CERTIFIED ABATEMENT SERV INC V DEPT OF MANAGEMENT AND BUDGET
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STATE OF MICHIGAN
COURT OF APPEALS
CERTIFIED ABATEMENT SERVICES, INC.,
UNPUBLISHED
January 27, 2004
Plaintiff-Appellant,
No. 245307
Court of Claims
LC No. 01-018014-CM
V
DEPARTMENT OF MANAGEMENT AND
BUDGET,
Defendant-Appellee.
Before: O’Connell, P.J., and Wilder and Murray, JJ.
PER CURIAM.
In this breach of contract action, plaintiff, Certified Abatement Services, Inc., (CASI)
appeals by right the Court of Claims’ order granting defendant’s motion for summary
disposition. We affirm.
I. Facts and Proceedings
In August 1999, defendant solicited bids from several contractors, including plaintiff, for
an asbestos removal project at the Clinton Valley Center, a state-owned mental health facility
consisting of several buildings in Pontiac, in anticipation of demolishing the buildings. Before
inviting the contractors to bid on the project, defendant hired Materials Testing Consultants, Inc.,
(MTC) to survey the project and supervise the contaminant abatement process. As part of the
services MTC provided during May through August 1999, it measured the amount of asbestos in
the complex to provide bidders a basis for calculating their bids. Because of the magnitude of
the project, however, defendant required bidders to provide a base price and a unit price for
completing the project. Defendant instructed bidders to include in their base price the charge for
removing up to fifteen percent more asbestos than the quantities MTC estimated the complex
contained.1 If the actual quantities exceeded MTC’s measurements by more than fifteen percent,
defendant indicated that it would pay the contractor an additional sum based on the unit price the
contractor provided.
1
Defendant indicated that the base price would also be paid if the contractor removed up to
fifteen percent less asbestos than MTC estimated.
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Plaintiff received the information MTC prepared, participated in a mandatory pre-bid tour
of the complex, and submitted a bid based on MTC’s estimates. Defendant accepted plaintiff’s
bid on September 10, 1999. The resulting contract provided:
The base proposal sum indicated shall be based on the quantities listed within the
documents and subsequent addenda. Quantities of piping or other materials
(slated for abatement) of up to ± 15% of the original quantity estimated within the
documents shall be completed by the Contractor at the cost indicated within the
original contract bid submittal, as approved by the Owner and Materials Testing
Consultants, Inc. If the total quantities of materials vary from quantities indicated
within the specifications for individual proposal items, the Contractor and MTC
representatives shall agree on the additional quantities and the Contractor shall
accept payment for quantities in excess of 15% of the indicated quantity based on
the unit rate provided within the bid submittal. If the Contractor is required to
address quantities less than 85% of the original indicated quantities, the
Contractor and MTC representatives shall agree on the appropriate quantities and
a credit based on the unit rate indicated within the original bid submittal will be
issued to the Owner. [Emphasis in original.]
***
Owner and [MTC] are not responsible for the accuracy of the quantities
and/or their locations given. The Contractor shall be fully responsible for all
measurements, and any items found, not identified in this document, shall become
the contractor’s responsibility as far as asbestos cleaning, removal,
decontamination, storage, transportation, and disposal, and any other items at the
Clinton Valley Center complex located in Pontiac, Michigan. The contractor is
responsible for the cleaning, removal, decontamination, storage, transportation
and disposal of all “true unknowns” within each “work area” and/or
“containment” . . . .
Plaintiff began work on the project in October 1999. As work progressed, plaintiff
discovered and removed substantially more asbestos than MTC estimated would be found.
Defendant paid plaintiff the contracted base price and the unit price for the quantities that
exceeded fifteen percent more than MTC estimated. In July 2001, plaintiff sued defendant in the
Court of Claims to receive compensation for removing the first fifteen percent of asbestos above
MTC’s estimate. Plaintiff alleged claims of “breach of contract (express),” “breach of contract
(covenant of good faith and fail dealing),” innocent misrepresentation, quantum meruit, and
unjust enrichment based on the underestimated measurements.
Defendant subsequently moved for summary disposition pursuant to MCR 2.116(C)(10),
and plaintiff opposed defendant’s motion. The Court of Claims, however, granted defendant’s
motion, stating that plaintiff entered the contract “with [its] eyes open,”; that the contract was not
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unconscionable; that the parties knew that certain “unknowns” existed; and that the facts did not
support plaintiff’s claims.2 This appeal ensued.
II. Standards of Review
This Court reviews de novo decisions on motions for summary disposition. Schmalfeldt v
North Pointe Ins Co, 469 Mich 422, 426; 670 NW2d 651 (2003), citing First Public Corp v
Parfet, 468 Mich 101, 104; 658 NW2d 477 (2003). We also review de novo questions
concerning the proper interpretation of a contract. Schmalfeldt, supra at 426, citing Archambo v
Lawyers Title Ins Corp, 466 Mich 402, 408; 646 NW2d 170 (2002).
III. Analysis
Plaintiff first argues that the Court of Claims erroneously granted defendant summary
disposition on plaintiff’s breach of contract claim based on the covenant of good faith and fair
dealing.3 We disagree. Plaintiff cites Burkhardt v City National Bank of Detroit, 57 Mich App
649,652; 226 NW2d 678 (1975), for the proposition that when a contracting party “makes the
manner of its performance a matter of its own discretion, the law does not hesitate to imply the
proviso that such discretion be exercised honestly and in good faith.” In this case, however,
defendant’s manner of performance was not discretionary. The contract clearly described
defendant’s payment obligations. The discretionary nature of estimating the amount of asbestos
did not relate to defendant’s performance of the contract. More importantly, “Michigan does not
recognize a claim for breach of an implied covenant of good faith and fair dealing.” Belle Isle
Grill Corp v Detroit, 256 Mich App 463, 476; 666 NW2d 271 (2003), citing Ulrich v Federal
Land Bank of St. Paul, 192 Mich App 194, 197; 480 NW2d 910 (1991).
Plaintiff also claims that the provision of the contract imposing responsibility for the
measurements on the contractor is unconscionable. According to plaintiff, because bids were
due less than ten days after the bid announcement, contractors had only a few days to take
measurements, an endeavor that took MTC months. We apply a two-pronged test to determine
whether a contract is unconscionable:
“(1) What is the relative bargaining power of the parties, their relative economic
strength, the alternate sources of supply, in a word, what are their options?; (2) Is
the challenged term substantively reasonable?” [Hubscher & Son, Inc v Storey,
228 Mich App 478, 481; 578 NW2d 701 (1998), quoting Northwest Acceptance
2
Although the Court of Claims’ order does not indicate the grounds on which it granted
defendant’s motion, defendant requested summary disposition based on MCR 2.116(C)(10) only.
3
Plaintiff’s statement of questions presented states that the Court of Claims erred by dismissing
its claim of breach of contract, but does not distinguish between plaintiff’s two breach of contract
claims. Plaintiff’s argument, however, addresses the implied covenant of good faith and fair
dealing to the exclusion of asserting that defendant failed to abide by the contract terms.
Accordingly, we presume that plaintiff’s argument is limited to its breach of contract claim based
on the implied covenant of good faith and fair dealing.
-3-
Corp v Almont Gravel, Inc, 162 Mich App 294, 302; 412 NW2d 719 (1987),
citing Allen v Michigan Bell Telephone Co, 18 Mich App 632, 637-638; 171
NW2d 689 (1969).]
Plaintiff argues that the Court of Claims focused only on the first inquiry without
examining whether the provision was substantively reasonable. Significantly, however, plaintiff
agrees with the Court of Claims’ answer to the first question: plaintiff had the option to refrain
from bidding on the contract. Because substantive unreasonableness alone does not provide a
basis for invalidating a contract term, Allen, supra at 638; Hubscher & Son, supra at 481, citing
Northwest Acceptance Corp, supra at 302, plaintiff has conceded that the contract provision is
enforceable.
Plaintiff next argues that the trial court erred by granting defendant summary disposition
on plaintiff’s claim of innocent misrepresentation. We disagree.
Michigan recognizes the doctrine of “innocent misrepresentation” in the making
of a contract whereby a false statement of fact, made without knowledge of its
falsity or intent to deceive, is actionable if relied upon by the other party to the
contract to their detriment and the party that made the false statement is unjustly
enriched. [Alibri v Detroit/Wayne Co Stadium Authority, 254 Mich App 545,
563-564; 658 NW2d 167 (2002), citing United States Fidelity & Guaranty Co v
Black, 412 Mich 99, 115-118; 313 NW2d 77 (1981).]
Nevertheless, “[a] misrepresentation claim requires reasonable reliance on a false
representation. . . . [t]here can be no fraud where a person has the means to determine that a
representation is not true.” Nieves v Bell Industries, 204 Mich App 459, 464; 517 NW2d 235
(1994); see also Novak v Nationwide Mut Ins Co, 235 Mich App 675, 690-691; 599 NW2d 546
(1999), citing Nieves, supra and Webb v First of Michigan Corp, 195 Mich App 470, 474-475;
491 NW2d 851 (1992). Here, plaintiff had access to the complex, albeit for a shorter period of
time than MTC, but chose not to take independent measurements. Plaintiff admittedly assumed
that MTC’s measurements were accurate, despite the fact that the contract described the
measurements as estimates. We conclude that the trial court appropriately granted defendant
summary disposition on this claim.
Finally, plaintiff argues that the trial court improperly dismissed its claims of unjust
enrichment and quantum meruit. We disagree. Plaintiff concedes that if this Court determines
that the contract terms are not unconscionable, it cannot recover on these claims. When a
plaintiff has fully performed its services under a valid express contract, the law will not imply a
contract covering the same subject matter. Barber v SMH, Inc, 202 Mich App 366, 375; 509
NW2d 791 (1993); Cascade Electric Co v Rice, 70 Mich App 420, 426; 245 NW2d 774 (1976).
Because the terms of the contract are not unconscionable, as discussed above, the trial court
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properly granted defendant summary disposition on plaintiff’s equitable claims of unjust
enrichment and quantum meruit.4
Affirmed.
/s/ Peter D. O’Connell
/s/ Kurtis T. Wilder
/s/ Christopher M. Murray
4
In light of our resolution of plaintiff’s issues on appeal, we do not need to discuss defendant’s
alternate argument that an accord and satisfaction precludes plaintiff’s claims.
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