Court Opinion

ID: 4412195
Source: CourtListenerOpinion
Date Created: 2019-06-28 09:05:50.121059+00
Date Added: 2024-06-11T09:37:06.934568
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

JOHN L. ROSEMAN,                                                   UNPUBLISHED
                                                                   June 27, 2019
              Plaintiff-Appellant,

v                                                                  No. 344677
                                                                   Oakland Circuit Court
GWEN WEIGER, KELLER WILLIAMS, doing                                LC No. 2018-164581-CH
business as KELLER WILLIAMS REALTY,
INC., CURTIS-BOTSFORD REAL ESTATE,
LLC, KELLER WILLIAMS REALTY WEST
BLOOMFIELD MARKET CENTER, PATRICIA
A. ADAMS, and PATRICK BURGESS,

              Defendants-Appellees.

Before: CAMERON, P.J., and MARKEY and BORRELLO, JJ.

PER CURIAM.

        Plaintiff appeals as of right the trial court’s orders granting defendants’ motion to set
aside a default against Keller Williams, doing business as Keller Williams Realty, Inc.
(collectively, Keller Williams), and granting defendants’ motion for summary disposition under
MCR 2.116(C)(7). For the reasons set forth in this opinion, we affirm.

                                      I. BACKGROUND

        This case arises out of plaintiff’s purchase of a personal residence from defendants
Patricia Adams and her husband, Patrick Burgess (sellers) in 2016. Sellers had completed a
Seller’s Disclosure Statement (SDS) on August 8, 2015, which they had updated on December
30, 2015. Pertinent to the issues here, the SDS indicated that the house had a geothermal heating
system that was in working order. Further, the SDS indicated that there were features of the
property deemed in common with the adjoining landowners, including roads, whose use or
responsibility for maintenance may have an effect on the property. In regards to this disclosure,
the SDS referred to an attached property maintenance agreement, which indicated that ingress
and egress to the property was by means of a private easement road. The property maintenance

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agreement further stated that the owner of the property, along with owners of other parcels
serviced by the private road, was responsible for paying maintenance costs for the private road.
This property maintenance agreement had also been recorded with the Oakland County Register
of Deeds.

        In May 2016, plaintiff and sellers executed a purchase agreement for the sale of the
subject property. Defendant Gwen Weiger, an independent agent with Keller Williams Realty
West Bloomfield Market Center, represented sellers in the transaction. The record reflects that
Keller Williams Realty West Bloomfield Market Center was independently owned and operated
by Curtis-Botsford Real Estate, LLC, and that Keller Williams was a franchiser that licensed the
rights to use its trademarks and logos. Pertinent to this appeal, the purchase agreement contained
an “as-is-condition” clause, providing:

       AS IS CONDITION: Purchaser acknowledges that Seller has provided
       Purchaser a required Seller’s Disclosure Statement. Purchaser has been afforded
       an independent inspection of the property and the Purchaser affirms that
       Purchaser has examined the above described property and is satisfied with the
       physical condition of the structure thereon and purchases said property in an “AS
       IS CONDITION,” subject only to the rights of a property inspection. It is further
       agreed that Keller Williams Realty and its agents have made no representations or
       warranties of any kind nor assume any responsibility for representations made by
       Seller or any cooperating broker pertaining to the condition of the property. It is
       further understood that no promises have been made other than those that are in
       writing and signed by all parties involved (NO VERBAL AGREEMENTS WILL
       BE BINDING).

The purchase agreement also contained a release, providing:
       RELEASE: Purchaser recognizes that Seller has provided Purchaser a required
       Seller’s Disclosure Statement. Purchaser has been afforded the right to
       independent inspections of the property and Purchaser affirms that property is
       being purchased “AS IS” and hereby knowingly waives, releases and relinquishes
       any and all claims or causes of action against Keller Williams, its officers,
       directors, employees and independent sales associates. Purchaser and Seller
       recognize and agree that brokers and sales associates involved in this transaction
       are not parties to this Agreement. Broker and sales associates specifically
       disclaim any responsibility for the condition of the property or for the
       performance of the Agreement by the parties. Keller Williams assumes no
       liability for performance of any inspection or statements on Seller’s disclosure
       form.

Plaintiff, in addition to signing the purchase agreement, specifically initialed both the release and
“as is” clauses. The purchase agreement also contained the following arbitration clause:
        ARBITRATION:

       A. Any claim of Seller or Buyer arising out of this agreement relating to the
       disposition of the earnest money deposit or the physical condition of the property
       covered by this agreement shall be arbitrated in accordance with the rules, then in

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       effect, adopted by the American Arbitration Association. This is a voluntary
       agreement between the Buyer and Seller and the failure to agree to arbitrate does
       not affect the validity of this agreement. This agreement is made subject to and
       incorporates the provisions of Michigan law governing arbitration. This provision
       shall survive closing.

This arbitration clause was expressly made part of the purchase agreement by checking the box
indicating its inclusion rather than the alternate paragraph that stated, “The parties do not wish to
agree to arbitrate future disputes.”

        In December 2016, several months after the closing, the geothermal furnace allegedly
failed. Plaintiff maintained that he was informed that it was necessary to replace the unit.

        On March 23, 2018, plaintiff initiated the instant action by filing a complaint naming
Weiger, Keller Williams, Curtis-Botsford Real Estate, LLC, and Keller Williams Realty West
Bloomfield Market Center as defendants. In this complaint, plaintiff alleged that defendants had
violated MCL 560.261 by failing to represent in the purchase agreement that the subject property
was located on a private road. Plaintiff sought to void the purchase agreement on this basis and
requested damages equal to the purchase price, the mortgage payments he had made on the
home, and the cost of repairing the private road.

        On April 11, 2018, before defendants filed an answer, plaintiff filed a first amended
complaint adding claims against sellers and several new claims against the realty companies and
agent. The amended complaint alleged that before execution of the purchase agreement,
defendants knowingly made representations attesting to the proper working condition of the
property’s geothermal heating system, even though defendants knew that these representations
were false and that the furnace was broken or “showed signs of potential breakdown.” The
amended complaint further alleged that defendants failed to represent in the purchase agreement
that the property was located on a private road. Plaintiff also alleged in the amended complaint
that sellers omitted facts regarding ownership of the private road and its condition. Plaintiff
alleged a violation of § 5 of the Seller Disclosure Act, MCL 565.951 et seq., fraudulent
misrepresentation, silent fraud, negligent misrepresentation, negligent infliction of mental and
emotional distress, unjust enrichment, and a violation of § 261 of the Land Division Act, MCL
560.101 et seq. He sought $5,000,000 in damages; to void the property sale; a refund of all
mortgage and other payments made with respect to the transaction; and an award of “statutory,
punitive, treble, economic, and non-economic damages in order to penalize Defendants.”

        On May 2, 2018, in lieu of filing an answer, defendants moved for summary disposition
pursuant to MCR 2.116(C)(7), (8), and (10). As pertinent to the issues now on appeal,
defendants argued that plaintiff’s claims against the realty companies and real estate agent were
barred by the release contained in the purchase agreement and that any claims against sellers
regarding the geothermal heating system or private road were subject to arbitration pursuant to
the agreement’s arbitration clause. Plaintiff opposed defendants’ motion for summary
disposition, apparently arguing that his complaint was not subject to the release or arbitration
clauses contained in the purchase agreement because the agreement was invalid, unenforceable,
or void as it was founded on defendants’ fraudulent misrepresentations and omissions regarding
the nature of the private road and the condition of the heating system.

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        The trial court granted defendants’ motion for summary disposition under MCR
2.116(C)(7), concluding that the claims against the realty companies and Weiger were barred by
the valid release contained in the purchase agreement and that the claims against sellers were
required to be resolved in arbitration because they fell within the scope of the arbitration clause
in the purchase agreement. This appeal ensued.

                            II. ORDER SETTING ASIDE DEFAULT

        As an initial matter, plaintiff raises several arguments that essentially constitute a
challenge to the propriety of the trial court’s decision to set aside a default that had been entered
against Keller Williams.

        The trial court entered a default against Keller Williams on June 6, 2018. The following
day, defendants moved to set aside the default on the ground that it was entered erroneously and
was a clerical error. Defendants noted that all defendants, including Keller Williams, had jointly
moved for summary disposition within 21 days of plaintiff’s filing of his first amended
complaint and that they therefore had timely responded to and defended against plaintiff’s first
amended complaint pursuant to the Michigan Court Rules. Following a hearing on the record at
which plaintiff was present, the trial court granted the motion and set aside the default on the
basis of defendants’ timely filing of their motion for summary disposition.

        This Court’s review of a trial court’s decision on a motion to set aside a default is for an
abuse of discretion. Huntington Nat’l Bank v Ristich, 292 Mich. App. 376, 383; 808 NW2d 511
(2011). “A trial court abuses its discretion when it reaches a decision that falls outside the range
of principled outcomes.” Id. Issues of law, such as the interpretation and application of court
rules, are reviewed de novo. Id.

        Pursuant to MCR 2.603(A)(1), a default must be entered against a party if it is established
that “a party against whom a judgment for affirmative relief is sought has failed to plead or
otherwise defend as provided by [the Michigan Court Rules].” However, under MCR
2.603(D)(3), “the court may set aside a default and a default judgment in accordance with MCR
2.612.” MCR 2.612(A)(1) in turn provides that “[c]lerical mistakes in judgments, orders, or
other parts of the record and errors arising from oversight or omission may be corrected by the
court at any time on its own initiative or on motion of a party and after notice, if the court orders
it.” Further, under MCR 2.612(C)(1)(a), “the court may relieve a party . . . from a final
judgment, order, or proceeding” on the grounds of mistake or inadvertence.

        In this case, although defendants never filed an answer, they moved for summary
disposition on all of plaintiff’s claims after plaintiff filed his amended complaint. It is a
fundamental concept of civil procedure that a party may permissibly move for summary
disposition under MCR 2.116 before filing an answer in response to a complaint. See MCR
2.116(D)(1) and (2) (discussing motions filed under MCR 2.116 prior to the party’s first
responsive pleading and when certain grounds for summary disposition must be raised); MCR
2.108(A)(1) (“A defendant must serve and file an answer or take other action permitted by law
or these rules within 21 days after being served with the summons and a copy of the complaint in
Michigan . . .”) (emphasis added); MCR 2.108(C)(1) (discussing the effect on timing
requirements for filing a responsive pleading if “a motion under MCR 2.116 made before filing a

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responsive pleading is denied”); Huntington Nat’l Bank, 292 Mich. App. at 387 (recognizing that
certain actions “alter[]the time for filing an answer, such as motions for summary disposition
under MCR 2.116 . . .”).

        The next question becomes whether defendants’ summary disposition constituted a
timely response under our court rules. Plaintiff’s original complaint, which named Keller
Williams as a defendant, was filed on March 23, 2018. Generally, a “defendant must serve and
file an answer or take other action permitted by law or these rules within 21 days after being
served with the summons and a copy of the complaint in Michigan . . .” MCR 2.108(A)(1).
Plaintiff attempted to effectuate service of the complaint against Keller Williams by certified
mail, return receipt requested, sent to its business address in Texas. It appears from the record
that receipt occurred on March 29, 2018. “If service of the summons and a copy of the
complaint is made outside Michigan, or if the manner of service used requires the summons and
a copy of the complaint to be sent by registered mail addressed to the defendant, the defendant
must serve and file an answer or take other action permitted by law or these rules within 28 days
after service.” MCR 2.108(A)(2).1

       However, these time limitations were modified by the effect of plaintiff’s amended
complaint, which was filed on April 11, 2018. See MCR 2.118(A)(1) (“A party may amend a
pleading once as a matter of course within 14 days after being served with a responsive pleading
by an adverse party.”). Plaintiff’s amended complaint superseded the original complaint and that
complaint is considered abandoned or withdrawn. MCR 2.118(A)(4); Grzesick v Cepela, 237
Mich. App. 554, 562; 603 NW2d 809 (1999).

       MCR 2.108(C)(3) provides as follows:

              (C) Effect of Particular Motions and Amendments. When a motion or an
       amended pleading is filed, the time for pleading set in subrule (A) is altered as
       follows, unless a different time is set by the court:

                                             * * *

               (3) The response to a supplemental pleading or to a pleading amended
       either as of right or by leave of court must be served and filed within the time
       remaining for response to the original pleading or within 21 days after service of
       the supplemental or amended pleading, whichever period is longer.

      In this case, there is a proof of service indicating that plaintiff served the amended
complaint on the same day that the amended complaint was filed, April 11, 2018.2 Thus,

1
  “If a rule uses the term ‘registered mail’, that term includes the term ‘certified mail’, and the
term ‘registered mail, return receipt requested’ includes the term ‘certified mail, return receipt
requested’.” MCR 2.105(K)(1).
2
  Defendants claim that the amended complaint was not actually served on any defendant and
that defendants obtained the amended complaint directly from the trial court. However,

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defendants had 21 days after April 11, which was a longer period than the time remaining for
responding to the original complaint, in which to respond to the amended complaint. MCR
2.108(C)(3). Defendants, including Keller Williams, filed their motion for summary disposition
on May 2, 2018, within 21 days of the date plaintiff filed his amended complaint. This
constituted a satisfactory and timely response under our Court rules. MCR 2.108(A)(1) and (2);
MCR 2.108(C)(3); Huntington Nat’l Bank, 292 Mich. App. at 387.

         Accordingly, it was improper to enter a default against Keller Williams because it did not
fail to “otherwise defend” against the action as provided by our court rules. MCR 2.603(A)(1);
Huntington Nat’l Bank, 292 Mich. App. at 388 (“This Court has previously interpreted MCR
2.603(A)(1) as meaning that a party must not be defaulted if the party pleads or, as an alternative
to filing a responsive pleading, otherwise defends the action.”). The trial court recognized that
the default was mistakenly entered and did not abuse its discretion by setting the default aside.
MCR 2.603(D)(3); MCR 2.612(A)(1), (C)(1)(a).

                  III. SUMMARY DISPOSITION UNDER MCR 2.116(C)(7)

        Plaintiff next claims that the trial court erred in granting defendants’ motion for summary
disposition pursuant to MCR 2.116(C)(7).

        We review a trial court’s decision to grant summary disposition de novo. Saffian v
Simmons, 477 Mich. 8, 12; 727 NW2d 132 (2007). Under MCR 2.116(C)(7), a party may move
for summary disposition on the ground that a claim is barred because of a release or an
agreement to arbitrate. In evaluating a motion brought under subsection (C)(7), the court must
consider the evidence submitted by the parties in support of or in opposition to the motion, to the
extent that the content or substance would be admissible as evidence. MCR 2.116(G)(5), (6).
This Court also reviews de novo the question whether a particular issue is subject to arbitration.
Altobelli v Hartmann, 499 Mich. 284, 295; 884 NW2d 537 (2016). Because “[a]rbitration is a
matter of contract,” we interpret an arbitration agreement according to the same legal principles
applicable to contract interpretation. Id. (quotation marks and citation omitted). The “primary
task is to ascertain the intent of the parties at the time they entered in to the agreement . . . by
examining the language of the agreement according to its plain and ordinary meaning.” Id.
Similarly, “[t]he scope of a release is controlled by the intent of the parties as it is expressed in
the release,” and thus, we must look to the language of the release. Gortney v Norfolk & Western
R Co, 216 Mich. App. 535, 540; 549 NW2d 612 (1996). If the text in the release is unambiguous,
we determine the parties’ intent from the language of the release itself. Id. We review the
interpretation of contractual language de novo. Altobelli, 499 Mich. at 295.

                     A RELEASE—REALTY COMPANIES AND AGENT

defendants also indicated that they are not challenging the method of service on appeal. Thus,
for purposes of our analysis, we simply assume service occurred on April 11, 2018.

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        The trial court did not err by concluding that plaintiff’s claims against the realty
companies and Weiger were barred by the release in the purchase agreement. As previously
noted, the release clause stated
        RELEASE: Purchaser recognizes that Seller has provided Purchaser a required
        Seller’s Disclosure Statement. Purchaser has been afforded the right to
        independent inspections of the property and Purchaser affirms that property is
        being purchased “AS IS” and hereby knowingly waives, releases and relinquishes
        any and all claims or causes of action against Keller Williams, its officers,
        directors, employees and independent sales associates. Purchaser and Seller
        recognize and agree that brokers and sales associates involved in this transaction
        are not parties to this Agreement. Broker and sales associates specifically
        disclaim any responsibility for the condition of the property or for the
        performance of the Agreement by the parties. Keller Williams assumes no
        liability for performance of any inspection or statements on Seller’s disclosure
        form.

Plaintiff signed the purchase agreement and specifically initialed the release clause.

        The validity of a release is controlled by the parties’ intent. Batshon v Mar-Que Gen
Contractors, Inc, 463 Mich. 646, 649 n 4; 624 NW2d 903 (2001). “A release is valid if it is fairly
and knowingly made.” Brooks v Holmes, 163 Mich. App. 143, 145; 413 NW2d 688 (1987). “A
release is invalid if (1) the releaser was acting under duress, (2) there was misrepresentation as to
the nature of the release agreement, or (3) there was fraudulent or overreaching conduct to secure
the release.” Id.

        In this case, the language of the release evidences a clear intent to waive and release “all
claims or causes of action” against Weiger and the realty company defendants.3 The release
further states, “Broker and sales associates specifically disclaim any responsibility for the
condition of the property . . .” The broad and inclusive language of the release evidences
defendants’ intent to disclaim all liability and plaintiff’s intent to release the realty companies
and agent from any and all claims or causes of action, arising out of the transaction and the
condition of the property. This release language necessarily includes the claims asserted in
plaintiff’s complaint stemming from the alleged misrepresentations or omissions regarding the
condition of the property. See Dresden v Detroit Macomb Hosp Corp, 218 Mich. App. 292, 297-
298; 553 NW2d 387 (1996) (discussing the broad nature of release language mentioning “ ‘any

3
  Based on the previously described relationships between the realty company defendants, we
conclude that they are sufficiently related to fall within the scope of the entities released in this
clause. Indeed, plaintiff appears to not meaningfully distinguish between these various
defendants. We also conclude that Weiger falls within the scope of this language. Plaintiff has
not advanced any argument that the release would not apply to certain of these defendants even if
it were considered valid. Therefore, we treat as abandoned any potential argument that the
release language somehow does not apply to all of these defendants. Houghton v Keller, 256
Mich. App. 336, 339-340; 662 NW2d 854 (2003).

                                                -7-
and all’ causes of action” and concluding that it applied to bar a fraud claim); Heritage
Resources, Inc v Caterpillar Fin Servs Corp, 284 Mich. App. 617, 642; 774 NW2d 332 (2009)
(“ ‘[T]here cannot be any broader classification than the word “all.” In its ordinary and natural
meaning, the word “all” leaves no room for exceptions.’ ”) (citation omitted). Accordingly, the
release foreclosed plaintiff’s claims against the realty companies and agent.

        Plaintiff has not presented any evidence that the release was not “fairly and knowingly
made,” that there was a misrepresentation regarding “the nature of the release agreement,” that
there was other fraudulent conduct employed “to secure the release,” or that he acted under
duress. Brooks, 163 Mich. App. at 145 (emphasis added). Although plaintiff has made
allegations that misrepresentations were made about the condition of the property, he has not
made any claims, or provided any evidence, directed at showing that there were
misrepresentations related to the substance or procurement of the release itself. The meaning
and effect of the release language is also clear and understandable; it is not misleading. We note
that the clause was captioned “RELEASE,” putting plaintiff on clear notice regarding the release.
And plaintiff does not appear to argue that he did not know or understand that he was releasing
his claims against the realty companies and agent when he signed the purchase agreement.
Finally, there is no indication that the release was a product of duress. To succeed on a claim of
duress, plaintiff would have had to show that he was “illegally compelled or coerced to act by
fear of serious injury to their persons, reputations, or fortunes.” Farm Credit Servs of Mich’s
Heartland, PCA v Weldon, 232 Mich. App. 662, 681; 591 NW2d 438 (1998) (quotation marks and
citation omitted). Plaintiff has provided no evidence that defendants engaged in such conduct to
induce him to sign the release. Thus, there is no indication that the release was invalid on any of
these grounds. See Dombrowski v City of Omer, 199 Mich. App. 705, 710; 502 NW2d 707 (1993)
(noting that rescission of a release would be appropriate only if defendants had “fraudulently
induced plaintiff into signing the document without reading it or otherwise misrepresented the
contents of the document”).

       The trial court did not err by granting summary disposition under MCR 2.116(C)(7) in
favor of the realty companies and Weiger on the ground that the claims against these defendants
were barred by the valid release contained in the purchase agreement.

                       B. AGREEMENT TO ARBITRATE—SELLERS

        The trial court also did not err by concluding that plaintiff’s claims against sellers were
subject to arbitration.

        “The existence of an arbitration agreement and the enforceability of its terms are judicial
questions for the court, not the arbitrators.” Fromm v Meemic Ins Co, 264 Mich. App. 302, 305;
690 NW2d 528 (2004); see also MCL 691.1686(2) (“The court shall decide whether an
agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.”). “In
deciding the threshold question of whether a dispute is arbitrable, a reviewing court must avoid
analyzing the substantive merits of the dispute.” Altobelli, 499 Mich. at 296. “If the dispute is
arbitrable, the merits of the dispute are for the arbitrator.” Id. (quotation marks and citation
omitted). “To ascertain the arbitrability of an issue, [a] court must consider whether there is an
arbitration provision in the parties’ contract, whether the disputed issue is arguably within the
arbitration clause, and whether the dispute is expressly exempt from arbitration by the terms of

                                                -8-
the contract.” Fromm, 264 Mich. App. at 305-306 (quotation marks and citation omitted;
alteration in the original). “[A] court should not interpret a contract's language beyond
determining whether arbitration applies and should not allow the parties to divide their disputes
between the court and an arbitrator.” Id. at 306. “An arbitrator shall decide whether a condition
precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement
to arbitrate is enforceable.” MCL 691.1686(3).

       In this case, as previously noted, the purchase agreement between plaintiff and sellers
contained the following arbitration provision that was expressly made part of their agreement:

       ARBITRATION:

       A. Any claim of Seller or Buyer arising out of this agreement relating to the
       disposition of the earnest money deposit or the physical condition of the property
       covered by this agreement shall be arbitrated in accordance with the rules, then in
       effect, adopted by the American Arbitration Association. This is a voluntary
       agreement between the Buyer and Seller and the failure to agree to arbitrate does
       not affect the validity of this agreement. This agreement is made subject to and
       incorporates the provisions of Michigan law governing arbitration. This provision
       shall survive closing.

Plaintiff’s claims against sellers involving the heating system and private road relate to the
physical conditions of the property and thus are “arguably within the arbitration clause.”
Fromm, 264 Mich. App. at 305-306 (quotation marks and citation omitted). There is no indication
in the language of the agreement to arbitrate that such claims are exempt from arbitration. Id. at
306. Therefore, plaintiff’s claims must be resolved in arbitration. Id. To the extent that plaintiff
argues that the arbitration agreement is unenforceable on the ground that the purchase agreement
itself was somehow invalid, these are matters for the arbitrator. MCL 691.1686(3). The trial
court did not err by concluding that plaintiff’s claims against sellers were required to be resolved
in arbitration.

                                       IV. CONCLUSION

        The trial court’s rulings were not erroneous, and we affirm in all respects. Finally, we
note that defendants have argued in their brief on appeal that these proceedings are vexatious and
that we should take disciplinary action against plaintiff pursuant to MCR 7.216(C)(1). However,
we decline to consider this request because defendants have not properly presented this request
to this Court under MCR 7.211(C)(8).

       Affirmed.

                                                             /s/ Thomas C. Cameron
                                                             /s/ Jane E. Markey
                                                             /s/ Stephen L. Borrello

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