Michigan Supreme Court

Lansing, Michigan

Robert P. Young, Jr., Chief Justice

Stephen J. Markman

Brian K. Zahra

Bridget M. McCormack

David F. Viviano 

Richard H. Bernstein

Joan L. Larsen, Justices

Order 

November 25, 2015

149536

DAVID ABBO, COLORADO TOYZ,

INC., and WIRELESS PHONES, LLC,

Plaintiffs-Appellees,

v SC: 149536

COA: 304185

Oakland CC: 2007-082804-CK

WIRELESS TOYZ FRANCHISE, LLC,

JOE BARBAT, RICHARD SIMTOB,

JSB ENTERPRIZES, INC., and JACK

BARBAT,

Defendants-Appellants.

____________________________________/

On November 4, 2015, the Court heard oral argument on the application for leave 

to appeal the May 13, 2014 judgment of the Court of Appeals. On order of the Court, the 

application is again considered, and it is DENIED, because we are not persuaded that the 

questions presented should be reviewed by this Court. 

ZAHRA, J. (dissenting). 

After a breakdown in the relationship between the franchisee-plaintiffs (David 

Abbo and related persons) and the franchisor-defendants (Wireless Toyz Franchise, LLC, 

and related persons), plaintiffs filed suit against defendants, alleging that defendants had 

failed to disclose certain costs and expenses of operating a franchise. Specifically, this 

allegation of “silent fraud” was based on defendants’ failure to disclose “chargebacks”1

and “hits.”2

 This Court was sufficiently concerned about the substance of the Court of 

Appeals’ opinion to order oral argument on the application for leave to appeal. Abbo v 

Wireless Toyz Franchise, LLC, 497 Mich 1032 (2015). After hearing the parties’ 

arguments, the majority has elected to deny leave. 

I write separately because, despite the factual complexities of this case and the fact 

that the Court of Appeals opinion’ is unpublished and of no precedential value, I would 

reverse. The opinion below cuts against a fundamental tenet of this Court’s jurisprudence 

that requires the enforcement of unambiguous contracts freely executed by the parties. 

This proposition is so central to our jurisprudence that it has become “an unmistakable 

 

1 Chargebacks are described as revocations of a franchise store owner’s commission that 

take effect when a customer prematurely cancels a telephone service contract.

2 Hits are described as discounts awarded to customers as incentives to purchase a 

telephone.
2

and ineradicable part of the legal fabric of our society.” Wilkie v Auto-Owners Ins Co, 

469 Mich 41, 52 (2003) (“The notion, that free men and women may reach agreements 

regarding their affairs without government interference and that courts will enforce those 

agreements, is ancient and irrefutable.”); Quality Prod & Concepts Co v Nagel Precision, 

Inc, 469 Mich 362, 370 (2003) (“[T]he freedom to contract principle is served by 

requiring courts to enforce unambiguous contracts according to their terms . . . .”); Rory v 

Continental Ins Co, 473 Mich 457, 461 (2005) (“[A] court must construe and apply 

unambiguous contract provisions as written.”); Bloomfield Estates Improvement Ass’n, 

Inc v City of Birmingham, 479 Mich 206, 212 (2007) (“We ‘respect[] the freedom of 

individuals freely to arrange their affairs via contract’ by upholding the ‘fundamental 

tenet of our jurisprudence . . . that unambiguous contracts are not open to judicial 

construction and must be enforced as written’ . . . .”) (citation omitted) (alteration in 

original).

Silent fraud arises “from the suppression of the truth . . . with the intent to 

defraud.” Tompkins v Hollister, 60 Mich 470, 483 (1886). But silent fraud requires more 

than simply a failure to disclose material information. It must be coupled with a duty to 

disclose. M&D, Inc v McConkey, 231 Mich App 22, 29 (1998) (“Michigan courts have 

recognized that silence cannot constitute actionable fraud unless it occurred under 

circumstances where there was a legal duty of disclosure.”) (quotation marks and citation 

omitted). Further, in asserting silent fraud, “[a] plaintiff cannot merely prove that the 

defendant failed to disclose something; instead, a plaintiff must show some type of 

representation by words or actions that was false or misleading and was intended to 

deceive.” Lucas v Awaad, 299 Mich App 345, 364 (2013) (quotation marks and citation 

omitted). Therefore, a silent-fraud claim cannot be maintained unless it can be 

established that there was (1) a duty to disclose, (2) an omission of a material fact from 

an otherwise truthful statement, and (3) the intent to mislead. See US Fidelity & 

Guaranty Co v Black, 412 Mich 99 (1981); Roberts v Saffell, 280 Mich App 397 (2008), 

aff’d 483 Mich 1089 (2009).

To establish defendants’ duty to disclose, plaintiffs rely on MCL 445.1505 of the 

Michigan Franchise Investment Law, which provides:

A person shall not, in connection with the filing, offer, sale, or 

purchase of any franchise, directly or indirectly:

* * *

(b) Make any untrue statement of a material fact or omit to state a 

material fact necessary in order to make the statements made, in the light of 

the circumstances under which they are made, not misleading. 

This statute requires either an affirmative untrue statement or a misleading 

omission coupled with an otherwise true statement. Plaintiffs argue that the latter 
3

occurred when defendants made incomplete statements during the negotiation process 

about the various chargebacks and hits. According to plaintiffs, these incomplete 

statements, coupled with defendants’ duty to disclose complete information, constituted 

silent fraud.

But here, plaintiffs and defendants entered into unambiguous written agreements 

containing broad disclaimers. For instance, the development agent agreement expressly 

acknowledged that no prior representations had been made:

[N]either Wireless Toyz nor any of its agents have made or are authorized 

to make any oral, written or visual representations or projections of 

potential earnings, sales, profits, costs, expenses, prospects or chances of 

success . . . . Development Agent agrees that it has not relied on and that 

Wireless Toyz will not be bound by allegations of any representations as to 

potential earnings, sales, profits, costs, expenses, prospects or chances of 

success . . . .

A similar disclaimer was also included in the franchise agreement. Accordingly, for the 

purposes of the agreements between plaintiffs and defendants, there were no prior 

representations made, including specifically about costs and expenses. Plaintiffs and the 

Court of Appeals majority failed to indicate why these disclaimers are not dispositive.

Both the duty to disclose, arising in this case under MCL 445.1505, and silent 

fraud require a prior representation in order for an omitted material fact to render 

misleading that otherwise truthful representation. Notwithstanding whether prior 

representations were actually made, two sophisticated entities negotiated contracts and 

determined that no prior representations had been made. Moreover, the parties agreed 

that defendants were not authorized to make representations regarding costs or expenses. 

Simply stated, as a matter of contract, the parties agreed that no prior representations had 

been made. We should respect that agreement. This Court’s contract-law jurisprudence 

requires lower courts to accept that agreement. And without any prior representations, 

there can be no claim for silent fraud or a breach of any duty arising out of MCL 

445.1505.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the

foregoing is a true and complete copy of the order entered at the direction of the Court.

 November 25, 2015

a1124

4

Clerk

The Court of Appeals’ quick dismissal of the pertinent contract language is a 

jurisprudentially significant error, and one that I would correct, notwithstanding the 

factual complexities of the record. The Court of Appeals’ opinion is unpublished and has 

no precedential value. Nor should it be considered for its persuasiveness because the 

conclusion is inconsistent with this Court’s longstanding contract-law jurisprudence. I 

would reverse.

MARKMAN, J., joins the statement of ZAHRA, J.