Leonardo Harper LLC v. Landmark Commercial Real Estate Services ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
LEONARDO HARPER LLC, UNPUBLISHED
March 21, 2017
Plaintiff-Appellant,
v No. 329338
Macomb Circuit Court
LANDMARK COMMERCIAL REAL ESTATE LC No. 2014-000805-CB
SERVICES INC., JOHN KELLO, and
CLINTHARP LLC,
Defendant-Appellees.
Before: TALBOT, C.J., and MURRAY and BOONSTRA, JJ.
PER CURIAM.
Plaintiff Leonardo Harper LLC (Harper) appeals as of right an order denying its motion
for summary disposition and granting summary disposition pursuant to MCR 2.116(C)(10) to
defendants Landmark Commercial Real Estate Services, Inc., John Kello, and Clintharp, LLC.
For the reasons stated herein, we affirm.
I. FACTS AND PROCEDURAL HISTORY
This case arises from a real estate development deal that culminated in a property sale.
Nicholas Lavdas, the owner of Harper, owned two parcels of vacant land in Clinton Township.
Kello, a real estate broker with whom Lavdas had previously worked, approached Lavdas about
the possibility of developing Lavdas’s vacant land into a Family Dollar Store (FDS). Kello, on
behalf of his employer Landmark, entered into an agreement with Lavdas. In the agreement,
Landmark stated that it “represents and has procured [FDS] as a prospective tenant” for Lavdas’s
vacant land. The agreement also specified that in the event FDS signed a lease for the property,
Lavdas agreed to pay Landmark “a leasing/brokerage commission.”
Kello provided Lavdas with FDS’ prototypical store plans, but Michael Gordon—
Lavdas’s architect for the development project—concluded that a store with FDS’ prototypical
layout would not fit on Lavdas’s two parcels of land and that an additional parcel of land was
necessary to accommodate the store. Gordon advised Kello of that fact, and Kello asked Lavdas
to prepare a site plan using his two parcels of land as well as an adjacent parcel of land. Lavdas
attempted to buy an adjacent parcel of land, but after months of negotiations, Lavdas was unable
to acquire an adjoining parcel of land for an economically feasible price. Accordingly, Kello
discussed with Lavdas a potential sale of his two parcels to another party that was interested in
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entering into a lease with FDS on the property and introduced Lavdas to the interested buyer,
Isam Yaldo, Clintharp’s principal.
Lavdas and Clintharp entered into an agreement for the sale of Lavdas’s two parcels of
land and signed a purchase agreement that provided, in part, that “the intended use of the
Property and other property which Buyer may acquire shall be a retail building for the operation
of a Family Dollar store.” The agreement also specified that “[Lavdas] shall be responsible for
paying a broker commission of six percent (6%) of the gross sales price at Closing to Landmark
[] who represents only [Clintharp] in this transaction.” Further, pursuant to the agreement,
Clintharp had 180 days to inspect the two parcels of land and the sale was to be closed 30 days
after Clintharp provided written notice that it was going to purchase. During the inspection
period, Clintharp sought variances from the Clinton Township Board of Appeals in order to build
a store for FDS utilizing only Lavdas’s two parcels of land, and Lavdas was advised that
Clintharp was seeking a variance and that the variance had been approved. Clintharp eventually
exercised its right under the purchase agreement, and the sale of Lavdas’s two parcels of land
was completed.
On March 6, 2014, plaintiff filed its complaint asserting that Kello made several material
misrepresentations to plaintiff while acting as its agent “and/or fiduciary” during the real estate
transactions. Plaintiff alleged that in an effort to induce plaintiff into selling the property so that
Clintharp, rather than plaintiff, could secure the benefit of FDS as a lease tenant, Kello falsely
represented to plaintiff that: (1) plaintiff’s property was not large enough to lease to FDS, (2)
plaintiff had to acquire adjacent property in order to develop an FDS store, (3) and that Clintharp
intended to acquire a third parcel of land in order to develop an FDS store on plaintiff’s property.
Plaintiff claimed to have relied on these alleged misrepresentations when it attempted to acquire
the adjacent property and agreed to sell the two parcels to Clintharp. Based on these allegations,
plaintiff made claims of: fraud/misrepresentation against Landmark and Clintharp, respondent
superior against Landmark, negligent supervision against Landmark, fraud in the inducement
against Kello, Landmark, and Clintharp, silent fraud against Landmark and Kello, breach of
fiduciary duties against Landmark and Kello, tortious interference with a business relationship or
expectancy against Kello, Landmark, and Clintharp, statutory and/or common law conversion
against Kello, Landmark, and Clintharp, and civil conspiracy and/or concert of action against
Kello, Landmark, and Clintharp.
Defendants subsequently filed a motion for summary disposition pursuant to MCR
2.116(C)(10), asserting “[t]he nexus of Plaintiff’s claims is that Landmark and Kello breached
their duties owed to the Plaintiff as its alleged agents by misrepresenting” certain information to
plaintiff. However, defendants argued that, “Plaintiff’s claims fail because Landmark and Kello
were never the Plaintiff’s agents.” In response, plaintiff filed a motion for partial summary
disposition on its fraud, breach of fiduciary duty, and tortious interference with a business
expectancy claims, arguing “there is no question of fact under Michigan law that Kello was, in
fact, the broker for [plaintiff] at all relevant times” and “there is no question of fact on liability
for fraud.” Plaintiff argued that Kello’s actions clearly indicated an agency relationship existed
between the parties, and pointed to documentary evidence and Kello’s deposition testimony to
support its contention.
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The trial court held a hearing on the motions and issued a written opinion and order
denying plaintiff’s partial motion for summary disposition and granting summary disposition to
defendants pursuant to MCR 2.116(C)(10). In its opinion, the trial court found that “there is no
genuine issue of material fact that Defendant Kello was not Plaintiff’s agent,” so held that
defendants were entitled to summary disposition on plaintiff’s claims of respondent superior,
negligent supervision, breach of fiduciary duties, and silent fraud, as they were “based [on] the
premise that Landmark/Defendant Kello were its agent” or broker. The trial court also found
that plaintiff failed to establish that Kello made the alleged misrepresentation, so granted
defendants’ motion for summary disposition as to plaintiff’s claims for fraud/misrepresentation
and fraud in the inducement. For similar reasons, the trial court found defendants were entitled
to summary disposition of plaintiff’s claims for tortious interference, conversion, and conspiracy
and concert or action.
Plaintiff filed a motion for reconsideration asking the court to reconsider its order
granting defendants’ motion for summary disposition and denying plaintiff’s motion for partial
summary disposition, but the court entered a written opinion and order denying plaintiff’s motion
for reconsideration. This appeal then resulted. 1
II. ANALYSIS
A. AGENCY
Plaintiff argues the trial court erred in concluding that there was no genuine issue of
material fact regarding whether an agency relationship existed between the parties or whether
Kello made the alleged misrepresentations.
This Court reviews a trial court’s decision on a motion for summary disposition de novo.
Johnson v Recca, 492 Mich 169, 173; 821 NW2d 520 (2012). Summary disposition may be
granted when, “[e]xcept as to the amount of damages, there is no genuine issue as to any material
fact, and the moving party is entitled to judgment or partial judgment as a matter of law.” MCR
2.116(C)(10). To determine whether the movant was entitled to judgment as a matter of law, this
Court reviews the record in the same manner as the trial court. Morales v Auto-Owners Ins, 458
Mich 288, 294; 582 NW2d 776 (1998). Review is limited to the evidence that had been
presented to the trial court at the time the motion was decided. Innovative Adult Foster Care, Inc
v Ragin, 285 Mich App 466, 476; 776 NW2d 398 (2009). A genuine issue of material fact exists
when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an
issue upon which reasonable minds could differ. Debano-Griffin v Lake County, 493 Mich 167,
175; 828 NW2d 634 (2013).
Whether an implied agency exists is a factual determination. AFP Specialties, Inc v
Vereyken, 303 Mich App 497, 505; 844 NW2d 470 (2014). If the record is conflicting, the
existence of an agency relationship is for a jury to decide. Meretta v Peach, 195 Mich App 695,
697; 491 NW2d 278 (1992). However, “where the relationship of the parties has been defined
1
On appeal, plaintiff does not challenge the trial court’s denial of its motion for reconsideration.
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by written agreement, it is the province of the trial judge to determine the relationship.” Birou v
Thompson-Brown Co, 67 Mich App 502, 506-507; 241 NW2d 265 (1976), citing Keiswetter v
Rubenstein, 235 Mich 36, 42; 209 NW 154 (1926).
An agency relationship is “a fiduciary relationship created by express or implied contract
or by law, in which one party (the agent) may act on behalf of another party (the principal) and
bind that other party by words or actions.” Breighner v Mich High Sch Athletic Ass’n, 255 Mich
App 567, 582-583; 662 NW2d 413 (2003). “[W]hether an agency has in fact been created is to
be determined by the relations of the parties as they exist under their agreements or acts, with the
question being ultimately one of intention.” Van Pelt v Paull, 6 Mich App 618, 623-624; 150
NW2d 185 (1967). “An agency relationship may arise when there is a manifestation by the
principal that the agent may act on his account,” and “[t]he test of whether an agency has been
created is whether the principal has a right to control the actions of the agent.” Meretta, 195
Mich App at 697-698; see also Tax Serv, LLC v Detroit Pub Schs, 485 Mich 69, 80; 780 NW2d
753 (2010) (“Fundamental to the existence of an agency relationship is the right of the principal
to control the conduct of the agent.”).
“ ‘An implied agency must be an agency in fact; found to be so by reasonable deductions,
drawn from disclosed facts or circumstances.’ ” AFP Specialties, Inc, 303 Mich App at 507,
quoting Weller v Speet, 275 Mich 655, 659; 267 NW 758 (1936). “[T]he facts and circumstances
giving rise to an implied agency must be (1) known to the alleged principal, (2) within the
control of the alleged principal, and (3) either explicitly acknowledged or at least acquiesced in
by the alleged principal.” Id. In determining whether an agency relationship exists, a court
considers “every relation in which one person acts for or represents another by his authority.” St
Clair Intermediate Sch Dist v Intermediate Ed Ass’n/Mich Ed Ass’n, 458 Mich 540, 557; 581
NW2d 707 (1998).
Plaintiff did not present evidence sufficient to create a genuine issue of material fact that
an agency relationship existed between it and defendants. First, both the commission agreement
and purchase agreement clearly state that Landmark and Kello represented FDS and Clintharp.
Plaintiff presented Lavdas’s deposition testimony to support the contention that, notwithstanding
that language, its agreement to pay Landmark a lease commission and Lavdas’s personal
relationship and course of dealing with Kello created an agency relationship between them.
However, plaintiff presented no evidence that in seeking to facilitate the deal to develop
plaintiff’s land for FDS, Kello held himself out as plaintiff’s agent. On the other hand, defendant
presented evidence in the form of deposition testimony from Kello, that Kello held himself out as
only FDS and Clintharp’s agent.
Second, plaintiff provided no evidence establishing it manifested an intention to have
Kello act on its behalf. In fact, the evidence submitted to the trial court supports the opposite
conclusion, as plaintiff only sought Kello’s assistance in determining the adjacent land owner’s
information in order to purchase a third parcel of land, but did not send Kello to facilitate the
purchase of the land or negotiate the purchase on plaintiff’s behalf. Additionally, while plaintiff
asserted that Kello acted on its behalf by acting as an intermediary between it and FDS and
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assisting plaintiff in its attempt to acquire an adjacent parcel of land, those actions were
consistent with Kello acting as FDS’ agent.2
Last, plaintiff offered no evidence demonstrating that it exerted control over Kello, nor is
there evidence that Kello had the authority to bind plaintiff. In fact, the evidence presented to
the trial court shows the contrary, as the documentary evidence demonstrates that Kello
repeatedly sought plaintiff’s assent to move forward and had no authority to bind plaintiff to the
deal. Thus, considering the facts in a light most favorable to plaintiff, the evidence does not
create a factual question regarding the existence of an agency relationship between the parties.
Accordingly, the trial court did not err in granting summary disposition on plaintiff’s claims of
respondent superior, negligent supervision, breach of fiduciary duties, and silent fraud on that
basis.
B. FRAUD ISSUES
Both fraudulent misrepresentation and fraud in the inducement require proof that the
defendant made a false representation. See Bergen v Baker, 264 Mich App 376, 382; 691 NW2d
770 (2004) (“A claim for fraudulent misrepresentation or actionable fraud generally requires a
showing” in part, that, (1) “the defendant made a material representation; [and] (2) the
representation was false.”); Custom Data Sols, Inc v Preferred Capital, Inc, 274 Mich App 239,
242-243; 733 NW2d 102 (2006) (“To establish a fraud in the inducement, a party must show [in
part] that (1) the defendant made a material representation; [and] (2) the representation was
false.”). Tortious interference with a business relationship requires proof of an intentional
interference by the defendant, Mino v Clio Sch Dist, 255 Mich App 60, 78; 661 NW2d 586
(2003), and conversion requires the defendant to have wrongfully exerted domain over another’s
personal property, Aroma Wines & Equip, Inc v Columbian Distribution Servs, Inc, 303 Mich
App 441, 447; 844 NW2d 727 (2013), aff’d and remanded sub nom Aroma Wines & Equip, Inc v
Columbian Distribution Services, Inc, 497 Mich 337 (2015).
Here, plaintiff asserted that Kello falsely informed plaintiff that: (1) additional property
was required in order to secure the lease with FDS, and that (2) without additional land FDS
would not sign as a lease tenant on plaintiff’s land. According to plaintiff, these alleged
misrepresentations served as the bases of its fraud claims and constituted proof that Kello
intentionally interfered with plaintiff’s potential FDS lease and wrongfully exerted domain over
plaintiff’s property by fraudulently inducing him into the sale of the land. To support these
2
Plaintiff asserts that none of the written agreements indicate that Kello was exclusively FDS’ or
Clintharps’ agent, indicating Kello was acting as a dual agent. “[D]ual agency occurs when two
persons or entities agree to share the services of an individual for a single act.” Vargo v Sauer,
457 Mich 49, 69; 576 NW2d 656 (1998). While dual agency can exist, it arises “only with the
knowledge and informed consent, in writing, of both the seller and the buyer.” MCL
339.2517(2). Thus, while Kello was not prohibited from acting as a dual agent, he could do so
only with the knowledge and informed consent of plaintiff and FDS and Clintharp. However,
there was no written agreement to share Kello or Landmark’s services in the development or sale
of the subject property.
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claims, plaintiff offered Lavdas’s deposition testimony where he asserted that Kello made the
misrepresentations to him. The documentary evidence presented to the trial court demonstrates
that Kello provided plaintiff with FDS’ prototypical plans, and indicated that, “FDS is very
particular about site plan layouts.” However, plaintiff offered no evidence demonstrating that
Kello represented to plaintiff that FDS required any potential development to strictly comply
with the prototypical specifications or that FDS was unwilling to accept a variance if proposed
by the developer.
Further, the evidence presented to the trial court demonstrates that it was Gordon—rather
than Kello—who concluded that plaintiff’s two parcels of land were not large enough for a
prototypical FDS store and determined that a third parcel of land was necessary to move forward
with the development project. The record shows that Kello left the execution of the store layout
and planning to plaintiff and Gordon, encouraged plaintiff to come up with a development plan
utilizing just two parcels of land even after Gordon concluded they were too small, and
attempted to aid in the development of the property utilizing the third parcel of land only after
Gordon concluded the two parcels were insufficient for the development. Thus, the evidence
shows that it was Gordon who concluded the FDS would not fit on Lavdas’s two parcels of land
and that a third parcel of land was required. Further, the evidence demonstrates that Kello
merely parroted that conclusion in an effort to move the deal forward utilizing the development
plan devised by plaintiff’s architect. Accordingly, the trial court did not err in granting summary
disposition on plaintiff’s claims of fraudulent misrepresentation, fraudulent inducement, tortious
interference, and conversion.
Plaintiff also argues the trial court erred in granting summary disposition to defendants
on its silent fraud claim, as Kello was under a duty to disclose even absent an agency
relationship. Generally, absent manifest injustice an issue not raised and considered before the
trial court is not preserved for appeal. See Herald Co, Inc v City of Kalamazoo, 229 Mich App
376, 390; 581 NW2d 295 (1998); Adam v Sylvan Glynn Golf Course, 197 Mich App 95, 98; 494
NW2d 791 (1993). Here, during the summary disposition proceedings plaintiff did not make the
arguments it now asserts on appeal—that the Real Estate Broker’s Act (REBA) and National
Association of Realtors (NAR) professional rules of conduct imposed a duty of disclosure on
Kello, and that Kello’s alleged violation of those duties provided grounds to void the purchase
agreement between plaintiff and Clintharp—and the trial court never addressed the arguments.
Therefore, this issue is unpreserved and we decline to review this unpreserved issue because our
review is not necessary to prevent a manifest injustice, as the trial court did not err in granting
summary disposition to defendants on plaintiff’s silent fraud claim.
Plaintiff also argues that the trial court abused its discretion in failing to permit plaintiff
to amend its complaint. Generally, this Court reviews a trial court’s decision on a motion to
amend a complaint for an abuse of discretion. Diem v Sallie Mae Home Loans, Inc, 307 Mich
App 204, 215-216; 859 NW2d 238 (2014). “ ‘The trial court abuses its discretion when its
decision results in an outcome that falls outside the range of reasonable and principled
outcomes.” ’ Sulaica v Rometty, 308 Mich App 568, 589-590; 866 NW2d 838 (2014) (citation
omitted).
Trial courts generally grant motions to amend a complaint. Diem, 307 Mich App at 216.
“Except as provided in [MCR 2.118(A)(1)], a party may amend a pleading only by leave of the
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court or by written consent of the adverse party.” MCR 2.118(A)(2). The rule also directs that
“[l]eave shall be freely given when justice so requires.” Id. “Because a court should freely grant
leave to amend a complaint when justice so requires, a motion to amend should ordinarily be
denied only for particularized reasons” that “include undue delay, bad faith or dilatory motive,
repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the
defendant, or futility.” Wormsbacher v Seaver Title Co, 284 Mich App 1, 8; 772 NW2d 827
(2009). A trial court “must specify its reasons for denying [a] motion” to amend a complaint,
and “failure to do so requires reversal, unless amendment would be futile.” Kincaid v Flint, 311
Mich App 76, 95; 874 NW2d 193 (2015) (citation and quotation marks omitted).
The appellant is responsible for securing and filing the transcripts of the lower court
proceedings. MCR 7.210(B)(1)(a). Here, the register of actions indicates that a hearing on
plaintiff’s motion to amend was held on the record on July 21, 2014. Following the hearing, the
trial court entered an order denying plaintiff’s motion to file an amended complaint “without
prejudice for the reasons stated on the record.” However, plaintiff has failed to provide this
Court with a transcript of the July 21, 2014 hearing, nor has a certificate been filed by the court
reporter verifying that the transcript was ever ordered. Further, plaintiff did not move for less
than the full transcript or stipulate with defendants to file less than the full transcript. MCR
7.210(B)(1)(c) and (d). Thus, plaintiff is in violation of MCR 7.210(B)(1)(a), “which constitutes
a waiver of the issue.” Shinn v Michigan Assigned Claims Facility, 314 Mich App 765; 887
NW2d 635 (2016), citing People v Wilson, 196 Mich App 604; 615, 493 NW2d 471 (1992); see
also Universal Gym Equip, Inc v Vic Tanny Intern, Inc, 209 Mich App 511, 512; 531 NW2d 719
(1994) (“The question regarding the circuit court’s denial of [plaintiff]’s motion to amend its
complaint was abandoned on appeal” where plaintiff “failed to order the full transcript of
proceedings” and did not “stipulate with defendants to file some portion less than the full
transcript.”).
Affirmed.
/s/ Michael J. Talbot
/s/ Christopher M. Murray
/s/ Mark T. Boonstra
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