Real estate purchase agreement; Breach of contract; Settlement negotiations; MRE 408; “Undue delay” exception; Outcome-determinative evidentiary error; Anticipatory repudiation; Van Buren Charter Twp v Visteon Corp; Jury instructions; M Civ JI 140.15; Substantial prejudice

The court held that the trial court reversibly erred by admitting evidence of the parties’ post-suit settlement negotiations under MRE 408 and by refusing to instruct the jury on anticipatory repudiation. Plaintiffs agreed to purchase defendant’s home for $1.275 million with closing scheduled for 1/21. The sale did not close, plaintiffs sued for breach and specific performance, and the parties later engaged in unsuccessful settlement negotiations that contemplated a possible 3/21 closing. At trial, defendant relied on those negotiations to support his counterclaim that plaintiffs breached by refusing to close in March, and the jury found defendant did not breach but plaintiffs did. On appeal, the court held that MRE 408’s “undue delay” exception did not permit the settlement evidence. Plaintiffs’ theory “was simply that defendant had disavowed the contract and refused to perform,” not that he had unduly delayed performance. Defendant instead used the negotiations to establish plaintiffs’ liability, which was “precisely the use of settlement negotiations that MRE 408(a) prohibits: to ‘prove or disprove the liability for . . . a disputed claim.’” The error was outcome determinative because defendant’s counterclaim theory depended on the settlement evidence, the evidence featured prominently at trial, and the jury specifically asked about later “addendums affecting the closing date.” The court also concluded plaintiffs were entitled to an anticipatory-repudiation instruction. They presented evidence that before the contractual closing date defendant repeatedly represented that the agreement was unenforceable, that he could not convey clear title, and that he would proceed only under different terms and timing. That evidence “reflected affirmative, unequivocal representations to plaintiffs that defendant would not perform his obligations,” potentially excusing plaintiffs from further performance. Because jury instructions “‘should not omit material issues, defenses, or theories if the evidence supports them,’” refusing the instruction was error. The omission was prejudicial because anticipatory repudiation provided plaintiffs “both a sword” on their breach claim “and a shield” against defendant’s counterclaim. The court vacated the liability and damages judgments and remanded.