Band v. Livonia Associates

439 N.W.2d 285, 176 Mich. App. 95
CourtMichigan Court of Appeals
DecidedMarch 21, 1989
DocketDocket 97220
StatusPublished
Cited by48 cases

This text of 439 N.W.2d 285 (Band v. Livonia Associates) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Band v. Livonia Associates, 439 N.W.2d 285, 176 Mich. App. 95 (Mich. Ct. App. 1989).

Opinion

Per Curiam.

Defendants appeal from orders of the Oakland Circuit Court appointing a receiver, granting partial summary disposition to plaintiffs pursuant to GCR 1963, 117, now MCR 2.116, and dissolving defendant Livonia Associates, a Michigan limited partnership. Defendants raise several claims of error. Finding no issue which merits reversal, we affirm.

Plaintiffs held limited partnership interests in defendant Livonia Associates (partnership). Defendants Robert Horvath and Cornel Peleo were the general partners. On July 19, 1970, C & R Investment Company, Inc. (c & R) entered into a purchase agreement with a group of sellers known as the Morganroth Group for a 115-acre parcel of land in Livonia (Lot No. 1). The sole stockholders of c & r were defendants Horvath and Peleo. The agreement provided for a purchase price of $1,000,000 with a $15,000 deposit to be credited to the purchase price when the sale was completed.

On February 19, 1971, the partnership was formed. Its purpose was to acquire, hold, develop, improve and manage for investment Lot No. 1. Horvath and Peleo, as general partners, were *100 given the specific power to acquire Lot No. 1 by entering into a land contract. The partnership authorized a purchase price of $1,265,000 with an initial down payment of $295,000.

On February 22, 1971, three transactions occurred. First, c & R entered into a land contract with the Morganroth Group to purchase Lot No. 1. The purchase price was $1,000,000 with an initial payment of $200,000. The balance was payable in yearly installments with interest at eight percent per annum. On that same day, c & R assigned its purchaser’s interest in the land contract to defendants Cornel Peleo and his wife, Viora Peleo. Also on February 22, 1971, Peleo and his wife entered into a land contract with the partnership to sell Lot No. 1 for $1,265,000 with an initial payment of $295,000, the balance payable in yearly installments with interest at eight percent per annum. Defendant Belcrest Realty Company, a sole proprietorship owned by defendant Horvath, received a sales commission of approximately $80,000 in connection with the sale to the partnership.

On December 3, 1971, Peleo and his wife purchased a second parcel of land (Lot No. 2) by land contract for $9,000 with an initial payment of $3,000. On April 15, 1972, the Peleos sold Lot No. 2 to the partnership by land contract for $18,000 with an initial payment of $6,000.

Plaintiffs filed a complaint on April 27, 1977, alleging that Horvath and Peleo had neglected to properly perform their duties as general partners by: failing to maintain the residence on the partnership property, resulting in a loss of rental income; failing to pay real estate taxes on Lot No. 1 in 1974, 1975 and 1976, resulting in the danger of the lot’s being sold at a state tax sale on May 7, 1977; failing to make the land contract payment; refusing to provide plaintiffs access to partnership *101 records; failing to take action against Jerry Spero, a limited partner who had not paid his capital contribution for two years; defaulting on their own obligation to make capital contributions; refusing to provide information regarding the rezoning of the land; and depositing capital contributions into an account other than the partnership’s. In count n, plaintiffs alleged that Horvath and Peleo had made an undisclosed profit for the sale of Lot No.

I. Plaintiffs asked for an accounting and payment of the secret profit. Plaintiffs also requested that the court appoint a receiver to take possession and control of the partnership’s assets.

On June 8, 1977, the trial court denied plaintiffs’ motion for appointment of a receiver. The parties were ordered to deposit their 1977 capital contributions with a specified escrow agent who would apply the sums to the past due payment on the Lot No. 1 land contract. Horvath and Peleo were also ordered to produce the books and records of the partnership. On August 3, 1977, the court entered an order determining that defendants Horvath and Peleo and an added defendant, Michael J. Hand, a limited partner, had not complied with the June 8, 1977, order.

On October 28, 1977, the trial court granted plaintiffs’ motion to appoint a receiver. The receiver was authorized to stand in the place of the general partners, collect contributions and disburse funds, make a thorough investigation, and hire an accountant and legal representative to assist him.

On February 3, 1978, the trial court entered an order allowing plaintiffs to amend their complaint. Plaintiffs added Belcrest Realty as a defendant and information regarding the acquisition of Lot No. 2. Count hi alleged that Viora Peleo had not contributed any money to the acquisition of Lot *102 No. 1. Plaintiffs requested a reformation of the land contracts. They also asked the court to impose a lien against any commissions that Belcrest Realty might receive in connection with the sale of partnership property in order to secure the claims against Horvath.

On April 26, 1978, the trial court, pursuant to the receiver’s motion, ordered Peleo and his wife to assign their purchasers’ interest in the land contract between c & k and the Morganroth group to the partnership, assign their sellers’ interest in the land contract between the Peleos and the partnership to the partnership, and execute a quitclaim deed to the partnership. The court also directed the receiver to withhold the commission payment of $22,500 to Horvath, doing business as Belcrest Realty, and apply it to Horvath’s $18,600 capital contributions debt.

On July 5, 1978, the complaint was amended to allow plaintiffs to seek dissolution of the partnership. On July 10, 1978, defendants brought a motion to dismiss the receiver because the order appointing the receiver failed to require a bond. Defendants argued that, because the receiver was not duly appointed, the October 28, 1977, order appointing the receiver and the subsequent actions of the receiver were null and void. The court denied the motion and entered an order nunc pro tunc requiring that the receiver post a bond.

The court granted partial summary judgment to plaintiffs on August 23, 1978, holding that Horvath and Peleo had a duty to disclose to the partnership the profit made on both lots and that they breached that duty. Horvath and Peleo were ordered to hold, as trustees for the partnership, all benefits and profits derived from the sale of Lot No. 1 to the partnership.

On May 30, 1979, the court denied defendants’ *103 motion to disqualify the trial judge. On April 4, 1980, following a bench trial, the court ordered dissolution of the partnership based on MCL 449.32(l)(b), (c) and (d); MSA 20.32(l)(b), (c) and (d). The receiver was given the authority to commence accounting and wrapping-up proceedings commensurate with the findings of the court.

On June 4, 1980, defendants moved to dismiss counts ii and m of the complaint. The trial court denied the motion as to count n because the relief had already been granted. The trial court dismissed count in.

The land was eventually sold for an aggregate amount of $1,830,000.

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Cite This Page — Counsel Stack

Bluebook (online)
439 N.W.2d 285, 176 Mich. App. 95, Counsel Stack Legal Research, https://law.counselstack.com/opinion/band-v-livonia-associates-michctapp-1989.