James W Ruster v. Michael K Koon
330328
| Mich. Ct. App. | Feb 28, 2017Background
- James Ruster (seller) executed a durable power of attorney appointing Michael Koon as his agent while Ruster was incarcerated; Koon later sought to buy Ruster’s 120‑acre property.
- Two offers were received: one for $228,000 (countered unsuccessfully) and a $240,000 cash offer from Rubingh (allegedly $2,000/acre); Ruster rejected offers and told Koon to do whatever it took to secure the property for himself.
- Koon negotiated a land‑contract purchase for $240,000 with a $40,000 down payment and staged interest rates; an addendum expressly granted purchaser the right “to timber the Real Estate during the term of the Land Contract.”
- Koon procured short‑term financing and a lumber company (Maple Ridge) agreed to pay him $75,000; Koon received funds and timber was harvested before Ruster’s release.
- Ruster rescinded the power of attorney after release and sued to (1) foreclose the land contract on the theory timbering was waste, and (2) rescind based on breach of fiduciary duty, silent fraud, and innocent misrepresentation for alleged nondisclosure of offers. Trial court granted summary disposition for Koon; appeals court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether agent’s purchase violated fiduciary duty / EPIC | Ruster: Koon (agent) cannot buy and profit from principal’s estate; nondisclosure of lumber and Rubingh offers breached fiduciary duty / EPIC | Koon: Ruster (through counsel) was informed, expressly authorized sale, ratified POA terms, and consented to transaction and timbering | Court: No breach; Ruster was informed, ratified terms, and consent defeated fiduciary/EPIC challenge |
| Whether silent fraud / innocent misrepresentation occurred | Ruster: Koon failed to disclose material offers (Maple Ridge $75k, Rubingh cash terms), inducing an adverse decision | Koon: Material terms were disclosed via Ruster’s attorney; any nondisclosure of Maple Ridge offer was immaterial because Ruster instructed sale and could not have exploited the offer | Court: Dismissed these claims; nondisclosure (if any) was not prejudicial and Ruster would not have acted differently |
| Whether timbering constituted waste under the land contract | Ruster: General waste provision barred removal of trees; timber harvest was waste supporting foreclosure | Koon: Addendum expressly granted right to timber during land‑contract term, amending contract and permitting harvest | Court: "To timber" unambiguously permits cutting/harvesting; addendum amended contract; timbering not waste |
| Whether trial court properly granted summary disposition | Ruster: Genuine factual disputes exist (e.g., what was disclosed, scope of timber right) | Koon: No material factual dispute; contract language and ratification entitle Koon to judgment | Court: Affirmed summary disposition for Koon — no genuine issue of material fact and judgment as a matter of law |
Key Cases Cited
- Peters v. Dep’t of Corrections, 215 Mich. App. 485 (standard of appellate review for summary disposition)
- Sallie v. Fifth Third Bank, 297 Mich. App. 115 (treating evidence in light most favorable to nonmoving party on MCR 2.116(C)(10))
- Latham v. Barton Malow Co., 480 Mich. 105 (summary disposition standard)
- In re Susser Estate, 254 Mich. App. 232 (agency principles and powers of attorney interpretation)
- In re Estate of Cummin, 258 Mich. App. 402 (agent may transact with principal if full disclosure and consent)
- Saltmarsh v. Burnard, 151 Mich. App. 476 (attorney’s knowledge imputed to client)
- Andrie v. Chrystal‑Anderson & Assocs. Realtors, Inc., 187 Mich. App. 333 (agent’s duty to disclose material offers)
- M & D, Inc. v. W. B. McConkey, 231 Mich. App. 22 (elements of innocent misrepresentation and silent fraud)
- Wilkie v. Auto‑Owners Ins. Co., 469 Mich. 41 (contract interpretation as a question of law)
- Ajax Paving Indus., Inc. v. Vanopdenbosch Const. Co., 289 Mich. App. 639 (plain‑meaning rule for unambiguous contracts)
- Klapp v. United Ins. Group Agency, Inc., 468 Mich. 459 (ambiguity as factual question for jury)
- DeFrain v. State Farm Mut. Auto. Ins. Co., 491 Mich. 359 (specific contractual terms govern over general clauses)