ALLSTATE INS CO V TIMOTHY BROE
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STATE OF MICHIGAN
COURT OF APPEALS
ALLSTATE INSURANCE COMPANY,
UNPUBLISHED
July 22, 2010
Plaintiff-Appellant,
v
TIMOTHY BROE, ELEANOR BROE, and BROE
REHABILITATION SERVICES, INC.,
No. 290133
Oakland Circuit Court
LC No. 2004-063179-CK
Defendants-Appellees.
Before: MURPHY, C.J., and K.F. KELLY and STEPHENS, JJ.
STEPHENS, J. (dissenting).
I respectfully disagree with my colleagues. Because I conclude that plaintiff did not
promptly rescind the contract upon defendants failure to timely perform, I further conclude that
plaintiff waived the requirement in question and was required to provide defendant a reasonable
period of time to perform. Therefore, I would vacate and remand for further proceedings.
I agree with the majority that a valid settlement agreement arose when plaintiff’s counsel
accepted defendants’ offer to pay $2.7 million by the end of the month. The acceptance was in
writing and signed by plaintiff’s counsel. Given that the parties specified a date for performance
and that plaintiff was giving up its right to collect on the judgment in exchange for prompt
payment of a lesser sum, time was of the essence to the contract. In re Day Estate, 70 Mich App
242, 246; 245 NW2d 582 (1976). I further agree that defendants breached the contractual
agreement when they failed to perform before the end of November. As the majority correctly
notes, once the breach was discovered, plaintiff had a right to rescind the contract so long as the
right was promptly asserted. Schneff v Thomas L McNamara, Inc, 354 Mich 393, 397; 93 NW2d
230 (1958). My disagreement with the majority arises from my conclusion that plaintiff failed to
promptly assert that right. Plaintiff did not elect to rescind the settlement agreement once
defendants failed to make payment when due. Rather, it continued to wait for payment. Of
particular importance to my conclusion is plaintiff’s counsel’s statement in his December 9, 2008
email, in which he stated that plaintiff “has been very understanding regarding the delay in
payment.” Counsel’s statement indicates that plaintiff was not requiring strict compliance with
that term of the agreement.
Because plaintiff did not promptly insist upon revocation when the deadline was missed,
and given plaintiff’s counsel’s warning that plaintiff had been patient in waiting for payment but
its patience was running out, I conclude that plaintiff, by its conduct, waived the requirement that
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defendants make payment by the end of the month. Quality Products & Concepts Co v Nagel
Precision, Inc, 469 Mich 362, 373-374; 666 NW2d 251 (2003). If one party has waived time for
performance of a contractual obligation, the other party has a reasonable time in which to
perform unless the waiver was accompanied by a specific extension of time, which time then
becomes of the essence. Absent a specific extension of time, the first party can rescind only after
full notice and a reasonable time for performance is given. A1-Oil, Inc v Pranger, 365 Mich 46,
53; 112 NW2d 99 (1961), citing 17 CJS Contracts § 506. Here, plaintiff initially waived any
objection to the delay in payment. In failing to demand timely performance, plaintiff did not
initially provide defendant with a specific extension of time. Consequently, plaintiff could only
rescind its offer after providing defendant with full notice and a reasonable time for performance.
Plaintiff's counsel notified defense counsel on December 9, 2008 that plaintiff was no longer
going to accept defendants’ delay in performance and advised, “If this matter is not resolved by
tomorrow [December 10, 2008], my client will enforce all of its options.” Plaintiff’s counsel
filed a motion before the expiration of the deadline at approximately 3:30 p.m., requesting
release of the bond posted in this case as “partial satisfaction” of the judgment. An hour later,
Defense counsel sent a proposed settlement agreement, which contained additional terms not
agreed to by the parties, and no funds were disbursed to plaintiff. Plaintiff’s counsel promptly
rescinded the agreement the next morning.
The statement of plaintiff's counsel placed defendant on full notice that performance was
required. However, based on the record, it is unclear whether it was reasonable to demand
performance within one day of that notice. The parties’ arguments were principally focused on
the enforceability of any agreement and whether time was of the essence in the original
agreement. The trial court failed to provide any explanation of the factors that led it to conclude
that the period of time was reasonable. As a result, I find it necessary to remand this matter to
determine whether it was reasonable for plaintiff, on December 9, 2008, to demand performance
by December 10, 2008 and to file a motion for release of the bond before the expiration of the
deadline period. In making its determination, I would instruct the trial court to consider whether
plaintiff could have reasonably expected the trial court to release its cash bond in the provided
amount of time.
Finally, I note that I agree with the majority regarding the inapplicability of the doctrine
of equitable estoppel.
/s/ Cynthia Diane Stephens
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