531 N.W.2d 815 | Mich. Ct. App. | 1995
GIORDANO
v.
MARKOVITZ
Michigan Court of Appeals.
Tyler, Xuereb & Nelson, P.C. (by Joseph M. Xuereb), for the plaintiff.
Robert Horvath, for the defendant.
Before: MICHAEL J. KELLY, P.J., and W.P. CYNAR[*] and P.D. SCHAEFER,[**] JJ.
PER CURIAM.
Plaintiff appeals as of right a verdict, entered by the trial court following a bench trial, that found no cause of action for ten of his eleven counts and awarded him $139,914.83 in restitution plus prejudgment interest.
Plaintiff and defendant Markovitz were equal partners in Malan Entertainment, a corporation operating "BT's," a topless bar. Plaintiff, Markovitz, and James Aboud formed ABT Corporation for the purpose of purchasing and operating "Can-Can's," another topless bar. Each party had a one-third ownership interest in ABT. Before the Liquor Control Commission (LCC) approved ABT's request for a liquor license and before the purchase of the topless bar was consummated, Markovitz, Aboud, and David Lachman incorporated defendant corporation, Almark, Inc., with the purpose of purchasing yet another topless bar, "Basin Street," which eventually became know as "Trumpps." The ABT project subsequently languished, and the sellers withdrew.
*678 According to plaintiff, Markovitz led him to believe that Lachman was only a strawman used in plaintiff's place at the time of Almark's incorporation and promised plaintiff a one-third ownership interest in the corporation when Trumpps opened. Plaintiff further testified that he contributed $165,000 to the construction costs of Trumpps in accordance with his one-third ownership interest in Almark and provided many hours of labor at the construction site in furtherance of Trumpps' interest. Markovitz allegedly represented to others that plaintiff was an owner of Trumpps. Monies from BT's were used to pay costs incurred in the construction of Trumpps.
Nonetheless, after receiving the LCC'S approval and closing the sale on Trumpps but before construction was completed, Markovitz offered plaintiff and Aboud a mere twenty percent interest in Almark, or twenty-five percent if they assigned Markovitz their voting rights.[1] Plaintiff and Aboud subsequently filed the instant action for breach of contract to transfer shares, promissory estoppel, fraud and misrepresentation, breach of fiduciary duties, constructive trust, quantum meruit, and restitution. Aboud dismissed his claims when he learned that the shares representing his one-third interest already had been issued to him. The trial court found that no contract had been made and dismissed all the counts except for the one for restitution, which it limited to financial contributions admitted by defendants.
Plaintiff first argues that the trial court erred in finding that no enforceable agreement existed regarding his one-third ownership interest in Almark. Findings of fact by the trial court are *679 reviewed for clear error. MCR 2.613(C). Our review of the evidence indicates that the trial court's conclusion was clearly erroneous. Plaintiff and Aboud, two of the three parties to the alleged agreement, testified that an agreement was reached. Plaintiff's contributions to the Trumpps project, Lachman's lack of contributions, and Markovitz' representations about plaintiff's status as a partner lent further support to this testimony. Markovitz did not testify. Essentially, there was unrefuted evidence that an agreement existed. The fact that plaintiff was not listed on the LCC application, while perhaps improper, did not nullify, abrogate, or disprove the agreement.
Furthermore, plaintiff's partial performance of the agreement was sufficient to remove it from the statute of frauds.[2] See McDonald v Scheifler, 323 Mich 117; 34 NW2d 573 (1948); Madison Nat'l Bank v Lipin, 57 Mich App 706, 719; 226 NW2d 834 (1975). Plaintiff's infusion of $139,914.83 into the Trumpps project, conceded by defendants, was close to one-third of the $500,000 budgeted for acquisition and start-up.
We find unpersuasive defendants' argument that the doctrine of part performance is inapplicable to agreements for the sale or subscription of securities in light of Dumas v Auto Club Ins Ass'n, 437 Mich 521, 540-541; 473 NW2d 652 (1991). The Dumas Court declined to apply the doctrine to the plaintiff's employment contract primarily because it was covered by the statute of fraud's prohibition regarding oral agreements incapable of performance within one year of being made:
"`As the prohibition relates not to the subject *680 matter, nor to the nature of the undertaking, but to the time of the performance itself, it seems impossible for any part performance to alter the relations of the parties, by rendering the contract one which, by its terms may be performed within one year.'" [Id., quoting Ordon v Johnson, 346 Mich 38, 46; 77 NW2d 377 (1956), quoting Pomeroy, Specific Performance (3d ed), § 100, p 241. Emphasis in original.]
In noting the lack of cases applying the doctrine of part performance to contracts other than for the sale of land, the Dumas Court did not hold that the doctrine applies only to real estate contracts. Rather, it essentially recognized that the real estate contract provision of the statute of frauds is one based on the subject matter of the contract and not on the time of performance. Here, whether falling under the statute of frauds provision of MCL 450.1305; MSA 21.200(305) (subscription agreements) or MCL 440.8319; MSA 19.8319 (agreements for the sale of securities), the agreement in this case is required to be in writing because of its subject matter, not because of its time frame.
In light of our holding that defendants breached an enforceable ownership agreement with plaintiff, we must also address the proper remedy. Plaintiff urges this Court to order specific enforcement of the agreement under principles of promissory estoppel. However, such a remedy requires a showing that enforcement of the promise is necessary to avoid injustice. Parkhurst Homes, Inc v McLaughlin, 187 Mich App 357, 360-361; 466 NW2d 404 (1991). In this case, there is no reason why money damages for plaintiff's breach of contract claim would not be sufficient to avoid injustice. Further, the strained relations among the parties also renders specific performance inadvisable. We *681 therefore remand for calculation of benefit-of-the-bargain damages. See Davidson v General Motors Corp, 119 Mich App 730, 733; 326 NW2d 625 (1982), modified on rehearing 136 Mich App 203; 357 NW2d 59 (1984).
Our holding regarding plaintiff's breach of contract claim obviates the need for decision of his remaining claims.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
NOTES
[*] Former Court of Appeals judge, sitting on the Court of Appeals by assignment pursuant to Administrative Order No. 1994-7.
[**] Circuit judge, sitting on the Court of Appeals by assignment.
[1] Markovitz' unwillingness to have only a minority interest in Almark may have been related to a lawsuit filed against him at that time by his partners in another venture, Tycoons.
[2] This issue was not reached by the trial court. However, because the issue is dispositive in light of our holding regarding the existence of an oral contract, and because the parties have discussed the issue in their briefs, we will address it for the first time on appeal.
