Court Opinion

ID: 4794635
Source: CourtListenerOpinion
Date Created: 2021-08-20 09:09:52.907638+00
Date Added: 2024-06-11T08:09:53.720777
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

MIKE JADAN,                                                           UNPUBLISHED
                                                                      August 19, 2021
               Plaintiff-Appellant,

v                                                                     No. 353177
                                                                      Oakland Circuit Court
GLENN F. NEVILLE and KELLY R. NEVILLE,                                LC No. 2019-172643-CZ

               Defendants-Appellees.

Before: LETICA, P.J., and SERVITTO and M. J. KELLY, JJ.

PER CURIAM.

       Plaintiff, Mike Jadan, appeals as of right the trial court order granting defendants Glenn
and Kelly Neville’s motion for summary disposition under MCR 2.116(C)(10). Because there are
no errors warranting reversal, we affirm.

                                         I. BASIC FACTS

        On May 4, 2018, Jadan purchased a residential property from the Nevilles. Before the
purchase, the Nevilles provided a seller’s disclosure statement in which they made a number of
representations regarding the condition of the property. Relevant to the issues raised in this appeal,
they represented that (1) the central air conditioning and heating system were in working order,
(2) there was no evidence of water in the basement/crawlspace, (3) there were no leaks in the roof,
(4) structural modifications, alterations, or repairs had not been made without the necessary
permits or licensed contractors, and (5) there were no known structural problems.

        After receiving the seller’s disclosure statement but before purchasing the property, Jadan
had the home and the crawlspace professionally inspected. Notably, the crawlspace inspection
report expressly stated that the condition of the crawlspace was “poor.” Major concerns included
mold contamination, a sewer leak, and “moist and fallen” insulation. The property inspection
report also identified problems with the property. With regard to the roof, the overall condition
was listed as “poor,” and the skylight flashings were noted to be “fair,” but covered in mastic. The
report stated that a window in the kitchen had a broken or cracked glass pane, but otherwise the
windows were functional. The report noted that the walls, ceiling, and floors in the “interior areas”
were in good condition. Further, it was noted that some windows showed signed of “loss of

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seal/condensation,” so repair or replacement was recommended. The floor in the laundry room
was listed as in fair condition; however, there were loose or missing tiles and water damage was
observed. The heater’s condition was listed as good, but the air conditioner was not level.

       In addition to the professional inspections, Jadan and his real estate agent also examined
the property several times. In an affidavit, his real estate agent averred that “[t]he house was in
good condition for its age.” She also noted:

               5. The condition of the interior floors, walls, ceilings, and windows were
       not concealed and could be observed by casual observation when we inspected the
       property. The exterior of the home and the structure of the swimming pool were
       also easily observable, although the pool was not in operation at the time because
       it was late winter and early spring when we inspected the property. The pool was
       operational at the time Mr. Jadan took possession of the property.

               6. I did not observe any significant sagging in the floors when we inspected
       the property. If the floors were in such condition, I would have told Mr. Jadan
       about it because that is something I routinely look for and advise my clients.

               7. Mr. Jadan retained two inspectors to professionally inspect the property.
       After receiving the inspection reports, he sent me the documents attached hereto to
       negotiate concessions with the Nevilles. After these negotiations, a new purchase
       agreement was signed by the parties and the parties closed the transaction.

Several e-mails from or to Jadan indicate the negotiations related to areas of the property that he
wanted to be fixed prior to his purchase. As a result of the post-inspection negotiations, the parties
agreed to two addendums to the purchase agreement: one related to the pool and one related to
general conditions, including a number of areas that were to be fixed prior to closing.

        After his purchase of the property, Jadan experienced several issues with the home, which
he attempted to have the Nevilles repair. Ultimately, the parties were unable to resolve the ongoing
disputes regarding the property’s condition, and on March 20, 2019, Jadan, acting in pro per, filed
a complaint against the Nevilles. Jadan contended that the Nevilles had falsified information in
their seller’s disclosure statement, that they had not made repairs that they agreed to make, that
they had removed shelves and window treatments from the home (damaging the walls in the
process), and that there were structural problems with the pool.

        On November 11, 2019, the Nevilles moved for summary disposition under MCR
2.116(C)(10). They asserted that they did not make any knowingly false statements in their seller’s
disclosure statement, and that, in any event, Jadan could not show that he relied on any statement
in that disclosure because he inspected the property personally, had two professional inspections,
and negotiated at length regarding conditions he wanted to be fixed prior to closing. Following
oral argument, the trial court granted the Nevilles summary disposition.

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                                            II. FRAUD

                                  A. STANDARD OF REVIEW

         Jadan argues that the trial court erred by granting the Nevilles’ motion for summary
disposition. This Court reviews de novo a trial court’s decision whether to grant a motion for
summary disposition. Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich App
362, 369; 775 NW2d 618 (2009). A motion for summary disposition under MCR 2.116(C)(10)
tests the factual sufficiency of a claim and may be granted when there is no genuine issue regarding
any material fact and the moving party is entitled to judgment as a matter of law. Joseph v Auto
Club Ins Ass’n, 491 Mich 200, 206; 815 NW2d 412 (2012). In reviewing such a motion, a court
considers the pleadings, affidavits, depositions, admissions, and documentary evidence in a light
most favorable to the nonmoving party. Id. “A genuine issue of material fact exists when the
record leaves open an issue on which reasonable minds could differ.” Bennett v Detroit Police
Chief, 274 Mich App 307, 317; 732 NW2d 164 (2006).

         In his brief on appeal, Jadan argues that the trial court erred by not liberally viewing the
allegations in his complaint, which was filed pro per. However, the trial court did not grant
summary disposition under MCR 2.116(C)(8) (failure to state a claim). Instead, it granted the
motion under MCR 2.116(C)(10). “In establishing the existence of a genuine issue of disputed
fact, [Jadan cannot] rely on mere allegations or denials in [his] pleading, but had to, by affidavits
or as otherwise provided [by MCR 2.116], set forth specific facts showing that there is a genuine
issue for trial.” See Barnard Mfg, 285 Mich App at 374 (quotation marks and citations omitted).

                                          B. ANALYSIS

       “Michigan’s contract law recognizes several interrelated but distinct common-law
doctrines—loosely aggregated under the rubric of ‘fraud’—that may entitle a party to a legal or
equitable remedy if a contract is obtained as a result of fraud or misrepresentation.” Titan Ins Co
v Hyten, 491 Mich 547, 555; 817 NW2d 562 (2012). As described by this Court in Alfieri v
Bertorelli, 295 Mich App 189, 193-194; 813 NW2d 772 (2012):

               Common-law fraud or fraudulent misrepresentation entails a defendant
       making a false representation of material fact with the intention that the plaintiff
       would rely on it, the defendant either knowing at the time that the representation
       was false or making it with reckless disregard for its accuracy, and the plaintiff
       actually relying on the representation and suffering damage as a result. Silent fraud
       is essentially the same except that it is based on a defendant suppressing a material
       fact that he or she was legally obligated to disclose, rather than making an
       affirmative misrepresentation. Such a duty may arise by law or by equity; an
       example of the latter is a buyer making a direct inquiry or expressing a
       particularized concern. A misleadingly incomplete response to an inquiry can
       constitute silent fraud. [Citations omitted.]

       The Seller Disclosure Act (SDA), MCL 565.951 et seq., imposes a legal duty on sellers to
disclose to buyers the existence of certain known conditions affecting the house. MCL 565.957(1).
The SDA requires a transferor to honestly disclose and to disclose in good faith information known

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to the transferor at the time the seller’s disclosure statement is completed. See Roberts v Saffell,
280 Mich App 397, 413; 760 NW2d 715 (2008). “[A] transferor may not be held liable for any
errors, inaccuracies, or omissions in the [seller’s disclosure statement] unless they were within the
transferor’s personal knowledge.” Id. As explained by this Court in Bergen v Baker, 264 Mich
App 376, 385; 691 NW2d 770 (2004), “it is evident that the Legislature intended to allow for seller
liability in a civil action alleging fraud or violation of the act brought by a purchaser on the basis
of misrepresentations or omissions in a disclosure statement, but with some limitations.”
Specifically, “liability is precluded for errors, inaccuracies, or omissions in a seller disclosure
statement that existed when the statement was delivered, where the seller lacked personal
knowledge, and would not have had personal knowledge by the exercise of ordinary care, of any
error, inaccuracy, or omission and thus proceeds in good faith to deliver the disclosure statement
to the buyer.” Id.

        In their seller’s disclosure statement, the Nevilles represented that there were no
“[s]tructural modifications, alterations or repairs made without necessary permits or licensed
contractors.” Although Jadan alleges a number of repairs were done without necessary permits or
licensed contractors, he did not provide any evidence to support that contention. Mere allegations
are insufficient to establish a genuine issue of material fact. Barnard Mfg, 285 Mich App at 374.
Here, rather than support his allegations, Jadan attached excerpts of the Nevilles’ answers to the
interrogatories. As it relates to structural repairs, modifications, or alterations, the Nevilles stated
that the bathroom was remodeled in 2017 by Mr. Bid Services, LLC, an entity that they believed
had obtained the necessary permits to complete the remodel. Stated differently, the uncontradicted
evidence indicates that, to the Nevilles’ personal knowledge, the remodel was not done without
proper permits or by an unlicensed contractor. Thus, in this case, liability is precluded because it
is for an alleged error or inaccuracy that the sellers, i.e., the Nevilles, lacked personal knowledge
of and would not have had personal knowledge by the exercise of ordinary care. See Bergen, 264
Mich App at 385.

        Jadan also contends that other work was done without necessary and required permits.
First, he notes that the skylight was repaired by the Nevilles, not by a licensed contractor.
However, the documentation he attached to his response to summary disposition indicates that, in
the absence of structural changes, repairs to windows and or re-roofing existing structures do not
require a permit. Jadan has not presented any evidence suggesting that applying mastic to a
skylight amounts to a structural change to a roof or window. Thus, there is nothing to show that
the Nevilles made a misrepresentation in the seller’s disclosure statement as to the skylight repairs.
And, even if they had, the property inspection report specifically mentioned that the skylight was
covered in mastic. Further, the roof was repaired or replaced after the Nevilles made their
disclosure statement. As a result, Jadan cannot show that he relied on the seller’s disclosure
statement with regard to any problems associated with the roof—including leaks—which would
include the skylight. See id. (noting that the errors, inaccuracies, or omissions in a seller’s
disclosure statement must be ones that exist at the time the statement is delivered).

        Jadan next asserts that there were multiple issues with the heater and the air conditioning
and that the Nevilles performed work on both units that was not inspected or that was done without
the proper permits. In their answers to the interrogatories, however, the Nevilles explained that
the furnace was installed in 2007 or 2008 by West Michigan Heating and Cooling and that the air
conditioning had not been replaced while they owned the home. Further, e-mails between the

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parties indicate that the Nevilles took apart the air conditioning unit to repair the flooring beneath
it. The floor repairs were negotiated because of problems identified in the property inspection
report. Therefore, given the e-mails regarding the air conditioning unit, Jadan was fully aware that
the Nevilles had done unlicensed work on it. Considering that the air conditioning unit was taken
apart by the Nevilles after they made the seller’s disclosure statement, it cannot be used to show
that they knowingly made a false statement on their seller’s disclosure statement. See id.

         Jadan also claims that the Nevilles failed to disclose that the air conditioning unit had a bad
coil, that it leaked throughout the crawlspace, and that it was installed in a manner contrary to
existing regulations. Yet he has presented no evidence that the Nevilles were aware that the air
conditioning unit had a bad coil. Moreover, in the seller’s disclosure statement the Nevilles only
represented that the air conditioning unit was in working order. After they made that
representation, Jadan obtained the crawlspace inspection report, which indicated that there was a
leak in the crawlspace. The parties then negotiated for the leak in the crawlspace to be fixed before
closing. The Nevilles submitted an affidavit averring that the leak was repaired by a licensed
contractor. Moreover, given that the undisputed evidence is that the air conditioning unit was not
replaced while the Nevilles were in the house, Jadan cannot show that they had any knowledge
that it was installed in a manner contrary to existing regulations.

        Additionally, Jadan asserts that the Nevilles failed to properly repair the utility room floor.
However, as reflected by e-mails between the parties, Jadan was aware that they were making
those repairs. Further, prior to closing, he inspected the property for a final time, so it cannot be
said that he relied upon their representation that they had fixed the floor. Thus, he cannot show an
action for fraud based on the repairs to the utility room floor.

        Jadan also complained that there was a broken window slide. However, he does not
identify any representation by the Nevilles that every window was 100% functional. Furthermore,
the property inspection report only identified one window as broken. With regard to the remaining
windows, the report noted that some of the windows showed signs of loss of seal/condensation
and might require repair or replacement. Jadan, therefore, did not rely on any representations the
Nevilles made regarding the condition of the windows in the home. Instead, he relied on the
property inspection report, which only identified one broken window, which was then repaired
before closing.

        Jadan has not provided any evidence showing that the Nevilles made a material
misrepresentation regarding the above-ground swimming pool. The seller’s disclosure statement
does not include any representations related to the pool. Further, the record reflects that the pool
was the subject of a separate addendum. Per that addendum, the Nevilles warranted that “the
structure of the pool, all pool equipment, [and the] filter and heater are currently operable and will
be in operable condition on the date of opening.” It stated that if the pool was “fully operational
when opened or if [Jadan] did not open the pool within one year after closing or possession
(whichever occurs later) then [Jadan] shall be deemed to have accepted the pool “as-is.” In an
affidavit, Jadan’s real estate agent averred that that the pool was operational when Jadan took
possession of the property. Jadan has not presented any evidence to the contrary.

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         Finally, Jadan contends that the Nevilles made misrepresentations regarding structural
problems with the home. The Nevilles represented in their seller’s disclosure statement that there
were no known structural defects. However, on June 18, 2019, Jadan had the home inspected “to
determine whether the previous owner would have likely known of the structural issues with the
first floor framing system and the subsequent cosmetic issues prior to the sale of the home.” The
report identified structural problems related to the “first floor framing.” The Nevilles have
presented evidence that they were unaware of those defects, but the structural engineer who
authored the June 18, 2019 report opined that the Nevilles would have known of the defects. The
engineer explained:

       [I]t is my professional opinion that several of the cosmetic repairs throughout the
       home and a couple of the structural issues related to the modifications to the floor
       deck framing for plumbing modifications should have been obvious to the previous
       homeowners and disclosure to you prior to your purchase of the home in the areas
       related to structural modifications, settling and grading problems. The extensive
       repairs to the crown moldings and the ceiling/wall cracks would have indicated a
       structural problem with the first floor deck framing, which was also readily evident
       due to the significant elevation variations of the floor surfaces throughout the home.
       . . . The significant sloping levels of the water in the above ground pool in the
       backyard due to the uneven support for the pool framing would have been known
       to the former homeowners at the time the residence was sold. [Emphasis added.]

The engineer also explained that the “crown molding gaps were previously caulked with
significant amounts of caulking materials in several areas in an attempt to conceal the floor
deflection related cracks, but the continual movement of the deflecting floor deck under live loads
in combination with the normal temperature and shrinkage changes throughout the heating and
cooling seasons, has revealed significant gaps in the previously repaired areas since you purchased
the home.” The engineer’s report, therefore, is circumstantial evidence that the Nevilles were
aware of the structural problems, that they concealed them by initiating significant, but ultimately
temporary repairs, and that the defects became apparent only after Jadan moved into the home.
Moreover, notwithstanding that the seller’s disclosure statement was not a warranty regarding the
property’s condition, the Nevilles’ failure to disclose knowledge that they had about structural
problems is circumstantial evidence that they intended Jadan would rely on the seller’s disclosure
statement and make an offer to purchase the property.1

1
  The Nevilles argue that they are only liable for errors, inaccuracies, or omissions in the seller’s
disclosure report that they had personal knowledge of or would have any personal knowledge of
by the exercise of ordinary care. See Bergen, 264 Mich App at 385. However, the engineer did
not opine that if the Nevilles had his expertise, they would have known of the structural defects.
Instead, he opined that their awareness should have developed because of the substantial repairs
he detailed in his report.

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       The fact that Jadan eventually agreed to purchase the property “as is” is also not dispositive.
As explained by this Court:

       “As is” clauses allocate the risk of loss arising from conditions unknown to the
       parties. . . . “As is” clauses also transfer the risk of loss where the defect should
       have reasonably been discovered upon inspection, but was not. They do not,
       however, transfer the risk of loss where a seller makes fraudulent representations
       before a purchaser signs a binding agreement. [Lorenzo v Noel, 206 Mich App 682,
       687; 522 NW2d 724 (1994) (quotation marks and citations omitted).]

Here, the Nevilles claim that they had no knowledge of the structural defects when they signed the
seller’s disclosure statement, but the engineering report indicates that, considering the scope of the
structural issues and the evidence that repairs had been done on multiple occasions to correct the
issues, the Nevilles would have been aware of the issue. Therefore, the “as is” clause in the
purchase agreement would only become dispositive if Jadan’s fraud claim failed on some other
ground.

        Jadan’s fraud claim fails because he cannot show that he relied upon the representations in
the seller’s disclosure statement. The SDA creates a duty to disclose certain information, but it is
not an independent cause of action. Instead, as explained above, a claim for fraud requires that the
plaintiff acted in reliance upon the misrepresentation. See Alfieri, 295 Mich App at, 193. Here,
the record reflects that Jadan did not rely on the representations in the seller’s disclosure statement.
Instead, he personally inspected the property on multiple occasions and he had retained two
professional inspections of the property. As a result of those inspections, he engaged in additional
negotiations to fix issues identified. Thus, even viewing the facts in the light most favorable to
Jadan, he cannot show that he relied upon the representations in the seller’s disclosure statement.

       In sum, because Jadan did not present evidence to establish that there was a genuine issue
of material fact with regard to his various claims of fraud, the trial court did not err by granting
summary disposition.

       Affirmed. The Nevilles may tax costs as the prevailing parties. MCR 7.219(A).

                                                               /s/ Anica Letica
                                                               /s/ Deborah A. Servitto
                                                               /s/ Michael J. Kelly

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