Author: LegalEase Solutions 

BRIEF IN SUPPORT OF PLAINTIFF/COUNTER-DEFENDANT’S MOTION FOR SUMMARY DISPOSITION

STATEMENT OF FACTS

This is a case in which no significant facts are in dispute. The Plaintiff/Counter- Defendant seeks repayment of $28,000.00 loaned to the Defendant/Counter-Plaintiff on or about June 20, 2003, and the Defendant/Counter-Plaintiff, counterclaims for payment of an amount totaling to $ 64,000.00 allegedly due to him from his former employer, Bruno Building Corporation (“Corporation”) under the theory that the amount had been personally guaranteed by the Plaintiff/Counter-Defendant pursuant to an oral agreement.

Plaintiff/Counter-Defendant is an individual residing in Northville, Michigan. Defendant/Counter-Plaintiff is an individual residing in Dearborn, Michigan.  The Plaintiff/Counter-Defendant VictorGino Abraham was a shareholder of the Corporation. The Defendant/Counter-Plaintiff was employed by the company as its sales manager/project manager. The Corporation was in the business of home remodeling and construction of additions.

While in the employ of the Corporation, the Defendant/Counter-Plaintiff was loaned $28,000.00 by the Plaintiff/Counter-Defendant. The loan was in the nature of a check dated June 20, 2003, which read “Loan” in the check’s memo line.  The amount was loaned in exchange for the Defendant/Counter-Plaintiff’s promise to repay the same. Though the Plaintiff/Counter-Defendant completed performance and tendered the amount on June 20, 2003, the Defendant/Counter-Plaintiff has failed to repay the loan proceeds. Therefore, the balance of $28,000.00 remains outstanding and due to the Plaintiff/Counter- Defendant. Interest has continued to accrue from June 20, 2003.

The Plaintiff/Counter-Defendant initiated this Complaint for recovery of an amount of $25,000[1] plus interests, costs and attorney fees wrongfully sustained as a result of the Defendant/Counter-Plaintiff’s failure to repay the loan.

In response to the Plaintiff/Counter-Defendant’s Complaint, the Defendant/Counter-Plaintiff filed a Counter-Complaint praying for judgment against the Plaintiff/Counter-Defendant for release of an amount totaling $64,000.00 allegedly due to him, plus interests and costs including attorney fees.

According to the Defendant/Counter-Plaintiff, his employment arrangement provided that the Corporation would compensate him on a commission basis[2] and by an annual salary of $ 25,000.00. For the year ending December 31, 2003, the Defendant/Counter-Plaintiff was responsible for approximately $1,500,000.00 in sales, and was therefore entitled to commission payments of $120,000.00.  The Defendant/Counter-Plaintiff, however, alleges that he was paid only approximately $ 70,000.00 apart from the $28,000.00 loaned on June 20, 2003. As a result, the Defendant/Counter-Plaintiff alleges that as of December 31, 2003, $22,000.00[3] remained due to him in the form of unpaid commissions.  Furthermore Defendant/Counter-Plaintiff received approximately $20,000.00 of the $25,000.00 salary.

It is alleged that in 2003, pursuant to the Plaintiff/Counter-Defendant’s request, the Defendant/Counter-Plaintiff permitted charges to be made to his Home Depot credit card account for business-related purchases. A principal balance in the amount of $22,000.00 was accumulated on the account, on which the Defendant/Counter-Plaintiff was required to make payments, along with interest accrued on those amounts.

It is now the Defendant/Counter-Plaintiff’s claim that the Plaintiff/Counter-Defendant personally guaranteed payment of the above-referenced amounts, and that therefore, as of December 30, 2003, the Plaintiff/Counter-Defendant owed the Defendant/Counter-Plaintiff $64,000.00[4] plus interest and costs, including attorney fees.  For the reasons outlined below, the Plaintiff/Counter-Defendant is petitioning the court for summary judgment in his favor.

STANDARD OF REVIEW

A motion for summary disposition brought pursuant to MCR 2.116(C)(8) tests the legal sufficiency of the complaint.  All well pled factual allegations are accepted as true and construed in a light most favorable to the non-movant.  Maiden v. Rozwood, 461 Mich 109 (1999).  A motion under MRC 2.116(C)(8) may be granted only where the claims alleged are “so clearly unenforceable as a matter of law that no factual development could possibly justify recovery.”  Id., (quoting Wade v. Department of Corrections, 439 Mich 158(1992)).  When deciding a motion brought pursuant to this section, a court considers only the pleadings.  MCR 2.116(G)(5).

Applicable standard for testing motion for summary judgment which is concerned with legal sufficiency of claim is whether plaintiff’s claim, on pleadings, is so clearly unenforceable as matter of law that no factual development can possibly justify right to recover.  Michigan Mut. Ins. Co. v Shaheen, 101 Mich App 761(1980).

A motion for summary disposition brought under MRC 2.116(C)(10) tests the factual support for a claim.  Lytle v. Malady, 456 Mich 1 (1997); Mitchell v. Dahlbert, 215 Mich App 718 (1996).  In reviewing such a motion, the trial court is to consider affidavits, pleadings, depositions, admissions and documentary evidence filed in the action or submitted by the parties in the light most favorable to the party opposing the motion.  If those things show that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law, then the motion may be granted.  Quinto v. Cross and Peters Co., 451 Mich 358 (1996).

Mere existence of issues of fact is no bar to entry of summary judgment if, upon resolving all such issues in favor of the non moving party, the moving party would still be entitled to judgment as matter of law.  Kuhn v Department of Treasury, 384 Mich 378 (1971); Hull v Green Oak, 24 Mich App 309 (1970).

ARGUMENT

1. DEFENDANT/COUNTER-PLAINTIFF CANNOT BRING A CLAIM FOR BREACH OF CONTRACT AGAINST THE PLAINTIFF/COUNTER-DEFENDANT FOR PAYMENTS DUE AS COMMISSION/SALARY FROM BRUNO BUILDING CORPORATION.

The Plaintiff/Counter-Defendant is a shareholder of The Corporation. The allegation of the Defendant/Counter-Plaintiff in his Counter-Complaint is that the Plaintiff/Counter-Defendant personally guaranteed payments of commission and/or salary due from The Corporation. The Plaintiff/Counter-Defendant in fact never personally guaranteed payments due as commission and/ or salary to the Defendant/Counter-Plaintiff from The Corporation. The Plaintiff/Counter-Defendant only loaned to the Defendant/Counter-Plaintiff an amount of $28,000 in exchange for the Defendant/Counter-Plaintiff’s promise to repay the same. The allegation made by the Defendant/Counter-Plaintiff in the Counter-Complaint is false and is intended to give rise to a cause of action where none exists.

The Defendant/Counter-Plaintiff’s Counter-Complaint alleges that the Plaintiff/Counter-Defendant personally guaranteed all payments due as commission and/ or salary to the Defendant/Counter-Plaintiff from The Corporation. (Defendant’s Counter-Complaint, Paragraph 16). However, the Defendant/Counter-Plaintiff admitted in deposition testimony that the Plaintiff/Counter-Defendant never personally guaranteed these corporate obligations.

Q         This agreement by Mr. Abbruzzino to personally guarantee something of Bruno’s, what did he agree to personally guarantee?

A         We were — Bruno was tight on money at the time and he agreed if I opened my account to Bruno and his  employees that he would make the payment and pay it off.

Q             So this was the Home Depot credit card?

A             Yes.

Q             Only?

A             Yes.

(Joseph Schiebel Deposition, page 65)

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Q         So the only thing he personally guaranteed was the Home Depot credit card?

A        Correct.

(Joseph Schiebel Deposition, page 66)

This deposition testimony reveals that no material facts as to this matter are in dispute. The Defendant/Counter-Plaintiff himself does not dispute the fact the Plaintiff/Counter-Defendant never personally guaranteed the commission and salary payments. Therefore, no genuine issue of material fact remains, and therefore the claim of the Defendant in the Counter-Complaint on the alleged personal guarantee must be dismissed.

1. DEFENDANT/COUNTER-PLAINTIFF’S ALLEGATION THAT THE PLAINTIFF/COUNTER-DEFENDANT PERSONALLY AGREED ON BEHALF OF THE CORPORATION TO PAY ALL PAYMENTS DUE UNDER THE DEFENDANT’S HOME DEPOT CREDIT CARD ACCOUNT IS BARRED BY THE STATUTE OF FRAUDS.

The Defendant/Counter-Plaintiff alleges that the Plaintiff/Counter-Defendant personally and orally agreed to pay on behalf of the Corporation, an amount of $22,000.00 accumulated on his Home Depot credit account, and seeks to recover the same alleging breach of contract. This alleged oral promise to pay is not a valid obligation in Michigan, as Michigan law requires such promises to pay for debt of another to be in writing.  MCL 566.132 § 2 (1) (b), states:

(1) In the following cases an agreement, contract, or promise is void unless that agreement, contract, or promise, or a note or memorandum of the agreement, contract, or promise is in writing and signed with an authorized signature by the party to be charged with the agreement, contract, or promise:

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(b) A special promise to answer for the debt, default, or misdoings of another person.

The statute of frauds makes void any oral promise to answer for the debt or default of another. Wilhelm v Voss, 118 Mich. 106, 107 (1898).  Accordingly, the agreement here in issue is directly controlled by the statutory provision and case law in support and hence is void.

The amount of $22,000.00 allegedly agreed to be paid by the Plaintiff/Counter-Defendant is in fact an amount accumulated by the Corporation in the Defendant/Counter-Plaintiff’s Home Depot credit card account. The Defendant/Counter-Plaintiff claims that the Plaintiff/Counter-Defendant personally agreed to pay the same. This agreement purported to be made by the plaintiff is not a written one and hence is void, MCL §  566.132.  See Shurlow Tile and Carpet Co v Farhat, 60 Mich App 486 (1975) (“The testimony of Mr. Shurlow, at best, shows the existence of a promise by one of the defendants to pay the debt of Lincoln Lawns to plaintiff… The promise here in issue is directly controlled by the statute [MCL 566.132]. Id. at 490); Roulo v Auto Club of Michigan, 386 Mich 324 (1971) (“The owner’s indirect promissory representation that a bond would be given can hardly create a more binding obligation than a direct promise to the plaintiff to pay him or see that the general contractor pays him.  In such a case, the law is clear and well settled.  MCL §  566.132 provides that such promises must be in writing.” Id. at 329.); Superior Ambulance Service v Lincoln Park, 19 Mich App 655 (1969) (“In the absence of a valid written contract whereby defendant city would assume the burden of payment to plaintiff corporation for services rendered at the request of defendant’s police or fire departments, an oral agreement to that effect is contrary to the statute of frauds and is void, as defendant contends.” Id. at 662).

In this case, the Defendant/Counter-Plaintiff alleges that the Plaintiff/Counter-Defendant orally promised to answer for the debt of the Corporation in the amount of $22,000 accumulated by the Corporation in the Defendant/Counter-Plaintiff’s Home Depot credit card account. Since the debt is not one incurred by the Plaintiff/Counter-Defendant, but by the Corporation, and not one based on a written agreement, the statute of frauds makes it void.

In summary, by trying to enforce an unwritten agreement to answer for the debt of another, the Defendant/Counter-Plaintiff has failed to state a cause of action and thus failed to state a valid claim upon which relief can be granted and hence is entitled to summary judgment.

• DEFENDANT/COUNTER-PLAINTIFF HAS NOT RAISED ANY VALID DEFENSE TO THE PLAINTIFF/COUNTER-DEFENDANT’S COMPLAINT AND HENCE PLAINTIFF/COUNTER-DEFENDANT IS ENTITLED TO SUMMARY DISPOSITION ON THE COMPLAINT UNDER MCR 2.116(C)(9).

            A motion for summary disposition based on the failure to state a valid defense tests the legal sufficiency of the pleaded defense. Such motion is tested by reference to the pleadings alone, with all well-pleaded allegations accepted as true. The proper test for such a motion is whether defendant’s defenses are so clearly untenable as a matter of law that no factual development could possibly deny plaintiff’s right to recovery. See Hanon v. Barber, 99 Mich. App. 851 (1980).  See also Durant v Stahlin, 375 Mich 628, 644 (1965);  Crowther v Ross Chemical & Mfg Co, 42 Mich App 426, 431 (1972).  Moreover, a motion for summary judgment brought on the ground that the defendant has failed to state a valid defense need not be supported by affidavit.  See Saginaw Firefighters Asso., Local 422, etc. v Saginaw 137 Mich App 625 (1984).

The Plaintiff/Counter-Defendant in his Complaint alleges that the he had loaned an amount of $28,000 to the Defendant/Counter-Plaintiff, and indeed has provided this Court with a copy a check dated June 20, 2003, which read “Loan” in the check’s memo line. Nowhere in the Counter-Complaint, affidavit, pleadings and testimony has the Defendant/Counter-Plaintiff denied the acceptance of the loan amount nor has he admitted to repaying that amount back to Plaintiff.  In fact, the Defendant/Counter-Plaintiff’s only defense is that the $28,000 check was made to Defendant/Counter-Plaintiff as draw against commissions allegedly owing to him. However as discussed above, Defendant/Counter-Plaintiff’s claims for money owed from Plaintiff/Counter-Defendant are wholly without merit, as Defendant/Counter-Plaintiff admitted in his deposition testimony that Plaintiff/Counter-Defendant never guaranteed payment of commissions and salary, and any such claims are barred by the statute of frauds.  Thus the Defendant/Counter-Plaintiff has made no viable defense to non-payment of the $28,000 loan, has pled no facts that can possibly deny the Plaintiff/Counter-Defendant’s right to recover his debt. Therefore the Defendant/Counter-Plaintiff has failed to state valid defenses, which entitles the Plaintiff/Counter-Defendant to summary disposition pursuant MCR 2.116 (2) (C) (9).

RELIEF REQUESTED

WHEREFORE, Plaintiff/Counter-Defendant respectfully requests that the Court grant summary disposition in his favor and award all costs, including attorney fees, incurred in this matter.

[1] Though an amount of $28,000 is due to the plaintiff/counter defendant, the complaint is for recovery of $25,000 only as it is the jurisdictional limit of a District Court.

[2] ie; a percentage of his sales.

[3] ($120,000.00 – $ 70,000.00) – $ 28,000.00

[4] $22,000.00  (Unpaid commissions) + $20,000.00 (unpaid salary) + $20,000.00 (unpaid credit card amount).