Stewart v. Isbell
| Decision Date | 02 February 1987 |
| Docket Number | 84890,Docket Nos. 84665 |
| Citation | 155 Mich.App. 65,399 N.W.2d 440 |
| Parties | Raymond L. STEWART, and Joan M. Stewart, Plaintiffs-Counter Defendants-Appellees, v. Billy D. ISBELL and Peggy S. Isbell, Defendants-Counter Plaintiffs-Appellants, and Richard Schade and Montgomery Ward & Co., Incorporated, Defendants. 155 Mich.App. 65, 399 N.W.2d 440 |
| Court | Court of Appeal of Michigan — District of US |
[155 MICHAPP 69] Lavan & Hegarty by Michael K. Hegarty, Brighton, for the stewarts.
Kizer & Reader by David J. Reader, Howell, for the Isbells.
Before MacKENZIE, P.J., and ALLEN and CROCKETT, * JJ.
The defendants-counter-plaintiffs, Billy D. Isbell and Peggy S. Isbell (defendants), appeal as of right from an October 7, 1985, amended order for judgment of deficiency entered by the Livingston Circuit Court. In addition to this order, defendants challenge a judgment of foreclosure, entered on April 15, 1985, and an order of partial summary judgment, entered on May 2, 1985, in favor of the plaintiffs-counter-defendants, Raymond L. Stewart and Joan M. Stewart (plaintiffs). The appeals were consolidated for hearing and decision by the Court of Appeals.
On December 2, 1980, the plaintiffs sold their home and acreage located in Deerfield Township, Livingston County, under a land contract to the defendants for a sum of $150,000. The contract called for the defendants to deposit a down payment of $20,000, to pay monthly installments of $1,200, and to make a $58,000 "balloon" payment on September 15, 1983. The unpaid balance was subject to an interest rate of eleven percent per annum (simple interest). The contract contained an "as is" clause and required the defendants to maintain adequate insurance on the premises.
On January 20, 1981, a fire, caused by the improper installation of a wood-burning stove, destroyed the home. On April 20, 1982, the plaintiffs filed a complaint to foreclose the land contract, alleging that the defendants stopped making payments on January 5, 1982. The defendant subsequently filed a counterclaim sounding in negligence, fraud and misrepresentation, and intentional infliction of emotional distress. Discovery followed.
On May 18, 1982, the circuit court ordered the defendants to place $80,000 in insurance proceeds into an escrow account. On November 29, 1982, the defendants were ordered to use the insurance [155 MICHAPP 71] proceeds to satisfy the arrearage payments under the land contract. The proceeds were depleted in September of 1983, leaving a balance of over $50,000 still owed to the plaintiffs according to a January 11, 1985, written opinion of the circuit court.
On January 12, 1984, after discovery was made, the defendants filed an amended counterclaim against the plaintiffs and also a complaint against Jack S. Schade, the builder of the chimney, and Montgomery Ward & Co., Incorporated, the retailer of the stove. The claim against the added parties was not considered below and is not relevant to this appeal.
The amended countercomplaint contained four counts. Count I sounded in negligence, alleging that the plaintiffs failed to: (1) comply with building and safety codes; (2) properly install the stove; (3) warn the defendants of the hazards; and (4) inspect the stove. It also alleged that the plaintiffs negligently hired an unlicensed builder to install the stove. Count II set forth allegations of three instances of fraud and misrepresentation by the plaintiffs. First, the defendants claimed that the plaintiffs misrepresented that the water well was in good working order when, in fact, the well malfunctioned and had to be replaced. Second, the plaintiffs purportedly misrepresented that the septic system was in good condition, but it failed after the defendants took possession. Third, it was alleged that the plaintiffs intentionally omitted to disclose that the stove was unsafe and improperly installed. Defendants further alleged that the plaintiffs knew or should have known of the misrepresentations and concealed defects. Count III attempted to state a cause of action for intentional infliction of emotional distress resulting from the way the plaintiffs handled the insurance proceeds. [155 MICHAPP 72] First, the defendants claimed that the plaintiffs, knowing that they were responsible for the fire, intentionally prevented the defendants from using the insurance funds to reconstruct the home. Second, the plaintiffs delayed depositing the insurance proceeds in an interest-bearing account, thus causing the loss of interest upon these funds. Count IV applied to defendant Montgomery Ward and is not relevant here.
On March 13, 1984, the plaintiffs moved for partial summary judgment for the reason that defendants "have failed to allege an intentional tort on the part of the plaintiffs, and therefore, defendants' claim for damages under the counterclaim is barred by the contractual agreement between the parties." The plaintiffs filed an affidavit stating that at no time were they ever aware of any defect in the stove, the flue, or the installation and that they never encountered any difficulty whatsoever in its operation even though they had used it on a continual basis.
On January 14, 1985, the circuit court issued a written opinion granting the motion. The circuit court determined that the burden of risk of loss remained with the defendants since the plaintiffs were unaware of the dangerous and concealed defect and the "as is" clause absolved the plaintiffs of liability for unknown defects. The written opinion struck "Paragraph 9(c) of the counterclaim," an apparent reference to the original counterclaim, in ruling that the defendants did not allege sufficient facts supporting a counterclaim for mental suffering.
On May 2, 1985, an order of summary judgment was entered dismissing the countercomplaint with prejudice and awarding costs to plaintiffs in the sum of $202.45. The order recited that both parties had filed extensive briefs and affidavits and that [155 MICHAPP 73] the court found that the countercomplaint failed to state a cause of action against plaintiffs for reasons stated in its prior opinion. The order did not identify the applicable court rule under which summary judgment was granted.
On April 15, 1985, the circuit court entered a judgment of foreclosure which provided:
"NOW, THEREFORE, IT IS ORDERED that there is due the Plaintiffs upon the land contract set forth in the Complaint, for principal and interest as of February 5, 1985, the sum of Eighty-Three Thousand Nine Hundred Seventy-Five and 76/100 ($83,975.76) Dollars, and that Defendants, BILLY D. ISBELL and PEGGY S. ISBELL, are personally liable for the payment thereof; ..."
The judgment of foreclosure further ordered defendants to pay interest on the $83,975.76 sum at the rate of twelve percent per annum from February 5, 1985. It further ordered that the premises be sold at a public auction.
At the foreclosure sale on June 28, 1985, plaintiffs purchased the property for $87,400. A deficiency judgment was subsequently entered against the defendants in the sum of $776.77 together with interest from the date of the foreclosure sale.
Two issues are presented. First, did the circuit court erroneously dismiss the countercomplaint for the reason that it failed to state a cause of action? Second, did the judgment of foreclosure erroneously compute interest on the principal balance at the statutory rate of twelve percent instead of the contractual rate of eleven percent?
At the outset we note that the plaintiff's motion for partial summary judgment, the circuit court's [155 MICHAPP 74] written opinion, and the order fail to specify the applicable court rule under which summary judgment was granted. A motion for summary judgment under GCR 1963, 117.2(1) tests the legal sufficiency of the pleadings with all well-pleaded facts accepted as true. Summary judgment is warranted only if a claim is so clearly unenforceable as a matter of law that no factual development could justify a right to recovery. Abel v. Eli Lilly & Co., 418 Mich. 311, 343 N.W.2d 164 (1984), reh. den. 419 Mich. 1201 (1984), cert. den. 469 U.S. 833, 105 S.Ct. 123, 83 L.Ed.2d 65 (1984). In contrast, a motion for summary judgment under GCR 1963, 117.2(3) tests the factual support for a claim or a defense. Crowther v. Ross Chemical & Manufacturing Co., 42 Mich.App. 426, 202 N.W.2d 577 (1972). Its limited purpose is to determine whether a genuine issue of any material fact exists. Durant v. Stahlin, 375 Mich. 628, 135 N.W.2d 392 (1965). When deciding a motion for summary judgment on this ground, the court must consider the affidavits, pleadings, depositions, admissions, and documentary evidence filed in the action or submitted by the parties. Rizzo v. Kretschmer, 389 Mich. 363, 207 N.W.2d 316 (1973). The court must be satisfied that it is impossible for the claim or the defense to be supported at trial because of some deficiency which cannot be overcome. Rizzo, supra. A motion based upon GCR 1963, 117.2(3) must be supported by affidavits. GCR 1963, 117.3. If summary judgment is granted under the wrong subsection, this Court may review the order of summary judgment as though it were granted under the proper subsection when the record permits meaningful review. Lawrence v. Dep't of Treasury, 140 Mich.App. 490, 494, 364 N.W.2d 733 (1985).
The written opinion first considered whether the plaintiffs knew of the hidden defect in the stove [155 MICHAPP 75] which caused the fire. The buyer bears the risk of loss under an "as is" contract unless the seller fails to disclose concealed defects known to him. Lenawee County Bd. of Health v. Messerly, 417 Mich. 17, 32, 331 N.W.2d 203 (1982); Christy v. Prestige Builders, Inc., 415 Mich. 684, 329 N.W.2d 748 (1982). The doctrine of caveat emptor governs land contracts when the seller surrenders title, possession, and control over the property to the buyer. C...
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...should have been awarded only on the jury verdict of $195,000, not on the trebled judgment. We do not agree. In Stewart v. Isbell, 155 Mich.App. 65, 80, 399 N.W.2d 440 (1986), this Court defined a money judgment as "For purposes of the interest statute, a money judgment is defined as one wh......
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