SIGMA REALTY LLC V MAPLE GARDEN ASSOCIATES
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STATE OF MICHIGAN
COURT OF APPEALS
SIGMA REALTY, LLC,
UNPUBLISHED
March 11, 2010
Plaintiff/CounterdefendantAppellee,
v
MAPLE GARDEN ASSOCIATES, a/k/a MAPLE
GARDEN LLC, and DAVID JANKOWSKI,
No. 289148
Oakland Circuit Court
LC No. 2008-090371-CH
Defendants,
and
STEPHAN CUBBA,
Defendant/CounterplaintiffAppellant.
Before: Servitto, P.J., and Bandstra and Fort Hood, JJ.
PER CURIAM.
Defendant-appellant appeals as of right from the circuit court’s order granting summary
disposition to plaintiff. We affirm. This appeal has been decided without oral argument
pursuant to MCR 7.214(E).
This action arises from the sale of an apartment building in Birmingham. Plaintiff sold
the building to defendant Maple Garden in March 2006. Maple Garden was owned by defendant
Jankowski and defendant. The latter two executed a promissory note and guaranty, which
provided that they personally guaranteed the payment of all principal, interest, and costs due
under the note. Plaintiff filed the instant collection action to collect on the note. Maple Garden
and Jankowski defaulted, but defendant answered and counterclaimed, alleging fraudulent
misrepresentation. Specifically, defendant alleged that plaintiff had fraudulently misrepresented
the number of inhabitable units in the complex.
Plaintiff moved for summary disposition. In granting the motion, the court held:
The Court finds that summary disposition is appropriate because there is
no genuine issue of material fact that Defendant Cubba executed the personal
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Guaranty and has failed to raise a valid defense or a prima facie case of fraudulent
misrepresentation. Defendant Cubba cannot establish the elements of fraudulent
misrepresentation because the Purchase Agreement provided him the opportunity
to inspect the property and raise any claims regarding the representations and
warranties associated with the sale within 18 months of closing. Defendant
Cubba failed to raise the issues within the 18 months, thereby waiving them under
the terms of the Agreement.
We review a trial court’s decision on a motion for summary disposition de novo as a
question of law. Ardt v Titan Ins Co, 233 Mich App 685, 688; 593 NW2d 215 (1999). Contract
interpretation likewise presents a question of law, calling for review de novo. See Archambo v
Lawyers Title Ins Corp, 466 Mich 402, 408; 646 NW2d 170 (2002).
When reviewing an order of summary disposition under MCR 2.116(C)(10), we examine
all documentary evidence in the light most favorable to the nonmoving party to determine
whether there exists a genuine issue of material fact. Ardt, 233 Mich App at 688. “A motion for
summary disposition under MCR 2.116(C)(8) tests the legal sufficiency of a claim by the
pleadings alone.” Smith v Stolberg, 231 Mich App 256, 258; 586 NW2d 103 (1998). In
reviewing a (C)(8) motion, we accept as true all factual allegations in the claim “to determine
whether the claim is so clearly unenforceable as a matter of law that no factual development
could establish the claim and justify recovery.” Id.
The purchase agreement describes “an 18-unit apartment complex,” and gives its
location. The agreement provides for a pre-closing inspection period during which “Buyer may
physically inspect the Property,” including records relating to “information concerning the
condition of the Property,” and further provides that the agreement “shall automatically
terminate unless, prior to the end of the Inspection Period, Buyer delivers to Seller written notice
stating that Buyer intends to proceed.” Not in dispute is that defendant conducted such an
inspection and provided such notice.
Among the seller’s warranties, representations, and covenants is that, until closing, the
property would be maintained “in the manner in which it is currently being maintained,” and that
the seller “has not received written notice indicating that the Property is not in compliance with
all applicable laws, regulations and ordinances.”
Of key importance in this case is the following provision:
The indemnities, representations and warranties of each of Seller and
Buyer, and their respective obligations intended to be performed after the Closing,
if any, shall survive the Closing for a period of eighteen (18) months and
thereupon shall lapse, terminate and become void. After eighteen (18) months
following the Closing, neither party shall have the right to commence any suit
against the other based upon any claim of breach of any warranty or
representation under this Agreement nor upon any right to indemnification under
this Agreement.
The agreement also includes an integration provision, stating that the agreement
“supercedes all prior agreements between the parties as to the interests and/or Property, if any,
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and constitutes the entire agreement between the parties with respect to the subject matter
hereof,” and that any modification or amendments must be executed by the parties in writing.
At deposition, defendant confirmed that he had signed the promissory note and guaranty,
and testified that he knew of no payments made upon it to date. Defendant testified that there
were wiring violations and other code violations, but added that he did not know if plaintiff’s
owner intentionally hid those defects from him. Asked specifically what information he had to
indicate that plaintiff intentionally withheld information concerning problems with the allegedly
uninhabitable unit, defendant replied, “I have no idea.” Defendant additionally testified that
there was a problem with the building’s heat exchanger, but, again, that he did not know of
plaintiff was aware of it.
Fraud occurs where a person knowingly or recklessly makes a false material assertion
intending to induce, and actually inducing, reliance by another, to that other’s detriment. See
Brownell v Garber, 199 Mich App 519, 533; 503 NW2d 81 (1993). In this case, defendant fails
to point to evidence of any knowingly or recklessly false material assertion, including by way of
concealment, and also fails to specify what form any such misrepresentations took and the
corresponding realities were.
“In allegations of fraud or mistake, the circumstances constituting fraud or mistake must
be stated with particularity.” MCR 2.112(B)(1). Defendant, however, testified on deposition
that he had “no idea” if plaintiff intentionally misrepresented anything. On appeal, defendant
reminds this Court that intent may be proved by circumstantial evidence, but even so points to no
circumstantial evidence of any fraudulent misrepresentation beyond the bare existence of
unspecified problems with the heat exchanger, wiring, or code compliance.
As noted, the purchase agreement included the warranty that the seller had received no
“written notice indicating that the Property is not in compliance with all applicable laws,
regulations and ordinances,” thus disclaiming any knowledge that the applicable municipal
authority had deemed a unit uninhabitable for code violations. Defendant points to nothing to
indicate otherwise, and nowhere argues that he should have been allowed further discovery in
order to produce such evidence.
Further, the purchase agreement included no express warranty concerning the number of
inhabitable units, but did include an integration provision disclaiming any agreements or
understandings beyond the four corners of the agreement. We thus question whether defendant
was entitled to ascertain the condition of the property by other than the terms spelled out in the
agreement—its description of the property, warranties, and inspection opportunities.
Finally, “there can be no fraud where the means of knowledge regarding the truthfulness
of the representation are available to the plaintiff and the degree of their utilization has not been
prohibited by the defendant.” Webb v First of Michigan Corp, 195 Mich App 470, 474; 491
NW2d 851 (1992). In this case, in addition to the pre-closing inspection opportunity, of which
defendant took advantage, the purchase agreement allowed 18 months after closing to bring
claims over breach of any warranty or representation. As the trial court noted, defendant had the
“opportunity to inspect the property and raise any claims regarding the representations and
warranties associated with the sale within 18 months of closing,” yet failed to raise any such
issues within that time. Defendant points to nothing plaintiff did, or did not do, that prevented
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him, or the agents of his choice, from discovering any defect in the subject property during either
the 30-day pre-closing inspection period, or the 18 months after defendant and related concerns
took possession.
For these reasons, we conclude that the trial court properly rejected defendant’s defense
and counterclaim, and granted summary disposition to plaintiff.
Affirmed.
/s/ Deborah A. Servitto
/s/ Richard A. Bandstra
/s/ Karen M. Fort Hood
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