Smith Trust and Estate v. Erickson Retirement Communities
928 N.W.2d 227
Mich. Ct. App.2018Background
- Decedent signed a Residence and Care Agreement (RCA), disclosure statement, and Refund of Entrance Deposit Form when moving into Henry Ford Village (HFV); RCA governed refund conditions, including §7.5 allowing reduction of refund if unit reoccupied at a lower entrance deposit.
- Decedent paid $152,000 (after a 2008 unit transfer); he died in 2013. Refund was contingent on re-occupancy and payment of a new entrance deposit.
- Unit remained vacant ~9 months; HFV advised lowering the listed entrance deposit to aid re-marketing; plaintiff (successor trustee) agreed to a discounted-refund addendum reducing the re-occupancy deposit to $136,000 and acknowledging a commensurate reduction in refund.
- HFV paid plaintiff $126,861.93 (the $136,000 reduced refund minus $9,138.07 in uncontested fees); plaintiff cashed the check and then sued claiming $16,000 was still owed, asserting breach, fraud, LCDA violations, conversion, unjust enrichment, civil conspiracy, and successor liability claims.
- Trial court granted defendants summary disposition under MCR 2.116(C)(10); Court of Appeals affirmed, holding (inter alia) that the RCA and the addendum are enforceable, plaintiff failed to show fraudulent inducement or reasonable reliance, the tender-back rule bars avoidance of the addendum, and plaintiff’s LCDA damages are offset by the reasonable cost of care.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract | RCA and disclosure promised a "100% refundable" deposit; Smith says HFV must refund full $152,000 despite §7.5 and the addendum | HFV says refund is contingent on re-occupancy and amount set by RCA §7.5; addendum validly reduced refund to match new deposit | Court: No breach. RCA (§7.5) and addendum enforceable; plaintiff bound and failed to prove fraudulent inducement or tender back the refund. |
| Fraud / silent fraud | Smith contends disclosure statements and HFV conduct induced decedent to sign RCA and accept reduced refund | HFV says all documents provided, RCA controlled, and plaintiff accepted/understood addendum; no justifiable reliance | Court: Summary disposition affirmed; plaintiff failed to show reasonable reliance or clear-and-convincing proof of fraudulent inducement; direct documents refuted alleged misrepresentations. |
| LCDA statutory claim | Smith alleges violations of LCDA disclosure/fraud provisions entitling him to recovery of entrance deposit | HFV argues plaintiff has no recoverable damages because reasonable cost of rental and care exceeds alleged $16,000 and no actionable LCDA violation shown | Court: Claim fails. Even if LCDA was violated, §29(1) requires net damages after deducting reasonable cost of rental/care, which exceed plaintiff's asserted loss. |
| Conversion / unjust enrichment / civil conspiracy / successor liability | Smith seeks recovery via tort theories and successor liability against management entities | Defendants assert contractual release/addendum bars tort recovery (tender-back rule); no separate tort duty shown; successor liability depends on underlying liability | Court: All tort-based claims dismissed. Tender-back rule and existence of express contract/addendum bar unjust enrichment and conversion; no separate tort established; successor-liability issue moot. |
Key Cases Cited
- Innovation Ventures v. Liquid Mfg., 499 Mich 491 (addresses de novo review and contract/summary disposition standards)
- Miller-Davis Co. v. Ahrens Constr., Inc., 495 Mich 161 (elements for breach of contract)
- Stefanac v. Cranbrook Educational Community, 435 Mich 155 (tender-back rule for challenging releases/compromises)
- Titan Ins. Co. v. Hyten, 491 Mich 547 (reliance as element of fraud, including silent fraud)
- Able Demolition v. Pontiac, 275 Mich App 577 (definition and effect of condition precedent)
- Bellevue Ventures, Inc. v. Morang-Kelly Inv., Inc., 302 Mich App 59 (unenforceability of unjust enrichment when express contract governs)