Opinion
No. 342829
03-21-2019
RALPH ROBERTS REALTY, LLC, Plaintiff-Appellant, v. MIKE GREEN, 209 E. GRAND TRAVERSE GROUP, LLC, and 1811 BEECHMONT GROUP, LLC, Defendants-Appellees.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Oakland Circuit Court
LC No. 2017-160135-CB Before: BORRELLO, P.J., and SWARTZLE and CAMERON, JJ. PER CURIAM.
In this breach of contract action, plaintiff appeals as of right the trial court's order granting defendants' motion for summary disposition. For the reasons set forth in this opinion, we affirm.
I. BACKGROUND
On August 3, 2017, plaintiff filed a complaint alleging that defendant Mike Green, who was the owner of the two defendant business entities, owed plaintiff money stemming from two real estate purchases that plaintiff made on Green's behalf. According to the complaint, plaintiff helped Green purchase two properties under plaintiff's "Investor Program," and Green owed plaintiff 50% of the equity in these properties pursuant to an oral contract between plaintiff and Green. More specifically, plaintiff made the following factual allegations:
7. In or around January 2012, Ralph R. Roberts, on behalf of [plaintiff], began discussions with Defendant Green regarding [plaintiff's] Investor Program ("Program").
8. Subsequently, Defendant Green was provided with a copy of the proposed Acquisition Agreement, attached hereto as Exhibit 1, which generally reflects the terms and conditions of [] [plaintiff's] Investor Program.
9. In or around January 2012, Defendant Green agreed to participate in the Investor Program pursuant to its terms and conditions, and began receiving information on potential real estate investment opportunities.
10. On or about January 30, 2012, Defendant Green contacted Plaintiff's agent, Ralph R. Roberts, regarding purchasing properties at Sheriff's Sale, through the Investor Program, and Plaintiff agreed to purchase a foreclosure property on behalf of Defendant, pursuant to the Program agreement: namely, 1811 Beechmont Street, Keego Harbor, MI.
11. On January 31, 2012, Plaintiff, as agent for Defendant Green and pursuant to the Program agreement, attended the Oakland County foreclosure sale and successfully bid on the property at 1811 Beechmont St. On behalf of Defendant Green, the Sheriff's Deed was prepared placing the foreclosure title to the property in the name of 1811 Beechmont Group LLC as Purchaser (which LLC was organized by Plaintiff).
12. On or about June 11, 2012, Defendant Green—after email communications with Plaintiff, agreed to purchase a second foreclosure property pursuant to the Program agreement.
13. On June 12, 2012, Plaintiff, as agent for Defendant Green and pursuant to the Program agreement, attended the Oakland County foreclosure sale and successfully bid on the property at 209 E. Grand Traverse St., Commerce Township, MI. On behalf of Defendant Green, the Sheriff's Deed was prepared placing the foreclosure title to the property in the name of Defendant 209 E. Grand Traverse Group, LLC, as Purchaser (which LLC was organized by Plaintiff).
14. Pursuant to the contract between Plaintiff and Defendants, Plaintiff is due fifty (50%) of the net equity in all properties Defendants have purchased through the Investor Program, at the expiration of the five year term of the Agreement.
15. The five year term has expired and despite Plaintiff's providing the agreed-upon services, Defendants have failed and/or refused to abide by the contract terms to pay Plaintiff the agreed upon profits related to the purchase of said Properties.
A copy of the "Acquisition Agreement" was attached to the complaint, and plaintiff alleged that this agreement "generally reflect[ed] the terms and conditions" of the investor program. This agreement was not signed or dated, and it did not include any indication that any of the defendants were parties to the agreement. None of the blanks in the Acquisition Agreement had been filled in. Plaintiff also did not include any allegations directed at explaining which terms of the Acquisition Agreement were actually terms of the alleged agreement between plaintiff and Green other than alleging that the agreement provided for plaintiff to be paid 50% of the net equity in the properties after the passing of five years from the date of purchase.
In the complaint, plaintiff raised a claim for breach of contract. Plaintiff asserted that the Beechmont Street property was purchased for $24,778 and was currently worth $142,242. Plaintiff also asserted that the E. Grand Traverse Street property was purchased for $6,753 and was currently worth $138,863. Plaintiff alleged that because the "five year term of the Agreement [had] expired as to each Property, and Defendants [had] failed/refused to abide by the contract terms and pay Plaintiff the agreed upon one-half of equity in the subject properties," defendants had breached the contract.
Plaintiff also raised a claim of unjust enrichment. The trial court granted summary disposition in favor of defendants with respect to both the breach of contract claim and the unjust enrichment claim. However, plaintiff does not challenge the trial court's ruling on the unjust enrichment claim in the instant appeal. Therefore, we will not discuss this claim further in this opinion.
In lieu of an answer, defendants filed a motion for summary disposition under MCR 2.116(C)(7) and (8). Defendants argued that plaintiff's breach of contract claim impliedly depended on the existence of an oral agreement that had not been reduced to a signed writing, and defendants argued further that plaintiff's breach of contract claim was barred by the applicable statutes of frauds. Specifically, defendants maintained (1) that plaintiff's claim was barred by MCL 566.106 because the claim arose from transactions involving the conveyance of land, (2) that the claim was barred by MCL 566.132(1)(a) because plaintiff was seeking fees or commissions that he claimed became due after five years had passed from the date of purchase and the alleged agreement therefore was not capable of being performed within one year, and (3) that the claim was barred by MCL 566.132(1)(e) because plaintiff was actually seeking commissions for the sale of real estate.
In response to defendants' motion, plaintiff first argued that it was not asserting a claim for real estate commissions but that the investor program was instead a joint venture agreement to share in the profits of acquiring and developing certain residential properties. Plaintiff further contended that this oral joint venture agreement was not barred by the statute of frauds because it was based on a claimed breach of the agreements to share the profits from the purchase and sale of land and there was no claim by plaintiff that it held any interest in the real property. Next, plaintiff argued that the oral agreement was capable of being performed in one year and thus was also not barred by the statute of frauds on that ground either. Plaintiff pointed to a section of the Acquisition Agreement that provided that a sale of the subject property would also trigger a distribution of profits to plaintiff. Plaintiff argued that such a sale could have occurred within one year even though defendants in this case had not decided to sell the subject properties and, by the terms of the agreement, only became obligated under these circumstances to make the 50% net equity payment after the expiration of the five-year term.
Defendants filed a reply, in which they argued that plaintiff had failed to properly allege the requisite elements to show the existence of a joint venture. Defendants specifically maintained that plaintiff did not allege that it invested any capital in the project or that there was a "community" of interest and control in the subject matter of the alleged joint venture. Defendants further argued that plaintiff did not allege that it was liable for sharing in the losses stemming from the properties and that plaintiff referred to itself in its complaint as defendant's "agent."
At the conclusion of the hearing on the motion, the trial court granted defendants' motion for summary disposition. In announcing its ruling, the trial court explained its reasoning in pertinent part as follows:
Here, based on the allegations in the complaint, it is clear that plaintiff's breach of contract claim is based on an interest in the real property and not profits or losses from any sale of the property. Thus, plaintiff's claim is barred because any conveyance of an interest in real property must be in writing, signed by the person charged with the agreement, MCL 566.106.
Moreover, taking all plaintiffs' allegations as true for purposes of this motion, the claimed fees were to be paid after five years from the date of purchase; however, under MCL 566.132(1)(a), any such agreement must be in writing. Since there is no signed writing, plaintiff is unable to overcome the requirements mandated by the statute of frauds. Accordingly, defendant's motion for summary disposition as to plaintiff's claim for breach of contract is granted and that claim is dismissed.
This appeal ensued.
II. STANDARD OF REVIEW
A trial court's ruling on a motion for summary disposition is reviewed de novo. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999).
Under MCR 2.116(C)(7), a court may grant summary disposition based on the application of a statute of frauds. "[A] movant under MCR 2.116(C)(7) is not required to file supportive material, and the opposing party need not reply with supportive material." Maiden, 461 Mich at 119. "The contents of the complaint are accepted as true unless contradicted by documentation submitted by the movant." Id.
When a motion is made under MCR 2.116(C)(8), summary disposition is appropriate if the "opposing party has failed to state a claim on which relief can be granted." A court may only consider the pleadings when a motion is based on this subrule. MCR 2.116(G)(5). "All well-pleaded factual allegations are accepted as true and construed in a light most favorable to the nonmovant." Maiden, 461 Mich at 119. "A motion under MCR 2.116(C)(8) may be granted only where the claims alleged are so clearly unenforceable as a matter of law that no factual development could possibly justify recovery." Id. (quotation marks and citation omitted).
Finally, "[w]hether a statute of frauds bars enforcement of a contract is a question of law that we review de novo." Kloian v Domino's Pizza, LLC, 273 Mich App 449, 458; 733 NW2d 766 (2006).
III. ANALYSIS
Under MCL 566.106,
No estate or interest in lands, other than leases for a term not exceeding 1 year, nor any trust or power over or concerning lands, or in any manner relating thereto, shall hereafter be created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the party creating, granting, assigning, surrendering or declaring the same, or by some person thereunto by him lawfully authorized by writing.
Plaintiff argues that it is seeking to enforce an "oral contract to develop real estate, sell it and divide the profits." Plaintiff contends that this type of agreement falls outside the purview of the statute of frauds contained in MCL 566.106 because the alleged oral agreement only relates to an interest in the proceeds of a real estate sale and does not involve any actual interest in real estate.
"As a general rule a contract relating to the disposition of the proceeds of land, in case of its sale, is not one for an interest in the land and may be enforced, though not in writing, after the land has been sold." Stewart v Young, 247 Mich 451, 456; 226 NW 222 (1929) (quotation marks and citation omitted); accord Koffman v Mathews, 352 Mich 390, 398; 89 NW2d 756 (1958) ("The general rule is that agreements to share profits and losses arising from the purchase and sale of real estate are not contracts for the sale or transfer of interests in land and need not be in writing.") (quotation marks and citation omitted).
In the instant case, however, the parcels of real property at issue have not been sold since being acquired by defendants, and there are no profits from a real estate sale that could be divided between the parties. Plaintiff is not actually claiming that an agreement to divide the profits from a sale of land has been breached but instead asserts a right to a monetary sum based on the value of the equity that the respective defendants hold in each property. In other words, plaintiff is essentially claiming to hold an interest in defendants' real property equity, even though plaintiff does not explicitly admit as much. "Equity" in this context means "[t]he amount by which the value of or an interest in property exceeds secured claims or liens; the difference between the value of the property and all encumbrances on it." Black's Law Dictionary (10th ed) (emphasis added). Our Supreme Court has explained the general concept of an interest in real property as follows:
The general rule is, that the word "interest" is broader and more comprehensive than the word "title." It embraces both legal and equitable rights. It covers rights in property less than title thereto, rights different from title, rights which may be enforced. legal [sic] rights.
Interest, in common speech in connection with land, includes all varieties of titles and rights. When given its plain and natural meaning it comprehends estates in fee, for life and for years, mortgages, liens, easements, attachments, and every kind of claim to land which can form the basis of a property right. [Lookholder v State Hwy Comm'r, 354 Mich 28, 36 n 7; 91 NW2d 834 (1958) (citations and some quotation marks omitted).]
In this case, it is clear from plaintiff's theory of relief as alleged in its complaint that plaintiff is not claiming a contractual right to proceeds from a sale in land but instead claims a property right to a portion of the value of each parcel of real estate. Thus, plaintiff's claim is premised on an interest in land, which comes within the statute of frauds contained in MCL 566.106. Lookholder, 354 Mich at 36 n 7. Because plaintiff's claim is premised on an alleged interest in the respective defendants' equity in each property, rather than on an interest in the proceeds of a sale of land, plaintiff's claim does not fall within the exception to the statute of frauds relied on by plaintiff. Stewart, 247 Mich 451, 456; Koffman, 352 Mich at 398. The trial court did not err by granting defendants' motion for summary disposition on the ground that the statute of frauds barred enforcing the alleged oral agreement regarding an interest in land.
Having reached this conclusion, there is no need for us to consider whether the alleged oral agreement was also barred by other statutes of frauds. --------
Affirmed.
/s/ Stephen L. Borrello
/s/ Brock A. Swartzle
/s/ Thomas C. Cameron