Opinion
Docket No. 180247.
Submitted November 16, 1994, at Lansing.
Decided February 22, 1995, at 9:35 A.M.
Lizza, Mulcahy, Casey Lawson, P.C. (by John B. Lizza), for the plaintiffs.
Rupp, Ehrlich, Foley Serwer, P.C. (by Joseph H. Ehrlich), for the defendants.
Before: TAYLOR, P.J., and HOOD and FITZGERALD, JJ.
ON REMAND
Our prior opinion in this case, 204 Mich. App. 234; 514 N.W.2d 221 (1994), was reversed by an October 28, 1994, order of the Supreme Court. 447 Mich. 897. That order reinstated the circuit court judgment in favor of plaintiffs, for the reasons stated by Judge TAYLOR in his dissent. We were ordered on remand to consider the issue of damages raised by plaintiffs in their cross appeal. The facts are set out in our prior opinion. We affirm in part, reverse in part, and remand.
Plaintiffs assert in their cross appeal that the trial court erred in its equitable accounting by (1) not awarding plaintiffs $63,500 for rent while at the same time holding plaintiffs' liable for $15,535.40 in property taxes, (2) awarding defendants twelve percent interest under MCL 600.6013; MSA 27A.6013 on the $32,000 down payment, and (3) not awarding plaintiffs attorney fees of $18,500.
In granting specific performance, a trial court may award such additional or incidental relief as is necessary to adequately sort out the equities of the parties, and should endeavor to put the parties as nearly as possible in the position that they would have occupied had the conveyance of the real property occurred when required by the contract. Reinink v Van Loozenord, 370 Mich. 121; 121 N.W.2d 689 (1963); Godwin v Lindbert, 101 Mich. App. 754, 758; 300 N.W.2d 514 (1980). Here, the trial court used October 12, 1986, as the first day that defendants failed to recognize the contract, and then allocated the equities between the parties. The property taxes on the Koerber property were charged to plaintiffs, but this was offset by the taxes plaintiffs paid on their existing residence. However, the trial court denied any award of the rental value of the Koerber property to plaintiffs because plaintiffs never introduced any credible evidence regarding their intent to rent out the subject property.
It has been held that a purchaser may be awarded compensation for any loss of the property during the delay in conveying the property in the form of the rental value or the net rents and profits for the period, subject to compensation to the seller for any loss of the use of the purchase money during the delay in the form of interest on that money for the period. The rationale for compensation for delay is that the contract is being awarded retrospectively and the equities adjusted accordingly. Frank v Coyle, 310 Mich. 14; 16 N.W.2d 649 (1944); Meyering v Russell, 53 Mich. App. 695, 706; 220 N.W.2d 121 (1974), rev'd on other grounds 393 Mich. 770 (1974).
A trial court may decide not to award rent where land was vacant and would have provided no income. Sloman v Rogers, 259 Mich. 302; 143 N.W. 13 (1932). Authority in other jurisdictions also presents instances in which rent has been denied where there is no contractual provision for rent and no rents generated, but has been allowed when the damages are allowed in tort for the loss and enjoyment of a home rather than as part of an equitable accounting. See generally Bernardini v Stefanowicz Corp, 29 Md. 508; 349 A.2d 287 (1975). Rent has also been denied where the evidence of lost rent is speculative because of a failure to prove that property would have been rented for a specific price or time. Goldman v Bloom, 90 Wis.2d 466; 280 N.W.2d 170 (1979).
However, where injury to some degree is found, a court does not preclude recovery for lack of precise proof but must do the best it can with what it has by way of evidence. Godwin v Ace Iron Metal Co, 376 Mich. 360, 368; 137 N.W.2d 151 (1965). This rule particularly applies when it is the defendant's own conduct that has caused the imprecision. Id. In such situations, it is preferable to err on the side of overcompensating the plaintiff, rather than adopt a rule that in all probability will preclude the injured party from recovery for a large portion of the damage sustained. Id.; Troppi v Scarf, 31 Mich. App. 240, 261-262; 187 N.W.2d 511 (1971); Howard v City of Melvindale, 27 Mich. App. 227, 235; 183 N.W.2d 341 (1970).
The trial court in this case quite obviously attempted to sort out the equities of the parties, attempting to place them as nearly as possible in the position they would have occupied had the conveyance occurred when required by the contract and considering the improvements defendant Henry Cornillie had made to the property.
The trial court denied plaintiffs' request for damages for the forty-seven months they did not have use of the property because plaintiffs did not intend to use the property as a rental property. In making this decision the trial court apparently misunderstood that the average fair rental value was introduced merely to help the court establish the amount of the loss. Fair rental value is an apt measure of damages in such a situation. See Lawrence C Young, Inc v Servair, Inc, 33 Mich. App. 643; 190 N.W.2d 316 (1971). A qualified witness' reasonable estimate of the value of the lost use of the property during the relevant time frame is competent evidence on which to base an award. See Andries v Everitt-Metzger-Flanders Co, 177 Mich. 110; 142 N.W. 1067 (1913).
Under the circumstances, we believe that the most equitable course is to remand this matter for a determination of plaintiffs' damages, including consideration of the improvements made.
While plaintiffs also suggest that it is inequitable to deny rental compensation while at the same time charge them taxes for the Koerber property (less the taxes paid on their existing home), this claim must be rejected because the purchase agreement itself sets the date of closing as the date for prorating taxes. Thus, it was equitable to give defendants credit for the taxes they paid, which were occasioned by the delay in conveying the property. We find no error in the trial court's determination in this regard.
Next, plaintiffs challenge the trial court's determination that it
is the finding of this Court, pursuant to MCL 600.6013(5); MSA 27A.6013(5), defendants shall receive interest on the $32,000.00 down payment. However, the Court finds defendants' assertions, as to interest on possible investment or money market earnings, speculative and beyond the thrust of Godwin.
Plaintiffs' claim regarding the above is that MCL 600.6013; MSA 27A.6013 does not apply, and that an appropriate rate of interest in equity would have been a bank savings rate of five percent. Plaintiffs' argument regarding the statute has merit, but we reject the suggested use of a five percent rate under the facts of this case.
While arriving at an appropriate interest factor is not always easy, it is clear to us that MCL 600.6013; MSA 27A.6013 does not apply to interest awarded in equity. Divorce cases are equitable, and we find the equitable principles discussed in divorce cases instructive. See Thomas v Thomas (On Remand), 176 Mich. App. 90, 92; 439 N.W.2d 270 (1989). See also Dep't of Treasury v Central Wayne Co Sanitation Authority, 186 Mich. App. 58, 61; 463 N.W.2d 120 (1990) (money judgment under the statute means adjudication of a sum of money as distinguished from an act to be done).
In this regard, the panel in Thomas, supra, noted that a minimum of five percent would be required pursuant to the lawful interest rate in MCL 438.31; MSA 19.15(1), although this may not always be adequate to compensate a party in equity. By comparison, the interest rate of twelve percent in MCL 600.6013(5); MSA 27A.6013(5), which was adopted by the trial court, is intended to apply to complaints filed after January 1, 1987, in which a money judgment is rendered on a written instrument. MCL 600.6013; MSA 27A.6013 is intended to provide compensation to a prevailing party for loss of use of funds awarded as a money judgment and to offset the costs of bringing a court action. Old Orchard by the Bay Associates v Hamilton Mutual Ins Co, 434 Mich. 244, 252; 454 N.W.2d 73 (1990).
In view of the above principles, we conclude that the trial court's use of MCL 600.6013; MSA 27A.6013 to determine interest was an abuse of discretion because this statute has no application to and does not comport with the equitable objective of interest in specific performance cases.
The issue then becomes whether the interest should be reduced to five percent as asserted by plaintiff or the case remanded to the trial court for further proceedings to determine a proper rate of interest. In this regard, the record shows that the trial court rejected defendants' interest proposal as being speculative. The minimum rate in the defendants' proposals appears to be about seven percent, although the proposals were combined to reach an average higher than seven percent. By comparison, plaintiffs' July 30, 1990, proposal reflects an interest rate of 6.35 percent.
In light of the trial court's rejection of defendants' proofs as speculative and plaintiffs' use of the 6.35 percent in its proposal, we find it appropriate to reduce the rate of interest to 6.35 percent, rather than remand for further proceedings to determine the interest rate. Plaintiffs' newly raised claim that a rate of five percent should be used is rejected because it was not presented to the trial court. As was noted in People v Murry, 106 Mich. App. 257, 262; 307 N.W.2d 464 (1981), a party cannot ask a trial court to take a certain action, and then argue on appeal that the action constitutes error.
Plaintiffs' final claim is that the trial court erred in failing to award attorney fees as part of the equitable accounting. The general rule is that no attorney fees may be awarded as costs unless authorized by statute or court rule.
Although there are exceptions to this rule, plaintiffs have shown no statute, court rule, or equitable principle justifying an award of attorney fees in this case. They do assert that defendants' breach of the purchase agreement was intentional and that having defendants pay their attorney fees is necessary to return the "parties" to the place they would be had there been no breach, and they cite Kelynack v Yamaha Motor Corp, USA, 152 Mich. App. 105; 394 N.W.2d 17 (1986), as being sufficiently analogous to the instant case to justify attorney fees. We find this argument unpersuasive because the issue in Kelynack involved a trial court's ability to award attorney fees as an element of damages under the Uniform Commercial Code, MCL 440.2715; MSA 19.2715. Kelynack has no relevance to the specific performance and equitable accounting at issue in this case. Because plaintiffs have not shown the requisite inequitable result for an award of attorney fees, the trial court's decision to deny attorney fees is affirmed.
Remanded for recalculation of interest on defendants down payment at the rate of 6.35 percent advocated by plaintiffs in the trial court and for a determination of plaintiffs' damages. In all other respects, the judgment of the trial court is affirmed.
We do not retain jurisdiction.