DESMER G WALCH V WILLIAM P WALCH
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STATE OF MICHIGAN
COURT OF APPEALS
DESMER G. WALCH and APRIL R. KIGGINS,
UNPUBLISHED
July 26, 2011
Plaintiffs-Appellants,
v
No. 296626
Oceana Circuit Court
LC No. 09-007513-CZ
WILLIAM P. WALCH, CYNTHIA WALCH,
SANDRA KILBOURNE, and NORTHERN
LABEL, INC.,
Defendants-Appellees.
Before: SHAPIRO, P.J., and O’CONNELL and OWENS, JJ.
SHAPIRO, J. (dissenting).
I respectfully dissent.
Plaintiffs asserted fraud against defendants. The trial court barred plaintiffs from
conducting any discovery and then dismissed the case on the grounds that plaintiffs had failed to
present sufficient proofs to create a question of fact. I would reverse because the trial court
failed to apply the appropriate standard under MCR 2.116(C)(10) and improperly foreclosed
discovery.
When deciding a motion for summary disposition, a court must consider the pleadings,
affidavits, depositions, admissions and other documentary evidence submitted in the light most
favorable to the nonmoving party, Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342
(2004), and all reasonable inferences are to be drawn in favor of the nonmovant. Dextrom v
Wexford County, 287 Mich App 406, 415; 789 NW2d 211 (2010). Summary disposition is rarely
appropriate in cases involving questions of credibility, intent or state of mind. In re
Handelsman, 266 Mich App 433, 438; 702 NW2d 641 (2005). The court may not make findings
of fact or weigh credibility in deciding a summary disposition motion. Skinner v Square D Co,
445 Mich 153, 161; 516 NW2d 475 (1994). Thus, when the truth of a material factual assertion
depends on credibility, a genuine factual issue exists and summary disposition may not be
granted. White v Taylor Distributing Co, 275 Mich App 615, 625; 739 NW2d 132 (2007).
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Desmer’s1 verified complaint stated a cause of action for fraudulent misrepresentation,
accounting, and other related claims. The complaint was supported by a detailed multi-page
affidavit executed by Desmer stating that, at a time he was seriously ill, defendant William P.
Walch, his son and minority business partner in Northern Label, Inc., falsely stated to him that
the company was in danger of collapse and the only way to save it was for Desmer to sell his
shares back to the company for a sum that was below market value and below the amount of
money Desmer had personally loaned the company so that the company could immediately
obtain a loan using the shares as collateral. In granting defendants’ motion under MCR
2.116(C)(10), the trial court simply ignored Desmer’s affidavit. The court stated that Desmer
had asserted “groundless allegations without any support” and dismissed his complaint noting, “I
don’t see any smoking gun here that – you know, any force or violence or anything that forced
the signatures on those documents.” The trial court did allow for the complaint to be amended.
In the amended complaint, Kiggins was added as a plaintiff, and both plaintiffs alleged
that their signatures on the resignation and waiver of claims documents that they were purported
to have signed were forgeries. Desmer also alleged that his signature was forged on the consent
(as majority shareholder) for the company to buy back his shares. Plaintiffs submitted an
affidavit prepared and signed by Robert Kullman, a forensic document examiner from the offices
of Speckin and Associates who had served for over 15 years as a document examiner for the
Michigan State Police. Kullman averred that it was “highly probable” that the signatures
purporting to be that of Desmer and Kiggins on these two documents were forgeries.2 This was
particularly significant since it was defendants William and his wife, Cynthia, who had signed
the documents as witnesses, thus asserting that they saw Desmer and Kiggins signing documents
that forensic review revealed they had not signed.
Defendants offered no evidence to contradict the Kullman affidavit. Indeed, an affidavit
executed by William in support of the motion did not even assert that he actually witnessed the
documents being executed. Defendants also refused to provide a date for William’s deposition
and refused to produce any of the requested discovery or to answer requests to admit. Instead,
defendants filed a motion for protective order3 asking that the court “strike Plaintiffs’ discovery
request or at the minimum stay our obligation to answer until such time as the Court rules on our
pending Motion for Summary Disposition.” At the hearing defendants did not raise any grounds
set forth in MCR 2.302(D), such as embarrassment, oppression, or undue expense as grounds to
1
Because several parties share a last name, they will be referred to by first name.
2
Kullman’s affidavit set forth a rating system indicating the certainty of his opinion based on the
evidence and stated that his conclusion that the signatures were forgeries was the highest level of
certainty other than absolute certainty.
3
The motion is not contained in the lower court record transmitted to this Court. However, it is
referenced in the docket sheet and there is a transcript of a hearing on that motion.
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bar discovery.4 Despite the lack of an argument grounded in the court rules and despite the fact
that the only evidence produced to date appeared to demonstrate a forgery in which defendants
participated. This was plainly contrary to the principle that the Michigan court rules establish
“an open, broad discovery policy.” Cabrera v Ekema, 265 Mich App 402, 406; 695 NW2d 78
(2005).
On December 21, 2009, the trial court heard defendants’ motion for summary disposition
of the amended complaint. The trial court concluded that Kullman’s affidavit did not create a
question of fact because “he talked about probabilities” and failed to “ever come out and allege
forgery.” This, like the trial court’s earlier reference to the lack of a “smoking gun,” misstates
the summary disposition standard, which requires that the trial court review all the evidence and
inferences therefrom in the light most favorable to the non-moving party and deny summary
disposition if there is any question of material fact. Plaintiff is not required to produce a
“smoking gun.” Moreover, it is an inaccurate description of the Kullman affidavit, which on its
face is credible proof of forgery in which defendants either acquiesced or participated. The trial
court similarly ignored the affidavit from the CPA retained by plaintiffs averring that, based on
the limited company records available to him, the company was indebted to Desmer.
The majority affirms the trial court on the narrow grounds that “plaintiffs failed to show
reasonable reliance on the alleged misrepresentations.” This limited ruling implicitly recognizes
that the trial court erred in finding no question of fact on the other elements of fraudulent
misrepresentation. The majority concludes that, because plaintiffs could have requested an
accounting before agreeing to the request to sell their shares, their claimed reliance could not
have been reasonable, but, according to plaintiffs, they were told that it was necessary to act
promptly to save the company. Ultimately, what statements were made and whether those
statements gave rise to reasonable reliance are questions of fact and, in light of plaintiffs’
affidavits and the apparent forgery on several documents there are material issues as to those
facts that must be determined.5
The majority’s conclusion that the redemption agreement was “unambiguous” and so
“must be enforced as written” is a red herring. The issue is not whether the redemption
agreement is subject to varying interpretations as to its content; rather the issue is whether the
4
A protective order is proper to protect a litigant from “excessive, abusive or irrelevant
discovery requests.” Hartmann v Shearson Lehman Hutton, Inc, 194 Mich App 25, 29; 486
NW2d 53 (1992). Absent the presence of such extreme discovery demands, “any document
which is relevant and not privileged is freely discoverable upon request.” Eyde v Eyde, 172
Mich App 49, 55; 431 NW2d 459 (1988). Given the extent of the requested discovery, I would
agree that the trial court could properly have ruled that it was excessive and required plaintiff to
substantially narrow the sought discovery. However, a complete bar to discovery was improper.
5
Given that the trial court’s protective order barred plaintiffs from access to company records, I
similarly cannot agree that plaintiffs should be faulted, at this stage, for failing to prove what the
company’s actual financial state was at the time in question.
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agreement to its terms was obtained by fraudulent misrepresentation.6 If non-ambiguity were a
defense to intentional misrepresentation, then no matter what falsehoods were told to a victim in
order to have him agree to a transaction, the perpetrator would be immunized so long as the
written document accurately stated the bare terms of the transaction.
In my view, the trial court concluded that plaintiffs were not credible and that no fraud
occurred and rendered a decision on the merits of the case under the guise of a (C)(10) ruling.
The trial court’s view that this was a non-meritorious claim may be correct, but, under our rules,
that is a matter to be determined after discovery and, if a material question of fact exists, after
trial.
/s/ Douglas B. Shapiro
6
Although I agree with the majority that a party cannot avoid enforcement of a contract alleging
failure to read or claiming the terms were different, contracts can be avoided on the basis of
fraudulent statements made to induce the party into signing it. Samuel D Begola Servs, Inc v
Wild Bros, 210 Mich App 636, 639-640; 534 NW2d 217 (1995).
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