Opinion
No. 331855
08-10-2017
BEAN LITTLE INVESTMENTS LLC, Plaintiff/Cross-Defendant-Appellant, v. MELSON PROPERTIES LLC, Defendant/Cross-Plaintiff-Appellee.
UNPUBLISHED Wayne Circuit Court
LC No. 14-015062-CZ Before: CAVANAGH, P.J., and METER and M. J. KELLY, JJ. PER CURIAM.
Plaintiff appeals as of right from an order of the trial court granting summary disposition to Sarah Melson ("Melson"). The claim was originally brought against Melson, who died on January 25, 2016. Melson Properties LLC was substituted as defendant. We affirm.
Melson sold plaintiff two adjoining parcels of commercial real property. After the conveyance, plaintiff discovered outstanding water bills for the property. Thereafter, the parties entered into a settlement agreement that contained a mutual release of claims provision, which reads, in pertinent part:
4. Mutual Release. For the purposes of this Mutual Release, and specifically for purposes of Sections 4.A and 4.B below, the term "Claims" shall mean: all manner of claims, actions, suits, monies owed or claimed to be owed, liens, claims of lien, damages, judgments, executions, costs, attorney fees, expenses and demands of whatever nature and wherever located from the beginning of time to the date of this Agreement and which to date were raised or which could have been raised at any time preceding this Agreement. This is a full and final release of any and all Claims, and [Melson] and [plaintiff] agree as further consideration of inducement for this compromise settlement that it shall
apply to all unknown and unanticipated damages or injuries resulting from said Claim(s), as well as those that were not disclosed.The settlement agreement also contained an integration or merger clause that reads, "This Agreement is fully and completely integrated and represents the entire understanding of the parties. No other agreements exist."
* * *
B. Except for the specific undertakings and obligations assumed by [Melson] in this Agreement, [plaintiff], for themselves and their predecessors, successors, agents, assigns and attorneys, do hereby release and forever discharge [Melson] and its subsidiaries, affiliates, predecessors, successors, directors, officers, shareholders, employees, owners, agents, assigns and attorneys of and from all manner of "Claims" whatsoever, in law or in equity, whether known or unknown, foreseen or unforeseen, from the beginning of time through the date of this Agreement.
After the execution of the settlement agreement, plaintiff discovered numerous property defects and city code violations (and associated fines) that were allegedly not disclosed by Melson before the conveyance. Plaintiff alleged that Melson knew about the needed repairs and code violations, but intentionally and fraudulently failed to disclose them in order to induce plaintiff into purchasing the property. Plaintiff filed a complaint against Melson, alleging fraud, breach of contract, and tortious interference with contractual relations and business expectancy. Melson then filed a motion for summary disposition, which was granted by the trial court. The trial court concluded that the release in the settlement agreement barred plaintiff's claims.
Plaintiff argues that the trial court erred in granting Melson's motion for summary disposition because there was a genuine issue of material fact relating to whether the alleged fraudulent conduct committed before the execution of the settlement agreement and mutual release invalidated the release, thus allowing plaintiff to bring its claims.
"This Court reviews de novo a circuit court's decision whether to grant or deny summary disposition." Joseph v Auto Club Ins Ass'n, 491 Mich 200, 205; 815 NW2d 412 (2012). A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Id. at 206. Summary disposition is proper if there is "no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law." Latham v Barton Malow Co, 480 Mich 105, 111; 746 NW2d 868 (2008). The court considering the motion "must consider the affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties, MCR 2.116(G)(5), in the light most favorable to the party opposing the motion." Joseph, 491 Mich at 206. All reasonable inferences are to be drawn in favor of the nonmoving party. Dextrom v Wexford Co, 287 Mich App 406, 415; 789 NW2d 211 (2010). "The purpose of summary disposition is to avoid extensive discovery and an evidentiary hearing when a case can be quickly resolved on an issue of law." Shepherd Montessori Ctr Milan v Ann Arbor Twp, 259 Mich App 315, 324; 675 NW2d 271 (2003).
Plaintiff cursorily argues that the scope of the release was intended by the parties to only encompass claims concerning the outstanding water bills and any conduct relating to the water-bills dispute, but was not intended to bar claims that were unrelated to the water-bills dispute. However, plaintiff offers no evidence to support this assertion, and there is no language in the release specifying that it only pertained to the water-bills dispute. The release states that it applies to all claims of "whatever nature . . . which to date were raised or which could have been raised at any time preceding this Agreement," and further specifies that it applies to "all unknown and unanticipated damages or injuries resulting from said Claim(s), as well as those that were not disclosed." "Well-settled principles of contract interpretation require one to first look to a contract's plain language. If the plain language is clear, there can be only one reasonable interpretation of its meaning and, therefore, only one meaning the parties could reasonably expect to apply." Singer v American States Ins, 245 Mich App 370, 381 n 8; 631 NW2d 34 (2001). Plaintiff's argument does not accord with the plain language of the contract.
Plaintiff argues that it could not have possibly raised its claims before the execution of the release because the property defects and code violations were not discovered by plaintiff until after the release's execution. Significantly, however, the release states that plaintiff was releasing Melson and successors "from all manner of 'Claims' whatsoever, in law or in equity, whether known or unknown, foreseen or unforeseen, from the beginning of time through the date of this Agreement." (Emphasis added.) A reading of the plain language makes clear that the release did apply to the present case, involving allegedly unknown claims that could have been raised had they been known. Plaintiff's claims concern Melson's alleged failure to disclose the property defects and code violations, an alleged failure that occurred before the execution of the release. The release encompasses these claims.
Plaintiff also argues that the release is invalid because Melson fraudulently concealed the property defects and code violations. A release may be invalid if "(1) the releasor was dazed, suffering from shock or under the influence of drugs; (2) there was misrepresentation as to the nature of the instrument; or (3) there was other fraudulent or overreaching conduct." Theisen v Kroger Co, 107 Mich App 580, 582-583; 309 NW2d 676 (1981).
Parol evidence is generally admissible to demonstrate fraud. 3 Corbin, Contracts, § 580 . . . . However, in the context of an integration clause, which releases all antecedent claims, only certain types of fraud would vitiate the contract. 3 Corbin, Contracts, § 578, p 411 states in part:
To establish fraud, it is not sufficient merely to show that the writing states that there was no antecedent agreement when the fact is that there had been one. If by artifice or concealment, one party induces the other to suppose that the antecedent agreement is included in the writing, or to forget that agreement and to execute an incomplete writing, while describing it as complete, the written provision may be voidable on the ground of fraud.
In other words, while parol evidence is generally admissible to prove fraud, fraud that relates solely to an oral agreement that was nullified by a valid merger clause would have no effect on the validity of the contract. Thus, when a contract
contains a valid merger clause, the only fraud that could vitiate the contract is fraud that would invalidate the merger clause itself, i.e., fraud relating to the merger clause or fraud that invalidates the entire contract including the merger clause. 3 Corbin, Contracts, § 578. [UAW-GM Human Resources Ctr v KSL Recreation Corp, 228 Mich App 486, 503; 579 NW2d 411 (1998) (emphasis added).]
The only fraud by Melson that plaintiff alleges is fraud pertaining to the purchase agreement, not fraud relating to the settlement agreement containing the release and integration clauses. In the fraud count of the complaint, paragraph 15 refers to "an agreement for the sale of" the property, and paragraphs 16, 17, and 18 are prefaced with the phrase "Prior to the sale," which delineates the timeframe in issue. Paragraph 18 specifically alleges that the failure to disclose the defects was "specifically intended to and did in-fact induce [plaintiff] into purchasing the" property.
Further, plaintiff alleged at the motion hearing that Melson's fraudulent nondisclosure began in early 2013, when property defects were revealed by inspection. The settlement agreement was not executed until December 2, 2013, after plaintiff discovered the outstanding water bills.
Melson's alleged fraud did not relate to the settlement agreement or its integration and release clauses. See, generally, id. There is no genuine issue of material fact regarding the validity of the release, and it bars plaintiff's claims.
Affirmed.
/s/ Mark J. Cavanagh
/s/ Patrick M. Meter
/s/ Michael J. Kelly
Bean Little Investments LLC v Melson Props LLC, unpublished order of the Court of Appeals, entered November 9, 2016 (Docket No. 331855).