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Old Kent Bank v. Kal Kustom2/28/2003
FOR PUBLICATION
Plaintiff Old Kent Bank (Old Kent) filed suit in this action as an assignee of J & M Marine Inc.'s rights against defendant Kal Kustom Enterprises (Kal Kustom). The trial court granted summary disposition to Kal Kustom. We reverse and remand.
I. Factual Background
The factual and procedural history of this case is somewhat complex. In February 1997, Daniel Popp purchased a powerboat through J & M Marine. Old Kent financed the sale, with J & M Marine acting as guarantor. J & M Marine contracted directly with Kal Kustom to provide the boat, which was manufactured by Magic Powerboat Sales, Inc. The transfer of the boat occurred sometime in the summer of 1997, and the boat did not conform to Popp's specifications. These defects resulted in correspondence from J & M Marine's attorney to Kal Kustom, dated August 20, 1997, notifying it of the defects in the boat. On September 11, 1997, Kal Kustom's attorney sent a response letter requesting "whatever documentation you have regarding the alleged deficiencies in the boat so we will have specific information to work from." On September 17, 1997, Old Kent's attorney sent a letter promising pertinent information, but it is unclear whether any further correspondence was received.
Meanwhile, in November 1997, Old Kent filed suit (the 1997 suit) against Popp and J & M Marine for the balance due on the installment sales contract for the boat. Popp filed a counterclaim against Old Kent and a cross-claim against J & M Marine, alleging misrepresentation/fraud, breach of contract, violation of the Consumer Protection Act, and indemnification. In August 1998, Popp, J & M Marine, and Old Kent entered into a stipulated order permitting Old Kent to sell the boat and apply the proceeds to the balance of the sales contract. Popp and J & M Marine waived their rights to notice with regard to the sale, and J & M Marine assigned Old Kent all of the rights and claims it had against Magic Powerboat Sales, Inc. and Kal Kustom. In October 1998, J & M Marine and Popp entered into a settlement agreement and general release of all claims under which Popp was released from all further liability for the boat and J & M Marine agreed to pay Popp $4,800. Old Kent sold the boat for $40,500, leaving a deficiency of $26,436.05. Popp refused to pay the deficiency and was released from that lawsuit in March 2000. However, Old Kent's claim against J & M Marine remained.
In April 1999, Old Kent, as assignee of J & M Marine, filed the instant action against Magic Powerboat Sales, Inc and Kal Kustom. In its complaint and amended complaint, Old Kent alleged Kal Kustom breached its contract and warranty of sale with J & M Marine with regard to the boat. Both parties thereafter filed cross motions for summary disposition. Kal Kustom asserted that Old Kent is without the right to assert claims against it because Old Kent failed to provide proper notice of the previous 1997 litigation between Old Kent, Popp, and J & M Marine. According to Kal Kustom, J & M Marine was required to have placed Kal Kustom on notice of the previous lawsuit, and because it did not, Old Kent was now precluded from bringing the instant action. Further, Kal Kustom contended that J & M Marine's liability to Old Kent was based on the retail installment sales contract between Popp and J & M Marine, and because Kal Kustom was not a party to that contract, J & M Marine has no liability in excess of the $4,800 settlement amount.
Old Kent insisted that Kal Kustom had multiple opportunities to step forward and defend the previous case but chose not to. Further, Old Kent claimed th
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