Court Opinion

ID: 4357068
Source: CourtListenerOpinion
Date Created: 2019-01-09 10:07:46.012575+00
Date Added: 2024-06-11T14:46:34.937678
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

ANNE M. WINTHROP,                                                     UNPUBLISHED
                                                                      January 8, 2019
               Plaintiff-Appellant,

v                                                                     No. 338773
                                                                      Oakland Circuit Court
LAURA HINES DECK,                                                     LC No. 2016-151187-CK

               Defendant-Appellee.

Before: GLEICHER, P.J., and BORRELLO and BECKERING, JJ.

PER CURIAM.

       In this breach of contract action, plaintiff, Anne M. Winthrop, appeals as of right an
opinion and order granting summary disposition to defendant, Laura Hines Deck, pursuant to
MCR 2.116(C)(10) (no genuine issue of material fact, nonmovant entitled to judgment as a
matter of law). We affirm.

                                      I. RELEVANT FACTS

        This action arises out of defendant’s sale of a horse to plaintiff. Defendant purchased the
horse from Royal Horse Farms (RHF) in Florida and transported it to Michigan. According to
the purchase agreement between RHF and defendant, RHF retained a right of first refusal to
purchase the horse should defendant ever decide to sell it. After boarding the horse for a while at
Highland Point Farms, defendant fell into financial hardship and stopped paying the fees
associated with boarding the horse. When plaintiff learned of defendant’s failure to pay for the
horse’s upkeep, she expressed an interest in purchasing the horse, and defendant agreed to sell.
Cindy Guitar, the horse’s trainer, and Cindy’s husband, Thomas, brokered the sale for plaintiff.

         Prior to the sale, defendant told plaintiff about RHF’s right of first refusal, and plaintiff
informed defendant through Cindy that she would only purchase the horse if defendant obtained
RHF’s waiver of the right. According to Cindy’s affidavit, defendant said she had contacted
RHF by telephone and the right of first refusal was “taken care of.” Plaintiff agreed to purchase
the horse, and defendant presented her with a bill of sale on April 30, 2015. Attached to the bill
of sale was a copy of the purchase agreement between defendant and RHF bearing defendant’s
initials next to several paragraphs; presumably, these were relevant to her sale of the horse to
plaintiff. Defendant had placed her initials next to the paragraph addressing RHF’s right of first
refusal, underlined the words “first,” “right,” and “refusal” and wrote, “spoke on phone 4/29/15.”
While plaintiff was signing the document, defendant asked her to write an addendum stating that
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she acknowledged the terms of defendant’s prior contract with RHF. Plaintiff complied. In a
second handwritten addendum to the bill of sale, defendant promised to deliver the horse’s
registration papers to plaintiff within seven days of the sale. In compensation for the horse,
plaintiff wrote a check to defendant for $4,600 and a check to defendant’s trainer for $900 to
cover past due training fees.

         According to plaintiff’s complaint, the day after she purchased the horse, defendant
informed her that RHF had decided to exercise its right of first refusal and purchase the horse.
The following month, RHF sued plaintiff for return of the horse and eventually reached a
settlement agreement with plaintiff, wherein RHF paid plaintiff $24,000 for the horse. Shortly
before signing the settlement agreement, plaintiff filed this action against defendant alleging
breach of contract and fraud. 1 Plaintiff alleged that defendant breached their contract for sale of
the horse by not delivering the horse’s registration papers as promised and that, as a result,
plaintiff incurred expenses for boarding the horse while being deprived of the use and value of
the horse and by having to pay defense costs in a lawsuit by RHF because she obviously would
want to put up a fight to keep the horse. In her claim for fraud, plaintiff alleged that she relied to
her detriment on defendant’s series of misrepresentations regarding her ownership of the horse,
her ability to deliver the horse’s registration papers, and her having obtained a waiver of RHF’s
first right of refusal.

        Defendant filed a motion for summary disposition pursuant to MCR 2.116(C)(10),
asserting that plaintiff did not have an action for breach of contract because she had
acknowledged RHF’s first right of refusal in the parties’ purchase agreement. Defendant further
asserted that even if there had been a breach, plaintiff could not show she suffered damages
when she received $24,000 from RHF, nearly $20,000 more than she paid for the horse.
Defendant made the same observations with regard to plaintiff’s allegations of fraud, adding that
plaintiff had failed to allege any specific false statements defendant made and plaintiff relied on
when purchasing the horse. Plaintiff responded by essentially reiterating the allegations she had
made in her complaint.

        The trial court issued a written opinion and order after hearing oral argument on
defendant’s motion. The court found that defendant breached the purchase agreement by failing
to provide plaintiff with the registration papers for the horse, but concluded that the damages
plaintiff claimed for that breach in excess of the $24,000 she had received from RHF were either
speculative or unavailable by law. Regarding plaintiff’s fraud claim, the trial court found that
because plaintiff expressly acknowledged in the bill of sale the terms of defendant’s contractual
agreement with RHF, which contract was attached to the bill of sale, she could not establish her
reasonable reliance on defendant’s alleged misrepresentations regarding obtaining a waiver of

1
  Plaintiff also alleged a claim for specific performance to obtain the registration papers for the
horse, but she withdrew this claim in her response to defendant’s motion for summary
disposition.

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the right of first refusal. The court further determined that any claim for damages based on fraud
would be speculative.2

                                         II. ANALYSIS

                                 A. STANDARD OF REVIEW

        We review the grant or denial of a motion for summary disposition de novo. Value, Inc v
Dep’t of Treasury, 320 Mich. App. 571, 576; 907 NW2d 872 (2017). Defendant moved for
summary disposition pursuant to MCR 2.116(C)(10). “A motion under MCR 2.116(C)(10) tests
the factual support for a claim and should be granted when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law.” Anzaldua v Neogen Corp,
292 Mich. App. 626, 630; 808 NW2d 804 (2011). A genuine issue of material fact “ ‘exists when
the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue
upon which reasonable minds might differ.’ ” Cox v Hartman, 322 Mich. App. 292, 299; 911
NW2d 219 (2017) (citation omitted).

                                 B. BREACH OF CONTRACT

       Plaintiff agrees with the trial court’s finding of a breach of contract premised on
defendant’s failure to provide her with registration papers for the horse, but she maintains that
she is entitled to additional damages above the $24,000 she received from RHF because that
amount did not sufficiently compensate her for her loss, and she claims that her additional
damage claims are not speculative. We disagree.

        In Michigan, a party damaged by another party’s breach of contract may recover “those
damages that are the direct, natural, and proximate result of the breach.” Alan Custom Homes,
Inc v Krol, 256 Mich. App. 505, 512; 667 NW2d 379 (2003). “[A] plaintiff’s remedy for breach
of contract is limited to damages that arise naturally from the breach” or that the parties
contemplated at the time they made the contract. Allison v AEW Capital Mgt, LLP, 481 Mich.
419, 426 n 3; 751 NW2d 8 (2008). “[T]he purpose of compensatory damages . . . is to make the
plaintiff whole . . . .” Unibar Maintenance Servs, Inc v Saigh, 283 Mich. App. 609, 631; 769
NW2d 911 (2009).

       Plaintiff does not contend that she failed to recover the purchase price of the horse.
Rather, she contends she is entitled to damages in excess of the $24,000 RHF paid her when it
exercised its right to repurchase the horse. However, any losses plaintiff incurred apart from the
purchase price of the horse occurred not because defendant breached the parties’ contract by not

2
  The court observed that plaintiff “seeks to include her cost of having to defend against the
action claiming a right to repurchase the horse brought by [RHF], while at the same time
Plaintiff acknowledges that [RHF] retained the right of first refusal.”
   Plaintiff also sought recovery of statutory and reasonable attorney fees, punitive damages, and
exemplary damages, but the trial court rejected plaintiff’s claims for these damages, which
plaintiff does not challenge on appeal.

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producing the horse’s registration papers, but because RHF decided to exercise its right of first
refusal. Under the terms of the purchase agreement between defendant and RHF, RHF reserved
a right of first refusal to repurchase the horse should defendant “at any point . . . wish to sell the
horse, for any reason.” Plaintiff acknowledged her awareness of this provision in the
handwritten addendum to the bill of sale for the horse. Thus, to the extent that plaintiff alleges
damages related to loss of possession of the horse, they are not recoverable from defendant
because they were not a “direct, natural, and proximate result of the breach,” Alan Custom
Homes, Inc, 256 Mich. App. at 512, nor could such unrelated damages have been contemplated at
the time the parties made the contract, see Allison, 481 Mich at426 n 3.

       Plaintiff next argues that she is entitled to damages in excess of the payment she received
from RHF because she has been deprived of future additional profits she could have made from
the horse. In support of this argument, plaintiff states that the horse’s value grew to between
$75,000 and $100,000 after RHF repurchased it. Again, however, the fact that plaintiff no longer
has the horse because RHF exercised its right to repurchase the horse was not occasioned by
defendant’s not producing the horse’s registration papers. Even if plaintiff’s loss of the horse did
arise naturally from defendant’s breach of the parties’ contract, plaintiff has offered no
admissible evidence to support the validity of her claim regarding the horse’s value.

        Moreover, no evidence supports plaintiff’s assumption that she would have had the same
success with the horse as RHF may have had. Her claim for damages based on the loss of future
profits is contingent on the horse’s continuing success in the equestrian community where
plaintiff planned to earn said profits, which can reasonably be said to “ ‘depend[] entirely on the
occurrence of multiple contingencies which might or might not occur at some point in the
future.’ ” Van Buren Charter Twp v Visteon Corp, 319 Mich. App. 538, 553; 904 NW2d 192
(2017) (citation omitted).

        A plaintiff may recover damages for lost future profits in breach of contract actions, but
damages “ ‘must be proven with a reasonable degree of certainty as opposed to being based on
mere conjecture or speculation.’ ” In re MCI Telecom Corp Complaint, 240 Mich. App. 292, 315;
612 NW2d 826 (2000) (citation omitted). Not only has plaintiff failed to prove that she is
entitled to lost profits based on defendant’s breach of contract, but she has not proved the loss of
profit with any degree of certainty. Accordingly, the trial court did not err by finding that she
was not entitled to damages in excess of the amount she received in her settlement with RHF,
and that her claim for such additional damages was speculative.

                                            C. FRAUD

        Plaintiff argues that a genuine issue of material fact exists concerning whether defendant
committed fraud in the inducement and silent fraud during the course of their dealings in the sale
of the horse.

       To prevail on a claim of fraud, a plaintiff must demonstrate the following six elements:

       (1) that the defendant made a material representation; (2) that it was false; (3) that
       the defendant made the representation knowing that it was false or made it
       recklessly without knowledge of its truth; (4) that the defendant intended that the

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       plaintiff would act on the representation; (5) that the plaintiff relied on the
       representation; and (6) that the plaintiff suffered injury as a result of having relied
       on the representation. [Lucas v Awaad, 299 Mich. App. 345, 363; 830 NW2d 141
       (2013).]

“Fraud in the inducement occurs where a party materially misrepresents future conduct under
circumstances in which the assertions may reasonably be expected to be relied upon and are
relied upon.” Samuel D Begola Servs, Inc v Wild Bros, 210 Mich. App. 636, 639-640; 534 NW2d
217 (1995) (citations omitted). Silent fraud occurs where “the defendant suppresse[s] the truth
with the intent to defraud the plaintiff[.]” Lucas, 299 Mich. App. at 363-364. “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.” Id. at 364 (quotation marks and citation omitted). Both fraud in the inducement and
silent fraud require a plaintiff to show that he or she reasonably relied on a defendant’s factual
statements or omissions. Nieves v Bell Indus, Inc, 204 Mich. App. 459, 464; 517 NW2d 235
(1994); Alfieri v Bertorelli, 295 Mich. App. 189, 195; 813 NW2d 772 (2012).

         Plaintiff premised her fraud claim largely on allegations that defendant either
misrepresented that RHF had waived its right of first refusal (fraud in the inducement), or did not
tell her that RHF had not waived its right of first refusal (silent fraud). However, the court found
that plaintiff’s reliance on defendant’s alleged misrepresentations was not reasonable given that
plaintiff specifically acknowledged RHF’s right of first refusal in an addendum to the bill of sale.
In other words, the trial court seemed to imply that the information contained in the addendum to
the bill of sale alerted plaintiff that defendant’s alleged misrepresentations were untrue.

        Plaintiff contends that the trial court should have considered extrinsic evidence to prove
that defendant fraudulently induced her to enter into the contract.3 “Parol evidence is generally
admissible to demonstrate fraud.” UAW-GM Human Resource Ctr v KSL Recreation Corp, 228
Mich. App. 486, 503; 579 NW2d 411 (1998). Plaintiff submitted affidavits from herself and
Cindy Guitar in which they respectively attested that defendant represented that “there were no

3
  Plaintiff also asserts that parol evidence is admissible to explain or augment the terms of a
contract that, like the one at issue, does not contain a merger or integration clause. However,
plaintiff fails to identify what language in the contract is ambiguous or requires augmentation.
She asserts in her brief to this Court that the trial court determined as a matter of law that,
pursuant to the contract, plaintiff had the responsibility to obtain a waiver of RHF’s right of first
refusal. However, we fail to see where in the opinion and order appealed from that the trial court
made this determination. See In re Contempt of Henry, 282 Mich. App. 656, 678; 765 NW2d 44
(2009) (“A court speaks through its written orders and judgments, not through its oral
pronouncements.”). Thus, plaintiff has identified no gap or ambiguity in the contract to fill or
explain by parol evidence. See Hamade v Sunoco Inc (R&M), 271 Mich. App. 145, 166; 721
NW2d 233 (2006) (stating, “parol evidence of contract negotiations, of prior or contemporaneous
agreements that contradict or vary the written contract, is not admissible to vary the terms of a
contract which is clear and unambiguous”) (quotation marks and citation omitted).

                                                -5-
issues with RHF and there would be no issues,” and that the right of first refusal had been “taken
care of.” Contrariwise, defendant asserted in her affidavit that RHF never indicated to her that it
waived its right of first refusal. Further, she stated that she clearly indicated to plaintiff that the
bill of sale the parties signed on April 30, 2015, was a contingent contract that would become
effective only if RHF did not repurchase the horse in accordance with its right of first refusal.
These affidavits arguably create a question of material fact regarding whether defendant
misrepresented to plaintiff that RHF had waived its first right of refusal. To the extent that
resolution of the competing scenarios requires a credibility determination, summary disposition
was inappropriate. Skinner v Square D Co, 445 Mich. 153, 161; 516 NW2d 475 (1994)
(indicating that a court may not weigh credibility in determining a summary disposition motion).

        However, even if the trial court had found a genuine issue of material fact with regard to
whether defendant made a material misrepresentation, the trial court properly granted
defendant’s motion for summary disposition because plaintiff failed to present evidence of non-
speculative damages in excess of the $24,000 she received when she sold the horse back to RHF.
In her brief to this Court, plaintiff does not address the issues of damages relative to the fraud
claim; therefore, it is unclear whether she is claiming damages. Assuming she is, as already
indicated, plaintiff presented no admissible evidence to support her claim for additional damages
beyond that which she already received in exchange for the horse. Her claim of lost profits rests
solely on her assumption of the horse’s continued success, which in turn rests entirely on
speculative future events.4 See Van Buren Charter Twp, 319 Mich. App. at 553.

       Affirmed.

                                                               /s/ Elizabeth L. Gleicher
                                                               /s/ Stephen L. Borrello
                                                               /s/ Jane M. Beckering

4
  Plaintiff notes the dearth of Michigan cases involving fraudulent dealings in the sale of horses,
and contends that Perry v Green III, 313 SC 250; 437 SE2d 150 (1993) is “very similar” to the
case at bar. Cases from foreign jurisdictions are not binding, but can be persuasive. Holton v
Ward, 303 Mich. App. 718, 727 n 11; 847 NW2d 1 (2014), citing People v Campbell, 289 Mich
App 533, 535; 798 NW2d 514 (2010). We find the facts of Perry distinguishable from those of
the instant case. With respect to damages, the plaintiff in Perry recovered for proven actual
damages that occurred because of the defendant’s conduct, and punitive damages based on the
defendant’s intentional obstructionist conduct over the course of six years.

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