Court Opinion

ID: 4707827
Source: CourtListenerOpinion
Date Created: 2021-07-30 09:08:09.983744+00
Date Added: 2024-06-11T08:06:46.277460
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                  revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                             COURT OF APPEALS

SBR ASSOCIATES II, LLC,                                                UNPUBLISHED
                                                                       July 29, 2021
                Plaintiff-Appellant,

v                                                                      No. 354992
                                                                       Oakland Circuit Court
AFJ DEVELOPMENT COMPANY, LLC,                                          LC No. 2020-181076-CB

                Defendant-Appellee.

Before: GADOLA, P.J., and JANSEN and O’BRIEN, JJ.

PER CURIAM.

       In this breach of contract action, plaintiff appeals as of right the trial court’s order granting
defendant’s motion for summary disposition under MCR 2.116(C)(8). We affirm.

                                    I. BACKGROUND FACTS

        Plaintiff is a real estate developer. In the summer of 2019, it was hoping to develop a
property owned by Kelly Properties, LLC (Kelly) located in Troy, Michigan (the Kelly Property).
In July 2019, plaintiff contacted defendant to begin negotiations about a possible partnership to
develop the Kelly Property. Defendant’s representatives agreed to meet with plaintiff about the
potential partnership. Before the meeting, plaintiff sent defendant a “Confidentiality and Non-
Circumvention Agreement” (the Agreement), which a representative from defendant signed. The
Agreement included a number of “Recitals,” one of which stated, “[Plaintiff] desires to purchase,
and[/]or develop certain real estate located in Southeastern Michigan five county Michigan [sic]
area excluding Wayne County.” The Agreement also noted that in signing the Agreement,
defendant agreed to “keep all information relating to the possible acquisition and development of
these properties . . . confidential. No disclosures to any third parties will be permitted unless given
written authorization by [plaintiff].”

       The parties met in-person to discuss the potential partnership; yet, the partnership never
materialized, and plaintiff eventually partnered with Kirco Development, LLC to submit a
proposal to Kelly for development of the Kelly Property. However, Kelly rejected the plaintiff-
Kirco proposal. In December 2019, plaintiff discovered that defendant had entered into a separate
agreement with Kelly to develop the Kelly Property.

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        Plaintiff filed a three-count complaint against defendant alleging (1) breach of contract, (2)
tortious interference with a business expectancy, and (3) unjust enrichment. In lieu of an answer,
defendant moved for summary disposition under MCR 2.116(C)(8), and the trial court granted the
motion. This appeal followed.

                         II. MOTION FOR SUMMARY DISPOSITION

                                  A. STANDARD OF REVIEW

        “This Court reviews de novo the trial court’s decision to grant or deny summary
disposition.” Rory v Continental Ins Co, 473 Mich 457, 464; 703 NW2d 23 (2005). This Court
has explained the review of a motion filed under MCR 2.116(C)(8) as follows:

                A motion under MCR 2.116(C)(8) tests the legal sufficiency of a claim
       based on the factual allegations in the complaint. When considering such a motion,
       a trial court must accept all factual allegations as true, deciding the motion on the
       pleadings alone. A motion under MCR 2.116(C)(8) may only be granted when a
       claim is so clearly unenforceable that no factual development could possibly justify
       recovery. [El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159-160; 934
       NW2d 665 (2019) (citations omitted).]

The issues presented on appeal also require this Court to interpret a contract, and “[t]he proper
interpretation of a contract is a question of law, which this Court reviews de novo.” Wilkie v Auto-
Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003).

                                          B. ANALYSIS

       Plaintiff argues that the trial court erred by dismissing all three of its claims. We disagree.

                                  1. BREACH OF CONTRACT

        “A party asserting a breach of contract must establish by a preponderance of the evidence
that (1) there was a contract (2) which the other party breached (3) thereby resulting in damages
to the party claiming breach.” Miller-Davis Co v Ahrens Constr, Inc, 495 Mich 161, 178; 848
NW2d 95 (2014). At issue in this case is the second element. Namely, whether the trial court
correctly interpreted the Agreement when it concluded that “[the] contractual terms do not support
Plaintiff’s allegations that the Agreement prohibited Defendant from pursuing its own project with
Kelly Properties, LLC.”

        “The cardinal rule in the interpretation of contracts is to ascertain the intention of the
parties.” Highfield Beach at Lake Mich v Sanderson, 331 Mich App 636, 654; 954 NW2d 231
(2020). “In ascertaining the meaning of a contract, we give the words used in the contract their
plain and ordinary meaning that would be apparent to a reader of the instrument.” Rory, 473 Mich
at 464. “[U]nless a contract provision violates law or one of the traditional defenses to the
enforceability of a contract applies, a court must construe and apply unambiguous contract
provisions as written.” Id. at 461.

                                                 -2-
         The Agreement stated that defendant would agree “to the following restriction of
activities,” and then specified that restriction as to “keep all information relating to the possible
acquisition and development of [the Kelly property] . . . confidential.” In its complaint, plaintiff
acknowledged that defendant informed plaintiff about “some dealings” defendant had with Kelly
about the Kelly Property before it signed the Agreement. The complaint nevertheless charged that
defendant “breached the Agreement by circumventing [plaintiff] and using [plaintiff’s]
confidential information” when “[defendant] secretly pursued and then entered into its own
agreement with Kelly, without notifying or including [plaintiff].”

        We agree with the trial court that the contractual terms of the Agreement do not support
plaintiff’s allegations that defendant breached the Agreement. A plain reading of the Agreement
shows that the parties intended to “restrict” plaintiff from only one thing—disclosing confidential
information. The allegations in plaintiff’s complaint do not support that defendant failed to keep
information relating to plaintiff’s “possible acquisition and development” of the Kelly Property
confidential—only that defendant “circumvent[ed]” plaintiff and struck its own deal for the Kelly
Property.

        On appeal, plaintiff argues that, when reading the contract as a whole, the parties agreed to
the Agreement’s title—“Confidentiality and Non-Circumvention Agreement”—as an enforceable
term of the contract, such that the Agreement had a “non-circumvention restriction.” Plaintiff cites
no authority for its assertion that a contract’s title is an enforceable term of the contract. Moreover,
contrary to plaintiff’s argument, reading the Agreement as a whole does not suggest that the parties
agreed to the title of the Agreement as an enforceable term. The title appears twice—once in the
header of the Agreement, and once in the Agreement’s first line, where it states, “THIS
CONFIDENTIALITY AND NON-CIRCUMVENTION AGREEMENT (this ‘Agreement’) is
made and entered into effective this [day] by and between [plaintiff] and [defendant].” Neither
reference suggests that the parties agreed to a “non-circumvention restriction” as a term of their
contract. Plaintiff’s argument otherwise is unpersuasive.

        Plaintiff also argues that there was parol evidence evincing that, when the Agreement was
signed, defendant orally agreed to plaintiff’s understanding of the Agreement as having a non-
circumvention restriction. Such evidence—extrinsic evidence of the parties’ intent—is only
permissible where the contract’s terms are ambiguous, Klapp v United Ins Group Agency, Inc, 468
Mich 459, 469; 663 NW2d 447 (2003), and the terms of the contract at issue in this case are not
ambiguous.1 As a result, it was not necessary for the trial court to deny summary disposition on
the basis of purported parol evidence.

       Plaintiff further argues that defendant co-opted its plans for the Kelly Property when it
sought the partnership with Kelly. Plaintiff explains that defendant’s initial discussions with Kelly
“were about a different project and had ended. It was only when [plaintiff] brought [defendant]
back into the discussions and described its broader project with Kelly on August 2 that [defendant]

1
  Plaintiff argues that the contract was ambiguous because it did “not fully describe the
confidentiality and non-circumvention restriction,” but there is nothing ambiguous about the
Agreement. Rather, it appears that plaintiff wishes to add a non-circumvention restriction to the
Agreement when such a restriction is plainly not part of the contract’s terms.

                                                  -3-
then re-connected with Kelly.” Accepting as true plaintiff’s allegation that its project proposal
was “much broader” than defendant’s original proposal to Kelly, this allegation still does not show
that defendant somehow breached the Agreement with plaintiff because, again, a breach under the
language of the Agreement would require defendant to disclose confidential information about
plaintiff’s plans to a third-party. Simply because defendant’s second proposal with Kelly was
“much broader” than its first proposal does not necessarily mean defendant disclosed confidential
information to a third-party.

        Accordingly, the trial court did not err when it concluded that, based on the allegations in
plaintiff’s complaint, plaintiff’s breach of contract claim was so clearly unenforceable that no
factual development could possibly justify recovery.

            2. TORTIOUS INTERFERENCE WITH A BUSINESS EXPECTANCY

        The elements of tortious interference with a business relationship are (1) “the existence of
a valid business relationship or expectancy,” (2) “knowledge of the relationship or expectancy on
the part of the defendant,” (3) “an intentional interference by the defendant inducing or causing a
breach or termination of the relationship or expectancy,” and (4) “resultant damage to the
plaintiff.” Dalley v Dykema Gossett, 287 Mich App 296, 323; 788 NW2d 679 (2010). To establish
a valid business expectancy, “[t]he expectancy must be a reasonable likelihood or probability, not
mere wishful thinking.” Cedroni Assn, Inc v Tomblinson, Harburn Assoc, Architects & Planners
Inc, 492 Mich 40, 45; 821 NW2d 1 (2012) (quotation marks and citation omitted).

        In its complaint, plaintiff alleged that it had “a reasonable expectation of a business
expectancy with Kelly” because plaintiff was “in contact with [Kelly] regarding a potential
multimillion-dollar mixed-use development project for [the Kelly property]” and, along with
Kirco, “proposed a Letter of Intent to Kelly.” The trial court rejected that this established a valid
business expectancy because “Plaintiff has not presented any allegations to demonstrate that it was
reasonably likely or probable that [Kelly] would choose its offer.” We agree with the trial court.
Plaintiff’s alleged business expectancy was “mere wishful thinking”—the complaint did not allege
facts sufficient to establish a reasonable likelihood or probability that its offer would be accepted,
so its complaint failed to allege a valid business expectancy. See id. Accordingly, the trial court
did not err when it concluded that, based on the allegations in plaintiff’s complaint, plaintiff’s
tortious-interference-with-a-business-expectancy claim was so clearly unenforceable that no
factual development could possibly justify recovery.

                                   3. UNJUST ENRICHMENT

     As explained by our Supreme Court in Wright v Genesee Co, 504 Mich 410, 417-418; 934
NW2d 805 (2019):

                Unjust enrichment is a cause of action to correct a defendant’s unjust
       retention of a benefit owed to another. It is grounded in the idea that a party shall
       not be allowed to profit or enrich himself inequitably at another’s expense. A claim
       of unjust enrichment can arise when a party has and retains money or benefits which
       in justice and equity belong to another. [Quotation marks and citations omitted.]

                                                 -4-
“In such instances, the law operates to imply a contract in order to prevent unjust enrichment.”
Barber v SMH (US), Inc, 202 Mich App 366, 375; 509 NW2d 791 (1993). “[A] contract will be
implied only if there is no express contract covering the same subject matter.” Id. (citation
omitted).

        The trial court ruled that plaintiff’s unjust enrichment claim failed as a matter of law
because the Agreement covered “the same subject matter as” plaintiff’s unjust enrichment claim,
and a court may not imply a contract where an express contract covers the same subject matter.
We agree with the trial court. The parties had an express contract covering their actions in relation
to the Kelly Property—the Agreement. Plaintiff’s unjust enrichment claim relates to this same
subject matter, so that claim fails as a matter of law.

        On appeal, plaintiff conflates the subject matter of the Agreement with its terms. Plaintiff
argues that the trial court concluded “that the written contract covers only one subject matter:
confidentiality,” so plaintiff’s unjust enrichment claim pertaining to defendant’s circumvention of
plaintiff would not be covered. But confidentiality and circumvention both fall under the subject
matter of the contract—the parties’ actions in relation to the Kelly Property. Whether the contract
included a confidentiality restriction and a non-circumvention restriction is an argument over the
contract’s terms, not over the contract’s subject matter.

        “If the parties admit that a contract exists, but dispute its terms or effect, an action will not
also lie for quantum meruit or implied contract.” Bowlers' Alley, Inc v Cincinnati Ins Co, 32 F
Supp 3d 824, 834 (ED Mich, 2014) (quotation marks and citation omitted). That is the case here.
The parties do not dispute that a contract exists, only the terms of the contract. Accordingly, the
trial court properly concluded that plaintiff’s unjust enrichment claim failed as a matter of law.2

                                         III. AMENDMENT

       Plaintiff asserts that it should have been allowed to amend its complaint under MCR
2.116(I)(5) in order to add allegations clarifying its claims. We disagree.

                                   A. STANDARD OF REVIEW

        A trial court’s decision to deny plaintiff the opportunity to amend its complaint is reviewed
for an abuse of discretion. Weymers v Khera, 454 Mich 639, 654; 563 NW2d 647 (1997). “[A]n
abuse of discretion occurs only when the trial court’s decision is outside the range of reasonable

2
  Plaintiff argues that defendant “has not conceded or stipulated that the Agreement covers the
specific subject matter of confidentiality and circumvention.” Again, “confidentiality and
circumvention” are not the subject matter of the Agreement. Moreover, defendant does not dispute
the existence of the contract, which is the pertinent inquiry. See Bowlers' Alley, Inc, 32 F Supp 3d
at 834 (“A plaintiff can only plead breach of contract and implied contract claims in the alternative
if there is doubt as to the existence of a contract.”). A defendant need not “concede” or “stipulate”
to a contract’s subject matter, so long as the contract’s existence is not disputed.

                                                  -5-
and principled outcomes.” Shawl v Spence Bros, Inc, 280 Mich App 213, 220-221; 760 NW2d
674 (2008).

                                          B. ANALYSIS

        MCR 2.116(I)(5) states, “If the grounds asserted are based on subrule (C)(8), (9), or (10),
the court shall give the parties an opportunity to amend their pleadings as provided by MCR 2.118,
unless the evidence then before the court shows that amendment would not be justified.” In other
words, when a court grants summary disposition under MCR 2.116(C)(8), it “must give the parties
an opportunity to amend their pleadings pursuant to MCR 2.118, unless the amendment would be
futile.” Weymers, 454 Mich at 658.

        With respect to its breach of contract claim, plaintiff argues that it could “expand on and
clarify the allegations that Defendant misused the elements of” plaintiff’s proposal for the Kelly
Property by showing that “[t]he project Defendant publicly announced [for the Kelly Property]
contained many of the same elements as [plaintiff] had developed working with Kelly through
August.” The trial court did not abuse its discretion by concluding that these additional allegations
would not have saved plaintiff’s claim. As previously explained, the Agreement required
defendant to keep plaintiff’s “possible acquisition and development of [the Kelly property] . . .
confidential,” and allegations that defendant announced a similar project to plaintiff’s does not
suggest that defendant disclosed plaintiff’s possible acquisition and development of the Kelly
property to Kelly. Plaintiff’s additional allegations arguably support that defendant circumvented
plaintiff to strike its own deal with Kelly, but as previously explained, such conduct was not
prohibited by the Agreement.

        Plaintiff also argues that it should have been allowed to amend its breach of contract claim
to “clarify that [defendant’s representative] verbally agreed not to circumvent [plaintiff].” As
previously explained, however, extrinsic evidence of the parties’ intent is not admissible when the
terms of the contract are unambiguous, as in this case. Klapp, 468 Mich at 469.

        For its tortious-interference-with-a-business-expectancy claim, plaintiff argues that it
could have asserted additional facts to show “how substantial its conversations with Kelly had
been and the likelihood that Kelly would choose [plaintiff’s] offer.” Yet the additional facts that
plaintiff points to merely show that plaintiff put substantial work into crafting its offer—plaintiff
spoke with Kelly on multiple occasions, sent multiple letters of intent, spent “hundreds of hours”
developing its proposal, and felt confident enough in its proposal to discuss it with possible
partners. None of this, however, suggests that Kelly was likely to choose plaintiff’s offer. All it
suggests is that plaintiff was intent on pursing the development of the Kelly Property. In short,
plaintiff’s efforts in pursuing development of the Kelly Property do not support that plaintiff’s
offer to Kelly had “a reasonable likelihood or probability” of being accepted. As a result, the trial
court did not abuse its discretion by concluding that amendment to plaintiff’s claim for tortious
interference with a business expectancy was futile. See Cedroni Assn, 492 Mich at 45 (quotation
marks and citation omitted).

       Finally, with respect to its unjust enrichment claim, plaintiff asserts that it “should have
been allowed to amend its complaint as noted above,” but it is unclear what plaintiff is referring
to. For the reasons previously explained, plaintiff’s unjust enrichment claim failed because the

                                                -6-
Agreement covered the same subject matter as the unjust enrichment claim. As such, no contract
could be implied, and plaintiff’s unjust enrichment claim failed as a matter of law. Bowlers' Alley,
Inc, 32 F Supp 3d at 834.

                                       IV. CONCLUSION

       Affirmed.

                                                             /s/ Michael F. Gadola
                                                             /s/ Kathleen Jansen
                                                             /s/ Colleen A. O’Brien

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