TIMOTHY FALL V GREGG LOUDON
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STATE OF MICHIGAN
COURT OF APPEALS
TIMOTHY FALL, BETH ANN FALL,
MICHIGAN AGGREGATE PRODUCTS, and
MICHIGAN INDUSTRIAL CONSTRUCTION
CORPORATION,
UNPUBLISHED
February 12, 2008
Plaintiffs/Counter-DefendantsAppellants,
v
GREGG LOUDON, LOUDON STEEL
TRANSPORTATION, LOUDON STEEL, INC.,
and MICHIGAN AGGREGATE PRODUCTS,
LLC,
No. 275519
Tuscola Circuit Court
LC No. 02-021397-CZ
Defendants/Counter-PlaintiffsAppellees.
Before: Fitzgerald, P.J., and Murphy and Borrello, JJ.
PER CURIAM.
Plaintiffs appeal as of right an order granting summary disposition in favor of defendants
under MCR 2.116(C)(8) and (10), in this case arising out of various business relationships and
dealings relative to the operation of a sand and gravel quarry. We affirm in part, reverse in part,
and remand for further proceedings.
Before addressing each of the causes of action alleged by plaintiffs, we shall make some
initial observations and findings, giving context to our analysis. First, we are aware of the
extensive factual history of this case and familiar with all of the events and transactions, which
we will not repeat here, except to the extent relevant to our analysis. Next, there does not appear
to be a dispute that a partnership existed between plaintiff Timothy Fall and defendant Gregg
Loudon and that Loudon withdrew from the partnership, resulting in dissolution. Indeed, this
was the finding of the trial court, and we conclude as a matter of law that a partnership did exist
under MCL 449.6, which provides that “[a] partnership is an association of 2 or more persons . . .
to carry on a business for profit.” In Byker v Mannes, 465 Mich 637, 653; 641 NW2d 210
(2002), our Supreme Court stated that “the intent to create a partnership is not required if the acts
and conduct of the parties otherwise evidence that the parties carried on as co-owners a business
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for profit.” Here, the evidence clearly established that, by their actions and conduct, Fall and
Loudon carried on as partners. This evidence included the written 2001 assignment of the 1964
sand agreement, good until 2013 to mine sand from the subject real property, from Sierra Nevada
Mining, LLC (Sierra Nevada), to plaintiff Michigan Aggregate Products (MAP or MAP
partnership), which was executed by Fall as president and Loudon as vice-president of the MAP
partnership.
However, it is important to distinguish between the existence of the partnership and the
enforceability of the particular partnership agreement alleged by plaintiffs; these are two separate
matters. A written partnership agreement was prepared by Fall, and while Fall testified that it
reflected the parties’ general promises, obligations, rights, and understandings regarding
operation of the partnership, Loudon never executed the agreement. Plaintiffs contended that the
agreement between Fall and Loudon called for a partnership term extending until 2013. An
agreement that, by its terms, is not capable of being performed within one year from the making
of the agreement is deemed void under the statute of frauds unless the agreement was in writing
and signed by the party to be charged with the agreement. MCL 566.132(1)(a); see Marrero v
McDonnell Douglas Capital Corp, 200 Mich App 438, 441; 505 NW2d 275 (1993), mod on
other grounds by Patterson v Kleiman, 447 Mich 429, 433-434; 526 NW2d 879 (1994). In the
context of MCL 566.132(1)(a), part performance cannot save it from the statute of frauds.
Dumas v Auto Club Ins Ass’n, 437 Mich 521, 540-541; 473 NW2d 652 (1991); Ordon v
Johnson, 346 Mich 38, 45-46; 77 NW2d 377 (1956); Whipple v Parker, 29 Mich 369 (1874);
Kamalnath v Mercy Mem Hosp Corp, 194 Mich App 543, 550-551; 487 NW2d 499 (1992).
Accordingly, the alleged partnership agreement here was void; however, the written assignment
of the sand agreement and accompanying promissory note were signed by Loudon, and these
documents suggest some agreement between Fall and Loudon regarding, in general, the
operations of the MAP partnership.
We glean from the assignment, when considered in conjunction with the original 1964
sand agreement, that MAP was given the right to remove, load, and ship marketable sand and
that MAP would pay Sierra Nevada $492,000 for the right, payable in installments through
November 15, 2003. According to the assignment, the final payment could be made, in whole or
in part, by the MAP partnership delivering acceptable sand to Sierra Nevada’s sand plant, and
the assignment included price calculations based on tonnage with respect to the amount of sand
that needed to be delivered to satisfy the final payment on the note. On the basis of the language
in the assignment and promissory note, we can at most safely conclude that Fall and Loudon had
reached agreement between themselves that MAP would be engaged in mining sand from the
subject site and be obligated to pay Sierra Nevada on the note. But no more can be said about
any other agreements without offending the statute of frauds under MCL 566.132(1)(a),
including any agreement regarding the partnership’s term that supposedly was to run until 2013.1
1
While the 1964 sand agreement expires in 2013, we cannot conclude that simply because Fall
and Loudon executed the assignment of the sand agreement that they also intended to operate the
partnership for the full remainder of the unexpired portion of the sand agreement.
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In light of our ruling, we do conclude that the partnership was dissolvable by will, and Loudon
did successfully dissolve the partnership by expressing his will to withdraw.2 We also note that
the applicability of the statute of frauds under MCL 566.132(1)(a) does not bar a claim of
promissory estoppel or unjust enrichment. Dumas, supra at 541 n 9, 546; Opdyke Investment Co
v Norris Grain Co, 413 Mich 354, 365; 320 NW2d 836 (1982); Marrero, supra at 442; Clark v
Coats & Suits Unlimited, 135 Mich App 87, 96; 352 NW2d 349 (1984); Lovely v Dierkes, 132
Mich App 485, 489; 347 NW2d 752 (1984).3
Further, we find that the act of Sierra Nevada assigning the sand agreement in September
2002 to defendant Michigan Aggregate Products, LLC, (MAP LLC), was improper, where Sierra
Nevada had previously assigned the sand agreement to the MAP partnership. With the MAP
partnership dissolved, the sand agreement assignment was a partnership asset that needed to be
distributed in the winding up phase of the partnership,4 and even if it rightfully should have been
2
MCL 449.31 governs dissolution of a partnership, indicating, in pertinent part, that a
partnership properly dissolves where it terminates pursuant to a definite term or particular
undertaking or by express will of any partner if no definite term or particular undertaking is
specified. MCL 449.31(1)(a) and (b). The statute of frauds precludes us from concluding that
the partnership was for a definite term, and while the assignment reflects an undertaking to mine
sand by the MAP partnership, it is not particularized as to the extent of the undertaking.
Accordingly, dissolution was allowable and occurred when Loudon expressed the desire to
terminate the partnership.
3
Defendants also present a statute of frauds argument under MCL 566.106, which addresses
interests in land. The argument is that any claim by Fall to ownership of either the sand lease
(assignment) or the surface real estate, which was later conveyed to the Falls and then assigned
to Loudon, fails because there are no documents conveying such interests in land. With respect
to the assignment of the sand agreement, Fall’s claim for this property or asset arises out of his
argument concerning the proper method to dissolve and wind up the partnership, not on the basis
of any alleged conveyance. MAP acquired the assignment pursuant to a writing signed by Fall
and Loudon. There is no statute of frauds problem under MCL 566.106 for purposes of the sand
agreement assignment. With regard to the surface real estate, plaintiffs simply claimed that their
conveyance of the property to Loudon through the assignment was induced by fraud and should
be voided, thereby returning the interest back to their ownership. This does not implicate MCL
566.106.
4
MCL 449.8 dictates that the rights in the sand agreement pursuant to the assignment constituted
partnership property. “The property rights of a partner are (1) his rights in specific partnership
property, (2) his interest in the partnership, and (3) his right to participate in the management.”
MCL 449.24. “A partner’s interest in the partnership is his share of the profits and surplus, and
the same is personal property.” MCL 449.26. “The dissolution of a partnership is the change in
the relation of the partners caused by any partner ceasing to be associated in the carrying on as
distinguished from the winding up of the business.” MCL 449.29. “On dissolution the
partnership is not terminated, but continues until the winding up of partnership affairs is
completed.” MCL 449.30. On dissolution of a partnership, its assets are distributed to the
partners. MCL 449.40; MCL 449.38; Howe v Webert, 332 Mich 84, 95; 50 NW2d 725 (1952).
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distributed to Loudon in full, the transfer or conveyance of the assignment would have been from
the MAP partnership to Loudon’s company MAP LLC, and not from Sierra Nevada to MAP
LLC. “Any estate in real property may be acquired in the partnership name. Title so acquired
can be conveyed only in the partnership name.” MCL 449.8(3). Sierra Nevada had nothing to
assign; therefore, MAP LLC acquired nothing. The MAP partnership technically still retained the
rights under the 2001 assignment. However, Loudon effectively took full control of the sand
mining operation in 2002.
In summarized form, the trial court ruled that a sand mining and excavation partnership
existed, with Fall and Loudon as partners, that Loudon properly withdrew from the partnership
by his expressed will, MCL 449.31(1)(b), thereby dissolving the partnership, that Loudon was
thereafter entitled to a winding up of the partnership and division of the partnership’s assets, that
Loudon properly acquired the sand agreement assignment (partnership asset) from Sierra Nevada
by way of MAP LLC, given that Loudon paid the remaining debt on the assignment, and that it
was appropriate for Loudon to solely obtain the sand agreement assignment, to the exclusion of
Fall, because “Loudon simply got out of the partnership that which he put into the partnership
and was minimizing his losses.” Apparently, the trial court believed that Loudon was entitled to
the sand agreement asset because he provided money as his capital contribution to the
partnership, which was used to pay Fall a salary for doing some of the excavation and mining
work, to pay toward the $492,000 promissory note on the assignment, and to rent excavation and
mining equipment from plaintiff Michigan Industrial Construction Corporation (MICC), a
corporation with its sole shareholder being plaintiff Beth Ann Fall (Mrs. Fall). The trial court
failed to explain how its conclusions related to the causes of action alleged by plaintiffs, and
some of the claims were not even related to sand agreement assignment.
While plaintiffs alleged nine separate counts, each pertaining to some or all of the parties,
plaintiffs’ case can be boiled down to the following alleged harms or injuries: failure to grant
Fall any interest in the sand agreement assignment, or compensation for the interest, despite his
contributions, with Loudon inappropriately receiving the entire asset solely for himself; improper
use of the MAP name relative to the creation of MAP LLC by Loudon; Loudon fraudulently
obtaining the surface real estate from the Falls; and defendants improperly keeping certain
equipment belonging to MICC on the basis of an alleged mechanic’s lien held by defendant
Loudon Steel Transportation for equipment repairs.
With this background, we now turn to the various causes of action alleged by plaintiffs.
Count I of the complaint alleged breach of fiduciary duty by Loudon individually. Plaintiffs
maintained that Loudon owed Fall a duty of good faith and fair dealing and that the duty was
breached when Loudon misappropriated trade secrets and partnership assets so as to steal the
business away from Fall.
Count I was dismissed pursuant to MCR 2.116(C)(10). This Court reviews de novo a
trial court’s decision on a motion for summary disposition. Kreiner v Fischer, 471 Mich 109,
129; 683 NW2d 611 (2004). MCR 2.116(C)(10) provides for summary disposition where there
is no genuine issue regarding any material fact, and the moving party is entitled to judgment or
partial judgment as a matter of law. A trial court may grant a motion for summary disposition
under MCR 2.116(C)(10) if the pleadings, affidavits, and other documentary evidence, when
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viewed in a light most favorable to the nonmovant, show that there is no genuine issue with
respect to any material fact. Quinto v Cross & Peters Co, 451 Mich 358, 362; 547 NW2d 314
(1996), citing MCR 2.116(G)(5). "A genuine issue of material fact exists when the record,
giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which
reasonable minds might differ." West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468
(2003). A court may only consider substantively admissible evidence actually proffered relative
to a motion for summary disposition under MCR 2.116(C)(10). Maiden v Rozwood, 461 Mich
109, 121; 597 NW2d 817 (1999).
“Partners shall render on demand true and full information of all things affecting the
partnership to any partner or the legal representative of any deceased partner or partner under
legal disability.” MCL 449.20. Moreover, pursuant to MCL 449.21(1)(entitled partner
accountable as a fiduciary), “[e]very partner must account to the partnership for any benefit, and
hold as trustee for it any profits derived by him without the consent of the other partners from
any transaction connected with the formation, conduct, or liquidation of the partnership or from
any use by him of its property.” In Band v Livonia Assoc, 176 Mich App 95, 113-114; 439
NW2d 285 (1989), this Court expressed the nature of the fiduciary relationship that exists
between partners:
The courts universally recognize the fiduciary relationship of partners and
impose on them obligations of the utmost good faith and integrity in their dealings
with one another in partnership affairs. Partners are held to a standard stricter than
the morals of the marketplace and their fiduciary duties should be broadly
construed, connoting not mere honesty but the punctilio of honor most sensitive.
The fiduciary duty among partners is generally one of full and frank disclosure of
all relevant information. Each partner has the right to know all that the others
know, and each is required to make full disclosure of all material facts within his
knowledge in any way relating to the partnership affairs. Thus, disclosure to one
or several partners does not fulfill this duty as to every other partner. [Citations
and internal quotations omitted.]
“[T]he cases involving a partner’s breach of the fiduciary duty to other partners have
been concerned solely with placing the wronged partners in the economic position that they
would have enjoyed but for the breach.” Gilroy v Conway, 151 Mich App 628, 637; 391 NW2d
419 (1986).
In viewing the evidence in a light most favorable to plaintiffs, there was evidence to show
that Loudon obtained the assignment of the sand agreement, a partnership asset with an
undetermined value, without accounting to Fall for any of the value. Indeed, viewing the
evidence in a light most favorably to defendants, we conclude, as a matter of law, that Loudon
breached his fiduciary duties to Fall, although we leave for the trier of fact the determination
whether Fall incurred any damages as a result of the breach.
There was evidence that the sand agreement was worth about $500,000 at the time the
partnership was commenced, and that value may have increased when Sierra Nevada agreed to
purchase 40,000 tons of sand annually at $3.25 per ton for five years once MAP satisfied all
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payments then due under the promissory note, a gross value of $130,000 annually. Based on
Fall’s work done before the partnership began, he and Loudon were able to obtain the sand
agreement for $492,000, and Fall’s efforts in mining sand during the partnership and delivering it
to Sierra Nevada partially reduced the amount owed under the promissory note, leaving
$180,000 owing around the time the partnership was finally dissolved.5 Fall did not provide any
cash investment as a capital contribution for the partnership, but he did contribute to the
partnership his considerable excavation experience in working the property, his negotiation of
the sand agreement assignment, his actual labor in excavating and mining the property, his
delivery of sand to Sierra Nevada that helped reduce the amount owed on the note, and he
obtained use of the equipment necessary to excavate and mine the sand.6 We recognize that,
through cash contributions made by Loudon, Fall did receive a salary for his work and the
equipment was rented from MICC. Loudon made a $375,000 capital contribution to the
partnership and paid $50,000 to pay off what appears to be a discounted remaining debt owed
under the promissory note. Further, there was evidence that Loudon continued to solicit sales of
sand and gravel after he dissolved the partnership, which may have led to additional unaccounted
for sales.
We find that Loudon breached his fiduciary duties because he was simply not entitled to
walk away from the partnership on dissolution with the sand agreement assignment in tow
without any winding up of the business, an accounting for the value of the sand agreement
assignment, and, possibly, a distribution of an interest, or compensation thereon, to Fall. Again,
there was not even an effective conveyance of the asset to MAP LLC.
The Uniform Partnership Act, MCL 449.1 et seq., seeks to make partners whole
economically. Gilroy, supra at 637. Fall is considered a co-owner of the sand agreement
assignment, with Fall and Loudon holding it as tenants in partnership. MCL 449.25. “Every
partner must account to the partnership for any benefit[.]” MCL 449.21(1). Loudon’s act of
dissolving the partnership by expressing his will to withdraw did not terminate the partnership,
which does not occur “until the winding up of partnership affairs is completed.” MCL 449.30.
Partners who have not wrongly dissolved the partnership have the right to wind up the
partnership affairs, MCL 449.37, yet Fall was given no say in the matter as Loudon took sole
control of the mining operation. Also, partners have the right to a formal accounting as to
partnership affairs when “circumstances render it just and reasonable” and when there is a
wrongful exclusion from the possession of partnership property. MCL 449.22(a) and (d). There
was no accounting here.
5
A letter from Sierra Nevada to Fall indicated that, as of March 2002, MAP had paid $172,000
in cash toward the note “and excavated and hauled sand to [Sierra Nevada] with a value of
$118,430,” equaling credits against the note in the amount of $290,430, leaving, at the time,
$201,570 owing.
6
The term “capital contribution” is defined as “[c]ash, property, or services contributed by
partners to a partnership.” Black’s Law Dictionary (7th ed).
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Furthermore, [e]ach partner shall be repaid his or her contributions, whether by way of
capital or advances to the partnership property and share equally in the profits and surplus
remaining after all liabilities, including those to partners, are satisfied.” MCL 449.18(a).
Additionally, MCL 449.38(1) provides in part:
When dissolution is caused in any way, except in contravention of the
partnership agreement, each partner, as against his copartners and all persons
claiming through them in respect of their interests in the partnership, unless
otherwise agreed, may have the partnership property applied to discharge its
liabilities, and the surplus applied to pay in cash the net amount owing to the
respective partners.7
The rules for distributing partnership property on dissolution of a partnership are set forth
in MCL 449.40, and after the payment to creditors and to partners for liabilities owing other than
for capital and profits, distribution is to be made to partners in respect to capital, MCL
449.40(b). Valuation should be made at the time of dissolution, and the winding up of
partnership affairs entails gathering the assets, paying and settling debts, and distributing any net
surplus to parties entitled to it. See Wanderski v Nowakowski, 331 Mich 202, 209-210; 49
NW2d 139 (1951).
Loudon did not engage in any of the activities required to properly wind up a partnership,
and this constituted a breach of his fiduciary duties to Fall. However, this does not mean that
Fall was necessarily damaged by the breach if he was not entitled to any interest in the sand
agreement assignment despite making some contributions in obtaining and operating under the
assignment. We are cognizant of defendants’ arguments concerning questionable practices by
plaintiffs, including claims relating to improper charges by MICC and misrepresentations by Fall
regarding various matters, such as whether sand alone could be mined under the sand agreement
as opposed to sand and gravel. Also, Fall did receive a salary for his excavation and mining
work. Further, no value has been placed on the assignment. This must all be contemplated in
assessing the issues of causation and damages under the fiduciary duty count.8 The trial court
erred in dismissing the claim.
Count II alleged breach of a partnership agreement. As discussed above, while a
partnership between Fall and Loudon did exist to mine sand based on actions and conduct and
the written assignment, we cannot recognize any partnership agreement detailing the particulars
of the partnership because of the statute of frauds under MCL 566.132(1)(a). Accordingly, count
7
Under the statute, partnership assets can be divided on dissolution rather than sold. Rinke v
Rinke, 330 Mich 615, 628; 48 NW2d 201 (1951).
8
We note that the statute of frauds does not preclude this claim because a partnership did exist,
which necessarily gave rise to fiduciary duties, MCL 449.20 and MCL 449.21, regardless of the
fact that the alleged partnership agreement was void under MCL 566.132(1)(a).
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II fails as a matter of law under MCR 2.116(C)(8).9 We do point out that any argument to save
the substance of the breach of partnership agreement claim on a promissory estoppel basis in
avoidance of the statute of frauds fails for the reasons set forth later in this opinion in our
discussion of promissory estoppel. While we conclude infra that an unjust enrichment claim
should not have been dismissed, we do not find that this renders the claim for breach of
partnership agreement salvageable. Our implying a contract pursuant to unjust enrichment
merely extends to a possible obligation by Loudon to account for any interest held by Fall in the
sand agreement assignment. We also note that the allegations in this count simply provide that
the agreement was breached “in numerous ways.” This is insufficient pleading under MCR
2.111(B). The trial court did not err in dismissing this count.
Count III alleged tortious interference with contractual and business relationships.
Plaintiffs alleged that Loudon interfered with the contractual and business relationship between
the MAP partnership and others, including the relationship between MAP and Sierra Nevada that
was created by Fall pursuant to the sand agreement assignment.
“The elements of tortious interference with a contract are (1) the existence of a contract,
(2) a breach of the contract, and (3) an unjustified instigation of the breach by the defendant.”
Health Call of Detroit v Atrium Home & Health Care Services, Inc, 268 Mich App 83, 89-90;
706 NW2d 843 (2005). First, plaintiffs do not present their arguments in the context of any
relevant legal authority on the issue. “‘It is not enough for an appellant in his brief simply to
announce a position or assert an error and then leave it up to this Court to discover and
rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then
search for authority either to sustain or reject his position.’” Mudge v Macomb Co, 458 Mich 87,
105; 580 NW2d 845 (1998), quoting Mitcham v Detroit, 355 Mich 182, 203; 94 NW2d 388
(1959). Additionally, the contract between MAP and Sierra Nevada was not breached, nor does
this count contain any allegations that a contract was breached. The claim was properly
dismissed.10
To bring a claim of tortious interference with a business relationship or expectancy, the
plaintiff must show (1) the existence of a valid business relationship or expectancy, which does
not have to be predicated on an enforceable contract; (2) knowledge of the relationship or
9
MCR 2.116(C)(8) provides for summary disposition where “[t]he opposing party has failed to
state a claim on which relief can be granted.” A motion for summary disposition under MCR
2.116(C)(8) tests the legal sufficiency of a complaint. Beaudrie v Henderson, 465 Mich 124,
129; 631 NW2d 308 (2001). The trial court may only consider the pleadings in rendering its
decision. Id. All factual allegations in the pleadings must be accepted as true. Dolan v
Continental Airlines/Continental Express, 454 Mich 373, 380-381; 563 NW2d 23 (1997).
10
To the extent that plaintiffs are claiming that Loudon interfered with a contract between
himself and Fall, the claim would fail because a party to a contract cannot maintain a cause of
action for tortious interference against another party to that same contract. Derderian v Genesys
Health Care Sys, 263 Mich App 364, 382; 689 NW2d 145 (2005).
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expectancy by the defendant; (3) an intentional interference by the defendant inducing or causing
a breach or termination of the relationship or expectancy, and (4) damage to the party whose
relationship or expectancy was disrupted. Health Call, supra at 90. The intentional interference
must be improper, involving “a per se wrongful act or the doing of a lawful act with malice and
unjustified in law for the purpose of invading the contractual rights or business relationship of
another.” Feldman v Green, 138 Mich App 360, 378; 360 NW2d 881 (1985).
With respect to interference with any business relationship or expectancy held by MAP,
the claim fails. Although Loudon knew that there existed a valid business relationship between
MAP and Sierra Nevada and that MAP held a business expectancy because of the relationship,
the termination of the relationship and expectancy was not due to any improper interference by
Loudon. Loudon’s act of withdrawing from the partnership and causing the partnership to
dissolve was not improper for the reasons discussed earlier, and it was this act that essentially
ended any continuing business relationship and expectancy held by MAP. Although it may have
been improper for Loudon to take sole control of the mining operation under the assignment, if a
valid winding up of the partnership had occurred, the MAP partnership would be defunct and
still would have lost its interest in the mining operation. However, viewing this matter from the
perspective of Fall and not the partnership entity, a different result must be reached. Fall’s
ongoing business relationship with Sierra Nevada, created via the assignment to MAP, and his
business expectancy would not necessarily be halted by dissolution of the partnership if, in the
winding up phase of the partnership, he would have been entitled to an interest in the sand
agreement assignment. While the statute of frauds under MCL 566.132(1)(a) prevents us from
finding that Fall had a valid business expectancy that the partnership would run until 2013,
during which time the partnership would enjoy the full benefits of the assignment, the statute of
frauds does not preclude a finding that Fall had an expectancy to reap some form of benefit
arising out of the sand agreement assignment, which was executed by Fall and Loudon. We
conclude that the documentary evidence, when viewed in a light most favorable to plaintiffs,
could support a finding that Loudon tortiously interfered with Fall’s business expectancy.11
Accordingly, the trial court erred in dismissing the claim of tortious interference with a business
relationship or expectancy, but only as that claim relates to Fall.
Count IV alleged unjust enrichment. To establish unjust enrichment, a plaintiff is
required to show (1) the receipt of a benefit by the defendant from the plaintiff and (2) an
inequity resulting to the plaintiff because of the retention of the benefit by the defendant. Barber
v SMH (US) Inc, 202 Mich App 366, 375; 509 NW2d 791 (1993). When the elements of unjust
enrichment have been shown, “the law operates to imply a contract in order to prevent unjust
enrichment.” Id. But a contract will not be implied if there is an express contract covering the
same subject matter. Id. Here, we cannot recognize an express contract or agreement regarding
the partnership because of the statute of frauds; therefore, a claim for unjust enrichment is not
precluded. Moreover, when viewing the evidence in a light most favorable to plaintiffs, a
genuine issue of material fact exists regarding whether Loudon unjustly received a benefit from
11
With respect to Mrs. Fall, we rule that dismissal was proper as there is no supporting evidence.
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Fall by keeping the sand agreement assignment entirely for himself and pursuing the mining
operation under the MAP LLC name, to Fall’s exclusion, and whether it would be inequitable to
Fall for Loudon to retain the benefit under the circumstances. Accordingly, the trial court erred
in dismissing this count.
Count V alleged common-law trademark infringement and unfair competition relative to
Loudon’s operation of the mining business under the MAP LLC name, where the partnership
operated under the name MAP. Plaintiffs sought injunctive relief, preventing further trademark
infringement and unfair competition by Loudon. This count was dismissed under MCR
2.116(C)(8).
Injunctive relief may be appropriate when a business competitor has adopted a name that
is confusingly similar to one already being used by another business and the similarity likely or
probably results in confusion among consumers who are using ordinary care. Boron Oil Co v
Callanan, 50 Mich App 580, 584; 213 NW2d 836 (1973). “Actual confusion of customers,
clients, or the public at large does not need to be shown; it is sufficient if the acts of the
defendant indicate that probable confusion will occur.” Id. The likelihood of confusion must be
evaluated in terms of the particular facts of each case. Id. Although there is no particular formula
for the courts to utilize, precedents reveal that “[c]orporate names are confusingly similar when
the first two words of a compound name are identical and in the same sequence.” Ed
Subscription Service, Inc v American Ed Services, Inc, 115 Mich App 413, 421; 320 NW2d 684
(1982). On the other hand, a plaintiff is not entitled to an injunction where the similarity of
names is “so slight as to be unlikely to confuse others than the careless or indifferent or they
involved banks or insurance companies or concerns doing business with a specialized field.” 220
Bagley Corp v Julius Freud Land Co, 317 Mich 470, 473; 27 NW2d 59 (1947).
Under the case law, this claim was sufficiently pled in the complaint. We do conceive of
one potential problem with this claim, which is that the MAP partnership was dissolved, and it is
no longer conducting operations and business. Therefore, there would not appear to be a
competition issue. Plaintiffs argue that the process of winding up the partnership has not been
completed, and that is technically true, especially given that the sand agreement asset was not
properly conveyed. But the fact remains that the partnership will no longer conduct operations.
However, on the possibility that Fall obtains an interest in the sand agreement assignment by
way of this litigation and decides to resume operations under the MAP name, injunctive relief
might be appropriate. This claim was prematurely dismissed.
Count VI alleged promissory estoppel. Plaintiffs alleged that they presented Loudon with
a written partnership agreement and that the parties proceeded to conduct business pursuant to
the agreement, with Loudon promising to sign “the written agreement or a suitable equivalent.”
The trial court dismissed this count under MCR 2.116(C)(8). To establish a promissory estoppel
claim, a plaintiff must show “(1) a promise, (2) that the promisor should reasonably have
expected to induce action of a definite and substantial character on the part of the promisee, and
(3) that in fact produced reliance or forbearance of that nature in circumstances such that the
promise must be enforced if injustice is to be avoided.” Novak v Nationwide Mut Ins Co, 235
Mich App 675, 686-687; 599 NW2d 546 (1999). To establish a claim of promissory estoppel, a
promise must be clear and definite. Derderian v Genesys Health Care Sys, 263 Mich App 364,
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381; 689 NW2d 145 (2005). Plaintiffs’ position, apparently, is that they not only want
enforcement of Loudon’s promise to execute the prepared partnership agreement, they also seek
enforcement of the promises made in the agreement. Making Loudon sign the partnership
agreement would in turn make him obligated under the agreement’s terms. There are no
allegations in this count that Loudon promised to perform a specific task in the partnership
agreement or promised to comply with a specific provision, e.g., allowing the partnership to run
until 2013 or giving Fall a 51% interest. And the problem with the complaint, in the absence of
such allegations, is that the alleged promise was simply to execute the written partnership
agreement or a suitable equivalent. This is not a clear and definite promise to sign the
partnership agreement, and the reference to a suitable equivalent leaves the door open to endless
possibilities, thereby also lacking definiteness. Accordingly, the promissory estoppel claim fails
under MCR 2.116(C)(8).
Count VII alleged fraudulent inducement. Plaintiffs alleged that Loudon induced the
Falls to execute an assignment of their purchase agreement for the surface real estate in favor of
Loudon. The alleged inducement was a promise by Loudon to continue participation in the
partnership, but, according to plaintiffs, Loudon lacked an intent to comply with the inducement
when it was made. Plaintiffs contended that, because of the fraud perpetrated against the Falls,
the real estate assignment should be voided and set aside. Although the trial court dismissed this
count under MCR 2.116(C)(8), the court’s discussion, which focused on the sand agreement
assignment, provided no rationale with regard to dismissal of the fraudulent inducement claim.
“A promise regarding the future cannot form the basis of a misrepresentation claim.”
Forge v Smith, 458 Mich 198, 212; 580 NW2d 876 (1998). However, this Court in Samuel D
Begola Services, Inc v Wild Bros, 210 Mich App 636, 639,640; 534 NW2d 217 (1995), explained
an exception to the rule under the law of fraud:
While plaintiff is correct in asserting that, in general, actionable fraud
must be predicated on a statement relating to a past or an existing fact, Michigan
also recognizes fraud in the inducement. Fraud in the inducement occurs where a
party materially misrepresents future conduct under circumstances in which the
assertions may reasonably be expected to be relied upon and are relied upon.
Fraud in the inducement to enter a contract renders the contract voidable at the
option of the defrauded party. [Citations omitted.]
On the basis of the case law describing the tort, we find that plaintiffs’ complaint
sufficiently pled a claim for fraudulent inducement and that the allegations satisfied the
particularity requirement of MCR 2.112(B)(1) in regard to claims of fraud. Accordingly, the
trial court erred in dismissing the count under MCR 2.116(C)(8).
With regard to the conversion and unjust enrichment claims involving the MICC
equipment, counts VIII and IX, in viewing the evidence in a light most favorable to plaintiffs,
there existed a genuine issue of material fact as to whether defendants wrongfully exerted control
over MICC’s equipment and with respect to whether defendants received a benefit from MICC
that would be inequitable to retain because defendants did not have permission to use the
equipment. See Pamar Enterprises, Inc v Huntington Banks of Michigan, 228 Mich App 727,
-11-
734; 580 NW2d 11 (1998); Barber, supra at 375. Whether defendants properly imposed a
mechanic’s lien also presented a genuine issue of material fact.
In sum, we hold that the trial court erred in dismissing the claims for breach of fiduciary
duty, tortious interference with a business relationship or expectancy as to Fall, unjust
enrichment relative to Loudon taking sole control of the sand agreement assignment, commonlaw trademark infringement and unfair competition, fraudulent inducement, conversion, and
unjust enrichment relative to MICC. The trial court did not err in dismissing the claims for
breach of the partnership agreement, tortious interference with a contractual relationship, tortious
interference with a business relationship or expectancy relative to MAP and Mrs. Fall, and
promissory estoppel. Furthermore, we find, as a matter of law, that Loudon breached his
fiduciary duties to Fall; however, a question of fact remains regarding whether the breach caused
damages to Fall.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.
/s/ E. Thomas Fitzgerald
/s/ William B. Murphy
/s/ Stephen L. Borrello
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