Opinion
No. 313353
07-01-2014
VICTOR COLETTA and DAVID DIPONIO, Plaintiffs-Appellants, and JAMES CEBULSKI and MARIE CEBULSKI, Plaintiffs, v. CITIZENS FIRST MORTGAGE, L.L.C., d/b/a CF BANCORP MORTGAGE COMPANY, Defendant-Appellee.
UNPUBLISHED
St. Clair Circuit Court
LC No. 10-000869-CB
Before: SAWYER, P.J., and METER and FORT HOOD, JJ. PER CURIAM.
Plaintiffs, Victor Coletta and David DiPonio, appeal as of right the trial court's order granting judgment in favor of defendant in this breach of contract action. We affirm.
Plaintiffs James Cebulski and Marie Cebulski are not parties to this appeal. Their claims were resolved before the bench trial below. Therefore, we use "plaintiffs" to refer to only DiPonio and Coletta.
This case arises from Coletta's and DiPonio's purchase of a "package" of real properties in 2009. The packages each contained 10 single-family homes. Plaintiffs planned to make repairs to the homes and rent or sell them, using the rental income and sale proceeds to pay off the cost of purchase. It is undisputed that DiPonio and Coletta both received mortgage loans from defendant to pay for the properties. It is also undisputed that DiPonio never received one of the homes he purchased and Coletta never received three of the homes he purchased.
Plaintiffs were introduced to the idea of this purported investment opportunity by David Griffor, a loan officer working for defendant. Plaintiffs' primary contact during the transaction was Michelle Shepley, another loan officer working for defendant. Plaintiffs believed that they were purchasing the properties in question from defendant. Although defendant does not appear as a party on the real estate purchase agreements, plaintiffs alleged at trial, and argue on appeal, that defendant is liable for the acts of its employees and agents, Griffor and Shepley, who breached the agreements.
"We review a trial court's findings of fact in a bench trial for clear error and its conclusions of law de novo." Chelsea Inv Group LLC v City of Chelsea, 288 Mich App 239, 250; 792 NW2d 781 (2010). A finding of fact is clearly erroneous if it lacks evidentiary support and "this Court is left with a definite and firm conviction that a mistake has been made." Id. at 251. The proper interpretation of a contract is a question of law that this Court reviews de novo. Northline Excavating, Inc v Livingston Co, 302 Mich App 621, 627; 839 NW2d 693 (2013).
First, we note that the breach of contract that plaintiffs alleged in their complaint is not the same breach of contract that they argued at trial and assert on appeal. Plaintiffs' complaint alleges that defendant's "refusal and/or failure to properly fund the loans as agreed to constitute[s] a breach of the underlying contractual agreement." Defendant's duty to fund the loans arose from the mortgage contracts and promissory notes. These are the only contracts referenced in the complaint. They are also the only contracts attached to the complaint, as required under MCR 2.113(F) ("[i]f a claim or defense is based on a written instrument, a copy of the instrument or its pertinent parts must be attached to the pleadings as an exhibit"). See also Laurel Woods Apartments v Roumayah, 274 Mich App 631, 635; 734 NW2d 217 (2007).
At trial, however, plaintiffs did not argue that defendant failed to "properly fund the loans as agreed." Instead, they argued that they incurred damages because defendant failed "to close the properties in a timely manner" or "deliver the properties at the closing." The duty to deliver the properties arises from the purchase agreements, not the mortgage contracts. Plaintiffs asserted that defendant was liable under the purchase agreements because it is liable for the acts of its employees, Griffor and Shepley. Plaintiffs claimed that Griffor and Shepley were acting as agents of defendant when they approached plaintiffs about purchasing the properties and then "engaged the [p]laintiffs in the transactions at issue."
It is well-established that "a party is bound by its pleadings." Angott v Chubb Group of Ins Cos, 270 Mich App 465, 470; 717 NW2d 341 (2006). In this case, plaintiffs' complaint alleges a breach of certain contracts, while their arguments at trial and on appeal relate to the breach of different contracts. MCR 2.118(C)(1) allows a party to move to amend the pleadings to conform to the evidence raised at trial, but plaintiffs have never moved to amend their complaint. Nonetheless, we address the arguments that plaintiffs raise on appeal below and find that they lack merit. We do not address the claims actually raised in plaintiffs' complaint, including breach of the mortgage contracts, promissory estoppel, and unjust enrichment. Plaintiffs have abandoned these issues; they do not address them in their appellate brief. See Gentris v State Farm Mut Auto Ins Co, 297 Mich App 354, 366-367; 824 NW2d 609 (2012).
The trial court did not err in concluding that plaintiffs have no cause of action. Defendant was not a party to the contracts at issue—Coletta's and DiPonio's purchase agreements. When reviewing a breach of contract claim, this Court looks to the plain language of the agreement to determine the parties' intent. Harbor Park Market v Gronda, 277 Mich App 126, 130; 743 NW2d 585 (2007). The goal of contract interpretation is to enforce that intent. Id. When interpreting a contract, we must give the words their plain and ordinary meaning. See Northline Excavating, 302 Mich App at 627.
In this case, the plain language of the purchase agreements clearly indicates that defendant was not a party to those contracts. Coletta's purchase agreement, has "David R. Griffor" printed below the seller's signature line. DiPonio's purchase agreement expressly states that Griffor, a member of Michigan & Florida Capitol, is the seller. "It goes without saying that a contract cannot bind a nonparty." AFSCME Council 25 v Wayne Co, 292 Mich App 68, 80; 811 NW2d 4 (2011), quoting Equal Employment Opportunity Comm v Waffle House, Inc, 534 US 279, 294; 122 S Ct 754; 151 L Ed 2d 755 (2002).
Thus, the plain language of the purchase agreements does not support plaintiffs' contention that they were actually contracting with defendant to purchase the properties. The agreements themselves indicate that a different individual or entity—Griffor or Michigan & Florida Capitol—was the seller. Plaintiffs' understanding of who was selling the properties is irrelevant where the purchase agreements indicate that it was Griffor or Michigan & Florida Capitol. "Michigan law presumes that one who signs a written agreement knows the nature of the instrument so executed and understands its contents." Watts v Polaczyk, 242 Mich App 600, 604; 619 NW2d 714 (2000). Thus, plaintiffs are charged with knowing what was written in the purchase agreements, including who was listed as the seller. See id. The "mere failure to read an agreement is not a defense in an action to enforce the terms of a written agreement." Id. Because the express language of the agreements indicates that defendant was not the seller, the agreements are not binding on defendant. See Harbor Park, 277 Mich App at 130; AFSCME Council 25, 292 Mich App at 80.
Plaintiffs attempt to circumvent the plain language of the purchase agreements by arguing that Griffor and Shepley were acting as defendant's agents. As the trial court concluded, any evidence that Griffor, Shepley, or Michigan & Florida Capitol were acting as defendant's agents is barred by the parol evidence rule. Parol evidence, or extrinsic evidence, "is generally not admissible to vary or contradict the terms of a clear and unambiguous contract." Smith v Smith, 292 Mich App 699, 702; 823 NW2d 114 (2011). While parol evidence can usually be used to show that a written agreement is not fully integrated, an explicit integration clause is conclusive evidence that an agreement is "the final embodiment of [the parties'] understanding." UAW-GM Human Resource Ctr v KSL Recreation Corp, 228 Mich App 486, 493-495; 579 NW2d 411 (1998).
In this case, there is nothing in the agreements indicating that Griffor or Michigan & Florida Capitol were acting on behalf of defendant as its agent. Parol evidence is inadmissible to prove otherwise because the agreements each include an explicit integration clause. See UAW-GM, 228 Mich App at 493-495. Thus, the purchase agreements constitute "the final embodiment of [the parties'] understanding," and extrinsic evidence is inadmissible to alter the terms of the contract, including the identities of the parties. See Smith, 292 Mich App at 702; UAW-GM, 228 Mich App at 493.
While parol evidence can be used to demonstrate a contract is void because it was based on fraud, plaintiffs did not allege fraud in their complaint. See Barclae v Zarb, 300 Mich App 455, 480; 834 NW2d 100 (2013). In addition, plaintiffs do not contend that the purchase agreements are void. Rather, plaintiffs rely on the validity of the agreements in arguing that they were breached. See Miller-Davis Co v Ahrens Const, Inc (On Remand), 296 Mich App 56, 71; 817 NW2d 609 (2012), lv gtd on other grounds 494 Mich 861 (2013) ("[a] party claiming a breach of contract must establish . . . that there was a contract").
To the extent that plaintiffs argue that defendant is liable for the acts of its employees under a theory of vicarious liability, plaintiffs' argument also lacks merit. Under the doctrine of respondeat superior, "[a]n employer is generally liable for the torts its employees commit within the scope of their employment." Hamed v Wayne Co, 490 Mich 1, 10-11; 803 NW2d 237 (2011). Plaintiffs have not alleged that Griffor or Shepley committed a tort for which defendant should be held vicariously liable. Rather, plaintiffs assert a breach of contract claim. Again, the plain language of the purchase agreements show that defendant was not the seller. There is no indication in the agreements that Griffor or Michigan & Florida Capitol was acting as an agent or employee of defendant when signing the agreement. Any evidence showing otherwise is barred by the parol evidence rule. See Smith, 292 Mich App at 702.
Because we conclude that plaintiffs are not entitled to relief, we need not address whether rescission is an appropriate remedy.
Affirmed.
David H. Sawyer
Patrick M. Meter
Karen M. Fort Hood