AD TRANSPORTATION INC V MICHIGAN MATERIALS & AGGREGATES CO INC
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STATE OF MICHIGAN
COURT OF APPEALS
A. D. TRANSPORT, INC., and M & G
DEVELOPMENT, INC.,
UNPUBLISHED
September 30, 2010
Plaintiffs-Appellees/CrossAppellants,
v
MICHIGAN MATERIALS & AGGREGATES
COMPANY, INC., and MICHIGAN PAVING &
MATERIALS COMPANY,
No. 290236
Wayne Circuit Court
LC No. 07-703403-CE
Defendants-Appellants/CrossAppellees.
A. D. TRANSPORT, INC., and M & G
DEVELOPMENT, INC.,
Plaintiffs-Appellants,
v
MICHIGAN MATERIALS & AGGREGATES
COMPANY, INC., and MICHIGAN PAVING &
MATERIALS COMPANY,
No. 290250
Wayne Circuit Court
LC No. 07-703403-CE
Defendants-Appellees.
Before: FITZGERALD, P.J., and MARKEY and BECKERING, JJ.
PER CURIAM.
This case arises out of the 2005 sale of alleged contaminated real property in Van Buren
Township, Michigan by defendant Michigan Materials & Aggregates Company (“MMAC”) to
plaintiff A. D. Transport, Inc. (“ADT”), pursuant to a written contract containing an “as is”
provision. After the contract was executed, ADT assigned its contract rights to plaintiff M & G
Development, Inc. (“MG Development”). In Docket No. 290236, MMAC and its parent
company, defendant Michigan Paving & Materials Company (“Michigan Paving”), appeal as of
right the trial court’s order granting plaintiffs summary disposition on their claims for fraud,
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negligent misrepresentation, negligence, and violation of the Natural Resources and
Environmental Protection Act (NREPA), MCL 324.101 et seq., and awarding plaintiffs a
judgment of $1,691,791.14. Plaintiffs cross appeal, challenging the trial court’s dismissal of
their additional claims for unjust enrichment and restitution, and common-law indemnification.
In Docket No. 290250, plaintiffs appeal as of right the trial court’s postjudgment order denying
their motion for costs and attorney fees. In Docket No. 290236, we affirm in part, reverse and
vacate in part, and remand for further proceedings. In Docket No. 290250, we affirm in part,
vacate in part, and remand for further proceedings regarding plaintiffs’ request for sanctions
pursuant to MCR 2.114(E).
I. BACKGROUND
Michigan Paving and its subsidiary, MMAC, are part of the same asphalt-paving business
in southern Michigan. The business maintained an office on approximately 22 acres of property
in Van Buren Township until July 2005, when MMAC accepted ADT’s offer to purchase the
property “as is” for approximately $1.4 million. In August 2005, ADT assigned its rights under
the contract to MG Development. MMAC then executed a warranty deed conveying the
property to MG Development.
In February 2007, plaintiffs filed this action against defendants. Plaintiffs’ second
amended complaint alleged that, contrary to representations made by defendants’ agents before
the sale, defendants were aware that contaminated waste was buried or hidden on the property.
Plaintiffs sought recovery of remediation costs from defendants under various common-law and
statutory theories of liability, including common-law fraud, negligent misrepresentation,
negligence, trespass, nuisance, unjust enrichment, common-law indemnification, and the
NREPA.
The parties filed cross-motions for summary disposition pursuant to MCR 2.116(C)(10).
The trial court granted defendants’ motion with respect to plaintiffs’ claims for trespass,
nuisance, unjust enrichment, and common-law indemnification, but granted summary disposition
in favor of plaintiffs with respect to their claims for fraud, negligent misrepresentation,
negligence, and the NREPA. The court thereafter awarded plaintiffs a judgment on their claims
in the amount of $1,691,791.14. Plaintiffs’ postjudgment motion for an award of costs and
attorney fees under various theories was denied.
II. DOCKET NO. 290236 (DEFENDANTS’ APPEAL)
Defendants challenge the trial court’s decision granting plaintiffs summary disposition on
their claims for fraud, negligent misrepresentation, negligence, and the NREPA.1
1
Defendants assert in a footnote in their brief on appeal that MG Development and MMAC are
the only real parties in interest in this case. The record does not disclose that this issue was
raised below and defendants have not properly raised it as an issue on appeal, nor do they
otherwise address it in their brief. “It is axiomatic that where a party fails to brief the merits of
an allegation of error, the issue is deemed abandoned by this Court.” Prince v MacDonald, 237
(continued…)
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We review a trial court’s decision on a motion for summary disposition de novo. Allison
v AEW Capital Mgt, LLP, 481 Mich 419, 424; 751 NW2d 8 (2008). A motion under MCR
2.116(C)(10) tests the factual support for a claim based on the substantively admissible evidence.
MCR 2.116(G)(6); Adair v Mich, 470 Mich 105, 120; 680 NW2d 386 (2004); Maiden v
Rozwood, 461 Mich 109, 120-121; 597 NW2d 817 (1999). The moving party has the initial
burden of supporting its position with affidavits, depositions, admissions, or other documentary
evidence. MCR 2.116(G)(3)(b) and (4); Quinto v Cross & Peters Co, 451 Mich 358, 362; 547
NW2d 314 (1996). The burden then shifts to the nonmoving party to show a genuine issue of
material fact for trial. Id.; Innovative Adult Foster Care, Inc v Ragin, 285 Mich App 466, 475;
776 NW2d 398 (2009). Summary disposition is appropriate if there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Healing Place at
North Oakland Med Ctr v Allstate Ins Co, 277 Mich App 51, 55-56; 744 NW2d 174 (2007).
“There is a genuine issue of material fact when reasonable minds could differ on an issue after
viewing the record in the light most favorable to the nonmoving party.” Allison, 481 Mich at
425.
Defendants argue that the trial court’s decision granting plaintiffs summary disposition
on their fraud, negligent misrepresentation, negligence, and NREPA claims was based on its
erroneous determination that defendants had a duty under the NREPA to disclose that the
property was a “facility” as defined in that act before transferring an interest in the property. We
agree that the trial court erred in finding that the property was a facility for which defendants had
a duty of disclosure under the NREPA, and that this error requires reversal of the trial court’s
decision with respect to each of the four claims for which the court granted plaintiffs summary
disposition. The statutory duty of disclosure was not material to each cause of action. Further,
there is a genuine issue of material fact whether the property was a “facility,” which thereby
precluded summary disposition in favor of either plaintiffs or defendants.
The NREPA is a recodification, with some amendments, of the former Michigan
Environmental Response Act (MERA), MCL 299.601 et seq. See Cairns v East Lansing, 275
Mich App 102, 108; 738 NW2d 246 (2007); Farm Bureau Mut Ins Co v Porter & Heckman, Inc,
220 Mich App 627, 629 n 1; 560 NW2d 367 (1996); Cipri v Bellingham Frozen Foods, Inc, 213
Mich App 32, 36; 539 NW2d 526 (1995). The MERA was originally enacted in 1982, but was
extensively amended in 1990. See Farm Bureau Mut Ins Co, 220 Mich App at 629 n 1. The
NREPA became effective March 30, 1995. Id. Part 201 of the NREPA encourages the prompt
cleanup of hazardous substances by authorizing administrative and private actions, and assigning
financial liability for the cleanup. Cairns, 275 Mich App at 108. It provides for retroactive
application of remedies for “facilities”2 posing a threat to public health, safety, or welfare, or to
(…continued)
Mich App 186, 197; 602 NW2d 834 (1999). Accordingly, this issue is not properly before this
Court. Therefore, for purposes of our review, we shall treat both plaintiffs as having a potential
right of recovery and both defendants as having potential liability.
2
MCL 324.20101(1)(o) defines a “facility” as:
. . . any area, place, or property where a hazardous substance in excess of the
concentrations which satisfy the requirements of section 20120a(1)(a) or (17) or
the cleanup criteria for unrestricted residential use under part 213 has been
(continued…)
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the environment, MCL 324.20102(h), although not all amendments to the MERA as set forth in
the NREPA have retroactive effect. See Cipri, 213 Mich App at 37-38.
In this case, plaintiffs’ complaint alleged entitlement to response activity costs under the
NREPA. Plaintiffs’ claim was based on MCL 324.20126a, which provides, in pertinent part:
(1) Except as provided in section 20126(2), a person who is liable under
section 20126 is jointly and severally liable for all of the following:
(a) All costs of response activity lawfully incurred by the state relating to
the selection and implementation of response activity under this part.
(b) Any other necessary costs of response activity incurred by any other
person consistent with rules relating to the selection and implementation of
response activity promulgated under this part.
(c) Damages for the full value of injury to, destruction of, or loss of
natural resources, including the reasonable costs of assessing the injury,
destruction, or loss resulting from the release.
***
(7) The costs recoverable under this section may be recovered in an action
brought by the state or any other person.
MCL 324.20126(1) provides that persons subject to liability under the NREPA include
the following:
(a) The owner or operator of a facility if the owner or operator is
responsible for an activity causing a release or threat of release.3
(…continued)
released, deposited, disposed of, or otherwise comes to be located. Facility does
not include any area, place, or property at which response activities have been
completed which satisfy the cleanup criteria for the residential category provided
for in section 20120a(1)(a) and (17) or at which corrective action has been
completed under part 213 which satisfies the cleanup criteria for unrestricted
residential use.
The “cleanup criteria for unrestricted residential use under part 213” was added by 1996 PA 115,
effective March 6, 1996.
“Facility” was originally defined in the NREPA, MCL
324.20101(1)(k) (emphasis added), as “any area, place, or property where a hazardous substance
has been released, deposited, stored, disposed of, or otherwise comes to be located.” This
definition was also contained in the former MERA, MCL 299.603(m). See Farm Bureau Mut
Ins Co, 220 Mich App at 640.
3
“Owner” is defined as “a person who owns a facility.” MCL 324.20101(1)(z). “Operator”
means “a person who is in control of or responsible for the operation of a facility.” MCL
(continued…)
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(b) The owner or operator of a facility at the time of disposal of a
hazardous substance if the owner or operator is responsible for an activity causing
a release or threat of release.
(c) An owner or operator of a facility who becomes an owner or operator
on or after June 5, 1995, unless the owner or operator complies with both of the
following:
(i) A baseline environmental assessment is conducted prior to or within
45 days after the earlier of the date of purchase, occupancy, or foreclosure. For
purposes of this section, accessing property to conduct a baseline environmental
assessment does not constitute occupancy.
(ii)
The owner or operator discloses the results of a baseline
environmental assessment to the department and subsequent purchaser or
transferee if the baseline environmental assessment confirms that the property is a
facility. [Emphasis added.]
The NREPA also establishes a duty of disclosure for persons transferring property that
qualifies as a “facility.” MCL 324.20116(1) provides:
A person who has knowledge or information or is on notice through a
recorded instrument that a parcel of his or her real property is a facility shall not
transfer an interest in that real property unless he or she provides written notice to
the purchaser or other person to which the property is transferred that the real
property is a facility and discloses the general nature and extent of the release.
[Emphasis added.]
Although both the disclosure duties and the liability provisions of the NREPA are linked
to the property constituting a facility, the disclosure duties are not material to whether a person
may file a private action under the NREPA to recover response activity costs. However, the
statutory duty of disclosure is material to plaintiffs’ silent fraud claim, which is based on
defendants’ failure to disclose that the property was a facility under the NREPA.
Plaintiffs’ fraud claim was based on both a fraudulent misrepresentation and silent fraud.
Where there is a contract between parties, an independent tort action, such as a claim for fraud, is
permissible as long as it is based on duties distinct from the contract. See Cooper v Auto Club
Ins Ass’n, 481 Mich 399, 410; 751 NW2d 443 (2008). Fraud in the inducement is a species of
fraud in a contract setting that “renders a contract voidable at the option of the defrauded party.”
Samuel D Begola Servs, Inc v Wild Bros, 210 Mich App 636, 640; 534 NW2d 217 (1995).
However, the defrauded party may elect to proceed under the contract and recover damages.
(…continued)
324.20101(1)(y). To apply MCL 324.20126(a), the person must be the current owner or
operator. See Farm Bureau Mut Ins Co v Porter & Heckman, Inc, 220 Mich App 627, 642-643 n
11; 560 NW2d 367 (1996) (discussing liability provisions under the former MERA). Because
defendants are not current owners, MCL 324.20126(a) does not apply.
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Nowicki v Podgorski, 359 Mich 18, 25; 101 NW2d 371 (1960). A claim of silent fraud requires
a suppression of material facts and a legal or equitable duty to make the disclosure. Hord v
Environmental Research Institute of Mich (After Remand), 463 Mich 399, 412; 617 NW2d 543
(2000); Bergen v Baker, 264 Mich App 376, 382; 691 NW2d 770 (2004); M & D, Inc v
McConkey, 231 Mich App 22, 35-36; 585 NW2d 33 (1998). Here, the existence of a statutory
duty of disclosure under the NREPA is material to the silent fraud claim because it would give
rise to a legal duty of disclosure.
With respect to plaintiffs’ claim of fraudulent misrepresentation, the relationship between
parties may give rise to a duty sufficient to permit fraud to be predicated on a misrepresentation.
Cooper, 481 Mich at 409. A claim of fraudulent misrepresentation requires proof that (1) the
defendant made a material misrepresentation, (2) the representation was false, (3) the defendant
knew that the representation was false, or made it recklessly, without knowledge of its truth and
as a positive assertion, (4) the defendant intended that the plaintiff would act on it, (5) the
plaintiff acted in reasonable reliance on the false representation, and (6) damages. Cummins v
Robinson Twp, 283 Mich App 677, 695-696; 770 NW2d 421 (2009). Here, the trial court did not
determine whether defendants made a false representation; rather, it only determined that the
statutory duty of disclosure under the NREPA was not satisfied. Thus, the court substantively
resolved the fraud claim by relying only on the concept of silent fraud.
Plaintiffs’ complaint also alleged negligent misrepresentation, which requires proof that
that the plaintiff justifiably relied to its detriment on information prepared without reasonable
care by one who owes a duty of care to the plaintiff. Fejedelem v Kasco, 269 Mich App 499,
502; 711 NW2d 436 (2006). This theory of relief is a means for holding a party liable for the
negligent performance of a contract to third parties who are foreseeably injured by the negligent
performance. See Williams v Polgar, 391 Mich 6, 20-23; 215 NW2d 149 (1974). Although
negligent misrepresentation is distinguishable from a claim of fraudulent misrepresentation and
silent fraud, the trial court here relied on the same statutory duty of disclosure under the NREPA,
not a separate duty of care owed by defendants to any plaintiff, to resolve this claim in favor of
plaintiffs. Further, plaintiffs’ allegations in support of this cause of action in their complaint
were based on the same alleged statements and statutory duty of disclosure that were the basis
for their general fraud and silent fraud claims. Thus, the trial court erred to the extent that it
found that plaintiffs were independently entitled to summary disposition on their negligent
misrepresentation claim without an independent basis for finding a negligent misrepresentation.
Substantively, the court only found silent fraud.
Similarly, plaintiffs’ negligence claim presupposes the existence of a legal relationship
between the parties giving rise to a duty of care. Id. at 18. Here, plaintiffs alleged that they were
owed a duty of disclosure under the NREPA, as purchasers of the subject property, and other
duties under the NREPA as adjoining property owners. In granting plaintiffs summary
disposition on this claim, the trial court did not determine that defendants owed plaintiffs any
duty of care based on their status as adjoining property owners. Rather, its resolution of the
negligence count is likewise indistinguishable from its resolution of the silent fraud claim. Thus,
our analysis of the silent fraud claim is dispositive of the negligence claim as well.
As previously indicated, both the NREPA and the silent fraud claims depend on whether
the property in question was a “facility” under the NREPA at the time it was sold, meaning “any
area, place, or property where a hazardous substance in excess of the concentrations which
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satisfy the requirements of section 20120a(1)(a) or (17) or the cleanup criteria for unrestricted
residential use under part 213 has been released, deposited, disposed of, or otherwise comes to be
located.” MCL 324.20101(1)(o) (emphasis added).
MCL 324.20120a refers to both generic and site-specific cleanup criteria for property.
The statute provides, in relevant part:
(1) The department may establish cleanup criteria and approve of
remedial actions in the categories listed in this subsection. The cleanup category
proposed shall be the option of the person proposing the remedial action, subject
to department approval, considering the appropriateness of the categorical criteria
to the facility. The categories are as follows:
(a) Residential.
***
(2) The department may approve a remedial action plan based on site
specific criteria that satisfy the applicable requirements of this part and the rules
promulgated under this part. The department shall utilize only reasonable and
relevant exposure pathways in determining the adequacy of a site specific
criterion. Additionally, the department may approve a remedial action plan for a
designated area-wide zone encompassing more than 1 facility, and may
consolidate remedial actions for more than 1 facility.
***
(17) A remedial action plan that relies on categorical cleanup criteria
developed pursuant to subsection (1) shall also consider other factors necessary to
protect the public health, safety, and welfare, and the environment as specified by
the department, if the department determines based on data and existing
information that such considerations are relevant to a specific facility. These
factors include, but are not limited to, the protection of surface water quality and
consideration of ecological risks if pertinent to the facility based on the
requirements of R 299.5717 of the Michigan administrative code.
The “department” refers to “the director of the department of environmental quality or his
or her designee to whom the director delegates a power or duty by written instrument.” MCL
324.20101(1)(f). The cleanup criteria is promulgated in various rules set forth in the Michigan
Administrative Code (AC), R 299.5701 et seq. Like the NREPA, the rules address the
availability of both generic and site-specific cleanup criteria:
(1) A remedial action plan which relies on cleanup criteria other than the
generic cleanup criteria provided for in section 20120a(1)(a) to (e) of the act and
these rules shall be based on either limited category cleanup criteria or on sitespecific cleanup criteria that are documented in a remedial action plan. It is the
responsibility of the person proposing the plan to adequately document the basis
for limited or site-specific cleanup criteria in any remedial action plan.
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(2) Limited or site-specific cleanup criteria may be based on reliable
exposure control measures, including work schedule limitations and personal
protective equipment used by workers at a facility to prevent exposure to
hazardous substances. . . . [AC, R 299.5732.]
The generic cleanup criteria for various soil and water mediums are summarized in AC,
R 299.5706a by reference to other rules. For instance, subject to certain exceptions, generic soil
cleanup criteria for residential and “commercial i” categories are expressed as values in a table
contained in R 299.5746. See AC, R 299.5706a(2). Pursuant to R 299.5718:
(1) The generic cleanup criteria for soil at a facility shall be the most
restrictive of the applicable criteria developed under R 299.5720 to R 299.5728,
considering those pathways that are reasonable and relevant at the facility and the
category of remedial action being proposed or implemented.
(2) If a generic soil cleanup criterion developed under R 299.5720 to R
299.5726 is greater than the Csat concentration for that hazardous substance, then
the Csat concentration shall be the generic criteria for that pathway, unless a
facility-specific Csat concentration is established using facility-specific soil
characteristics.4
A “relevant pathway” is defined in Part 1 (general provisions) of the department’s rules
as follows:
“Relevant pathway” means an exposure pathway that is reasonable and
relevant because there is a reasonable potential for exposure to a hazardous
substance to occur to a human or nonhuman receptor from a source or release.
The components of an exposure pathway are a source or release of a hazardous
substance, an exposure point, an exposure route, and, if the exposure point is not
the source or point of release, a transport medium. The existence of a municipal
water supply, exposure control measure, exposure barrier or other similar feature
does not automatically make an exposure pathway irrelevant.
[AC, R
299.5103(h).]
Various definitions of a “hazardous substance” are contained in MCL 324.20101(1)(t),
but the only specific definition that plaintiffs’ expert, James Murray, identified in his affidavit as
applying to the property is the definition in subpart (iv), “[p]etroleum as described in part 213.”5
Specifically, Murray averred:
4
Csat is defined in AC, R 299.5101(f), as “the concentration in soil at which the solubility limits
of the soil pore water, the vapor phase limits of the soil pore air, and the absorptive limits of the
soil particles have been reached. As used in these rules, Csat is a theoretical threshold above
which a free phase liquid hazardous substance may exist.”
5
Part 213 of NREPA (leaking underground storage tanks) describes petroleum in its definition of
(continued…)
-8-
The presence in 2006-2007 of significantly elevated levels of petroleumbased compounds such as VOCs and SVOCs set forth in the attached laboratory
analytical results, when considered in conjunction with the results of other soil
sample analyses conducted at the Subject Site, leads to the conclusion that, at the
time of the 2005 transfer of the Subject Site to the Plaintiffs in this case, as well as
the time of the NAR Report issued in 1999, the Subject Site was a “facility,”
based on the presence of petroleum-based material, including No. 6 Fuel Oil, in
subsurface strata at the Subject Property.
At an earlier deposition, Murray testified regarding a January 2006 report prepared by his
company, Canopus Environmental Group (CEG), in which it was concluded that test results were
unlikely to qualify the site as a “facility” because “there may be no pertinent exposure pathways
for contaminants of concern whose detectable levels exceed NREPA Part 201 Residential
Criteria (i.e. 1,3-dichlorobenzene in soil and pentachlorophenol in groundwater).” When
addressing why he did not prepare a baseline environmental assessment for the property, Murray
explained:
A. That’s a good question. I’m glad you asked that question. We did identify
some contamination slightly above the applicable residential criteria.
Therefore, the site may qualify as a facility; however, it’s incumbent upon us
to be able to demonstrate that there’s some exposure pathway for these
contaminants of concern. Because if there’s really no exposure pathway for
contamination above residential criteria, the site may not qualify as a facility
in any event.
We felt that what we found, though it was contamination at the time, based on
our limited sampling out there, we felt there was no pertinent exposure
pathway that contamination in that particular area that we drilled.
Q. The criteria identified as being exceeded related to drinking water, is that
right?
A. Yes.
Q. In both instances?
(…continued)
a “regulated substance” as follows:
Petroleum, including crude oil or any fraction of crude oil that is liquid at
standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7
pounds per square inch absolute). Petroleum includes but is not limited to
mixtures of petroleum with de minimis quantities of other regulated substances
and petroleum-based substances composed of a complex blend of hydrocarbons
derived from crude oil through processes of separation, conversion, upgrading, or
finishing such as motor fuels, jet fuels, distillate fuel oils, residual fuel oils,
lubricants, and petroleum solvents. [MCL 324.21303(d)(ii).]
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A. Yes.
Q. And the groundwater at the site is not used for drinking; is that right?
A. Correct. And aside from that, we did not identify in any of those borings—I
think there was six, right—we didn’t identify any real groundwater, a true
aquifer . . . .
In addition, Murray testified that CEG provided services during the excavation work on
the property. He indicated that most of the petroleum products that were encountered were
within two feet of the surface and that they would “ooze” out when driven over by heavy
equipment. He also indicated that drums full of compounds were located during the excavation
work.
We find merit to defendants’ argument that it is improper for a party to submit a
witness’s affidavit that contradicts the witness’s prior deposition testimony in an attempt to
establish the absence of a genuine issue of material fact for purposes of summary disposition. In
general, “a witness is bound by his or her deposition testimony, and that testimony cannot be
contradicted by affidavit in an attempt to defeat a motion for summary disposition.” Casey v
Auto Owners Ins Co, 273 Mich App 388, 396; 729 NW2d 277 (2006). Although this case
involves cross-motions for summary disposition, the same rationale applies to preclude a party
from presenting a witness’s contradictory affidavit to provide the necessary substantively
admissible evidence to support their own motion for summary disposition.
Considering that Murray’s deposition was taken on October 12, 2007, after a laboratory
analyzed additional samples in July 2007 and the excavation activities disclosed the “oozing”
product, that Murray did not conclude at that time that the property qualified as a “facility,” and
that Murray’s affidavit ignored the “exposure pathway” consideration that was the basis for his
deposition testimony that the site might not qualify as a facility, we agree with defendants that
Murray’s affidavit could not be used to contradict his earlier opinion. To the extent that
plaintiffs suggest that exposure pathways are not relevant to determining whether the property
qualifies as a facility under the NREPA, they have failed to substantiate their position.
Regardless, we are convinced that summary disposition was inappropriate with respect to
whether the property was a facility because MRE 703 requires that “facts or data in the particular
case upon which an expert bases an opinion or inference shall be in evidence.” The proponent of
expert testimony must show that every aspect of the expert’s testimony, including the data
underlying the opinion, is reliable. See Gilbert v DaimlerChrysler Corp, 470 Mich 749, 780782; 685 NW2d 391 (2004). Here, the only apparent additional information acquired after
Murray’s deposition that might have affected his opinion is the 1999 report prepared by North
American Reserve (“NAR”) for “Oldcastle-Materials Group,” which indicated that number six
fuel oil was placed between layers of earth, and a 2008 opinion from a laboratory that samples
taken in 2007 were consistent with number six fuel oil.
Even assuming that these documents are substantively admissible, Murray’s change in his
opinion was based on an inference that fuel oil was placed in the ground, as claimed in the 1999
NAR report. But it is clear from the face of that report that no testing was conducted to verify
the presence of the fuel oil. Further, while defendants’ vice president, James Lindstrom, was
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identified as the representative for defendants who was interviewed by NAR to prepare the
report, Lindstrom denied being the source of the information.
Summary disposition is not appropriate where the truth of a matter depends on a
credibility determination. SSC Assoc Ltd Partnership v Gen Retirement Sys, 192 Mich App 360,
365; 480 NW2d 275 (1991). Because the credibility dispute here affects the trustworthiness of
information in the 1999 NAR report regarding the fuel oil, there is a material question whether
Murray had sufficient facts and data to provide a reliable change in his opinion regarding
whether the property was a facility.
Accordingly, the trial court erred in finding that there was no genuine issue of material
fact with respect to the NREPA claim. There is a genuine issue of fact whether defendants knew
or had information that the property was a facility when the property was sold in 2005. Further,
because there is a genuine issue of material fact regarding whether the property was a facility,
and the property’s status as a facility is the basis for the duty of disclosure underlying plaintiffs’
silent fraud claim, summary disposition of that claim was likewise improper.6
Defendants also argue that the trial court erred by failing to enforce the “as is” provision
in the purchase agreement when granting summary disposition in favor of plaintiffs. Because an
“as is” provision in a contract does not allocate the risk of loss to the purchaser where fraud in
the inducement is alleged, the trial court correctly found that the parties’ “as is” contract was
ineffective to preclude the silent fraud claim. See Clemens v Lesnek, 200 Mich App 456, 460461; 505 NW2d 283 (1993). In addition, while the NREPA does not preclude private parties
from allocating cleanup costs between themselves, see MCL 324.20130, the contract at issue
here only obligates the purchaser to take the property “as is”; it does not allocate responsibility
for statutory cleanup costs under the NREPA. Therefore, the “as is” clause provides no defense
to plaintiffs’ NREPA action. Thus, summary disposition in favor of plaintiffs was proper under
MCR 2.116(C)(10) with respect to this contract issue.
6
We also note that defendants have failed to demonstrate that the doctrine of imputed knowledge
could not be applied to impute to them the knowledge of their past president, Robert Thompson,
regarding filling activities on the property in the 1960s and 1970s. Under this doctrine, the
combined knowledge of a corporation’s officers and agents, acting within the scope of their
authority, is imputed to the corporation. Upjohn Co v New Hampshire Ins Co, 438 Mich 197,
214; 476 NW2d 392 (1991). Even where there is a change in corporate personnel, the
corporation continues to be affected by knowledge gained through the former personnel. Gordon
Sel-Way, Inc v Spence Bros, Inc, 177 Mich App 116, 125; 440 NW2d 907 (1989), rev’d in part
on other grounds 438 Mich 488 (1991). Here, defendants have insufficiently briefed their
position that Thompson was acting outside the scope of his employment, or should be treated as
having been employed by a different company, when he acquired his knowledge. Thus, we do
not consider this claim. An appellant may not merely announce a position and leave it to this
Court to discover and rationalize its basis, or give an issue only cursory treatment, with little or
no citation to supporting authority. McIntosh v McIntosh, 282 Mich App 471, 485; 768 NW2d
325 (2009).
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Defendants also present additional arguments in which they contend that summary
disposition of plaintiffs’ fraud claims should have been granted in their favor. To the extent that
defendants raised these arguments below, but they were not decided by the trial court, we shall
consider them pursuant to our authority to consider issues of law for which the necessary facts
have been presented.7 See Steward v Panek, 251 Mich App 546, 554; 652 NW2d 232 (2002).
Defendants have failed to establish that they were entitled summary disposition in their
favor with respect to the silent fraud claim. Silent fraud requires reasonable reliance by the
defrauded party. See Novak v Nationwide Mut Ins Co, 235 Mich App 675, 690-691; 599 NW2d
546 (1999); UAW-GM Human Resource Ctr v KSL Recreation Corp, 228 Mich App 486, 504;
579 NW2d 411 (1998). There must be a material influence on the mind of the party claiming
fraud. United States Fidelity & Guaranty Co v Black, 412 Mich 99, 121; 313 NW2d 77 (1981).
Weighing against plaintiffs’ contention that they reasonably relied on the nondisclosure
regarding the alleged “facility” status of the property is the contract itself, which indicates that
defendants were not making environmental claims. Further, the contract imposed an affirmative
duty on the purchaser to conduct an investigation as may be necessary to satisfy itself as to the
condition of the property. There is also evidence, though minimal, that plaintiffs actually
investigated the property. “‘There can be no fraud when a person has the means to determine
that a representation is not true.’” Cooper, 481 Mich at 415, quoting Nieves v Bell Indus, Inc,
204 Mich App 459, 464; 517 NW2d 235 (1994). In addition, claims of silent fraud generally
involve circumstances where a seller responds to a specific inquiry from a purchaser in an
incomplete or misleading manner. M & D, Inc, 231 Mich App at 31. Indeed, silent fraud is
actionable where action or conduct is intended to create a misimpression in the opposing parties.
Id. at 33. Here, however, the record contains no evidence that plaintiffs made a specific inquiry
regarding the environmental conditions of the property during negotiations for the 2005 contract.
At most, there is evidence that plaintiffs’ president, Gary Percy, made a generalized inquiry to
defendants’ president, Dennis Rickard, concerning whether there was anything wrong with the
property and that he received a negative response.
7
But we decline to consider the parties additional arguments’ regarding the negligent
misrepresentation claim because they are outside the scope of defendants’ statement of the
question presented, contrary to MCR 7.212(C)(5), and the issue is insufficiently briefed. See
McIntosh, 282 Mich App at 485. We also decline to consider plaintiffs’ argument regarding
their unpleaded innocent misrepresentation claim that was raised in their motion for summary
disposition. Although plaintiffs are free to argue alternative grounds for affirmance without
filing a cross appeal, see Middlebrooks v Wayne Co, 446 Mich 151, 166 n 41; 521 NW2d 774
(1994), plaintiffs failure to address why their unpleaded innocent misrepresentation theory
warrants consideration precludes appellate relief. See McIntosh, 282 Mich App at 485; see also
Roberts & Son Contracting, Inc v North Oakland Dev Corp, 163 Mich App 109, 113; 413 NW2d
744 (1987). We also decline to consider plaintiffs’ silent fraud claim based on an equitable or
good-faith duty of disclosure. Fraud must be pleaded with particularity. MCR 2.112(B)(1);
Cooper, 481 Mich at 414; Cummins, 283 Mich App at 695. The second amended complaint only
alleged a claim of silent fraud based on a statutory duty of disclosure. Plaintiffs have not
established any justification for this Court to consider their unpleaded claim.
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On the other hand, assuming that defendants knew from their collective knowledge that
the property was a facility, a trier of fact could reasonably conclude that Rickard made a false
statement of fact to Percy when he denied that there was anything wrong with the property. See
Foreman v Foreman, 266 Mich App 132, 142; 701 NW2d 167 (2005). In addition, assuming a
duty of disclosure, plaintiffs could expect defendants to follow the law by providing them with
the statutorily required disclosure if it was known that the property was a facility. The evidence
also supports an inference that such an expectation would be reasonable because the disputed
property is a large parcel and there was evidence that the environmental contamination was not
visible from the surface. Because reasonable minds could differ on whether plaintiffs reasonably
relied on defendants’ alleged failure to satisfy a statutory duty of disclosure, or whether plaintiffs
should have exercised greater diligence to investigate the possibility of environmental
contamination, neither plaintiffs nor defendants were entitled to summary disposition with
respect to the reasonable reliance element of the silent fraud claim. See Allison, 481 Mich at
425.
Turning to the fraudulent misrepresentation claim, defendants argue that plaintiffs’ claim
based on Rickard’s response to Percy’s inquiry is not actionable because the response was mere
sales talk or “puffery.” Whether a specific representation is an actionable statement of fact is
dependent upon the circumstances of each case. Foreman, 266 Mich App at 142. In this case,
the inquiry whether there was something wrong with the “as is” property goes hand-in-hand with
plaintiffs’ claim that defendants knew that the property was a facility. Therefore, given our prior
conclusion that a genuine issue of material fact existed with respect to that issue, summary
disposition of the fraudulent misrepresentation claim was likewise unwarranted under MCR
2.116(C)(10).
Plaintiffs also argue that their fraudulent misrepresentation claim is supported by a
statement by Thompson to Percy regarding his disbelief that someone would dump anything on
their property. Plaintiffs have not shown that this theory was raised in the trial court. Thus, it is
not properly before us. See City of Riverview v Sibley Limestone, 270 Mich App 627, 633 n 4;
716 NW2d 615 (2006). Furthermore, we are not persuaded that this remark by Thompson
constitutes an actionable statement of fact. See Foreman, 266 Mich App at 142. Even assuming
that the statement could be actionable, the evidence indicated that Thompson left the business in
2002, three years before the property was sold. Although he was involved in prior negotiations
to sell the property, Thompson testified in his deposition that a decision was made to not sell the
property at that time. There was no evidence that Thompson was involved in the negotiations for
the 2005 contract that ultimately resulted in the property transfer. Although defendants might be
chargeable with Thompson’s knowledge regarding the condition of the property and the
contamination that allegedly took place before Thompson left, it would not be reasonable for
plaintiffs to rely on Thompson’s past statements to enter into the 2005 contract. Therefore,
plaintiffs have not established any basis for upholding the trial court’s summary disposition
ruling based on Thompson’s remarks. Similarly, plaintiffs have not shown any basis for
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affirming the trial court’s liability ruling based on evidence that Thompson provided a past
response to Percy about there being nothing wrong with the property.8
In sum, neither plaintiffs nor defendants were entitled to summary disposition under
MCR 2.116(C)(10) with respect to plaintiffs’ claims for silent fraud, fraudulent
misrepresentation, negligent misrepresentation, negligence, and the NREPA. Accordingly, we
vacate the trial court’s judgment for plaintiff and remand for further proceedings with respect to
those claims.
In light of our decision, it is unnecessary to address defendants’ challenge to the trial
court’s decision, on summary disposition, determining the amount of plaintiffs’ damages. But
because this issue may arise again on remand, we shall briefly address it.
In an action for fraud and misrepresentation, “the tortfeasor is liable for injuries resulting
from his wrongful act, whether foreseeable or not, provided that the damages are the legal and
natural consequences of the wrongful act and might reasonably have been anticipated.” Cooper,
481 Mich at 409 n 4, quoting Phinney v Perlmutter, 222 Mich App 513, 532; 564 NW2d 532
(1997). By contrast, MCL 324.20126a specifies the costs and damages recoverable in an action
under the NREPA. MCL 324.20126a(1)(b) allows for the recovery of “necessary costs of
response activity incurred . . . consistent with rules relating to the selection and implementation
of response activity promulgated under this part.”
Here, the trial court applied the same measure of damages for plaintiffs’ NREPA and tort
claims without distinguishing between the claims. For purposes of a NREPA claim, the court
failed to consider whether the costs were necessary or consistent with departmental rules. The
trial court also relied on a conclusory averment in an affidavit from plaintiffs’ president, Percy,
concerning the accuracy of expenses listed in a spreadsheet to establish the basis for its decision
to award approximately $1.7 million in damages to plaintiffs. The spreadsheet listed items dated
between August 26, 2005, and January 23, 2008, with brief “name” descriptions such as “D5” or
“truck,” some purported invoice numbers or hours, and “memos” such as “clay” and “testing.”
The most recent items consisted of the 2007 summer property taxes and 2008 winter property
taxes.
We conclude that the trial court erred in determining plaintiffs’ damages based on the
affidavit and spreadsheet. Even assuming, without deciding, that the same measure of damages
was appropriate for both the tort and statutory claims, plaintiffs, in addition to having the burden
of establishing the amount of their damages with reasonable certainty, had the initial burden of
supporting their position that determination of damages by summary disposition was appropriate.
MCR 2.116(G)(3)(b) and (4); Quinto, 451 Mich at 362. Conclusory averments in an affidavit are
insufficient to satisfy a party’s burden under MCR 2.116(C)(10). SSC Assoc Ltd Partnership,
192 Mich App at 364. In view thereof, and considering that the determination of the amount of
8
Plaintiffs also refer to an alleged statement that the property was suitable for a truck staging
facility, but do not sufficiently address whether this statement may support an actionable claim
for fraud. Therefore, we decline to consider this theory. See McIntosh, 282 Mich App at 485.
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damages rested entirely on the credibility of Percy’s conclusory affidavit, it was inappropriate to
determine damages on summary disposition. See id. at 365.
Next, defendants argue that the trial court erred by denying their motion for leave to file a
counterclaim to assert a claim for contribution under the NREPA. We agree.
Leave to file an amended pleading “should ordinarily be denied only for particularized
reasons such as undue delay, bad faith or dilatory motive, repeated failures to cure by
amendments previously allowed, or futility.” In re Kostin Estate, 278 Mich App 47, 52; 748
NW2d 583 (2008); MCR 2.118(A)(2). We review a trial court’s decision denying leave to
amend pleadings for an abuse of discretion. Ormsby v Capital Welding, Inc, 471 Mich 45, 53;
684 NW2d 320 (2004). “An abuse of discretion occurs when the decision results in an outcome
falling outside the principled range of outcomes.” Woodard v Custer, 476 Mich 545, 557; 719
NW2d 842 (2006).
The record discloses that the trial court denied defendants’ motion for leave to file a
counterclaim for contribution under the NREPA on the ground that it would be futile. The court
agreed with plaintiffs’ argument that the proposed amendment was unnecessary because
defendants had already raised the affirmative defense of mitigation of damages. A proposed
amendment is futile where it merely restates allegations already pleaded. See Dukesherer
Farms, Inc v Dir of the Dep’t of Agriculture, 172 Mich App 524, 530; 432 NW2d 721 (1988).
Further, a “court may treat a cross-claim or counterclaim designated as a defense, or a defense
designated as a cross-claim or counterclaim, as if the designation had been proper and issue an
appropriate order.” MCR 2.110(C)(3). “An affirmative defense is a defense that does not
controvert the plaintiff’s establishing a prima facie case, but that otherwise denies relief to the
plaintiff.” Stanke v State Farm Mut Auto Ins Co, 200 Mich App 307, 312; 503 NW2d 758
(1993); see also MCR 2.111(F)(3). The right to contribution under the NREPA is not an
affirmative defense, but rather a distinct remedy that depends on an inequitable distribution of
common liability among liable parties. See United States v Atlantic Research Corp, 551 US 128,
138-139; 127 S Ct 2331; 168 L Ed 2d 28 (2007) (addressing 42 USC 9613(f)(1), a comparable
provision in the Comprehensive Environmental Response, Compensation, and Liability Act9);
see also MCL 324.20129(3)(b) (equitable principles apply to contribution).
In the absence of an appropriate court order treating any of defendants’ affirmative
defenses, in whole or in part, as a counterclaim for contribution under the NREPA, defendants’
assertion of such a counterclaim cannot be deemed futile. Therefore, the trial court abused its
discretion in denying defendants’ motion for leave to file the counterclaim.
Defendants lastly argue that the trial court erred by denying their motion to strike from
plaintiffs’ brief a reference to information regarding settlement negotiations. While we agree
9
Federal cases construing the Comprehensive Environmental Response, Compensation, and
Liability Act have been considered by Michigan courts as persuasive in construing part 201 of
the NREPA. See Genesco, Inc v Mich Dep’t of Environmental Quality, 250 Mich App 45, 5051; 645 NW2d 319 (2002).
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that the referenced matter involved inadmissible evidence, the trial court expressly indicated that
the information was “not important to me in terms of making a decision.” Thus, even if it would
have been appropriate to strike the information from plaintiffs’ brief, the failure to do so was
harmless because it did not affect the disposition of the parties’ respective motions for summary
disposition. See MCR 2.613(A).
III. DOCKET NO. 290236 (PLAINTIFFS’ CROSS APPEAL)
On cross appeal, plaintiffs argue that the trial court erred in granting defendants summary
disposition on plaintiffs’ claims for unjust enrichment and restitution, and common-law
indemnification, pursuant to MCR 2.116(C)(10). We disagree.
As this Court observed in Belle Isle Grill Corp v Detroit, 256 Mich App 463, 478; 666
NW2d 271 (2003), a claim for unjust enrichment requires that the plaintiff establish:
(1) the receipt of a benefit by defendant from plaintiff, and (2) an inequity
resulting to plaintiff because of the retention of the benefit by defendant. If this is
established, the law will imply a contract in order to prevent unjust enrichment.
However, a contract will be implied only if there is no express contract covering
the same subject matter. [Citations omitted.]
Because plaintiffs’ unjust enrichment claim is based on defendants’ sale of the property
pursuant to a written purchase agreement, the trial court correctly granted defendants’ motion for
summary disposition with respect to this claim. We agree with plaintiffs that unjust enrichment
remains a viable cause of action when a contract is void or unenforceable. See Biagini v Mocnik,
369 Mich 657, 658-659; 120 NW2d 827 (1963). Here, however, plaintiffs were not seeking to
void the contract. Rather, they sought to retain the property and recover damages. Thus,
plaintiffs waived any claim that the contract should be voided. See Walters v Nadell, 481 Mich
377, 387; 751 NW2d 431 (2008).
Common-law indemnification is an equitable action, which entitles a party to restitution
when it is held liable based on another party’s wrongful act. North Community Healthcare, Inc v
Telford, 219 Mich App 225, 229; 556 NW2d 180 (1996). The party seeking indemnification
must be free of active or causal negligence. Langley v Harris Corp, 413 Mich 592, 597; 321
NW2d 662 (1982). The equitable right to indemnification “can only be enforced where liability
arises vicariously or by operation of law from the acts of the party from whom indemnity is
sought.” Id. at 601. Further, as a general equitable principle, equitable relief is not available
where a party has an adequate remedy at law. See Mich Bean Co v Burrell Engineering &
Constr Co, 306 Mich 420, 424; 11 NW2d 12 (1943).
Plaintiffs waived their claim that their liability arose by operation of law by failing to
present this claim to the trial court. See Walters, 481 Mich at 387. In any event, even assuming
that the property was a facility, there is no merit to plaintiffs’ argument because their liability
under the NREPA, as a purchaser of a facility, does not arise by operation of law. A purchaser
may avoid liability by conducting a baseline environmental assessment, and disclosing the
results if the property is a facility. See MCL 324.20126(1)(c). Regardless, plaintiffs have not
demonstrated that they have an inadequate remedy at law in light of the comprehensive scheme
provided in the NREPA for establishing and litigating a person’s liability. The adequacy of
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plaintiffs’ remedies at law formed a basis for defendants’ motion for summary disposition. Thus,
plaintiffs have not established that the trial court erred in dismissing their claim for common-law
indemnification.
IV. DOCKET NO. 290250
Plaintiffs argue that the trial court erred in denying their postjudgment motion for
attorney fees under MCR 2.114(E) and (F).
MCR 2.114(E) provides that if a document is signed in violation of the court rule, the
trial court shall impose an “appropriate sanction, which may include an order to pay to the other
party or parties the amount of the reasonable expenses incurred because of the filing of the
document, including reasonable attorney fees.” MCR 2.114(D) provides that the signature of an
attorney constitutes a certification that he or she has read the document, that the document is not
interposed for an improper purpose, and that “to the best of his or her knowledge, information,
and belief formed after reasonable inquiry, the document is well grounded in fact and is
warranted by existing law or a good faith argument for the extension, modification, or reversal of
existing law.” Whether a document was signed in violation of the court rule is a question of fact,
which is reviewed by an appellate court for clear error. MCR 2.613(C); Contel Sys Corp v
Gores, 183 Mich App 706, 711; 455 NW2d 398 (1990).
Here, plaintiffs rely on the “reasonable inquiry” standard to argue that an answer to an
allegation in their second amended complaint warranted sanctions under MCR 2.114(E).
Plaintiffs have failed to establish that they preserved this specific argument by presenting it to
the trial court. See City of Riverview, 270 Mich App at 633 n 4; FMB-First Mich Bank v Bailey,
232 Mich App 711, 718; 591 NW2d 676 (1998). Further, the trial court did not render specific
factual findings with respect to any of the documents relied upon by plaintiffs, or the arguments
raised in plaintiffs’ motion for sanctions under MCR 2.114(E), so we are left to speculate as to
the basis for the court’s decision. Therefore, we vacate the portion of the trial court’s order
denying sanctions under MCR 2.114(E) and remand for specific findings with respect to
plaintiffs’ motion. See In re Forfeiture of Cash & Gambling Paraphernalia, 203 Mich App 69,
72-73; 512 NW2d 49 (1993).
Plaintiffs also argue that the trial court erred in denying their motion for sanctions under
MCR 2.114(F), on the ground that defendants pleaded a frivolous defense. In light of our
decision to reverse the trial court’s summary disposition decision and vacate the judgment for
plaintiffs, and to remand for further proceedings, plaintiffs have not demonstrated that they are
entitled to sanctions under MCR 2.114(F). Any sanctions would be premature because a
prevailing party has not yet been determined. See In re Costs & Attorney Fees, 250 Mich App
89, 104; 645 NW2d 697 (2002); MCL 600.2591(3)(b) (defining “[p]revailing party” as “a party
who wins on the entire record”).
V. CONCLUSION
In Docket No. 290236, we affirm the trial court’s dismissal of plaintiffs’ claims for unjust
enrichment and common-law indemnification, reverse the trial court’s decision granting
plaintiffs summary disposition on their claims for fraud, negligent misrepresentation, negligence,
and violation of the NREPA, vacate the judgment for plaintiffs, and remand for further
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proceedings on plaintiffs’ remaining claims. We also reverse the trial court’s order denying
defendants’ motion to file a counterclaim to allege a claim for contribution under the NREPA.
In Docket No. 290250, we affirm the trial court’s denial of sanctions under MCR 2.114(F), but
vacate the portion of the trial court’s order denying sanctions under MCR 2.114(E) and remand
for specific findings with respect to plaintiffs’ request for sanctions under that rule.
Affirmed in part, reversed and vacated in part, and remanded for further proceedings not
inconsistent with this opinion. We do not retain jurisdiction.
/s/ E. Thomas Fitzgerald
/s/ Jane E. Markey
/s/ Jane M. Beckering
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