*1 Dailey & Hartman Eichhorn v COMPANY, HARTMAN& EICHHORN BUILDING INC DAILEY January 11,2005, May Docket No. 249847.Submitted at Detroit. Decided 26, 2005, at 9:00 a.m. Building Company, (HEBC), brought Hartman & Eichhorn Inc. against action in the Oakland Circuit Court Steven and Janine others, unjust alleging and breach of contract and enrich- ment, seeking relating and foreclosure on a construction hen to Daileys the renovation of the residence. The counter- contract, negligence, misrepre- claimed for breach of fraudulent Michigan sentation and violations of the Consumer Protection Act (MCPA), act, seq., et 445.901 the builders’ trust fund Daileys third-party MCL 570.151 et The also filed a action Jeffry Hartman, signed R. who contract on behalf of HEBC, alleging misrepresentation fraudulent and the same statu- tory they alleged against court, violations HEBC. The Colleen O’Brien, J., granted summary disposition of the claims individually, determining party Hartman that Hartman was not a liability. to the contract and bore no individual The appealed granted. leave Appeals The Court of held: stating 1. The trial court erred that there was no basis for
imposing upon individually allegedly for his employment fraudulent acts committed in the course of his Agents corporation. corporation and officersof a are hable for torts they personally though doing they commit even so act for corporation though corporation and even is also liable for the tort. 2. The trial court erred when it held that Hartman was not
personally any resulting liable for MCPA violations from his Legislature actions, conduct. The constructed the MCPA so that affiliations, yield liability. Legislature rather than intended actually alleged that those who violate the which Hartman is done, to have would be the ones from whom victims could recover damages, regardless of the violators’ affiliation with business 445.911(7) entity. plain language of MCL indicates that the liability. generally envisions individual App 266 Mich 7.215(J)(1) panel Appeals 3. MCR constrains this of the Court of holding Laszar, (2000), follow in Forton v subject that residential builders are to the MCPA. itWere not so constrained, panel apply hold would that the MCPAdoes not residential builders. The MCPA does not to transactions or *2 specifically conduct by authorized under the laws administered a regulatory acting statutory authority, hoard or officer under 445.904(1), being such as Hartman’s contractor’s license controlled Occupational Code,
under the MCL 339.2401 ei If a statute performance by authorizes the profes- of some service a licensed sional, apply professional’s then the perfor- MCPAdoes not to the Although agrees panel mance of the service. with Hartman that liability may MCPA, his tort not be determined under the under the controlling precedent grant summary of Forton the trial court’s of dispositionmust he reversed and the case must be remanded so that court can address the merits of the MCPAclaims. proceedings. Reversed and remanded for further J., concurring part dissenting part, and stated Sawyer, majority that the liability is correct that there be individual However, for Hartman on the fraud claim. there cannot he liability unfair, under the MCPA.The MCPAaddresses unconscionable, deceptive methods, acts, or practices or in the 445.903(1). conduct a means, trade or commerce in MCL That according MCPA, to the definitions in the that the conduct a actionable, business is what is not the conduct of an individual. equitable MCPA authorizes relief an individual engaging in conduct that authorizing violates the MCPA while damages against financial benefiting a business from the con- correctly duct. The trial court concluded that there is no indi- liability by MCPA, vidual Hartman regard under the without Forton. Harnisch, Lebow, Gerlach, Gadd, & PLC (by Steffi Lebow, Michael J. James C. Steffi, and Charles J. Gerlach), for Steven and Dailey. Janine
Robert S. Rollinger for Jeffry Hartman. Before: P.J., and and O’CONNELL, SCHUETTE, SAWYER JJ. & Eichhorn the Court O’CONNELL, J. This case us to reconsider requires under building a contractor can be liable issue whether Although Consumer Protection Act.1 Michigan § 3 of the intended under the Legislature apparently “conduct,” for their a to extend to individuals or renovation of a building contractor’s construction Code,2 so the regulated by Occupational house is in the MCPA3 should not remedy apply. provisions Nevertheless, Ins Co.4 our decision Smith v Globe Life Smith to build- already applied in Forton v Laszar5 has building contractors and found that act of ing exemption provi- house does not fit within the MCPA’s result, MCR sion. As a accordance with 7.215(J)(2), our earlier decision in disagree we required Forton and because we are to do follow 7.215(J)(1). so MCR declare a conflict with We Forton, and, precedent, if we were not bound this we would hold that the MCPA does not renovation, construction, of residential performance *3 licensed residential builders. MCR repair 7.215(J)(2).
I and Janine en- Third-party plaintiffs Steven an agreement tered into with Hartman & Eichhorn (HEBC), Building Company, Inc. to renovate their pro- house located West Bloomfield. The contract $166,041, paid vided for a total amount to be 1 MCL 445.903. 2 seq.; seq. regarding et MCL 339.101 et see MCL 339.2401 residential and contractors.
builders
3
MCL 445.901 ei
(1999).
446, 462-467;
460 Mich
initial payment down and various draws as construction proceeded. Defendant Hartman signed the contract on behalf of HEBC. Daileys became dissatisfied with the quality of the performed
work by HEBC and withheld a portion of the money contract, due under the demanding that various deficiencies be corrected. allege Plaintiffs that HEBC refused to complete project after plaintiffs refused payment.
HEBC filed a complaint against the Daileys alleging breach of unjust enrichment, contract and and seeking foreclosure on a construction lien. The Daileys filed a counter-complaint contract, for breach of negligence, and slander of title against HEBC, and also claims fraudulent misrepresentation, violation MCPA, and violation of the builders’ trust fund act6 both HEBC and defendant Hartman in his individual capacity. Thereafter, the trial court granted summary disposition on the claims Hartman individually on the basis that there was no genuine issue of material fact that Hartman could not bear any individual liabil- ity. Specifically, the trial court held as follows: argues
Hartman party he was not a Agreement. to the claims that dealing were with him exclusively capacity agent his as an officer and of HEBC. imposing there is no liability upon basis for him individually. agrees.
This Court The Court genuine finds there is no issue of material fact that Hartman cannot bear liability. This Court thereafter granted the Daileys’ application for leave to appeal. issue before this Court is the dismissal of the claims against Hartman in his individual capacity. We reverse.
6 MCL570.151 et 549 v Hartman & Eichhorn
II
argue
trial court erred
that the
first
Although
dismissing
claim
Hartman.
the fraud
genuine
of
no
issue
that there is
court stated
the trial
appears
trial
that the
fact,
to this Court
material
genuine
concluding
no
issue
that there was
court
acting only in his
that Hartman was
material fact
corporation.
agent
capacity
an officer and
as
accepted,
appears
trial court
with
Further, it
that the
any authority
indicating
conclusion,
its
out
argument
agent
liable for his tortious
that an
cannot be
capacity
an
done in the
if that conduct was
conduct
agent
corporation.
this Court observed
But as
agent may
Stephenson,7
held
v
be
Warren Tool Co
agent participated.
for those torts which
liable
agents and
of a
principle
a familiar
that the
officers
It is
they personally
corporation are liable for torts which
they
corpora
commit,
though
doing
act for the
even
so
tion,
though
corporation
for the
is also liable
and even
Woodward,
Company [355
Construction
tort. Zaino v. North
(1959)] (fraudulent
425, 429;
represen
33
Mich
95 NW2d
214,
tations);
Building Company [360
Allen v.
Mich
Morris
(willful
(1960)]
218;
change in natural
491
103 NW2d
210,
water);
Crosby
Mich
flowage
[169
v.
& Co.
Wines
(1912)] (active
214;
promotion
96
and sale of a
135 NW
dangerous);
Hayes
compound
[286
Bush v.
known
be
(1938)] (conversion);
546, 549;
Hemp
Mich
See also Detroit.9
7
(1968).
274, 300;
App
11 Mich
In it does not from the trial appear court’s that the court opinion basing its conclusion a upon determination that there was insufficient factual sup- port Rather, fraud claim. appears the trial court’s decision solely was based on the incor- rect legal conclusion that Hartman could not be held individually liable for tortious acts committed in the course of employment by his the corporation. Accord- ingly, grant we reverse the of summary in disposition favor of Hartman on the fraud claim.
III Next, the Daileys argue that the trial court in erred granting summary disposition on their claim under the MCPA. Again, basis for the trial court’s grant of summary disposition was that there would be no liability by Hartman. agree We with the Daileys that the Legislature intended to hold individu- als, and not just businesses, their liable for conduct that violates the MCPA. On appeal, Hartman also raises issue whether the MCPA even applies building con- tractors. We are bound by precedent to hold that it does, so we reverse the trial grant court’s of summary dispo- sition for Hartman on plaintiffs’ MCPA claim.
The MCPA enables victims sue those who violate but the enabling provision does not expressly limit a victim’s choice of violating defendants to a certain class or type.10 Nothing in the expressly states whether an individual who violates act in his or her capacity as an employee or corporate officer is personally liable a Nevertheless, civil suit. we note that most of the violations listed MCL 445.903 have the common root of fraudulent or deceptive practice, 445.911(2). & Eichhorn and, above, generally applicable noted torts are first vicariously to the actual tortfeasor and then to his or In the realm of her certain circumstances. employer torts, determining holding company liable first and executives second is the employees drifting upstream. a raft equivalent “[u]nfair, Also, the MCPA makes unlawful unconscio- nable, methods, acts, or in the deceptive practices or ,”11 commerce . . . the act conduct of trade or conduct, resolutions, not and it redresses actual board goes saying corporation without that no other busi- *6 entity anything, including ness can do violate the MCPA, without human action. This case makes the point While the claim that HEBC perfectly. through representations violated the act various omissions, they representations attribute those same and omissions to Hartman and claim that the acts sustain their MCPA claim him individually. the the Legislature Because constructed MCPA so that actions, affiliations, yield liability, rather than individu- necessarily primary als are the act’s violators. It stands that, language to reason to the express contrary, absent the Legislature actually intended that those who violate the act would be the ones from whom victims could damages, regardless recover of the violators’ affiliation any entity. business 445.911(7) Finally, plain language of MCL indi- that the generally cates envisions individual liabil- ity. The a person subsection states “when com- an action another the defendant person, mences may any assert... claim under this act... .”12In the absence of a caveat individuals excluding acting owners, members, executives, employees, board this added). (emphasis Id. 445.911(7) added). (emphasis
language declares what should be intuitive-those who may sue for violations of the act sue those who Therefore, violate the act. Hartman was personally liable for MCPA violations that resulted from his conduct, and the trial court erred when it held to the contrary.
This appellate leaves us with Hartman’s argument that the by MCPA does not to actions taken him or HEBC because the act of a contractor building repairing a house regulated by is Code. Occupational agree, We by but we are bound precedent hold otherwise. Ac- cording 445.904(1), to MCL the MCPA “does not apply .(a) to.. [a] transaction or conduct specifically autho- rized under regulatory laws administered board or acting officer under statutory authority this Smith, supra at state ....” In our Supreme Court liberally interpreted phrase “transaction or conduct specifically authorized” to include any activity or ar- rangement permitted by statute. The Court did not limit scope inquiry to the specific misconduct Id. alleged. if a statute authorizes the perfor- mance of some service a licensed professional, then the MCPA not apply does to the professional’s perfor- Smith, mance of the supra at 465-466 n 12. service. Smith case, Applying to this we would find that statutes allow licensed residential builders or al- *7 teration contractors to perform the reconstruction here, work at 339.601(1), issue 339.2401, 339.2404, and Hartman held the license HEBC in accordance with MCL 339.2405.
and HEBC generally were allowed statute to make and repairs renovations to Daileys’ home, and the MCPA should not apply.13However, Forton, supra 13 Corrigan’s The identical conclusion was reached in Justice concur ring opinion Supreme appeal to our Court’s denial of leave to in Forton. 553 Hartman &Eichhorn Opinion by Sawyer, J. are that residential builders 715, held expressly at we the wisdom question we to the MCPA. While subject MCR Forton, we are bound Smith or either 7.215(J)(1) hold Hartman account- Forton and claims, the the fraud the MCPA. As with able under the merits court did not address trial of sum- claims, grant reverse the court’s MCPA so we proceedings. for further and remand mary disposition retain jurisdic- do not Reversed and remanded. We tion.
SCHUETTE,PJ., concurred. and
SAWYER, dissenting (concurring part J. there majority may I that Although agree with part). claim, the fraud I liability by Hartman on be individual -liability individual on the that there could be disagree Furthermore, ques I not reach the MCPA claim. would Laszar, 711; Mich 609 Forton v 239 tion whether I not (2000), correctly decided as do NW2d 850 need reach that and create a conflict. believe we issue grant summary the trial court’s The basis for be the MCPA claim was that there would on disposition liability by defendant. Whether no itself or under the MCPA is limited to the business employee agent be extended to an individual the violation on behalf actually who commits business impres to be a of first appears question of the business in Michigan. sion (2001), concurrence, explained reported Mich at 463 justified exemption regulation from the their of residential builders timely the issue in a manner. in that case failed to assert but the builder applies parties the MCPA discuss in their briefs whether do Forton, supra at 715, v Paul and Winans Cf. residential builders. (Docket
Marlene, Inc, unpublished opinion per curiam, July issued 230944). majority that Winans Although agree presents the I No. issue, ultimately decide this the trial court did not view of this better and, therefore, opinion to address it. question we should decline in its *8 by Opinion J. Sawyer, The Daileys alleged in their counter-complaint and third-party complaint various violations of MCL 445.903. That section sets out numerous that practices are unlawful under the act and the initial paragraph “(1) provides, Unfair, unconscionable, or deceptive methods, acts, or practices the conduct of trade or commerce are unlawful and are defined as follows . ...” The term “trade or commerce” is one of art that is 445.902(d) defined by MCL as follows: “Trade or commerce” means the conduct of a business providing goods, property, primarily or personal, service family, purposes or advertising, household and includes the solicitation, offering rent, sale, lease, for sale or or distri- property, tangible real, bution of a service or intangible, or personal, mixed, article, or other or a business opportunity. “Trade or commerce” does not include the purchase franchise, or sale of a pyramid but does include promotions, “franchise”, and chain “pyramid”, as promotions” “chain are [MCL defined in 445.1501 to 445.1545].
Resolution of the issue of individual versus company liability under the MCPA can be achieved looking the first clause of the definition of “trade or commerce.” Specifically, that term is defined as “the conduct of a business..'..” the statute addresses “the conduct of a business” rather than the conduct of an individual.
Furthermore, in drafting MCPA, Legislature clearly demonstrates it was cognizant of when wished a provision to include an individual and when it 445.902(c) did not. For example, MCL defines “person” to include a “natural person” as well a “corporation” and other business By contrast, entities. Legislature did not provide a definition of “business” that includes natural persons. Moreover, although MCL 445.903 ad- dresses the conduct of a business, other sections ad- & Eichhorn J. Sawyer, example, For persons. dress the conduct of engaged mean “a “company” person defines 445.903a a service contract to provides in trade or commerce who MCL 445.903c and MCL Similarly, consumers.” misleading “a from person” placing 445.904d prohibit *9 or advertisement. directory entry telephone Further, dealing the with remedies also sections against per- available “a selectively establish remedies the attor- For MCL 445.905 authorizes example, son.” restraining against a order “a ney general seek violating general who is MCL 445.903. person” 445.911, section, para- MCL authorizes under remedy against relief who violates graph equitable person MCL But under which paragraph provides 445.903. recovery, language a financial there is no such for “a regarding being against person” the action who use of the Legislature’s violates the act. both terms term) (a (a “a business” and “a more specific person” term) an general reflects intentional distinction be- very the and a the specific tween two scheme relief Legislature: equitable against persons violating damages against the but no financial those indi- viduals. 445.911(7)
Moreover, majority’s reliance on MCL First, is for a number of reasons. as noted misplaced above, the MCPA defines to include “person” legal entity, partnerships. There- including corporations fore, the use of the word in that subsection “person” an necessarily remedy against not establish a does Second, period individual. that subsection establishes a of limitations in which to commence an action under then that a in a lawsuit provides the act and defendant may raise a claim under the act as a defense or be the consumer suing counterclaim. But who would a claim under the MCPA? It would be might that have 266 Mich APP 545 J. Sawyer, contracted, not with which the consumer the business the act. who have violated employee 445.911(7) Therefore, supports if anything, are damages that financial under the act recover- view the indi- against entity, against the business not able Third, subsection 7 does not create a employee. vidual above, it is subsection 1 that remedy. As discussed individual, and that rem- remedy against creates a in nature. edy equitable is clear and to me that Accordingly, unambiguous is Legislature provided equitable relief in the conduct that actually engages individual who conduct, stop the act in order to while violates for financial remedies the business providing I that benefits from that conduct. believe that the trial concluded there correctly court liability by no individual Hartman and it properly for him granted summary disposition on the MCPA claim.