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STATE OF MICHIGAN 

COURT OF APPEALS 

JERRY ZABEL ELECTRIC COMPANY, 

 Plaintiff/Counter-Defendant/ThirdParty-Defendant, 

UNPUBLISHED 

July 23, 2015 

v No. 320168 

Macomb Circuit Court 

STONECREST BUILDING COMPANY, a/k/a 

SABLE HOMES, f/k/a SILVERCREST 

CONSTRUCTION COMPANY, and RICHARD J. 

SABLE, 

LC No. 2007-004101-CK 

 Defendants/Cross-DefendantsAppellees, 

and 

EUROPEAN CABINETS, 

 Defendant/CrossDefendant/Counter-PlaintiffAppellant, 

and 

ABN AMRO MORTGAGE GROUP, INC., 

DAVID CHILDS, THERESE CHILDS, DENISE 

MADDEN, and WILLIAM MADDEN, 

 Defendants, 

and 

STERLING CREEK, L.L.C., SABLE REALTY 

VENTURES - AMBASSADOR I LIMITED 

PARTNERSHIP, SABLE REALTY VENTURES 

– SHELBY I LIMITED PARTNERSHIP, SILVER 

PINES LIMITED PARTNERSHIP, 

AMBASSADOR I LIMITED PARTNERSHIP, 

PIPECON, INC., STANDARD DRYWALL, 

RYSZARD F. ANDRUSZ, TERESA E. 
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ANDRUSZ, CAROL BUCKHANNON, CAROL 

GROTELUESCHEN, CPTF MANORS, L.L.C., 

THERESA V. DELISO, FRANK J. JELISH 

TRUST, SUSAN K. JELISH TRUST, LOTTIE E. 

KIEL, OTTOMAR KEIL, JEDDO DRYAWALL, 

INC., LANDSCAPE SERVICES, INC., 

LASALLE BANK, CECELIA LEWANDOWSKI, 

THOMAS O. MARCHIONE, MICHAEL 

MURDOCK, and NATIONAL EXTERIORS, 

INC., 

 Defendants/Cross-Defendants, 

and 

SABLE REALTY VENTURES, L.L.C., SABLE 

REALTY VENTURES – EAGLE CREEK 

LIMITED PARTNERSHIP, CORNWALL FIRE 

PROTECTION, L.L.C., COUNTRYWIDE HOME 

LOANS, INC., KEVIN P. LESLIE, PROLINE 

CERAMIC, INC., STOCK BUILDING SUPPLY, 

INC., and CHEROKEE CARPET & FLOOR 

COVERING, INC., 

 Defendants/CrossDefendants/Third-Party Defendants, 

and 

WG FIREPLACE, L.L.C., 

 Defendant/Cross-Defendant/CrossPlaintiff, 

and 

AMBASSADOR HOMES, INC., NADICKA 

ANEVSKI, B & D DRYWALL SUPPLY, INC., 

and BEST BLOCK COMPANY, 

 Defendants/CrossDefendants/CounterPlaintiffs/Cross-Plaintiffs, 

and 
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HOMEOWNER CONSTRUCTION LIEN 

RECOVERY FUND, CHARMAIN CHAHINE, 

W. G. HEATING & COOLING, INC., and J & S 

TRUCKING AND CLEANUP, L.L.C., 

 Defendants/CrossDefendants/Third-Party 

Defendants/Cross-Plaintiffs, 

and 

BEDIENT CONSTRUCTION, INC., 

 Defendant/Cross-Defendant/CrossPlaintiff/Third-Party Plaintiff, 

and 

F & M TRENCHING, INC., 

 Intervening Defendant/CrossDefendant/Counter-Plaintiff/CrossPlaintiff, 

and 

UNITED LAWNSCAPE, INC., 

 Intervening Defendant/CrossDefendant/Third-Party 

Plaintiff/Third-Party Defendant, 

and 

ARLINGTON TRANSIT MIX, INC., DENNIS 

CARLIN, CARPENTERS PENSION TRUST 

FUND MANORS, L.L.C., JOSE V. DELAPAZ, 

LIZA A. DELAPAZ, KOLA GJOKAJ, d/b/a 

EUROPEAN PAINTING COMPANY, LION 

MASONRY CORPORATION, MID-AMERICA 

LABOR TRUST, JULEEN M. O’BRYAN, OHIO 

SAVINGS BANK, BARBARA M. PRIZGINT, 

ROY J. PRIZGINT, JOHN PLATEVOET, 

PRONTO CONSTRUCTION, JOE SCIANNA, 

PAULINE SCIANNA, CHRISTOPHER 

MAYNARD, and MICHIGAN 
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UNDERLAYMENTS, 

 Third-Party Defendants, 

and 

AA CAPITAL EQUITY FUND II LP, 

CARPENTERS PENSION TRUST FUNDDETROIT AND VICINITY, CENTERPOINTE 

ELECTRIC L.L.C., DIRECT PLUMBING, INC., 

MICHIGAN REGIONAL COUNCIL OF 

CARPENTERS ANNUITY FUND, MORTGAGE 

ELECTRONIC REGISTRATION SYSTEMS, 

INC., PINE TREE FURNITURE & LIGHTING, 

INC., WARREN BANK, NISHA YOYAKEY, 

GATEWAY ENGINEERING & SURVEYING, 

INC., GOLDON WINDOWS & MIRRORS, INC., 

and STERLING SANITATION, INC. 

 Third-Party Defendants/CrossDefendants, 

and 

F & M CONTRACTORS, INC., KAREN 

CARLIN, THOMAS VANDERMERGEL, 

JOGODA DJURIC and VOJO DJURIC 

 Third-Party Defendants/Third-Party 

Plaintiffs, 

and 

KITCHEN SUPPLIERS, INC., 

 Third-Party Defendant/CounterPlaintiff/Cross-Plaintiff, 

and 

SERRA VALLE CONSTRUCTION COMPANY, 

 Third-Party Defendant/Third-Party 

Plaintiff/Counter-Plaintiff/CrossPlaintiff. 

 
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Before: FORT HOOD, P.J., and SAAD and RIORDAN, JJ. 

PER CURIAM. 

 Defendant European Cabinets (European) appeals the trial court’s dismissal of its crossclaim against defendants Stonecrest Building Company (a/k/a Sable Homes, f/k/a Silvercrest 

Construction Company) (Stonecrest), and its principal, Richard J. Sable (collectively the 

Stonecrest defendants), for violation of the Michigan builder’s trust fund act (MBTFA), MCL 

570.151 et seq. European also challenges the trial court’s denial of its motion to amend its crosscomplaint to add a claim for common-law fraud. For the reasons stated below, we affirm. 

I. FACTS AND PROCEDURAL HISTORY 

 This case involves the failed development of multiple condominium projects. Before the 

financial crisis, the real-estate developers who owned the land obtained financing from numerous 

lenders to build condominiums on their property. Stonecrest served as the project manager for 

these multiple developments, and had two primary duties in this capacity: (1) interaction with 

and management of the building-trade contractors who worked on the condominium 

developments; and (2) provision of other services to the real-estate developers, such as 

marketing, and negotiation and closing of sales. 

After the financial crisis, this arrangement broke down. The real-estate developers 

suffered significant losses because of a steep decline in the market value of their properties. As a 

result, they were unable to pay either their lenders, or the numerous building-trade contractors 

that had worked on the condominium developments. For this reason, many of these contractors 

sued the real-estate developers, the Stonecrest defendants, and other contractors and associated 

individuals involved in the construction projects, in an attempt to obtain payment for the services 

they provided. 

This appeal involves the claim of a single building-trade contractor and supplier, 

European, against the Stonecrest defendants. Stonecrest contracted with European to provide 

and install countertop materials at three of the condominium projects. As it performed its work, 

European issued a series of invoices to Stonecrest, and was paid by checks drawn on the 

accounts of the real-estate development companies. After a number of the real-estate developers 

defaulted on their loans, and the developers’ lenders took control of the condominium projects, 

Stonecrest ceased its involvement in the projects on which European was working. Though 

European was able to obtain partial payment on its invoices through construction liens, it 

apparently did not receive full payment for its countertop delivery and installation. 

To recoup its expenses, European sued the Stonecrest defendants in the Macomb Circuit 

Court, and demanded payment. Specifically, it alleged that Stonecrest: (1) received money from 

the real-estate developers intended for payment to building-trade contractors like European; and 

(2) failed to hold this money in trust, as it was required to do under the MBTFA, for European 

and other building-trade contractors and suppliers. The Stonecrest defendants responded that 

Stonecrest merely acted as a manager and agent for the real-estate developers at the various 

construction projects, and that it never received funds intended to pay building-trade contractors. 
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Both parties initially moved for summary disposition, which the trial court denied. The 

court instead held an exhaustive evidentiary hearing, at which it heard testimony from, among 

others: (1) Richard Sable; (2) European’s owner; and (3) multiple employees of both Stonecrest 

and European.1

 From this testimony, and its examination of financial records and other 

documents, the court concluded that Stonecrest never received any funds from the lenders or 

real-estate developers that were intended for dispersal to the building-trade contractors, and 

instead merely received funds for provision of its own services and to cover its own expenses.2

 

As such, the court held that European’s claim that Stonecrest violated the MBTFA had no 

merit, because Stonecrest never received any funds on behalf of European and did not 

misappropriate such funds. The court further noted that Stonecrest’s actions supported its 

contention that it was an agent and manager for the real-estate developers: after the real-estate 

developers defaulted on their loans, and the lenders took control of the condominium projects, 

Stonecrest’s involvement in the projects ceased. 

 On appeal, European argues that the trial court erred when it: (1) held that Stonecrest was 

not a contractor subject to the requirements of the MBTFA; and (2) denied European’s motion to 

amend its complaint to allege that Stonecrest committed fraud. The Stonecrest defendants ask us 

to uphold the ruling of the trial court. 

II. STANDARD OF REVIEW 

We review the trial court’s findings of fact for clear error. Waisanen v Superior Twp, 305 

Mich App 719, 723; 854 NW2d 213 (2014). “A finding is clearly erroneous if there is no 

evidentiary support for it or if this Court is left with a definite and firm conviction that a mistake 

has been made.” Charles A Murray Trust v Futrell, 303 Mich App 28, 50; 840 NW2d 775 

(2013) (citation and internal quotations omitted). The trial court’s conclusions of law are 

reviewed de novo,3 as are issues of statutory interpretation. Waisanen, 305 Mich App at 723. 

 

1

 During the evidentiary hearing, European moved to amend its pleadings to include a count of 

common-law fraud, which it claimed was exposed through Sable’s testimony. The trial court 

denied this motion in its final judgment, on the grounds that amendment of European’s 

complaint would be futile. 

2

 Specifically, the court found that: 

Each property owner borrowed money for its respective development and 

received all of the construction draws. Stonecrest Building handled construction 

management, sales and some administrative matters for the owners of each 

development. Stonecrest Building did not receive any funds from loans or 

investors but from the property owners and was only paid for providing its own 

services and covering its own expenses. 

3 Scholma v Ottawa Co Rd Comm, 303 Mich App 12, 16; 840 NW2d 186 (2013). 
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A trial court’s decision to grant or deny leave to amend a pleading is reviewed for an 

abuse of discretion. Boylan v Fifty Eight LLC, 289 Mich App 709, 727; 808 NW2d 277 (2010). 

An abuse of discretion occurs if the trial court chooses an outcome outside the range of 

reasonable and principled outcomes. Id.

III. ANALYSIS 

A. THE MBTFA 

The primary goal of statutory interpretation is “to give effect to the intent of the 

Legislature by focusing on the statute’s plain language.” Speicher v Columbia Twp Bd of 

Trustees, 497 Mich 125, 134; 860 NW2d 51 (2014). When it interprets a statute, a court 

considers “both the plain meaning of the critical word or phrase as well as its placement and 

purpose in the statutory scheme.” Id. “A court must give effect to every word, phrase, and 

clause, and avoid an interpretation that renders any part of a statute nugatory or surplusage.” Lee 

v Smith, ___ Mich App ___, ___; ___ NW2d ___ (2015); slip op at 1. 

Section 1 of the MBTFA provides: 

 In the building construction industry, the building contract fund paid by 

any person to a contractor, or by such person or contractor to a subcontractor, 

shall be considered by this act to be a trust fund, for the benefit of the person 

making the payment, contractors, laborers, subcontractors or materialmen, and the 

contractor or subcontractor shall be considered the trustee of all funds so paid to 

him for building construction purposes. [MCL 570.151.] 

“The MBTFA is a penal statute, but the Michigan Supreme Court has recognized that a 

civil cause of action may be brought for its violation.” BC Tile & Marble Co, Inc v Multi Bldg 

Co, Inc, 288 Mich App 576, 584; 794 NW2d 76 (2010). To establish a claim under the MBTFA, 

a party must demonstrate: 

 (1) that the defendant is a contractor or subcontractor engaged in the 

building construction industry, (2) that the defendant was paid for labor or 

materials provided on a construction project, (3) that the defendant retained or 

used those funds, or any part of those funds, (4) that the funds were retained for 

any purpose other than to first pay laborers, subcontractors, and materialmen, and 

(5) that the laborers, subcontractors and materialmen were engaged by the 

defendant to perform labor or furnish material for the specific construction 

project. [Livonia Bldg Materials Co v Harrison Constr Co, 276 Mich App 514, 

519; 742 NW2d 140 (2007).] 

 Accordingly, to be liable under the MBTFA, a party must be paid money for “labor and 

materials provided on a construction project”—i.e., the work of its “laborers, subcontractors, and 

materialmen”—and then retain those funds instead of disbursing them to these groups and 

individuals. Id. 

 Here, the trial court specifically found that Stonecrest was not “paid money for labor and 

materials provided on a construction project” that was intended for disbursement to other 
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“laborers, subcontractors, and materialmen.”4

 Id. Rather, Stonecrest received payment from the 

real-estate developers only for the provision of its services and to cover its expenses—a financial 

arrangement consistent with the Stonecrest defendants’ assertions that Stonecrest acted as an onsite manager and agent of the real-estate developers in their dealings with the building-trade 

managers.5 The trial court further held that the real-estate developers paid European directly, 

and did not channel funds to European through Stonecrest. On the basis of these findings—and 

European has provided no substantive evidence to show that these findings are clearly 

mistaken6—the trial court correctly concluded that the Stonecrest defendants did not violate the 

MBTFA.7

 Id. 

B. AMENDMENT OF EUROPEAN’S COMPLAINT 

 A party may amend a pleading by right within 14 days after being served with a 

responsive pleading, or within 14 days after serving the pleading if a responsive pleading is not 

required. MCR 2.118(A). Outside of this timeframe, a party may not amend a pleading unless 

the court grants leave to do so, or the adverse party consents in writing. MCR 2.118(A)(2). 

“Ordinarily, a motion to amend a complaint should be granted unless the amendment would be 

futile.” Sanders v Perfecting Church, 303 Mich App 1, 9; 840 NW2d 401 (2013). 

 

4

 Despite the protestations of the Stonecrest defendants, it is obvious that Stonecrest served as a 

“contractor . . . engaged in the building construction industry,” because it contracted with 

European to provide and install countertops at three condominium projects. Livonia Bldg 

Materials Co, 276 Mich App at 519. As such, the purchase order between European and 

Stonecrest designated Stonecrest as a “contractor,” as did some portions of an addendum 

explaining the policies and procedures for working on the condominium sites. However, as 

discussed above, the fact that Stonecrest is a “contractor” within the meaning of the MBTFA is 

irrelevant, because it never received any funds for further disbursement to “laborers, 

subcontractors, and materialmen.” Id. 

5

 Contrary to European’s assertions, the fact that the real-estate developers used construction 

draws from their financing to direct payment to Stonecrest does not establish that Stonecrest 

received monies intended for European or any other trade contractor. The MBTFA “does not 

impose a trust upon funds held by the owner.” Renshaw v Samuels, 117 Mich App 649, 661; 324 

NW2d 117 (1982). 

6 Charles A Murray Trust, 303 Mich at 50. 

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 Likewise, the fact that Stonecrest did not receive funds for further disbursement fatally 

undermines European’s claim that the Stonecrest defendants committed fraud under MCL 

570.152 and 570.153. If Stonecrest only received payment for its own services, and did not 

receive funds for further disbursement to building trade contractors, it is impossible for 

Stonecrest to have: (1) received money subject to the MBTFA, or (2) committed fraud under that 

statute. 
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“The elements of fraud are: (1) that the charged party made a material representation; (2) 

that it was false; (3) that when he or she made it he or she knew it was false, or made it 

recklessly, without any knowledge of its truth and as a positive assertion; (4) that he or she made 

it with the intention that it should be acted upon by the other party; (5) that the other party acted 

in reliance upon it; and (6) that the other party thereby suffered injury.” City of Novi v Robert 

Adell Children’s Funded Trust, 473 Mich 242, 253 n 8; 701 NW2d 144 (2005). Claims of fraud 

must be pleaded with specificity. Huron Tool & Engineering Co v Precision Consulting Servs, 

Inc, 209 Mich App 365, 375 n 3; 532 NW2d 541 (1995). 

Here, European moved to amend its complaint to add an allegation of common-law fraud 

against the Stonecrest defendants—on the basis that violation of the MBTFA constitutes fraud. 

This proposed amendment is problematic for two reasons. First, common-law fraud is a separate 

and distinct cause of action from statutory fraud: one cannot be assumed merely from the 

supposed existence of the other. See Rzepka v Farm Estates, Inc, 83 Mich App 702, 711; 269 

NW2d 270 (1978). Second, once again, the trial court found that the Stonecrest defendants did 

not violate the MBTFA, for the reasons explained above. If the Stonecrest defendants did not 

violate the MBTFA, it is impossible for them to have “defrauded” European through violation of 

the MBFTA, and amendment of European’s complaint to add such a count would be futile, as the 

trial court correctly held. 

In sum, European’s appeal is largely a meritless demand that asks our Court to refind 

facts European finds unappealing. The trial court properly handled the disposition of this case 

and conducted a thorough evidentiary hearing that provided a basis for its factual findings. It did 

not clearly err in so doing, and European’s claims to the contrary are unavailing. Charles A 

Murray Trust, 303 Mich at 50. 

 Affirmed. 

/s/ Karen M. Fort Hood 

/s/ Henry William Saad 

/s/ Michael J. Riordan