Basrah Custom Design Inc v. Huntington National Bank

CourtMichigan Court of Appeals
DecidedOctober 8, 2024
Docket363542
StatusUnpublished

This text of Basrah Custom Design Inc v. Huntington National Bank (Basrah Custom Design Inc v. Huntington National Bank) 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
Basrah Custom Design Inc v. Huntington National Bank, (Mich. Ct. App. 2024).

Opinion

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

BASRAH CUSTOM DESIGN, INC., and WEAAM UNPUBLISHED NOCHA, also known as WEAAM DAWOOD, October 08, 2024 12:04 PM Plaintiffs-Appellants,

v No. 363542 Wayne Circuit Court HUNTINGTON NATIONAL BANK, LC No. 19-016861-CB

Defendant-Appellee.

Before: MARKEY, P.J., and BORRELLO and GARRETT, JJ.

PER CURIAM.

This case represents a battle between delinquent debtors and their creditor. Weaam Dawood (also known as Weaam Nocha) (Dawood) and his cabinet-design business, Basrah Custom Design, Inc. (Basrah), borrowed $625,000 from the predecessor-in-interest to defendant, Huntington National Bank (Huntington), between 2000 and 2005. The indebtedness was secured with mortgages over commercial properties housing the business. After a 2013 default, the parties entered a settlement agreement. Dawood and Basrah (collectively plaintiffs) then tried to improve their financial outlook by entering the medical marijuana business. Plaintiffs leased the property to MJCC 8 Mile (MJCC), who renovated one building for a dispensary. Between 2015 and 2019, MJCC attempted to purchase the property as permitted in the lease, while plaintiffs sought to either sell the property to a higher bidder or begin their own medical marijuana business. MJCC filed suit against plaintiffs and the court ordered plaintiffs to sell the property to MJCC for the amount set in the lease’s option to purchase. Plaintiffs attempted to avoid the forced sale by Basrah filing for bankruptcy, but its petition was dismissed.

In the midst of these actions, plaintiffs filed the current suit against Huntington, seeking a declaratory judgment of its rights and obligations and raising claims of breach of contract and tortious interference with a business expectancy. Plaintiffs blamed Huntington for their failures, claiming the bank wanted plaintiffs to default so it could foreclose on the property and benefit from its newly increased value. The trial court summarily dismissed plaintiffs’ claims. Although the trial court erred in finding the tortious-interference claim was time-barred as a matter of law, the court otherwise properly determined that plaintiffs failed to create genuine issues of material

-1- fact to be placed before a jury. Specifically, plaintiffs defaulted on the settlement agreement when Basrah filed its bankruptcy petition. Although Huntington failed to notify plaintiffs before it declared a default, the failure to meet this condition precedent did not give rise to a separate breach- of-contract action. Further, plaintiffs contended Huntington tortiously interfered with their attempt to either sell the property to or partner with an unidentified third party by refusing to provide a loan payoff amount. However, plaintiffs presented absolutely no evidence to support its claim. With clear evidence of plaintiffs’ default, which triggered plaintiffs’ obligation to repay the entire amount of indebtedness under the original notes, plaintiffs were not entitled to a declaratory judgment. We affirm.

I. FACTS AND PROCEEDINGS

Dawood, as Basrah’s sole owner, executed four promissory notes on Basrah’s behalf with Fidelity Bank in 2000, 2004, and 2005, for a total principal indebtedness of $625,000. These notes were secured by mortgages on Dawood’s commercial property on Eight Mile Road in Detroit (the subject property),1 and by commercial guaranties pledging plaintiffs’ assets as collateral. In 2012, Fidelity’s interests in the notes, mortgages, and guaranties were assigned to Huntington. In 2013, plaintiffs fell behind on their payments and defaulted on the loan agreements. Huntington brought suit against them for breach of contract. In 2015, plaintiffs and Huntington entered into a settlement agreement setting a schedule of installment payments. The agreement entitled Huntington to pursue all legal remedies to collect the full amount of indebtedness, not just the settlement amount, if plaintiffs again defaulted. Default was defined to include either Basrah or Dawood filing a bankruptcy petition. The agreement required Huntington to notify plaintiffs of a default before pursuing legal action.

In 2016, plaintiffs leased the subject property to MJCC, to operate a medical marijuana dispensary. The lease included an option to purchase, which was renegotiated for $1.2 million. In the amended complaint, plaintiffs alleged that in 2016 and 2017, they requested the settlement agreement payoff amount from Huntington because they had a potential buyer for the subject property. Plaintiffs later claimed this sale was not connected to MJCC’s option to purchase, but rather to unnamed individuals who either wanted to purchase the property or to partner with Dawood and his son to open their own medical marijuana business “that would have netted the family hundreds of thousands (or millions) of dollars.” According to plaintiffs, Huntington sent an agent to the property, who saw its modifications for use as a medical marijuana dispensary and realized the property’s value had significantly increased.2 Plaintiffs accused Huntington of purposely causing them to default on the settlement agreement by refusing to provide a payoff

1 Plaintiffs own two or three neighboring parcels. The distinction between the properties is irrelevant in this appeal. 2 Plaintiffs never cited an exact date for this inspection. In response to Huntington’s summary disposition motion, plaintiffs indicated that they began contacting Huntington for a payoff amount in 2016. “Bank then sent a representative to inspect the Collateral,” and learned about the renovations.

-2- amount necessary to close the sale, so the bank could seize the subject property and benefit from its increased value.

Plaintiffs and MJCC disputed several matters relating to the lease and option to purchase. MJCC brought suit against plaintiffs in 2017 in Wayne Circuit Court, Docket No. 17-001633-CB. The case proceeded to a bench trial in spring 2018, which culminated in a judgment for MJCC. As later noted by the bankruptcy court, the trial court found in the MJCC suit “that the efforts by” the current plaintiffs and other Dawood family members “to avoid enforcement of the” option to purchase “were motivated by a desire to make more money” by selling this unique property for a higher price to another medical marijuana dispensary operator or to operate their own dispensary. MJCC was granted a choice of remedies: either enforcement of the option to purchase or monetary damages. MJCC chose to purchase the property. This Court affirmed the trial court’s decision. MJCC 8 Mile, LLC v Basrah Custom Design Inc, unpublished per curiam opinion of the Court of Appeals, issued April 28, 2022 (Docket Nos. 346969 and 357238), and the Supreme Court denied leave to appeal. MJCC 8 Mile, LLC v Basrah Custom Design Inc, 510 Mich 1069 (2022).

After the MJCC judgment was entered, and while that appeal was pending, Basrah filed for Chapter 11 bankruptcy. Huntington filed a notice of claim in the bankruptcy proceedings for the full amount of plaintiffs’ indebtedness in December 2018. Basrah’s bankruptcy petition was subsequently dismissed because the subject property housed a medical marijuana dispensary, a use prohibited under federal law. The MJCC suit was administratively stayed while the bankruptcy petition was pending. After the stay was lifted, the trial court appointed a receiver, who successfully moved to distribute the proceeds from the property sale to an escrow account. Huntington intervened in the MJCC action in January 2020, to assert its priority interest in the sale proceeds. The receiver agreed with Huntington’s position.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Magee v. DaimlerChrysler Corp.
693 N.W.2d 166 (Michigan Supreme Court, 2005)
West v. General Motors Corp.
665 N.W.2d 468 (Michigan Supreme Court, 2003)
Klapp v. United Insurance Group Agency, Inc
663 N.W.2d 447 (Michigan Supreme Court, 2003)
Maiden v. Rozwood
597 N.W.2d 817 (Michigan Supreme Court, 1999)
Blazer Foods, Inc v. Restaurant Properties, Inc
673 N.W.2d 805 (Michigan Court of Appeals, 2004)
Mikonczyk v. Detroit Newspapers, Inc
605 N.W.2d 360 (Michigan Court of Appeals, 2000)
Liparoto Construction, Inc v. General Shale Brick, Inc
772 N.W.2d 801 (Michigan Court of Appeals, 2009)
Hammond v. United of Oakland, Inc
483 N.W.2d 652 (Michigan Court of Appeals, 1992)
Miller-Davis Co. v. Ahrens Construction, Inc.
848 N.W.2d 95 (Michigan Supreme Court, 2014)
Bank of America Na v. Fidelity National Title Insurance Company
316 Mich. App. 480 (Michigan Court of Appeals, 2016)
David Gurski v. Motorists Mutual Insurance Company
910 N.W.2d 385 (Michigan Court of Appeals, 2017)
Kincaid v. Cardwell
834 N.W.2d 122 (Michigan Court of Appeals, 2013)
Gorman v. American Honda Motor Co.
839 N.W.2d 223 (Michigan Court of Appeals, 2013)

Cite This Page — Counsel Stack

Bluebook (online)
Basrah Custom Design Inc v. Huntington National Bank, Counsel Stack Legal Research, https://law.counselstack.com/opinion/basrah-custom-design-inc-v-huntington-national-bank-michctapp-2024.