ANNETTA LOGAN V RICHARD VANCE (Per Curiam Opinion)
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STATE OF MICHIGAN
COURT OF APPEALS
ANNETTA LOGAN,
UNPUBLISHED
June 23, 2011
Plaintiff-Appellant,
v
RICHARD VANCE, EMILY HECHT, HECHT &
HECHT, L.L.C., and the DONALD J. NEUSER
REVOCABLE TRUST, and DONALD J.
NEUSER,1
No. 297003
Berrien Circuit Court
LC No. 2009-000001-CZ
Defendants-Appellees.
Before: TALBOT, P.J., and GLEICHER and M. J. KELLY, JJ.
PER CURIAM.
In this dispute surrounding the transfer of real property, plaintiff Annetta Logan appeals
as of right the trial court’s order granting summary disposition under MCR 2.116(C)(10) in favor
of defendants Emily Hecht, Hecht & Hecht, LLC (collectively the Hecht defendants) and the
Donald J. Neuser Revocable Trust as to her fraudulent conveyance and tortious interference with
business expectancy claims. Because we conclude there were no errors warranting relief, we
affirm.
I. BASIC FACTS AND PROCEDURAL HISTORY
This case has its origins in a property deal that Logan and her then husband, Richard
Vance, entered into during their marriage. In August 2006, Logan and Vance, as husband and
wife, signed a real estate purchase agreement with Neuser Management, LLC. As part of the
purchase agreement, Donald J. Neuser agreed to lease Logan a property located at 221 West
Main Street in the city of Benton Harbor for one year with a one year option to purchase the
property for $135,000. Vance later entered into a lease agreement with Donald Neuser for the
properties at 209, 211, 221, 225 and 229 West Main Street (the Ridge and Kramer property),
1
Although Donald J. Neuser is listed as a defendant-appellee, the trial court entered an
uncontested order dismissing Donald in his individual capacity on May 7, 2010.
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which also included an option to purchase the properties for $135,000. There was a factual
dispute regarding whether the Neuser Trust subsequently granted Logan and Vance a six-month
extension of the option to purchase the Ridge and Kramer property.
In April 2007, Logan sued for a divorce from Vance. While the divorce was pending,
Vance contacted Hecht, a social acquaintance, about purchasing the Ridge and Kramer property
for $189,000, even though he might not have had any interest in the property at the time. The
evidence suggests that Vance sought to broker the sale of the Ridge and Kramer property from
the Neuser Trust to the Hecht defendants in a way that might enable him to later obtain a portion
of the property from Hecht without purchasing it. Vance told Hecht that she could purchase one
of the buildings on the property for $137,500, which was actually the amount the Neuser Trust
was asking for the entire property.2 Vance claimed that the property would be divided with other
purchasers who would cover the rest of the property costs. When Logan discovered that Vance
was negotiating the sale of the Ridge and Kramer property, she brought it to the attention of the
divorce court. The divorce court entered an order requiring the sale of any proceeds from the
property to be escrowed.
In February 2008, Hecht & Hecht, LLC entered into a purchase agreement for the entire
Ridge and Kramer property for $137,500. Hecht claimed that she still believed she was only
receiving title to one of the buildings on the property and was prepared to execute a quitclaim
deed for the rest of the property to Vance for the other purchasers. When Hecht learned the total
price of the property was $137,500, not $189,000 as Vance had led her to believe, Hecht refused
to deed any of the property to Vance or anyone else.
In May 2008, Logan raised the issue in the divorce court again, and the court entered a
second order requiring any proceeds from the sale of the Ridge and Kramer property to be placed
into escrow. In June 2008, Logan and Vance stipulated to a divorce judgment that awarded
Logan “one-half of any and all proceeds resulting from the sale of 229 West Main, Benton
Harbor, Michigan up to $132,000.”
Logan sued Vance, the Hecht defendants, the Neuser Trust and Donald Neuser in January
2009. She alleged that the sale of the Ridge and Kramer property was fraudulent and should be
voided under MCL 566.221. She also claimed that the defendants tortiously interfered with a
business expectancy.
In February 2010, the trial court dismissed Logan’s claims under MCR 2.116(C)(10).
The trial court determined that neither Logan nor Vance exercised the option to purchase the
Ridge and Kramer property. Therefore, they had no property interest and there was no basis for
voiding the sale. The court also determined that Logan could not meet the valid business
relationship or expectation element for a tortious interference claim. Additionally, because there
was no evidence that Vance received any proceeds from the transfer of the Ridge and Kramer
property, Logan failed to meet the damages element of the tortious interference claim.
2
Hecht formed Hecht & Hecht, LLC with her brother in order to purchase the building.
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This appeal followed.
II. DEFAULT
A. STANDARD OF REVIEW
Logan first argues that the trial court erred in setting aside the default against the Hecht
defendants. We review a trial court’s decision on a motion to set aside a default for an abuse of
discretion. Shawl v Spence Bros, Inc, 280 Mich App 213, 218, 220; 760 NW2d 674 (2008). An
abuse of discretion “occurs only when the trial court’s decision was outside the range of
reasonable and principled outcomes.” Saffian v Simmons, 477 Mich 8, 12; 727 NW2d 132
(2007).
B. ANALYSIS
Typically, a trial court may set aside a default “only if good cause is shown and an
affidavit of facts showing a meritorious defense is filed.” MCR 2.603(D)(1). Good cause is
shown when there is “(1) a substantial irregularity or defect in the proceeding upon which the
default is based, or (2) a reasonable excuse for failure to comply with the requirements that
created the default.” Alken-Ziegler, Inc v Waterbury Headers Corp, 461 Mich 219, 230; 600
NW2d 638 (1999). Although manifest injustice is often cited as a basis to show good cause,
“manifest injustice is not a third form of good cause that excuses failure to comply with the court
rules where there is a meritorious defense.” Barclay v Crown Bldg & Dev, Inc, 241 Mich App
639, 653; 617 NW2d 373 (2000), citing Alken-Ziegler, 461 Mich at 230-233. Rather, manifest
injustice “is the result that would occur if a default were not set aside where a party has satisfied
the ‘good cause’ and ‘meritorious defense’ requirements of the court rule. Id. at 653. “[I]f a
party states a meritorious defense that would be absolute if proven, a lesser showing of ‘good
cause’ will be required than if the defense were weaker in order to prevent a manifest injustice.”
Id. at 233-234.
In determining whether there was good cause, the trial court considered the complexity of
the litigation, the timing of events, and the reasonableness of counsel’s request for information
from the Hecht defendants. Shawl, 280 Mich App at 238. This was a multi-party litigation,
which involved a separate divorce case to which the Hecht defendants were not a party, and the
complaint included 76 allegations and was over 70 pages in length with exhibits. There was
evidence that the Hecht defendants contacted counsel 10 to 14 days after service, and counsel
requested documentation needed to file an answer. The trial court found this to be a reasonable
request. And the Hecht defendants only missed the deadline for filing the answer by a short
amount of time; they filed the motion to set aside the default along with the answer and
affirmative defenses just seven business days after the default. See id. The trial court had the
discretion to determine how much weight to assign this evidence. Shawl, 280 Mich App at 239
(“[I]t is within the trial court’s discretion to determine how much weight any single factor in
determining good cause should receive.”). Furthermore, Hecht’s affidavit and the Hecht
defendants’ pleadings showed clear grounds for summary disposition because Logan could not
prove the elements for fraudulent transfer and tortious interference claims. Shawl, 280 Mich
App at 238. Under the facts, it was evident that the Hecht defendants had a nearly absolute
defense to the claims against them. For that reason, they could establish good cause on a lesser
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showing. Alken-Ziegler, Inc, 461 Mich at 233-234. Therefore, on this record, we cannot
conclude that the trial court’s decision to set aside the default was outside the range of reasonable
and principled outcomes. See Saffian, 477 Mich at 12.
III. RES JUDICATA
Next, Logan argues the trial court erred when it determined that her fraudulent transfer
and tortious interference with a business expectancy claims were barred by res judicata. This
argument is based on a misinterpretation of the record. The trial court’s res judicata order did
not bar Logan’s fraudulent transfer or tortious interference with a business expectancy claims
against the Hecht defendants or the Neuser Trust. Further, any issue related to whether the trial
court improperly barred Logan’s claims against Vance under res judicata has been abandoned
because Logan did not brief the issue. Prince v MacDonald, 237 Mich App 186, 197; 602
NW2d 834 (1999).
IV. SUMMARY DISPOSITION
A. STANDARDS OF REVIEW
Finally, Logan argues the trial court erred by granting summary disposition under MCR
2.116(C)(10) because there was a genuine issue of material fact concerning the elements of the
fraudulent transfer and the tortious interference with a business expectancy claims. This Court
reviews de novo a trial court’s decision to grant summary disposition. Maiden v Rozwood, 461
Mich 109, 118; 597 NW2d 817 (1999). “A motion under MCR 2.116(C)(10) tests the factual
sufficiency of the complaint.” Id. at 120. Summary disposition is properly granted if there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of law.
MCR 2.116(C)(10).
B. ANALYSIS
Generally, a creditor may challenge the validity of a transfer from the creditor’s debtor to
a third party by showing that the transfer was fraudulent as to the creditor. See MCL 566.37. A
transfer is fraudulent as to a creditor where the transfer was made with the actual intent to hinder,
delay, or defraud the creditor. See MCL 566.34(1)(a); see also MCL 566.221 (stating that a
conveyance of an interest in land is void if done with “the intent to hinder, delay, or defraud
creditors or other persons of their lawful suits, damages, forfeitures, debts or demands . . . .”).
Here, although Logan could be considered Vance’s creditor, she did not demonstrate that
Vance had any interest in the property at issue that he transferred to a third-party. Further, she
was not a creditor of the Neuser Trust. Indeed, the evidence showed that Logan had no
relationship with either of the actual parties to the transfer that could serve as a basis for
challenging the transfer. Instead, her claim was premised on speculation—admittedly supported
by some evidence—that, at some point in the future, Hecht might transfer a portion of the
property to Vance without any consideration. That is, Logan wanted to void a present transfer of
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property between third-parties, with whom she had no creditor relationship, on the basis that the
buyer might gift a portion of the property to Vance in a future transaction.3 But the fact that the
property might be the subject of a later gift is not a ground for voiding the transaction at issue.
Consequently, the trial court correctly determined that Logan had not established a question of
fact as to her fraudulent transfer claims.
Similarly, Logan failed to establish a question of fact on the elements of her tortious
interference claim. To establish this claim, she had to present evidence establishing the
“existence of a valid business relationship or expectancy”, that the Neuser Trust and Hecht
defendants knew about “the relationship or expectancy” and that they intentionally induced a
breach or termination of the relationship or expectancy with resultant damages. BPS Clinical
Laboratories v Blue Cross & Blue Shield of Mich (On Remand), 217 Mich App 687, 698-699;
552 NW2d 919 (1996).
Logan clearly could not maintain a cause of action for tortious interference against the
Neuser Trust or Vance because they were parties to the option agreement at issue in this claim.
Derderian v Genesys Health Care Sys, 263 Mich App 364, 382; 689 NW2d 145 (2004) (“A
plaintiff, who is party to a contract, cannot maintain a cause of action for tortious interference
against another party to the contract.”). Additionally, Logan failed to raise genuine issues of
material fact concerning the elements of her tortious interference claim against the Hecht
defendants. There was no evidence that the Hecht defendants had actual knowledge of Logan’s
business expectancy or that they intentionally interfered with her business relationship with the
Neuser Trust thereby causing a breach or termination of her expectancy. Logan’s accusations
alone are insufficient to establish that the Hecht defendants did any act that was wrongful per se,
and Logan failed to identify affirmative acts by the Hecht defendants that corroborate the
improper motive of interference. See Feldman v Green, 138 Mich App 360, 369-370; 360
NW2d 881 (1984). Logan also did not challenge the Hecht defendants’ evidence that they had a
legitimate business purpose for buying the Ridge and Kramer property to help revitalize Benton
Harbor. Lastly, neither Logan nor Vance exercised the option to purchase and Logan failed to
present any evidence that, but for the Hecht defendants’ interference, she or Vance would have
purchased the property. Finally, even though she was entitled to half of any proceeds Vance
received from the property, the undisputed evidence showed that Vance did not receive any
proceeds. Hence, Logan failed to present any evidence that she suffered damages as a result of
the Hecht defendants’ wrongful interference with any expectancy that she might have had with
regard to the property at issue.
3
We note that there was evidence that would permit an inference that Vance was trying to
defraud Hecht. Yet the fact that Vance might have profited from a fraud against Hecht is not a
ground for Logan to challenge the transfer from the Neuser Trust to the Hecht defendants
because that transfer would not be fraudulent as to her.
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The trial court properly granted summary disposition in favor of the Hecht defendants
and the Neuser Trust.
Affirmed. As the prevailing parties, the Hecht defendants and Neuser Trust may tax their
costs. MCR 7.219(A).
/s/ Michael J. Talbot
/s/ Elizabeth L. Gleicher
/s/ Michael J. Kelly
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