e-Journal Summary

e-Journal Number : 74761
Opinion Date : 01/28/2021
e-Journal Date : 02/16/2021
Court : Michigan Court of Appeals
Case Name : UUSI, LLC v. Stieg
Practice Area(s) : Business Law, Contracts
Judge(s) : Per Curiam - Shapiro, Sawyer, and Beckering
Full Text Opinion

Contract dispute; Contract interpretation; McKenzie v Sykes; Whether the trial court properly allowed the jury to determine the terms of the loan at issue; Whether the loan was payable on demand; Colburn v First Baptist Church & Soc’y of Monroe; Waiver; The Cadle Co v Kentwood; Recoupment; Mudge v Macomb Cnty; Set-off; Roemelmeyer v Roemelmeyer’s Estate


The court held that the trial court did not err by failing to find that a loan from plaintiffs to defendant was a “demand loan” and instead allowing the jury to determine a reasonable period for repayment. It also held that plaintiffs waived the argument as to repayment terms. Finally, it held that the trial court did not err by refusing to allow defendant to use the affirmative defenses of setoff and recoupment to offset the loan award. The parties entered into a stock purchase agreement under which plaintiffs purchased 49% of defendant’s company. They also provided him a loan to pay off company debt. Plaintiffs later sued, alleging fraud as to representations made about the company’s financial condition, as well as breach of fiduciary duty. They also sought to recover the loan money. The jury found defendant was personally liable for the loan, and determined it was to be repaid over 60 months, with an interest rate of 7%. The trial court entered a judgment consistent with the jury’s findings. The court first found that the trial court did not err when it determined that the facts “did not establish a demand loan and that it was for the jury to determine the terms of the loan.” The court also held that plaintiffs waived their claim that “the jury’s verdict—finding that repayment was to be made over 60 months—is not supported by the evidence.” It next rejected defendant’s contention on cross-appeal that the trial court erred by not allowing him to use the doctrines of recoupment or setoff to offset from the loan any amounts representing inventory or accounts receivable that the plaintiff-company allegedly appropriated after assets were transferred to its facility. Under the trial court’s ruling limiting the recoupment defense, because the jury found “plaintiffs did not suffer damages for fraud and did not prove a breach of fiduciary duty, there were no damages against which” he could claim recoupment. As to set-off, “unlike recoupment, which is available when the defendant proves a breach of contract or duty,” the court noted it was not “aware of any authority allowing setoff on the basis of something other than a debt owed.” Thus, it concluded that defendant did not “set forth a cognizable claim for setoff.” Affirmed.

Full Text Opinion