Lv204 LLC v. Lucia Gatmaitan
332916
| Mich. Ct. App. | Oct 17, 2017Background
- LV 204 (through agent David Clapper) negotiated to buy Lucia Gatmaitan’s historic Lake Angelus mansion; initial buyer offer: $1,700,000 with $1,000,000 cash and $700,000 promissory note, 14-day due-diligence period and no inspection.
- Gatmaitan counteroffered on March 6, 2013: price raised to $1,800,000, sale “as is,” limited included wall hangings to draperies; the form required the buyer to initial each change to accept a counteroffer.
- Clapper (LV 204) signed the counteroffer document but did not initial each change as the offer’s COUNTEROFFER provision required; parties continued negotiations and exchanged communications over ~2½ years.
- During negotiations Clapper sought financing, ordered inspections/appraisals, demanded repairs, reduced his purchase price offers, and filed a recorded claim of interest in January 2015; no $1,000,000 payment or land contract was ever tendered.
- Gatmaitan refused the later reduced offers; LV 204 sued in September 2015 seeking breach of contract and specific performance; Gatmaitan counterclaimed and moved for summary disposition.
- The circuit court granted summary disposition for Gatmaitan, concluding no valid contract was formed (failure to strictly accept the counteroffer), alternatively noting ambiguity, due-diligence default, and laches; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid contract formed when buyer signed seller’s counteroffer but failed to initial each change required by the form | LV 204: signing and subsequent conduct manifested acceptance; seller’s later amendment waived the initialing requirement | Gatmaitan: the counteroffer clause required initials for acceptance; absent initials there was no strict acceptance and thus no contract | No contract formed—acceptance must strictly conform to the offer; buyer did not initial changes |
| Whether parties’ post-offer conduct established an enforceable contract or substantial performance | LV 204: parties and counsel treated the transaction as a contract; inspections/appraisals showed performance | Gatmaitan: conduct contradicted written terms (buyer had waived inspection/financing) and continuous renegotiation shows no agreement | Conduct did not create a contract; substantial-performance doctrine does not apply when no contract existed |
| Whether defendant’s signature on an amendment ratified a contract or waived formal defects | LV 204: amendment allowing financing evidenced ratification or waiver of initialing defect | Gatmaitan: amendment only applied if a contract was formed; signature did not ratify a nonexistent contract | Signature did not ratify a contract; amendment merely anticipated a future contract if one were formed |
| Whether equitable defenses (ambiguity, failure of due diligence, laches) independently justify dismissal | LV 204: disputed factual issues precluded summary disposition | Gatmaitan: alternative grounds support dismissal—ambiguity, failure to perform due diligence within 14 days, and laches after 2½ years of negotiations | Court did not need to reach alternatives but found them sufficient; summary disposition proper on primary ground and alternatives argued supported dismissal |
Key Cases Cited
- Beaudrie v. Henderson, 465 Mich. 124 (1999) (standard of review for summary disposition)
- BC Tile & Marble Co., Inc. v. Multi Bldg. Co., Inc., 288 Mich. App. 576 (2010) (definition of genuine issue of material fact)
- Kloian v. Domino’s Pizza, LLC, 273 Mich. App. 449 (2006) (existence and interpretation of a contract are questions of law)
- Pakideh v. Franklin Commercial Mtg. Group, Inc., 213 Mich. App. 636 (1995) (acceptance must be unambiguous and in strict conformance unless offer permits other modes)
- Ajax Paving Indus., Inc. v. Vanopdenbosch Constr. Co., 289 Mich. App. 639 (2010) (court enforces clear and plain contractual language)
- Rodgers v. JP Morgan Chase Bank NA, 315 Mich. App. 301 (2016) (substantial performance doctrine does not apply where no contract was formed)
- Buhalis v. Trinity Continuing Care Servs., 296 Mich. App. 685 (2012) (courts analyze substance over labels in contractual disputes)
- Laster v. Henry Ford Health Sys., 316 Mich. App. 726 (2016) (labels in communications do not control legal analysis)