A new unpublished opinion of the Michigan Court of Appeals, Lake Area Group LLC v. Selbert, Not Reported in N.W.2d, 2017 WL 6542560, is an instructive example of what can happen if experts disagree about the safety of an element as constructed by a developer.
The factual background from the decision reads as follows:
“This case arises from the purchase of real property in a platted subdivision near Portage Lake in Washtenaw County. In July 2014, the Selberts signed a purchase agreement with Lake Area Group to purchase vacant residential property at 8680 Dexter-Pinckney Road, consisting of Unit 4 of the Woods of Portage Lake development in Dexter Township. The purchase agreement provided that the Selberts intended to build a home on the lot. The purchase price was $230,000, of which $200,000 was allocated to the property and $30,000 to a ‘development fee.’ The development fee would be waived if the Selberts used Lake Area Group’s builder, ‘MSB.’
The Selberts assert that their decision to purchase the property was influenced by the presence of a boardwalk that ran to Portage Lake and by representations that the boardwalk was safe for both foot traffic and the use of an e-cart (i.e., a golf cart).
…The Selberts decided not to use MSB as their builder, and they also refused to pay the $30,000 development fee, ostensibly due to the condition of the boardwalk. Lake Area Group brought this action for breach of contract to recover the development fee… The Selberts also filed a countercomplaint.”
Both sides submitted testimony from experts. The Selberts’ expert opined that the boardwalk was “substantially too light to be used for e-carts… did not meet the applicable building code and was unsafe for individuals and e-carts.” On the other hand, the boardwalk’s designer, an engineer, testified that the boardwalk was safe, and the township inspector testified that he inspected the boardwalk and approved it.
In affirming the trial court’s decision on the claims and counterclaims, the Court of Appeals noted, “We defer to the trial court’s determinations of witness credibility. Guerrero v Smith, 280 Mich App 647, 669; 761 NW2d 723 (2008).” So, the Court of Appeals was not about to second-guess the trial court’s determination that the developer’s experts were more convincing than the Selberts’ expert.
The Selberts did achieve a small victory – the Court of Appeals found that the trial court had clearly erred when it awarded attorneys’ fees and costs to the developer. Since the Selberts had expert testimony that could form a basis for a valid claim, their actions should not be regarded as frivolous.
As the Court of Appeals noted:
“The mere fact that a party did not ultimately prevail does not render that party’s legal position frivolous. Moreover, whether a claim or defense is frivolous is determined, not with hindsight, but from the perspective of the person making the claim or defense at the time it was made.” [Citations omitted.]