MACDONALD LAW OFFICE PLLC V TED JANSEN
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STATE OF MICHIGAN
COURT OF APPEALS
MACDONALD LAW OFFICE, PLLC,
UNPUBLISHED
June 24, 2010
Plaintiff-Appellant,
v
No. 289167
Hillsdale Circuit Court
LC No. 08-000624-CK
TED JANSEN and PENNY JANSEN,
Defendants-Appellees.
Before: SERVITTO, P.J., and FITZGERALD and BECKERING, JJ.
PER CURIAM.
Before this Court is an action to enforce a guarantee agreement that was executed by
defendants to ensure the payment of attorney fees and costs incurred by Autumn Ellsworth in a
child protective services matter. Plaintiff, MacDonald Law Office, PLLC, appeals as of right
from an order dismissing its complaint pursuant to MCR 2.116(C)(10) following a scheduling
hearing. We reverse and remand.
Defendants solicited plaintiff to represent Ellsworth, a cognitively impaired individual. It
is undisputed that defendants signed a written guarantee promising to pay the retainer, fees, and
costs incurred by Ellsworth, to the extent that she was unable to do so, in defense of an abuse and
neglect petition filed by the Department of Human Services. When the costs and fees reached
$5,000, defendants notified plaintiff by letter that they could no longer guarantee any future
payment and that they were withdrawing their guarantee. Plaintiff brought the present suit to
enforce the guarantee agreement.
On November 10, 2008, a scheduling conference was held on the record. Plaintiff
acknowledged that it received defendants’ letter, but noted that it disagreed with plaintiff “as to
whether or not that would eliminate his responsibility as a guarantor under the agreement, since
he had signed the agreement agreeing to be responsible for whatever it wound up being.” The
trial court, finding that defendants put plaintiff on notice that they would not pay any attorney
fees beyond the $5,000 that they had already paid, dismissed plaintiff’s complaint.
Under MCR 2.401(C)(1)(l), during a pretrial conference, the court may consider any
matters that may aid in the disposition of the action. Further, at any time after an action has
commenced, if the pleadings show that a party is entitled to judgment as a matter of law, the
court must render judgment without delay. MCR 2.116(I)(1). In that regard, if no factual
dispute exists, a trial court is required to dismiss an action when a party is entitled to judgment as
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a matter of law, and a motion for summary disposition is unnecessary. Sobiecki v Dep't of
Corrections, 271 Mich App 139, 141; 721 NW2d 229 (2006).
Under Michigan case law, when a contract is unambiguous, it must be enforced
according to its terms. Hamade v Sunoco, Inc, 271 Mich App 145, 166; 721 NW2d 233 (2006);
see also Phillips v Homer (In re Smith Trust), 480 Mich 19, 24; 745 NW2d 754 (2008) (stating
that when “contractual language is unambiguous, courts must interpret and enforce the contract
as written because an unambiguous contract reflects the parties' intent as a matter of law”).
A guarantee is “[a] promise to answer for the payment of some debt, or the performance
of some duty, in case of the failure of another who is liable in the first instance.” Black's Law
Dictionary (8th ed). The guarantor's duty to pay or to perform is collateral to the duty of the
primary obligor and only arises upon the obligor's failure to pay the debt. Mortgage & Contract
Co v Linenberg, 260 Mich 142, 146-147; 244 NW 428 (1932); see also Bandit Industries, Inc v
Hobbs Int'l (After Remand), 463 Mich 504, 507 n 4; 620 NW2d 531 (2001). The guarantee
signed by defendants provided:
We, Ted Jansen and Penny Jansen, agree to act as Guarantors for the retainer, fees
and costs outlined above, and agree to be legally responsible for the same to the
extent that Client is unable to do so. We realize that this will not entitle us to
control of litigation, or to be privy to privileged information except as authorized
by Client or as is in compliance with HIPAA, the Americans with Disabilities
Act, and other, similar, state and federal privacy laws.
The written guarantee does not refer to any limitation on the maximum amount of
attorney fees and costs. Plaintiff denied at the scheduling hearing that a verbal agreement was
reached regarding such a limitation. The trial court nonetheless found that defendants could
legally terminate the guarantee for the payments of attorney fees and costs once such costs
exceeded “the stated amount of the cost of representation,” and that the letter sent by defendants
to plaintiff provided notice of termination of the agreement.
A problem exists with this reasoning, however. The trial court completely failed to
consider the language of the written guarantee to determine the terms of the parties’ agreement.1
A review of the written guarantee is necessary to determine the terms of the parties’ agreement.
It was error for the trial court to determine as a matter of law that the letter sent by defendants to
plaintiff could extinguish defendants’ contractual liability.
Additionally, defendants’ letter was based on their assertion that the parties verbally
agreed that defendants’ guarantee limited their financial liability to $5,000 in attorney fees and
costs. Essentially, the trial court relied on parol evidence of an oral contemporaneous agreement
1
Although not properly before this Court, the written guarantee is unconditional and
unambiguous and provides no limitation on the maximum amount of attorney fees and costs.
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in finding that defendants’ letter to plaintiff put plaintiff on notice that they would not pay any
additional attorney fees and costs and thereby defeated plaintiff’s cause of action. Generally,
parol evidence of contract negotiations, or of prior or contemporaneous agreements that
contradict or vary the written contract, is not admissible to vary the terms of a clear,
unambiguous contract. Schmude Oil Co v Omar Operating Co, 184 Mich App 574, 580; 458
NW2d 659 (1990). “The practical justification for the rule lies in the stability that it gives to
written contracts; for otherwise either party might avoid his obligation by testifying that a
contemporaneous oral agreement released him from the duties that he had simultaneously
assumed in writing.” Hamade, 271 Mich App at 167, quoting 4 Williston, Contracts, § 631. “In
other words, the parol evidence rule addresses the fact that ‘disappointed parties will have a great
incentive to describe circumstances in ways that escape the explicit terms of their contracts.’”
Id., quoting Fried, Contract as Promise (Cambridge: Harvard University Press, 1981) at 60 n 14.
There are, however, exceptions to the rule. First, it is a prerequisite to application of the
parol evidence rule that there be a finding that the parties intended the written instrument to be a
complete expression of their agreement with regard to the matters covered. Hamade, 271 Mich
App at 167-168. Where there is no express integration clause, “[p]arol evidence is admissible to
establish the full agreement of the parties [to a contract] where the document purporting to
express their intent is incomplete.” Greenfield Construction Co, Inc v Detroit, 66 Mich App
177, 185; 238 NW2d 570 (1975).
Under the circumstances of this case, the trial court prematurely sua sponte granted
summary disposition at the scheduling conference. At a minimum, review of the written
guarantee is necessary before the trial court can determine whether an ambiguity existed,
whether the parties intended the written guarantee to be a complete expression of their
agreement, and, if not, whether defendants’ parol evidence that plaintiff made representations
regarding the maximum legal fees for the year established that the parties intended those
representations to be included as a term of their agreement.
Reversed and remanded for further proceedings. Jurisdiction is not retained.
/s/ Deborah A. Servitto
/s/ E. Thomas Fitzgerald
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