Borsuk v. Wheeler
Borsuk v. Wheeler
Opinion of the Court
Defendant-appellant Advance Mortgage Corporation appeals by leave granted from a May 10, 1982, circuit court order denying its motion for summary judgment under GCR 1963, 117.2(1) for failure to state a claim upon which relief can be granted. The case arose out of a conspiracy allegedly entered into between defendant Willie Joe Wheeler and employees of defendant Advance Mortgage Corporation to defraud the plaintiffs. The plaintiffs alleged that defendant Wheeler contracted to purchase their house and to apply for a mortgage with defendant Advance Mortgage Corporation. The employees of Advance allegedly falsified earnings and savings records in order to qualify defendant Wheeler for the mortgage. Shortly before the closing, and pursuant to the conspiratorial plan, defendant Wheeler demanded a renegotiation of the contract price, which plaintiffs refused to do. Wheeler failed to appear at the closing, thus resulting in damages to the plaintiffs.
"13. That the representations made by defendant Wheeler were made falsely, and solely with the purpose of inducing plaintiffs to enter into a binding agreement whereby they would be precluded from selling their home to others, and with the deliberate and purposeful intent to attempt to renegotiate the down payment at the last minute.
"14. Plaintiffs are informed and have reason to believe that certain employees of defendant Advance Mortgage Corporation aided, abetted, assisted and conspired with defendant Wheeler to falsify financial and earnings data in order that defendant Wheeler would qualify for mortgage approval from defendant Advance Mortgage Corporation.
"15. That if not for the aforesaid unlawful and fraudulent conspiracy, defendant Wheeler would not have been approved for the mortgage applied for.
"16. That defendants acted purposefully and maliciously in their scheme to defraud plaintiffs, without regard to the consequences to plaintiffs.”
The trial judge denied the motion for summary judgment on the grounds that the complaint did state a cause of action, in light of the fact that Michigan is a notice-pleading state.
A motion for summary judgment brought under GCR 1963, 117.2(1) merely tests the legal sufficiency of the claim as determined from the pleadings alone. Karr v Board of Trustees of Michigan State University, 119 Mich App 1; 325 NW2d 605 (1982); Appollinari v Johnson, 104 Mich App 673; 305 NW2d 565 (1981). The factual allegations of the complaint are taken as true, along with any
At the outset, it is apparent that the trial court utilized an improper standard in denying Advance’s motion. When stating his reasons for denying the motion, the trial judge cited the fact that Michigan is a notice-pleading state. However, the motion for summary judgment was not based upon a claim that the complaint failed to inform defendant as to the nature of the cause it was called upon to defend, to which a motion for a more definite statement under GCR 1963, 115.1 would be appropriate. Instead, the motion was grounded upon a claim that the pleadings did not set forth legal grounds upon which relief could be granted, under GCR 1963, 117.2(1). Nevertheless, this Court may apply the correct standard in testing the validity of Advance’s claim in order to determine whether the trial court’s error requires reversal.
The first argument presented by Advance is that the complaint failed to allege reliance by the plaintiffs upon the acts of Advance’s employees. In support of this argument, Advance contends that the complaint establishes only that plaintiffs relied upon the representations of defendant Wheeler. The acts of Advance’s employees, it is argued, did not occur until after the agreement was entered into, thus ruling out any reliance by plaintiffs upon the actions of the employees of Advance.
Keeping in mind that a motion under GCR 1963, 117.2(1) may only be denied where, as a matter of
Advance’s argument that the agreement was entered into before the fraudulent actions by the employees is also without merit. As stated above, a conspirator is liable for all the acts of his co-conspirators done in furtherance of the object of the conspiracy. Thus, as long as plaintiffs can prove at trial that the conspiracy was entered into prior to the time of the agreement between defendant Wheeler and the plaintiffs, a basis for liability will be established. In other words, the fraudulent acts of Wheeler will be imputed to his co-conspirators, the employees of Advance Mortgage Corporation. The fact that the employees did not fulfill their part of the conspiracy until after the agreement was entered into would in no way relieve them of liability._
Advance next contends that the plaintiffs failed to allege a causal relationship between their damages and the conduct of Advance’s employees. The argument is based upon the notion that the sole cause of the damage was defendant Wheeler’s failure to appear at the closing. However, in making this argument, Advance takes an unrealistically simplistic view of the scheme alleged by the plaintiffs. Clearly, the immediate cause of the damage was the failure to sell the house to Wheeler as agreed. However, the damage also
Finally, Advance argues that no legal basis for holding it liable for the actions of its employees has been alleged. Specifically, Advance argues that the plaintiffs can recover only under a theory of respondeat superior, yet no allegation that the employees acted within the scope of their employment has been made. Advance also contends that, as a matter of law, it cannot be held liable for the acts of its employees since an employer is never liable for the intentional and reckless torts of its employees. The latter argument will be addressed first.
Advance correctly notes that in an employer-employee (master-servant) relationship, the employer may not be held liable for the acts of his employees which are beyond the scope of their employment. Intentional and reckless torts are generally held to be beyond the scope of employment. Bradley v Stevens, 329 Mich 556; 46 NW2d 382 (1951); Watson v Aquinas College, 83 Mich App 192; 268 NW2d 342 (1978), lv den 403 Mich 848 (1978). However, in the agency context, a principal may be held liable for the acts of his agent done not within the scope of his employment
Plaintiffs allege that the employees of Advance "abetted, assisted and conspired with defendant Wheeler to falsify financial and earnings data in order that defendant Wheeler would qualify for mortgage approval from defendant Advance Mortgage Corporation”. It is true, as Advance points out, that plaintiffs do not specifically state that the employees were acting within the scope of their employment (or within the scope of their authority pursuant to the argument above). However, utilizing the rule that the factual allegations of the complaint are to be taken as true, along with any inferences or conclusions which may fairly be drawn from the facts alleged, the following argument reasonably can be made. From plaintiffs’ allegation that the employees of Advance conspired to falsify earnings and financial data in order to qualify defendant Wheeler for a mortgage,
The Supreme Court in Jones v Martz & Meek Construction Co, Inc, 362 Mich 451; 107 NW2d 802 (1961), held that it is sufficient to argue simply that a corporation was a part of the conspiracy without identifying the individuals within the organization who actually took part in the conspiracy. Obviously, in such a case, there would be no need to plead that the employees acted within the scope of their authority. As stated in Jones, "[t]he corporate veil need not be pierced merely to plead a cause of action”. The identity of the employee, and whether or not his actions were within the scope of his authority, are matters for trial, not pleading. Jones, p 455.
We emphasize that we are making a distinction between those intentional torts which are clearly outside the scope of employment (e.g., Watson v Aquinas College, supra, where security guards deliberately set fire to buildings), and the instant case in which the employees of Advance participated in the issuance of a mortgage approval to defendant Wheeler and the issuance of mortgage approvals was precisely the . nature of defendant’s
Affirmed and remanded for trial. Costs to abide the final outcome.
A conspiracy is a combination of two or more persons, by some concerted action, to accomplish a criminal or unlawful purpose or a purpose not unlawful by criminal or unlawful means. Fenestra Inc v Gulf American Land Corp, 377 Mich 565; 141 NW2d 36 (1966).
Concurring Opinion
(concurring). I concur in the result.
I note the majority refers uncritically to the trial judge’s citation as fact "that Michigan is a notice-pleading state”. I am of the impression that Michigan is a fact-pleading state and the federal courts are notice-pleading forums. See the author’s comments to Rule 111, 1 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), pp 194-195, where it is stated that although Michigan is primarily concerned with notice it is generally known as a fact-pleading state.
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