Earl Pegues LLC v. Izis General Contractors LLC
327931
| Mich. Ct. App. | Oct 6, 2016Background
- Pegues, sole member of plaintiff Earl Pegues, L.L.C., contracted Izis General Contractors in July 2012 to build a Popeyes restaurant for about $1.05M plus three agreed add-ons totaling $22,873.38 and a $5,000 credit, yielding an expected total ≈ $1,067,873.38.
- By the time of an October 11, 2012 sworn statement to the title company, defendant’s sworn statement listed 12 change orders and an adjusted contract price of $1,143,064.45, and showed plaintiff had paid ~$493,191.76 with $649,872.69 then owing.
- Pegues signed the sworn statement but later testified he did not read or understand it when he signed and claimed he only agreed to three change orders; defendant’s member testified Pegues approved changes verbally on site.
- Title company disbursed $649,872.69 based on the sworn statement; plaintiff alleges an overpayment of about $123,001 and sued for breach of contract, fraudulent misrepresentation, conversion, and unjust enrichment.
- Defendant moved for summary disposition (MCR 2.116(C)(10)) attaching the signed sworn statement and Pegues’ deposition; the trial court found Pegues’ signature ratified the listed change orders and granted dismissal of all claims; appeal followed.
Issues
| Issue | Pegues' Argument | Izis' Argument | Held |
|---|---|---|---|
| Whether unsigned/written change orders are required to alter contract price | Only three verbal changes were agreed; no written change orders for the additional nine, so contract not modified | Sworn statement signed by Pegues constitutes the required writing reflecting changes and price adjustments | Court held Pegues’ signature on the sworn statement satisfied the contract’s writing requirement; no genuine issue of fact |
| Whether fraud claim survives where sworn statement allegedly misrepresents amounts | Sworn statement falsely represented amounts due; Pegues didn’t consent to extra change orders | Pegues had means to verify amounts and signed the sworn statement; cannot claim fraud when able to discover falsity | Court held no fraud because plaintiff had means to determine accuracy and signed the document |
| Whether conversion claim valid where funds disbursed per sworn statement | Defendant converted funds by accepting payment in excess of contract price without consent | Disbursement was made with plaintiff’s signed sworn statement consenting to the amounts | Court held conversion claim fails because payment was obtained with plaintiff’s consent via the signed statement |
| Whether unjust enrichment claim applies despite an express contract | Plaintiff sought recovery under unjust enrichment for overpayment | Defendant argued express contract governs, precluding unjust enrichment | Court (trial court earlier) dismissed unjust enrichment; plaintiff conceded dismissal on appeal |
Key Cases Cited
- Shay v. Aldrich, 487 Mich 648 (clarifies that a signatory cannot set aside a contract merely for failing to read it)
- Christensen v. Christensen, 126 Mich App 640 (instrument signed without inquiry cannot be avoided for ignorance of contents)
- Nieves v. Bell Indus., Inc., 204 Mich App 459 (no fraud where plaintiff had means to detect falsity)
- Novak v. Nationwide Mut. Ins. Co., 235 Mich App 675 (similar rule: availability of means to verify defeats fraud claim)
- Head v. Phillips Camper Sales & Rental, Inc., 234 Mich App 94 (conversion requires lack of owner consent to defendant’s possession of funds)
- Detroit Edison Co. v. Stenman, 311 Mich App 367 (standard of review and summary disposition standards under MCR 2.116(C)(10))