Ana Jose v. Sebastian Malarz ( 2019 )

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
ANA JOSE, UNPUBLISHED
December 3, 2019
Plaintiff/Counterdefendant-
Appellee,
v No. 347154
Kent Circuit Court
SEBASTIAN MALARZ, LC No. 17-004766-CH
Defendant/Counterplaintiff-
Appellant.
Before: MARKEY, P.J., and BORRELLO and BOONSTRA, JJ.
BORRELLO, J. (dissenting).
In this matter, the trial court and the majority focus on defendant’s alleged lack of
cooperation. There is nothing per se wrong in such an examination, except if, as here, it leads to
conclusions that judicially alter the terms of the initial contract. Additionally, this emphasis on
the defendant’s alleged lack of cooperation is given far greater weight than the effects of
plaintiff’s various actions, which, simply stated, demonstrated that she did not accept the option
contract (an offer) on its own terms. As such, there was no formation of a binding contract of
purchase and sale triggering any obligation by defendant to participate in any sales transaction:
defendant’s conduct is completely irrelevant at this juncture where the sum total of the evidence
shows that plaintiff did not actually intend to go through with purchasing the property unless
defendant first agreed to her additional demands. No matter how the majority characterizes
plaintiff’s requests, I view these additional demands as adding additional contract conditions that
are nowhere to be found in the language of the option agreement. Moreover, I find troubling the
majority’s rule, granting plaintiff the ability to legally enforce any term that is “not prohibited”
by the contract. For these reasons, I respectfully dissent.
The evidence introduced at trial reflects that plaintiff expressed a desire to buy the
property but that her intent to purchase was, in actuality, conditioned on certain additional
requirements being met by defendant first. As an aside, it appears from the text messages
between the parties that plaintiff’s purported “acceptance” was equivocal in any event. It could
fairly be understood that plaintiff had indicated that she wanted to buy the property “as soon as”
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she sold her other property, and there was no evidence that she ever followed up with defendant
afterward by informing him that she had sold the other property and was actually ready to
proceed with the purchase of the property at issue in this case.
However, regardless of the level of clarity with which plaintiff expressed her bare
aspiration to purchase the property at some unspecified future time, her acts still did not
constitute a valid acceptance of the option because plaintiff attempted to impose additional
requirements on defendant and the evidence is clear that plaintiff had no intent of proceeding
with the purchase until these additional requirements were satisfied. Specifically, plaintiff
wanted defendant to provide her with proof that there were no outstanding past-due taxes on the
property, she wanted defendant to provide her with a written statement of the “payoff amount”
for the property, she wanted to be sure that the property was not subject to any liens, and she
wanted assurances that defendant could convey clear title. In essence, she was demanding that
defendant convey to her a warranty deed. I do not find any such requirement anywhere in the
language of the option. Simply stated, none of these additional demands, prudent as they may
have been, were terms contained in the language of the option. Furthermore, plaintiff explicitly
testified at trial that she did not want to simply tender payment to defendant by giving him a
check because there were “issues with taxes” and she “wanted to make sure that there were no
tax liens on the property.” Plaintiff also testified that she did not give the money to defendant
before the option expired because she “wanted to make sure that [she] got clear title, and he was
not going to be able to provide [her] that.” According to plaintiff, she expressly told defendant
that she could not “just give [him] a check” and that she wanted to “close at a title company.”
Again, these are all additional demands that were not incorporated into, or even mentioned in the
option.
Hence, plaintiff’s actions and communications to defendant, when considered
objectively, did not reflect an unequivocal acceptance of the existing terms of the option to
purchase but instead constituted an attempt to alter the terms of the option by requiring
additional written assurances and information from defendant before agreeing to go through with
the transaction. “A meeting of the minds is judged by an objective standard, looking to the
express words of the parties and their visible acts, not their subjective states of mind.” Klokan,
273 Mich App at 454 (quotation marks and citation omitted). Based on the record evidence, no
reasonable person in defendant’s shoes could have understood plaintiff’s communications to
have evidenced an unequivocal acceptance of the existing minimalistic terms of the option
contract, which were simply to “purchase the property for a price of $13,500” at “the end of the
36 month period.” “Substantial compliance with the terms of the option is not sufficient to
constitute an acceptance of the offer.” Bergman v Dykhouse, 316 Mich 315, 319; 25 NW2d 210
(1946) (quotation marks and citation omitted).
In Bergman, an option to purchase certain real property had been granted to Harry
Bergman in an instrument executed on March 20, 1945. Id. at 316. The option stated as follows:
For the sum of $25.00 the receipt of which is hereby acknowledged. The
undersigned hereby gives to Harry Bergman an option to purchase the following
described property for $2,250.00 cash;—North half of Northwest quarter of Sect.
Eleven (11), Township (4), Range Eleven West (11), located in Allegan county,
State of Michigan, containing 80 acres, more or less.
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In case of a purchase the undersigned agrees to pay one-half of the
surveying charges, but not more than $75.00.
Said option to be exercised within thirty (30) days. [Id. at 316-317
(quotation marks omitted).]
On April 9, 1945, Bergman purported to accept the option in the following letter sent by John
Vander Wal:
In behalf of Harry Bergman we are giving notice that he hereby exercises
the option given to him by you under date of March 20, 1945, for the purchase of
the following described property for the price of $2,250.00.
N. 1/2 of NW 1/4 of Sec. 11, Township 4, Range 11 West, located in
Allegan county, State of Michigan, containing 80 acres more or less.
We are prepared to close this deal as soon as the abstract can be
examined by us to see that you have good legal title to this property. Will you
please get in touch with us at once so that we can have the abstract for
examination? [Id. at 317 (quotation marks omitted; emphasis added).]
The abstract was delivered to Vander Wal, but the landowner conveyed the property to other
buyers on August 13, 1945. Id. Bergman tendered the price stated in his option after the
property had already been conveyed, and he initiated an action seeking either specific
performance of his option to purchase or damages. Id. at 317-318.
Our Supreme Court affirmed the dismissal of Bergman’s action and reasoned as follows:
The instant option contemplated a cash transaction and was silent as to the
furnishing of an abstract. It was required to be exercised within 30 days. Vander
Wal’s letter of acceptance of April 9th, though delivered within 30 days, altered
the terms of the option. Tender of the purchase price was not made within the
required time, but nearly four months later. It must therefore follow, as found by
the trial judge, that plaintiff did not exercise the option in accordance with its
terms, and is not entitled to either specific performance or damages. [Id. at 319-
320.]
In this case, the option to purchase only gave plaintiff the right to accept an offer to
purchase the property for $13,500. It did not contain any terms giving her the right to compel
defendant to comply with her additional requests for further information. Defendant clearly did
not accept the invitation to engage in further negotiations regarding the potential sale of the
property to plaintiff. While plaintiff may have had good reasons for desiring additional
information, she could not rely on the option language to provide her with a right to force the
sale at the stated price and with additional conditions. Therefore, by attempting to alter the
terms of the option, plaintiff did not effectuate a valid acceptance of the offer in compliance with
its terms, and the option did not ripen into a binding contract for purchase of the property. Id.;
Le Baron Homes, 319 Mich at 313, 315. The evidence clearly reflects that there was no meeting
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of the minds between the parties and that no contract to purchase was formed. Kloian, 273 Mich
App at 452. The majority reaches the opposite conclusion by cherry picking isolated pieces of
testimony and ignoring the effect of the sum total of plaintiff’s actions and communications.
Unlike the majority, I find Bergman indistinguishable in any material way from the
factual circumstances in this case. Although, as the majority states, plaintiff “repeatedly sought
to arrange the sale of the property, within the required time frame, in the usual manner of a real
estate closing,” plaintiff’s own trial testimony demonstrates that her attempts to “arrange” the
sale were merely demands that defendant comply with her additional conditions and that in
reality, she had no intent (and by not being able to place the sale price into an escrow account
producing the sale price did not have the financial means to complete the transaction) to go
through with the sale unless defendant first met these additional demands. This was similar to
the fact pattern presented in the letter in Bergman which our Supreme Court used to demonstrate
that Bergman had no intent to close on the sale unless he could first examine the abstract to be
assured that clear title would be conveyed.
The majority, instead of viewing plaintiff’s demands as additional conditions,
characterizes them as “inquiries” and further states that “plaintiff was not prohibited by the terms
of the option from asking defendant for additional information.” I do not subscribe to such an
approach to contract interpretation. By trying to incorporate her additional demands into the
sales transaction even though they were not part of the option contract, plaintiff did not accept
the option in strict compliance with its terms and the option did not ripen into a binding bilateral
contract of purchase. Le Baron Homes, 319 Mich at 313, 315. The lack of cooperation by
defendant to which the majority refers was defendant’s refusal to accede to plaintiff’s legally
unenforceable demands so, regardless of how the majority downplays the significance of
plaintiff’s additional demands, the majority has effectively ruled that defendant was legally
obligated to perform on plaintiff’s additional conditions and made these conditions legally
enforceable parts of the contract on the ground that the addition of these terms was not expressly
prohibited. In my opinion, such a holding creates a problematic new rule by which a party to a
contract can legally bind the other party to perform any additional term that is not expressly
prohibited by the contract.
Clearly, such a holding is contrary to well-established principles of contract law. An
essential element of contract formation is “mutual assent or a meeting of the minds on all the
essential terms.” Kloian, 273 Mich App at 452. “Where mutual assent does not exist, a contract
does not exist.” Quality Products & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 372;
666 NW2d 251 (2003). It would be illogical to consider a term that is not even mentioned in the
contract to actually be an enforceable part of the parties’ mutual agreement simply because the
parties did not include contract language expressly prohibiting such a term. Rather, courts
enforce unambiguous contractual provisions as written (unless the provision violates law or
public policy) and must not rewrite the parties’ agreement. Rory v Continental Ins Co, 473 Mich
457, 468-470; 703 NW2d 23 (2005).
To be clear, my conclusions in this case are not based on plaintiff’s lack of tender per se;
the option was silent about precisely when and how the purchase price was to be tendered. As
this Court has previously stated,
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[w]here the terms of the option require that payment of the purchase money, or a
part thereof, accompany the election to exercise the option, such provision must
ordinarily be complied with; on the other hand, its terms may merely require that
notice be given of the exercise of the option and leave the matter of the payment
of the purchase money to be thereafter settled as in the case of the ordinary
executory contract of sale. In the first instance payment is a condition precedent
to the creation of a contract. In the second, it is a condition subsequent to
creation. [Catsman, 8 Mich App at 567 (quotation marks and citation omitted).]
Thus, it appears that plaintiff conceivably could have accepted the option and created a valid
binding contract before actually tendering payment to defendant. However, in this case,
plaintiff’s communications with defendant reflected more than a mere attempt to settle “the
matter of the payment of the purchase money.” Rather, plaintiff was engaging in further
negotiations to add additional terms to the contract in the form of warranties and additional
assurances from defendant. Plaintiff’s attempt to add additional terms and conditions to the
agreement evidenced her reluctance to accept the agreement that she had made and her desire to
rewrite the option contract rather than accept the option on its terms. Here, plaintiff’s failure to
express an unequivocal acceptance of the option, expressing instead only an intent to accept the
option if her additional conditions were met first, is the decisive factor in this case. In order to
accept the option, plaintiff needed to make an unequivocal acceptance of the existing terms of
the option—i.e., express an unconditional willingness to purchase the property for $13,500. See
Kloian, 273 Mich App at 453-454 (“[A]n acceptance sufficient to create a contract arises where
the individual to whom an offer is extended manifests an intent to be bound by the offer, and all
legal consequences flowing from the offer, through voluntarily undertaking some unequivocal
act sufficient for that purpose.”) (quotation marks and citation omitted; alteration in original).
There is no evidence that defendant prevented plaintiff from performing such an act of
acceptance. Because there was no acceptance, no contract for sale was formed. Because there
was no contract for sale, defendant never became legally obligated to cooperate with effectuating
a sale of the property. For these reasons, I respectfully dissent.
For the reasons stated above, I would reverse.
/s/ Stephen L. Borrello
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