TOV Injury and Safety Blog

Court holds that statute of limitations ran while case was on appeal

A Traverse City couple sued the sellers from whom they bought their home after learning that the sellers experienced an undisclosed insect infestation.  They dropped fraud and contract claims at the suggestion of their lawyers and achieved a verdict for innocent misrepresentation.  This appears from the outside to have been a reasonable trial tactic at the time. The sellers appealed, however, and the Court of Appeals ruled that terms of The Seller's Disclosure Act invalidated their innocent misrepresentation claim.  Therefore, the verdict was overturned, the plaintiffs claims were dismissed, and the couple sued their attorneys for malpractice.

Homeowner improperly foreclosed upon loses "third strike."

Like many others, Donald Bond admitted he was in default on his mortgage. Nevertheless, when U.S. Bank commenced foreclosure on his property, it did not even have a legal interest in Bond's mortgage.  It acquired an interest on October 13 of 2008, but had sued for foreclosure in District Court in September of 2008.  Bond fought the Bank's eviction action, claiming that the bank lacked the legal right to pursue foreclosure, however, the trial judge mistakenly ruled that the mortgagee's interest in the property was not a proper defense to an eviction action. 

Bond did not appeal that result, but instead brought a separate action to enforce his legal rights.  Unfortunately, the court in the later action ruled that under existing law the decision in the eviction action determined Bond's rights and he could not "re-litigate" the issue.  Even though the prior decision was mistaken, his rights were foreclosed by his failure to appeal that ruling.

Title insurer owes no duty to defend claims of reciprocal negative easement

Kevin T. Blaser and others sued to impose restrictions on property owned by Dale M. DeVries and Pernella Fowler. They argued that a seventh lot subdivided by the third-party defendants had mistakenly omitted the sought-after restrictions applicable to six contiguous lots and that the restrictions should be imposed. The defendants sought coverage and a defense from their title insurer, First American Title.  The title company sought summary disposition, relying on exclusions in the policy language for title risks that did not appear in the chain of title in public records.  The trial court had held that the exclusion language in the policy did not apply, however the Court of Appeals reversed.  It held that the language "clearly applied" to the pending claims and therefore the insurer owed no duty to defend the case.

Realtors required to defend fraud claim

Frank and Tonya Alfieri sued Marc Bertonelli and others, including Coldwell Banker Weber Seiler Realtors, allegin fraud in the sale of a condominium.  The Alfieris bought a condominium in an restored, previously abandoned factory.  They alleged that the defendants failed to disclose that the factory, which had previously been contaminated with the chemical TCE, had not been adequately decontaminated. 

Appeals court insists on enforcement of attorney fee provision in purchase agreement

A Leelanau Circuit judge declined to enforce a buy-sell provision granting attorneys fees to the sellers after a lawsuit brought by the purchasers was dismissed.  The parties appealed and the Court of Appeals sent the case back to the trial judge with instruction to enforce the fee award provision.  Under traditional American law, prevailing parties are not awarded attorneys fees unless there is a court rule or statute that grants fees in a particular circumstance.  The case is Roberts v. Saffell.

Farmer's ex-wife loses case against the farm's accountant

Judith Zwerk sued Walter Don Zehnder in Saginaw Circuit Court after Zehnder removed her name from the farm's corporate books, eliminating her ownership of stock.  After a number of complicated rulings, the jury ruled that Zehnder had committed a form of silent fraud by not disclosing his "succession plan" maneuvering to Zwerk, but that Zwerk had suffered no damages as a result:  it appears that the jury determined that Zwerk's damages had been fully compensated by adjustments to the marital estate in her divorce.

Zwerk appealed but the jury's decision was upheld.  The Court held that the lower court did not err in allowing Zehnder to testify that he thought Zwerk knew about his actions and approved.  It also held that the trial judge did not err in admitting the pleadings from the divorce action.

Court reaffirms principle that unlicensed contractor may not sue homeowner

Southeastern Tile, LLC, sued Phillip Pierce and Sherri Pierce, after placing a lien on their home, when a contractor wrote the company a bad check to cover sub-contracted tile work.  The homeowners argued that Southeastern lacked the capacity to sue them, because neither the general contractor, nor Southeastern was a licensed building contractor.  The Court agreed and upheld an award of  $12,000.00 in attorneys fees and costs incurred by the homeowners.

Landowner may not maintain public nuisance claim arising out of alleged mis-use of common area

The Ford Motor Company deeded parcel of woodland area 15-20 feet behind the Fairlane Woods Country Townhomes Condominium to Association with restrictions on development.  A resident, Jack Robinson, believed that some of his neighbor owners were violating the restrictions by clearing and gardening a section of the woodland.  He sued them and the Condominium group to prohibit non-conforming uses of the woodland.

Title insurance company is not responsible for expenses arising out of trespass claim

Carlton Dean owned property in Leelanau County that he had insured through Fidelity National Title Company.  A dispute arose between Dean and a contiguous neighbor, arising out of Dean's use of an abandoned road over the neighbor's property.  The neighbor sued for trespass and Dean sued Fidelity to provide him with a defense.    The neighbors worked out their differences, but without the cooperation of Fidelity.  The Court ultimately ruled that Fidelity's title insurance contract did not protect against liability arising out of road right-of-way at issue.

Sellers reinstate claim against buyer who backed out of purchase

David A Spindler and Brenda K. Spindler thought they had their house sold to Michael I. Wiegand.  Unfortunately, Wiegand did not follow through on financing and closing the deal and the Spindlers sued.  Wiegand argued that he was unable to obtain financing and that in any event, the Spindler's only remedy was a liquidated damages clause.  The Court of Appeals reversed the lower court and reinstated the Spindler's lawsuit.  It ruled that the trial court was premature in summarily dismissing their claims.

Fraud verdict is upheld

Gabriela Giura and three relatives sustained their fraud verdict against Aldo Bartolomeo and Source One Mortgage Corporation, doing business as Maximum Mortgage.  The Defendants had appealed, arguing that the lower court erred by not affording the plaintiffs' signatures a "presumption" of authenticity.  The Court held that the initial presumption that the plaintiffs' signatures on real estate documents and promissory notes were genuine was overcome by straightforward testimony denying that the Plaintiffs' executed the documents. Since the evidence presented by the Plaintiffs was clear, positive and credible, the lower court was within its authority in rejecting the presumption created by notarization.

Partner is not "apparent agent:" fraud does not bind his partners

Industrial Drive, LLC sued Richard Werner and his real estate partners.  Werner had pledged partnership land for his own personal debt.  Relying on affidavits of authority allegedly signed by Werner's partners, Industrial Drive took the property as collateral but when they attempted to seize it to pay the debt, the partners objected.  The Court of Appeals upheld the trial court's decision that Werner was not an "apparent" or "ostensible" agent of the partnership.  It noted that the only basis for reliance upon Werner's apparent authority to pledge the partnership property were the affidavits signed by his partners, and these turned out to be fraudulent.  The Court cited long-standing Michigan jurisprudence confirming that fraudulent documents cannot be used against the party defrauded:  "forged papers cannot be made the basis of a recovery...against the supposed maker."

Condo owner's claim against Condo association is recognized by Court of Appeals

Beth A. O'Sullivan claimed that water pooled and turned to ice on the steps leading to her condominium.  She also claimed that the condition had existed since the condo was built, and that she had complained about it without any response by the Association.  After she fell and suffered a fractured ankle, she sued the Condo Association for failing to correct the defect.  The trial court dismissed her claim, based on the Association's argument that the roof defect and ice accumulation were "open and obvious conditions" caused by the developer which the Condo Association owed no duty to eliminate.

Insurer avoids payment for water damage caused by defective workmanship

TMW Enterprises purchased an existing building and insured it with Federal Insurance Company under an "all risks" policy.  Soon after buying the building, TMW discovered that the building had suffered substantial water damage caused by errors made during its original construction.  TMW undertook repairs, totaling several million dollars, and argued that Federal should be responsible for some of its repair costs.  Federal argued in response that any damage to the building was excluded from coverage under a policy exclusion relating to defective workmanship. 

Court addresses statute of limitations for claim against appraisal service

Capital Bankcorp Limited sued the Landheer Appraisal Service in Ottawa Circuit Court in 2008, alleging that Landheer made significant errors in its evaluation of a 20-unit motel.   Capital Bankcorp was investigating a loan to support the development of the property into separate units to be sold with separate mortgages.  On the basis of an $800,000 appraisal, the bank loaned the developers $600,000 in 2002. 

Court of Appeals rejects malpractice insurer's misuse of legal procedures

In Estate of Daniel Jilek vs. Carlin Stockson, M.D., et al., the Michigan Court of Appeals overturned a jury verdict for the medical providers, concluding that it was a result of improper legal tactics by the attorneys and error by the trial court.  The Court noted that the attorneys for Stockson engaged in protracted "gamesmanship" by attempting to stall a decision about the proper standard of care--without identifying what it claimed to be the proper standard--until after the statute of limitations had been exhausted. 

Rare Michigan product liability claim is dismissed by Court of Appeals

Since Michigan adopted product liability "reforms" two decades ago, it is very rare to see a product liability claim in this state.  Among other "reforms" the Legislature ruled that if a drug is approved by the FDA--even based on fraud by the manufacturer--the manufacturer is immune from liability.  The other "reforms" included holding manufacturers to a lower standard of care and eliminating a retailer's responsibility for selling a defective product.  This week, the Court of Appeals decided that Brown and Myers-Brown v. Indiana Building Systems LLC, et al., should be dismissed for failing to establish the claimed defect.  The Plaintiffs had claimed that a missing vent pipe in their manufactured home created a water damage and mold problem that forced them to move out. 

Another party denied justice by Engler Majority's decision eliminated "continuing wrong" statute of limitations.

For decades, Michigan did not allow the statute of limitations to run if a wrong-doer continued engaging in the same wrongful conduct.  This policy encouraged victims to be patient in responding to negligence and nuisance and to seek out non-litigious solutions and negotiated settlements.  Several years ago, however, the insurance-friendly majority of the Michigan Supreme Court handed down a ruling completely wiping out the "continuing wrong" doctrine.  Under the reactionary approach of the Engler justices, the statute of limitations would run from the first day of any trespass or tort, and regardless of how many times it was repeated, the victim would have no recourse after the statute of limitations was applied to that first transgression.

Mother's death arrangements result in family litigation

Robert Shaeffer sued his sister, Mary Burghardt, for silent fraud and conversion.  In short, he argued that Mary had abused her rights as a signatory on bank accounts by spending money for her own purposes during her mother's life and then attempting to keep the balance when Mom died.  He argued that nearly $250,000.00 in the accounts was intended to be shared between the five siblings and ultimately the jury agreed, awarding the four plaintiffs about $230,000.00.  On appeal, the higher court concluded there was ample evidence to support the jury's decision over-riding Mary's presumptive ownership of the bank accounts as a "surviving" joint owner.

Court upholds modest verdict for fiduciary fraud

Bert Elgersma sued Re/Max of Grand Rapids and its agent, John Postma, alleging fraud in the sale of his house.  The jury found a breach of fiduciary duty, but awarded Elgersma only $25,000.00, even though Elgersma claimed a loss of several hundred thousand dollars in the sale of his house.  Ultimately, both the trial court and the Court of Appeals upheld the jury's determination after Eglersma sought relief by additur.

What "real" state Attorneys General do for their constituents

Michigan's Attorney General Cox likes to posture himself as an advocate for consumers, but other than cherry-picking a couple of "Hot-button" items, like the Chicago River asian carp, he hasn't done anything for Michigan Consumers.  This week, we saw an example of what "real" attorneys general can accomplish.  In Florida, distressed homeowners received checks of $6,000.00 each written by Countrywide Financial Corporation as part of a $17 million dollar class action settlement with Florida's Attorney General. 

Florida's Attorney General Bill McCollum acted on the widespread claims that Countrywide engaged in deceptive and unfair trading practices which placed consumers in mortgages under terms that they could not possibly afford. McCollum collected another four million dollars to assist in foreclosure defense assistance programs.  Michigan's consumers could use similar, aggressive protection, but in a state government that is paralyzed by pro-business Republicans, you can guarantee that nothing like this will ever happen.

Condo owners may sue developer; trial court's spoliation order was too broad

The Court of Appeals recently decided several issues in a civil action between Oakland County's Heritage in the Hills condo owners and the developer.  The owners argued that the developer sold property with a number of defects, including concrete common areas that were deteriorating;  they argued that the developer violated the consumer protection act.  The trial court had dismissed the owners' claims and also held that they could not prove that the concrete was defective because they had not retained the samples that they tested and which allegedly documented shoddy workmanship.

Court allows evidence from litigant who had earlier claimed fifth amendment privilege

Paul Paulson claimed the fifth amendment privilege against self-incrimination in a debtor's examination arising out of his bankruptcy claim.  Later, the assignee of Old Kent Bank, who was a major creditor of his defunct business, Lakeside Machine, Inc., sued Paulson and his wife for fraud or "reckless disregard of the truth."  The wife claimed that she was simply acting in a ministerial role when she signed various loan documents for the bank, and her husband filed an affidavit supporting this claim. 

Title Agency must defend claim of gross negligence

When BCV Colonnade attempted to sell the K-Mart it owned in Jackson, it relied upon United Realty Companies, LLC and the Morris Home Title Agency to close the transaction. It required the buyer to maintain a $100,000.00 cash deposit with Chicago Title Insurance Company and Morris Home until the closing date, and was twice assured by Morris that the deposit was secure.  The buyer failed to perform, and when BCV sought the escrow from Morris, it was informed that the buyer had also failed to place the cash deposit with Morris. 

Verdict in favor of contractor upheld

John Kotsonis sued Raymond Anglin, his contractor, for defective work installing a roof on Kotsonis' home.  The jury found that Anglin's work was not in accordance with industry standards, but also held that installing the insulation and vapor barrier upside down did not "cause" Kotsonis' condensation and moisture problems.   The Court of Appeals upheld the defense verdict, finding that there was adequate evidence to support the defendant's claim that he acted reasonably in installing the vapor barrier upside down, expecting it to be removed and reinstalled after drywall repairs were completed.  While the defendant's claim sounds preposterous and it appears that something else influenced the jurors' decision, the Kotsonis case confirms how difficult it is for a losing litigant to overturn a jury's verdict.

Title insurer once again insulated from error by contract language

In an Emmet County case filed by Brian Ludlow, the Court was forced to adjudicate the relative rights to Block 16 in a Carp Lake Township platted subdivision.  The Defendants in the case, who were accused of selling more than they owned [specifically abandoned roadways], joined their title insurers in the action as third-party defendants.  The latter defendants, Petoskey Title Company and Lawyer's Title Insurance Corporation, argued that they should be dismissed because their contract did not insure against the Plaintiff's claims. 

Court of Appeals decides to publish case rejecting title insurer negligence

Several weeks ago, we described the holding in Wormsbacher and W & FLLC v. Phillip R. Seaver Title Company, Inc., holding, in which a panel of the Court of Appeals concluded that a title insurance company cannot be held responsible for negligence.  This month, the panel decided the decision should be published and serve as a precedent for the proposition that title insurers can only be held responsible to fulfill the duties they spell out in the title insurance contract.  Under the decision, insureds have no remedies other than those agreed to by the insurer in the contract.  The judges concluded that if a buyer or developer wants a remedy in the event of an error in examining the title, it should pay for an abstract rather than a title insurance commitment.

Court analyzes mobile home mold claim

Steven and Amber Raab purchased a manufactured home and leased a lot from River Ridge-Saline, LLC in November 2000.  The lot didn't drain properly, resulting in mold problems focused primarily underneath the mobile home.  The Raabs consulted experts who documented the mold problems, however, their findings did not indicate catastrophic damages.  One expert did testify, however, that it would cost $48,000.00 to remediate the problems.  Despite this claim, the trial court removed the case to District Court on the basis that reasonable minds could not conclude that the family suffered more than $25,000.00--the jurisdictional limit of the Court.

Party added through "Notice of Third Party Fault" seeks sanctions

The Koza family sued a number of parties after their new mobile home became consumed by toxic mold.  One of the original Defendants identified a number of contractors who helped place the home, including Unique Electric, as "non parties at fault" in causing the water leakage that resulted in the runaway mold problem. The Plaintiff family joined them in the suit, which was ultimately settled by the original defendants.  Meanwhile "Unique" was dismissed by summary disposition and sought costs from the Koza family, maintaining the claim against Unique was frivolous.

Title insurers aren't responsible for negligence in Michigan

Apparently because there was concern they would flee the state, Michigan title insurers have gradually been granted immunity by state court judges, at least according to the Court of Appeals' recent ruling in Wormsbacher v. Phillip R. Seaver Title Co.  A buyer who relied on title searches before buying land in a Rochester subdivision attempted to sue the title company when it turned out that the company failed to advise him of restrictions prohibiting commercial use of the land.

Purchasers cannot sue over mold problem

Dr. Charles Gabe and his wife bought a home knowing that it had water problems in the basement.  They attempted to sue when they later learned of mold problems in the walls.  They couldn't point to an express misrepresentation by the sellers, however, they believed that the sellers were guilty of "silent" fraud--that is, failing to disclose all that they knew about the existence of "material" water and mold problems.