Vassar Real Estate LLC v. Swisher Realty Co ( 2023 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
VASSAR REAL ESTATE, LLC, UNPUBLISHED
July 27, 2023
Plaintiff-Appellant,
v No. 361308
Washtenaw Circuit Court
SWISHER REALTY CO., doing business as LC No. 21-000072-CB
SWISHER COMMERCIAL,
Defendant-Appellee.
Before: CAMERON, P.J., and BORRELLO and O’BRIEN, JJ.
PER CURIAM.
In this action for breach of fiduciary duty involving a real estate transaction, plaintiff
appeals as of right the trial court’s order granting defendant’s motion for summary disposition
under MCR 2.116(C)(10). For the reasons set forth in this opinion, we affirm.
I. BACKGROUND
Plaintiff Vassar Real Estate, LLC, is a Michigan limited liability company that was formed
in 2015 for the purposes of real estate investment. Vassar is comprised of four member-partners:
Dr. Prakash Sarvepalli and his wife, Dr. Sailaja Sarvepalli, as well as Dr. Ashok Vashishta and his
wife, Dr. Nisha Vashishta. This lawsuit concerns Vassar’s 2019 purchase of a six-acre parcel of
vacant land in Scio Township.
In approximately January 2019, Vassar member Prakash1 found the listing for the subject
property and contacted real estate agent Randy Maas. Maas was an agent with defendant Swisher
Realty. Vassar had an established relationship with Maas, who had acted as Vassar’s real estate
agent in multiple previous real estate purchases and as a lease listing agent for Vassar. According
1
We will refer to Vassar members by their respective first names because some of them share last
names.
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to Prakash, Maas had “been our agent for everything what [sic] we have done in Ann Arbor”
because Vassar and its members were located in Mount Pleasant. Prakash2 testified that he and
his partners intended to develop a commercial strip mall on the subject property and that this
intention was communicated to Maas. The subject property was zoned for commercial use and
listed for sale for approximately $1.5 million. Prakash also testified that Vassar had been looking
for a property to purchase in this area and that Maas had previously counseled Vassar against
buying certain other properties for various reasons such as issues with “land cuttings,” deficient
buildable area, and the presence of wetlands.
In February 2019, Charlie Koenn, another Swisher agent, showed Prakash the subject
property for the first time because Maas was out of town. It was winter and the property was
covered in snow. Prakash did not know at that time that Koenn was also the agent for the seller3
of the subject property, but he learned of Koenn’s role at some point during the process leading up
to the purchase.4
Koenn testified in his deposition that he told the Vassar representatives at this showing that
there was “fill”5 on the property. Koenn also told Maas that there was fill on the property at some
point in February 2019. Prakash testified, however, that Koenn did not discuss the soil or fill issue
during this initial showing. According to Prakash, Koenn merely touted the subject property’s
desirable location, high value, lot size, and development potential. Prakash indicated that he was
told that the seller’s previous plans to build a car dealership on the subject property had fallen
through for financial reasons.6
Vassar made an initial formal offer to purchase the subject property on February 20, 2019,
for $1,150,000. Maas testified that he acted as the buyer’s agent for Vassar, although there was
no written agreement between Maas and Vassar. Maas explained that he typically does not execute
a written agreement when acting as a buyer’s agent in a commercial transaction. The offer
included a condition that a Phase I environmental study would be completed. Both Maas and
Prakash testified that Maas had recommended adding this condition. Vassar’s initial offer was
rejected, and Maas encouraged Vassar to raise its offer because of the desirability of the property.
Vassar and the seller subsequently agreed to a purchase price of $1.3 million and executed a sales
2
Prakash was also a member or partner in other entities that were involved in commercial real
estate transactions.
3
The seller was Arbor Motors Enterprises, LLC, which was a real estate holding company.
Douglass Fox was the sole member of Arbor Motors.
4
Prakash testified at his deposition that he was not particularly concerned that Swisher agents were
representing both parties in the real estate transaction at issue. It does not appear on appeal that
Vassar has raised any issue concerning this dual representation.
5
As will subsequently become clear in this opinion, this so-called “fill” referred to construction
debris that was buried in the soil on the subject property.
6
There was also evidence in the record that the planned automotive dealership was not built due
to issues with zoning.
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contract. The sales contract also included the condition that it was contingent on obtaining a
satisfactory Phase I environmental report at the buyer’s expense.
Vassar hired Applied EcoSystems to complete the Phase I assessment. According to Maas,
the Vassar members chose this company “on their own.” The report, which was completed by
early April 2019, indicated that there was debris and groundwater contamination on the property.
Prakash testified that he read the report. Subsequently, Vassar asked the seller to obtain soil boring
testing. The seller agreed to pay for the soil boring testing to address Vassar’s concerns about the
soil and what was buried in the soil on the subject property.
Meanwhile, on approximately March 23, 2019, there was a meeting at a Panera Bread
restaurant between Vassar members Prakash and Ashok, Maas, and Al Bloom.7 Bloom was the
founder and president of Bloom General Contracting,8 which performed construction management
and general contracting services. The parties refer to this meeting as “the Panera Bread meeting.”
Prakash testified that Maas arranged the meeting and recommended Bloom, whom Prakash
had not previously met, for purposes of discussing the development of the subject property and
building a strip mall. According to Prakash, Maas presented Bloom as someone who was
trustworthy and had a lot of commercial construction experience in the local area, including
experience in building strip malls. Prakash testified that Bloom estimated that the project would
cost approximately $110 to $120 per square foot. However, Prakash acknowledged that the size
and design of the structure had not been determined at that point and that Bloom was not able to
give a “correct estimate” at that point. Both Prakash and Bloom seemingly agreed in their
respective deposition testimonies that this meeting primarily focused on discussing the overall
vision for the development and as an “interview” to determine whether Vassar would hire Bloom
for the project.
Bloom testified that the subject of construction debris on the parcel came up at this meeting,
and he indicated that there was some visible brick and concrete debris on the property. As
especially pertinent to this appeal, Bloom was asked at his deposition whether he gave any kind of
estimate to the Vassar representatives at the Panera Bread meeting on March 23, 2019, regarding
the cost of removing debris, or excavation or fill work; Bloom responded as follows:
Yes, I don’t consider it a cost estimate. There was visibly some brick and
cement in the rear of the site, that’s the only thing I knew about that site, period.
When asked how much, well, towards the end of the meeting I think we
were standing to leave and the doctors were pressing me to, you know, give them
some sort of dollar figure on what it would cost to remove that debris. I said, I have
no idea, you know, I have no idea, and they kept pressing and pressing and I said it
7
Bloom’s son was also present, but this fact is not material to any of the issues presented on appeal.
Al Bloom will be referred to by last name throughout this opinion.
8
Bloom founded this company in 1985.
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could be 50 grand, it could be 80, 90, 100, I don’t know, that’s that, it’s as simple
as that and that’s all from visible material and who would even know?
I didn’t know what they wanted to build. They talked about building a
basement maybe. I don’t know if they were going to build a medical building with
a walk-out basement. They talked about a lot of things at that meeting and they
were all over the map and after that meeting there was very hardly any interaction
at all. I never heard about it again. I’d drive by the site and I always wondered
what they were going to do.
Maas also testified that the topic of debris on the subject property was discussed at the
March 23, 2019 Panera Bread meeting. According to Maas, the Vassar representatives asked
Bloom how much it would cost to remove the subsurface debris, and Bloom indicated that he did
not know. Maas testified that Bloom subsequently estimated that it would cost $50,000 to
$100,000 after Prakash pressured him to provide a number. Maas did not have any previous
experience with land that had waste or debris that needed remediation.
As Prakash acknowledged, Maas also took Prakash and Ashok to meet with another
contractor immediately after the meeting with Bloom. Prakash testified that this other construction
company did not show much interest in the project and that there were no further discussions with
that company.
With respect to the soil boring that the seller had agreed to obtain, the seller chose to retain
Haengel & Associates Engineering, Inc., to complete the testing based on a recommendation from
Bloom. Haengel produced a Subsurface Soil Exploration and Geotechnical Report for the
property. The report is dated May 12, 2019. In a May 16, 2019 email, Maas provided the Haengel
report to Vassar and recommended contacting Bloom to discuss the report.9 Prakash testified that
he read the Haengel report.
The Haengel report stated in relevant part:
“The fill materials vary from sand, clayey sand, sandy clay, and silty clay,
with presence of debris, concrete, brick, organics, and roots extending to depths
ranging from 9.5 to 12 feet from the existing ground surface. Based on the extent
of construction debris and three borings, we believe an old structure with basement
was demolished and the area was backfilled with soil and construction debris.”10
Prakash testified that he discussed his concerns about the findings in the Haengel report
with Bloom, pursuant to the recommendation of Maas:
9
Maas admitted at his deposition that he did not actually know whether Bloom was qualified to
give a cost estimate for the excavation and fill work recommended in the Haengel report.
10
This portion of the Haengel report was read into the record during Prakash’s deposition.
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Q. Okay. Did you have any questions of Mr. Maas about the soil boring
report?
A. Yes, I did.
Q. And what did you discuss with him?
A. So when we reviewed this soil boring report, it showed there’s [a] lot of
debris and all those things in the bottom. So I spoke to Randy and Randy told us,
you know, the best thing would be to call Al Bloom. And, “This is his number.
Why don’t you call him?” So I did call him and talk to him about this.
That is when he told me it’s no big deal, that is where we can put that mesh
foundation or something of that nature to make it happen, and to—just to clean up
this whole thing is the same thing that we have talked about. It’s not going to get
any higher, and we should be able to start the construction anytime.
Q. When you say “he”—
A. Al Bloom.
Prakash’s testimony about exactly when Bloom allegedly provided a remediation estimate
of $90,000 and the scope of the work contemplated by that estimate is somewhat unclear. Prakash
testified that he had two in-person meetings with Bloom, both of which occurred at Panera Bread.
Prakash stated that the March 23, 2019 meeting was the first of these meetings, at which time
“[w]e did not know anything about the soil status” and had “never [been] told of anything that this
particular piece of land was contaminated or filled or anything of that nature.” The second
meeting, according to Prakash, occurred at some point in May 2019, after the Haengel report had
been received. Prakash appeared to testify that after the soil borings had been completed, Bloom
stated that it was “ ‘not a big deal’ ” and “ ‘it’s going to cost you approximately around $90,000
to get that soil taken care of, and we should be able to put a strip mall very quickly.’ ” Prakash
also indicated that the $90,000 estimate was “mostly” discussed by Bloom at the second meeting
and that Maas was present at the second meeting. Prakash testified both that Bloom provided this
estimate directly and that Maas repeated the estimate from Bloom to Prakash in their
conversations.
The following exchange also occurred during Prakash’s deposition:
Q. …Now, what discussions did you have with Mr. Bloom about the fill on
the property?
A. Done?
Q. Now, yes.
A. Okay. When we got the—about the situation has come up for the fill
and all the things, and what Mr. Al Bloom has mentioned is it is a very simple
problem. He told us that he can put some kind of a mesh foundation. I don’t know
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what it means. It’s a simple mesh foundation that we can do and we can put the
construction up. And that is what it’s going to cost us, around $90,000 to do it. It’s
a different kind of construction, putting that foundation or something.
Q. Okay. Anything else?
A. That’s it.
Q. Okay. How did the issue of fill even come up?
A. After getting the soil boring reports, that is where—that we have been
talking about.
Q. Okay. You had the soil boring reports after you met with Mr. Bloom,
just to let you know. How did it come up with Mr. Bloom in March of 2019 about—
A. No; no, not at that time. First time was only the sugar-coating of the
project. When we’re getting deeper and deeper into the project, that is when they
told us about this mesh foundation to be done.
Q. Okay. I’m trying to limit the issue right now and the questions that I’m
posing to you with regard to this Panera Bread meeting. So at that meeting this
mesh foundation didn’t come up; correct?
A. There are [a] couple of meetings we had—
Q. Okay. But Dr. Sarvepalli, you got to listen to my questions. I am
limiting my questions right now to the Panera Bread meeting. I want to know
everything that was discussed during the Panera Bread meeting. Something that
comes up later I don’t care about at this point in time. Right now I’m asking about
the Panera Bread meeting. Okay?
A. Okay.
Q. So again, what discussions took place at Panera Bread with Mr. Bloom
about the fill on the property?
A. There was no[t] too much of a discussion about the fill in Panera Bread.
It was only how we can start the construction project, how we can do it. And they
were trying to market themselves to—for us to recruit them to—as a builder.
Q. Okay. Was there any discussion about fill at the Panera Bread—
A. I don’t remember.
Prakash admitted in his deposition that he never entered into a contract with Bloom and
that if he had hired Bloom, he would have expected that Bloom would have further investigated
the property before providing a quote.
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Bloom testified that he remembered talking to Prakash by telephone at some point in April
2019, but he did not recall the substance of that conversation. Bloom also testified that he received
the Haengel report and that he “kind of skimmed through it” and read the summary. He did not
read the entire report because he had not been hired for the project. Bloom recalled that the report
provided suggestions on how to proceed based on the geotechnical analysis and that if he had been
hired for the project, he would have consulted a construction engineer because he was unable to
“render any opinion on those suggestions.” Bloom General Contracting was not in the business
of performing excavation or providing fill for sites. Bloom General Contracting would contract
with an excavation and fill contractor if necessary, and it had done so in the past. Bloom testified
that he never discussed the Haengel report, or any of its proposed options for proceeding with
construction on the site, with anyone.
Although the precise details appear unclear, it nonetheless seems that Prakash claimed to
have spoken to Bloom at some point after the Haengel report was provided and then discussed this
conversation with Maas. Prakash further told Maas that Vassar was ready to close on the subject
property and begin construction. According to Prakash, Maas responded by indicating that “ ‘[i]f
Al Bloom has said this is what is going to happen, this is what it’s going to take to get it fixed, let
us get—move forward.’ ” Prakash also stated that Maas told him “ ‘it is only going to cost you
90,000 [to] remediate it. I think you should grab it and take it.’ ” Prakash testified that although
“[w]e were . . . trying to get to the point of retaining [Bloom] permanently” for the project, they
had not yet obtained a written estimate from Bloom or executed a written contract. Prakash stated
that the decision to purchase the subject property was based on Bloom’s indication that the
remediation of the property would be “very simple.” According to Prakash, Bloom did not change
his remediation estimate of $90,000 after the Haengel report. Prakash further testified:
Q. Did you ask him if the estimate that he gave you of 90,000 at the Panera
Bread meeting would change based upon this soil boring report?
A. He said no. I mean, there no—not specific—that specific question, but
he said “This can be done.”
Q. Okay.
A. I mean, if you’re going to put one single-story building with a mesh
foundation or whatever, it can—it’s doable.
Q. Did you ask him what the mesh foundation would cost?
A. Everything including $90,000 extra. That’s what it was to clean the land
and put the foundation or whatever has to be done.
Prakash acknowledged that the Haengel report specifically recommended that the site
preparation should include excavating test pits to determine the extent of the basement backfill
and where to properly locate the building. He admitted that there was no test pit excavation
conducted by Vassar before purchasing the subject property.
The Haengel report contained three potential remediation alternatives ranging from a more
economical and less invasive remediation to a more thorough and more expensive option. The
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report also suggested that a combination of these alternatives may be appropriate among various
areas on the parcel.
Prakash was asked in his deposition whether he had harbored any concern about purchasing
the property as a result of the finding in the Haengel report that the site had been backfilled with
soil and construction debris after a building was demolished. He responded:
A. . . . We discussed this soil boring report with my agent. And we have
taken him—we got his information; I mean, what he felt about it and all those
things. And he said, “You know what? This is just a fill that can be remediated
and we can still use this whole land for construction.”
Q. When you say “agent,” who do you mean?
A. My agent is Randy Maas.
Q. Mr. Maas told you that you could—that he looked as this soil boring
report—
A. That’s what he told me. I didn’t sit with him—next to him to see whether
he read it or not. We asked him, “What do you think about the soil boring report?”
He said, “You know, this can be remediated. It can be fixed. And that’s what Al
Bloom is mentioning. And we can move forward in the construction.”
Vassar lowered its offer to $1.2 million to account for the $90,000 remediation cost. Then
Vassar and the seller agreed to split the cost of remediation, and Maas agreed to lower his
commission by $10,000. The parties agreed to a final sales price of $1,244,501. Vassar closed on
the property on June 14, 2019. The sales contract contained terms that the parties agreed they were
not relying on any representation by the broker or broker’s agents regarding the fitness or
conditions of the property.
At some point in approximately September or October 2019, Vassar discussed the subject
property with a different contractor, Kevin Lovell, who had also done some other remodeling work
for Vassar. Lovell referred Vassar to E.T. MacKenzie Company for purposes of obtaining a bid
to remediate the property. MacKenzie provided a written estimate that it would cost more than $2
million to remediate the subject property. At the time of Prakash’s deposition, Vassar had not yet
entered into a contract for work on the subject property with either Lovell or MacKenzie. Prakash
testified that he and the Vassar partners felt “cheated” and “betrayed.” Prakash also admitted that
he did not know that MacKenzie’s bid was accurate, never asked for a written estimate from
Bloom, and did not know whether Bloom and MacKenzie were contemplating the same scope of
work. Prakash claimed that it was only after the purchase when Vassar was soliciting bids for the
construction that Vassar learned of “[a]ll the land issues, the subsoil issues, the—how the entire
team has hidden the facts and sold us a lemon about—in developing the piece of property.”
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On January 20, 2021, plaintiff Vassar initiated this action against defendant Swisher11
alleging counts for breach of fiduciary duties and fraudulent misrepresentation. Plaintiff’s
fraudulent misrepresentation count was subsequently dismissed pursuant to the parties’ stipulation.
The trial court subsequently granted Swisher’s motion for summary disposition of the breach-of-
fiduciary-duty claim under MCR 2.116(C)(10). This appeal followed.
II. STANDARD OF REVIEW
“Whether to recognize a cause of action for breach of fiduciary duty is a question of law
reviewed de novo because the existence of a duty is generally a question of law.” Calhoun Co v
Blue Cross Blue Shield Mich, 297 Mich App 1, 20; 824 NW2d 202 (2012) (citations omitted). A
trial court’s summary disposition ruling is reviewed de novo to determine whether the moving
party is entitled to judgment as a matter of law. Maiden v Rozwood, 461 Mich 109, 118; 597
NW2d 817 (1999). When evaluating a motion under MCR 2.116(C)(10), a court considers the
evidence submitted by the parties in the light most favorable to the nonmoving party, and summary
disposition is warranted if there is no genuine issue of material fact and the moving party is entitled
to judgment as a matter of law. Id. at 120; West v Gen Motors Corp, 469 Mich 177, 183; 665
NW2d 468 (2003). “A genuine issue of material fact exists when the record, giving the benefit of
reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might
differ.” West, 469 Mich at 183.
III. ANALYSIS
“To establish a claim for breach of fiduciary duty, a plaintiff must prove (1) the existence
of a fiduciary duty, (2) a breach of that duty, and (3) damages caused by the breach of duty.”
Highfield Beach at Lake Mich v Sanderson, 331 Mich App 636, 666; 954 NW2d 231 (2020). A
fiduciary relationship has been defined as
“[a] relationship in which one person is under a duty to act for the benefit of the
other on matters within the scope of the relationship. Fiduciary relationships—such
as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client—
require the highest duty of care. Fiduciary relationships [usually] arise in one of
four situations: (1) when one person places trust in the faithful integrity of another,
who as a result gains superiority or influence over the first, (2) when one person
assumes control and responsibility over another, (3) when one person has a duty to
act for or give advice to another on matters falling within the scope of the
relationship, or (4) when there is a specific relationship that has traditionally been
recognized as involving fiduciary duties, as with a lawyer and a client or a
stockbroker and a customer.” [Calhoun Co, 297 Mich App at 20, quoting In re
11
Vassar did not name Bloom or Maas as parties. Vassar relies on Maas’s conduct to impute
liability to Swisher, although it does not appear that Vassar explicitly claimed that Swisher was
vicariously liable for Maas’s actions. Nonetheless, like Vassar, we will sometimes refer to Maas
as the party alleged to have breached certain duties although we are fully aware that the claims
have only been brought against Swisher in this action.
-9-
Karmey Estate, 468 Mich 68, 74 n 2; 658 NW2d 796 (2003), quoting Black’s Law
Dictionary (7th ed) (alterations in original).]
This Court has also stated that “a fiduciary relationship arises from the reposing of faith,
confidence, and trust and the reliance of one on the judgment and advice of another” and that
“[r]elief is granted when such position of influence has been acquired and abused, or when
confidence has been reposed and betrayed.” Teadt v Lutheran Church Missouri Synod, 237 Mich
App 567, 580-581; 603 NW2d 816 (1999). “[T]he placement of trust, confidence, and reliance
must be reasonable . . . .” Prentis Family Foundation v Barbara Ann Karmanos Cancer Institute,
266 Mich App 39, 44; 698 NW2d 900 (2005).
As specifically pertinent to the instant case, a “real estate agent is a fiduciary and it is not
permissible for him to act in opposition to his principal.” Mackey v Baker, 327 Mich 57, 65; 41
NW2d 331 (1950); see also Brotman v Roelofs, 70 Mich App 719, 729; 246 NW2d 368 (1976)
(“According to Michigan law, a real estate broker is in a fiduciary relationship with his client.”).
“The duties of loyalty, fidelity, care and disclosure may arise impliedly from the agent’s position
or out of an express agency contract in a listing agreement.” Brotman, 70 Mich App at 729. “An
agent undertaking any business or the performance of any services for another is disabled in equity
from dealing with the subject-matter of the agency upon his own account or for his own benefit,
and if he does attempt so to deal in his own name he will be deemed a constructive trustee for his
principal.” Mackey, 327 Mich at 65 (quotation marks and citation omitted).
In this case, Maas was the real estate broker representing Vassar in purchasing the subject
property, and he thus owed a fiduciary duty to Vassar. Mackey, 327 Mich at 65; Brotman, 70 Mich
App at 729. Vassar argues on appeal that because there was no dispute regarding the existence of
a fiduciary duty and because there were genuine issues of material fact regarding whether that duty
was breached in a manner that caused damages, the trial court erred by granting summary
disposition.
As is evident from the record evidence, there certainly are disputed questions of fact in this
case. In particular, the timing, scope, and definiteness of Bloom’s alleged $90,000 remediation
estimate appear unclear from the record. Nonetheless, as Swisher properly recognizes in its
appellate brief, the scope of the fiduciary duty Maas owed to Vassar is disputed in this case even
if the parties do not dispute that Maas was in a fiduciary relationship with Vassar. Logically, the
scope of the fiduciary duty must be determined, which is a matter of law, before questions of
breach, damages, and causation become relevant. See Highfield Beach at Lake Mich, 331 Mich
App at 666; Calhoun Co, 297 Mich App at 20.
Vassar argues that Maas and Swisher had a duty to refer Vassar to a qualified professional
who could provide an accurate remediation estimate for the property following the issuance of the
Haengel report and, further, to conduct appropriate due diligence on Bloom before referring Vassar
to Bloom. Accepting as true, for purposes of reviewing this summary disposition motion, Vassar’s
contentions that Bloom provided an estimate of $90,000 to remediate the property after receiving
the Haengel report, that Maas encouraged Vassar to purchase the property in reliance on Bloom’s
estimate, and that Vassar’s sole additional remediation estimate obtained from E.T. MacKenzie
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established the “correct” remediation cost,12 Vassar’s legal theory appears to be that the record
demonstrates a breach of the fiduciary duty Maas and Swisher owed because Bloom was inherently
unqualified to offer an accurate estimate.
Vassar contends that because Michigan recognizes that real estate brokers have a fiduciary
duty to their clients, the duty that Vassar attempts to impose on Maas and Swisher is automatically
encompassed within the scope of a real estate broker’s fiduciary duty. Vassar does not cite any
authority recognizing that a real estate broker’s fiduciary duty essentially extends to guaranteeing
the accuracy of quotes provided by contractors referred by the broker for work on the property that
is the subject of a potential real estate transaction. Hence, this claim of duty could be considered
abandoned. “An appellant may not state a position without citing authority and expect this Court
to search for grounds to support the claim.” Prentis Family Foundation, 266 Mich App at 56.
Nonetheless, considering that the question of the scope of a real estate broker’s fiduciary
duty presents a question of law, Vassar’s argument may be resolved on the merits. In doing so, it
is instructive to consider the purposes of the relationship between a real estate broker and a client,
and the corresponding duties entailed, as stated by our Supreme Court:
A broker is an agent with special and limited authority, one who is
employed by another to negotiate for specific property with the custody of which
he has no concern.
The first and paramount duty of an agent is loyalty to his principal. He that
acts fraudulently acts in vain. An agent to purchase hay cannot purchase and get
title to hay which he was under obligation to purchase for his principal.
One occupying a confidential and fiduciary relation to another is held to the
utmost fairness and honesty in dealing with the party to whom he stands in that
relation.
Except with the full knowledge and consent of his principal, an agent
authorized to buy for his principal cannot buy of himself. An agent authorized to
sell cannot sell to himself. An agent authorized to buy or sell for his principal
cannot buy or sell for himself; nor can an agent take advantage of the knowledge
acquired of his principal’s business to make profit for himself at his principal’s
expense. The same rule applies to leases and other similar transactions.
* * *
It is the duty of an agent in all transactions concerning or affecting the
subject matter of the agency, to act with the utmost good faith and loyalty to further
12
Notably, Vassar admitted in its trial court briefing that the E.T. MacKenzie quote involved
removing more subsurface debris than was absolutely necessary, according to the Haengel report,
and that the $2 million remediation quote was probably too high.
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the principal’s interest. [Stephenson v Golden, 279 Mich 710, 735-737; 276 NW
849 (1937) (quotation marks and citations omitted).]
The Court in Stephenson further stated:
The term ‘fiduciary’ or ‘confidential’ relation, * * * is a very broad one. It
has been said that it exists, and that relief is granted, in all cases in which influence
has been acquired and abused—in which confidence has been reposed and
betrayed. The origin of the confidence and the source of the influence are
immaterial. The rule embraces both technical fiduciary relations and those informal
relations which exist whenever one man trusts in and relies upon another.
The existence of such a fiduciary relation as that of principal and agent
precludes the latter from taking advantage of his employer or to use any knowledge
acquired by such relation to his injury and the personal pecuniary advantage of the
agent at his employer’s expense. [Id. at 739 (citations and some quotation marks
omitted).]
It is thus evident that a real estate broker generally has a fiduciary duty to act for the benefit
of, and give advice to, the broker’s client on matters concerning the negotiations for the purchase
or sale of specific real property (depending on whether the broker has been employed to represent
a potential buyer or seller). Calhoun Co, 297 Mich App at 20; Mackey, 327 Mich at 65; Brotman,
70 Mich App at 729; Stephenson, 279 Mich at 735-737. This fiduciary duty arises out of the
relationship created by employing the broker as a representative with respect to a real property
transaction and the consequent placing of confidence and trust in the broker’s advice and judgment
regarding real estate transactions. Stephenson, 279 Mich at 735; Calhoun Co, 297 Mich App at
20; Teadt, 237 Mich App at 580-581. “An agent whether he is engaged to effect a sale or a
purchase, his employer is entitled to the benefit of his best judgment, knowledge, and skill . . . .”
Stephenson, 279 Mich at 756 (quotation marks and citation omitted).
As a fiduciary, the real estate broker may not deal with the subject matter of the agency for
the broker’s own benefit or otherwise act in opposition to the principal. Mackey, 327 Mich at 65.
It is clear that the broker’s fiduciary duties fundamentally involve loyalty, fairness, and honesty in
dealing with the principal, and the primary concern is that the broker should work to advance the
principal’s interests and refrain from self-dealing or otherwise taking advantage of knowledge
acquired through the relationship to make a profit for the broker at the expense of the principal.
Stephenson, 279 Mich at 735-737, 739. Relief may be granted if the broker betrays the confidence
entrusted to the broker or abuses the broker’s position. Stephenson, 279 Mich at 739; Teadt, 237
Mich App at 581. “It is settled law that an agent who has been guilty of fraud in the transaction
of his principal’s business forfeits his rights to a commission as such.” Stephenson, 279 Mich at
759.
Here, Vassar’s apparent claim that Maas failed to act in Vassar’s best interest is predicated
exclusively on Vassar’s claim that Maas should have referred Vassar to a specific type of
contractor, rather than merely a contractor who was undisputedly more knowledgeable than Maas
or Vassar’s representatives, and that this failure caused Vassar to purchase a property that would
require more expensive remediation costs than Vassar anticipated. Vassar’s theory essentially
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alleges that Maas gave incompetent advice and thus is more akin to negligence than the type of
self-dealing or dishonesty characteristic of a breach of fiduciary duty claim. See Case v Consumers
Power Co, 463 Mich 1, 7; 615 NW2d 17 (2000) (“Negligence . . . consists in a want of that
reasonable care which would be exercised by a person of ordinary prudence under all the existing
circumstances, in view of the probable danger of injury.”) (quotation marks and citation omitted;
ellipsis in original).13 “The conduct required to constitute a breach of fiduciary duty requires a
more culpable state of mind than the negligence required for malpractice[,]” and “[d]amages may
be obtained for a breach of fiduciary duty when a position of influence has been acquired and
abused, or when confidence has been reposed and betrayed.” Prentis Family Foundation, 266
Mich App at 47 (quotation marks and citation omitted).14
Vassar additionally argues there were genuine issues of material fact whether Swisher
breached its statutory duties under MCL 339.2512d(2). However, in opposing Swisher’s motion
for summary disposition in the trial court, Vassar limited itself to its common-law fiduciary duty
claim and abandoned any claim predicated on MCL 339.2512d by arguing as follows:
In our case, because there was no “service provision agreement” between Swisher
and Vassar - for some reason, Swisher never presented one to Vassar and asked
Vassar to sign it - it seems that Vassar probably cannot credibly argue that MCL
Sec. 339.2512d imposed any duties on Swisher. But that doesn’t matter. It seems
clear that the very duties enumerated in that section were imposed on Swisher by
common law.
As this Court has stated:
It is well established that “[a] party who waives a right is precluded from
seeking appellate review based on a denial of that right because waiver eliminates
any error.” A waiver is a “voluntary and intentional abandonment of a known
right.” “A party who expressly agrees with an issue in the trial court cannot then
take a contrary position on appeal.” “ ‘[A] party is not allowed to assign as error
on appeal something which his or her own counsel deemed proper at trial since to
do so would permit the party to harbor error as an appellate parachute.’ ”
13
We express no opinion whether Vassar’s theory would present an actionable claim for
negligence. This Court has stated that “a negligence claim may advance solely on a claim of
economic loss.” Quest Diagnostics, Inc v MCI WorldCom, Inc, 254 Mich App 372, 381; 656
NW2d 858 (2002). Here, Vassar has clearly pursued a claim for breach of fiduciary duty and has
not attempted to frame its theory as a claim for negligence. We merely conclude that Vassar’s
allegations of what could at most be considered potentially negligent conduct by Maas is legally
insufficient to establish a claim for breach of fiduciary duty.
14
Vassar does not cite any evidence, or advance any argument on appeal, that Maas knew that
Bloom’s remediation estimate was incorrect, that remediation would actually cost more, or that
Maas somehow knowingly sought to provide Vassar with a false estimate of the remediation cost
so as to induce Vassar to buy the property and suffer a loss while, somehow, providing a concurrent
financial gain to Swisher. Instead, Vassar request this Court infer such a factual scenario from
conduct that could be understood as potential negligence.
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[Braverman v Granger, 303 Mich App 587, 608; 844 NW2d 485 (2014) (citations
omitted; alterations in original).]
Thus, Vassar waived any claim of error predicated on the trial court’s failure to address
whether there was a genuine question of material fact regarding any alleged breach of MCL
339.2512d.
In light of the above conclusions, there is no need to address Vassar’s additional arguments
that the trial court erroneously imposed a burden of showing adequate due diligence on Vassar and
that the provisions of the sales contract did not waive its right to pursue the instant lawsuit against
Swisher because the breach-of-fiduciary-duty claim is not predicated on alleged representations
about the fitness or condition of the property. Assuming without deciding that Vassar is correct,
the trial court still did not err by granting summary disposition in favor of Swisher for the reasons
previously discussed.
Affirmed. Defendants having prevailed in full are entitled to costs. MCR 7.219(A).
/s/ Thomas C. Cameron
/s/ Stephen L. Borrello
/s/ Colleen A. O’Brien
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