Summary
finding litigation with third party to correct title deficiency to be "legal and natural consequence" of defendant seller lying to plaintiff purchaser about legal boundaries of plot of land and allowing recovery on tortuous fraud claim
Summary of this case from 455 Cos. v. Landmark Am. Ins. Co.Opinion
Docket No. 89332.
Decided November 3, 1987.
Steward, Peterson, Sheridan Nancarrow (by James B. Steward), for plaintiff.
Kendricks, Bordeau, Adamini, Keefe, Smith Girard, P.C. (by Stephen F. Adamini), for defendant.
Defendant Lillian Roberts LeBlanc appeals as of right, arguing that the trial court erred in finding that plaintiffs' claim against LeBlanc was not barred by the statute of limitations. Plaintiffs cross-appeal regarding the amount of damages awarded to them following a bench trial on their claim of fraud and misrepresentation.
In May, 1967, defendants James and Emeline LeMire along with James and Karen Radtke entered into a land contract with defendant LeBlanc for the purchase of certain real property. Prior to execution of a deed, the Radtkes assigned their interest in the land contract to the LeMires. In 1972, defendant LeBlanc conveyed the property to the LeMires by warranty deed. Plaintiffs purchased the property from the LeMires in June of 1973, and subsequently began construction of a permanent residence on the property. The sale was handled by defendant Acre Realty and its agent, defendant Theodore H. Hokenson. During negotiations for the sale of the property, Hokenson made several representations to plaintiffs concerning the property, some of which concerned the location of the boundary lines. These representations were later discovered to be untrue. After beginning construction on the residence, plaintiffs discovered that the basement was located outside the property line. A survey of the property revealed that the west property line was considerably farther to the east than what plaintiffs were told. Thereafter, plaintiffs filed the instant action against the LeMires, Acre Realty, and Hokenson alleging fraud and misrepresentation.
The LeMires subsequently filed a third-party complaint against LeBlanc, their predecessor in title, alleging that she or her agent was the original source of the property line misrepresentation. The LeMires were ultimately dismissed from the instant action after filing for and obtaining a discharge in bankruptcy.
At a pretrial conference held on August 17, 1981, plaintiffs filed a pretrial statement indicating their intent to assert a claim directly against LeBlanc. On August 24, 1981, plaintiffs filed an "Assignment of Cause of Action" in which the LeMires purported to assign their third-party claim against LeBlanc to plaintiffs. LeBlanc filed a motion to dismiss the third-party complaint arguing that any judgment rendered against the LeMires would be invalid due to their discharge in bankruptcy and further that the cause of action was not assignable at common law. Thereafter, plaintiffs filed a motion for substitution of parties requesting that they be substituted as parties plaintiff against LeBlanc as the real parties in interest.
Following a hearing on the parties' motion the trial court concluded that plaintiffs could not derive a cause of action from the assignment of the third-party claim due to the LeMires' discharge in bankruptcy. In an order entered July 23, 1982, the trial court granted defendant LeBlanc's motion to dismiss the third-party claim, but allowed plaintiffs thirty days to amend their complaint to name LeBlanc as a principal defendant. On August 19, 1982, plaintiffs filed an amended complaint naming LeBlanc as a principal defendant and alleging that she had misrepresented the location of the property lines to her successors in title.
Defendant LeBlanc subsequently moved for accelerated judgment asserting among other things that plaintiffs' claim was barred by the statute of limitations. The trial court denied defendant's motion, holding that the amended complaint related back to the third-party pleadings and, therefore, was brought before the period of limitations had run.
Following a bench trial, the trial court found that plaintiffs had a valid cause of action against LeBlanc but that there was no cause of action against Hokenson and Acre Realty because the misrepresentations by Hokenson were not made purposely or recklessly. The trial court awarded $6,800 in damages along with interest. The trial court ruled that plaintiffs were not entitled to certain consequential damages.
On appeal, defendant LeBlanc asserts that the trial court erred in finding that plaintiffs' claim was not barred by the statute of limitations. We disagree.
In actions for fraud or misrepresentation the applicable limitation period is six years. MCL 600.5813; MSA 27A.5813; Kwasny v Driessen, 42 Mich. App. 442, 445-446; 202 N.W.2d 443 (1972). In a tort action, the period of limitations "runs from the date the tort was committed, not the date the actor put his or her force wrongfully into motion." Williams v Polgar, 391 Mich. 6, 23; 215 N.W.2d 149 (1974). The period of limitations does not begin running until the date when plaintiff knew or should have known of the misrepresentation. Id., p 25. In the instant case, the period of limitations began to run on July 26, 1976, when plaintiffs were informed of the property line discrepancies by the surveyor. Applying the limitations period to the discovery date, the period of limitations would have run on July 26, 1982, unless it was tolled by some action on the part of plaintiffs.
In the instant case, the trial court denied defendant LeBlanc's motion for accelerated judgment on the ground that plaintiffs' amended complaint related back to the third-party complaint. Although we disagree with the basis of the trial court's ruling, that the amended complaint related back to the third-party complaint [see Higginbotham v Fearer Leasing, Inc, 32 Mich. App. 664; 189 N.W.2d 125 (1971)], we conclude that the denial of defendant LeBlanc's motion for accelerated judgment was correct.
The running of the period of limitations is tolled when the complaint is filed and a copy of the complaint, along with a summons, is served on the defendant, or when jurisdiction over the defendant is otherwise acquired. MCL 600.5856; MSA 27A.5856. In addition, this Court has held that a motion to add a party defendant or to amend the complaint to add such a party tolls the running of the period of limitation during the time in which the motion is pending. In Moore v Flower, 108 Mich. App. 214, 217; 310 N.W.2d 336 (1981), remanded 414 Mich. 897 (1982), on remand 121 Mich. 235; 329 N.W.2d 35 (1982), this Court stated:
Application of statutes of limitations is a counting procedure with a primary purpose being to give the parties and the courts a specific time at which the statutory bar goes into effect. We find that the Supreme Court order in Charpentier, supra, [ Charpentier v Young, 403 Mich. 851; 291 N.W.2d 926 (1978)] applies such a rule and hold that, when a plaintiff moves to add a party defendant or to amend a complaint to do so, the statute of limitations is tolled during the time in which the motion to add parties or amend the complaint is pending in the trial court.
See also Thomas v Process Equip Corp, 154 Mich. App. 78, 85-86; 397 N.W.2d 224 (1986); Fazzalare v Desa Industries, Inc, 135 Mich. App. 1, 5-6; 351 N.W.2d 886 (1984).
In the instant case, prior to the running of the period of limitations, plaintiffs filed a motion for substitution of parties requesting that they be substituted as parties plaintiff against LeBlanc as the real party in interest. Although certainly not the technical equivalent of a motion to add a party defendant or to amend the complaint, plaintiffs' motion had the same effect, i.e., bringing a direct action against defendant LeBlanc. We conclude that plaintiffs' motion for substitution of parties should be treated as the functional equivalent of a motion to amend the complaint or to add a party defendant. Therefore, pursuant to Thomas, supra, Fazzalare, supra, and Moore, supra, the running of the period of limitations was tolled during the pendency of plaintiffs' motion. Plaintiffs' motion was pending before the trial court for almost eleven months because of delays occasioned through no fault of the parties. With the tolling of the running of the period of limitations during this time, plaintiffs' amended complaint asserting a direct cause of action against defendant LeBlanc was filed in a timely fashion. Accordingly, plaintiffs' cause of action was not barred by the statute of limitations.
In a cross-appeal, plaintiffs challenge the amount of damages awarded by the trial court. Plaintiffs' challenge is twofold. First, plaintiffs assert that the trial court erred by awarding plaintiffs damages in the amount of the difference between the value of the property as represented and the value of the property actually received as of the date of purchase. Plaintiffs contend that they should have been awarded the value difference as measured in 1976 when they discovered the misrepresentation. We disagree.
It is a well-settled rule of damages that, if a person is led to purchase land by representations which prove untrue, the measure of damages in a tort action where there is no rescision is the difference between the actual value of the land at the time of contract and the value it would have possessed had the representations been true. Paquin v Van Houtum, 343 Mich. 111, 123; 72 N.W.2d 169 (1955); Williams v American Title Ins Co, 83 Mich. App. 686, 701; 269 N.W.2d 481 (1978). Plaintiffs were not entitled to have value-difference damages measured as of the date of discovery of the misrepresentation.
Plaintiffs also assert that the trial court erred in refusing to award consequential damages resulting from the misrepresentation, such as the surveyor's fees expended, the attorney fees expended to correct the title deficiency, miscellaneous costs to secure title to the property previously represented as theirs, increased construction costs due to delay, and losses incurred as a result of a delay in selling their former home.
In a tort action, the tortfeasor is liable for all 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. Sutter v Biggs, 377 Mich. 80; 139 N.W.2d 684 (1966); Wendt v Auto-Owners Ins Co, 156 Mich. App. 19, 25; 401 N.W.2d 375 (1986).
We conclude that the attorney and surveyor fees ($2,242.67 and $1,448.75, respectively), miscellaneous acquisition costs ($462.50), and increased construction costs occasioned by the delay ($20,000), represent damages which were actually and proximately caused by defendant LeBlanc's misrepresentation. Further, these damages are of a type which might reasonably have been anticipated by defendant. Accordingly, the trial court erred in disallowing recovery for these consequential damages.
We disagree with plaintiffs' assertion that they are entitled to consequential damages for losses incurred as a result of a delay in selling their former residence. Although plaintiffs began construction of a new residence on the property in question while still owning their former residence, there was no evidence indicating that any potential purchasers were refused because plaintiffs were unable to move into their new residence as planned. Therefore, these damages would be purely speculative and were properly disallowed.
In summary, we affirm the trial court as to liability and remand so that the trial court may award consequential damages in conformity with this opinion.
Affirmed in part, reversed in part and remanded.