Hastings Dog Park Companions v. City of Hastings

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

HASTINGS DOG PARK COMPANIONS, UNPUBLISHED

September 3, 2020

Plaintiff-Appellant,

v No. 348915

Barry Circuit Court

CITY OF HASTINGS, LC No. 2018-000670-CZ

Defendant-Appellee.

Before: BORRELLO, P.J., and SAWYER and SERVITTO, JJ.

PER CURIAM.

Plaintiff appeals as of right the trial court’s order granting summary disposition in favor of

defendant. Because summary disposition was premature, we reverse and remand for further

proceedings consistent with this opinion.

In May 2011, plaintiff and defendant entered into a Dog Park Agreement whereupon

plaintiff, acting as a subcommittee of the Barry County Humane Society, would erect a dog park

on property owned by defendant in Hastings, Michigan. The Dog Park Agreement provided an

expiration date of May 11, 2016. In July 2016, plaintiff, acting on its own behalf, and defendant

entered into a new Dog Park Agreement (“the Agreement”). The Agreement mirrored the May

2011 Dog Park Agreement in all pertinent respects. Relevant to the instant matter, the Agreement

provided at paragraph one that the Agreement would be operable for an initial term of five years,

with automatic renewal on a yearly basis, “unless either party gives notice to the other at least

ninety (90) days prior to the expiration of the Initial Term or Renewable term . . . .” Also of

relevance, the Agreement stated at paragraph four that “[u]pon expiration or termination of this

Agreement, the Hastings Dog Park Companions at its cost shall promptly repair and restore the

area to the reasonable satisfaction of [defendant].”

It is undisputed that on October 17, 2017, defendant sent plaintiff a “Notice of Termination

of Dog Park Agreement,” advising plaintiff that the Agreement would be terminated effective

January 16, 2018. Thereafter, defendant allegedly refused to allow plaintiff to remove the fence

surrounding the dog park, a gazebo located in the dog park, and other items plaintiff claims it had

installed or kept on the dog park premises owned by defendant. Thus, on August 13, 2018, plaintiff

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initiated a lawsuit against defendant seeking a declaratory judgment that plaintiff had the right to

remove specified items from defendant’s property. Plaintiff’s lawsuit also contained claims of

unjust enrichment and conversion.

In lieu of answering plaintiff’s complaint, defendant moved for summary disposition in its

favor pursuant to MCR 2.116(C)(5) and (10). Defendant asserted that plaintiff did not have the

capacity to sue because it had disbanded or dissolved. Defendant further asserted that if plaintiff

does exist, the written agreement between plaintiff and defendant precludes a claim of unjust

enrichment, and that defendant did not commit conversion because the Agreement provided for

repair and restoration to defendant’s satisfaction and because any donations made from individuals

were to the dog park rather than plaintiff. The trial court determined that plaintiff lacked the

capacity to sue and granted summary disposition in defendant’s favor on all of plaintiff’s claims

pursuant to MCR 2.116(C)(5). After the trial court denied plaintiff’s motion for reconsideration,

plaintiff filed the instant appeal.

This Court reviews de novo a trial court’s ruling on a motion for summary disposition.

Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Summary disposition is

appropriate under MCR 2.116(C)(5) where “[t]he party asserting the claim lacks the legal capacity

to sue.” When reviewing a ruling on a motion under MCR 2.116(C)(5), we consider the pleadings,

depositions, admissions, affidavits, and other documentary evidence submitted by the parties.

Wortelboer v Benzie Co, 212 Mich App 208, 213; 537 NW2d 603 (1995). The legal capacity to

sue and be sued is a legal doctrine, and is thus decided as a question of law and reviewed de novo.

Flint Cold Storage v Dep’t of Treasury, 285 Mich App 483, 492; 776 NW2d 387 (2009) (“We also

review de novo . . . all other questions of law.”).

On appeal, plaintiff contends that the documentary evidence established that plaintiff did

not dissolve or disband such that it, as an unincorporated voluntary association, had the legal

capacity to sue defendant. Before delving into the merits of plaintiff’s argument on appeal, we

note that both plaintiff and defendant use “standing” and “legal capacity to sue” interchangeably.

Our Supreme Court has previously held that “the real-party-in-interest [defense] is not the same as

the legal-capacity-to-sue defense.” Leite v Dow Chem Co, 439 Mich 920; 478 NW2d 892 (1992).

This Court has likewise stated that “standing to sue and capacity to sue are two distinct concepts”

that should not be improperly conflated. Flint Cold Storage, 285 Mich App at 502, citing Mich

Chiropractic Council v Comm’r of Fin & Ins Servs Office, 475 Mich 363, 374 n 25; 716 NW2d

561 (2006) (opinion by YOUNG, J.), overruled on other grounds by Lansing Sch Ed Ass’n v

Lansing Bd of Ed, 487 Mich 349, 352, 371 & n 18; 792 NW2d 686 (2010); see also, Le Gassick

as Tr of James A Bellamy Tr v Univ of Michigan Regents, __ Mich App __, __; __ NW2d __

(2019); slip op at 3 n2, citing Flint Cold Storage, 285 Mich App at 502. We thus take this

opportunity to clarify the difference between these two distinct concepts.

“The purpose of the standing doctrine is to assess whether a litigant’s interest in the issue

is sufficient to ensure sincere and vigorous advocacy.” Lansing Sch Ed Ass’n, 487 Mich at 355

(internal quotation marks and citation omitted). “Thus, the standing inquiry focuses on whether a

litigant is a proper party to request adjudication of a particular issue and not whether the issue itself

is justiciable.” Id. (quotation marks and citation omitted). In other words, a defense asserting a

lack of standing refers to whether a party has the requisite interest in the lawsuit to be allowed to

maintain it. A motion based on a lack of standing defense “would be within MCR 2.116(C)(8) or

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MCR 2.116(C)(10), depending on the pleadings or other circumstances of the particular case.”

Leite, 439 Mich at 920.

The “lack of legal capacity to sue,” on the other hand, refers to a party’s inherent inability

to initiate any lawsuit. This Court has stated, for example, that a lack of capacity to sue “refers to

some legal disability, such as infancy or mental incompetency . . . .” Moorhouse v Ambassador

Ins Co, Inc, 147 Mich App 412, 419; 383 NW2d 219 (1985).1 This Court has also found that the

termination of a corporation’s existence implicates the entity’s legal capacity to sue. Flint Cold

Storage, 285 Mich App at 499. Common sense would dictate that a person or entity’s very lack

of existence would qualify as a legal disability that would deprive it of the ability to sue. A motion

based on a lack of legal-capacity-to-sue defense is specifically governed by MCR 2.116(C)(5).

That “standing” and “capacity to sue” are legal terms of art that bear discrete meanings can

most easily be seen by reviewing their definitions. “Standing” is defined in Black’s Law

Dictionary (11th ed) as a “party’s right to make a legal claim or seek judicial enforcement of a duty

or right.” (emphasis added). Black’s Law Dictionary (11th ed) defines “capacity,” specifically as

it applies to the “capacity to sue” as:

The power to create or enter into a legal relation under the same circumstances in

which a normal person would have the power to create or enter into such a relation;

spec., the satisfaction of a legal qualification, such as legal age or soundness of

mind, that determines one’s ability to sue or be sued, to enter into a binding contract,

and the like. (emphasis added).

Thus, whereas standing concerns itself with a party’s right to initiate a lawsuit, the capacity to sue

addresses a party’s ability to initiate a lawsuit. Moreover, MCR 2.201(B) states “Real Party in

Interest. An action must be prosecuted in the name of the real party in interest . . . .” MCR

2.201(C) governs “Capacity to Sue or Be Sued” and thereafter specifies, among others, that a

natural person, a partnership, a corporation, and an unincorporated voluntary association may sue

or be sued in their own names. Were a real party in interest (i.e., one who has standing) and one

who has the capacity to be sued the same thing, there would have been no need for them to be set

forth in separate portions of MCR 2.201. And, while MCR 2.116(D)(2) requires that challenges

based upon MCR 2.116(C)(5) (party lacks legal capacity to sue) be raised in a party’s first

responsive pleading to avoid being waived, standing is a justicability doctrine that is jurisdictional

in nature, may be raised at any time, and may not be waived by the parties. Mich Chiropractic

Council, 475 Mich at 370-372, overruled on other grounds by Lansing Sch Ed Ass’n, 487 Mich

349.

In this matter, defendant recognized in its first responsive pleading that an unincorporated

voluntary association may file suit in its association name, but only if it has a distinguishing name

1

Although opinions of this Court issued prior to November 1, 1990 are not binding authority,

MCR 7.215(J)(1), we may nonetheless find them persuasive. Long v Liquor Control Comm, 322

Mich App 60, 74 n 5; 910 NW2d 674 (2017).

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pursuant to MCL 600.2051(2) and MCR 2.201(C)(3). According to defendant, plaintiff disbanded

or dissolved. An LLC with the name of “Hastings Dog Park LLC” and an assumed name of

“Hastings Dog Park Companions” was thereafter formed and filed appropriate paperwork with the

state of Michigan. Defendant asserted that plaintiff therefore did not have a distinguishing name

and did not have the legal capacity to sue. Because defendant’s defense was clearly premised upon

whether plaintiff currently existed as an unincorporated voluntary association with a distinguishing

name, the issue for the trial court’s resolution was whether plaintiff had the inherent ability to sue.

The relevant inquiry here, then, becomes whether the trial court correctly determined that plaintiff

did not have the legal capacity (i.e., the inherent ability) to sue.

MCL 600.2051(2) states that “[a] partnership, partnership association, or any

unincorporated voluntary association having a distinguishing name may sue or be sued in its

partnership or association name, or in the names of any of its members designated as such or both.”

MCR 2.201(C)(3) likewise provides that “[a] partnership, partnership association, or

unincorporated voluntary association having a distinguishing name may sue or be sued in its

partnership or association name, in the names of any of its members designated as such, or both.”

It is uncontested that plaintiff was an unincorporated voluntary association when the

Agreement was signed in 2016. The Agreement was signed by Vicki Butler, acting as chair for

plaintiff. In support of its position that plaintiff dissolved (and was thus no longer an entity that

could sue or be sued), defendant provided the minutes of a September 28, 2017, closed meeting

held by the Hasting Dog Park Committee. At the meeting, a vote was held, wherein a majority of

the 8 people present voted to disband the dog park board, close the dog park, and notify defendant

of its intent. Votes were passed at the same meeting to “file with the State Attorney General’s

office of the State of Michigan to close out the 501(C)(3) tax exempt status,” to refund monies for

memorial bricks that had been purchased, to donate all funds to the Barry County Humane Society,

to return all donated items to the donors if they wished, to auction off all equipment and donated

items not picked up by donors, and for final dissolution of the Hastings Dog Park and Hastings

Dog Park Companions.

However, plaintiff provided evidence that a closed meeting was also held on October 2,

2017, by five of the eight people who were present at the September 28, 2017, closed meeting.

The minutes of the October 2, 2017, meeting reflect that a vote was passed to not dissolve the

Hasting Dog Park and the Dog Park Committee. Votes were also passed at that meeting to accept

the resignation of two people from the Dog Park Committee that had been present and voted at the

September 28, 2017, closed meeting but were not present at the October 2, 2017 meeting. Plaintiff

further provided the affidavit of Christopher Geisert, who was present and voted at both meetings.

Geisert swore that he is the chairman of plaintiff and that plaintiff is an active entity that

had not dissolved. Geisert swore that plaintiff pays the insurance for the dog park on the premises

and continues to do so. He further swore that after the September 28, 2017, closed meeting, board

members met and realized that the meeting was a “rush to judgment, wherein members reacted on

their emotions as a result of the treatment by the City,” and thereafter voted to continue the business

of plaintiff.

As can be seen, there is no question that votes were held on September 28, 2017, and

October 2, 2017, that reached different conclusions. While defendant avers that the September 28,

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2017, votes could not be “undone,” and the trial court agreed, several factors lead this Court to

conclude that the trial court erred in its determination.

First and foremost, MCL 600.2140 provides:

In any suit or proceeding, civil or criminal hereafter instituted in any of the courts

of this state, wherein it shall become material or necessary to prove the

incorporation of any company or corporation, or the existence of any joint stock

company or association, whether the same be a foreign or domestic corporation,

company, or association, evidence that such corporation, company, or association

is doing business under a certain name shall be prima facie proof of its due

incorporation or existence pursuant to law, and of its name.

Thus, there is a presumption that plaintiff exists and of its name.

Second, 2 Mich Civ Jur Associations and Societies § 35 refers to Sommers v Reynolds, 103

Mich 307, 309; 61 NW 501 (1894), for the proposition that an association made up of fewer than

the original members still has the rights and obligations of the initial group. 2 Mich Civ Jur

Associations and Societies § 35 specifically states, “[u]pon the dissolution of an association with

the formation of a new one by 10 of the members of the old organization, the new society may

have a right to continue the use of a hall under a lease executed to the dissolved society.”

Third, the September 28, 2017, meeting took place on a Thursday evening and a majority

of plaintiff’s committee members met the following Monday to apparently reconsider their

September 28, 2017, votes. There has been no authority provided by either party indicating that

such an action is disallowed. It appears that minutes were generally taken at each meeting and that

each meeting’s minutes were thereafter, at later meeting, put to a vote for approval. It may be that

the resolutions reached by vote at a meeting are thus not effective until the minutes for that meeting

are approved at a later meeting. Perhaps also pertinent to this matter, the September 28, 2017,

minutes bear a notification for “Next meeting: October 11, 2017.” If, as defendant asserts, plaintiff

no longer existed after September 28, 2017, there would be no need for a “next meeting.”

Fourth, in an October 5, 2017, email defendant’s city manager, Jeff Hastings, inquired of

one of the persons who was present and voted at both meetings whether plaintiff intended to file a

90-day notice of termination of the Agreement. That person responded the same day, “Yes, the

intent of the Dog Park Companions is to terminate our agreement. As for the 90 day notice most

of the board are stepping down as of Wed [sic],” and requested that all further correspondence be

directed to another person who was present and voted at both meetings. This email exchange could

be viewed to indicate that defendant still recognized plaintiff as the same, existing association,

which it expected to file a 90-day notice pursuant to the parties’ Agreement. The email also

suggests that plaintiff had not, in fact, been dissolved on September 28, 2017, but instead, that

most of its board would be stepping down as of October 11, 2017.

“Generally, a motion for summary disposition is premature if granted before discovery on

a disputed issue is complete.” Oliver v Smith, 269 Mich App 560, 567; 715 NW2d 314 (2006)

(quotation marks and citation omitted). That long-recognized pronouncement is particularly apt

here, where, as acknowledged by defendant, there is a dearth of Michigan authority concerning

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how an unincorporated association properly dissolves and whether the action of dissolution can be

“undone.” Those issues remain disputed between the party.

That summary disposition was premature is evident not only when reviewing defendant’s

assertion that plaintiff had dissolved and longer existed, but also with respect to defendant’s claim

that plaintiff lacked the legal capacity to sue because it did not have a distinguishing name. In his

affidavit, Geisert swore that Vicki Butler had resigned as chair of plaintiff as of September 1, 2016;

plaintiff provided August 17, 2016, minutes of a meeting showing the same. As also stated by

Geisert in his affidavit, Vicki Butler signed the Articles of Organization for Hastings Dog Park,

LLC, with a stated assumed name of “Hastings Dog Park Companions” on October 10, 2017, mere

days after the October 2, 2017, meeting. Vicki Butler is also the resident agent for the LLC. While

this Court expresses no opinion as to whether Hastings Dog Park Companions is a name

distinguishable from Hastings Dog Park, LLC, we do opine that if it is proven that plaintiff did not

dissolve and continues to exist, it would be questionable whether an LLC using the same, but

assumed, name of “Hastings Dog Park Companions” would be permissible. See, e.g., MCL

430.101. However, because no discovery has yet taken place in this matter and because both

parties have provided limited support for their respective positions, we find that further discovery

could stand a reasonable chance of uncovering factual support for plaintiff’s position. Id. Thus,

summary disposition was inappropriate at this juncture.

We reverse and remand for further proceedings consistent with this opinion. We do not

retain jurisdiction.

/s/ Stephen L. Borrello

/s/ Deborah A. Servitto

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