RESORT CONDOMINIUMS MARKETING INC V CROSSWINDS INC
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STATE OF MICHIGAN
COURT OF APPEALS
RESORT CONDOMINIUMS MARKETING,
INC., AKRAM M. SIDHOM and GLENN
BUNNELL,
UNPUBLISHED
April 30, 1999
Plaintiffs-Appellants,
v
No. 209018
Antrim Circuit Court
LC No. 97-007338 CK
CROSSWINDS, INC., H. GRANT ROWE,
BELLAIRE GROUP LIMITED PARTNERSHIP,
SHANTY CREEK PROPERTIES, INC., d/b/a
SHANTY CREEK RESORT MARKETING, REAL
ESTATE PLACE OF BELLAIRE, INC., d/b/a
VACATION PROPERTIES NETWORK, FIRST
NORTHERN HOLDING CORPORATION,
RIDGEWALK ASSOCIATES and RIDGEWALK
II, INC.,
Defendants-Appellees.
Before: McDonald, P.J., and Sawyer and Collins, JJ.
PER CURIAM.
Plaintiffs appeal by right from an order granting defendants’ motion for summary disposition
pursuant to MCR 2.116(C)(10) in this third-party beneficiary action. We affirm.
Plaintiffs argue that the trial court erred in dismissing their claim that they were entitled to
damages as third-party beneficiaries pursuant to a contract between defendants and Aggressive
Marketing Services, Inc. (“AMS”), which defendants breached. Plaintiffs essentially argue that because
the marketing agreement required AMS to utilize real estate brokers, and plaintiffs were the brokers
hired by AMS, they are third-party beneficiaries. In Michigan, the rights of third-party beneficiaries are
prescribed by MCL 600.1405; MSA 27A.1405, which provides in part:
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Any person for whose benefit a promise is made by way of contract, as
hereinafter defined, has the same right to enforce said promise that he would have had if
the said promise had been made directly to him as the promisee.
(1) A promise shall be construed to have been made for the benefit of a person
whenever the promisor of said promise had undertaken to give or to do or refrain from
doing something directly to or for said person.
In determining third-party beneficiary status, we must objectively determine from the form and meaning
of the contract itself, Kammer Asphalt Paving Co, Inc v East China Twp Schools, 443 Mich 176;
504 NW2d 635 (1993), whether the promisor of a contract promised to do or refrain from doing
something for the benefit of the party claiming third-party beneficiary status. Alcona Community
Schools v Michigan, 216 Mich App 202; 549 NW2d 356 (1996); Alden State Bank v Old Kent
Bank—Grand Traverse, 180 Mich App 40, 44; 446 NW2d 599 (1989). The promise must be an
express promise. Dynamic Const Co v Barton Marlow Co, 214 Mich App 425; 543 NW2d 31
(1995); see also Downriver Internists v Harris Corp, 929 F2d 1147 (CA 6, 1991).
No promise was ever made to plaintiffs pursuant to the marketing agreement. The language of
the agreement evidences an intent by defendants to hire AMS as a marketing organization to market and
sell the interval ownership interests in the condominiums. The rest of the agreement provides how such
sales will be accomplished, including the requirement that licensed real estate brokers be utilized. The
agreement specifically stated that AMS will hire and train employees and real estate brokers, and that it
will be the sole responsibility of AMS to determine appropriate wages and pay such wages.
Furthermore, the agreement specifically stated that defendants would pay AMS a commission of forty
seven percent of the actual sale price of the units. The agreement simply does not reveal any express
promise on defendants’ part to benefit the licensed real estate broker to be hired by AMS pursuant to
the agreement. Defendants were not responsible for hiring or compensating the broker under the
agreement. No benefit or duty flowed directly from defendants to plaintiffs pursuant to the agreement.
It is true that whichever real estate broker was retained stood to benefit from this agreement,
and plaintiffs likely did benefit from the agreement. However, these benefits were incidental to the
contract, Rieth-Riley Const Co, Inc v Dep’t of Transportation, 136 Mich App 425; 357 NW2d 62
(1984), and did not confer rights on plaintiffs as third-party beneficiaries. Koenig v South Haven, 221
Mich App 711; 562 NW2d 509 (1997), citing Alcona, supra at 205; Paul v Bogle, 193 Mich App
479; 484 NW2d 728 (1992).
The record indicates that it is almost certain that defendants and AMS had an understanding that
plaintiffs would be hired as the licensed real estate broker pursuant to the agreement. However, nothing
to this effect was set forth in the agreement, and whatever subjective motives and intentions defendants
and AMS had are irrelevant to determining plaintiffs’ third-party beneficiary status. Alcona, supra at
205. In addition, although plaintiffs argue that their course of dealing is relevant, the law specifically
states that the courts must look to the contract itself for answers. Kammar, supra at 176. Here, it is
clear from the language of the agreement that defendants and AMS, the signatories to the agreement,
were the primary beneficiaries of this agreement to market and sell the interval units. Thus, plaintiffs, as
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incidental beneficiaries, are not entitled to third-party beneficiary status. Paul, supra at 492; see also
Taggart v United States, 880 F2d 867 (CA 6, 1989).
Plaintiffs further argue that they must be intended beneficiaries because they were necessary
parties to the agreement. Many contracts require the involvement of other parties for successful
completion. However, these other actors are generally not considered third-party beneficiaries of the
prime contract; rather, they are incidental beneficiaries. See, e.g., Dynamic Const, supra at 425;
Kammer, supra at 176. Thus, that the agreement required a licensed real estate broker to conduct the
closings on the units did not make plaintiffs anything other than incidental beneficiaries. We conclude
that no record could be developed that would leave open an issue upon which reasonable minds could
differ regarding plaintiffs’ alleged third-party status. Bertrand v Alan Ford, Inc, 449 Mich 606, 617
618; 537 NW2d 185 (1995). Accordingly, summary disposition on this issue was appropriate.
Plaintiffs also argue that defendants were judicially estopped from claiming that plaintiffs were
not third-party beneficiaries based on what defendants alleged in a prior lawsuit between defendants
and AMS. “In Michigan, the doctrine of judicial estoppel prohibits a party who has successfully and
unequivocally asserted a position in a prior proceeding from asserting a wholly inconsistent position in a
subsequent proceeding.” Driver v Hanley, 226 Mich App 558, 563; 575 NW2d 31 (1997), citing
Paschke v Retool Industries, 445 Mich 502, 509-510; 519 NW2d 441 (1994). In the prior case
between defendants and AMS, defendants apparently argued that since part of the forty-seven percent
commission that AMS would have earned on the sales of the units but for the breach would have been
shared with the plaintiffs in this case, any damage award to AMS should have been reduced by
whatever amount was owed to plaintiffs. Plaintiffs apparently argue that defendants are judicially
estopped from arguing that plaintiffs are not third-party beneficiaries because defendants previously
recognized that plaintiffs were owed money out of AMS’ forty-seven percent commission, maintaining
that these claims are inconsistent. This Court fails to see how these two “claims” are inconsistent. The
question of whether plaintiffs were third-party beneficiaries was apparently never raised in the prior
lawsuit, and it does not appear that defendants somehow asserted such a contention. Defendants
simply argued that AMS’ damage award should be reduced by the amount of money AMS would had
to have paid plaintiffs as commissions for unit sales, apparently pursuant to some separate agreement
between AMS and plaintiffs. These arguments were not inconsistent, and the trial court did not err in
finding the doctrine of judicial estoppel inapplicable to the facts here.
Affirmed.
/s/ Gary R. McDonald
/s/ David H. Sawyer
/s/ Jeffrey G. Collins
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