TIMOTHY E WAUN V UNIVERSAL COIN LAUNDRY
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STATE OF MICHIGAN
COURT OF APPEALS
TIMOTHY E. WAUN and DEANNA WAUN,
UNPUBLISHED
September 26, 2006
Plaintiffs-Appellants,
v
UNIVERSAL COIN LAUNDRY MACHINE,
LLC, STEPHEN M. BEAN, and FREDERIC M.
BEAN,
No. 267954
Wayne Circuit Court
LC No. 04-424221-CK
Defendants-Appellees.
Before: Davis, P.J., and Murphy and Schuette, JJ.
SCHUETTE, J. (concurring in part and dissenting in part).
I concur in part and dissent in part. I agree with the majority in granting summary
disposition for the claim of breach of fiduciary duty, the claims of breach of contract and breach
of fiduciary duty with regards to Mrs. Waun, and the claim of personal liability for the Beans
regarding the breach of contract claim. I respectfully dissent from the majority on all other
claims and would affirm the trial court’s grant of summary disposition on all claims.
I. BREACH OF CONTRACT
I disagree with the majority’s conclusion that Universal was contractually obligated to
engage in a cost and income analysis. “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.” Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003). The
contract mandated that defendant use its “best efforts to locate a demographically valid location .
. . in accordance with [Universal] criteria for the establishment of a coin or debit card laundry . . .
.” It also required its “best efforts to secure financing on [Waun’s] behalf . . . .” In reading the
terms of the contract using the plain and ordinary meaning of the words, I do not believe that a
cost and income analysis was mandated. The majority believes that the contract is ambiguous
and the only reason defendant would engage in a cost and income analysis is because it was
obligated under the contract, but a reasonable belief could be that the cost and income analysis
was developed to help plaintiffs secure financing – a contractual obligation of defendant. I
believe that the contract is not ambiguous and must be enforced as written. Our Supreme Court
has noted that “ ‘[t]he general rule [of contracts] is that competent persons shall have the utmost
liberty of contracting and that their agreements voluntarily and fairly made shall be held valid
and enforced in the courts.’ ” Rory v Continental Ins Co, 473 Mich 457, 468; 703 NW2d 23
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(2005). In his deposition, Stephen Bean was asked if developing a site included an income
analysis like the one he provided to plaintiffs and he answered in the affirmative. This extrinsic
evidence is only permitted to interpret the intent of the parties where the language employed in
the contract is ambiguous. Edoff v Hecht, 270 Mich 689, 260 NW 93 (1935). The language of
this contract is not ambiguous and therefore this statement by Bean cannot be used to determine
the intent of the parties. Defendant was not contractually obligated to perform a cost and income
analysis and consequently could not have breached the contract; therefore, the trial court did not
err in dismissing the breach of contract claim.
II. FRAUDULENT MISREPRESENTATION
In order to claim fraudulent misrepresentation, a plaintiff must show that the
representation was false. Hord v Environmental Research Institute of Michigan (After Remand),
463 Mich 399, 404; 617 NW2d 543 (2000); M & D, Inc v McConkey, 231 Mich App 22, 27; 585
NW2d 33 (1998). Generally, a representation that something will occur (or will not) occur in the
future cannot support a fraud claim because such a representation “from its nature cannot be true
or false when it is made.” Broaden v Doncea, 340 Mich 564, 572; 66 NW2d 216 (1954). “An
action for fraud may not be predicated upon the expression of an opinion or salesmen’s talk in
promoting a sale, referred to as puffing.” Van Tassel v McDonald Corp, 159 Mich App 745,
750; 407 NW2d 6 (1987). Under these standards, the requirements for plaintiffs’ claim of
fraudulent misrepresentation would not be satisfied. The majority relies on Mesh v Citrin, 299
Mich 527, 534; 300 NW 870 (1941), that states when projected incomes and profits are
predicated on underlying deceit concerning past or existing facts, it could form the basis of a
fraud claim. Although the projections for plaintiffs’ annual income may have been ambitious,
they were within industry standards. The claims by defendant were not outrageous or outlandish,
but rather projections attainable by some competitors in the industry. I believe that there was not
underlying deceit in defendant’s projections to plaintiffs, but rather optimistic projections that
eventually proved to be wrong. Therefore defendant did not make a representation that was false
and the trial court did not err in dismissing the breach of contract claim.
III. NEGLIGENT MISREPRESENTATION
In order to have a successful claim of negligent misrepresentation, a plaintiff must show
that he justifiably relied on the statements made by the other party. Law Offices of Lawrence J
Stockler, PC v Rose, 174 Mich App 14, 33; 436 NW2d 70 (1989). Plaintiffs understood that all
the pro-formas developed by defendants were simply projections and that they did not guarantee
the income that they projected. Plaintiffs could have checked these assertions made by
defendant by doing their own research on the industry, i.e. finding out the average turns per day
and the normal income for a similarly situated launderette. Also, defendant was selling
merchandise to plaintiffs and plaintiffs realized that the seminars were a ‘slick’ sales pitch; both
of these realizations should have put plaintiffs on guard. Finally, defendant was not
contractually obligated to perform a cost and income analysis; therefore, plaintiffs would have
less reason to rely on the projections relayed by defendant. Plaintiffs did not justifiably rely on
the projections made by defendant; therefore, the trial court did not err in dismissing the claim of
negligent misrepresentation.
IV. NEGLIGENCE
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In order to have a successful claim of negligence, a plaintiff must show that the defendant
owes him or her a duty. Henry v The Dow Chemical Co, 473 Mich 63, 71-72; 701 NW2d 684
(2005). In this case, the plaintiffs allege defendant breached that duty by developing the site
analysis with grossly exaggerated income projections. Defendant was not contractually
obligated to prepare a cost and income analysis as part of the site analysis, so therefore defendant
did not owe plaintiffs a duty. The threshold question in any negligence action is whether the
defendant owed a duty to the plaintiff. Fultz v Union-Commerce Assoc, 470 Mich 460, 463; 683
NW2d 587 (2004). The trial court did not err in dismissing the negligence claim.
V. SILENT FRAUD
In order to have a successful claim of silent fraud, a plaintiff must show that there was a
legal or equitable duty of disclosure. M & D, Inc v McConkey, 231 Mich App 22, 29; 585 NW2d
33 (1998). Defendant does not have a legal duty to disclose that average industry sales were
significantly lower than the sales projections supplied to plaintiffs because defendant was not
contractually obligated to perform a cost and income analysis as part of the site analysis. An
equitable duty of disclosure could arise where the buyers express a particularized concern or
directly inquire of the seller and the seller remains silent. Id. at 33. There is no evidence that
plaintiffs requested the non-disclosed information, consequently defendant did not have an
equitable duty to disclose the information to plaintiffs. Defendant did not owe plaintiffs a legal
or equitable duty to disclose; therefore, the trial court did not err in dismissing the silent fraud
claim.
VI. REMAINING CLAIMS
The majority correctly affirmed the trial court’s decision to dismiss the breach of contract
and breach of fiduciary duty claims brought by Mrs. Waun. The tort claims brought by Mrs.
Waun, as shown above, should be dismissed against both plaintiffs. Therefore, I would find that
the trial court did not err in dismissing the claims regarding Mrs. Waun of fraudulent and
negligent misrepresentation, negligence and silent fraud.
The question of whether the Beans are personally liable for the tort claims brought by
plaintiffs need not be answered as I do not believe that there are any surviving tort claims. I
would find that the trial court did not err in dismissing the tort claims holding the Beans
personally liable.
I would affirm the grant of summary disposition by the trial court on all claims.
/s/ Bill Schuette
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