GMAC LLC V TYRONE L SMITH
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STATE OF MICHIGAN
COURT OF APPEALS
GMAC, LLC,
UNPUBLISHED
September 21, 2010
Plaintiff-CounterdefendantAppellee,
v
No. 292418
Wayne Circuit Court
LC No. 08-114706-CK
TYRONE L. SMITH,
Defendant-CounterplaintiffAppellant.
Before: MURPHY, C.J., and SAWYER and MURRAY, JJ.
PER CURIAM.
In this action arising out of a vehicle lease agreement and an accident involving the
leased vehicle, defendant Tyrone L. Smith appeals as of right the trial court’s order granting
summary disposition in favor of plaintiff GMAC, LLC, and awarding GMAC damages in the
amount of $38,403 on its complaint. Smith also appeals the summary dismissal of his
counterclaim. We affirm.
In May 2005, Smith leased a Chevrolet Corvette from a car dealer pursuant to a threeyear lease agreement, and the lease was immediately assigned to GMAC. In May 2007, two
years into the lease, the car was involved in an accident and deemed a total loss. For the next
seven months, the vehicle sat on the grounds of a collision shop while Smith’s no-fault insurer,
Nationwide, engaged in an investigation of the accident and Smith’s claim for coverage. In
December 2007, Nationwide formally denied coverage, finding that Smith had "made material
misrepresentations of fact, committed fraud, and [had] sworn falsely concerning the facts and
circumstances of the loss, the damage to the Corvette, [his] injuries, [his] financial condition,
[his] alleged inability to work, [and] the extent of loss . . . all for the purpose of fraudulently
submitting claims, inflating [his] claims, misleading [the] investigation[,] and wrongfully
obtaining insurance proceeds." In February 2008, GMAC sent a letter to Smith, which stated,
"Because the vehicle you were leasing from GMAC was destroyed, your lease has ended. The
vehicle has been sold and we are providing you with your final account settlement." GMAC
asserted that Smith owed $36,030, which included, in part, $12,424 in net remaining base
monthly payments and $20,614 in excess mileage / excess wear charges. In its appellate brief,
GMAC indicates that the Corvette had been returned to GMAC after the insurance denial and
that the vehicle “was sold at auction for salvage value.” Smith averred in his affidavit that
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GMAC sold the vehicle without providing him any notice of the sale, and GMAC does not
appear to dispute this contention.
In its complaint, GMAC alleged that the “vehicle was destroyed” and that Smith had
“breached the terms of the Lease, by failing to pay all the sums required pursuant to the Lease.”
Smith stopped making the monthly lease payments after the accident. GMAC requested entry of
judgment in the amount of $36,030. In a counterclaim, Smith alleged counts of breach of lease
contract, breach of GAP insurance policy contract, defamation and violation of the fair credit
reporting act, and intentional infliction of emotional distress.
GMAC subsequently filed a motion for summary disposition under MCR 2.116(C)(9)
and (10) relative to its complaint only, arguing that Smith was in default of the lease agreement
pursuant to ¶ 31 of the agreement and particularly the language in that paragraph providing that a
default occurs when the lessee “do[es] not pay on time.” GMAC also cited additional language
in ¶ 31, which provides that, upon default, GMAC has the authority to “[e]nd this lease and
require [lessee] to pay the early end charge,” along with the authority to “[t]ake the vehicle from
[lessee] without demand.” Paragraph 37 of the lease agreement addresses early end charges, as
referenced in ¶ 31, providing that, unless GAP insurance applies, the lessee will owe any unpaid
monthly payments, offset by a “credit for any unearned rent charge and a credit if [GMAC]
sell[s] the vehicle for more than residual value.” Paragraph 37 sets forth a specific formula for
calculating the early end charge, which involves taking the base monthly rental payment times
the number of payments not yet due, subtracting any unearned rent charge, subtracting any
surplus1 on the vehicle sale, and adding, if there is no surplus, any early excess mileage and wear
charge.2 GMAC used this formula from ¶ 37 in calculating its damages and argued that it was
1
A definition of “surplus” contained in the lease agreement provides as follows: “Unless you get
an appraisal or gap insurance applies, we will sell the vehicle at wholesale. If we sell the vehicle
for more than residual value, the excess will be the surplus. If we sell the vehicle for residual
value or less, the surplus will be zero.” (Emphasis added.) Smith focuses on the reference to an
“appraisal” in this definition in forming his appellate argument, which we discuss below. The
residual value of the Corvette, i.e., its estimated value at the end of the lease absent the accident,
was $33,114. While there is no information in the record concerning the exact dollar amount
that GMAC received when selling the vehicle for salvage value at auction, there certainly was no
“surplus,” and no credit for a surplus was attributed to Smith for purposes of GMAC’s
calculation of damages.
2
We note that ¶ 37 and the formula contained therein is prefaced by language which indicates
that, “[i]f the vehicle is a total loss, see the Gap Protection section,” which is ¶ 38 of the lease
agreement. Paragraph 38 provides that, if a vehicle is a total loss before the scheduled lease end
date and GMAC obtains an insurance settlement, GAP protection applies, but if there is no
insurance settlement, as occurred here, there is no GAP protection. Where there is no insurance
settlement, and thus no GAP protection, GMAC is entitled to collect “any excess of the residual
value over the vehicle’s salvage value,” which formula was not used by GMAC. However, in
such circumstances (no insurance settlement and no GAP protection), and where the lease ends
before the last scheduled payment is due, ¶ 38 further provides that GMAC is entitled to “the
early end charge that applies when the vehicle is not a total loss,” which language necessarily
redirects the reader back to ¶ 37.
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entitled to summary disposition, where Smith had not stated a valid defense, and where there was
no issue of fact that Smith had defaulted under the lease agreement. Smith’s argument in
response essentially boiled down to a claim that he was entitled to notice that GMAC had
obtained possession of the Corvette and notice of any intended sale, so that he could obtain an
appraisal; therefore, GMAC had breached the lease agreement and was not entitled to summary
disposition.3
The trial court agreed with GMAC, granting the motion for summary disposition and
indicating, in cursory fashion, that Smith had not made the lease payments and that GMAC was
simply exercising remedies available to it under the lease agreement. The order that was entered
reflects the court’s ruling that GMAC was granted summary disposition on its complaint, and the
order also indicates, in handwriting, that Smith’s counterclaim was dismissed with prejudice.
GMAC’s motion for summary disposition did not entail Smith’s counterclaim, nor was the
counterclaim discussed at the hearing. Smith asserts, without contradiction from GMAC, that
after the hearing, GMAC’s attorney inquired, off the record, about the status of the counterclaim
and that the court, also off the record, casually ordered the dismissal of the counterclaim without
any relevant discussion.
Summary disposition may be granted under MCR 2.116(C)(9) when “[t]he opposing
party has failed to state a valid defense to the claim asserted against him or her.” Summary
disposition may be granted under MCR 2.116(C)(10) when “there is no genuine issue as to any
material fact, and the moving party is entitled to judgment . . . as a matter of law.” This Court
reviews de novo a trial court’s decision on a motion for summary disposition. Maiden v
Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). “In ascertaining the meaning of a
contract, we give the words used in the contract their plain and ordinary meaning that would be
apparent to a reader of the instrument.” Rory v Continental Ins Co, 473 Mich 457, 464; 703
NW2d 23 (2005). “If the language of [a] contract is unambiguous, we construe and enforce the
contract as written.” Quality Products & Concepts Co v Nagel Precision, Inc, 469 Mich 362,
375; 666 NW2d 251 (2003). A contract is ambiguous if its provisions are capable of conflicting
interpretations. Klapp v United Ins Group Agency, Inc, 468 Mich 459, 467; 663 NW2d 447
(2003). We cannot read words into a contract that simply are not there. Terrien v Zwit, 467
Mich 56, 75; 648 NW2d 602 (2002).
3
In an affidavit, Smith averred that “[t]he mileage on the vehicle was extremely low and there
was clearly no excess mileage,” which claim appears substantiated by a photo of the vehicle’s
odometer taken after the accident. Smith also averred that “GMAC never informed [him] or
allowed [him] to inspect the vehicle to determine the actual value of any tear and wear and the
extent of the tear and wear.” GMAC submitted numerous post-accident photographs of the
vehicle to the trial court as attachments to its brief in support of the motion for summary
disposition.
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On appeal, Smith contends that he had a right to an appraisal under the lease agreement,
which right could only be asserted if GMAC gave him notice that it had possession of the vehicle
and intended to sell the vehicle. Smith maintains that, absent notice, his ability to mitigate his
liability was impaired and he was unable to assess the accuracy of GMAC’s damage claims as to
excess mileage and excess wear and tear.
We first note that ¶ 38 of the lease agreement, which addresses GAP protection,
insurance settlements, vehicles that are deemed total losses, and salvage value, see footnote 2
above, makes no reference to an appraisal. Given Nationwide’s determination denying
coverage,4 there was no insurance settlement and thus no GAP protection. Paragraph 37 refers to
an appraisal in the context of defining the term “surplus,” indicating that GMAC will sell the
vehicle at wholesale unless GAP protection applies or the lessee obtains an appraisal.5
Determining whether there was a surplus is part of the calculation of the early end charge or
damages under ¶ 37, which paragraph was relied on by GMAC in assessing damages.
Considering that the vehicle was totaled and sold for “salvage value,” we question whether the
appraisal language in ¶ 37 was even implicated, where the appraisal references are couched in
terms of a sale at “wholesale” and the vehicle’s “wholesale value.” More importantly, ¶ 37 does
not indicate that GMAC has to give notice to a lessee that it possesses the lessee’s vehicle, nor
that it plans to sell the vehicle. There is nothing in the record suggesting that Smith attempted to
obtain an appraisal and was rebuffed during the many months the vehicle sat idle, nor that Smith
even made an inquiry regarding an appraisal, a possible sale, or possession of the vehicle. A
contracting party cannot place obstacles in the way of the other contracting party’s attempt to
perform the contract, see Harbor Park Market, Inc v Gronda, 277 Mich App 126, 131-132; 743
NW2d 585 (2007), but there is nothing in the record suggesting that GMAC took affirmative or
any steps to prevent Smith from obtaining an appraisal or inquiring about a sale or possession of
the vehicle, let alone that GMAC deceived Smith relative to any inquiry.6
4
Smith’s counsel indicated at the summary disposition hearing that Smith was engaged in
litigation against Nationwide in the federal district court with respect to the denial of coverage.
5
Paragraph 37 also contains language specifically outlining the parameters of an appraisal,
stating:
You may get a professional appraisal of the vehicle’s wholesale value. If
you do so within a reasonable time, we will use the appraised value as the sale
price when we figure the surplus (if any). The appraiser must be an independent
third party. You and we must agree on the appraiser. You must pay for any
appraisal. The appraisal will be binding.
6
While Smith vaguely averred that GMAC did not allow him to inspect the vehicle, he did not
specify the circumstances of any effort or request to inspect the Corvette. Moreover, Smith did
not aver that he requested an appraisal and was turned down, or that he sought information about
a potential sale of the vehicle or the vehicle’s whereabouts and was denied information in
response.
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The law presumes that a party who has executed a contract has read the contract, Wilkie v
Auto-Owners Ins Co, 469 Mich 41, 59; 664 NW2d 776 (2003), in which case Smith is presumed
to know that he would not have GAP coverage if Nationwide declined no-fault coverage, that a
default would thus occur on stopping the lease payments, that repossession and a sale of the
vehicle was a remedy available to GMAC, that he might be able to pursue an appraisal, and that
he could be held liable for damages. Smith needed to proceed accordingly. While there might
have been a contractual right to an appraisal, Smith did not exercise the right, and he fails to
identify any expressed contractual right of notice relative to GMAC’s possession and sale of the
Corvette. We disagree with Smith’s assertion that the only way he could have asserted the right
to an appraisal is if GMAC gave him notice of its possession of the Corvette. It would have been
very simple for Smith, by himself or through counsel who was handling the matter, to invoke the
right as a preemptive move, knowing that GMAC had a contractual right to take the vehicle
without demand on default and a right to sell the vehicle. Confining our analysis to the
arguments presented by Smith, reversal on this issue is unwarranted.7
Smith also refers to remedies available under Article 9 of the Uniform Commercial Code
(UCC), MCL 440.9601 et seq., which governs secured transactions, relative to a creditor’s
failure to provide notice. Smith acknowledges, however, that a different article of the UCC,
Article 2A, MCL 440.2801 et seq., governs the lease agreement in this case. We decline Smith’s
invitation to “adopt by reference the statutory scheme of Article 9 of the UCC and use those
statutory provisions to determine what relief is available to a party to whom a lessor denied a
contractual right.” Again, GMAC did not deny any presumed right to an appraisal; it was never
invoked, and there was no contractual right to notice. And we cannot read language into a
statute if it is not there, i.e., making the UCC’s article governing secured transactions applicable
to lease agreements. AFSCME v Detroit, 468 Mich 388, 412; 662 NW2d 695 (2003). Smith
does not present any arguments under Article 2A of the UCC.
With respect to the summary dismissal of Smith’s counterclaim, the full argument made
by Smith in his appellate brief is as follows:
That decision is so blatantly illegal that there is no need to provide further
legal argument in support of its illegality. This Court must order the peremptory
reversal of the trial court judge.
There is no citation of court rules, statutes, constitutional provisions, or caselaw. The
argument is wholly undeveloped, lacking any discussion regarding the nature of the counts
contained in the counterclaim, let alone explaining how and why the counterclaim can survive
even with the court’s ruling in favor of GMAC on its complaint, which we have now affirmed.
As our Supreme Court stated in Mudge v Macomb Co, 458 Mich 87, 105; 580 NW2d 845
(1998):
7
With respect to Smith’s ability to assess the accuracy of GMAC’s damage claims as to excess
mileage and excess wear and tear, this would be information known to Smith, given that he
possessed and operated the vehicle for two years and was certainly aware of the extent of the
damage associated with the accident for which he sought insurance coverage from Nationwide.
-5-
“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.
The appellant himself must first adequately prime the pump; only then does the
appellate well begin to flow.” [Citation omitted.]
We do not condone the manner in which the trial court summarily dismissed Smith’s
counterclaim, as it does give rise to due process and notice concerns. See Al-Maliki v LaGrant,
286 Mich App 483, 485-489; 781 NW2d 853 (2009). However, Smith’s cursory argument on
the issue is simply insufficient. Moreover, we fail to see how the counts in the counterclaim can
survive given our ruling that the trial court did not err in entering judgment in favor of GMAC on
its contract claim.
Affirmed. Having prevailed in full, GMAC is awarded taxable costs under MCR 7.219.
/s/ William B. Murphy
/s/ David H. Sawyer
/s/ Christopher M. Murray
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