Donna Walker v. Otis M Underwood Jr , 923 N.W.2d 274 ( 2019 )

Order Michigan Supreme Court
Lansing, Michigan
March 8, 2019 Bridget M. McCormack,
Chief Justice
156651 David F. Viviano,
Chief Justice Pro Tem
Stephen J. Markman
Brian K. Zahra
DONNA WALKER, WILLIAM WALKER, and Richard H. Bernstein
HEAD TO TOES MASSAGE THERAPY OF Elizabeth T. Clement
OXFORD, INC., Megan K. Cavanagh,
Justices
Plaintiffs-Appellees,
v SC: 156651
COA: 333160
Oakland CC: 2015-145545-CK
OTIS M. UNDERWOOD, JR.,
Defendant-Appellant.
_________________________________________/
On January 23, 2019, the Court heard oral argument on the application for leave to
appeal the September 7, 2017 judgment of the Court of Appeals. On order of the Court,
the application is again considered, and it is DENIED, because we are not persuaded that
the question presented should be reviewed by this Court.
ZAHRA, J. (dissenting).
I respectfully dissent. In this case, defendant agreed to develop a part of a
building that he owned for plaintiffs Donna and William Walker, who planned to lease
the space for their business, Head to Toes Massage Therapy of Oxford, Inc. The
agreement was memorialized in a written contract (the letter agreement) that the parties
signed. Although the letter agreement provided that defendant would “use all reasonable
efforts/expense to obtain a final occupancy permit,” defendant experienced continual
delays in doing so. After nine months without the necessary occupancy permit,
plaintiffs’ attorney sent a letter to defendant indicating that they had decided “to
terminate their interest in any and all obligations regarding the property.”
Plaintiffs filed suit, seeking damages resulting from the delay. Defendant moved
for summary disposition, arguing that plaintiffs were not entitled to such relief under the
terms of the letter agreement. In support of his position, defendant pointed to paragraph
10 of the letter agreement, which specifically outlined the remedies agreed to by the
parties, stating:
10. The failure of either party to perform the preliminary duties outlined
in this agreement will permit the obligee of the duty to declare a default and
terminate this preliminary agreement to lease or other remedy that may be
agreed to by the parties.
2
The trial court held that paragraph 10 was clear and unambiguous, granting summary
disposition in defendant’s favor. A divided panel of the Court of Appeals reversed,
however, with the majority reasoning that paragraph 10 did not contain any language
expressly limiting the parties to the two remedies specified therein. 1 Judge O’BRIEN
drafted a partial dissent, in which she opined that the majority’s holding effectively
rendered paragraph 10 meaningless. 2
I, like Judge O’BRIEN, am persuaded that the panel majority’s holding does not
comport with the rule against surplusage. That is, “courts must [] give effect to every
word, phrase, and clause in a contract and avoid an interpretation that would render any
part of the contract surplusage or nugatory.” 3 Paragraph 10 is inartfully drafted with
regard to the second remedy, which awkwardly allows for the pursuit of an alternative
remedy agreed to by the parties. Nevertheless, considered as a whole, paragraph 10 is
clear, concise, and cannot be ignored as surplusage. To hold, as the panel majority has,
that the parties in this case were not limited in the remedies available writes paragraph 10
out of the contract entirely.
Further, I note the well-established principle that “[i]n interpreting a contract, our
obligation is to determine the intent of the contracting parties.” 4 “[T]he intent of the
contracting parties is best discerned by the language actually used in the contract.” 5 It
seems peculiar to me that the letter agreement would include a provision that details two
specific remedies—neither of which is unique to this manner of contract or these
particular circumstances—if the parties did not intend for those remedies to be exclusive.
1
Walker v Underwood, unpublished per curiam opinion of the Court of Appeals, issued
September 7, 2017 (Docket Nos. 332129 and 333160), pp 2-4.
2
Id. at 4-5 (O’BRIEN, J., dissenting).
3
Klapp v United Ins Group Agency, Inc, 468 Mich. 459, 468; 663 NW2d 447 (2003).
4
Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich. 362, 375; 666 NW2d
251 (2003).
5
Rory v Continental Ins Co, 473 Mich. 457, 469-470 n 21; 703 NW2d 23 (2005).
3
For these reasons, I would peremptorily reverse the decision reached by the Court
of Appeals’ panel majority and reinstate the trial court’s order granting summary
disposition.
MARKMAN, J., joins the statement of ZAHRA, J.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
March 8, 2019
t0305
Clerk