Opinion ID: 2976706
Heading Depth: 4
Heading Rank: 1

Heading: Lenawee County Bd. of Health v. Messerly

Text: The first case is Lenawee County Bd. of Health v. Messerly, 417 Mich. 17, 24 (1982). It recognizes that “a contract may be rescinded because of a mutual misapprehension of the parties, but this remedy is granted only in the sound discretion of the court.” Id. at 26 (emphasis added). Although Goulson relies on Messerly for its discussion of mutual mistake, he fails to recognize that the opinion, as a whole, works strongly against him. In fact, Messerly poses three distinct problems for him. First, whereas Messerly recognizes the appropriateness of rescission as a potential remedy in the case of a mutual mistake, Goulson is not seeking rescission. He is quick to disavow any desire to rescind the agreement in which the release appears. That is, although Goulson’s right to bring this action depends on his successful repudiation of the release itself, he does not want to rescind the whole agreement in order to repudiate the release. Goulson recognizes that rescission would require him to surrender to Yorkshire the consideration he received in exchange for the release, i.e., the estimated $238,389.50 in after-tax income generated by Yorkshire’s repurchase of his 2,391 option -9- No. 07-2232 Goulson v. Yum! Brands, Inc., et al. shares. Stefanac, 435 Mich. at 176 (holding “that a plaintiff must, in all cases where a legal claim is raised in contravention of an agreement, tender the consideration recited in the agreement prior to or simultaneously with the filing of suit.”).3 Goulson would prefer to repudiate the release only to the extent necessary to enforce Yorkshire’s supposed obligation to repurchase the restricted shares not included in the attachment listing. Such an argument was specifically rejected in Stefanac, where the court held that until the party who would repudiate the release puts the other party in statu quo, a precondition to setting aside the release, the release remains a good defense, barring actions in contract and in tort. 435 Mich. at 166. Hence, Goulson’s insistence that he doesn’t mean to rescind the parties’ agreement, but rather to enforce it, is a futile exercise in semantics. He cannot even begin to enforce any part of the agreement until he first carries his burden of proving that the release should be set aside. The second problem posed by Messerly relates to the mutual mistake requirement. In Messerly, the court concluded that, irrespective of whether the asserted mutual mistake goes to the essence of the consideration or goes merely to its quality or value, rescission will be an appropriate remedy only “when the mistaken belief relates to a basic assumption of the parties upon which the contract is made, and which materially affects the agreed performances of the parties.” 417 Mich. at 28-29. We do not have this sort of mutual mistake in this case. Goulson identifies Yorkshire’s mistake as consisting of its failure to list the 1,198 restricted shares awarded to him in 1998 and 1999 in the listing attached to the notice. Yet, the record does 3 Goulson’s failure to tender this consideration back to Yorkshire by the time he commenced this action was held by the district court to be a second ground for dismissal of his claims. - 10 - No. 07-2232 Goulson v. Yum! Brands, Inc., et al. not support the notion that Yorkshire views this failure as a mistake at all. Yorkshire’s position is that Goulson forfeited the restricted shares on separation, September 30, 2000, when he failed to expressly accept the offer of accelerated vesting. Ragsdale letter, July 3, 2001, JA 310; Allen dep. pp. 60-61, 66-68, JA 557, 559. Hence, Yorkshire sees no incorrectness or mistake in the listing indication that Goulson held zero restricted shares on April 23, 2002. According to Yorkshire, the listing accurately reflects what Yorkshire’s records then showed. The asserted “mistake” was not, therefore, a mutual misapprehension, but a unilateral one. Moreover, even accepting Goulson’s characterization, his asserted mistake is different than the mistake he attributes to Yorkshire. Goulson identifies his mistake as consisting of his failure to examine the attachment listing carefully, which resulted in his failure to discover the erroneous listing of zero restricted shares. This characterization is at odds with Goulson’s own deposition testimony, where he conceded that, by the time he received the April 23, 2002 notice, he had forgotten he owned the restricted stock. Goulson dep. p. 51, JA 648. Hence, if Goulson had forgotten all about the restricted shares, it is unlikely that correction of his mistake through a more careful review of the attachment listing would have revealed the supposed incorrectness. Yet, even accepting Goulson’s characterization as credible, it is still not the sort of mistake for which relief would be available under Messerly. His failure to read the notice carefully did not give rise to a misapprehension regarding a basic assumption of the parties affecting their promised performances. Moreover, as the district court recognized, Goulson’s failure to read the notice carefully is not a mistake that Michigan law is prepared to excuse in any event. See Rowady, 170 Mich. App. at 60. - 11 - No. 07-2232 Goulson v. Yum! Brands, Inc., et al. Messerly presents yet a third problem for Goulson. Messerly recognizes that “rescission is an equitable remedy which is granted only in the sound discretion of the court.” 417 Mich. at 31. “Rescission is not available, however, to relieve a party who has assumed the risk of loss in connection with the mistake.” Id. at 30. Here, Goulson was urged by the Option Exercise Notice to read the notice and attachment carefully and to contact Yorkshire if the information in the attachment was incorrect. JA 182. By executing the release, he forever and irrevocably released and discharged Yorkshire from any all claims and causes of action whatsoever, known or unknown, suspected or unsuspected, relating to the restricted stock. JA 185. In broad, explicit, unambiguous language, the parties thus clearly allocated the risk of loss associated with any mistake to Goulson. Under these circumstances, per Messerly, even if there were a “mutual mistake,” equity would not come to Goulson’s aid and permit him to repudiate the release.