Salzeider Inc v. Easy Street Spartan 8411 LLC ( 2023 )

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
SALZEIDER, INC. and SCOTT SALZEIDER, UNPUBLISHED
October 26, 2023
Plaintiffs-Appellants,
v No. 359551
Oakland Circuit Court
EASY STREET SPARTAN 8411, LLC, LC No. 2021-189003-CB
Defendant-Appellee.
Before: K. F. KELLY, P.J., and JANSEN and CAMERON, JJ.
PER CURIAM.
Plaintiffs appeal by right the trial court’s order granting summary disposition in favor of defendant
under MCR 2.116(C)(1) on the basis that the court lacked personal jurisdiction over defendant. Finding
no errors warranting reversal, we affirm.
I. BASIC FACTS AND PROCEDURAL HISTORY
Plaintiff Scott Salzeider, the owner of plaintiff Salzeider, Inc., and Anthony Leeds, the owner of
OM Capital Fund II, LLC (“OM Capital”), entered into a joint venture to purchase real property for
$2,100,000 from defendant Easy Street Spartan 8411, LLC (“Easy Street”), located in Carol Stream,
Illinois. Under the terms of the joint venture, Salzeider and Leeds were to split equally the purchase price
and all costs arising from the transaction with OM Capital. Kelly Disser, the president of Easy Street,
negotiated with Leeds to sell the property to OM Capital.
On June 26, 2020, OM Capital entered into a “Purchase and Sale Agreement” with Easy Street for
the sale of the property. Under the terms of that agreement, OM Capital was to transfer $250,000 in a
nonrefundable earnest-money payment to Easy Street. Leeds allegedly provided Salzeider with a falsified
copy of the purchase agreement that instead showed that OM Capital was required to provide $800,000 in
refundable earnest money. The day before the agreement between OM Capital and Easy Street was
executed, Salzeider sent $400,000 to OM Capital, which Salzeider believed to be his 50% share of the
earnest-money payment. Leeds purportedly sent the $250,000 earnest-money payment to Easy Street and
kept the remaining $150,000. For reasons not in the record, the original purchase agreement was
terminated on July 24, 2020.
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On July 29, 2020, OM Capital and Easy Street executed a “Reinstatement and Amendment to
Purchase and Sale Agreement” that advanced the date of the closing from the original purchase agreement
and required OM Capital to pay an additional $550,000 in nonrefundable earnest money. Leeds allegedly
sent Salzeider another falsified copy of the reinstatement agreement that stated that a $1,300,000
refundable earnest-money payment was due, and Salzeider sent Leeds $650,000 to cover what he believed
was his half of the payment. Leeds allegedly transferred $550,000 to Easy Street and kept the remaining
$100,000. In total, Salzeider alleged he transferred $1,050,000 to OM Capital, of which $800,00 was
transferred to Easy Street and $250,000 was kept by Leeds. The deal between Easy Street and OM Capital
never closed, and Easy Street refused to return the earnest money to plaintiffs. On November 18, 2020,
Salzeider, Inc. was awarded a default judgment against Leeds and OM Capital for the conversion of its
funds. In a filing in that case, Salzeider, Inc. alleged that Leeds fled to South Carolina to avoid payment
on the judgment.
In this case, plaintiffs filed a five-count complaint against Easy Street for unjust enrichment,
conversion, aiding and abetting conversion, restitution, and a declaratory judgment that Easy Street’s
retention of the earnest money was an unenforceable liquidated damages penalty. In lieu of filing an
answer, Easy Street moved for summary disposition under MCR 2.116(C)(1), arguing that it did not have
sufficient minimum contacts within Michigan for Michigan’s long-arm statute to confer personal
jurisdiction and would violate its due-process rights to have to defend against a suit in Michigan because
it had never availed itself of the protections of Michigan law. The trial court agreed, concluding that no
relationship between Easy Street and Michigan existed that would confer personal jurisdiction over Easy
Street under Michigan’s long-arm statute and that it would violate Easy Street’s due-process rights to
require Easy Street to defend against this case in Michigan. This appeal followed.
II. STANDARDS OF REVIEW
A trial court’s decision on a motion for summary disposition is reviewed de novo. El-Khalil v
Oakwood Healthcare, Inc, 504 Mich 152, 159; 934 NW2d 665 (2019). Whether a court has personal
jurisdiction over a defendant is also a question of law that is reviewed de novo. Oberlies v Searchmont
Resort, Inc, 246 Mich App 424, 426; 633 NW2d 408 (2001). “The plaintiff bears the burden of
establishing jurisdiction over the defendant, but need only make a prima facie showing of jurisdiction to
defeat a motion for summary disposition.” Jeffrey v Rapid American Corp, 448 Mich 178, 184; 529 NW2d
644 (1995) (citation omitted).
“When reviewing a trial court’s decision on a motion for summary disposition brought under MCR
2.116(C)(1), the trial court and this Court consider the pleadings and documentary evidence submitted by
the parties in a light most favorable to the nonmoving party.” Yoost v Caspari, 295 Mich App 209, 221;
813 NW2d 783 (2012). “The plaintiff’s complaint must be accepted as true unless specifically
contradicted by affidavits or other evidence submitted by the parties.” Id. Whether the exercise of
personal jurisdiction over a defendant is consistent with due process under the Fourteenth Amendment is
a question of law that is reviewed de novo. Id. at 219.
III. LONG-ARM STATUTE
Plaintiffs first argue that the trial court erred when it concluded that Michigan’s long-arm statute
did not confer limited personal jurisdiction over Easy Street. We agree.
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“Before a court may obligate a party to comply with its orders, the court must have in personam
jurisdiction over the party.” Oberlies, 246 Mich App at 427. “When a defendant’s contacts with the
forum state are insufficient to confer general jurisdiction, jurisdiction may be based on the defendant’s
specific acts or contacts with the forum state.” Electrolines, Inc v Prudential Assurance Co, Ltd, 260
Mich App 144, 166; 677 NW2d 874 (2003). “When examining whether a Michigan court may exercise
limited personal jurisdiction over a defendant, this Court employs a two-step analysis.” Yoost, 295 Mich
App at 222. First, the Court must determine whether the exercise of jurisdiction is authorized by
Michigan’s long-arm statute. Glenn v TPI Petroleum, Inc, 305 Mich App 698, 712; 854 NW2d 509(2014). “Second, this Court determines if the exercise of jurisdiction is consistent with the requirements
of the Due Process Clause of the Fourteenth Amendment.” Electrolines, 260 Mich App at 167. “Both
prongs of this analysis must be satisfied for a Michigan court to properly exercise limited personal
jurisdiction over a nonresident.” Yoost, 295 Mich App at 222.
“Long-arm statutes establish the nature, character, and types of contacts that must exist for
purposes of exercising personal jurisdiction.” Yoost, 295 Mich App at 222. Plaintiffs contend that
Michigan courts may exercise limited personal jurisdiction over Easy Street under MCL 600.715, which
states:
The existence of any of the following relationships between a corporation or its
agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of
record of this state to exercise limited personal jurisdiction over such corporation and to
enable such courts to render personal judgments against such corporation arising out of the
act or acts which create any of the following relationships:
(1) The transaction of any business within the state.
(2) The doing or causing any act to be done, or consequences to occur, in the state
resulting in an action for tort.
(3) The ownership, use, or possession of any real or tangible personal property
situated within the state.
(4) Contracting to insure any person, property, or risk located within this state at
the time of contracting.
(5) Entering into a contract for services to be performed or for materials to be
furnished in the state by the defendant.
“The primary goal of judicial interpretation of statutes is to ascertain and give effect to the
Legislature’s intent.” Wiesner v Washtenaw Co Community Mental Health, 340 Mich App 572, 580; 986
NW2d 629 (2022). “[I]f the language is clear and unambiguous, the plain meaning of the statute reflects
the legislative intent and judicial construction is not permitted.” Grand Rapids v Brookstone Capital,
LLC, 334 Mich App 452, 459; 965 NW2d 232 (2020). Thus, “[w]ell-settled principles of statutory
interpretation require us to look to the plain language of MCL 600.715(1) to determine whether defendant
falls within the state’s long-arm jurisdiction.” Oberlies, 246 Mich App at 429.
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The phrase, “transaction of any business” in MCL 600.715(1) is not defined by statute. This Court,
therefore, has relied on dictionary definitions of the phrase to interpret its meaning. Id. at 430. In Oberlies,
we explained:
“Transact” is defined as “to carry on or conduct (business, negotiations, etc.) to a
conclusion or settlement.” Random House Webster’s College Dictionary (1997).
“Business” is defined as “an occupation, profession, or trade . . . the purchase and sale of
goods in an attempt to make a profit.” Id. Our Legislature’s use of the word “any” to
define the amount of business that must be transacted establishes that even the slightest
transaction is sufficient to bring a corporation within Michigan’s long-arm jurisdiction.
[Id.]
Here, plaintiff alleged that Leeds and Disser had a longstanding relationship that predated the real
estate transaction in this case. In his affidavit, Salzeider averred that “Leeds learned about the Property
and the opportunity to purchase it” from Disser, who “solicited Leeds [sic] interest in the Property.”1 In
preparation for closing on the deal, plaintiffs and Leeds in Michigan met with Easy Street in Illinois
virtually or telephonically to discuss due diligence and other matters. Salzeider also explained that the
money for the earnest money deposits were transferred from OM Capital’s credit union account in
Michigan to Easy Street in Illinois.
Easy Street’s contacts with Michigan concerning the real estate transaction were sufficient to bring
Easy Street within Michigan’s long-arm statute under MCL 600.751(1). Easy Street was certainly
involved in a “business” activity when it negotiated the sale of property in Illinois with parties located in
Michigan, all in a purported attempt to realize a profit from the transaction. Moreover, Easy Street
“transacted” that business in Michigan when it solicited Leeds’s interest in purchasing the property,
negotiated the purchase of the property with parties physically present in Michigan, received money
pursuant to that transaction from a business and bank account located in Michigan, and eventually brought
the negotiations to a terminal point when the deal did not close.
In sum, plaintiffs have established a prima facie case that Easy Street transacted business in
Michigan. See Oberlies, 246 Mich App at 430 (stating that “[t]he only real limitation placed on this long
arm statute is the due process clause”) (quotation marks and citation omitted; quotation cleaned up).
Therefore, we agree the trial court erred when it concluded that the long-arm statute did not confer limited
personal jurisdiction over Easy Street. However, the exercise of jurisdiction must still comport with due
process, which we turn to next.
IV. DUE PROCESS
Plaintiffs contend that the trial court erred when it ruled that the Due Process Clause of the
Fourteenth Amendment prohibits a Michigan court from exercising personal jurisdiction over Easy Street.
We disagree.
1
Although Easy Street denies that it was the party that initiated first contact concerning the purchase of
the property, for purposes of this appeal, we must view all facts in the light most favorable to plaintiff.
See Yoost, 295 Mich App at 221.
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Once it has been established that personal jurisdiction over a defendant may be exercised under a
long-arm statute, the trial court must next determine whether the exercise of personal jurisdiction over the
defendant is proper under the principles of due process. Electrolines, 260 Mich App at 167. “The Due
Process Clause requires that the exercise of personal jurisdiction comport with ‘traditional notions of fair
play and substantial justice.’ ” Oberlies, 246 Mich App at 432-433, quoting Int’l Shoe Co v Wash Office
of Unemployment Compensation & Placement, 326 US 310, 316; 66 S Ct 154; 90 L Ed 95 (1945). “The
constitutional touchstone of a due process analysis with respect to personal jurisdiction is whether the
defendant purposely established the minimum contacts with the forum state necessary to make the exercise
of jurisdiction over the defendant fair and reasonable.” Oberlies, 246 Mich App at 433 (quotation marks
omitted). In Mozdy v Lopez, 197 Mich App 356, 359; 494 NW2d 866 (1992), this Court laid out a three-
part test for determining whether a defendant has established minimum contacts sufficient to comply with
due process:
First, the defendant must have purposefully availed itself of the privilege of conducting
activities in Michigan, thus invoking the benefits and protections of this state’s laws.
Second, the cause of action must arise from the defendant’s activities in the state. Third,
the defendant’s activities must be so substantially connected with Michigan to make the
exercise of jurisdiction over the defendant reasonable.
“Whether jurisdiction is proper under the minimum contacts test does not depend on the weight of
the factors individually. Rather, the primary focus when analyzing personal jurisdiction should be on
‘reasonableness’ and ‘fairness.’ ” Oberlies, 246 Mich App at 433, quoting Jeffrey, 448 Mich at 186. Thus,
we reject “any talismanic jurisdictional formulas; the facts of each case must always be weighed in
determining whether personal jurisdiction would comport with fair play and substantial justice.” See
Burger King Corp v Rudzewicz, 471 US 462, 485-486; 105 S Ct 2174; 85 L Ed 2d 528 (1985) (quotation
marks and citation omitted; quotation cleaned up).
A. PURPOSEFUL AVAILMENT
The “ ‘purposeful availment’ requirement ensures that a defendant will not be haled into a
jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts or of the unilateral activity
of another party or a third person[.]” Rudzewicz, 471 US at 475 (citations omitted). To have purposely
availed itself of Michigan law, the defendant must “deliberately engage in significant activities within a
state, or create continuing obligations between himself and residents of the forum to the extent that it is
presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.”
Vargas v Hong Jin Crown Corp, 247 Mich App 278, 285; 636 NW2d 291 (2001) (quotation marks
omitted). There must be a degree of foreseeability to a defendant that his “conduct and connection with
the forum State are such that he should reasonably anticipate being haled into court there.” World-Wide
Volkswagen Corp v Woodson, 444 US 286, 297; 100 S Ct 559; 62 L Ed 2d 490 (1980). The Due Process
Clause also “gives a degree of predictability to the legal system that allows potential defendants to
structure their primary conduct with some minimum assurance as to where that conduct will and will not
render them liable to suit.” Id. However, “the constitutional touchstone remains whether the defendant
purposefully established ‘minimum contacts’ in the forum.” Rudzewicz, 471 US at 474.
As noted above, there is a question of material fact regarding whether Disser was first to reach out
to Leeds regarding the availability of the property. The evidence submitted to the trial court supports a
reasonable inference that Disser initiated contact with Leeds. In his affidavit, Salzeider averred that Leeds
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learned about the property from Disser. Disser, on the other hand, stated in his affidavit that he did not
initiate contact with any Michigan entity regarding the sale of land. However, the documentary evidence
does not necessarily support the facts in Disser’s affidavit. In an April 2, 2020 e-mail from Disser to
Leeds with the subject line “two-bts sites,” Disser wrote: “Here are the sites we have deals going on . . .
.” From this e-mail and Salzeider’s affidavit, it is reasonable to infer that Disser was the first to contact
Leeds about the sale of real estate. Even if Leeds made first contact about prospective properties, the
documentary evidence shows that Disser offered Leeds a specific property that Leeds had not known
about, and the correspondence listed Leeds as representing a Michigan-based company. Therefore, on the
basis of these facts, it would not be unreasonable for Easy Street to expect to be haled into court in
Michigan. See Jeffrey, 448 Mich at 187 (stating the mere fact that a defendant was not physically present
in Michigan would not defeat the exercise of personal jurisdiction where the defendant “reaches beyond
its own state and purposefully avails itself of the privilege of exploiting forum-based business
opportunities”).
However, in order for the exercise of personal jurisdiction to comport with due process even where
a defendant purposefully avails itself of the forum jurisdiction, the connection between the plaintiff’s
cause of action and the defendant’s contacts with the state must not be “so attenuated that it is unreasonable
to exercise jurisdiction over [the] defendant in this case.” Oberlies, 246 Mich App at 435. Thus, “for
limited personal jurisdiction to attach, the cause of action must arise from the circumstances creating the
jurisdictional relationship between the defendant and the foreign state.” Id. (quotation cleaned up). In
other words, the defendant’s activities in Michigan must, “in a natural and continuous sequence, have
caused the alleged injuries forming the basis of the plaintiff’s cause of action.” Id. at 437. When the
causes of action include claims based on conspiracy between in- and out-of-state defendants, “mere
allegations that a conspiracy exists between the defendant and another over whom the court has
jurisdiction are insufficient. Rather, evidence or facts must support the allegations of conspiracy.” Yoost,
295 Mich App at 225 (citations omitted); see also Walden v Fiore, 571 US 277, 286; 134 S Ct 1115; 188
L Ed 2d 12 (2014) (“A forum State’s exercise of jurisdiction over an out-of-state intentional tortfeasor
must be based on intentional conduct by the defendant that creates the necessary contacts with the
forum.”).
Turning to the allegations in the complaint and other documentary evidence, the contacts Easy
Street had with Michigan can be fairly summed up as follows: Sometime before June 2020, Easy Street
reached out to Leeds in Michigan concerning potential properties for sale in Illinois. After Leeds and
plaintiffs selected a desirable property, the parties negotiated the various agreements virtually from their
respective locales (plaintiffs and Leeds in Michigan and Easy Street in Illinois). Lastly, on two separate
occasions, Leeds wired money on behalf of OM Capital from bank accounts in Michigan to Easy Street
in Illinois for the purpose of making the earnest-money payments. It is against this backdrop of “contacts”
that we address each claim in the complaint. See Oberlies, 246 Mich App at 437.
B. LIQUIDATED DAMAGES
In Counts I, II, and V of the complaint, plaintiffs allege that the $800,000 paid by OM Capital to
Easy Street constituted an unenforceable penalty or that Easy Street was otherwise unjustly enriched by
its retention of the earnest money because it did not sell the property. It is important to note and reiterate
here that the $800,000 paid to Easy Street was the amount due under the “non-fraudulent” agreements that
presumably originated from Easy Street. In other words, the $800,000 represents the amount that OM
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Capital was supposed to pay before Leeds fraudulently altered the agreements presented to plaintiffs to
increase the price.
Plaintiffs did not allege sufficient facts nor come forward with sufficient evidence to demonstrate
how Easy Street’s contacts with Michigan harmed plaintiffs. Without a doubt, the allegations made by
plaintiffs, if true, constitute various torts committed by Leeds in Michigan as it concerned his business
relationship with plaintiffs. However, for purposes of the due process analysis, the mere fact that the
parties entered into a contractual relationship is insufficient to confer limited personal jurisdiction in
Michigan over Easy Street. See Burger King, 471 US at 478 (stating that a contract with an out-of-state
party, alone, is insufficient to establish minimum contacts with the forum state). The gravamen of
plaintiffs’ allegations is that Easy Street is unlawfully holding money, obtained pursuant to contract, in
Illinois. The injury to plaintiffs,2 as alleged, are the result of unlawful actions taking place in Illinois, not
Michigan, and the fact that one party to the transaction is a Michigan resident, standing alone, is too
attenuated from the established contacts made by Easy Street to confer limited personal jurisdiction.
Similarly, we conclude that the exercise of jurisdiction over Easy Street would be unreasonable,
because Michigan’s interest in adjudicating these claims is weak in comparison to Illinois’s interest. See
Jeffrey, 448 Mich at 203. Counts I, II, and V of the complaint relate to whether Easy Street’s retention of
the earnest money deposits—paid under agreements that were governed by Illinois law and concerned
property physically located in Illinois—constituted an illegal liquidated damages provision or otherwise
unjustly enriched Easy Street. Illinois, as the state with jurisdiction over the property, has a superior
interest to Michigan in resolving questions concerning the enforceability of contracts concerning that
property.
In sum, even though Easy Street may have purposefully availed itself of Michigan, allowing
limited personal jurisdiction in Michigan would not comport with fair play and substantial justice, and the
trial court did not err when it granted summary disposition in Easy Street’s favor as to Counts I, II, and V.
C. CONVERSION
In Count III of the complaint, plaintiff alleged that Easy Street converted plaintiffs’ earnest money
by retaining it and, in Count IV, by aiding and abetting Leeds’s conversion of the money. “Under the
common law, conversion is any distinct act of dominion wrongfully exerted over another’s personal
property in denial of or inconsistent with his rights therein.” Aroma Wines & Equip, Inc v Columbian
Distrib Servs, Inc, 497 Mich 337, 346; 871 NW2d 136 (2015). Similarly, under a statutory claim for
conversion, an injured party may be awarded treble damages as a result of “[a]nother person’s stealing or
embezzling property or converting property to the other person’s own use.” MCL 600.2919a(1)(a). “[A]
person may be guilty of a conversion by actively aiding or abetting or conniving with another in such an
act.” Trail Clinic, PC v Bush, 114 Mich App 700, 706; 319 NW2d 638 (1982). “The essential elements
2
We question whether plaintiffs—separate from OM Capital—have standing to assert claims against Easy
Street that originate from the agreements themselves, as the only parties to those agreements were OM
Capital and Easy Street. In other words, it is not clear that plaintiffs suffered a harm separate from OM
Capital as it relates to Easy Street’s alleged improper retention of the earnest money deposit. Nevertheless,
even if plaintiffs could demonstrate that they have standing to assert these claims, plaintiffs have not
established that litigating the claims in Michigan comports with due process.
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required for aiding-and-abetting liability are: (1) that an independent wrong occurred, (2) that the aider or
abettor had knowledge of the wrong’s existence, and (3) that substantial assistance was given to effecting
that wrong.” Nicholl v Torgrow, 330 Mich App 660, 675; 950 NW2d 535 (2019).
Similar to plaintiffs’ liquidated damages claims, their statutory and common law conversion claims
do not relate to the contract formation or negotiation stages and all the attendant contacts between Easy
Street and OM Capital that occurred during those time periods. Rather, the allegations relate to what
plaintiff contends occurred after the money transferred from OM Capital to Easy Street under the terms
of the agreements—i.e., plaintiff demanded the return of the money and Easy Street declined the request.
Easy Street’s contacts with Michigan as the forum state as it relates to the conversion claims are simply
too attenuated from the unenforceable penalty claims to satisfy due process.
Lastly, plaintiffs failed to adequately plead or come forward with facts establishing jurisdiction on
the basis of the aiding and abetting conversion claim. Aiding and abetting is not a stand-alone tort but
rather is, like conspiracy, a theory of joint and several liability. And, therefore, like a conspiracy claim,
plaintiffs are required to do more than simply allege “aiding and abetting” to invoke the jurisdiction of
Michigan. A bare allegation, however, is all that plaintiffs made concerning Easy Street’s purported role
in aiding and abetting Leeds. For example, plaintiffs do not allege that Leeds and Disser met in Michigan
in furtherance of the scheme, or that Disser even contacted Leeds in Michigan concerning Leeds’s alleged
fraud. All that is alleged is that “Easy Street aided and abetted Leeds in concealing the stolen, embezzled
and/or converted funds.” The allegation, standing alone, is insufficient for purposes of conferring
jurisdiction. See Yoost, 295 Mich App at 225 (citations omitted) (“[M]ere allegations that a conspiracy
exists between the defendant and another over whom the court has jurisdiction are insufficient. Rather,
evidence or facts must support the allegations of conspiracy.”). Thus, the trial court did not err when it
granted summary disposition in favor of Easy Street.
Affirmed. Easy Street, as the prevailing party, may tax costs. MCR 7.219(A).
/s/ Kirsten Frank Kelly
/s/ Kathleen Jansen
/s/ Thomas C. Cameron
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