Erma Rogers Revocable Trust v. Erickson Retirement Communities
332495
| Mich. Ct. App. | Dec 12, 2017Background
- Plaintiff David Plumley, trustee of the Erma Rogers Revocable Trust, sued HFV and related entities alleging HFV promised 100% refundable entrance deposits in pre-December 1, 2000 Residence and Care Agreements but then refused to market vacated units fairly unless residents agreed to amended contracts accepting reduced refunds.
- Plaintiff’s mother paid a $125,000 entrance deposit in 1999; after her death HFV allegedly would not market the unit at market price unless Plumley accepted a reduced refund. Plumley refused and sued in May 2014.
- Plaintiff alleged breach of contract, fraud (in inducement), breach of the duty of good faith and fair dealing, violation of the Michigan Living Care Disclosure Act (LCDA), and conversion.
- Trial court certified a class defined as: all persons (and estates) who entered Residence and Care Agreements with HFV before December 1, 2000 who received less than a 100% refund (adjusted for agreed charges) and persons subject to declaratory relief.
- Defendants appealed class certification. The Court of Appeals reviews factual findings for clear error and discretionary rulings for abuse of discretion and affirms certification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper legal standard for class certification | Trial court applied MCR 3.501(A)(1) and considered pleadings plus evidence as required | Trial court applied an incorrect (C(8)-type) standard | Court: Trial court applied MCR 3.501(A)(1) correctly and considered evidence beyond pleadings consistent with Henry v. Dow Chem. |
| Inclusion of current residents who haven’t vacated | Current residents can seek declaratory/injunctive relief; same legal questions affect them | Current residents have no present refund claim and thus shouldn’t be in class | Court: Inclusion permissible because MCR 3.501(A)(2)(b) allows equitable/declaratory relief; common issues exist. |
| Effect of amended agreements (residents who accepted reduced refunds) | Amendments may have been procured by fraudulent inducement; those members can remain in class | Amendments are enforceable releases extinguishing claims | Court: Signing amendments doesn’t preclude class participation; fraud claims survive and rescission/tender-back arguments are misplaced for these class claims. |
| Numerosity (impracticable joinder) | Sufficient numbers: evidence of 223 former residents and ~839 current residents; exact counts not required | Plaintiff failed to prove enough members after class adjustments | Court: Plaintiff provided reasonable estimates; numerosity satisfied. |
| Commonality / predominance of common issues | Liability turns on standardized agreements and common marketing/practice; common proof of misrepresentations and inducement | Differences in units, management companies, marketing times defeat common issues | Court: Common liability issues predominate; differences mainly affect damages, not liability. |
| Manageability / superiority / individualized damages | Damages can be calculated by formula from agreements/amendments; class adjudication is superior and manageable | Individualized damages and discovery make class unmanageable | Court: Individual damages do not defeat certification; class action is superior and manageable. |
| Typicality and adequacy of representative | Plumley’s claims arise from same theories and practices as class; counsel experienced; no conflicts | Plumley didn’t sign an amendment and dealt with a different management company | Court: Typicality and adequacy satisfied; factual differences don’t defeat representation. |
Key Cases Cited
- Henry v. Dow Chem. Co., 484 Mich. 483 (Mich. 2009) (state courts may consider evidence beyond pleadings for class certification but must avoid merits inquiry)
- Duskin v. Dep’t of Human Servs., 304 Mich. App. 645 (Mich. Ct. App. 2014) (standard of review and class-certification considerations)
- Zine v. Chrysler Corp., 236 Mich. App. 261 (Mich. Ct. App. 1999) (numerosity and practical joinder guidance)
- A&M Supply Co. v. Microsoft Corp., 252 Mich. App. 580 (Mich. Ct. App. 2002) (predominance, manageability, and damages formulas in class actions)
- Mich. Ass’n of Chiropractors v. Blue Cross Blue Shield of Mich., 300 Mich. App. 551 (Mich. Ct. App. 2013) (typicality and commonality discussion)
- Elson v. Harris, 356 Mich. 175 (Mich. 1959) (fraud claim may survive despite continued exercise of contractual rights)