Contracts

This summary also appears under Wills & Trusts

 

Issues: Estate dispute; Contract interpretation; Dobbelaere v. Auto-Owners Ins. Co.; In re Smith Trust; Allstate Ins. Co. v. Muszynski; Hastings Mut. Ins. Co. v. Safety King, Inc.

Court: Michigan Court of Appeals (Unpublished)

Case Name: In re Estate of Sperlik

e-Journal Number: 57470

Judge(s): Per Curiam – Murphy, Shapiro, and Riordan

 

Holding that the trial court erred in interpreting the "heirs" clause in the consulting contract at issue in this estate dispute, the court reversed its order granting the appellee-personal representative (PR) summary disposition. Before his death, the decedent gifted all of his stock in one of his companies (Terminix) to the PR (Patrick). Through his other company (R.E.S. Consulting), the decedent then entered into a consulting agreement with Terminix. "The contract detailed that R.E.S. Consulting would provide pest control consulting services to Terminix. Upon his death, decedent left his R.E.S. stock to the estate, which was to be distributed to" the appellant (Dean) and his siblings, but not Patrick. Patrick, as PR, filed an amended inventory listing the value of R.E.S. stock at $0. "Dean filed an objection to the inventory, arguing that payments owed from Terminix to R.E.S. for services provided by decedent could increase the value of the R.E.S. stock." Patrick successfully moved for summary disposition under MCR 2.116(C)(8), arguing that the heirs clause in the consulting contract prevented recovery for any sum, as it stated - "This agreement shall not be binding and [inure] to the benefit of the parties['] heirs, assigns, executors, and successors." The trial court found that the clause prevented recovery for any unpaid sums owed to R.E.S. for services performed by decedent before his death "because it precluded the contract from binding or inuring to the parties' 'heirs.'" The court first noted that it was "not clear from the face of the agreement what or who are the companies' 'heirs.'" However, assuming Dean and his siblings were "heirs" such that decedent's death would trigger the clause, the court still found the trial court in error. "The issue before the trial court was whether decedent's company should be paid," even after his death, "for work already performed or for sums already due. This is not an issue of the contract benefiting the heirs. Rather, the issue is whether decedent's company itself was entitled to past-owed payment" for which he had a cause of action on behalf of R.E.S. "Thus, any cause of action to collect unpaid fees belonged to decedent's company, not his heirs," which the PR could pursue on decedent's behalf. The trial court's interpretation led "to an illogical result, as it would require the estate to divest itself of funds already paid to decedent for work performed on behalf of the corporation even before his death, as permitting those sums to remain in the estate could also benefit 'heirs' for services performed pursuant to the contract."

 

Full Text Opinion

This summary also appears under Municipal

 

Issues: Whether the plaintiff could pursue a contract claim where it failed to follow the reimbursement procedures in the parties' first contract modification; Contract interpretation; St. Clair Med., P.C. v. Borgiel; Harbor Park Mkt., Inc. v. Gronda; McCoig Materials, L.L.C. v. Galui Const., Inc.; Klapp v. United Ins. Group Agency, Inc.; Whether the defendant waived the reimbursement procedure; Quality Prods. & Concepts Co. v. Nagel Precision, Inc.; "Differing site conditions" clause requirement; MCL 125.1592; Adams v. Edward M. Burke Homes, Inc.; Whether the defendant-City had a duty to disclose any knowledge of the location of gas mains and services; Hersey Gravel Co. v. State Hwy. Dep't; W.H. Knapp Co. v. State Hwy. Dep't; "Overhead" damages; Capital Elec. Co. v. United States (Fed. Cir.); "Eichleay formula" devised by the Army Services Board of Contract Appeals; Fairfax Cnty. Redevelopment & Hous. Auth. v. Worcester Bros Co. (VA); Proposed amendment of the complaint to assert a claim of "quantum meruit"; Hayman Co. v. Brady Mech., Inc.; Futile amendment; Lane v. KinderCare Learning Ctrs., Inc.

Court: Michigan Court of Appeals (Unpublished)

Case Name: T.R. Pieprzak Co. v. City of Troy

e-Journal Number: 57473

Judge(s): Per Curiam – Donofrio, Gleicher, and M.J. Kelly

 

The defendant-City was entitled to summary disposition on the plaintiff's claims arising from the parties' contract involving a water main replacement project because the plaintiff failed to follow the reimbursement procedures set forth in the parties' first contract modification. "In their first contract modification, the parties agreed that the original agreement's compensation scheme contemplated excavation work to verify the location and elevation of existing underground house services[,]" and that plaintiff "would be entitled to additional payments for time and materials involved in excavation for utilities other than house service, but only if the claim was first submitted to and approved by the City's engineer[.]" The court concluded that because the parties agreed "that verification of all existing underground house services was included in the original contract price," plaintiff could not recover additional compensation for those costs. It also could not recover for "excavation work unrelated to house services," because it "did not obtain approval from the City's engineer for the excavation work." The court found the plaintiff's argument - that "the cost recovery procedure applied only to costs associated with locating 'existing' services" and not to "costs related to the 'new' services the City installed afterward" - was without merit. Plaintiff "simply failed to get prior approval for its additional excavations and, for that reason, was not entitled to additional compensation." The court also held that the City never waived the first modification's reimbursement procedure. Plaintiff's "'notice' of its intent to seek additional compensation" in letters to City officials did not establish that it "complied with" the requirements, or "establish how the City purportedly waived the approval requirement." Section 3D did not contravene "MCL 125.1592 and the Differing Site Conditions clause incorporating that statute." While "a governmental entity generally has a duty to disclose any superior knowledge it may have regarding soil conditions differing from those represented to a contractor at the bidding stage," the contract here provided that plaintiff could recover "additional costs when it encountered conditions differing from those in the plans or those represented by the City." Thus, it was not simply plaintiff's "responsibility to verify the City's representations as in Hersey, nor was its verification a matter of ability or willingness as in Midwest Bridge Co." The City's accountant's signature on an audit letter did not "constitute[] an acknowledgement or admission" that the City owed plaintiff the damages sought. While urging the court to adopt the "Eichleay formula" as to "home office overhead damages," plaintiff failed to cite or provide any portion of the contract entitling it to recover such damages. Finally, quantum meruit did not apply, making the proposed complaint amendment futile. Affirmed.

 

Full Text Opinion
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