AFP Specialties, Inc. v. Vereyken
303 Mich. App. 497
| Mich. Ct. App. | 2014Background
- Vereyken, as equitable owner via Northtowne's land contract, contracted to purchase property in Kalkaska County for development into a restaurant.
- Vereyken and AFP entered a contract on April 10, 2007 to install a fire suppression system required by building codes for a restaurant.
- AFP completed most work by September 2007; temporary occupancy was issued, then revoked after a system issue, causing closure and missed payments on the land contract.
- Vereyken faced financial setbacks including a separate restaurant fire, refinancing difficulties, and Northtowne extended the contract due date, but default persisted.
- AFP sought foreclosure of its construction lien and alleged Northtowne and Vereyken had an implied agency; Northtowne denied agency and any obligation to authorize improvements.
- Trial court held Northtowne liable as the owner who contracted for the improvement and that Vereyken’s contract required the improvement; Court of Appeals reverses on implied agency and contract-requirement findings and affirms attorney-fee ruling in a separate docket.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did an implied agency exist between Northtowne and Vereyken? | AFP contends Northtowne’s knowledge and acquiescence in improvements created implied agency. | Northtowne argues no control or acknowledgement; improvements were permitted, not required or controlled. | No implied agency; Northtowne not bound by Vereyken’s contract for improvements. |
| Did the land contract require the fire-suppression improvement for MCL 570.1107(1)? | Contract requires improvements to operate the building as a restaurant; thus AFP’s lien attaches to Northtowne’s interest. | Contract did not require installation; improvements were driven by the restaurant decision and building code, not by the contract. | The land contract did not require the fire-suppression system; lien did not attach to Northtowne’s entire interest on that basis. |
| Were Etna’s attorney fees properly awarded under the offer-of-judgment rule? | Fees were necessitated by AFP’s rejection of Etna’s offer of judgment; costs should be awarded. | Challenge to reasonableness and discretionary application of the interest-of-justice exception. | Affirmed; fees necessitated by rejection; no abuse of discretion in not applying the interest-of-justice exception. |
Key Cases Cited
- Norcross Co v Turner-Fisher Assoc, 165 Mich App 170 (1987) (when vendor controls improvements, implied agency may arise)
- Weller v Speet, 275 Mich 655 (1936) (implied agency requires principal knowledge, control, and acquiescence)
- Shinabarger v Phillips, 370 Mich 135 (1963) (implied agency rests on acts prior to the incident and acquiescence)
- Rowen & Blair Electric Co v Flushing Operating Corp, 399 Mich 593 (1977) (mere permit to improve is insufficient for implied agency)
- Sewell v Nu Markets, Inc, 353 Mich 553 (1958) (agency rules and caveat emptor considerations in improvements)
- Norcross Co v Turner-Fisher Assoc, 165 Mich App 170 (1987) (distinguishes control over improvements and written approvals)