Court Opinion

ID: 4014024
Source: CourtListenerOpinion
Date Created: 2016-07-08 12:07:43.373962+00
Date Added: 2024-06-11T14:44:44.751297
License: Public Domain

STATE OF MICHIGAN

                             COURT OF APPEALS

BRIAN BECK, GUY HANSON, KAREN                                        UNPUBLISHED
HANSON, RAYMOND FAVICHIA,                                            July 7, 2016
MARGARET FAVICHIA, JUDITH
SCHLEBECKER, JOHN SCHLEBECKER, and
BERNADETT STEINER,

               Plaintiffs,

and

AUDREY MAHONEY, DAVID OPPENHEIM,
FELICE OPPENHEIM, and PATTY BROWN,

               Plaintiffs-Appellants/Cross-
               Appellees

v                                                                    No. 319463
                                                                     Oakland Circuit Court
PARK WEST GALLERIES INC, ALBERT                                      LC No. 2011-122042-CZ
SCAGLIONE, MORRIS SHAPIRO, ALBERT
MOLINA, and PLYMOUTH AUCTIONEERING
SERVICES LTD,

               Defendants-Appellees/Cross-
               Appellants.

                                          ON REMAND

Before: MURRAY, P.J., and HOEKSTRA and WILDER, JJ.

PER CURIAM.

        We receive this case from the Supreme Court “for consideration of the issues raised in
plaintiff’s appeal that [we] did not address to the extent those issues relate to claims that are not
subject to arbitration.” Beck v Park West Galleries, Inc, 449 Mich. 40, 51; 878 NW2d 804
(2016). Per the Supreme Court’s directive, we have considered the remaining issues, and we
affirm in part and reverse in part the trial court’s order granting summary disposition to
defendants.

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                           I. FACTS AND PROCEDURAL HISTORY

         Plaintiffs purchased artwork at auctions on various cruise ships from defendant, Park
West Galleries, Inc. (“Park West”). Plaintiffs claimed that some of the works were fraudulently
represented, that they were overcharged, or that they did not receive what defendants represented
they were purchasing. Specifically, plaintiffs alleged (1) a violation of Michigan’s Fine Art’s
Statute, (2) fraud, (3) conversion, (4) a violation of the Michigan Consumer Protection Act, (5)
breach of contract, (6) a violation of the Michigan Art Multiple Sales Act, (7) negligent
misrepresentation, (8) conspiracy, (9) negligence, and (10) breach of warranty of quality and
fitness.

        With each sale, Park West provided plaintiffs with a certificate of authenticity and a
written appraisal. All the purchases made by plaintiffs were accompanied by an invoice under
which the parties agreed to the terms of the transaction. By 2007, the invoices contained an
arbitration clause.

        This action was filed by 13 plaintiffs, but most plaintiffs agreed to dismiss their claims,
leaving only plaintiffs Audrey Mahoney, David Oppenheim, Felice Oppenheim, and Patty
Brown. Defendants filed a motion for summary disposition arguing that plaintiffs’ claims were
subject to arbitration. The trial court granted defendants’ motion for summary disposition
pursuant to MCR 2.116(C)(7) and dismissed all claims brought by plaintiffs Mahoney and
Brown, and some of the Oppenheims’ claims, on the ground that the claims were subject to an
arbitration agreement. The court refused to dismiss any of the Oppenheims’ claims that involved
invoices that did not contain an arbitration clause, concluding that the arbitration clauses in other
invoices were not broad enough to subject all claims to arbitration.

       Defendants later filed a second motion for summary disposition pursuant to MCR
2.116(C)(7), requesting dismissal of the Oppenheims’ remaining claims on the ground that they
were barred by the statute of limitations. The trial court agreed and dismissed the remaining
claims. The court rejected the Oppenheims’ argument that the limitations period could be tolled
under MCL 600.5855 because of fraudulent concealment. Plaintiffs subsequently moved for
reconsideration, arguing that the trial court erred by not following Best v Park West Galleries,
Inc, unpublished opinion per curiam of the Court of Appeals, issued September 5, 2013 (Docket
Nos. 305317, 308085).

        Plaintiffs appealed the trial court’s order and defendants filed a cross-appeal, challenging
the trial court’s ruling that not all of the Oppenheims’ claims were subject to arbitration. In an
unpublished decision, our Court affirmed the trial court’s ruling that the arbitration agreements
were enforceable despite the challenges to the invoices, but reversed the trial court’s ruling that
all of the Oppenheims’ claims were not subject to arbitration. Beck v Park West Galleries,
unpublished opinion per curiam of the Court of Appeals, issued March 3, 2015 (Docket No.
319463).

       Plaintiffs filed an application for leave to appeal to our Supreme Court arguing that our
Court erred by concluding that all of their claims were subject to arbitration. The Michigan
Supreme Court agreed with plaintiffs, and held that the Oppenheims’ claims that arose in 2003
and 2004 were not subject to arbitration because those purchases were not accompanied by an

                                                -2-
invoice that contained an arbitration clause. Beck, 499 Mich. at 50-51. The Michigan Supreme
Court remanded the case to our Court for consideration of the remainder of the Oppenheims’
issues that do not involve claims subject to arbitration. Id. at 43 n 3, 51.

                                          II. ANALYSIS

                                A. STATUTE OF LIMITATIONS

        The Oppenheims argue that the trial court erred when it granted summary disposition
because their claims are not barred by the applicable statute of limitations. This Court reviews a
grant of summary disposition de novo. Kincaid v Cardwell, 300 Mich. App. 513, 522; 834 NW2d
122 (2013). A party moving for summary disposition under MCR 2.116(C)(7) may support the
motion with affidavits, depositions, admissions, or other admissible documentary evidence,
which the reviewing court must consider. Id. Summary disposition under MCR 2.116(C)(7) is
appropriate when the undisputed facts establish that the plaintiffs’ claim is barred under the
applicable statute of limitations. Id. If there is no factual dispute, whether a plaintiffs’ claim is
barred under the applicable statute of limitations is a matter of law for this Court to determine.
Id. at 523.

        The Oppenheims do not dispute that their claims are untimely under the six-year
limitations period, instead, they argue a genuine issue of fact exists regarding whether the
limitations period was tolled by way of the fraudulent concealment statute. MCL 600.5855, the
fraudulent concealment statute, reads as follows:

       If a person who is or may be liable for any claim fraudulently conceals the
       existence of the claim or the identity of any person who is liable for the claim
       from the knowledge of the person entitled to sue on the claim, the action may be
       commenced at any time within 2 years after the person who is entitled to bring the
       action discovers, or should have discovered, the existence of the claim or the
       identity of the person who is liable for the claim, although the action would
       otherwise be barred by the period of limitations.

To take advantage of the fraudulent concealment statute, “[t]he plaintiff must prove that the
defendant committed affirmative acts or misrepresentations that were designed to prevent
subsequent discovery [of the cause of action.]” Sillis v Oakland General Hosp, 220 Mich. App.
303, 310; 559 NW2d 348 (1996). “The fraud must be manifested by an affirmative act or
misrepresentation,” Doe v Roman Catholic Archbishop of the Archdiocese of Detroit, 264 Mich
App 632, 642; 692 NW2d 398 (2004) (citation and quotation marks omitted), and mere silence
on the part of the defendant is insufficient. Sills, 220 Mich. App. at 310. Moreover, MCL
600.5855 requires reasonable diligence on the part of the plaintiff, and if the plaintiff should
have discovered that liability existed, the statute does not operate to toll the limitations period.
Prentis Family Foundation v Barbara Ann Karmanos Cancer Institute, 266 Mich. App. 39, 48;
698 NW2d 900 (2005).

        Importantly, only actions that occur after the alleged injury can conceal plaintiff’s causes
of action against defendant because actions taken before the alleged injury would not have been
capable of concealing causes of action that did not yet exist. Doe, 264 Mich. App. at 641. In

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“focusing on the fraudulent-concealment claim, we focus on [a] defendant’s alleged actions after
the alleged abuse.” Id.

        In their complaint, the Oppenheims alleged that defendants affirmatively acted to prevent
them from discovering their claims when defendants provided them with fraudulently created
certificates of authenticity. However, these acts (providing faulty certificates of authenticity)
form the basis of many of plaintiff’s causes of actions and are not an act that occurred after the
alleged injury. Id. Particularly, plaintiff’s causes of action for (1) a violation of the Michigan’s
Warranty in Fine Arts Statute, (2) fraud, (3) breach of contract, (4) negligent misrepresentation,
and (5) conspiracy are based in part1 on the certificates of authenticity issued by defendants.
Because the concealing act must be distinct and after an act that forms the basis of a claim, the
Oppenheims are unable to toll the statute of limitations by way of fraudulent concealment with
regard to these claims.

        With regard to the five other remaining claims, a genuine issue of material fact existed
regarding whether the act of providing the Oppenheims with fraudulently created certificates of
authenticity and appraisals was an affirmative act or misrepresentation designed to prevent
subsequent discovery. Here, the Oppenheims alleged that the defendants issued false certificates
of authenticity. Importantly, in Michigan, a certificate of authenticity warrants the “authenticity
of the authorship [of the piece of art.]” MCL 442.322(a). Because it was alleged that defendants
fraudulently warranted the authenticity of the artwork, plaintiffs have alleged an affirmative act
or misrepresentation that prevented plaintiff’s from discovering their causes of action. Evidence
was also presented that the certificates of authenticity were issued after plaintiffs’ made the
purchases at issue.

        Additionally, a question of material fact existed regarding whether the Oppenheims
exercised reasonable diligence in discovering their claim. Nothing in the record indisputably
establishes that the Oppenheims acted unreasonably by failing to discover their claims within the
limitations period. As mentioned above, the Oppenheims received certificates of authenticity for
the artwork, which warranted the artworks’ authenticity. MCL 442.322(a). A reasonable juror
could conclude that the Oppenheims reasonably relied on these certificates of authenticity, and
that the Oppenheims had no basis to believe that the certificates of authenticity were
disingenuous and that the artwork was not what it was purported to be. Nor does anything in the
record indicate that the Oppenheims should have been prompted to investigate the genuineness
of the artwork they purchased because they were provided with certificates of authenticity that
warranted the authenticity of the artwork. On the other hand, a reasonable juror may conclude—
as defendants argue—that the Oppenheims did not act reasonably when an Internet search may
have provided information during the limitation period that a cause of action may exist.

1
  The complaint is not entirely clear as to whether these causes of action are also based on acts
other than the issuance of the certificate of authenticity, so to the extent these claims are also
based on acts that occurred before the issuance of the certificates of authenticity, they may be
tolled by the statute of limitations along with the Oppenheims’ five other remaining claims.

                                                -4-
Consequently, a genuine issue of material fact existed regarding whether the Oppenheims should
have discovered the existence of their claims.2

        Affirmed in part, reversed in part, and remanded for further proceedings. No taxable
costs, neither party having prevailed in full. MCR 7.219(A).3 We do not retain jurisdiction.

                                                          /s/ Christopher M. Murray
                                                          /s/ Joel P. Hoekstra
                                                          /s/ Kurtis T. Wilder

2
  This conclusion is similar to the one reached in Best v Park West Galleries, unpublished
opinion per curiam of the Court of Appeals, issued September 5, 2013 (Docket Nos. 305317,
308085), and King v Park West Galleries, unpublished opinion per curiam of the Court of
Appeals, issued December 2, 2014 (Docket No. 314188), lv den 498 Mich. 896 (2015).
3
 We do not address the Oppenheims’ assertion that the trial court abused its discretion when it
denied their motion for reconsideration as our holding makes that issue moot.

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