Cass Industrial Park consists of approximately 50 acres in the I-2 manufacturing zoning district in a village in Michigan. The industrial park, which was created by the village in 1990, was subject to a set of restrictive covenants that ran with the land. The restrictions provided for a 10-year automatic renewal period as well as authorization for a majority of real estate owners to revoke or modify the restrictions.
In June 2020, Cass sold 15.65 acres in the industrial complex to HTB based on HTB’s assurance that it would build a 30,000-square-foot building, with an anticipated investment of three million dollars and the creation of 25 jobs. The village council authorized the sale of an additional 23.41 acres in the park to HTB in August 2020. HTB obtained all of the necessary licenses and permits to build its marijuana cultivation and processing facility.
S Co. moved into the industrial park in March 2008. In October 2020, the president of S Co. told the owner of HTB that he was opposed to marijuana and threatened to file a lawsuit against HTB because he believed that HTB would be engaging in agricultural activity in violation of the restrictive covenants. S Co.’s president claimed that HTB’s operations would inhibit S Co.’s business and decrease its property value.
Revocation and Release of Restrictive Covenants
HTB maintained that its business did not violate the restrictive covenants. But, considering the threats of legal action, on October 23, 2020, HTB and the village executed and recorded a Revocation and Release of Restrictive Covenants.
Temporary Restraining Order (TRO)
S Co. filed a complaint against HTB alleging that HTB’s agricultural use breached the restrictive covenants. S Co. also filed an ex parte motion for a temporary restraingin order (TRO) to halt HTB’s construction and a motion for preliminary injunction.
HTB moved to dissolve the TRO. Following a two-day evidentiary hearing, the trial court determined that S Co. was not likely to succeed on the merits of its claims because, as an owner of more than 75% of the land in the industrial park, HTB was authorized to revoke the restrictive covenants.
The court concluded that the revocation became effective on January 1, 2021. The revocation in this case was executed by the requisite 75% super-majority and it did not subject the property in the industrial park to additional encumbrances. The court found that HTB’s harm was actual, while S Co.’s harm was merely speculative. Based on its findings, the trial court dissolved the TRO and denied the motion for a preliminary injunction. HTB moved to dismiss S Co.’s complaint pursuant to MCR 2.116(C)(7)3 and MCR 2.116(C)(8). In light of the lengthy evidentiary hearing where the parties presented substantial evidence and testimony, the trial court considered the motion under MCR 2.116(C)(10). The trial court granted the motion and dismissed S Co.’s complaint in its entirety. Because the restrictive covenants were successfully revoked effective January 1, 2021, HTB’s proposed facility does not violate the covenants.
Real Estate Litigation
Are you involved in a real estate dispute in Michigan? If you are facing a residential or commercial real estate, seek the advice of an experienced and skilled real estate litigation attorney at Aldrich Legal Services in Plymouth.