Sullivan Creek Properties, LLC v Dellenger

Jeffrey C. Hicks

Case Conclusion Date:February 12, 2004

Practice Area:Real Estate

Outcome:Summary disposition in favor of Defendants

Description:The defendants, sellers under a buy/sell agreement with the plaintiff, contracted with the plaintiff for the sale of a multi-family residential rental property. The buy/sell, which was drafted by the parties, contained the following items: 1) a contingency allowing the plaintiff to terminate the contract unless the property was properly zoned; 2) a representation and warranty by the defendants that the property conformed to all building codes, and that no code violations currently existed, or were previously noticed to the defendants; and 3) that defendants would procure for the plaintiff all "certificates of inspection, certification of occupancy, or the like required under the terms of any local ordinance." The plaintiff closed on the property and, at the time of the closing, signed a standard closing agreement acknowledging that the plaintiff was purchasing the property in an "as is" condition, and that the purchaser was making no "warranties as to the land and structure purchased or the condition thereof." Two months after the closing, the defendants received a demand for rescission from plaintiff's counsel. Plaintiff's counsel maintained that at the time of the closing: 1) the property did not meet the building code requirements; 2) the property was not properly zoned; 3) the property was subject to a stop work order for work that was performed by the defendant's predecessor in title; and 4) no occupancy permit existed. The defendants repeatedly refused the plaintiff's demands for rescission, maintaining that monetary damages and/or repairs were adequate. The plaintiff subsequently filed a four-count complaint for rescission, breach of contract, fraud and misrepresentation, and mutual mistake. Nearly a year passed, during which time the only party conducting any discovery was the defendants. The defendants ultimately filed a motion for summary disposition. The defendants brought their motion as to all counts pursuant to MCR 2.116(C)(8) and 2.116 (C)(10). The defendants maintained in their motion that: 1) the plaintiff subsequently amended the original sales contract to remove all contractual contingencies and acknowledged that it was purchasing the property in an "as is" condition; 2) the existence of the "as is" clause, coupled with the plaintiff's contractual right to inspect the property, allocated the risk of loss to the plaintiff; 3) the equitable remedy of rescission was not proper where monetary damages were sufficient; and 4) the plaintiff failed to plead its fraud claim with particularity. The plaintiff subsequently filed a cross-motion for summary disposition. The defendants' motion was granted in its entirety as to all counts, under both subsections of MCR 2.116. The plaintiff's motion was denied. In summarily dismissing the plaintiff's claims, the court held, among other things, that the plaintiff's signature on the closing statement amended the parties' buy/sell such that all contingencies were removed, and that the plaintiff purchased the property "as-is."