Court Opinion

ID: 4441206
Source: CourtListenerOpinion
Date Created: 2019-09-25 09:05:31.421208+00
Date Added: 2024-06-11T09:36:50.703457
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

SUMMIT DIAMOND BRIDGE LENDERS, LLC,                                UNPUBLISHED
                                                                   September 24, 2019
              Plaintiff/Counterdefendant-
              Appellant,

v                                                                  No. 342920
                                                                   Oakland Circuit Court
PHILIP R. SEAVER TITLE COMPANY, INC.,                              LC No. 2014-143557-CK
doing business as PRS ASSETS, INC.,

              Defendant/Counterplaintiff/Third-
              Party Plaintiff-Appellee,
and

DIAMOND HEROES OF SOUTHEAST
MICHIGAN, INC., and CITYWIDE LENDING,
INC., doing business as CITYWIDE LENDING
GROUP INTERNATIONAL,

              Third-Party Defendants.1

Before: BORRELLO, P.J., and K. F. KELLY and SERVITTO, JJ.

PER CURIAM.

       Plaintiff appeals as of right from the trial court’s opinion and order denying plaintiff’s
motion for summary disposition under MCR 2.116(C)(10), and granting summary disposition to
defendant, which served as plaintiff’s escrow agent, under MCR 2.116(I)(2), its order denying

1
  Defendant’s third-party claims against Diamond Heroes of Southeast Michigan, Inc. (Diamond
Heroes) were dismissed with prejudice, and a default judgment was entered on defendant’s third-
party claim against Citywide Lending, Inc. (Citywide). Also, defendant’s counterclaim against
plaintiff was dismissed with prejudice. Therefore, only plaintiff’s claims against defendant are
relevant to this appeal.

                                               -1-
plaintiff’s motion for reconsideration, and its final order dismissing its claims against defendant.
We affirm.

                                        I. BACKGROUND

       In a prior appeal in this matter, this Court provided the following relevant, preliminary
background facts:

                 In 2010, Diamond Heroes of Southeastern Michigan, LLC sought funding
         to construct a park in Waterford, Michigan.              Citywide Lending Group
         International, a California based entity, offered to provide Diamond Heroes a $12
         million construction loan, but required Diamond Heroes to pay $676,000 as a
         “Collateral Commitment Deposit.”[2] In June 2010, plaintiff was formed to
         provide a “bridge loan” to Diamond Heroes to pay the required collateral. In
         exchange, plaintiff sought security in the form of a “Stand-By Letter of Credit.”

                 In order to effectuate the transaction, plaintiff, Diamond Heroes, Citywide,
         and defendant entered into an escrow agreement in which defendant was the
         escrow agent. According to plaintiff, the escrow agreement provided that
         plaintiff’s funds were not to be disbursed until defendant received the “Stand-By
         Letter of Credit,” and that each party was to indemnify the others for any claims
         or damages arising out of or in connection with an instrument used in the
         transaction. The agreement also provided that “[a]ny dispute arising from or
         related to this Agreement, shall be governed by, and subject to, the laws of the
         State of California and shall be handled by the appropriate state or federal court
         located in California.” [Summit Diamond Bridge Lenders, LLC v Philip R. Seaver
         Title Co, Inc, unpublished per curiam opinion of the Court of Appeals, issued
         December 22, 2016 (Docket No. 326679), pp 1-2 (footnote added; footnote
         omitted).]

         The Escrow Agreement was executed on June 25, 2010. With respect to defendant’s
duties as plaintiff’s escrow agent, the Escrow Agreement provided that defendant’s “only duty,
liability, and responsibility [was] to receive, hold and deliver the Escrow Funds, and verify the
same” as provided by the Agreement, and that defendant “shall have no duties except those
which are expressly set forth” within the Agreement. The Escrow Agreement further provided
that all notices be sent to (1) Stuart Anderson, vice president of Citywide; (2) Robert Hilliard,
president and chief executive officer (CEO) of Diamond Heroes;3 (3) Carol Ann Arvan,
president of Summit (plaintiff); and, (4) Tina Easley, representative of Philip R. Seaver Title
Company, Inc. (defendant). Each of those four representatives signed the Escrow Agreement on
behalf of their respective entities. A “sample” Stand-By Letter of Credit (SBLC) was attached as
an exhibit to the Escrow Agreement.

2
    The amount was later raised to $700,000.
3
    Hilliard also served as co-managing member and secretary of plaintiff.

                                                 -2-
        On August 11, 2010, Anderson and Frank Ulbright—the representative of Accelerated
Commercial Consultants (ACC), the party to deliver the SBLC to defendant to hold in escrow—
informed the parties that the Royal Bank of Scotland (RBS) in Moscow, Russia, would be
issuing the SBLC. On August 14, 2010, Anderson provided a “draft” SBLC indicating that the
RBS would issue the SBLC. Arvan approved this “draft” SBLC after making minor corrections.

        On August 16, 2010, the parties agreed to amend certain provisions in the Escrow
Agreement regarding the establishment of the escrow and the procedures for the disbursement of
the escrow funds. The Amendment to the Escrow Agreement provided that “[a]n electronic or
facsimile copy of the issued SBLC” would be delivered to defendant and plaintiff by ACC, and
that the original SBLC would be delivered to defendant to be held in escrow. Plaintiff was
required to validate the SBLC and formally reject it “only if it is materially different in scope and
use as identified by this Agreement.” The Amendment further provided that both plaintiff and
defendant “shall immediately review the original SBLC when it is delivered to [defendant] to
determine it matches the previously validated electronic or facsimile copy of the SBLC.” If it
did not match, then the SBLC would be rejected and returned to the RBS for cancellation.
However, if the original SBLC was not rejected, the Amendment provided that defendant could
then disburse the escrow funds.

       On August 16, 2010, ACC sent defendant what ACC claimed was “the original SBLC
from [the] RBS.” However, upon reviewing the SBLC on August 17, 2010, Easley expressed
concern whether the SBLC sent by ACC was, in fact, the original SBLC. Easley informed
Arvan, Hilliard, Timothy Birtsas (a representative of Diamond Heroes), Tim Patterson (the
attorney for Diamond Heroes), Anderson, and Ulbright that both Easley and Philip Seaver
(Seaver)4 “were unable to determine if the [SBLC] is an original.” Arvan and Easley discussed
the matter on August 17, 2010, and according to Arvan’s affidavit, they could not verify the
SBLC’s authenticity.

        Nonetheless, after Easley’s discussion with Arvan, Easley sent an e-mail to Arvan,
Hilliard, Birtsas, Anderson, Ulbright, and Seaver stating that defendant “will not disburse any
funds from the escrow account without authorization from all parties to the Escrow Agreement.”
In the same email, Easley provided a written authorization document for all of the parties’
representatives to sign—including Hilliard for Diamond Heroes, Arvan for plaintiff, Anderson
for Citywide, and Ulbright for ACC—that would allow defendant to disburse the escrow funds.
This written authorization stated that, by signing the authorization, the parties authorized “the
acceptance of the [SBLC] that was submitted to [defendant] on August 17, 2010,” authorized the
disbursement of the escrow funds, and agreed not to hold defendant responsible for the SBLC’s
authenticity.

       A short time after Easley requested written authorization from the parties to disburse the
escrow funds, Arvan sent an e-mail to Anderson, Ulbright, Hilliard, Birtsas, and Easley. Arvan’s
e-mail imposed additional requirements on defendant to further verify the SBLC. Arvan

4
  We will refer to “Seaver” in his individual capacity, while his title company will continue to be
referred to as “defendant.”

                                                -3-
expressed her unease about the purported original SBLC that defendant received from ACC.
Arvan pointed out that Anderson had informed her that Stroy Investments, an “account party” for
plaintiff and an investor in the baseball park project, possessed the original SBLC, which
contradicted ACC’s claim that it sent the original SBLC to defendant, as well as the terms of the
Escrow Agreement requiring defendant—the escrow agent—to be in possession of the original
SBLC. Arvan, however, did not specifically reject the SBLC, nor did she address Easley’s
request for written authorization to disburse the escrow funds. Rather, Arvan’s August 17, 2010
e-mail, imposing additional requirements on defendant, was “an effort to verify the SBLC
delivered today to [defendant] is the one and only original, valid for presentation and draw
should a default occur.” Arvan left the country for a personal trip, and was unavailable until
August 19, 2010.

        Meanwhile, Patterson informed Hilliard on August 17, 2010, that Seaver also expressed
significant concern regarding the procedures used by Anderson and Citywide in issuing the
SBLC and in verifying its authenticity. However, Hilliard independently confirmed the SBLC’s
authenticity with Anderson.5 Hilliard then informed Patterson, Easley, and Seaver that Hilliard
and Birtsas were confident that the SBLC was valid and authentic, and that Hilliard wanted to
move forward with disbursement of the escrow funds. Hilliard also sought out the approval of
George Shaieb, one of the four co-managing members of plaintiff’s LLC. Shaieb acknowledged
Arvan’s unavailability, and stated that he was in favor of finalizing the SBLC transaction.
Hilliard notified Easley, Arvan, and Othman Kadry (the fourth comanaging member of plaintiff’s
LLC) of Shaieb’s approval of the SBLC. However, neither Arvan nor Kadry responded.

        On August 19, 2010, without Arvan having responded to either Easley’s request for
written authorization to disburse the escrow funds or Hilliard’s and Shaieb’s approval of the
SBLC’s authenticity, Hilliard provided defendant with a signed copy of the written authorization
allowing defendant to disburse the escrow funds. Birtsas signed for Diamond Heroes, Hilliard
signed for plaintiff, Anderson signed for Citywide, and Ulbright signed for ACC. Notably,
Hilliard’s name was crossed out as the representative for Diamond Heroes, and was replaced by
Birtsas, who signed as Diamond Heroes’ authorized signatory. Arvan’s name was crossed out as
the representative for plaintiff, and was replaced by Hilliard, who signed as plaintiff’s
“secretary/co-managing member and authorized signatory.” Under this signed, written
authorization, defendant disbursed the escrow funds on the morning of August 19, 2010, and
notified Arvan, Hilliard, Ulbright, Anderson, and Patterson by e-mail of the disbursement. The
SBLC was later determined to be a forgery, and plaintiff was unable to collect the $700,000 after
Citywide defaulted.

5
  Hilliard apparently learned—and informed Patterson, Easley, and Seaver—that ACC erred in
describing the SBLC that ACC sent to defendant as “an original” because it was actually a “first-
generation hard copy” of the SBLC that was sent to ACC. Hilliard also indicated that Stroy
Investment, the entity that received the “original” SBLC, was an investor for plaintiff. In fact,
Stroy Investment was listed as the “applicant” on the SBLC issued by the RBS.

                                               -4-
        On October 17, 2014, plaintiff filed this lawsuit, alleging that defendant breached its
fiduciary duties as plaintiff’s escrow agent by disbursing the escrow funds without first receiving
the original, authenticated, and verified SBLC.6 After this Court’s decision in Summit, unpub op
at 3-8, rendering the parties’ forum-selection clause unenforceable, plaintiff moved for summary
disposition under MCR 2.116(C)(10), arguing that defendant failed to comply with the explicit
requirements of the Escrow Agreement, and that defendant breached both its express and implied
fiduciary duties as plaintiff’s escrow agent by disbursing the escrow funds without the original,
authenticated, and verified SBLC. Defendant responded by moving for summary disposition
under MCR 2.116(I)(2), arguing that defendant owed no fiduciary duties, express or implied,
under the explicit terms of the Escrow Agreement, that defendant complied with the Escrow
Agreement in disbursing the escrow funds, and that plaintiff’s breach-of-contract claim was
barred by California’s four-year statute of limitations. Plaintiff replied, arguing that Hilliard did
not have the authority to sign the written authorization on behalf of plaintiff, and that defendant
admitted that it did not possess the original SBLC as required by the Escrow Agreement.

        The trial court denied plaintiff’s motion for summary disposition, and granted summary
disposition to defendant. The trial court held that, under California law7, defendant owed no
duties to plaintiff other than the ones expressly set forth in the Escrow Agreement, because the
parties agreed to limit defendant’s duties to those expressly stated in the Escrow Agreement.
The trial court also ruled that plaintiff’s claim against defendant sounded exclusively as a breach-
of-contract claim, not a breach of fiduciary duty claim. Further, the trial court held that
defendant was contractually protected in relying on Hilliard’s authority as secretary and co-
managing member of plaintiff when he executed the written authorization. As an alternative
basis for granting summary disposition to defendant, the trial court held that plaintiff’s claim was
time-barred under California’s four-year statute of limitations for breach of contract claims.
Plaintiff filed a motion for reconsideration, arguing that the trial court failed to properly interpret
the Escrow Agreement in accordance with California law, and also erred in applying California’s
four-year statute of limitations instead of Michigan’s six-year statute of limitations. The trial
court denied plaintiff’s motion for reconsideration, holding that it merely presented the same
issues already ruled on by the trial court. Plaintiff now appeals, challenging the trial court’s
denial of plaintiff’s motion for summary disposition, its grant of summary disposition to
defendant, and its denial of plaintiff’s motion for reconsideration.

                         II. BREACH OF THE ESCROW AGREEMENT

6
 Plaintiff later added a breach-of-contract claim against defendant arising out of the Escrow
Agreement.
7
  The trial court acknowledged the Escrow Agreement’s choice-of-law clause stating that any
disputes arising out of the Escrow Agreement would be governed by California law. We note
that this Court’s earlier opinion in Summit, unpub op at 3-7, only discussed—and subsequently
rendered unenforceable—the Escrow Agreement’s forum-selection clause, not the choice-of-law
clause. Thus, California law is the governing law applicable to this case.

                                                 -5-
        Plaintiff argues that the trial court erred in denying plaintiff’s motion for summary
disposition and granting summary disposition to defendant because defendant breached its
contractual obligations under the Escrow Agreement. Plaintiff also argues that the trial court
failed to properly apply California law in interpreting defendant’s obligations and duties under
the Escrow Agreement. Finally, plaintiff argues that defendant did not act in good faith in
relying on Hilliard’s signed, written authorization allowing defendant to disburse the escrow
funds. We disagree.

        “[A]n issue must be raised, addressed, and decided in the trial court to be preserved for
review.” Dell v Citizens Ins Co of America, 312 Mich. App. 734, 751 n 40; 880 NW2d 280
(2015).

        This Court reviews a trial court’s grant or denial of a summary disposition motion de
novo. Allison v AEW Capital Mgt, LLP, 481 Mich. 419, 424; 751 NW2d 8 (2008). Under MCR
2.116(C)(10), a motion for summary disposition should be granted “if the evidence submitted by
the parties fails to establish a genuine issue regarding any material fact, [and] the moving party is
entitled to judgment as a matter of law.” Id. at 424-425 (quotation marks and citation omitted).
A genuine issue of material fact exists when, after viewing the record in the light most favorable
to the nonmoving party, reasonable minds could differ on an issue. Id. at 425. “The trial court
appropriately grants summary disposition to the opposing party under MCR 2.116(I)(2) when it
appears to the court that the opposing party, rather than the moving party, is entitled to judgment
as a matter of law.” Sherry v East Suburban Football League, 292 Mich. App. 23, 34; 807 NW2d
859 (2011) (citation omitted). Questions involving the proper interpretation of a contract or the
legal effect of a contractual clause are also reviewed de novo on appeal. Rory v Continental Ins
Co, 473 Mich. 457, 464; 703 NW2d 23 (2005).

        Plaintiff argued before the trial court that, under California law, defendant breached its
fiduciary duties owed to plaintiff, as well as its contractual obligations under the Escrow
Agreement. However, plaintiff did not argue to the trial court that defendant failed to act in good
faith by relying on Hilliard’s signed, written authorization allowing defendant to disburse the
escrow funds. While it did argue, in its brief, that Hilliard had no authority to sign an
authorization, plaintiff did not specifically argue that defendant had no good faith reliance on
Hilliard’s signature. Therefore, plaintiff’s good-faith argument is unpreserved. This Court
reviews unpreserved arguments for plain error affecting a party’s substantial rights. Hogg v
Four Lakes Ass’n, Inc, 307 Mich. App. 402, 406; 861 NW2d 341 (2014). “To avoid forfeiture
under the plain error rule, three requirements must be met: 1) the error must have occurred, 2)
the error was plain, i.e., clear or obvious, 3) and the plain error affected substantial rights.” Kern
v Blethen-Coluni, 240 Mich. App. 333, 336; 612 NW2d 838 (2000), quoting People v Carines,
460 Mich. 750, 763; 597 NW2d 130 (1999). The third requirement generally necessitates a
showing of prejudice, i.e., that the error affected the outcome of the lower court proceedings. In
re Utrera, 281 Mich. App. 1, 8-9; 761 NW2d 253 (2008).

                            A. NATURE OF PLAINTIFF’S CLAIMS

       As an initial matter, plaintiff argues that defendant, as plaintiff’s escrow agent, was
required to strictly comply with its obligations and fiduciary duties—both explicit and implicit—
under the Escrow Agreement. The trial court held that plaintiff’s breach of fiduciary duty claim

                                                 -6-
sounded as a breach-of-contract claim exclusively. Under California law, “[a]n act such as
breach of fiduciary duty may be both a breach of contract and a tort.” Kangarlou v Progressive
Title Co, Inc, 128 Cal App 4th 1174, 1178; 27 Cal Rptr 3d 754 (2005). In determining whether
an action lies in contract or tort, the Kangarlou Court stated, in relevant part:

                Whether an action is based on contract or tort depends upon the nature of
       the right sued upon, not the form of the pleading or relief demanded. If based on
       breach of promise it is contractual; if based on breach of a noncontractual duty it
       is tortious. If unclear the action will be considered based on contract rather than
       tort. In the final analysis we look to the pleading to determine the nature of
       plaintiff’s claim. [Id. at 1178-1179 (quotation marks and citations omitted).]

       Further, an escrow holder has a fiduciary duty to the escrow parties to strictly comply
with the parties’ instructions. Id. at 1179, citing Summit Fin Holdings, Ltd v Continental
Lawyers Title Co, 27 Cal 4th 705, 711; 117 Cal Rptr 2d 541 (2002). If the escrow agent
“disburses the property of his principals in violation of his instructions or otherwise breaches that
duty, he is liable to the injured parties for breach of contract.” Kirk Corp v First American Title
Co, 220 Cal App 3d 785, 806; 270 Cal Rptr 24 (1990).

        Plaintiff’s claims sound, as conceded by it, exclusively in contract. Plaintiff alleges that
defendant breached its fiduciary duties by failing to comply with its obligations under the terms
of the Escrow Agreement in disbursing the escrow funds. Kirk, 220 Cal App 3d at 807 (“Upon
the escrow holder’s breach of an instruction that it has contracted to perform or of an implied
promise arising out of the agreement with either party, the injured party acquires a cause of
action for breach of contract.”) (emphasis added); Kangarlou, 128 Cal App 4th at 1178-1179.

        Plaintiff previously argued that defendant owed plaintiff implied fiduciary duties under
the Escrow Agreement. “An escrow holder has an implied obligation to do all of the things
normally done by an escrow agent which were not expressly excluded by the escrow
instructions.” Kirk, 220 Cal App 3d at 807 (emphasis added). The parties in this matter,
however, explicitly provided in their Escrow Agreement that defendant “shall have no duties
except those which are expressly set forth herein.” This provision excepts defendant from any
implied fiduciary duties under the Escrow Agreement. Accordingly, the trial court did not err in
dismissing plaintiff’s claim that defendant breached its fiduciary duties, express or implied, as
plaintiff’s escrow agent.

                   B. BREACH OF CONTRACT–ESCROW AGREEMENT

        Next, plaintiff argues that the trial court erred in granting summary disposition to
defendant because the evidence demonstrates that defendant failed to abide by the express terms
of the Escrow Agreement. To that end, plaintiff also argues that the trial court failed to properly
interpret defendant’s obligations under the Escrow Agreement in accordance with California law.
We disagree.

       Under California law, “[e]scrow instructions are interpreted under the rules applicable to
contracts.” Claussen v First American Title Guaranty Co, 186 Cal App 3d 429, 437; 230 Cal
Rptr 749 (1986). California’s approach to contract interpretation is as follows:

                                                -7-
               The fundamental rules of contract interpretation are based on the premise
       that the interpretation of a contract must give effect to the mutual intention of the
       parties . . . . Such intent is to be inferred, if possible, solely from the written
       provisions of the contract. The clear and explicit meaning of these provisions,
       interpreted in their ordinary and popular sense, unless used by the parties in a
       technical sense or a special meaning is given to them by usage, controls judicial
       interpretation. [RealPro, Inc v Smith Residential Co, LLC, 203 Cal App 4th 1215,
       1221; 138 Cal Rptr 3d 255 (2012) (quotation marks and citations omitted).]

“[Courts] must view the language of a contract as a whole, avoiding a piecemeal, strict
construction approach.” Jones v Jacobson, 195 Cal App 4th 1, 18; 125 Cal Rptr 3d 522 (2011).
“If possible, [courts] should give effect to every provision and avoid rendering any part of an
agreement surplusage.” Id.

        Moreover, “an escrow holder has no general duty to police the affairs of its depositors;
rather, an escrow holder’s obligations are limited to faithful compliance with the depositors’
instructions.” Summit, 27 Cal 4th at 711 (citation omitted). “[E]scrow instructions may be oral,
even when some are in writing and some escrow instructions may be implicit in the express
instructions given.” Kirk, 220 Cal App 3d at 807 (citation omitted). “In the event of a conflict or
apparent error in instructions, the escrow holder is obliged to take corrective steps before
obeying questionable instructions.” Id.

        Defendant complied with the obligations of the Escrow Agreement in disbursing the
escrow funds. Neither Arvan, nor any of plaintiff’s other representatives, explicitly rejected the
purported original SBLC received by defendant on August 17, 2010. Arvan discussed the
SBLC’s questionable authenticity with Easley, but never specifically rejected the SBLC.
According to Arvan’s affidavit, Arvan and Easley discussed “what steps were needed to validate
the SBLC.” Arvan further stated, in her August 17, 2010 e-mail, that “[i]n an effort to verify the
SBLC delivered today to [defendant] is the one and only original,” additional steps were
required. While there is an implication that Arvan did not approve the SBLC, there is no
affirmative statement that verification by her of the SBLC as the original was required in order to
accept the SBLC. The implications by Arvan are obviously at least complicated by, if not erased
by, Hilliard’s signing the written authorization allowing disbursement of the escrow funds.
According to the express terms of the Escrow Agreement, and absent plaintiff’s rejection of the
SBLC, defendant was permitted to disburse the escrow funds. RealPro, 203 Cal App 4th at 1221
(explaining that California courts interpret contract provisions in accordance with their “clear
and explicit meaning”) (quotation marks and citation omitted).

        While plaintiff characterizes Arvan’s August 17, 2010 e-mail imposing additional
requirements to verify the SBLC as a conflicting instruction in the face of Hilliard’s and Shaieb’s
independent verification of the SBLC, the fact that defendant sought plaintiff’s signed, written
authorization before disbursing the escrow funds demonstrates defendant’s due diligence in
clarifying any conflicting escrow instructions. See Kirk, 220 Cal App 3d at 807 (“In the event of
a conflict or apparent error in instructions, the escrow holder is obliged to take corrective steps
before obeying questionable instructions.”).

                                                -8-
        Plaintiff relies on Diaz v United California Bank, 71 Cal App 3d 161; 139 Cal Rptr 314
(1977), in arguing that defendant “did not have a right to ignore the instructions of [Arvan] and
was under a duty to at least hold up” in disbursing the escrow funds until instructions were
clarified. In Diaz, the escrow agent closed the escrow despite receiving a notice from one of the
parties that there was a mistake in the amount to be disbursed. Id. at 165. The Diaz Court held
that, “the failure of [the escrow agent] to heed the notice of a possible error in the escrow
instructions and to blindly close in the face thereof might be found to be a failure to exercise
reasonable skill and ordinary diligence in the conduct of the escrow,” and that the escrow agent
was required to “at least hold up closure until the situation was clarified.” Id. at 167-168, 171.
However, the situation in Diaz is distinguishable from the facts presented here because defendant
affirmatively requested written authorization from plaintiff to disburse the escrow funds in the
face of conflicting instructions from plaintiff’s representatives. Thus, defendant’s due diligence
renders plaintiff’s reliance on Diaz meritless.

        Further, plaintiff argues that defendant failed to comply with Arvan’s August 17, 2010 e-
mail imposing additional requirements on defendant to verify the purported original SBLC’s
authenticity, and thus, breached plaintiff’s escrow instructions. Specifically, plaintiff contends
that defendant “breached by ignoring [plaintiff’s] instructions that the SBLC was not validated,”
and that “the rejected status of the SBLC could only be overcome by strict compliance with all
the conditions set forth in [Arvan’s August 17, 2010 e-mail].” However, Arvan’s August 17,
2010 e-mail is devoid of any mention that she, or any of plaintiff’s other representatives,
affirmatively “rejected” the SBLC. Further, defendant was not obligated to comply with Arvan’s
instructions from her August 17, 2010 e-mail because it constituted a unilateral change in the
escrow instructions. See Diaz, 71 Cal App 3d at 170-171 (“It is also elemental that, where the
written escrow instructions amount to an agreement made by two principals with their joint agent
and signed by both, neither can unilaterally change the instructions.”). Ultimately, defendant
properly disbursed the escrow funds in accordance with the Escrow Agreement and without any
objection from plaintiff or any of its representatives.

                                        C. GOOD FAITH

        Plaintiff also argues that Hilliard lacked the authority to sign the written authorization on
behalf of plaintiff, that defendant knew Hilliard lacked that authority, and that defendant had no
good-faith basis to rely on Hilliard’s signed, written authorization allowing defendant to release
the escrow funds. Plaintiff has abandoned this argument on appeal for failing to provide any
legal authority supporting its position. We reiterate that plaintiff’s good-faith argument is also
unpreserved for appellate review.

        “An appellant may not merely announce its position and leave it to this Court to discover
and rationalize the basis for its claims, unravel or elaborate its argument, or search for authority
for its position.” Greater Bethesda Healing Springs Ministry v Evangel Builders & Const
Managers, LLC, 282 Mich. App. 410, 413; 766 NW2d 874 (2009). Plaintiff’s brief on appeal fails
to cite any legal authority addressing defendant’s duty to act in good faith under the Escrow
Agreement, or what the duty of good faith entails. In fact, plaintiff first alleged that defendant
breached the implied covenant of good faith and fair dealing in its motion for reconsideration.
“Where an issue is first presented in a motion for reconsideration, it is not properly preserved.”
Vushaj v Farm Bureau Gen Ins Co of Mich, 284 Mich. App. 513, 519; 773 NW2d 758 (2009).
                                                -9-
Therefore, not only is plaintiff’s argument that defendant did not act in good faith unpreserved,
but plaintiff has abandoned this argument on appeal for failing to support its position with any
legal authority. Id.; Greater Bethesda Healing Springs Ministry, 282 Mich. App. at 413.

        Even if not abandoned, defendant acted in good faith by relying on Hilliard’s signed,
written authorization to disburse the escrow funds.

               It has long been recognized, of course, that every contract imposes upon
       each party a duty of good faith and fair dealing in the performance of the contract
       such that neither party shall do anything which will have the effect of destroying
       or injuring the right of the other party to receive the fruits of the contract. Storek
       & Storek, Inc v Citicorp Real Estate, Inc, 100 Cal App 4th 44, 55; 122 Cal Rptr
       2d 267 (2002).

However, “an implied covenant of good faith and fair dealing cannot contradict the express
terms of a contract.” Id. Moreover, “[a] lack of good faith . . . suggests a moral quality, such as
dishonesty, deceit, or unfaithfulness to duty.” Id. at 59.

       The Escrow Agreement provided, in relevant part, that defendant:

       shall be protected in acting upon any written notice, request, waiver, consent,
       receipt or other paper or document furnished to it, not only as to its due execution
       and the validity and effectiveness of its provisions, but also as to the truth and
       acceptability of any information therein contained, which [defendant] in good
       faith believes to be genuine and what it purports to be.

Further, the parties to the Escrow Agreement, by signing the written authorization allowing
defendant to release the escrow funds, accepted the SBLC’s authenticity, and agreed not to hold
defendant “responsible and/or liable for the authenticity and or review of said document.”
Hilliard served as co-managing member, secretary, and authorized signatory of plaintiff, and
formed plaintiff’s LLC for the sole purpose of providing a bridge loan to Diamond Heroes,
where Hilliard served as president and CEO. Indeed, Hilliard exhibited his authority, as a
representative of plaintiff, throughout the process by obtaining and verifying the SBLC.

        Plaintiff relies on the following facts in support of its argument that defendant lacked a
good-faith basis to rely on the signed, written authorization: (1) Hilliard crossed out Arvan’s
name and signed the written authorization as a representative of plaintiff instead of Diamond
Heroes; (2) defendant knew that only Hilliard and Shaieb, two of the four co-managing members
of plaintiff’s LLC, approved of the disbursement; and, (3) defendant “had no basis to accept
[Hilliard’s] authority without any confirmation.” However, these facts are unavailing given that
there is no supporting document or evidence to suggest that Arvan had the exclusive authority to
bind plaintiff, nor is there any evidence that defendant acted dishonestly, deceitfully, or
unfaithfully in seeking the written authorization. Storek, 100 Cal App 4th at 55, 59. Instead, the
facts demonstrate that defendant had a good-faith basis to rely on Hilliard’s authority—as co-
managing member, secretary, and authorized signatory of plaintiff—to sign the written
authorization permitting defendant to disburse the escrow funds. Therefore, the trial court did
not err in granting summary disposition to defendant.

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                                III. STATUTE OF LIMITATIONS

        Plaintiff argues that the trial court erred in holding that California’s four-year statute of
limitations barred plaintiff’s breach-of-contract claim because Michigan’s six-year statute of
limitations governs plaintiff’s claim. Because the trial court properly granted summary
disposition to defendant on the merits of plaintiff’s breach-of-contract claim, we need not
address this claim.

                           IV. MOTION FOR RECONSIDERATION

        Plaintiff argues that the trial court abused its discretion in denying plaintiff’s motion for
reconsideration because (1) defendant breached its obligations and duties under the Escrow
Agreement by releasing the escrow funds, (2) the trial court failed to correctly apply California
law to plaintiff’s breach-of-contract claim, and (3) the trial court exhibited bias. We disagree.

        This Court reviews “a trial court’s decision on a motion for reconsideration for an abuse
of discretion.” Woods v SLB Prop Mgmt, LLC, 277 Mich. App. 622, 629; 750 NW2d 228 (2008).
“An abuse of discretion occurs when the decision of the trial court results in an outcome falling
outside the principled range of outcomes.” Id. at 625 (quotation marks, citation, and brackets
omitted).

       MCR 2.119(F) provides, in relevant part:

                Generally, and without restricting the discretion of the court, a motion for
       rehearing or reconsideration which merely presents the same issues ruled on by
       the court, either expressly or by reasonable implication, will not be granted. The
       moving party must demonstrate a palpable error by which the court and the
       parties have been misled and show that a different disposition of the motion must
       result from correction of the error.

MCR 2.119(F) provides that trial courts have “considerable discretion in granting
reconsideration to correct mistakes, to preserve judicial economy, and to minimize costs to the
parties.” Al-Maliki v LaGrant, 286 Mich. App. 483, 486; 781 NW2d 853 (2009) (quotation marks
and citation omitted).

        Plaintiff argued in its motion for reconsideration that the trial court failed to properly
interpret the Escrow Agreement in accordance with California law, and that defendant breached
its contractual obligations and fiduciary duties under the Escrow Agreement by disbursing the
escrow funds without first receiving the original SBLC validated by plaintiff. Plaintiff’s motion
for reconsideration merely presented the same issues that the trial court already ruled on when in
granting summary disposition to defendant. MCR 2.119(F).

        With respect to its third claim of error, that the court displayed judicial bias, to preserve
an issue of judicial bias, a party must raise the claim before the trial court. Illes v Jones Transfer
Co (On Remand), 213 Mich. App. 44, 56 n 2; 539 NW2d 382 (1995). Plaintiff failed to argue to
the trial court that it exhibited bias against plaintiff. Therefore, this is issue is unpreserved.
Unpreserved claims of error are reviewed for plain error affecting a party’s substantial rights.
Hogg, 307 Mich. App. at 406. “To avoid forfeiture under the plain error rule, three requirements

                                                -11-
must be met: 1) the error must have occurred, 2) the error was plain, i.e., clear or obvious, 3) and
the plain error affected substantial rights.” Kern, 240 Mich. App. at 336. The third requirement
generally necessitates a showing of prejudice, i.e., that the error affected the outcome of the
lower court proceedings. Utrera, 281 Mich. App. at 8-9.

        Plaintiff argues that the trial court exhibited bias by making “disparaging comments” that
plaintiff’s statute of limitations argument was “disingenuous.”8 Not only has plaintiff abandoned
this argument on appeal by failing to provide any legal authority addressing when a trial court
exhibits judicial bias, see Greater Bethesda Healing Springs Ministry, 282 Mich. App. at 413, but
the trial court’s characterization of plaintiff’s statute of limitations argument as “disingenuous”
does not rise to the level of “a deep-seated favoritism or antagonism that would make fair
judgment impossible.” Kern v Kern-Koskela, 320 Mich. App. 212, 231-232; 905 NW2d 453
(2017) (quotation marks and citation omitted). “[A] trial judge’s remarks made during trial,
which are critical of or hostile to counsel, the parties, or their cases, ordinarily do not establish
disqualifying bias.” Id. at 232 (quotation marks and citation omitted). Accordingly, plaintiff’s
argument that the trial court exhibited bias is without merit. The trial court did not abuse its
discretion in denying plaintiff’s motion for reconsideration.

                                        V. CONCLUSION

       Affirmed.

                                                              /s/ Stephen L. Borrello
                                                              /s/ Kirsten Frank Kelly
                                                              /s/ Deborah A. Servitto

8
 Plaintiff also argued that the trial court exhibited bias in dismissing plaintiff’s argument that
Michigan’s six-year statute of limitations applied to plaintiff’s breach-of-contract claim.
Because analysis of the statute of limitations claim was unnecessary, so too is this argument.

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