Brenda Ealey v. Benjigates Estates LLC

STATE OF MICHIGAN
COURT OF APPEALS
BRENDA EALEY, UNPUBLISHED
August 11, 2016
Plaintiff-Appellant,
v No. 327244
Wayne Circuit Court
BENJIGATES ESTATES, LLC, ELM LC No. 14-012837-CZ
INVESTMENT COMPANY, and KEITH
HUDSON, also known as KEITH BENJAMIN,
Defendants-Appellees,
and
ANTOINE M. HAYES, also known as ANTOINE
BENJAMIN, EUGENE W. BROADWAY, also
known as BROADWAY BENJAMIN, and
DAVID WILLIAMS,
Defendants.
Before: K. F. KELLY, P.J., and M. J. KELLY and RONAYNE KRAUSE, JJ.
PER CURIAM.
In this dispute over the sale of real property, plaintiff, Brenda Ealey, appeals by right the
trial court’s order dismissing her claims. For the reasons more fully explained below, we affirm.
I. UNJUST ENRICHMENT AND CONSUMER PROTECTION ACT
A. RES JUDICATA
Ealey first argues that the trial court erred when it dismissed her claims for unjust
enrichment and violation of the Michigan Consumer Protection Act (MCPA) on the ground that
these claims were decided in an earlier federal action and, for that reason, were barred under the
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doctrine of res judicata.1 This Court reviews de novo a trial court’s decision on a motion for
summary disposition. Washington v Sinai Hosp of Greater Detroit, 478 Mich. 412, 417; 733
NW2d 755 (2007). This Court also reviews de novo whether the trial court properly applied the
doctrine of res judicata. Peterson Novelties, Inc v City of Berkley, 259 Mich. App. 1, 10; 672
NW2d 351 (2003).
The doctrine of res judicata has been held to apply when an original action was filed in
federal court and a subsequent action is then brought in state court. McKane v City of Lansing,
244 Mich. App. 462, 466; 625 NW2d 796 (2001). Similarly, if a party “has litigated a claim in
federal court, the federal judgment precludes relitigation of the same claim in state court based
on issues that were or could have been raised in the federal action, including any theories of
liability based on state law.” Pierson Sand & Gravel, Inc v Keeler Brass Co, 460 Mich. 372,
380-381; 596 NW2d 153 (1999) (quotation marks and citation omitted). However, in this case,
the federal court plainly stated that it was dismissing the federal claims and not retaining
jurisdiction over the state claims; for that reason it dismissed the state claims without prejudice.
Ealey v Benjigates Estates, LLC, unpublished opinion of the United States District Court for the
Eastern District of Michigan, issued December 9, 2013 (Docket No. 13-10723). A dismissal
without prejudice does not constitute an adjudication on the merits. Yeo v State Farm Fire &
Cas Ins Co, 242 Mich. App. 483, 484; 618 NW2d 916 (2000). Moreover, when a plaintiff sues in
federal court and asserts both state law claims and federal law claims, and the federal court
refuses to retain jurisdiction over the state law claims after dismissing the federal law claims, the
plaintiff is not barred by res judicata from bringing the state law claims in state court. Pierson
Sand & Gravel, Inc, 460 Mich. at 382. Consequently, the trial court erred when it applied the
doctrine of res judicata to bar these claims.
B. FAILURE TO STATE VALID CLAIMS OF UNJUST ENRICHMENT AND A
VIOLATION OF THE CONSUMER PROTECTION ACT
Ealey also argues that the trial court erred to the extent that it dismissed her unjust
enrichment and MCPA claims on the ground that she failed to state a claim upon which relief
could be granted. Although the trial court did not cite this ground in its written order dismissing
these claims, the parties addressed it before the trial court and Elm Investment and Hudson ask
this Court to affirm on this basis. Because the parties addressed these issues and the issues are
ones of law that this Court can decide on the existing record, we elect to exercise our discretion
and analyze whether dismissal should have been granted under MCR 2.116(C)(8). See Sylvan
Twp v City of Chelsea, 313 Mich. App. 305, 329; ___ NW2d ___ (2015).
A claim for unjust enrichment involves the imposition of an implied contract to prevent
an inequity; however, courts cannot impose an implied contract when there is an express contract
covering the same subject matter. See Barber v SMH (US), Inc, 202 Mich. App. 366, 375; 509
NW2d 791 (1993). In her complaint, Ealey alleged that there was an express contract covering
1
The trial court’s oral ruling was somewhat unclear. Nonetheless, the trial court’s written orders
made it clear that it dismissed these claims under MCR 2.116(C)(7). See In re Contempt of
Henry, 282 Mich. App. 656, 678; 765 NW2d 44 (2009).
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the sale at issue. Nevertheless, she maintains that the unjust enrichment claim is merely an
alternative claim in the event that the contract is determined to be invalid given that Benjigates
had no interest in the property and that Elm Investment, the true owner of the property, was not a
party to the land contract. But the land contract has not been deemed invalid, and Ealey cites no
authority and offers no argument establishing that the facts she has alleged would invalidate the
land contract, particularly where she has received a deed and there are no alleged facts indicating
that Elm Investment has challenged the validity of the deed. Given these allegations, Ealey
failed to state a valid claim for unjust enrichment. Id.
“The Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq., prohibits
‘unfair, unconscionable, or deceptive methods, acts or practices in the conduct of trade or
commerce[.]’ ” Gorman v American Honda Motor Co, Inc, 302 Mich. App. 113, 128; 839 NW2d
223 (2013), quoting MCL 445.903(1). Ealey has not pleaded facts demonstrating that defendants
engaged in conduct prohibited under the MCPA. She made conclusory allegations that they
charged interest at a usurious rate and that no title-monitoring services were actually provided,
but failed to cite authority or establish whether or how such actions amounted to a violation of
the MCPA. This is particularly true given that, as discussed below, there were no
misrepresentations of fact, and she has already paid the finance charges, thereby waiving any
usury defense she may have had. Ealey has also received the deed to the property for which she
bargained in this transaction.
Ealey made numerous conclusory assertions that defendants violated the MCPA, but the
assertions were unsupported by facts and do not amount to a violation of the MCPA. She alleged
that they caused a probability of confusion or a misunderstanding of legal rights, obligations, or
remedies in violation of MCL 445.903(1)(n). Specifically, she referred to statements that she did
not need a lawyer and that the contract comported with Michigan law. She did not, however,
establish how the expression of an opinion on those matters created the requisite probability of
confusion or misunderstanding. She also alleged that they represented that the interest rate was
legal in violation of MCL 445.903(q), but—even if true—such a statement does not contravene
that provision. Ealey similarly asserted that defendants made misrepresentations of fact with
respect to the interest rate, in contravention of MCL 445.903(1)(bb), which bars “[m]aking a
representation of fact or statement of fact material to the transaction such that a person
reasonably believes the represented or suggested state of affairs to be other than it actually is.”
She did not, however, identify any misrepresentation of fact, as opposed to expressions of
opinion, as discussed below in connection with the fraud claim. She alleged that they took
advantage of her inability to protect her interests “by reason of disability, illiteracy, or inability
to understand the language of an agreement[,]” MCL 445.903(1)(x), but failed to state the
manner that they did so. Ealey also alleged that there were gross discrepancies between their
oral representations and the written agreement, contrary to MCL 445.903(1)(y), but failed to
identify the discrepancies. She further claimed there was a failure to reveal a material fact, the
omission of which tended to mislead or deceive, see MCL 445.903(1)(s), and asserted that the
parties entered into a consumer transaction in which she waived or purported to waive a right,
benefit, or immunity granted by law, see MCL 445.903(1)(t), but alleged no facts to support
either statement. Finally, she claimed that defendants failed to reveal material facts in light of
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representations of fact made in a positive manner, see MCL 445.903(1)(cc), but again made no
factual allegations to support this conclusion, as discussed in connection with the fraud and silent
fraud claims. Therefore, she failed to state a claim under the MCPA.2 And, because amendment
would be futile under the facts of this case, we conclude that Ealey is not entitled to an
opportunity to amend either claim. Kincaid v City of Flint, 311 Mich. App. 76, 94-95; 874 NW2d
193 (2015).
II. FRAUD, CONSPIRACY, AND CONCERT OF ACTION
Ealey next argues that the trial court erred when it dismissed her fraud, silent fraud, civil
conspiracy, and concert of action claims under MCR 2.116(C)(8). “This Court reviews de novo
a trial court’s decision on a motion for summary disposition.” Hackel v Macomb Co Comm, 298
Mich. App. 311, 315; 826 NW2d 753 (2012). “Statutory interpretation is a question of law we
review de novo, as is the interpretation of administrative regulations.” In re Petition of Attorney
General for Investigative Subpoenas, 274 Mich. App. 696, 698; 736 NW2d 594 (2007) (citations
omitted). Unambiguous statutory language must be enforced as written in accordance with its
plain meaning. Id.
A motion under MCR 2.116(C)(8) tests the legal sufficiency of the
complaint on the basis of the pleadings alone to determine if the opposing party
has stated a claim for which relief can be granted. A reviewing court must accept
all well-pleaded allegations as true and construe them in the light most favorable
to the nonmoving party. The motion should be granted only if no factual
development could possibly justify a recovery. [Id. at 315-316 (quotation marks
and citations omitted).]
“However, conclusory statements that are unsupported by allegations of fact on which they may
be based will not suffice to state a cause of action.” Michigan ex rel Gurganus v CVS Caremark
Corp, 496 Mich. 45, 63; 852 NW2d 103 (2014). A heightened pleading standard applies to fraud
claims, which must be stated with particularity. Id., citing MCR 2.112(B)(1).
The elements of common-law fraud are that (1) the defendant made a material
representation; (2) the representation was false; (3) the defendant knew that the representation
was false when making it, or made it recklessly without knowledge of its truth and as a positive
assertion; (4) the defendant made the representation while intending that the plaintiff would act
upon it; (5) the plaintiff acted in reliance on the representation; and (6) the plaintiff thereby
suffered injury. Titan Ins Co v Hyten, 491 Mich. 547, 555; 817 NW2d 562 (2012). “Each of
these facts must be proved with a reasonable degree of certainty, and all of them must be found
to exist; the absence of any one of them is fatal to a recovery.” Id. (quotation marks and citation
omitted). In general, “an action for fraudulent misrepresentation must be predicated upon a
statement relating to a past or an existing fact. Future promises are contractual and do not
constitute fraud.” Hi-Way Motor Co v Int’l Harvester Co, 398 Mich. 330, 336; 247 NW2d 813
2
Because of our resolution of this issue on appeal, we decline to consider whether the exemption
stated in MCL 445.904(1)(a) applies.
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(1976). An expression of a legal opinion is also not a false representation concerning an existing
or past fact and thus does not constitute fraud. Cummins v Robinson Twp, 283 Mich. App. 677,
697; 770 NW2d 421 (2009).
In support of her fraud claim, Ealey asserted that defendant, Antoine Hayes, also known
as Antoine Benjamin, Hudson, and defendant, Eugene W. Broadway, also known as Broadway
Benjamin, represented that the land contract she signed for residential property satisfied the
requirements of Michigan law and that she did not need a lawyer. These representations cannot
support a fraud claim because they were expressions of opinion that did not concern an existing
or past fact. Cummins, 283 Mich. App. at 697. It is also notable that the land contract addendum,
which Ealey signed, indicated that she acknowledged that “ample time has been allotted for
contract review and consultation by qualified legal counsel[]” and that she expressed full and
complete understanding of the terms of the document. The land contract addendum is attached
to her complaint and is thus part of the pleadings. See Laurel Woods Apartments v Roumayah,
274 Mich. App. 631, 635; 734 NW2d 217 (2007).
Even if, as Ealey claims, the land contract addendum contained a usurious interest rate3,
her sole remedy after signing the agreement was to assert usury as an affirmative defense in any
action brought to enforce the usurious contract; once she paid the usurious interest, she waived
her usury defense. Osinski v Yowell, 135 Mich. App. 279, 287-288; 354 NW2d 318 (1984).
Ealey may not use an independent action alleging a claim such as fraud as a vehicle to recover
amounts that she claims to have already paid as interest at an allegedly usurious rate. See Thelen
v Ducharme, 151 Mich. App. 441, 449; 390 NW2d 264 (1986); Sienkiewicz v Leonard Mtg Co, 59
Mich. App. 154, 156; 229 NW2d 352 (1975).
Ealey also alleged that defendants fraudulently concealed the legal interest rate that they
were permitted to charge on a land contract. Specifically, she alleged that they did not advise her
that the amount they were charging as a finance charge and for other charges exceeded the
amount allowed by law. However, Ealey did not allege facts establishing a misrepresentation
concerning a past or existing fact. Instead, she merely claimed that they failed to inform her that
the finance and other charges purportedly exceeded the amount allowed by law. To the extent
she claims that they failed to disclose information to her, this claim is more appropriately
analyzed as silent fraud, which is discussed later in this opinion.
Ealey also asserted that defendants charged a fee, comprised of $250 for enrollment and
$7 a month, for title monitoring services that, according to her, were never provided. She alleged
that the land contract addendum required her to pay this fee “for the sole purpose of increasing
Defendants’ profits and was not for any legal or legitimate purpose in that no title monitoring
services were provided.” At bottom Ealey claims that defendants did not actually provide the
service they contractually agreed to provide; that is, this is nothing more than a claim of a broken
3
The land contract addendum does not expressly impose the 70% interest rate claimed by Ealey.
Rather, she calculated this rate by treating the monthly “finance charge” of $175 that was
described as “the monthly fee for the time to complete the purchase” as an additional interest
payment.
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promise rather than a false representation concerning a past or existing fact and is therefore
insufficient to establish fraud. Hi-Way Motor Co, 398 Mich. at 336. A mere broken promise
does not comprise fraud. Derderian v Genesys Health Care Sys, 263 Mich. App. 364, 379; 689
NW2d 145 (2004). Although fraud may be predicated on a promise made in bad faith without
the present intention to perform, Ealey has alleged no facts demonstrating that they did not
intend to fulfill the promise at the time it was made. See id. at 378-379.
Ealey also asserted that the property was not properly transferred to her given that
Benjigates was represented to be the seller of the property, but the deed was from Elm
Investment and signed by Hayes as its agent under what Ealey characterizes as the “fictitious”
name of Antoine Benjamin. She cites no authority establishing that a deed is invalidated if it is
signed under an assumed or fictitious name. “An appellant’s failure to properly address the
merits of his assertion of error constitutes abandonment of the issue.” Peterson Novelties, Inc,
259 Mich. App. at 14 (quotation marks and citations omitted). A person who conducts or
transacts business under an assumed name is required to comply with certain registration
requirements. See MCL 445.1(1). Although a statutory penalty is imposed for failure to comply
with the registration requirements, the fact that such a penalty is provided “shall not be construed
to avoid contracts.” MCL 445.5. Hence, even if Hayes failed to file the required certificate for
use of the assumed or fictitious name Antoine Benjamin, this would not invalidate any contract
that he signed. A deed is a contract. In re Rudell Estate, 286 Mich. App. 391, 402; 780 NW2d
884 (2009). The deed therefore was not invalidated by Hayes’s use of the name Antoine
Benjamin when signing the deed even if he did not register the assumed name. Ealey also fails
to explain how the deed is invalidated merely by virtue of the fact that the land contract and land
contract addendum failed to disclose Elm Investment as the owner of the property, particularly
given that the deed itself identifies Elm Investment as the owner and there is no indication that it
has challenged the validity of the deed. And even if the property was not properly transferred to
Ealey, this would amount to a mere broken promise, which is insufficient by itself to establish
fraud. Derderian, 263 Mich. App. at 379.
Ealey failed to state a valid claim of common-law fraud.
Ealey next argues that the trial court erred when it determined that she did not state a
valid claim of silent fraud. Silent fraud is the same as common-law fraud except that it involves
the failure to disclose a material fact that the defendant was under an obligation to disclose.
Alfieri v Bertorelli, 295 Mich. App. 189, 193; 813 NW2d 772 (2012). “Such a duty may arise by
law or by equity; an example of the latter is a buyer making a direct inquiry or expressing a
particularized concern. A misleadingly incomplete response to an inquiry can constitute silent
fraud.” Id. (citations omitted). “A plaintiff cannot merely prove that the defendant failed to
disclose something; instead, a plaintiff must show some type of representation by words or
actions that was false or misleading and was intended to deceive.” Lucas v Awaad, 299 Mich
App 345, 364; 830 NW2d 141 (2013) (quotation marks omitted).
In her complaint, Ealey failed to allege a valid duty to disclose. “Whether a duty exists is
a question of law, not a question of fact. Only factual allegations, not legal conclusions, are to be
taken as true under MCR 2.116(C)(8).” Id. at 365 (quotation marks and brackets omitted).
Ealey alleged that Hayes, Hudson, and Broadway failed to disclose to her that the land contract
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did not satisfy the requirements of Michigan law given the allegedly usurious interest rate. In
support of this contention, she cites MCL 565.965 and Mich Admin Code, R 339.22333(1).
MCL 565.965, which is part of the Seller Disclosure Act (SDA), MCL 565.951 et seq.,
provides: “An agent of a transferor shall not be liable for any violation of this act by a transferor
unless any agent knowingly acts in concert with a transferor to violate this act.” She fails to
elaborate why she believes this provision created a duty of disclosure regarding the requirements
of Michigan law concerning interest rates, or to cite authority establishing that the statute creates
such a duty. The disclosures required by the SDA concern the condition of the property rather
than the requirements of Michigan law concerning interest rates or other aspects of the
transaction. See MCL 565.957.
Likewise, the administrative rule Ealey cites, Rule 339.22333(1), which is part of the
rules governing the licensure of real estate brokers and salespersons, see Mich Admin Code, R
339.22101 et seq., appears, when read in context with Rule 339.22333(2), to be limited to
disclosures concerning the condition of the real estate. Rule 339.22333 states:
(1) A licensee shall not, directly or indirectly, misrepresent material facts.
(2) A licensee’s full disclosure to a buyer or seller of material facts within his or
her knowledge about the condition of the real estate offered shall not be grounds
for disciplinary action, despite a claim by the buyer or seller that the disclosure
constituted disloyalty to the buyer or seller in violation of an agency relationship.
[Emphasis added.]
But even if the prohibition on misrepresenting material facts in Rule 339.22333(1) is not limited
to the condition of the real estate as set forth in Rule 339.22333(2), Ealey fails to explain how
this prohibition on misrepresenting material facts creates a legal duty to disclose the
requirements of Michigan law concerning interest rates. There is no indication in the text of the
rule that it creates a duty of disclosure regarding the terms of the transaction between the buyer
and seller or the requirements of Michigan law. Also, she has identified no past or existing fact
about which anyone failed to make a disclosure; as discussed earlier, it was a matter of legal
opinion whether the land contract terms in this case satisfied the requirements of Michigan law.
Because Ealey has not established the existence of a legal or equitable duty of disclosure that
was violated, she has failed to state a valid claim of silent fraud. Moreover, given the facts of
this case, amendment would be futile. Kincaid, 311 Mich. App. at 94-95. Consequently, the trial
court did not err when it dismissed these claims under MCR 2.116(C)(8).
Ealey next challenges the dismissal of her civil conspiracy and concert of action claims.
“A civil conspiracy is a combination of two or more persons, by some concerted action, to
accomplish a criminal or unlawful purpose, or to accomplish a lawful purpose by criminal or
unlawful means.” Admiral Ins Co v Columbia Cas Ins Co, 194 Mich. App. 300, 313; 486 NW2d
351 (1992). If a plaintiff fails to establish any tortious conduct, the plaintiff’s conspiracy action
must also fail. Id. Similarly, “to establish a concert-of-action claim, a plaintiff must prove that
all defendants acted tortiously pursuant to a common design that caused harm to the plaintiff.
For both civil conspiracy and concert of action, the plaintiff must establish some underlying
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tortious conduct.” Urbain v Beierling, 301 Mich. App. 114, 132; 835 NW2d 455 (2013)
(quotation marks and citations omitted).
Here, Ealey argues that underlying tortious conduct exists on the basis of her allegations
of fraud, silent fraud, and MCPA violations. She argues that the trial court improperly dismissed
those underlying claims, and that her civil conspiracy and concert of action claims are also valid
on the basis of those underlying claims. But as discussed, Ealey has failed to state valid claims
for fraud, silent fraud, and MCPA violations. And she identifies no other tortious conduct that
she believes the underlying facts establish. Because Ealey failed to allege facts establishing that
defendants committed an underlying tort, she cannot sustain her civil conspiracy and concert of
action claims, and the trial court thus properly granted summary disposition on those claims. Id.
The trial court properly dismissed Ealey’s claims under MCR 2.116(C)(8).
Affirmed.
/s/ Kirsten Frank Kelly
/s/ Michael J. Kelly
/s/ Amy Ronayne Krause
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