Van Buren Charter Township v. Visteon Corporation

923 N.W.2d 266
CourtMichigan Supreme Court
DecidedMarch 8, 2019
DocketSC: 156018; COA: 331789
StatusPublished
Cited by1 cases

This text of 923 N.W.2d 266 (Van Buren Charter Township v. Visteon Corporation) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Van Buren Charter Township v. Visteon Corporation, 923 N.W.2d 266 (Mich. 2019).

Opinion

On October 9, 2018, the Court heard oral argument on the application for leave to appeal the May 16, 2017 judgment of the Court of Appeals. On order of the Court, the application is again considered, and it is DENIED, there being no majority in favor of granting leave to appeal or taking other action.

Viviano, J. (dissenting).

I respectfully dissent from the Court's order denying leave to appeal. I believe that the circuit court and the Court of Appeals erred in holding that plaintiff's declaratory judgment claim was not ripe. The Court of Appeals then proceeded to determine whether the parties had any present rights or obligations under their settlement agreement, even though such a determination was not necessary to the Court's ripeness analysis. Regardless, I believe the Court of Appeals further erred by concluding that the parties had no present rights or obligations under the settlement agreement. Accordingly, I would vacate Part (III)(A) of the Court of Appeals' opinion and remand to the trial court for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

In 2002, defendant Visteon Corporation entered into discussions with plaintiff Van Buren Charter Township about the possibility of locating its national headquarters in the Township. Specifically, defendant discussed building its headquarters in plaintiff's Local Development Finance Authority District (LDFA District). In 2003, plaintiff issued over $28 million in bonds to assist in the construction of defendant's headquarters, known as "Visteon Village." Plaintiff projected that property-tax revenue from the LDFA District would cover the costs of bond issuance.

By 2006, tax revenues from the LDFA District were lower than projected, so plaintiff issued new bonds in order to advance refund a portion of the original bonds. This allowed plaintiff more time to pay the principal on the original bonds. As a result, plaintiff was able to temporarily avoid a shortfall, i.e. not having sufficient funds to make the bond payments.

Then, in 2009, defendant filed for bankruptcy. Plaintiff filed an unsecured claim to recover unpaid amounts from earlier tax abatement agreements. In 2010, the parties entered into a settlement agreement, which provided that plaintiff would significantly lower Visteon Village's assessed taxable value. In exchange, defendant agreed to pay $2.2 million toward plaintiff's claimed amount and to not object to the remainder of plaintiff's unsecured claim. 1 The settlement agreement also contained the following provision, the meaning of which is now in dispute:

Section 3. Bond Payments

Visteon acknowledges that the Township assisted Visteon in the construction of the Village through the issuance by the Township of certain bonds supported by the full faith and credit of the Township, the proceeds of which were used to help construct the Village. To the extent that the property tax payments made by Visteon to the Township, including payments made by Visteon to the Township pursuant to Section 2.2, are inadequate to permit the Township to meet its payment obligations with respect to that portion of the bonds that were used to help fund the Village, Visteon hereby agrees to negotiate with the Township in good faith to determine the amount of the shortfall with respect to those bonds and make a non-tax payment, payment in-lieu-of tax, (PILOT) to the Township to assist the Township in making timely payments on the bonds.

Visteon emerged from bankruptcy later that year.

In 2013, plaintiff retained Public Financial Management (PFM) to conduct a cash-flow analysis to determine plaintiff's ability to pay on the bonds. In its report, PFM predicted that a shortfall ranging from $23.7 million to $36.4 million would occur sometime between 2017 and 2018. 2 Based on the report, plaintiff demanded that defendant enter into negotiations to determine defendant's payment obligations under the agreement with respect to the projected shortfall. Defendant met with plaintiff but argued that it had no obligation to negotiate until plaintiff experienced an actual shortfall and, even in the event of a shortfall, defendant argued that it may not owe plaintiff any amount under the contract.

Plaintiff filed suit, seeking both a declaratory judgment and damages for breach of contract. As to the declaratory judgment claim, plaintiff asked that the court "adjudicate the Parties' rights and obligations under the Settlement Agreement" and "enter a declaration that Visteon is responsible for payment of any shortfall ...." As to the breach of contract claim, plaintiff asserted that defendant breached the agreement by "(i) refusing to negotiate the amount of the Bond debt service shortfall in good faith and (ii) failing to provide - or commit to provide - the Township with funds to pay for any shortfall with the Bond debt service payments." Plaintiff also claimed anticipatory repudiation, pointing to certain statements made by defendant indicating that defendant did not believe it owed plaintiff anything under the agreement.

Defendant filed a motion for summary disposition under MCR 2.116(C)(4) and (C)(8), arguing that plaintiff's claims were not ripe. Defendant argued that plaintiff's claims rested upon a hypothetical future shortfall; thus, no actual controversy presently existed. The trial court agreed, granting summary disposition in defendant's favor. On the record, the trial court explained its reasoning as follows:

The Court agrees with the defendant that this case epitomizes why the ripeness doctrine exists, mainly to prevent courts from becoming prematurely embroiled in complex disputes involving hypothetical and contingent facts when, especially when the projected [shortfall] is estimated three years from now.

The Court of Appeals affirmed in a published opinion. In finding plaintiff's declaratory judgment claim unripe, the court explained:

According to the plain language of the contract, defendant is obligated to "negotiate with [plaintiff] in good faith to determine the amount of the shortfall," but only "[t]o the extent that the property tax payments made by [defendant]" are "inadequate to permit [plaintiff] to meet its payment obligations" and only "with respect to that portion of the bonds that were used to help fund the Village." Thereafter, defendant is obligated to "make a non-tax payment" in order to "assist" plaintiff in making "timely" payments on those bonds. In each case, the tense of the verb is present, not future. No reasonable person reading this provision could find it ambiguous or conclude that defendant is obligated to engage in negotiations before the shortfall. Indeed, the contract admits of but one interpretation, in which the occurrence of the shortfall is a condition precedent to defendant's obligation to perform, and defendant is not obligated to do anything until after plaintiff has experienced a shortfall. In fact, defendant is not obligated to perform until after two conditions have been met: (1) a shortfall has occurred, and (2) property taxes paid by defendant are inadequate for plaintiff to pay that portion of the bonds that was used to fund the Village. This second condition cannot be met until after the shortfall has occurred and the parties have determined the amount due.

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Cite This Page — Counsel Stack

Bluebook (online)
923 N.W.2d 266, Counsel Stack Legal Research, https://law.counselstack.com/opinion/van-buren-charter-township-v-visteon-corporation-mich-2019.