Gorman v. Soble
| Decision Date | 06 January 1983 |
| Docket Number | Docket No. 57219 |
| Citation | 120 Mich.App. 831,328 N.W.2d 119 |
| Parties | Benjamin GORMAN, Anna Gorman, and Irving Sniderman, Plaintiffs-Appellees, v. Goldie SOBLE, personal representative of the estate of Harold Soble, deceased, Defendant-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Weiner, Hauser, Wartell & Roth (by J. Laevin Weiner and Harvey R. Heller), Southfield, for plaintiffs-appellees.
Honigman, Miller, Schwartz & Cohn (by John Sklar), Detroit, and Cole & Tamsen (Arthur J. Cole, Detroit, of counsel), for defendant-appellant.
Before KAUFMAN, P.J., and V.J. BRENNAN and TAHVONEN *, JJ.
In this action for damages, plaintiffs claimed they were induced to enter into a consent judgment by fraud on the part of defendant's decedent, Harold Soble. Following a lengthy non-jury trial, the trial court found for plaintiffs and defendant now appeals as of right.
As is often true in fraud actions, the legal issues before this Court cannot be considered apart from a detailed statement of the factual setting from which they spring. With due but necessarily passing regard for the virtues of brevity, that statement follows.
In 1967, Harold Soble purchased two adjoining parcels of real property located at the intersection of Northland Drive and Eight Mile Road in Southfield for approximately $1,000,000. In 1968, Northpointe Venture, a partnership, was formed among the parties to this lawsuit and other individuals. The partnership acquired the real estate from Harold Soble for the purpose of building a hotel on the property. The managing partners included Harold Soble, Jerome Soble, Herman Brodsky, plaintiff Benjamin Gorman, and plaintiff Irving Sniderman.
The partnership was divided into 100 points. Ninety-seven points were sold to partners and three points remained in the treasury. Harold Soble purchased 47 points of the partnership. The subscription agreement required him to make a capital contribution of $580,000. The partnership, however, loaned Soble $200,000. Gorman received 15 points and was required to make a capital contribution of $325,000. Sniderman received two points and was required to contribute $45,000.
In 1969, a dispute arose concerning the feasibility of the hotel project. Harold Soble was of the opinion that due to a deteriorating market condition and high interest rates it would be more profitable to sell the property in its unimproved state and dissolve the partnership. Gorman, Sniderman, and Brodsky disagreed, after which relations between the parties deteriorated significantly. Subsequently, an action was commenced by the partnership to compel Soble to repay the $200,000 loan. A second action was commenced by the nonmanaging partners against Harold Soble, Gorman, Brodsky, and Max Shultz. They sought to compel the payment of $600,000 by the defendant, which represented the outstanding $200,000 loan in addition to the unpaid portion of his subscription, and to compel Gorman, Brodsky, and Shultz to pay the unpaid portions of their subscriptions. In addition, the nonmanaging partners sought to dissolve the partnership and, as a result, a receiver was appointed.
Gorman and Soble had become adversaries in another dispute involving a different partnership, Northland Square, which was unrelated to this action. Gorman became involved in serious financial difficulties and related this to Soble. In late 1973 and early 1974, a series of meetings took place between Soble, Gorman, Sniderman, and Brodsky. Gorman testified that the meetings took place at the insistance of Soble. During the meetings, Soble indicated his dissatisfaction with the appointment of a receiver because of the associated costs and attempted to settle the lawsuit. Gorman responded that he was not interested in settling because he wanted the property sold and did not believe Soble would now agree to a sale. To induce Gorman to agree to a consent judgment, Soble offered to transfer $100,000 of his capital account to Gorman, pay Gorman $4,000 in cash, and assign a $36,000 note to him. Soble told Gorman on many occasions that he wanted to sell the property as soon as a settlement was reached in order to generate tax losses.
Sniderman testified that he wanted to sell the property and did not want the lawsuit settled. When the partnership's receiver eventually received an offer for the property of $650,000, Sniderman considered the price to be acceptable, but found the offer to be unacceptable because of certain attached conditions. Soble told Sniderman that if they settled the lawsuit they would be able to sell the property easily and that he was willing to sell in order to generate tax losses. To induce Sniderman to agree to a consent judgment, Soble offered to transfer $10,000 of his capital account to Sniderman.
Soble testified that he owned unrelated property which he expected to sell for a large profit. Negotiations for the sale of that property were ongoing at the time of his negotiations with Gorman and Sniderman. Soble agreed to transfer part of his interest in the partnership to Gorman and Sniderman in exchange for their agreement to allocate all of the partnership's tax losses to him. He stated that he would not have agreed to a consent judgment had he not believed that the sale of his other property was to take place. He did not inform the plaintiffs that his interest in selling the partnership property depended upon the sale of his other property. The sale of Soble's other property did not take place.
A consent judgment was entered on March 4, 1974. It provided for the purchase of the partnership interests of the dissatisfied partners, forgave all indebtedness of the partners, and provided for the transfer of capital, as discussed above. In addition, the judgment provided for distribution of the partnership assets. Essentially, it provided that the partner whose cost per point was the highest would be paid first until his cost per point was reduced to the level of the partner whose cost per point was second highest. Both of these partners would then be paid until their cost per point was reduced to the level of the partner whose cost per point was the third highest, and so on, until the cost per point of each partner equaled that of the others. Any remaining funds available for distribution were then to be distributed pro rata to all of the remaining partners. Finally, the agreement provided:
Gorman and Sniderman testified that they agreed to the consent judgment because they believed Soble's representations that he was willing to sell the property.
Gorman testified that on the day following the entry of the consent judgment, he met with Soble to discuss their dispute over the Northland Square partnership. Soble told Gorman that he wanted him to remove himself from the controversy and testify on Soble's behalf in any related hearings. Soble indicated that he would allow the property involved in the present action to be sold and offered to pay Gorman $5,000 if he agreed to so testify. Gorman refused. Soble then told Gorman that if he did not accede to Soble's demands, the partnership property would not be sold as long as Gorman lived.
Soble initially denied that the meeting took place. On cross-examination, however, he admitted that he may have met with Gorman on the day following the entry of the consent judgment.
In July, 1974, Gorman presented Soble with a real estate listing agreement which Soble refused to sign, stating that he would not permit the property to be sold. Gorman approached Soble on numerous other occasions to request his cooperation in attempting to sell the property. Soble refused to agree to a sale unless Gorman agreed to modify the consent judgment's distribution formula.
On April 24, 1975, plaintiffs commenced the present action complaining that Soble induced plaintiffs to enter into the consent judgment by fraud. Following trial, the court found in favor of the plaintiffs, awarded the Gormans $335,900.98 plus interest of $134,176.33, awarded Sniderman $42,786.80 plus interest of $17,091,27, and ordered the plaintiffs to assign their partnership interests to Soble upon satisfaction of the judgment. Defendant then brought this appeal as of right.
Defendant's first arguments contend that the trial court's finding of actionable fraud was clearly erroneous. The elements of fraud are well-settled:
Candler v. Heigho, 208 Mich. 115, 121, 175 N.W. 141 (1919); Hi-Way Motor Co. v. International Harvester Co., 398 Mich. 330, 336, 247 N.W.2d 813 (1976).
The burden of proof rests with the plaintiff, who must prove fraud by clear and convincing evidence. International Harvester Co., supra, p. 336, 247 N.W.2d 813.
Defendant asserts initially that Mr. Soble's representation...
To continue reading
Request your trial
-
Disner v. Westinghouse Elec. Corp.
...398 Mich. 330, 336, 247 N.W.2d 813 (1976); Youngs v. Tuttle Hill Corp., 373 Mich. 145, 128 N.W.2d 472 (1964); Gorman v. Soble, 120 Mich.App. 831, 328 N.W.2d 119 (1983); Higgins v. Lawrence, D.P.M., P.C., 107 Mich.App. 178, 309 N.W.2d 194 (1981). See, United States For Use of U.S. Steel v. C......
-
Triplett v. St. Amour
...Mich.App. at p. 74, 382 N.W.2d 734.2 The Courtney majority found the facts before it to be indistinguishable from Gorman v. Soble, 120 Mich.App. 831, 328 N.W.2d 119 (1982), in which the Court implicitly recognized a claim for damages based on fraudulent inducement to enter a consent judgmen......
-
Skyline Steel Corp. v. AJ Dupuis Co.
...v. American Std., Inc., 100 Mich.App. 600, 300 N.W.2d 335 (1980), aff'd, 419 Mich.App. 610, 358 N.W.2d 845 (1984); Gorman v. Soble, 120 Mich.App. 831, 328 N.W.2d 119 (1982). Dupuis has not met that burden of The Court notes that Dupuis' argument of a failure to mitigate has been raised sole......
-
Mina v. General Star Indem. Co.
...opinion made no mention of them. In Jim-Bob, Inc. v. Mehling, 178 Mich.App. 71, 90, 443 N.W.2d 451 (1989), and Gorman v. Soble, 120 Mich.App. 831, 840, 328 N.W.2d 119 (1982), this Court cited Hi-Way Motor in support of statements that fraud must be proved by "clear, satisfactory and convinc......