Smith Trust and Estate v. Erickson Retirement Communities , 326 Mich. App. 366 ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
SMITH LIVING TRUST and ESTATE OF FOR PUBLICATION
REGINALD SMITH, by DAVID SMITH, as October 30, 2018
Trustee and Personal Representative, and on behalf 9:00 a.m.
of all others similarly situated,
Plaintiff-Appellant,
v No. 338638
Wayne Circuit Court
ERICKSON RETIREMENT COMMUNITIES, LC No. 16-004191-CK
HENRY FORD VILLAGE, INC., REDWOOD-
ERC MANAGEMENT, LLC, doing business as
ERICKSON LIVING MANAGEMENT, LIFE
CARE SERVICES, SENIOR CAMPUS
SERVICES, LLC, and SENIOR CAMPUS
LIVING, INC.,
Defendants-Appellees.
Before: MURRAY, C.J., and BORRELLO and RONAYNE KRAUSE, JJ.
RONAYNE KRAUSE, J.
Acting as personal representative and successor trustee, respectively, of the estate and
trust of his deceased father Reginald Smith (decedent), plaintiff David Smith appeals as of right
from the trial court’s order granting defendants summary disposition under MCR 2.116(C)(10)1
of all claims in this action. We affirm.
1
Defendants moved for summary disposition under MCR 2.116 (C)(7), (C)(8), and (C)(10), and
the trial court did not explicitly state the subpart under which it ruled. However, when
announcing its ruling, the trial court did not seemingly conclude that any of plaintiff’s claims
were barred for purposes of (C)(7), and it considered evidence outside the pleadings and the
several documents that constitute the parties’ written agreement. Thus, we review the trial
court’s decision under MCR 2.116(C)(10). See Sisk-Rathburn v Farm Bureau Gen Ins Co of
Mich, 279 Mich. App. 425, 427; 760 NW2d 878 (2008); Laurel Woods Apartments v Roumayah,
274 Mich. App. 631, 635; 734 NW2d 217 (2007).
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I. FACTUAL BACKGROUND
A. INTRODUCTION
Decedent resided in a unit at the Henry Ford Village Continuing Care Retirement
Community (the retirement community) in the years immediately preceding his death. The
retirement community is owned by defendant Henry Ford Village, Inc. (HFV), and it was
managed, at various times, by the other defendants. Decedent was required to pay a “refundable
entrance deposit” for his unit. The entirety of this deposit was “refundable” to decedent’s estate
or trust as of decedent’s death in 2013, subject to several conditions precedent, and minus certain
fees that plaintiff does not challenge. HFV refunded most, but not all, of the remainder of
decedent’s entrance deposit, pursuant to an agreement with plaintiff, which in turn was pursuant
to a provision of decedent’s contract with HFV. The gravamen of this case is plaintiff’s
contention that HFV should have refunded the entirety of decedent’s deposit, notwithstanding
the terms of decedent’s contract with HFV or plaintiff’s agreement with HFV. At oral argument,
plaintiff conceded that HFV violated none of the terms of its contract with the decedent or
agreement with plaintiff, as those documents are actually written.
One of the conditions precedent to a refund was re-occupancy of decedent’s unit by a
new resident, including the payment of a new entrance deposit. Decedent’s unit remained
unoccupied approximately nine months after it was vacated. HFV suggested to plaintiff that, due
to the decline in the real estate market, the unit was priced too high at $152,000.00. Plaintiff
agreed to a reduction in the unit’s entrance deposit. In 2016, decedent’s unit was re-occupied for
an entrance deposit of $136,000.00. Under the agreement and one of the contractual provisions
in the Residence and Care Agreement (the RCA), if a unit’s re-occupancy entrance deposit is
reduced, any refund of the original deposit will be likewise reduced. Consequently, HFV issued
a check to plaintiff in the amount of $126,861.93, reflecting the reduced entrance deposit and the
subtraction of the unchallenged fees. Plaintiff asserts that, notwithstanding the agreement to the
lesser amount, $16,000.00 of decedent’s entrance deposit refund remains outstanding.
B. CONTRACTS AND DOCUMENTS EXECUTED BY DECEDENT
Several contracts and other documents are at issue in this matter. On May 22, 2006,
decedent executed a “Refund of Entrance Deposit Form,” which, in relevant part, stated that “the
Resident” (i.e., decedent) was
entitled to a refund of the Entrance Deposit . . . under certain specified conditions
during Resident’s lifetime or upon Resident’s death based upon termination of the
applicable Care Agreement. The conditions for the refund of the Entrance
Deposit are set forth in the Care Agreement.
The form further expressly advised the Resident to “review this Refund Form with an attorney or
other estate planning professional prior to execution . . . ” Finally, the form provided,
immediately above the signature line, that “Resident hereby acknowledges that he or she has
read the following preliminary statements and instructions, reviewed the attached options for a
refund of the Entrance Deposit, and understands the purpose and consequences of this Refund
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Form.” Decedent nominated himself, as trustee of his revocable living trust (the trust), as sole
beneficiary of any refund of his entrance deposit.
On June 8, 2006, decedent executed several more documents. One of those was a single-
page document entitled “Helpful Information Regarding Your Refund of Entrance Deposit and
Your Residence and Care Agreement.” This document described itself as “a brief and general
overview of some sections of the Residence and Care Agreement,” but cautioned that it “is not
meant to replace the Residence and Care Agreement nor supercede [sic] any of its terms . . . ” It
stated, in relevant part, that “[i]n general, in the event of death of a resident, the entrance deposit
will be refunded within 30 days of their apartment being re-settled (a new entrance deposit has
been placed on that apartment).” The document did not mention any reduction in the entrance
deposit. It concluded by stating that “[y]our Residence and Care Agreement is designed to offer
you many protections,” and inviting the resident to discuss any questions about the RCA with
HFV’s Marketing Office.
The same day, decedent executed another single-page document entitled “Receipt of
Disclosure Statement.” In relevant part, decedent acknowledged that he had received and had
sufficient time to review2 a disclosure statement required by the Living Care Disclosure Act
(LCDA), MCL 554.801 et seq.; specifically by MCL 554.819.3 The disclosure statement itself,
which included a table of contents, provided, in relevant part:
REQUIRED DISCLOSURES
1. YOU HAVE THE RIGHT TO CANCEL YOUR PURCHASE AND
RECEIVE A FULL REFUND WITH SEVEN (7) DAYS AFTER YOU HAVE
EITHER MADE A DEPOSIT AND RECEIVED A COPY OF THIS
DISCLOSURE STATEMENT OR EXECUTED THE RESIDENCE AND CARE
AGREEMENT AND RECEIVED A COPY OF THIS DISCLOSURE
STATEMENT. YOU CANNOT BE REQUIRED TO MOVE INTO THE
FACILITY BEFORE THE EXPIRATION OF THIS 7 DAY PERIOD.
2. THE SIGNING OF A LIFE INTEREST OR LONG TERM LEASE IS
AN INVESTMENT THAT MAY INVOLVE A HIGH DEGREE OF RISK AND
YOU SHOULD SEEK ADVICE FROM AN ATTORNEY OR OTHER
FINANCIAL ADVISOR INDEPENDENT OF THE FACILITY.
3. THIS DISCLOSURE STATEMENT IS REQUIRED BY LAW TO
CONTAIN ALL MATERIAL FACTS REGARDING THE OFFERING
MADE HEREBY. THE MICHIGAN OFFICE OF FINANCIAL AND
2
Plaintiff admitted at oral argument that decedent had been given all of the documents ahead of
time and the opportunity to review them before returning to sign them.
3
The LCDA was repealed effective April 2, 2015, by 2014 PA 448, and replaced by the
Continuing Care Community Disclosure Act, MCL 554.901 et seq.
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INSURANCE SERVICES HAS NOT PASSED UPON THE ACCURACY
OF THIS DISCLOSURE STATEMENT, NOR HAS THE OFFICE
APPROVED OR DISAPPROVED THE OFFERING DESCRIBED
HEREIN. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL AND SHOULD BE REPORTED . . .
4. NO PERSON IS AUTHORIZED TO MAKE ANY PROMISES IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS DISCLOSURE STATEMENT.
* * *
SECTION 5 - ENTRANCE DEPOSITS (SUMMARY)
The one-time refundable Entrance Deposit must be paid by the resident of
each Living Unit, with 10 percent due upon signing a Residence and Care
Agreement and the remainder due prior to occupancy. A list of the current
Entrance Deposits is attached as Exhibit 2. The Entrance Deposit is determined
by the size of and amenities available in the living unit. The Entrance Deposit is
100% refundable in accordance with the terms of the Residence and Care
Agreement.
* * *
SECTION 7 – OTHER SERVICES AND CHARGES
* * *
Residents have no further financial obligations to Henry Ford Village
other than those described in the Residence and Care Agreement, attached as
Exhibit 6.
* * *
SECTION 11 - CANCELLATIONS AND REFUNDS
* * *
C. Termination After Six Months of Occupancy: A Resident is entitled
to a full refund of the Entrance Deposit if the Resident terminates or all Joint
Residents terminate the Residence and Care Agreement more than six months
after taking occupancy. The Resident must give Henry Ford Village 90 days [sic]
notice in writing. The Resident shall be entitled to a full refund of the Entrance
Deposit, less the applicable Monthly Service Package, if previously not paid, the
Vacancy Fee, the Marketing Fee, and all other outstanding charges. The unearned
portion of such refund shall be refunded within 45 days after the Notice is given
or upon re-occupancy of the Unit, whichever occurs first. The earned portion of
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the Entrance Deposit shall be paid within 30 days of the date that a new qualified
Resident pays a new Entrance Deposit in full.[4]
* * *
SECTION 12 - DIVORCE, DEATH OF SPOUSE, MARRIAGE
A. Death of a Single Resident: If a single Resident dies during residency
at Henry Ford Village, the Residence and Care Agreement is automatically
terminated. The refund of the Entrance Deposit will be made within thirty (30)
days of fulfillment of the following conditions: the Resident’s or the Resident’s
representative’s vacating the living unit, removing all possessions, paying all
outstanding charges, and a new, qualified Resident paying a new Entrance
Deposit in full.
Plaintiff’s counsel admitted in the trial court that a copy of the RCA was attached to the
disclosure statement.
Finally, also on June 8, 2006, decedent executed the RCA itself. With its attached
schedules and table of contents, the RCA was 29 pages in length. Its table of contents listed the
title and page of each of its sections and subsections. In pertinent part, the RCA provided:
Section 7. REFUNDABLE ENTRANCE DEPOSIT
7.1 Payment of Refundable Deposit. Resident shall pay to HENRY
FORD VILLAGE a total Entrance Deposit, as indicated in Schedule I, attached
and incorporated hereto, on or before taking residence at the Community.
* * *
7.4 Refund of Deposit after Occupancy. After occupancy of the
Continuing Care Unit and subject to the terms and conditions of Section 7.5 of
this Agreement, HENRY FORD VILLAGE shall pay a refund of the Entrance
Deposit to the Resident as follows.
7.4.1 Refund during Lifetime. These terms apply
whether Resident or Henry Ford Village terminates the Agreement
during Resident’s lifetime . . .
* * *
7.4.2 Refund due to Death of Resident. If Resident dies
after the Occupancy Date, HENRY FORD VILLAGE shall pay a
4
The distinction between “earned” and “unearned” is not relevant to this appeal. It is undisputed
that the entirety of decedent’s entrance deposit was “earned” by the time of his death.
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refund of the Entrance Deposit within thirty (30) days after
fulfillment of the following conditions: (1) the Resident’s personal
representative or family has removed all possessions from the
Continuing Care Unit; (2) the Resident’s personal representative or
family has signed a unit release for the Continuing Care Unit; (3)
the Resident’s personal representative or family has paid all
outstanding fees and charges; and (4) a qualified new resident has
signed a new Residence and Care Agreement for the continuing
Care Unit and has settled in full by paying a new entrance deposit.
The refund shall be payable by HENRY FORD VILLAGE to the
beneficiaries named in a duly executed Refund of Entrance
Deposit Form or, if there is no Refund of Entrance Deposit Form,
to the personal representative of Resident’s estate . . .
Please be advised that HENRY FORD VILLAGE is not
obligated to refund the full Entrance Deposit until, or unless,
the conditions stated above are fulfilled, including the re-
subscription of the Unit.
7.5 Limitation on Amount of Refund. The amount of the refund which
HENRY FORD VILLAGE is obligated to pay to Resident or Resident’s estate
and which Resident or Resident’s estate is entitled to receive shall normally be the
amount of Resident’s Entrance Deposit at termination minus any outstanding fees
or charges unless paid separately . . . With respect to the refund of any Earned
Portion of the Entrance Deposit, if Resident’s Continuing Care Unit is not
reoccupied within a reasonable period of time, in HENRY FORD VILLAGE’s
sole discretion, by a qualified new resident with an Entrance Deposit equal to or
greater than Resident’s Entrance Deposit, then HENRY FORD VILLAGE will so
notify Resident or Resident’s personal representative. Resident or Resident’s
personal representative may then direct HENRY FORD VILLAGE to re-market
the Continuing Care Unit for a discounted Entrance Deposit. The amount of the
discounted Entrance Deposit, when received from a qualified new resident, minus
the Unearned Portion already refunded, will constitute the amount of the refund of
the Earned Portion of the Entrance Deposit to Resident.
* * *
Section 14. MISCELLANEOUS PROVISIONS.
14.1 Documents Incorporated by Reference. This Agreement includes
the Admissions Application for residence, the Financial Information Form, the
Resident Information Form, including Resident’s medical records, if any, and the
Refund of Entrance Deposit Form. . . . Resident acknowledges that HENRY
FORD VILLAGE will rely on statements of Resident in these documents and
warrants that all statements are true and complete to the best of Resident’s
knowledge.
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* * *
14.4 Entire Agreement. This Agreement and the documents referenced
in Section 14.l represent the entire agreement between HENRY FORD
VILLAGE, Resident, and Guarantor, if any, and supersedes all prior Agreements
and negotiations. Except as contained herein or in any contemporaneous, written
agreements, there are no promises or agreements between the parties.
* * *
14.6 Disclosure Statement. Resident hereby acknowledges that
Resident received the latest disclosure statement of HENRY FORD VILLAGE at
least three (3) days before signing this Agreement or before transferring any
money to HENRY FORD VILLAGE, whichever is earlier, and has reviewed such
statement.
Immediately above the signature lines was the statement:
This document is a legal contract. Signing this Agreement means that you are
legally bound by its terms. Therefore, you should seek the advice of a legal or
financial advisor.
Decedent initially paid an entrance deposit of $145,000.00, but in 2008 he transferred to a more
expensive unit, which increased his total entrance deposit to $152,000.00.
C. EVENTS FOLLOWING DECEDENT’S DEATH
Following decedent’s death on April 30, 2013, his children removed his belongings from
his unit, and HFV, through its agents, began to market the unit to new prospective tenants. The
unit was listed for the original entrance deposit of $152,000.00. As of January 2014, the unit
remained unoccupied. HFV sent correspondence to plaintiff opining that decedent’s unit was
likely overpriced due to the drastic decline in the real estate market. HFV indicated that the
average entrance deposit recently charged for similar units was $129,000, and further that 24
similar units were available at the time. HFV noted that under § 7.5 of the RCA, if plaintiff
wished to do so, he could agree to lower the unit’s listed entrance deposit—at the expense of
lowering the resulting refund commensurately—in hopes of pricing the unit competitively and
thereby expediting reoccupancy. Plaintiff ultimately agreed to do so.
Therefore, on February 24, 2014, plaintiff and HFV executed a “discounted refund
addendum” that, in significant part, agreed to discount the entrance deposit for decedent’s unit to
$136,000.00 pursuant to § 7.5 of the RCA. The addendum contained an acknowledgement that
plaintiff’s entrance deposit refund would be reduced by an equal amount. The addendum further
provided that plaintiff had freely entered into the addendum, had read and fully understood §
7.4.2 and § 7.5 of the RCA, and had a reasonable opportunity to consult with an independent
legal or financial advisor. Finally, the addendum provided:
This Addendum, including the exhibits hereto, constitutes the entire
understanding between the parties and supersedes any and all other prior
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agreements, written or oral, between the parties, with respect to the subject matter
hereof . . . This Addendum does not terminate, amend or reform any provision of
the RCA executed by Resident and HFV, which shall remain in full force and
effect, except as expressly stated herein.
HFV eventually found a new occupant for the decedent’s unit, who paid an entrance fee of
$136,000. On December 1, 2016, HFV remitted a check to plaintiff, as successor trustee of
decedent’s trust, for $126,861.93, which represented the reduced refund amount of $136,000,
minus uncontested fees of $9,138.07. Plaintiff accepted that refund amount, cashing HFV’s
check.
Plaintiff subsequently instituted this action against defendants. In his first amended
complaint, which sought certification of a class action including all others similarly situated,5
plaintiff alleged 12 counts, among them breach of contract, fraud, unjust enrichment, conversion
(both statutory and common-law), a statutory cause of action under the LCDA, and civil
conspiracy. Following several months of discovery, defendants all moved for summary
disposition. At the ensuing motion hearing, the trial court entertained extensive oral argument
and then ruled from the bench in defendants’ favor. This appeal ensued.
II. STANDARD OF REVIEW
We review de novo the trial court’s ruling concerning summary disposition, the proper
interpretation of the parties’ agreement, and any questions of statutory interpretation. Innovation
Ventures v Liquid Mfg, 499 Mich. 491, 507; 885 NW2d 861 (2016); Kemp v Farm Bureau Gen
Ins Co of Mich, 500 Mich. 245, 251-252; 901 NW2d 534 (2017).
A motion under MCR 2.116(C)(10) tests the factual support of a plaintiff’s claim.
Summary disposition is appropriate under MCR 2.116(C)(10) if there is no
genuine issue regarding any material fact and the moving party is entitled to
judgment as a matter of law. In reviewing a motion under MCR 2.116(C)(10),
this Court considers the pleadings, admissions, affidavits, and other relevant
documentary evidence of record in the light most favorable to the nonmoving
party to determine whether any genuine issue of material fact exists to warrant a
trial. 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 might differ. [Zaher v Miotke, 300 Mich. App. 132, 139-140;
832 NW2d 266 (2013) (quotations marks and citations omitted).]
“Only the substantively admissible evidence actually proffered may be considered.” 1300
LaFayette East Coop, Inc v Savoy, 284 Mich. App. 522, 525; 773 NW2d 57 (2009) (quotation
marks and citation omitted). “Circumstantial evidence can be sufficient to establish a genuine
issue of material fact, but mere conjecture or speculation is insufficient.” McNeill-Marks v
5
The trial court did not rule on class certification before granting defendants summary
disposition. We likewise conclude that it is unnecessary to do so.
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Midmichigan Med Ctr-Gratiot, 316 Mich. App. 1, 16; 891 NW2d 528 (2016). “This Court is
liberal in finding genuine issues of material fact.” Jimkoski v Shupe, 282 Mich. App. 1, 5; 763
NW2d 1 (2008).
III. ANALYSIS
Plaintiff, in an exceedingly loquacious and difficult to comprehend brief, has presented
an ostensible 20 distinct issues for this Court to address. However, those stated issues resolve to
seven effective claims. In essence, plaintiff argues that the trial court erred in granting summary
disposition: (1) to HFV on plaintiff’s claim for breach of contract, (2) to all defendants on
plaintiff’s several fraud-based claims, (3) to all defendants on plaintiff’s statutory claims under
the LCDA, (4) to all defendants on plaintiff’s claims for common-law and statutory conversion,
(5) to all defendants on plaintiff’s claim for unjust enrichment, (6) to all defendants on plaintiff’s
civil conspiracy claim, and (7) to defendant Redwood-ERC Management, LLC (Redwood-ERC)
on plaintiff’s “claim” of successor liability against it. We disagree with all seven claims.
A. BREACH OF CONTRACT
We conclude that the trial court did not err by granting defendants summary disposition
of plaintiff’s claim for breach of contract.
“A party asserting a breach of contract must establish by a preponderance of the evidence
that (1) there was a contract (2) which the other party breached (3) thereby resulting in damages
to the party claiming breach.” Miller-Davis Co v Ahrens Constr, Inc, 495 Mich. 161, 178; 848
NW2d 95 (2014). There can be no serious dispute that the RCA is a contract, although plaintiff
argues that the disclosure statement should also be deemed contractual. HFV’s alleged breach
was, broadly, requiring plaintiff to accept a reduced refund. The amount of that reduction is
plaintiff’s claimed damages. Plaintiff’s breach of contract claim is premised on first reforming
the parties’ contracts. As noted, plaintiff admitted that HFV did not breach any term of the RCA
as written, without either reformation or considering the disclosure statement to be part of the
same contract.
Initially, HFV argues that we are precluded by the RCA’s merger clause from
considering the disclosure statement. For purposes of resolving this appeal, we disagree. “[I]t is
a prerequisite to application of the parol evidence rule that there be a finding that the parties
intended the written instrument to be a complete expression of their agreement with regard to the
matters covered.” Hamade v Sunoco, Inc, 271 Mich. App. 145, 167; 721 NW2d 233 (2006). The
merger clause provided that “[e]xcept as contained herein or in any contemporaneous, written
agreements, there are no promises or agreements between the parties” (emphasis added). The
Receipt of Disclosure Statement was signed by both decedent and HFV’s agents on the same
date as the RCA. We think it reasonable that decedent would have read, and thus relied on, both
the RCA and the disclosure statement. We will presume, although we do not decide, that the
disclosure statement constitutes a “contemporaneous, written agreement,” the consideration of
which is not precluded by the RCA’s merger clause.
Plaintiff properly concedes that under both the RCA and the disclosure statement, HFV’s
duty to refund the entrance deposit was contingent on several conditions precedent. “A
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condition precedent is a fact or event that the parties intend must take place before there is a right
to performance.” Able Demolition v Pontiac, 275 Mich. App. 577, 583; 739 NW2d 696 (2007)
(quotation marks and citation omitted). “If the condition is not satisfied, there is no cause of
action for a failure to perform the contract.” Harbor Park Market, Inc v Gronda, 277 Mich. App.
126, 131; 743 NW2d 585 (2007). In particular, plaintiff accepts that HFV had no obligation to
refund decedent’s entrance deposit until decedent’s unit was re-occupied and the new resident
paid a new entrance deposit in full. Rather, plaintiff argues that § 7.5 of the RCA must be
deemed unenforceable, and as a consequence he should have been entitled to a refund of the
entirety of decedent’s entrance deposit irrespective of the amount of the new entrance deposit.
Several of plaintiff’s arguments rely on interpreting the word “refundable.” Specifically,
plaintiff notes that the entrance deposit is described in some documents as “100% refundable.”
Plaintiff apparently deems this to mean that the entirety of the deposit necessarily must be
refunded, thus conflicting with § 7.5 of the RCA. We disagree. “Refundable” is not defined in
the RCA, so we consult a dictionary. See Auto Owners Ins Co v Seils, 310 Mich. App. 132, 145;
871 NW2d 530 (2015). “Refundable” is an adjectival form of the verb “refund.” Merriam-
Webster’s Collegiate Dictionary (11th ed). Importantly, the suffix in the word “refundable” is “-
able,” which—“chiefly in adjectives derived from verbs,” e.g., “breakable”—means “capable of,
fit for, or worthy of (being so acted upon or toward)[.]” Merriam-Webster’s Collegiate
Dictionary (11th ed). Thus, the plain meaning of the word “refundable” is not the meaning
suggested by plaintiff. A “100% refundable” sum is one that can be refunded entirely, not one
that necessarily will be refunded entirely. Describing the deposit as “100% refundable” does not
conflict with the existence of possible limitations on the amount of that refund.
Plaintiff further argues that decedent should be excused from any obligation to read the
RCA, and therefore from being bound by the RCA. Plaintiff admits that as a general rule, “one
who signs a contract will not be heard to say, when enforcement is sought, that he did not read it,
or that he supposed it was different in its terms.” Int’l Transportation Ass’n v Bylenga, 254
Mich. 236, 239; 236 N.W. 771 (1931). Nevertheless, plaintiff contends that decedent was induced
to execute the RCA by both fraudulent misrepresentations and acts of silent fraud. “Fraud in the
inducement to enter a contract renders the contract voidable at the option of the defrauded party.”
Custom Data Solutions, Inc v Preferred Capital, Inc, 274 Mich. App. 239, 243; 733 NW2d 102
(2006) (quotation marks and citation omitted). Moreover, “Michigan has long recognized that an
agreement may be reformed because of a unilateral mistake that was induced by fraud.” Johnson
Family Ltd Partnership v White Pine Wireless, LLC, 281 Mich. App. 364, 380; 761 NW2d 353
(2008). Plaintiff concludes that if he could prove decedent was fraudulently induced into
executing the RCA, the trial court could reform the RCA as plaintiff has requested.
To prevail on a theory of fraud in the inducement, a plaintiff must prove five essential
elements, one of which is reasonable (or justified) reliance. Barclae v Zarb, 300 Mich. App. 455,
482; 834 NW2d 100 (2013); Hamade, 271 Mich. App. at 167; Custom Data, 274 Mich. App. at
243. We note that all of the above-described documents signed by decedent at least mentioned
the RCA, and most of them either stated or implied that the entrance deposit refund was
governed by the terms set forth in the RCA. The Refund of Entrance Deposit Form states:
[t]he conditions for the refund of the Entrance Deposit are set forth in the Care
Agreement. Resident and Resident’s beneficiaries are subject to all terms and
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conditions for the refund of the Entrance Deposit and should review the same
carefully.
The “Helpful Information” sheet clearly explains that it “is not meant to replace the Residence
and Care Agreement nor supercede [sic] any of its terms.” The disclosure statement makes
numerous references to the RCA, including an express statement that “[t]he Entrance Deposit is
100% refundable in accordance with the terms of the Residence and Care Agreement” (emphasis
added). No reasonable person would, after reviewing the above documents, fail to appreciate
that the RCA was the critical and controlling document. In any event, plaintiff admitted at his
deposition that he did not know which documents decedent read before signing, or whether
decedent viewed any allegedly misleading advertisements.
Even if we were to conclude that the disclosure statement is misleading, which we do not,
plaintiff has not provided any evidence beyond speculation that decedent declined to read the
RCA because he read the contents of the disclosure statement. Fraudulent inducement must be
proved by clear and convincing evidence. Hi-Way Motor Co v Int’l Harvester Co, 398 Mich.
330, 336; 247 NW2d 813 (1976). Plaintiff could not merely rest on the allegations in his
complaint. See MCR 2.116(G)(4); Coblentz v City of Novi, 475 Mich. 558, 569; 719 NW2d 73
(2006). Instead, to survive summary disposition, plaintiff was required to adduce substantively
admissible evidence to support each of the essential elements of his fraud-in-the-inducement
theory. See MCR 2.116(G)(6); Quinto v Cross & Peters Co, 451 Mich. 358, 363; 547 NW2d
314, 317 (1996). Plaintiff has not done so. Thus, the trial court correctly concluded that
plaintiff’s allegations of fraud in the inducement concerning the RCA did not preclude summary
disposition of his claim for breach of contract.6
Consequently, we conclude that plaintiff is bound by the provisions of the RCA,
including § 7.5. Plaintiff therefore attempts to minimize the importance of the refund addendum.
However, “where one writing refers to another, the two writings are to be construed together,”
Foremost Ins Co v Allstate Ins Co, 439 Mich. 378, 389 n 27; 486 NW2d 600 (1992), “including
any modifications agreed to by the parties” in subsequent writings, Neville v Neville, 295 Mich
App 460, 469-470; 812 NW2d 816 (2012). In the refund addendum, plaintiff agreed to accept a
discounted refund on behalf of the trust. Under the Michigan Trust Code, plaintiff, as successor
trustee of decedent’s trust (i.e., the named beneficiary of the refund), had legal authority to
6
Plaintiff additionally argues that HFV failed to undertake reasonable or good-faith efforts to
market the unit. See Stewart v Henry Ford Village, Inc, unpublished per curiam opinion of the
Court of Appeals, issued January 28, 2014 (Docket No. 312130), slip op at pp 6-9. Unpublished
opinions of this Court are not binding. MCR 7.215(C)(1). However, they may be instructive or
persuasive. Cox v Hartman, 322 Mich. App. 292, 307-308; 911 NW2d 219 (2017). Nevertheless,
Stewart is materially distinguishable: it appears that the Residence and Care Agreement in that
case lacked a provision analogous to § 7.5 of the RCA here, and the plaintiff in Stewart did not
agree to a reduced entrance deposit. Plaintiff’s argument regarding HFV’s alleged marketing
infirmities largely depends on voiding § 7.5 of the RCA and the refund addendum.
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modify decedent’s agreement with HFV. See MCL 700.7817. Consequently, the parties’ 2006
agreement must be construed in accordance with the refund addendum.
Because plaintiff recognizes that the refund addendum is—unless unenforceable—fatal to
his breach of contract claim, he argues strenuously against its enforceability. He first contends
that he was fraudulently induced to enter the refund addendum. However, plaintiff readily
admitted at his deposition that he understood § 7.5 of the RCA and the terms of the refund
addendum at the time that he executed the addendum. Plaintiff asserts that the addendum was
fraudulently obtained because he was not provided a copy of the disclosure agreement prior to
executing the addendum, but as discussed, because the RCA, including § 7.5, is binding, that
omission is irrelevant. We conclude that the record provides no support for plaintiff’s claim of
fraudulent inducement.
Furthermore, plaintiff’s attempts to avoid enforcement of the refund addendum are barred
by the tender-back rule, under which a party seeking to set aside a compromise “must tender the
recited consideration before there is a right to repudiate the release.” Stefanac v Cranbrook Ed
Community, 435 Mich. 155, 165; 458 NW2d 56 (1990). An offer to tender back consideration
“must occur not only within a reasonable time after execution of the agreement, but in all cases
prior to or simultaneously with the commencement of any proceeding raising a legal claim in
contravention of the agreement.” Stefanac, 435 Mich. at 159 (emphasis added). Furthermore, an
offer to tender back must be made even “if it is apparent that it would not be accepted.” Randall
v Port Huron, St C & MC Ry Co, 215 Mich. 413, 424; 184 N.W. 435 (1921). The only exceptions
entail a waiver by the other party, or fraud in the execution, neither of which are present here.
Stefanac, 435 Mich. at 165.
Fraud in the execution exists when a party is induced, by fraud, to sign a document under
the mistaken belief that he or she is actually signing something else. Stefanac, 435 Mich. at 166.
Plaintiff makes no such claim. Moreover, plaintiff has presented no evidence that he ever
offered to tender back the discounted refund that he received. Even if he were to now make such
an offer, it is too late. See Stefanac, 435 Mich. at 159 (holding that tender back must occur
before filing suit); Randall, 215 Mich. at 424 (holding that a delay of “2¼ years . . . cannot be
said to be a reasonable time as a matter of law.”). Plaintiff cashed HFV’s refund check on
December 7, 2016, approximately eight months after he initiated this action in the trial court, and
also about seven months after he had notice that HFV was asserting, as an affirmative defense,
that plaintiff’s claims in this action were barred absent “tender back of any refund received . . . ”
Indeed, even now, plaintiff has not indicated that he would be willing to tender back the partial
refund if doing so was necessary to save his claims.
Plaintiff also contends that the RCA and the addendum are unenforceable under various
provisions of the since-repealed LCDA. However, we are aware of no exception to the tender-
back rule for claims brought pursuant to the LCDA, nor has plaintiff cited any authority
suggesting an exception. On the contrary, in Stefanac, our Supreme Court held, “The only
recognized exceptions in Michigan are a waiver of the plaintiff’s duty by the defendant and fraud
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in the execution.” Stefanac, 435 Mich. at 165 (emphasis added; citations omitted).7
Nevertheless, we note that plaintiff has presented a baffling argument that the LCDA somehow
prohibits disclosure statements from incorporating terms of the RCA by reference, apparently on
the theory that an analogous statute in Pennsylvania expressly permits such incorporation by
reference. We take this as a mangled attempt to invoke the doctrine of expressio unius est
exclusio alterius, that “the expression of one thing suggests the exclusion of all others.” People v
Wilson, 500 Mich. 521, 526; 902 NW2d 378 (2017). This argument might be plausible if
plaintiffs were comparing one provision of Michigan’s LCDA to another provision of
Michigan’s LCDA, but the mere fact that another state chose to expressly permit something in a
different statute that our Legislature did not see fit to expressly prohibit is of no coherent
significance.
In sum, we hold that that the trial court did not err by granting defendants summary
disposition of plaintiff’s breach of contract claim. Plaintiff failed to present sufficient evidence
of reliance to support his theory that decedent was fraudulently induced into executing the RCA,
and plaintiff cannot challenge the RCA or the refund addendum on the grounds he now argues
without having first offered to tender back the partial refund that he accepted. He has failed to
do so. In all other respects, we agree with plaintiff’s concession that HFV breached no provision
of any contract as written. Therefore, summary disposition of this claim was appropriate.
B. FRAUD
Plaintiff offers no freestanding arguments concerning his fraud claims, but rather
incorporates his arguments from his breach of contract analysis by reference. Reliance is an
element of all forms of actionable fraud, including silent fraud. Titan Ins Co v Hyten, 491 Mich.
547, 555; 817 NW2d 562 (2012); Hamade, 271 Mich. App. at 171.8 As we have already
explained, plaintiff failed to adduce sufficient evidence of reliance for his fraud arguments to
7
Plaintiff’s attempts to distinguish Stefanac are unpersuasive. In effect, plaintiff’s argument is
that, when a plaintiff signs a release of a valid, noncontingent claim (i.e., a claim already actually
owed), the tender-back rule is inapplicable. Here, the claim was contingent—HFV only
remarketed the unit at a lower entrance deposit, and later issued a refund based on that lower
value, because plaintiff signed the refund addendum. Additionally, any factual differences
between Stefanac and this case are immaterial. In Stefanac, our Supreme Court ruled
unambiguously that the tender-back rule applies to release agreements. Id. at 165-166. The
refund addendum is, in substance, a release agreement. Hence, the tender-back rule applies here.
8
Plaintiff contends that the trial court erroneously held reliance to be an element of silent fraud,
relying on a nearly 18-year-old persuasive federal decision, Gasperoni v Metabolife, Int’l, Inc,
unpublished order of the United States District Court for the Eastern District of Michigan, issued
September 27, 2000 (Case No. 00-71255). We disagree. The courts of this state are the ultimate
arbiters of questions of state law. See Montana v Wyoming, 563 U.S. 368, 377 n 5; 131 S. Ct.
1765; 179 L. Ed. 2d 799 (2011). Even assuming that Gasperoni represented an accurate statement
of this state’s common law at the time, subsequent Michigan decisions such as Titan Ins Co and
Hamade have made clear that reliance is an essential element of a claim for silent fraud.
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survive summary disposition. Moreover, “[t]here can be no fraud where a person has the means
to determine that a representation is not true.” Nieves v Bell Indus, Inc, 204 Mich. App. 459, 464;
517 NW2d 235 (1994). See also Titan Ins Co, 491 Mich. at 555 n 4 (explaining that a claim of
fraud fails if “the allegedly defrauded party was given direct information refuting the
misrepresentations.”). In this case, decedent was given such direct information in a copy of the
RCA, and plaintiff was given—and admittedly read and understood—a copy of the refund
addendum. Plaintiff cannot succeed on a claim of fraud related to the terms of either of those
agreements. There is no genuine issue of material fact that both plaintiff and decedent were
given direct information that refuted any alleged misrepresentations about the terms of the RCA
and the refund addendum. Summary disposition of all of plaintiff’s fraud claims was properly
granted.
C. LCDA
Nor did the trial court err by granting defendants summary disposition of plaintiff’s
LCDA claim. 9 Plaintiff’s claim is pursued under § 29(1) of the LCDA, former MCL 554.829(1),
which provided a private cause of action for violations of § 6(1), among others,10 as follows:
A person who offers or sells a life interest or long-term lease in violation
of section[] 6(1) . . . is liable to the person purchasing the life interest or lease for
damages and repayment of all fees paid to the facility less the reasonable cost of
rental and care provided until discovery or until the violation should reasonably
have been discovered and with interest at 6% from the date of purchase and
reasonable attorney fees and court costs. [Emphasis added.]
Section 6(1) of the LCDA, former MCL 554.806(1), in relevant part prohibited entities such as
HFV from:
(a) Employ[ing] a device, scheme, or artifice to defraud.
(b) Mak[ing] an untrue statement of a material fact or fail to state a
material fact necessary in order to make the statements made, in the light of the
circumstances under which they are made, not misleading.
(c) Engag[ing] in an act, practice, or course of business which operates or
would operate as a fraud or deceit upon a person.
9
Despite the repeal of the LCDA, plaintiff can nevertheless pursue a statutory cause of action
under it because his claim accrued before the effective date of the repealing act. 2014 PA 488;
MCL 8.4a; Hurt v Michael’s Food Ctr, 249 Mich. App. 687, 692; 644 NW2d 387 (2002).
10
The LCDA did not provide a private cause of action for alleged violations of § 8, which is the
section that plaintiff contends mandates the express and explicit recitation of § 7.5 of the RCA in
the disclosure statement. However, plaintiff correctly notes that the LCDA did provide a cause
of action for more generally engaging in fraud or deceit.
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Under MCL 554.806(2), “fraud” and “deceit” were expressly “not limited to the common law
definitions of fraud and deceit, but include the provisions of section 6(1).”
We need not determine whether HFV did, in fact, engage in “fraud” or “deceit” within
the meanings set forth in the LCDA. The plain language of § 29(1) unambiguously provides that
damages exceeding “the reasonable cost of rental and care provided until discovery or until the
violation should reasonably have been discovered” are an element of a claim pursued under §
29(1). Absent such damages, there is no liability to enforce, and consequently there is no claim.
As a matter of law, plaintiff cannot satisfy that damages element. Because plaintiff does
not contest the propriety of the $9,138.07 in fees that HFV deducted from the discounted refund,
the only potential damages figure that he has identified is $16,000—i.e., the difference between
decedent’s $152,000 entrance deposit and the $136,000 refund that was actually issued.
Moreover, plaintiff alleges that his statutory claim did not accrue until after decedent’s death, at
which time plaintiff discovered that HFV would not refund the entire entrance deposit.
The codified monthly cost of care for decedent was $2,280 (i.e., 1.5% of his $152,000
entrance deposit). MCL 554.803(8); MCL 554.810(1)(d); Mich Admin Code, R 554.1(3).
Accordingly, after just eight months of residency, the cost of care provided to decedent alone
would have exceeded his purported damages of $16,000. Thus, we also need not consider “the
reasonable cost of rental,” which is also to be deducted from the damages figure under § 29(1).
Decedent resided in the retirement community for more than six years. At the end of his sixth
year of residency, the codified cost of the care provided to him would have been $164,160.
Therefore, plaintiff’s “reasonable cost of rental and care” necessarily exceeds the purported
damages plaintiff has identified to support his LCDA claim. Thus, even if plaintiff had an
otherwise viable claim for violations of § 6(1) of the LCDA, the trial court did not err by
granting defendants summary disposition of that claim.
In any event, plaintiff has failed to make the requisite showing that defendants’ conduct
in this case constituted a violation of § 6(1). It is undisputed that HFV gave decedent a copy of
all relevant documents, ample time to review them in their entirety, and repeated admonishment
to seek independent legal counsel. For the reasons already discussed above, no reasonable
person would have deemed the disclosure statement to be a substitute for the RCA itself. No
rational trier of fact could conclude that defendants’ conduct in connection with the “offer” or
“sale” of decedent’s unit was part of “a device, scheme, or artifice to defraud;” that defendants
made “an untrue statement of a material fact” or failed “to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they [we]re made,
not misleading;” or that defendants “[e]ngage[d] in an act, practice, or course of business which
operate[d] or would operate as a fraud or deceit upon a person.” Summary disposition of this
claim was thus appropriately granted.
D. CONVERSION
For dual reasons, the trial court also properly granted summary disposition of plaintiff’s
claims for statutory and common-law conversion. First, his claims are barred by the tender-back
rule, because they conflict with the terms of the addendum, in which plaintiff agreed to accept
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the discounted refund and to permit HFV to retain the balance of decedent’s entrance deposit.
See Stefanac, 435 Mich. at 159.
Second, plaintiff’s conversion claims fail on the merits. Plaintiff has presented no
evidence that HFV had an obligation to keep intact or deliver the specific $152,000 that decedent
paid, in two installments, for his entrance deposit. See Dunn v Bennett, 303 Mich. App. 767, 778;
846 NW2d 75 (2014). Nor has plaintiff presented any evidence that HFV’s exercise of dominion
over the $152,000 was either wrongful or contrary to the interests of decedent and his trust. See
Aroma Wines & Equip, Inc v Columbian Distribution Servs, Inc, 497 Mich. 337, 351-352; 871
NW2d 136 (2015). Rather, under the terms of the 2006 agreement as amended by the refund
addendum, plaintiff expressly consented to HFV’s exercise of dominion over the $152,000.
Even if plaintiff could definitively prove that HFV was obligated to refund the full $152,000
under the parties’ agreement and failed to do so, “[t]he failure to perform a contractual duty
cannot give rise to a tort action unless the plaintiff alleges a violation of a duty separate and
distinct from the underlying contractual obligation.” Kisiel v Holz, 272 Mich. App. 168, 172; 725
NW2d 67 (2006). We cannot discern any such separate and distinct duty in plaintiff’s
allegations.
Consequently, the trial court did not err by granting defendants summary disposition of
plaintiff’s conversion claims.
E. UNJUST ENRICHMENT
The existence of an enforceable, express agreement between the parties covering the
same subject matter entitles defendants to summary disposition of plaintiff’s claim for unjust
enrichment. See Bellevue Ventures, Inc v Morang-Kelly Investment, Inc, 302 Mich. App. 59, 64;
836 NW2d 898 (2013). Furthermore, because plaintiff’s unjust enrichment claim seeks to
recover funds that plaintiff agreed HFV could retain, it plainly contravenes the terms of the
refund addendum. Accordingly, the tender-back rule bars plaintiff’s claim for unjust enrichment.
See Stefanac, 435 Mich. at 159. Again, the trial court correctly granted summary disposition of
plaintiff’s unjust enrichment claim.
F. CIVIL CONSPIRACY
We also reject plaintiff’s argument that the trial court erred by granting defendants
summary disposition of his claim alleging civil conspiracy. Plaintiff failed to adduce sufficient
evidence of any separate actionable tort to survive summary disposition. See Urbain v Beierling,
301 Mich. App. 114, 132; 835 NW2d 455 (2013). Moreover, to the extent that his claim for civil
conspiracy is based on allegations that defendants failed to comply with contractual duties, the
claim cannot proceed as a matter of law. See id. Finally, because the tender-back rule bars
plaintiff from avoiding enforcement of the refund addendum, plaintiff cannot cite any damages
arising from the alleged civil conspiracy, which is the “foundation” of any civil conspiracy
action. See Fenestra, Inc v Gulf Am Land Corp, 377 Mich. 565, 594; 141 NW2d 36 (1966).
Accordingly, the trial court did not err by granting defendants summary disposition of the civil
conspiracy claim.
G. SUCCESSOR LIABILITY
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Finally, plaintiff argues that the trial court erred by granting defendant Redwood-ERC
summary disposition of plaintiff’s “claim” of successor liability against it. Although “successor
liability” is commonly described as a “claim,” it is truly a theory of liability that depends on an
underlying breach of a legal duty or commission of underlying wrongful conduct. See Chase v
Michigan Tel Co, 121 Mich. 631, 637; 80 N.W. 717 (1899); Stevens v McLouth Steel Products
Corp, 433 Mich. 365, 370-379; 446 NW2d 95 (1989); Lemire v Garrard Drugs, 95 Mich. App.
520, 524; 291 NW2d 103 (1980). Because summary disposition of all other claims was
appropriately granted in favor of defendants, this issue is moot. See Barrow v Detroit Election
Comm, 305 Mich. App. 649, 659; 854 NW2d 489 (2014) (“We generally do not address moot
questions or declare legal principles that have no practical effect in a case.”). Even presuming
that Redwood-ERC could be held liable for the acts and omissions of its predecessors under a
theory of successor liability, because those predecessors were entitled to summary disposition, it
necessarily follows that Redwood-ERC was also entitled to summary disposition.
IV. CONCLUSION
The trial court’s grant of summary disposition in favor of all defendants is affirmed.
Defendants, having prevailed in full, may tax costs. MCR 7.219(A).
/s/ Amy Ronayne Krause
/s/ Christopher M. Murray
/s/ Stephen L. Borrello
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