364438
Mich. Ct. App.Dec 28, 2023Background
- Plaintiffs (the Drivers) and Kathy Corbett (claim assigned to Drivers) engaged Ryan Corey (contractor) and, allegedly, Dana Bordeaux, for renovations; payments for work were made directly into Bordeaux’s accounts per Corey’s direction.
- Corey did not perform the contracted construction work, and substantial funds were misappropriated for unrelated personal expenses such as gambling.
- Demolition subcontractor for the Drivers was unpaid and required separate payment by the Drivers.
- Bordeaux maintained she had no business role, was coerced by Corey under threat of violence, and did not use project funds personally outside Corey’s direction.
- Drivers sued for violation of the Michigan Builders’ Trust Fund Act (MBTFA), conversion, and breach of contract; Corey defaulted, and Bordeaux sought summary dismissal, which the trial court denied, granting judgment to Drivers on both MBTFA and conversion claims.
- On appeal, Bordeaux challenged her personal liability under MBTFA and conversion; Drivers claimed duress is not a defense and sought treble damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| MBTFA Liability | Bordeaux received trust funds, acted as Corey's agent, thus is liable. | She was not a contractor/subcontractor and acted only under coercion. | Bordeaux was a trustee/subcontractor for MBTFA purposes. |
| Conversion Liability | Bordeaux misappropriated funds held in trust, entitling Drivers to damages. | She acted with consent, not unlawfully; claimed duress defense. | Bordeaux held in trust; conversion liability affirmed. |
| Treble Damages Under Conversion | Statutory violation mandates treble damages, costs, and attorney fees. | Challenged basis and automatic award of treble damages. | Treble damages are discretionary, not automatic; remanded. |
| Defense of Duress | Duress is not a recognized defense to MBTFA or conversion claims. | Implied duress from Corey's coercion and physical threats. | Argument abandoned for lack of legal development. |
Key Cases Cited
- Livonia Bldg Materials Co v Harrison Constr Co, 276 Mich App 514 (MBTFA imposes a trust on construction payments for benefit of payors and project participants)
- DiPonio Constr Co, Inc v Rosati Masonry Co, Inc, 246 Mich App 43 (recognizes civil cause of action under MBTFA for private construction contracts)
- Reiter v Kuhlman, 59 Mich App 54 (recipient of construction payments is a subcontractor/trustee under MBTFA)
- Brown, People v, 239 Mich App 735 (personal liability of corporate officers for MBTFA violations)
- Weathervane Window, Inc v White Lake Constr Co, 192 Mich App 316 (contractor-trustee's fiduciary duty under MBTFA)
- Aroma Wines & Equip, Inc v Columbian Distribution Servs., Inc, 497 Mich 337 (limiting statutory conversion remedy to conversion "to the other's own use")