provides in pertinent part that, among the remedies available to Pinebrook Plaza in
the event of a default by plaintiff, Pinebrook Plaza could do the following:
Maintain [plaintiff’s] right to possession, in which case this Lease shall
continue in effect whether or not [plaintiff] shall have abandoned the Premises. In
such event [Pinebrook Plaza] shall be entitled to enforce all of [Pinebrook
Plaza’s] rights and remedies under this Lease, including the right to recover the
rent and any other charges and Adjustments as may become due hereunder . . . .
Again, plaintiff is confusing the remedies available to Pinebrook Plaza upon plaintiff’s
default during the express term of the lease with plaintiff’s option to renew the lease after filling
a condition precedent. Paragraph 23.B. does not contain any language indicating that it applies
beyond the term of the lease itself. In other words, if plaintiff defaulted during the original term
of the lease, Pinebrook Plaza was entitled under ¶ 23.B. to hold plaintiff accountable for its rent
obligations during the remainder of the lease term even if plaintiff abandoned the premises,
during which time all of the lease provisions also remained in effect. However, nothing in
¶ 23.B. permits such a set of circumstances to continue beyond the express term of the lease—
i.e., February 28, 2015. The mere fact that plaintiff remained on the premises after the lease term
expired on February 28, 2015, does not somehow make ¶ 23.B. applicable.
Indeed, such a scenario is dealt with under a separate lease provision in ¶ 20, which
provides as follows:
Holding Over. If [plaintiff] remains in possession of the Premises or any
part thereof after the expiration of the term hereof with the express written
consent of [Pinebrook Plaza], such occupancy shall be a tenancy from month to
month at a rental in the amount of one hundred twenty percent (120%) of the last
Monthly Minimum Rent, plus all other charges payable hereunder, and upon all
the terms hereof applicable to a month to month tenancy. [Emphasis added.]
In this case, plaintiff makes no claim that it had obtained “the express written consent” of
Pinebrook Plaza to become a hold over tenant as that term is contemplated in the lease.
Moreover, as will be explained below, even if plaintiff had successfully become a month-to-
month holdover tenant as that term is contemplated in the lease, this provision nevertheless does
not indicat that the right-of-first-refusal provision continues to apply during the holdover period.
Accordingly, plaintiff cannot rely on its continued possession of the leased premises beyond
February 28, 2015, when the lease term expired to claim that the lease—including the important
right-of-first-refusal provision—remained in effect and enforceable beyond February 28, 2015,
because neither ¶ 20 nor ¶ 23.B. provide for the lease term to be extended under the
circumstances here. Rather, the lease terms would only have stayed in effect if plaintiff had
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successfully obtained a renewal of the lease for a second term. Furthermore, assuming without
deciding that plaintiff’s continued possession during the original lease term after making late
payments was under the terms of ¶ 23.B., the renewal option in ¶ 5a was still subject to the
condition precedent requiring plaintiff not to make more than three late payments of rent in the
five-year lease period. It is undisputed that this condition precedent was not satisfied, and
plaintiff therefore could not exercise the option to renew the lease regardless whether ¶ 23.B.
was applicable to the situation. We note that the renewal provision has no language that required
providing notice to plaintiff about any “default” or giving plaintiff an opportunity to “cure” any
default. Hence, plaintiff failed to satisfy the condition precedent for exercising its option to
renew the lease for a second five-year term pursuant to the renewal provision in the lease. In re
Smith Trust, 480 Mich at 24.
Next, plaintiff argues that it was a holdover tenant after the expiration of the lease term
on February 28, 2015, and that plaintiff still retained the right of first refusal regarding the
purchase of the property during the holdover period, including at the time that the property was
sold to Mikhail Plaza.
As previously stated, plaintiff could not be considered a holdover tenant as that term was
defined in ¶ 20 of the lease because plaintiff did not actually obtain express written consent from
Pinebrook Plaza to remain in possession of the premises after the lease expired on February 28,
2015. Moreover, even if the course of conduct between plaintiff and Pinebrook Plaza could
somehow be considered a modification or waiver of the provisions of ¶ 20 involving the amount
of rent and the need for written consent, there still is no language in ¶ 20 to indicate that the
right-of-first-refusal provision remained in force during the holdover period. As previously
noted, ¶ 20 states that the month-to-month tenancy is to be “upon all the terms hereof applicable
to a month to month tenancy.” (Emphasis added.) Contrary to plaintiff’s apparent
understanding, this provision does not say that all terms in the lease necessarily continue to apply
to a month-to-month tenancy. The sole provision explaining the terms of such a month-to-month
tenancy is contained in ¶ 20, which is limited to outlining the rent and charges that the tenant is
to pay in exchange for its continued holdover possession once written consent is obtained from
the landlord. There similarly is nothing in the right-of-first-refusal provision to indicate that it
applies to a month-to-month holdover tenancy. Paragraph 20 is therefore inapplicable, and
plaintiff’s reliance on this provision to show that the right-of-first-refusal provision necessarily
remained in effect after the expiration of the lease term is unavailing.
Nevertheless, “[a]s a general rule, when a tenant comes rightfully into possession of land
by permission of the owner and continues to occupy the same after the time for which, by such
permission, he had the right to hold the same, he becomes a tenant by sufferance.” Felt v
Methodist Ed Advance, 251 Mich 512, 517; 232 NW 178 (1930). More specifically, a person
who holds over without right after lawfully possessing the land “becomes a tenant at sufferance,
if the owner suffers him to remain in possession a sufficient length of time to imply an
intentional acquiescence in the occupancy . . . .” Sch Dist No 11 of Alpine Twp v Batsche, 106
Mich 330, 334; 64 NW 196 (1895). “An express consent to occupancy is not necessary to create
such a tenancy.” Id. Moreover, the “tenancy is of such a nature as necessarily implies an
absence of any agreement between the owner and the tenant, and if express assent is given by the
owner to such possession the tenancy is thereby, instanter, converted into a tenancy at will, or
from year to year, according to the circumstances.” Id. (quotation marks and citation omitted).
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Applying these principles to the case before us, the issue becomes whether the right of
first refusal contained in ¶ k of the addendum was a term of the lease that somehow became
automatically applicable to the holdover period despite the fact that a formal agreement between
plaintiff and Pinebrook Plaza was no longer in effect. “A right of first refusal, or preemptive
right, is a conditional option to purchase dependent on the landowner’s desire to sell.” Randolph
v Reisig, 272 Mich App 331, 336; 727 NW2d 388 (2006). This Court has previously explained
the nature of a right-of-first-refusal agreement:
An option contract does not create an interest in land. A right of first
refusal gives the promisee fewer rights than an option contract. The promisee in
an option contract holds the power to purchase the property at will for the
specified price during the specified period. But the option contract does not
create an interest in land. Conversely, the promisee in a right of first refusal
agreement cannot exercise any right to purchase property unless the seller decides
to sell to a different buyer. Because the right of first refusal gives the holder
fewer rights than an option, we conclude that if the latter does not create an
interest in land, neither does the former. Indeed, Michigan courts have generally
treated similar agreements containing first-refusal rights as contracts, not property
interests . . . . [Id. at 338-339 (citation omitted).]
Regarding the right-of-first-refusal provision in the lease at issue in this case, it is true
that generally, “when a tenant under a valid lease for years holds over, the law implies a contract
on his part to renew the tenancy on the same terms for another year; but the landlord may treat
him as a trespasser, or as a tenant holding upon the terms of the original lease.” Glocksine v
Malleck, 372 Mich 115, 119; 125 NW2d 298 (1963) (quotation marks and citation omitted).
Despite the seemingly broad sweep of this general rule, our Supreme Court has explained that it
is not the case that all lease terms automatically carry over and apply to a holdover tenancy:
A presumption arises from the holding over by the tenant and acceptance
of rent by the landlord, in a case of a lease for a term of years, that the parties
intend to renew the tenancy for a period of 1 year. There is no implication that
the lease itself as a binding contract is to be continued in force. Its provisions
may be inquired into to determine the terms under which the tenant holds and the
nature of his tenancy. In an action to recover the rent, the liability would not be
predicated upon the agreement of the tenant to pay as embodied in the lease, but
upon the implied contract to pay according to the terms of the lease.
. . . Thus the law in this State is not that the terms on which a holdover
tenant holds are necessarily the same as those of the lease, but rather that the
terms of the original tenancy may be inquired into to determine the terms of the
holdover tenancy. The most obvious illustration of the fact that all terms of the
lease are not necessarily applicable to the holdover tenancy is that, although the
lease may provide for a term of several years, each holdover tenancy is for only
one year. . . .
Our Court in its opinions has distinguished between the nature and terms
of a renewal tenancy and those of a holdover tenancy. When a lease contains an
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option to purchase during its term and an option to renew the lease on the same
terms, a renewal of the lease carries with it the right to exercise the purchase
option during the renewed term. However, an option to purchase which expires at
the end of a lease term, or at the end of a renewal thereof, cannot be exercised
during the holdover tenancy. [Id. at 120-121 (quotation marks and citations
omitted).]
In Glocksine, our Supreme Court held that “an option to purchase during the term of a
lease is not one of the provisions of the lease which will automatically accompany a holdover
tenancy,” emphasizing that the nature and terms of a tenancy created by a tenant holding over are
implied by law. Id. at 123-125. The Glocksine Court reasoned, as especially pertinent to the
instant case, that an option provision was not essential to regulating the parties’ landlord-tenant
relationship, that the parties could have included an express lease provision allowing for the
option provision to continue beyond the term of the lease, and that the legal rights of a holdover
tenant should not by enlarged by implication beyond the terms necessary to maintain the
landlord-tenant relationship. Id. at 122-123.
Moreover, “first refusal agreements, like option agreements, must be for a definite period
of time. The absence of specific time limits will not render the agreement void. Rather, the
courts will construe the agreement to be for a reasonable period of time.” Brauer v Hobbs, 151
Mich App 769, 777; 391 NW2d 482 (1986); see also Randolph, 272 Mich App at 336-337 (citing
Brauer for these propositions).
In this case, neither the lease nor the addendum specifically provides that the right of first
refusal extends to any holdover period, and most importantly, neither the lease nor the addendum
provides that this provision applies to a tenancy at sufferance. The right of first refusal must be
limited in duration to a reasonable time, Brauer, 151 Mich App at 777, and contractual language
granting a right of first refusal is construed narrowly, LaRose Market, Inc v Sylvan Center, Inc,
209 Mich App 201, 205; 530 NW2d 505 (1995). The right of first refusal here is reasonably
understood as limited to the duration of the lease given that the right was granted in the context
of a lease, the lease contained a specific provision for effecting a renewal of the entire lease,3 the
lease contained a separate provision that addressed a tenant’s holdover without indicating that
the right of first refusal applied to the holdover period, and there is no language in the lease or
the addendum suggesting that the right of first refusal extended beyond the expiration of the
lease.
Plaintiff has failed to establish that the right of first refusal contained in ¶ k of the lease
addendum was a term that was applicable to a tenancy at sufferance or a holdover tenant under
¶ 20 of the lease such that the right of first refusal remained in effect during the holdover period.4
3
Notably, and as previously discussed, plaintiff failed to properly avail itself of this option.
4
We note that even if plaintiff were considered a holdover tenant under ¶ 20 of the lease, our
conclusion would be the same. There is no language in the lease or addendum expressly stating
that the right of first refusal constitutes a term applicable to a month-to-month tenancy. In
discerning the meaning or import of an undefined legal phrase or term of art contained in a
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Considering that a right of first refusal provides a promisee with even fewer rights than a
purchase option, Randolph, 272 Mich App at 338-339, we conclude that a right of first refusal is
clearly not essential to the parties’ landlord-tenant relationship and is not a lease provision that
automatically carries over to a tenancy at sufferance created by operation of law, see Glocksine,
372 Mich at 122-125. Plaintiff accordingly did not retain the right of first refusal after the lease
expired on February 28, 2015, and did not have that right when the property was sold to Mikhail
Plaza.
For all of the reasons stated above, the trial court did not err by granting summary
disposition in favor of Mikhail Plaza.5
Affirmed. Mikhail Plaza, having prevailed, may tax costs. MCR 7.219(A).
/s/ Christopher M. Murray
/s/ Stephen L. Borrello
/s/ Amy Ronayne Krause
contract, a court may consider “common law understandings and case law explanations that
those familiar with such terms of art are held to understand.” Henderson v State Farm Fire &
Cas Co, 460 Mich 348, 357-358, 357 & n 9; 596 NW2d 190 (1999).
5
To the extent our reasoning differs from that of the trial court, we still affirm a trial court’s
ruling on a motion for summary disposition that reached the correct result. Kyocera Corp v
Hemlock Semiconductor, LLC, 313 Mich App 437, 449; 886 NW2d 445 (2015).
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