Preview:

STATE OF MICHIGAN
COURT OF APPEALS


STEPHEN WILLIAM BEHM, Plaintiff-Counter DefendantAppellee, v WALLY CROSS, Defendant-Cross Defendant Appellant, and NORTH SAILS DETROIT, Defendant-Cross DefendantAppellant. STEPHEN WILLIAM BEHM, Plaintiff-Counter DefendantAppellant, v WALLY CROSS, Defendant-Cross DefendantAppellee, and NORTH SAILS DETROIT, Defendant-Cross DefendantAppellee.

UNPUBLISHED July 19, 2005

No. 252711 Macomb Circuit Court LC No. 2000-004774-NZ

No. 253844 Macomb Circuit Court LC No. 2000-004774-NZ

Before: Bandstra, P.J., and Fitzgerald and Meter, JJ.

-1-

PER CURIAM. In these consolidated cases, defendants appeal as of right the trial court's finding in favor of plaintiff on his breach of contract and fraudulent misrepresentation claims. Plaintiff appeals as of right the trial court's failure to award sanctions against defendant. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion. A. Factual Background and Proceedings Below In the spring of 1999, plaintiff Stephen Behm contacted defendant Wally Cross at an email address belonging to defendant North Sails Detroit. In a series of e-mails and telephone calls, plaintiff and defendant entered into an agreement, not otherwise reduced to writing, that defendants would find a racing yacht for plaintiff to use in the annual Port Huron-Mackinac yacht race scheduled to begin on Saturday, July 17. On March 26, plaintiff issued a $10,000 check payable to North Sails Detroit as a deposit and defendant Cross began to search for a boat. In May, he located an appropriate yacht that had been recently purchased by Tom Lindemann of Milwaukee, Wisconsin. The yacht was approved by plaintiff, and defendants entered into an agreement with Lindemann for the charter of the boat for lease and use by plaintiff. Plaintiff paid an additional $7,054.50 on July 2, the balance of the charter fee owed to defendants. Lindemann raced the yacht the weekend preceding the Port Huron-Mackinac race, in the Chicago to Mackinac competition. Thereafter, defendants hired a transport crew to motor the boat from Mackinac to Port Huron for plaintiff's use. The crew experienced mechanical and other problems and the head of the crew contacted Cross to say that the boat was "barely functional." Cross contacted plaintiff on Wednesday, July 14, to advise him that it was impossible to fulfill the charter and offered to return the amount plaintiff had paid. However, plaintiff wanted to complete his plans for the race and offered defendant Cross an additional $10,000 to undertake whatever efforts were necessary to get the yacht ready on time. Further, plaintiff purchased new batteries for $1,000, and paid an additional $3,000 to secure the help necessary to attempt to get the electrical system in order. At some point during the cleanup/repair process, Cross was asked where the boat's registration was and he allegedly said "somewhere down below," apparently meaning they were in the usual place such records would be stored, the navigation station. However, no one actually checked to see if the registration papers were, in fact, on the boat. Notwithstanding everyone's best efforts, the boat continued to experience problems during the race. Most notably, its electrical system failed, requiring the crew to use handheld navigational equipment instead of on-board equipment. Nonetheless, plaintiff and his crew were able to complete the race, admitting that they had a good time doing so, and finished quite well. Following the race, the crew of the boat was approached by a Department of Natural Resources (DNR) officer who questioned whether the boat was properly registered. Plaintiff explained that he was not the owner but assumed that it was. Plaintiff had to leave to check in with race officials or risk disqualification so he gave the DNR officer, who apparently did not know exactly how to handle the situation, his driver's license. After reviewing the situation further and not being provided proof of registration, the DNR officer issued a ticket against -2-


plaintiff, as skipper of the vessel, and gave the ticket to plaintiff's crew chief. The crew chief came across defendant Cross (who had also participated, on another boat, in the race). Cross told the crew chief that he would handle the ticket. Plaintiff never saw the ticket and he and his crew considered it nothing more than a minor inconvenience that was not their responsibility. Defendant Cross assumed that Lindemann had properly registered the boat in some state, probably Wisconsin, meaning that an appropriate sales tax had been paid for its purchase. Thus, Cross assumed that the ticket made out against plaintiff resulted from confusion regarding the fact that the boat did not have an "MC" license number on its side. Such license numbers, while ordinary, are not required if a vessel is documented with the U.S. Coast Guard, and the boat was so documented. Cross sent a letter to the St. Ignace District Court, which had enforcement authority over the DNR ticket, explaining that the boat was properly documented with the Coast Guard. The letter stated that Lindemann should be called with any further questions and also supplied both Lindemann's and Cross's phone numbers. Cross assumed that this addressed the ticket problem when he never heard back from the district court. However, even a boat documented with the Coast Guard has to be registered in some state. Accordingly, the district court did not conclude that the matter was resolved because of the Cross message regarding documentation. Further, the district court did not attempt to correspond with Lindemann or Cross regarding the issue, but, instead, attempted to correspond with plaintiff (who had since returned to his home in California) as the person against whom the ticket had been issued. Plaintiff claims that he never received any of the court's notices regarding the outstanding ticket. The following year, plaintiff again sailed in the Port Huron-Mackinac race, this time using a new boat he had purchased for that purpose. Again, he was approached by the authorities at Mackinac regarding the outstanding registration ticket issue. He was arrested in front of his friends, family, and colleagues, and held for some time in both the Mackinac Island and St. Ignace jails. When plaintiff learned the reason for his arrest, he immediately contacted Cross who immediately contacted Lindemann who immediately made payment of the outstanding sales tax to secure Wisconsin registration, proof of which was faxed to St. Ignace. As a result, plaintiff was released from custody within hours of his initial arrest. However, during the process, he had pled guilty to operating an unregistered boat and was fined $500. There was ample trial testimony from both plaintiff and others involved about the extreme humiliation and embarrassment he suffered as a result of his arrest. The incident purportedly destroyed his plans to continue sailing on his new boat with his family and, following that, take a motor tour of the continental United States. Further, as a result of the incident, plaintiff claims to be unable to have any association with Michigan, his home state, including continuing to participate in Port Huron-Mackinac races as he traditionally has. Further, plaintiff's family is closely associated with law enforcement and the fact that he pled guilty to a criminal offense is highly offensive to him. Thus, he spent $22,000 on legal fees to have his guilty plea/criminal record expunged. In an opinion rendered from the bench, the trial court concluded that there was a breach of the contract between the parties. Defendant promised plaintiff a turnkey boat ready to go without any worries, but, instead, the boat was a filthy mess, mechanically inadequate and not ready for the race. Further, the contract included a promise that a boat would be made available -3-


to plaintiff on the Tuesday before the race, allowing him ample time to make preparations. Although defendant suggested that the contract should be voided when the boat showed up late and in bad condition, the trial court concluded that the contract was reaffirmed when defendant Cross accepted an additional $10,000 from plaintiff to get the boat in order. The contract between the parties was further broken because the boat was not properly registered; the trial court concluded that it was not plaintiff's responsibility, nor the responsibility of his crew, to discover that this was a problem. The trial court awarded breach of contract damages of $17,054.50 (the original charter fee) plus $10,000 (the additional charter payment), plus $1,000 (for the purchase of batteries), plus $3,000 (to provide for electronic repairs). In addition, plaintiff was awarded the $22,000 he had spent to secure legal assistance in having the criminal record resulting from his guilty plea expunged. Further breach of contract damages awarded to plaintiff included the $500 fine he had to pay (for pleading guilty to operating an unregistered boat) as well as the $1,200 paid to a psychologist for an evaluation of the emotional damages he suffered as a result of his arrest. All tolled, the damages awarded to plaintiff for the breach of contract were $54,754.50. The trial court further found that defendant had misrepresented to plaintiff that he would provide a turnkey boat with proper registration; that the registration documentation was in the boat; that he would take care of the ticket plaintiff received and that he did, in fact, take care of that ticket. The trial court characterized these misrepresentations as both "false" and "reckless." With little further analysis, the trial court determined that defendant was liable for damages arising from the misrepresentations. As a method of computing the value of the emotional distress that plaintiff suffered as a result of the misrepresentations, the trial court began with plaintiff's life expectancy of thirty-six years (attested to by an expert witness). The trial court determined a per year value for the emotional distress based on the value of the yacht race in which plaintiff will no longer be able to participate and the distress preventing his return to Michigan for any purpose. The trial court expressed surprise that an accomplished person like plaintiff would suffer so as the result of an arrest, but basically concluded that his testimony that he did was credible. The trial court took the $17,000 needed to lease a yacht for the race in this case, added $3,000 per year to account for inflation, and multiplied the resulting $20,000 times the thirty-six years of life expectancy to arrive at an emotional distress damage amount of $720,000. Adding that to the damages from the breach of contract claim made the judgment against defendants total $774,754.50. B. Breach of Contract Issues Defendant argues that the trial court clearly erred in entering judgment in favor of plaintiff in the amount of $54,754.50 for breach of contract. We find that the trial court properly entered judgment in favor of plaintiff for breach of contract; however, remand is necessary to reduce damages which are not recoverable in a contract action. This Court reviews a trial court's findings of fact in a bench trial for clear error and reviews de novo its conclusions of law. Ambs v Kalamazoo Co Rd Comm, 255 Mich App 637, 651; 662 NW2d 424 (2003). "A finding is clearly erroneous where, although there is evidence to support the finding, the reviewing court is left with a definite and firm conviction that a mistake has been made." Id. at 652. Moreover, this Court defers to the trial court's superior ability to -4-


observe and evaluate witness credibility, and will not "set aside a nonjury award merely on the basis of a difference of opinion." Marshall Lasser, PC v George, 252 Mich App 104, 110; 651 NW2d 158 (2002), quoting Meek v Dep't of Transportation, 240 Mich App 105, 121; 610 NW2d 250 (2000). Defendants first argue that they were not the proper parties against which judgment should have been entered, and that judgment should have been entered against Total Yacht Management because Cross was merely an agent of Total Yacht Management, and North Sails Detroit was merely doing business as Total Yacht Management. Defendants argue that defendant Cross is not liable for breach of contract because he was merely acting as an agent of Total Yacht Management. It is generally understood that "an agent may work on behalf of a principal within the scope of the agency agreement as if the agent had stepped into the shoes of the principal without incurring any personal liability." PM One, Ltd v Dep't of Treasury, 240 Mich App 255, 266-267; 611 NW2d 318 (2000). However, an agent may be held personally liable when he acts only on his own behalf rather than on behalf of the principal. Baranowski v Strating, 72 Mich App 548, 558-559; 250 NW2d 744 (1976). Here, the evidence adduced at trial demonstrated, for example, that all of plaintiff's contacts were with defendant Cross: plaintiff and defendant Cross exchanged approximately forty telephone calls, and plaintiff sent numerous e-mails to, and received numerous e-mail from wally@northsails.com. This and other evidence regarding Cross's personal participation in the contract is sufficient to conclude that defendant Cross acted on his own behalf as a contracting party. In the absence of a written contract identifying the contracting parties, the trial court's factual finding that defendant Cross was a proper party liable for breach of contract was not clearly erroneous. Defendants also argue that North Sails Detroit is not liable for breach of contract because it was merely doing business as, or operating under an assumed name for, Total Yacht Management. An assumed-name certificate under MCL 450.1217 could only provide protection to Cross, as an agent of Total Yacht Management, if Total Yacht Management was otherwise undisclosed. Penton Publishing, Inc v Markey, 212 Mich App 624, 626-627; 538 NW2d 104 (1995). It provides no protection to North Sails Detroit the assumed-name entity of which plaintiff was fully aware. Defendants next argue that the trial court clearly erred in finding that a breach of contract occurred when they failed to deliver a yacht to plaintiff on the Tuesday before the race, because the delivery date was left open in accordance with the nature of yacht racing and transport, and the writings between the parties were silent concerning a certain delivery date. Specifically, defendants argue that the trial court erred in inserting an implied performance date into the original oral contract. However, our Supreme Court has noted that when no time for performance is specified in a contract, a reasonable time is implied. Smith v Michigan Basic Prop Ins Ass'n, 441 Mich 181, 191 n 15; 490 NW2d 864 (1992). At trial, plaintiff testified that the contract was for a one week yacht rental to be delivered on the Tuesday before the race, July 13, consistent with pre-race socializing and practice. Further, plaintiff testified that he did not make arrangements to stay in a hotel because he believed he could stay on the yacht when he arrived on Tuesday, defendant Cross knew that plaintiff was scheduled to arrive on Tuesday, and plaintiff's crew was scheduled to start arriving -5-


on Tuesday to practice. To support their claim, defendants proffered the testimony of three sailors that delivery on July 13 would have been impossible because the yacht was used in the Chicago to Mackinac race starting on July 10 and ending on July 12 or 13, and that a reasonable delivery date would have been July 14 or 15. Defendants argue that any expectation on plaintiff's part that the yacht would be delivered on July 13 was subjective and unilateral. Although defendants disputed plaintiff's testimony, the trial court found plaintiff to be a "very credible" witness, and its apparent conclusions that the Tuesday before the race was a reasonable time for delivery, that the parties originally agreed to a Tuesday delivery, and that defendants' failure to deliver the yacht on Tuesday constituted a breach of the original contract were not clearly erroneous.1 In any event, there was ample evidence to support the conclusion that defendants breached the contract by failing to deliver a "turnkey" boat, as promised. We reject defendants' arguments that no breach of contract occurred because, for example, plaintiff was ultimately able to finish the race albeit without a functional installed navigation system. "When performance [of a duty under a contract] is due . . . anything short of full performance is a breach, even if the party who does not fully perform was not at fault and even if the defect in his performance was not substantial." 2 Restatement Contracts, 2d,

Download STEPHEN WILLIAM BEHM V WALLY CROSS.pdf

Michigan Law