ROBERT VANHELLEMONT V ROBERT GLEASON
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STATE OF MICHIGAN
COURT OF APPEALS
ROBERT VANHELLEMONT
VANHELLEMONT,
and
MINDY
UNPUBLISHED
September 24, 2009
Plaintiffs-Appellants,
v
ROBERT GLEASON, MEREDITH COLBURN,
DONNA BARLOW, and SKBK SOTHEBY’S
INTERNATIONAL REALTY,
No. 286350
Oakland Circuit Court
LC No. 2007-085475-CZ
Defendants-Appellees.
Before: Donofrio, P.J., and Wilder and Owens, JJ.
PER CURIAM.
Plaintiffs appeal of right the circuit court’s order granting summary disposition in favor
of defendants. We affirm.
I
Plaintiffs desired to purchase a home in Birmingham, Michigan. Defendant Donna
Barlow, a licensed real estate sales agent of defendant SKBK Sotheby’s International Realty
(SKBK), and an agent with whom plaintiffs had worked in the sale and purchase of other
Birmingham properties, began assisting plaintiffs in their search, and eventually showed them a
property owned by Kevin McManamon (hereafter the McManamon Property). Gleason and
SKBK were the listing and selling brokers of the McManamon Property, and listed the property
for sale on July 26, 2006. Defendant Meredith Colburn, also a licensed real estate sales agent of
SKBK, was the listing agent of the McManamon Property.
After seeing the McManamon Property, the plaintiffs told Barlow they wished to make an
offer to purchase the property. On August 13, 2006, Barlow prepared a purchase offer for the
McManamon Property (on a document titled Purchase Agreement). Barlow and the plaintiffs
signed the Purchase Agreement offer. Barlow also prepared a disclosure form required by MCL
339.2517(1) and MCL 339.2517(2). This document, titled “Disclosure Regarding Real Estate
Agency Relationships,” is a state-law mandated disclosure, from the licensee, i.e., the licensed
real estate agent, to the potential home buyer or seller, describing the nature of the operative
agency relationship(s) for the potential real estate transaction at issue.
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Plaintiffs and Barlow signed the disclosure form on August 13, 2006, which identified
Barlow as a “dual agent” with respect to the offer being submitted on the McManamon Property.
The disclosure form stated that as a dual agent, Barlow would act as the agent of both plaintiffs
and McManamon on the transaction, but would not owe plaintiffs or McManamon the full range
of fiduciary duties normally owed by a buyer’s agent or a seller’s agent. MCL 339.2517(9)(f).1
Plaintiffs also initialed a document generated by SKBK that gave an expanded explanation of
what a dual agent could and could not do on behalf of the buyer and seller in a real estate
transaction. After the plaintiffs’ offer was submitted to McManamon, McManamon also
initialed the SKBK “dual agency” document.
A series of counteroffers between McManamon and plaintiffs ensued, and a final
agreement was reached on August 18, 2006. Barlow prepared a final Purchase Agreement
document to reflect the negotiated terms to which the parties had agreed. The document
reflected that plaintiffs agreed to purchase the McManamon Property for $2,182,500, and to
deposit earnest money in the amount of $35,000. The parties also agreed to close on January 15,
2007, some five months after the agreement was reached. The agreement required the seller to
order a commitment for title insurance within 14 days, and to furnish it to plaintiffs. In addition,
in relevant part, paragraph 14.A. of the Purchase Agreement provided that if the buyer should
default, such as by failing to close by January 15, 2007, “[s]eller may elect to enforce terms
herein, declare sale void, retain deposit . . . and/or seek available equitable remedies.” Paragraph
17 of the Purchase Agreement provided: “DISCLAIMER OF BROKERS: . . . Parties
acknowledge that they are not relying on any representation or warranties that may have been
made other than those in writing.” The Purchase Agreement also provided: “LEGAL
COUNSEL RECOMMENDATION: BROKER(S) RECOMMEND(S) THAT ALL PARTIES
TO THIS AGREEMENT RETAIN AN ATTORNEY TO PROTECT THEIR INTERESTS.”
Contemporaneous with the signing of the Purchase Agreement, on August 18, 2006,
plaintiffs and McManamon also signed an option agreement that afforded plaintiffs with “an
option to terminate the Purchase Agreement thirty (30) days prior to the Closing Date . . ..” If
plaintiffs exercised the option, a new Purchase Agreement with “like terms” to the prior
agreement would become operable, at a purchase price of $1,682,500. In exchange, the terms of
the option agreement required plaintiffs to make a deposit of $500,000 at the time they exercised
the option. McManamon was permitted to retain the $500,000 deposit in the event plaintiffs did
not close on the property.
The Purchase Agreement and the option agreement having been executed, on August 21,
2006, Colburn requested a title insurance commitment for the property. She received the
commitment on August 24, 2006. Shortly thereafter, Colburn told Barlow that SKBK had
1
MCL 339.2517 was substantially modified by the Legislature, effective July 1, 2008. Because
“[a]mendments of statutes are generally presumed to operate prospectively unless the Legislature
clearly manifests a contrary intent,” Tobin v Providence Hosp, 244 Mich App 626, 661; 624
NW2d 548 (2001), we cite to the statutory section in effect at the time the dual agency agreement
at issue was signed by the parties.
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received the title commitment. However, Colburn did not physically give the title commitment
paperwork to Barlow.
The option expired without being exercised by plaintiffs, and shortly thereafter, plaintiffs
attempted to negotiate a land contract purchase of the property with McManamon. McManamon
refused to renegotiate the terms of the Purchase Agreement. Plaintiffs then declared that
McManamon had breached the terms of the Purchase Agreement and was in default, because he
failed to provide them with the required title commitment within 14 days of the date of the
Purchase Agreement, September 1, 2006. Plaintiffs further declared that because of this alleged
breach by McManamon, they did not intend to close on the transaction on January 15, 2007.
After receiving notice of plaintiffs’ claim of default, McManamon provided a copy of the title
commitment to plaintiffs on January 11, 2007. Plaintiffs still refused to close after receipt of the
title commitment.
McManamon filed suit against the plaintiffs for breach of contract, and ultimately moved
for summary disposition of the case. In support of his motion, McManamon in part relied upon
affidavits signed by Barlow and Colburn. Barlow averred in her affidavit, dated March 19, 2007,
that, as the plaintiffs’ agent, she did not receive a title insurance commitment for the
McManamon Property within 14 days of the signing of the Purchase Agreement. Colburn
averred in her affidavits dated February 21, 2007 and April 5, 2007, that she received the title
insurance commitment on or about August 24, 2006, and that within a few days thereafter, she
had discussed with Barlow the fact that the title commitment had been received by SKBK. After
briefing and oral argument, on October 3, 2007, the circuit court granted summary disposition in
favor of McManamon as to liability only, concluding that while plaintiffs had breached the terms
of the Purchase Agreement by failing to close, the question of whether the proper remedy for the
breach should be specific performance or monetary damages was reserved for trial. Plaintiffs
represent, and defendants agree, that prior to the remedy phase of the trial, in settlement of the
case against them, plaintiffs granted McManamon specific performance and closed on the
McManamon property under the terms of the Purchase Agreement.2
While McManamon’s breach of contract action against the plaintiffs was still pending, on
August 30, 2007, plaintiffs commenced this action against defendants, alleging claims of
professional malpractice, breach of fiduciary duty, and fraud. Plaintiffs asserted in their
complaint that (1) notwithstanding the dual agency agreement, defendants’ failure to ensure that
they represented plaintiffs’ interests by drafting a buyer-oriented purchase agreement that
provided the seller’s sole remedy for the plaintiffs’ failure to close on the purchase would be loss
of the $35,000 earnest money deposit, rather than a seller-oriented purchase agreement, and
defendants’ further failure to ensure that the sale of plaintiffs’ then current home was a condition
precedent to closing on the purchase of the McManamon Property, constituted professional
malpractice; (2) alternately, defendants’ engagement in a dual agency relationship with respect to
2
While we accept this assertion as a true, nevertheless, we note that there is no documentary or
affidavit evidence in the record in support of, or contrary to, the parties’ representation that
specific performance of the Purchase Agreement occurred.
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the purchase of the McManamon Property constituted a breach of defendant’s fiduciary duties to
plaintiffs; (3) in order to induce plaintiffs to sign the Purchase Agreement, defendants made
fraudulent representations that the Purchase Agreement as drafted was buyer-oriented and not
seller-oriented, that the seller’s sole remedy under the agreement as drafted for plaintiffs’ failure
to close on the transaction would be the loss of the $35,000 earnest money deposit, and that the
sale of plaintiffs’ home was a condition precedent to closing on the transaction; (4) that
defendants’ representation of plaintiffs with respect to the drafting of the Purchase Agreement,
and defendants’ execution of affidavits filed in support of McManamon’s motion for summary
disposition, were violations of the standard of care applicable to real estate agents and brokers, as
well as negligent breaches of defendants’ duties to plaintiffs; and (5) that as a result of
defendants’ wrongful actions and omissions, defendants should be found jointly and severally
liable to plaintiffs, in contribution, for any amounts plaintiffs were found to be liable to
McManamon.
Following discovery, defendants filed a motion for summary disposition under MCR
2.116(C)(8) (failure to state a claim on which relief can be granted) and (C)(10) (no genuine
issue of material fact). Defendants argued, in relevant parts, (1) that plaintiffs’ negligence and
professional malpractice claims must fail because defendants’ sole duties to plaintiffs were
contractual, and that plaintiffs could therefore not assert claims in tort against the defendants; (2)
that defendants did not breach any alleged fiduciary duties to the plaintiffs, and that in any event,
the terms of the dual agency agreement and the purchase agreement precluded liability; and (3)
that plaintiffs could not point to evidence in the record sufficient to satisfy the elements of a
claim of fraud.
Plaintiffs challenged defendants’ motion for summary disposition, arguing in response
that the evidence supported their assertions that defendants committed professional malpractice
and negligence by failing to ensure, consistent with their alleged representations, that the only
penalty to be stated in the Purchase Agreement for the McManamon Property, for plaintiffs’
failing to close on the agreement, was the forfeiture of the $35,000 earnest money deposit.
Plaintiffs further argued that defendants’ alleged representations imposed duties in tort that were
consistent with and complimentary to defendants’ duties under the dual agency agreement, and
that neither the language of the Purchase Agreement nor the dual agency agreement precluded
liability for breach of fiduciary duty. Plaintiffs also contended that defendants had failed to
proffer any evidence to refute plaintiffs’ claims of fraud by defendants. Robert VanHellemont’s
affidavit, filed in support of plaintiffs’ response to the motion, identified the various
representations plaintiffs alleged were breached by defendants, including that defendants
promised to represent plaintiffs’ best interests notwithstanding the dual agency agreement,
promised to prepare a buyer-oriented agreement, agreed to ensure that the sole remedy for the
plaintiffs’ default on the Purchase Agreement would be the loss of the earnest money deposit,
and agreed that the sale of plaintiffs’ then current home would be a condition precedent to
closing on the purchase of the McManamon Property.
Following oral argument, the circuit court granted summary disposition in favor of
defendants.
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II
Plaintiffs first argue on appeal that the circuit court erred in dismissing their malpractice
claim, because there was a genuine issue of a material fact as to whether defendants breached
duties owed to plaintiffs under the dual agency agreement. We disagree.
We review summary disposition rulings de novo. Willett v Waterford Charter Twp, 271
Mich App 38, 45; 718 NW2d 386 (2006). Whether one party owes a duty to another is a
question of law, reviewed de novo. Brown v Brown, 478 Mich 545, 552; 739 NW2d 313, 316
(2007).
A prima facie case of negligence requires a plaintiff to prove four elements: duty, breach
of that duty, causation, and damages. Fultz v Union-Commerce Assoc, 470 Mich 460, 463; 683
NW2d 587 (2004). “The threshold question in a negligence action is whether the defendant
owed a duty to the plaintiff. It is axiomatic that there can be no tort liability unless defendants
owed a duty to plaintiff.” Id. (internal quotation marks and citation omitted).
Duty has been defined as “an obligation that the defendant has to the plaintiff to avoid
negligent conduct.” Terry v Detroit, 226 Mich App 418, 424; 573 NW2d 348 (1997). Whether a
duty exists is a question of law. Meek v Dep't of Transportation, 240 Mich App 105, 115; 610
NW2d 250 (2000). If a court determines as a matter of law that a defendant owed no duty,
summary disposition is appropriate. Terry, supra at 424.
The question of duty turns on the relationship between the actor and the injured person.
Krass v Tri-County Sec, Inc, 233 Mich App 661, 668; 593 NW2d 578 (1999). Here, because
defendants’ relationship to plaintiffs was that of a dual agent, defendants’ duty to plaintiffs is
defined by the dual agency agreement signed by plaintiffs and Barlow. In signing this
agreement, defendants complied with MCL 339.2517(1) to advise plaintiffs, and plaintiffs
acknowledged, that defendants would not be able to provide the full range of fiduciary duties
typically owed to buyers by a buyers’ agent, such as the obligation to promote the best interests
of the buyer or to fully disclose to the buyer all facts that might affect or influence the buyer’s
decision to tender an offer to purchase. Thus, we reject plaintiffs’ contention that defendants
violated their duties as dual agents because the Purchase Agreement did not make the sale of
plaintiffs’ home a condition precedent to closing the transaction, or because the Purchase
Agreement did not provide that the sole remedy for failure to close was forfeiture of the earnest
money deposit. In fact defendants’ would have violated their duties as dual agents had they
drafted either a buyers-oriented or sellers-oriented agreement. In short, by signing the dual
agency agreement, plaintiffs acknowledged that defendants’ duty was simply to “provide
services to complete a real estate transaction.” MCL 339.2517(f).
Since defendants’ duty as a dual agent was simply to provide services to complete the
transaction, plaintiffs were solely responsible for having understood the implications of the
Purchase Agreement they freely signed. City of Grosse Pointe Park v Michigan Muni Liability
& Prop Pool, 473 Mich 188, 218-219; 702 NW2d 106 (2005)(“[t]he law presumes that the
contracting parties’ intent is embodied in the actual words used in the contract itself.”). That the
Purchase Agreement is unambiguous and contained no conditions precedent requiring the sale of
plaintiffs’ home before closing on the transaction, and no statement that the sole remedy for
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plaintiffs’ failure to close the agreement would be forfeiture of the earnest money deposit, is
therefore conclusive evidence of plaintiffs’ and McManamon’s intent, when they signed the
Purchase Agreement, that such terms were not part of the agreement.
In addition, the fact that plaintiffs signed an option agreement prepared by Barlow that
would have given plaintiffs the opportunity to avoid the imposition of the remedy of specific
performance, by exercising the option and, in the event plaintiffs failed to close, forfeiting the
$500,000 deposit, is strong evidence that plaintiffs understood that the Purchase Agreement did
not limit McManamon’s remedies if plaintiffs failed to close on the transaction. Plaintiffs offer
no logical explanation, and we can conceive of none, why they negotiated and signed an option
agreement under which, should they have exercised the option and failed to close on the
transaction, they would have forfeited $500,000, if the Purchase Agreement itself permitted the
plaintiffs to refuse to close on the transaction at the much smaller penalty of $35,000.
We also reject plaintiffs’ claim that defendants committed professional malpractice,
negligence or a breach of any duty because the title commitment was not delivered to plaintiffs
on September 1, 2006, but instead was delivered on January 11, 2007. First, this claim was not
pleaded in the complaint or decided by the trial court, and therefore, is not preserved for appeal.
Fast Air, Inc v Knight, 235 Mich App 541, 549; 599 NW2d 489 (1999). Second, even if we were
to review this claim,3 plaintiffs’ claim that the title commitment was delivered to them well
beyond the point in time when plaintiffs could exercise a right of rescission because of defects in
the title, misconstrues the language of the Purchase Agreement. Paragraph 10 of the Purchase
Agreement provides that seller will order the title insurance within 14 days of the agreement.
We find no language in the agreement requiring defendants to deliver the title commitment to
plaintiffs within 14 days, and plaintiffs fail to identify any such language. As such, by ordering
the title commitment on August 21, 2006, defendants complied with the terms of the Purchase
Agreement. Third, plaintiffs have not identified or asserted in this action any defects in the
marketability of the title precluding closure of the transaction, or any defects they were required
to accept when they actually closed on the transaction.
Given the evidence presented to the trial court, for all of the above reasons we conclude
that the trial court did not err by finding that plaintiffs failed to show the existence of a genuine
issue of material fact as to whether defendants were professionally negligent. Summary
disposition on this claim in defendants’ favor was properly granted.
III
Plaintiffs next argue that the circuit court erred in granting summary disposition of their
breach of fiduciary duties claim, contending that there were genuine issues of material fact as to
whether such duties were breached. We disagree.
3
We decline to do so because there is no showing that a manifest injustice would occur, or that
deciding this issue is necessary to a proper resolution of the case. Steward v Panek, 251 Mich
App 546, 554; 652 NW2d 232 (2002).
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As we noted above, the dual agency agreement signed by plaintiffs and defendants
constituted the entirety of the agency relationship between the parties. As dual agents,
defendants were unable to provide the full range of fiduciary duties typically owed to buyers by a
buyers’ agent, and had only the duty to “provide services to complete a real estate transaction.”
MCL 339.2517(f).4 Plaintiffs attempt to avoid the impact of this limited duty by claiming that,
despite the dual agency agreement, they were led to believe that defendants were negotiating a
buyers-oriented agreement on plaintiffs’ behalf, and that when they signed the Purchase
Agreement, they believed the Purchase Agreement contained the buyers-oriented provisions they
had allegedly discussed with defendants.
However, as a general rule, “one who signs a contract will not be heard to say, when
enforcement is sought, that he did not read it, or that he supposed it was different in its terms.”
Zaremba Equipment, Inc v Harco Nat'l Ins Co, 280 Mich App 16, 29; 761 NW2d 151 (2008),
quoting Farm Bureau Mut Ins Co of Michigan v Nikkel, 460 Mich 558, 567; 596 NW2d 915
(1999) (Citation omitted.). The plain language of the Purchase Agreement contains no condition
precedent of the sale of plaintiffs’ then current home, and no limitation of McManamon’s
remedies for plaintiffs’ failure to close the transaction. Plaintiffs cannot now argue that they
supposed these terms were contained in the agreement when they signed it. Zaremba, supra.
Moreover, plaintiffs affirmed in paragraph 17 of the Purchase Agreement that they relied
on no representations or warranties that were not in writing. Thus, having agreed to the dual
agency arrangement in order to facilitate the submission of an offer on the McManamon
Property, and there being no requirement stated in the dual agency agreement that defendants
should ensure the inclusion of certain specified provisions in the Purchase Agreement, plaintiffs
cannot now argue that defendants had duties to plaintiffs beyond those set forth in the dual
agency agreement.
For the foregoing reasons, we conclude that the trial court properly granted summary
disposition in favor of defendants on plaintiffs’ breach of fiduciary duties claim.
IV
Plaintiffs last contend on appeal that the circuit court erred in granting summary
disposition of their fraud claim. Again, we disagree.
Fraud has six elements: (1) a material misrepresentation; (2) that was false; (3) that when
the defendant made the representation, defendant knew it was false, or made it recklessly,
without any knowledge of its truth and as a positive assertion; (4) that the defendant made the
representation with the intention that it should be acted upon by the plaintiff; (5) that the plaintiff
acted in reliance upon the representation; and (6) that the plaintiff thereby suffered injury.
4
Indeed, since SKBK was the listing broker, and Colburn, an SKBK agent, was the listing agent,
we see no way that Barlow could have ethically worked with plaintiffs to submit an offer on the
McManamon Property unless plaintiffs agreed that defendants would act as dual agents on the
transaction.
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Cooper v Auto Club Ins Ass’n, 481 Mich 399, 408; 751 NW2d 443, 448 (2008). “Each of these
facts must be proved with a reasonable degree of certainty, and all of them must be found to
exist; the absence of any one of them is fatal to a recovery.” Id. “Further, an action for fraud
must be predicated upon a false statement relating to a past or existing fact; promises regarding
the future are contractual and will not support a claim of fraud.” Cummins v Robinson Twp, 283
Mich App 677, 696; ___ NW2d ___ (2009) (citation omitted). “Further, to establish a claim of
fraudulent misrepresentation, the plaintiff must have reasonably relied on the false
representation.” Id. Finally, there can be no fraud where a person has the means to determine
that a representation is not true. Id.
Plaintiffs are unable to show the existence of a genuine issue of material fact on their
fraud claim. Paragraph 37 of the Purchase Agreement urged the parties to retain legal counsel to
protect their interests. In addition, plaintiffs acknowledged when they signed the Purchase
Agreement that they relied on no unwritten representations in signing the agreement, and they
have not shown any written representations made by defendants that defendants assumed any
duties beyond those established in the dual agency agreement. Given the plain language of both
the Purchase Agreement and the dual agency agreement, plaintiffs cannot establish either that
they relied upon any unwritten representations made by defendants, or that they reasonably relied
on any such representations.
For the above-stated reasons, we conclude that the trial court properly granted summary
disposition in favor of defendants on plaintiffs’ fraud claim.
V
On the record before us, we conclude that the trial court properly granted summary
disposition in favor of defendants. Therefore, we affirm. Defendants, being the prevailing
parties, may tax costs pursuant to MCL 7.219.
/s/ Pat M. Donofrio
/s/ Kurtis T. Wilder
/s/ Donald S. Owens
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