Borsuk v. Wheeler

• Decision Date: 07 June 1984
• Docket Number: Docket No. 65942
• Citation: 133 Mich.App. 403,349 N.W.2d 522
• Parties: Kenneth R. BORSUK, and Madeline C. Borsuk, Plaintiffs-Appellees, v. Willie Joe WHEELER, John Doe and Richard Roe, Defendants, and Advance Mortgage Corporation, Defendant-Appellant. 133 Mich.App. 403, 349 N.W.2d 522
• Court: Court of Appeal of Michigan — District of US

Page 522

349 N.W.2d 522

Kenneth R. BORSUK, and Madeline C. Borsuk Plaintiffs-Appellees, v. Willie Joe WHEELER, John Doe and Richard Roe, Defendants and Advance Mortgage Corporation, Defendant-Appellant.

Docket No. 65942.

133 Mich.App. 403, 349 N.W.2d 522

Court of Appeals of Michigan.

Submitted Oct. 5, 1983.

Decided April 2, 1984.

Released for Publication June 7, 1984.

[133 MICHAPP 405] Pevos & Pevos by Raphael I. Pevos, Southfield, for plaintiffs-appellees.

Butzel, Keidan, Simon, Myers & Graham by Gordon W. Didier and Dennis K. Egan, Detroit, for defendant-appellant Advance Mortg. Corp.

Before KELLY, P.J., and HOOD and SHEPHERD, JJ.

SHEPHERD, Judge.

Defendant-appellant Advance Mortgage Corporation appeals by leave granted from a May 10, 1982, circuit court order denying its motion for summary judgment under GCR 1963, 117.2(1) for failure to state a claim upon which relief can be granted. The case arose out of a conspiracy allegedly entered into between defendant Willie Joe Wheeler and employees of defendant Advance Mortgage Corporation to defraud the plaintiffs. The plaintiffs alleged that defendant Wheeler contracted to purchase their house and to apply for a mortgage with defendant Advance Mortgage Corporation (hereinafter Advance). The employees of Advance allegedly falsified earnings and savings records in order to qualify defendant Wheeler for the mortgage. Shortly before the closing, and pursuant to the conspiratorial plan, defendant Wheeler demanded a renegotiation of the contract price, which plaintiffs refused to do. Wheeler failed to appear at the closing, thus resulting in damages to the plaintiffs.

[133 MICHAPP 406] The issue to be decided on appeal is whether the plaintiffs' first amended complaint was sufficiently drafted to avoid a summary judgment for failure to state a claim upon which relief can be granted. The more relevant portions of the complaint set forth the following allegations:

"13. That the representations made by Defendant WHEELER were made falsely, and solely with the purpose of inducing Plaintiffs to enter into a binding agreement whereby they would be precluded from selling their home to others, and with the deliberate and purposeful intent to attempt to renegotiate the down payment at the last minute.

"14. Plaintiffs are informed and have reason to believe that certain employees of Defendant ADVANCE MORTGAGE CORPORATION aided, abetted, assisted and conspired with Defendant WHEELER to falsify financial and earnings data in order that Defendant WHEELER would qualify for mortgage approval from Defendant ADVANCE MORTGAGE CORPORATION.

"15. That if not for the aforesaid unlawful and fraudulent conspiracy, Defendant WHEELER would not have been approved for the mortgage applied for.

"16. That Defendants acted purposefully and maliciously in their scheme to defraud Plaintiffs, without regard to the consequences to Plaintiffs."

The trial judge denied the motion for summary judgment on the grounds that the complaint did state a cause of action, in light of the fact that Michigan is a notice-pleading state.

A motion for summary judgment brought under GCR 1963, 117.2(1) merely tests the legal sufficiency of the claim as determined from the pleadings alone. Karr v. Board of Trustees of Michigan State University, 119 Mich.App. 1, 325 N.W.2d 605 (1982); Apollinari v. Johnson, 104 Mich.App. 673, 305 N.W.2d 565 (1981). The factual allegations of the complaint are taken as true, along with any [133 MICHAPP 407] inferences or conclusions which may fairly be drawn from the facts alleged. Unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover, the motion should be denied. May v. Leneair, 99 Mich.App. 209, 297 N.W.2d 882 (1980); Crowther v. Ross Chemical & Manufacturing Co., 42 Mich.App. 426, 202 N.W.2d 577 (1972).

At the outset, it is apparent that the trial court utilized an improper standard in denying Advance's motion. When stating his reasons for denying the motion, the trial judge cited the fact that Michigan is a notice-pleading state. However, the motion for summary judgment was not based upon a claim that the complaint failed to inform defendant as to the nature of the cause it was called upon to defend, to which a motion for a more definite statement under GCR 1963, 115.1 would be appropriate. Instead, the motion was grounded upon a claim that the pleadings did not set forth legal grounds upon which relief could be granted, under GCR 1963, 117.2(1). Nevertheless, this Court may apply the correct standard in testing the validity of Advance's claim in order to determine whether the trial court's error requires reversal.

The first argument presented by Advance is that the complaint failed to allege reliance by the plaintiffs upon the acts of Advance's employees. In support of this argument, Advance contends that the complaint establishes only that plaintiffs relied upon the representations of defendant Wheeler. The acts of Advance's employees, it is argued, did not occur until after the agreement was entered into, thus ruling out any reliance by plaintiffs upon the actions of the employees of Advance.

Keeping in mind that a motion under GCR 1963, 117.2(1) may only be denied where, as a matter of [133 MICHAPP 408] law, no factual development can possibly justify a right to recover, it appears that Advance's argument must fail for the following reason. The complaint clearly alleges reliance by the plaintiffs upon the acts of defendant Wheeler. It also clearly alleges a conspiracy between Wheeler and the employees of Advance. ¹ It is an established rule of law that the act of any one conspirator is legally the act of the other, in that a conspirator is liable for all acts of his co-conspirators done in furtherance of the object of the conspiracy. Solomon v. United States, 276 F.2d 669 (CA 6, 1960), cert. den. 364 U.S. 890, 81 S.Ct. 219, 5 L.Ed.2d 186 (1960), reh. den., 364 U.S. 939, 81 S.Ct. 376, 5 L.Ed.2d 371 (1961). Thus, Advance's claim that the plaintiffs did not rely upon the acts of the employees, but upon those of defendant Wheeler, would not defeat plaintiffs' cause of action.

Advance's argument that the agreement was entered into before the fraudulent actions by the employees is also without merit. As stated above, a conspirator is liable for all the acts of his co-conspirators done in furtherance of the object of the conspiracy. Thus, as long as plaintiffs can prove at trial that the conspiracy was entered into prior to the time of the agreement between defendant Wheeler and the plaintiffs, a basis for liability will be established. In other words, the fraudulent acts of Wheeler will be imputed to his co-conspirators, the employees of Advance Mortgage Corporation. The fact that the employees did not fulfill their part of the conspiracy until after the agreement was entered into would in no way relieve them of liability.

[133 MICHAPP 409] Finally, contrary to the claims of Advance, the complaint does not allege that the conspiracy did not arise until after the agreement to purchase was entered into. Paragraph 14 of the complaint merely states that the conspiracy was entered into for the purpose of enabling defendant Wheeler to qualify for a mortgage. The time at which the conspiracy was entered into is not alleged and it is presumably a fact to be proven at trial. Utilizing the rule that "[t]he factual allegations of the complaint are taken as true, along with any inferences or conclusions which may fairly be drawn from the facts alleged", May, supra, 99 Mich.App. p. 213, 297 N.W.2d 882, it can be inferred from plaintiffs' complaint that the conspiracy is alleged to have existed prior to any contact between defendant Wheeler and the plaintiffs. The entire claim rests upon the theory that Wheeler entered into the agreement intending to dupe the plaintiffs into renegotiating the purchase price at the last minute. The only way this could be achieved was for Wheeler to qualify for a mortgage. Therefore, it can be inferred from the plaintiffs' theory of the case, as contained in the pleadings, that the conspiracy was allegedly entered into prior to any contact between Wheeler and the plaintiffs.

Advance next contends that the plaintiffs failed to allege a causal relationship between their damages and the conduct of Advance's employees. The argument is based upon the notion that the sole cause of the damage was defendant Wheeler's failure to appear at the closing. However, in making this argument, Advance takes an...