Case ID: mich-app_121/html/0580-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

METHENY v COY-MAGEE CUSTOM BUILDER, INC
    Docket No. 59228.
    Submitted June 28, 1982, at Lansing.
    Decided September 29, 1982.
    David and Rita Metheny purchased a new home. After they and their family moved in it was discovered that the water supply was contaminated and unsafe to drink. The Methenys brought an action against the builder, Coy-Magee Custom Builder, Inc., the broker, Countryside Real Estate, Inc., and the mortgage lender, Great Lakes Federal Savings and Loan, alleging, inter alia, that defendant Great Lakes had a duty to inspect the water supply and inform the plaintiffs of the contamination. The Livingston Circuit Court, Bert M. Hensick, J., granted summary judgment in favor of Great Lakes only, and the plaintiffs appeal, alleging that defendant’s duty was created by certain language in the mortgage application regarding the requirement of a survey of the property. Held:
    
    There was no duty on the part of the mortgage lender, either created by the loan application or otherwise, to undertake a water analysis. Summary judgment was properly granted.
    Affirmed.
    1. Judgments — Summary Judgment — Failure to State Claim.
    A motion for summary judgment based on the allegation of the defendant that he had no legal duty to do that which the plaintiff has alleged the defendant failed to do is properly based upon the subrule allowing summary judgment for failure to state a claim upon which relief may be granted (GCR 1963, 117.2[1]).
    2. Judgments — Summary Judgment — Failure to State Claim.
    A motion for summary judgment based upon the failure to state a claim upon which relief may be granted is tested by the pleadings alone, taking as true the factual allegations of the complaint along with any inferences which may fairly be drawn therefrom; unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover, the motion should be denied (GCR 1963, 117.2[1]).
    
      Reference for Points in Headnotes
    
       61A Am Jur 2d, Pleading § 230 et seq.
    
    
      
      Decker & Cleary (by Charles F. Decker), for plaintiffs.
    
      Davidson, Gotshall, Kohl, Secrest, Wardle, Lynch & Clark (by Mark E. Morley), for defendant appellee.
    Before: R. B. Burns, P.J., and D. F. Walsh and P. J. Marutiak, JJ.
    
      
       Circuit judge, sitting on the Court of Appeals by assignment.
    
   Per Curiam.

In 1979, David Metheny signed a purchase agreement (contingent on obtaining financing) for a house located at 6410 Brookfield, Brighton, Michigan. The house was being built by defendant Coy-Magee Custom Builder, Inc., and sold through defendant Countryside Real Estate, Inc. David Metheny filed a mortgage loan application with defendant-appellee Great Lakes Federal Savings and Loan on August 10, 1979, which was approved on September 10 and finalized on October 22. Plaintiffs moved into their new home on September 6, 1979. The water was found to contain high levels of coliform bacteria and salt. Plaintiffs were advised by the county health department that the water was unsafe to drink. Since November 1979, plaintiffs have been provided with bottled water. The Methenys brought an action against Coy-Magee, Countryside and Great Lakes. Great Lakes (hereinafter defendant) moved for summary judgment, which the trial court granted at a hearing on the motion held on June 29, 1981. Plaintiffs now appeal the trial court’s decision.

In Count IV of the complaint plaintiffs alleged that defendant breached its fiduciary duty of care in failing to discover or warn plaintiffs of the contamination. There is no indication on the record as to which subrule of the summary judgment rule the court relied on, GCR 1963, 117.2(1) or 117.2(3), although the motion presented by defendant was based on GCR 1963, 117.2(3). Since the issue here is whether or not defendant had a legal duty to test the water, 117.2(1) is the appropriate subrule to apply. See Woodworth v Brenner, 69 Mich App 277; 244 NW2d 446 (1976).

In Partrich v Muscat, 84 Mich App 724, 729-730; 270 NW2d 506 (1978), this Court stated the test employed in reviewing summary judgments under 117.2(1):

"The standard governing this Court’s review of a grant or denial of a motion for summary judgment based on GCR 1963, 117.2(1) is well settled. The motion is to be tested by the pleadings alone. Todd v Biglow, 51 Mich App 346; 214 NW2d 733 (1974), lv den 391 Mich 816 (1974). The motion tests the legal basis of the complaint, not whether it can be factually supported. Borman’s, Inc v Lake State Development Co, 60 Mich App 175; 230 NW2d 363 (1975). The factual allegations of the complaint are taken as true, along with any inferences or conclusions which may fairly be drawn from the facts alleged. Unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover, the motion under this subrule should be denied. Crowther v Ross Chemical & Manufacturing Co, 42 Mich App 426; 202 NW2d 577 (1972).”

Plaintiffs cite no authority supporting their claim that defendant had an affirmative duty to undertake a water analysis or that defendant had a duty to disclose the contamination to plaintiff if it was aware of it. We agree with defendant that a lender has no affirmative duty as part of the mortgage loan process to test the quality of the water supply. Even assuming that defendant had a duty to warn about the water contamination problem if it had known about it, it appears that defendant did not know about it. There is no suggestion in any of the depositions or affidavits that defendant knew of the problem. Even plaintiff David Metheny conceded during deposition and by letter that, to the best of his knowledge, defendant did not know about it. Therefore, even assuming a duty to warn plaintiffs if the water problem was known, defendant would be entitled to summary judgment on the ground that plaintiffs have raised no issue of material fact. GCR 1963, 117.2(3).

In their effort to avoid summary judgment for defendant, plaintiffs rely mainly on the proposition that paragraph 2 of the addendum to commitment of their loan application created an affirmative duty on the part of Great Lakes to test the water quality at the premises in question. Paragraph 2 states:

"2. A mortgage Survey from a registered Civil Engineer of your choice is required, in order to check all easements, encroachments or other irregularities which could affect our ability to make a mortgage loan on the subject property. Unless otherwise directed by you, Lender will arrange to obtain the survey.”

Nowhere in their complaint do plaintiffs mention that the alleged fiduciary duty arose out of this contractual language, but it appears that the trial court rested its decision on this language.

Even assuming this theory had been pled, plaintiffs’ argument is without merit. Clearly, paragraph 2 of the addendum to commitment was not intended to protect plaintiffs against a bad water supply.

Plaintiffs are precluded from raising the allegation that the alleged fraud of Countryside Real Estate is imputed to Great Lakes since this theory of recovery was not pleaded or raised at any time below.

Affirmed.