The Michigan Court of Appeals recently reiterated in the unpublished opinion, Carol B Alberti v Sunbay Real Estate et. al., LC No. 1-00905-CH (October 30, 2018), that the main goal in interpreting a contract is to honor the parties’ intent as discerned from the words used in the contract. The Court of Appeals further held that where the parties have not expressly defined a term or used it in a technical sense, one should construe the word according to its plain and ordinary meaning. In Alberti, the Court of Appeals reversed the ruling of the trial court that failed to use the plain and ordinary meaning of a word in the parties’ contract and then improperly denied summary disposition to the defendant based on that error.
On April 15, 2015, plaintiff and defendants entered into a one-year listing agreement to sell plaintiff’s house. The house was originally listed for $999,000. After some negotiation between plaintiff and a potential buyer, the potential buyer’s real estate agent purportedly telephoned defendant with the offer of $950,000 and followed up the phone call with a written offer via email. Defendants contended there was never a phone call and that defendant did not see the written email offer. It was undisputed that defendant did not relay the $950,000 offer to the plaintiffs. After the one-year listing agreement expired, plaintiffs used a different agent and sold the house for $840,000. On December 22, 2016, more than 8 months after the agreement expired, plaintiffs sued.
Defendants responded that plaintiff’s claims were barred by a provision of the listing agreement that stated, “any and all claims between the parties must be filed no more than 6 months after the date of termination of this agreement.” (emphasis added). Plaintiff replied that the 6-month limitation period only applied if the sellers terminated the listing agreement under the termination provision of the agreement. Therefore, the Plaintiff argued, that since they did not terminate the agreement, the limitations period was not triggered. The trial court agreed with the Plaintiff’s argument that the 6-month limitation period did not apply and denied the Defendant’s motion for summary disposition.
On appeal, the Court of Appeals reversed the trial court’s denial of summary disposition to the Defendant. The Court of Appeals concluded that the plaintiff’s assertation that the termination provision defines the word “termination” is unsupported by the language of the paragraph and the structure of the document. Rather, the termination provision merely states the consequences of the seller’s unilateral termination of the agreement. The Court also concluded that the plaintiff’s argument that the word “termination” is ambiguous is incorrect even though the word can have different meanings. The fact that the word has multiple meanings “conflates the plain and ordinary meaning of the word ‘termination’ with the multiple ways in which termination may occur.”
A link to the opinion can be found here:
https://law.justia.com/cases/michigan/court-of-appeals-unpublished/2018/337921.html
This article was written by Ryan Hansen, Law Clerk
