Law, Manufacturing, and Real Estate

Appeals court 'affirms' Steelcase Pyramid sale

October 24, 2017
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Pyramid
The former Steelcase Pyramid in Gaines Township was designed as a 663,000-square-foot center for innovation. Courtesy 8THIRTYFOUR

The Michigan Court of Appeals has found that Steelcase did not breach a contract when it entered into a negotiation with the eventual buyer of the former Steelcase Pyramid while it was in talks with another potential buyer.

Grand Rapids-based Steelcase, Norman Pyramid LLC and Paracom LLC won the appeal by Education Campus Investors LLC, or ECI.

The Michigan Court of Appeals posted last week its ruling related to the property in Gaines Township, at 6100 E. Paris Ave. SE.

Norman Pyramid LLC bought the property from Steelcase in May 2015, according to a report by the Business Journal.

ECI claimed in its suit in Kent County Circuit Court that Steelcase broke a deal that included ECI’s acquisition of the Pyramid property.

The suit alleged numerous defects in the building were discovered, including easements affecting the property, during the inspection process, which would delay the purchase of the property.

Steelcase allegedly offered to sell the property for $3 million if ECI “would forego further inspections and close within 60 days.”

ECI said it agreed on the offer through a series of emails.

ECI alleged that during that period Steelcase “secretly and covertly” negotiated to sell the property to Norman Pyramid LLC.

ECI filed a lawsuit, and the trial court ruled in favor of Steelcase. It then allowed ECI to file a second amended complaint.

This time around, the trial court gave a detailed outline of why it believed the plaintiff attempted to “cobble together a new contract quoting its e-mail offer to defendant Steelcase on April 22, 2015.”

Steelcase’s e-mail reply to ECI’s offer is below, according to the appeals court ruling:

“Thanks Jerry — this is great news. I will get Nic working on this. As we discussed, we will continue to operate in parallel paths ... where we work the deal with you to close in 60 days and continue down the path of planning to demo the building.

Also, in talking with our IT they are planning a 5-6 month timeframe to exit. I know internally we will be putting pressure on this timeline, so I would expect more of a 4-5 month timeframe.

Given that how would you feel about the following structure of the agreement:

--closing on June 30th,

--building handover, September 30th (allowing some work, construction, repairs, etc. to occur, however, with prior approval of Steelcase)

--Steelcase cover operating expenses until building hand over (utility bills...electric, gas, water, etc.) as well as any costs related specifically to our data center.

--ECI to cover all other costs

Thanks again — I will give you a call over the weekend or Monday.”

The trial court agreed that while the email sounded optimistic, there was never an acceptance by Steelcase. The phrase “working on this” in the email indicated that Steelcase was getting closer to a deal, but Steelcase had to begin working on the specifics of the agreement.

The trial court also pointed out that the phrase “the deal with you to close in 60 days …” in the email left a possibility of an agreement not being reached.

In the verdict, the trial court stated, “Steelcase’s acceptance of the offer would have to have been in writing and that written acceptance would have to have been delivered to the plaintiff.”

The Michigan Court of Appeals affirmed the trial court's ruling.

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