Consumer Law Newsletter
Volume 7, No. 1 May 2002
St ate B ar o f M i c h i ga n C o n s u me r L aw S e c t i o n
Aiding and Abetting the Consumer Client:
Using Theories of Joint Liability to Find a Collectable Defendant
By Stephen E. Goren
The responsibility for a terrorist’s act does not rest solely with the subpart (b) as corresponding to civil aiding and abetting. Halberstram
terrorist. One need not act as a terrorist to suffer consequences. As v Welch, 705 F2d 472 (DC Cir 1983). Realistically, the terms have
the Taliban in Afghanistan have learned, conspiring, aiding and abet- been used too loosely for too long by too many different courts to
ting, or otherwise acting in concert with wrongdoers can also give reach one consistent definition of any of the three words.
rise to punishment. The moral and legal foundations for a conspiracy For purposes of this article, I will use the words interchangeably,
case have been well understood by criminal lawyers. Civil litigators, despite a recognition that some courts have distinguished the three.
however, are much less likely to invoke theories like civil conspiracy, See, e.g. Dow Chemical Co v Malhum, 1998 NV 42061 (1998)
aiding and abetting, or concert of action. These theories can and (distinguishing concert of action from civil conspiracy under Ne-
should be used more often in consumer cases. vada law. Concert of action has a different standard requiring only a
All too often in consumer scams, the primary culprit is a corpo- tort to be committed while acting in concert, unlike civil conspiracy
rate shell without substantial assets. To achieve justice for a con- which requires an intent to engage in unlawful activity. Aiding and
sumer, the problem of the uncollectable defendant must be solved. abetting was separately analyzed as requiring knowing and substan-
Consider a cause of action using one of the common law theories tial assistance of a tort and an awareness of its role in furthering the
creating joint and several liability, such as concert of action, civil wrongful behavior); Cousineau v Ford Motor Co, 140 Mich App
conspiracy, or aiding and abetting. 19 (1985) (Concert of action requires Defendant to have acted tor-
Called “Concert of Action” by the Restatement (Second) of Torts, tiously and in concert with the entity causing harm; Civil conspiracy
it is defined in §876: requires an agreement between the tortfeasors and an action by De-
For harm resulting to a third person from the tortious con- Continued on page 3
duct of another, one is subject to liability if he:
(a) does a tortious act in concert with the other or pursuant
to a common design with him, or
CONTENTS
(b) knows that the other’s conduct constitutes a breach of From the Chair ______________________________________ 2
duty and gives substantial assistance or encouragement to
the other so to conduct himself, or Proposed Amendment to Section Bylaws __ 2
(c) gives substantial assistance to the other in accomplish- Michigan Cases Allow Unlicensed Builders to
ing a tortious result and his own conduct, separately con- Collect—Is this a Usurpation of
sidered, constitutes a breach of duty to the third person. Legislative Prerogatives or an Attempt
See also, the scholarly discussion of civil aiding and abetting by to do Equity? ______________________________________ 4
Judge Wald in Halberstam v. Welch, 227 U.S. App. D.C. 167, 705
F.2d 472, 481-86 (D.C. Cir. 1983). These doctrines are not new. Lesson on Consumer Legislation:
See, e.g. Burdick, The Tort of Conspiracy, 8 Col. L. Rev 117 (1908); Less May be Better ______________________________ 7
Charlesworth, Conspiracy as a Ground of Liability in Tort, 36 L. Q.
Using the Michigan Consumer Protection
Rev. 38 (1920); Prosser Handbook of the Law of Torts, (4th ed) at
293. Yet, the parameters have not been truly tested by modern con-
Act to Build your Practice: Even “Small”
sumer protection attorneys. Cases can be Good Cases ____________________ 8
The power of these overlapping doctrines are not to be underesti- Consumer Law Essay Contest ________________ 10
mated. Different courts have given different names to these joint and
several liability theories. The most common names are civil conspiracy,
Section Notes _____________________________________ 11
concert of action, and aiding and abetting. At least one case has tried Nominations Sought for the
to define subpart (a) of section 876 as being a civil conspiracy and Frank J. Kelley Award __________________________ 11
Consumer Law Section Newsletter
From the Chair
COUNCIL 2001-2002
COUNCIL 2001-2002 By John Roy Castillo
A Time for Vigilance
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Chairperson
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432109876543210987654321
John Roy Castillo
432109876543210987654321
Detroit
432109876543210987654321 Year 2002 started off with
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432109876543210987654321
Chairperson-Elect rising unemployment, a
432109876543210987654321 recession, downsizing, continued
Kathy P. Fitzgerald
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432109876543210987654321
Lansing
432109876543210987654321 deregulation, an uncertain
432109876543210987654321 economic climate and an increase
Secretary
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432109876543210987654321 of payday loan business openings.
Frederick L. Miller
432109876543210987654321 Unfortunately, the time is ripe for
Detroit
432109876543210987654321 consumer fraud.
432109876543210987654321
432109876543210987654321
Treasurer
432109876543210987654321 We who work in the consumer
Laurin’ C. Roberts Thomas
432109876543210987654321 protection field must be more
432109876543210987654321
Lansing vigilant in 2002.
432109876543210987654321
432109876543210987654321 We are seeing legislation proposed and introduced to further weaken
Immediate Past Chairperson
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432109876543210987654321
Carolyn B. Bernstein
432109876543210987654321 consumer protection laws, including the Michigan Consumer Protection
Saginaw
432109876543210987654321 Act and the Item Pricing and Advertising Act. We will try to keep you
432109876543210987654321 informed about any anti-consumer legislation that may be introduced,
432109876543210987654321
and oppose bills the council deems ill-advised.
76543210987654321
76543210987654321 On a positive note, the Section co-sponsored a consumer law seminar
76543210987654321 with ICLE in February, with the broadest consumer law content that
76543210987654321
Council Members
76543210987654321 ICLE has ever put on. Attendance was very good. The section will
76543210987654321
Daniel J. Andrews sponsor a law essay contest this year. The section filed its first amicus
76543210987654321
Plymouth
76543210987654321 appellate brief this winter, and will look to do the same in other cases
76543210987654321 that raise significant consumer law issues.
William J. Ard
76543210987654321
76543210987654321
Lansing
76543210987654321 I look forward to a very interesting year.
76543210987654321
Peter L. Bagley
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Saginaw
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76543210987654321 NOTICE:
76543210987654321
Lorray Brown
76543210987654321 The following amendment to the Consumer Law Section Bylaws
Ann Arbor
76543210987654321 has been approved by the Council and will be submitted to the
76543210987654321 full membership of the Section for approval at the Consumer Law
Clarence R. Constantakis
76543210987654321
76543210987654321 Section Business Meeting held at the State Bar of Michigan Annual
Dearborn Heights
76543210987654321
76543210987654321 Meeting on Thursday, September 26, 2002 beginning at 9:30 in
Steven E. Goren
76543210987654321 Grand Rapids.
Bingham Farms
76543210987654321
76543210987654321
76543210987654321
Lawrence J. Lacey
76543210987654321 BYLAWS OF THE
Royal Oak
76543210987654321 CONSUMER LAW SECTION
76543210987654321
Steve Lehto
76543210987654321 OF THE STATE BAR OF MICHIGAN
76543210987654321
Farmington Hills
76543210987654321
76543210987654321
Adam G. Taub Proposed amendment:
76543210987654321
Southfield
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Gary M. Victor ARTICLE VIII
76543210987654321 SECTION MEETINGS
Ypsilanti
76543210987654321
76543210987654321 SECTION 1. ANNUAL MEETING. The annual meeting of the
Commissioner Liaison
76543210987654321
76543210987654321 Section shall be held during the Annual Meeting of the State Bar
Hon. Joseph J. Farah
76543210987654321
76543210987654321 of Michigan, in the same city or place, or at such other place and
Flint
76543210987654321 time as may be arranged by the Council. The annual meeting
76543210987654321
76543210987654321 shall include with such programs and order of business as may be
arranged by the Council.
2
May 2002
Aiding and Abetting the Consumer Client:
Using Theories of Joint Liability to Find a Collectable Defendant
Continued from page 1
fendant in furtherance of the conspiracy even if it is not a tortious One of the best cases citing the Restatement and giving rise to
action). The issue for the litigator is not how to distinguish the three, bank liability was decided by the New Jersey Supreme Court. In
but how they can be used to build a legitimate claim against a col- Judson v Peoples Bank, 25 NJ 17, 134 A2d 761 (1957), Plaintiff
lectible defendant. sued after they were induced to sell their shares in a corporation for
less than fair market value. Plaintiff was able to prove that flagrantly
THE LENDER fraudulent misrepresentations induced a sale at a rock bottom price
One good way to use the Concert of Action doctrine is to attack because of a false picture of imminent doom. Defendant People’s
the source of the wrongdoer’s money. Banks generally do not make Bank was held to be jointly and severally liable for the scheme be-
loans without thoroughly understanding the intricacies of a busi- cause it knew of the fraudulent conduct and yet helped develop the
ness. In fact, most loan documents will require the culprit scam art- scheme and furnished the funds to accomplish the profitable decep-
ist to continue acting in the same fashion as a condition of the loan. tion. The key to holding the bank liable is that it not only lent money,
After all, a bank is making the loan on the condition that the money but did so with knowledge of the improper nature of the scheme.
will be used in a certain fashion. Nonetheless, a detailed search of This made the bank more than a lender. It was a “conspiratorial
lender’s liability law shows incredibly few cases in which a bank participant.” See also Powell v HEF Partnership, 793 F Supp 91
was ever sued as a co-conspirator. Even detailed textbooks on bank- (D UT 1992); MetgeI v Baehler, 762 F2d 621 (8th Cir 1985); Pereira
ing law do not adequately discuss the subject. There is inadequate v United Jersey Bank, NA, 201 B.R. 644 (D NY 1996).
case law to often determine whether the bank can be held liable. In To hook a bank, you must plead and prove that the bank under-
part, this is the fault of the Plaintiff’s bar. Plaintiffs too rarely try to stood what was being done to the plaintiff, agreed to assist in the
sue the bank. That is a mistake. endeavor by lending money and that plaintiff was the victim of tor-
Consider a hypothetical. Assume an individual (or corporation or tious or statutory wrongdoing. The bank’s moral innocence and le-
bank) were acting as the financier to a drug cartel, lending money to gal naivete do not provide a shield from liability. See, e.g., Scholnick
help import illegal narcotics. So long as the financier knows that the v Continental Bank, 752 F Supp 1317 (E Dist Mich 1990) (Conti-
money is to be used for illegal activities, no one would have trouble nental Bank was held liable for aiding and abetting a securities fraud,
finding the financier part of an illegal conspiracy, and thus jointly because it knowingly failed to warn investors of an inadequate pre-
and severally liable. It does not matter that the financier does not investment disclosure issued by a third party, even though Conti-
develop the scheme or control the activities. The shared desire to nental did not prepare or distribute the disclosure).
profit from a known illegal scheme is enough.
THE ADVERTISERS
To make the hypothetical more interesting and realistic, assume
that the financier is aware of the details of the borrower’s business, Banks are not the only entity potentially liable for providing as-
as most lenders are in this day and age, but makes a mistake of law. sistance. Consider the newspaper or television station that adver-
The financier’s wrongful belief that a business practice is legal does tises the wrongful scheme. Now, in many cases the media placing
not free the financier of liability as a co-conspirator. For example, the ad does not have sufficient knowledge of the wrongful act to be
In Daniel v First National Bank of Birmingham, 227 F2d 353 (5th held liable for aiding and abetting. Certainly the First Amendment
Cir 1955), the plaintiffs bought a tractor. A cash price was negoti- offers the media protection from their innocent acts in disseminat-
ated, but Plaintiff needed a loan. The dealer had the customer sign ing fraud schemes. However, to the extent the media publicizing the
an agreement selling the tractor at a “time/price” premium. After scam is aware of the fraudulent nature of what it is helping to sell to
the deal was consummated, the commercial paper was assigned to its readers, the First Amendment is not a strong shield. The
the bank. Although the law recognized time/price sales as being an Michigan’s Consumer Protection Act is instructive and restates the
exception to the applicable usury laws, the court held that in decid- law in many states:
ing if the transaction was merely disguised usury, the “paper bag” in “An act done by the publisher, owner, agent, or employee
which the parties pack the transaction must be penetrated. In Daniel, of a newspaper, periodical, directory, radio or television
the substance of the transaction was deemed to be usurious based station, or other communications medium in the publica-
on the nature of the negotiations and the method the higher “time/ tion or dissemination of an advertisement [will not give
price” sale price was calculated. Defendant Bank, which knew the rise to liability] unless the publisher, owner, agent, or em-
details of the transaction but believed (as did the trial judge) that the ployee knows or, under the circumstances, reasonably
transaction was not usury, was nonetheless held liable to pay the should know of the false, misleading, or deceptive charac-
statutory penalty for usury. See also, FDIC v First Interstate Bank ter of the advertisement or has a direct financial interest in
of Des Moines, 885 F2d 423 (8th Cir 1989) ( jury verdict against a the sale or distribution of the advertised goods, property,
bank for aiding and abetting securities fraud upheld when loan given or service. “ MCL 445.904 (1)(b).
to further an illegal scheme if bank had “conscious involvement in Incredibly, few if any cases seem to test when a publisher reason-
impropriety or constructive notice of it”). ably should know of the deceptive character of an advertisement.
Continued on page 9
3
Consumer Law Section Newsletter
Michigan Cases Allow Unlicensed Builders to
Collect—Is this a Usurpation of Legislative
Prerogatives or an Attempt to do Equity?
This article previously appeared in the MTLA Quarterly and is reprinted by permission
By Gary M. Victor
Introduction a counterclaim for money damages, it indicated that trial court’s
decision on that issue did not end the inquiry.8
The Michigan Legislature has demonstrated a clear intention to
make sure that only licensed builders can collect for their services. The Court agreed with the trial court’s conclusion that “the con-
Unlicensed builders are prohibited from using the courts to collect veyance from Kirkendall to Heckinger while absolute on its face
for their services.1 Also, unlicensed builders are forbidden from constituted a mortgage”9 and that plaintiffs’ case in equity was one
asserting construction liens on residential property.2 Even so, home to have that mortgage removed. Citing the equitable maxim that “he
owners end up dealing with unlicensed builders on a regular basis. who seeks equity must be prepared to do equity,”10 the Court reached
Despite the unambiguous legislative objective, judicially created the following conclusion:
law may permit these unlicensed builders to collect. Where an unli- The plaintiffs sought an equitable remedy. Before order-
censed builder illegally places a lien on property and the property ing the conveyance to Dennis Kirkendall, the trial court
owner sues to quite title, Michigan cases allow the court in equity to was obliged to determine the amount the plaintiffs were
require the property owner to pay for the labor and materials pro- required to pay the defendants in order to do equity. As the
vided by the unlicensed builder.3 This article will examine and cri- equitable mortgagee, Heckinger was entitled as a condi-
tique the Michigan case law that established this odd position. tion to reconveyance to reasonable expenditures for im-
provements on the property made with the Kirkendalls’
consent (and in fact with Dennis Kirkendall’s active par-
The Development of the Case Law ticipation) while Heckinger had title to the property.11
The Supreme Court case of Kirkendall v. Heckinger4 was the first Six months after the Supreme Court’s decision in Kirkendall, the
reported case to examine the question of whether an unlicensed builder Court of Appeals had the opportunity to examine this issue again in
can recover in equity. The plaintiffs in Kirkendall were Frank Green v Ingersoll.12 The defendant, an unlicensed builder, purchased
Kirkendall and his son Dennis. The elder Kirkendall purchased a lot fourteen lots and built houses on thirteen of them. The property in
on which he planned to have a house built for Dennis. Kirkendall question was used as a model home. On one occasion Mr. Ingersoll
owed money on the land purchase and back taxes at the time he ap- and his son spent several nights in the house to prevent vandalism,
proached defendant Heckinger, an unlicensed builder, to construct a but otherwise they did not live in the house. Plaintiffs purchased the
house for Dennis. For an amount of money which was later disputed, house assuming an existing mortgage and executing a second mort-
Heckinger agreed to pay off the money owed by Kirkendall and pro- gage in favor of defendants. A dispute arose and defendants filed an
vide labor and materials toward constructing a house for Dennis.5 affidavit of a lien on the property for the amount they claimed was
Apparently as security, the elder Kirkendall transferred title to still due them on the sale. Plaintiffs sold the house to third party
the property to Heckinger. Heckinger then built the house with the defendants, but were required to deposit money in escrow until the
help of Dennis. When the dispute arose over the amount due lien issue was resolved. Plaintiff filed suit to have the lien removed
Heckinger, he refused to convey the property to Dennis and the on the basis that defendant was not a licensed builder.13 Defendant
Kirkendalls filed suit in equity. Heckinger filed a counterclaim for filed a counterclaim. The trial court awarded a judgment to defen-
his labor and materials. 6 The trial court ordered the title be con- dant. It concluded that defendant was exempt from the licensing
veyed to Dennis upon plaintiffs’ reimbursement of the amount paid statute because the house was built for defendant’s own use and
by Heckinger to pay off the land contract and back taxes. The Court occupancy until a sale could be made.
of Appeals affirmed.7 The Court of Appeals held the licensing statute exemption not
The Supreme Court reversed and remanded. The Court posed the applicable; however, it remanded the case for the trial court to ap-
question as follows: ply principle established in Kirkendall.
The question before us is whether in an action brought by So too in this case, as noted by the trial judge, it was plain-
plaintiffs for equitable relief, § 16 of the residential build- tiffs who first invoked the equity powers of the court. Al-
ers licensing act precludes defendants from obtaining re- though we disavow the trial judge’s definition of “use and
lief in the form of reasonable expenditures for improve- occupancy” and hold that the court was precluded, under
ment made with the consent of the plaintiffs while defen- the statute, from granting defendants any relief on their coun-
dants had title to the property. terclaim, he was bound to determine the relative equitable
While the Court acknowledged that the trial court was correct in rights of all parties in fashioning the appropriate relief.
concluding that an unlicensed builder was prohibited from bringing
4
May 2002
We therefore reverse the judgment entered for defendants Next in this line of cases is Republic Bank v. Modular One LLC.23
and remand this case to the circuit court for a determina- In this case, the plaintiff bank had purchased eight residential lots at
tion of the equitable rights of the parties. If the court deter- a foreclosure sale. Defendant, an unlicensed builder, had improved
mines that plaintiffs are entitled to the equitable relief which each lot with a modular home and had placed liens on each of the
they seek, it shall also determine what plaintiffs must pay lots prior to the foreclosure. The bank filed an action to have the
defendants in order to do equity.14 liens removed. The trial court granted the bank summary disposi-
The next case to consider the right of unlicensed builders to re- tion on the basis that defendant did not possess a builder’s license.24
cover was Barbour v. Handlos Real Estate & Building Corp.15 The The Court of Appeals agreed with the trial court that the liens
facts of Barbour are fairly convoluted. In Barbour, the primary in- were indeed invalid. However, citing Kirkendall, Green and Barbour,
dividual defendant, Thomas Handlos (Thomas), was licensed as both the Court reversed and remanded for a determination of what amount
a real estate broker and residential builder. He later incorporated was due defendant to do equity.
the corporate defendant. After incorporation, the corporation con- Applying these principles, we believe that the trial court
tinued to do work on projects begun by Thomas, but it did not ob- incorrectly held that defendant’s liens were unenforceable
tain its own residential builder’s license.16 Plaintiff contracted with because defendant did not have a builder’s license. As a
the corporate defendant to have a chalet built on his Higgins Lake precondition to resolving plaintiff’s action to quiet title,
property. Plaintiff also applied for a mortgage from the corporation. the court should have determined if defendant was entitled
Later, Thomas notified plaintiff that the mortgage had been approved; to payment for the work he performed on the property.25
however, when the papers were signed Thomas rather than the cor-
poration was listed as the mortgagee.17 The most recent case to examine this issue is Stokes v Millen
Roofing Co.26 Plaintiffs in Stokes had contracted with defendant, an
During construction, a dispute arose between Thomas and one of unlicensed roofing contractor, to have a slate roof constructed on
his suppliers, Wickes Corporation. Wickes notified plaintiff of its their house. After a dispute arose, defendant placed a lien on plain-
intention to put a lien on the property. Thomas assured plaintiff that tiffs’ property. Plaintiffs filed suit against defendant for breach of
the matter would be resolved and not to worry. Shortly after the contract and to have the construction lien removed. Defendant filed
chalet had been turned over to plaintiff, Wickes recorded its lien on a counterclaim. The trial court dismissed defendant’s counterclaim
the property. When Wickes gave notice of its intent to foreclose on and removed the lien, but after a bench trial allowed defendant eq-
its lien, Plaintiff stopped making payments on the mortgage and uitable relief.27 Plaintiffs appealed.
demanded that Thomas discharge Wickes’ lien. Thomas notified
plaintiff that the mortgage has been assigned, but refused to inform The Stokes panel examined the prior line of cases with great dis-
him that it had been assigned to his parents some nine months ear- approval. It reluctantly affirmed; however, it was clear that but for
lier. Subsequently, Thomas’ parents demanded payments and late the fact that it was bound by Republic Bank under MCR 7.21528 it
fees be made on the mortgage.18 would decide the matter differently. In order to reach this conclu-
sion, the Stokes Court first distinguished the Supreme Court’s deci-
Plaintiff sued, among other things, to invalidate the building con- sion in Kirkendall.
tract and mortgage. After the suit was filed, the Wickes lien was
discharged. Ultimately, the trial court held both the building con- First, the circumstances under which the trial court’s equi-
tract and mortgage valid, but awarded plaintiff $270.00 for closing table powers were invoked in the present case is (sic) sig-
costs charged by Thomas but not incurred by him and $670.00 for nificantly different. In Kirkendall, the trial court found that
costs and expenses incurred by plaintiff in removing the Wickes an equitable mortgage existed between the parties. The
lien. The trial court also held that Thomas’ parents were holders in circumstance that gave rise to the equitable mortgage,
due course on the mortgage.19 namely, the contractor’s promise to transfer title to the prop-
erty to the original owner’s son, existed before the parties’
The Court of Appeals reviewed the matter on an agreed statement dispute arose and was premised upon the property owner’s
of facts. The Court stated its belief that plaintiff was attempting to promise to pay the contractor. Further, although the con-
take advantage of mistakes of ignorance made by Thomas.20 The tractor had no right to pursue payment against the prop-
Court went on to quote Kirkendall extensively and conclude: erty owner because of his unlicensed status, there was noth-
As did the plaintiffs in Kirkendall and Green, plaintiff ing invalid or illegal about the manner in which the con-
herein has sought unclouded title to his property at the tractor obtained title to the property, and, accordingly, an
expense of the equitable rights of the mortgagees. To re- equitable remedy for the contractor was appropriate.
ceive equity, he must do equity. Accordingly, plaintiff must, By contrast, in the present case, there was no predispute
at the least, pay for reasonable expenditures incurred by agreement whereby plaintiffs agreed to pay defendant in
Thomas Handlos in improving plaintiff’s property.21 exchange for receiving clear title to their property. In fact,
Barbour is clearly the oddest in this line of cases. One thing that the circumstance that compelled plaintiffs to seek an equi-
makes it so is the fact that this Court did not remand the case to the table remedy, defendant’s lien on plaintiffs’ property, was
trial court for a determination in equity of the “reasonable expendi- not a term of the parties’ agreement and did not arise until
tures” incurred by the unlicensed builder. It merely affirmed stating after the relationship between the parties had broken down.
that the plaintiff was not “entitled to further relief”.22 Additionally, In addition, as an unlicensed residential builder, defendant
it emphasizes the innocence of Thomas while it is clear that Tho- had no legal right to claim a lien on plaintiffs’ property.
mas improperly charged plaintiff for closing fees to which he was Although the lien was invalid and unenforceable, plain-
not entitled. Continued on page 6
5
Consumer Law Section Newsletter
Michigan Cases Allow Unlicensed Builders to Collect...
Continued from page 5
tiffs were compelled to seek an equitable remedy, not to CRITIQUE
unjustly enrich themselves at defendant’s expense, but to
clear the clouded title on their property. These clear dis- This line of cases that would permit unlicensed builders to collect
tinctions lead to the conclusion that the equitable excep- in equity appears to be the result of a conflict between the courts
tion to (the builder’s licensing statute) created by the and the Legislature. This conflict has led to what must be viewed as
Kirkendall Court should be limited to the facts of that case at least a partial usurpation of the legislative role by courts—courts
and need not be applied to the present case.29 (citations that view the legislative plan as too punitive. These courts balk at
omitted). the notion that unlicensed builders might be taken advantage of by
property owners. This view, exemplified by Green, Babour and
After distinguishing Kirkendall, the Stokes Court turned its at- Republic Bank, assumes that the courts are better suited to deter-
tention to a critique of Republic Bank’s decision. It found Republic mine and resolve the equities involved than is the Legislature.
Bank incorrectly decided for several reasons. First was the improper
use of equitable principles. While the Republic Bank’s panel used Stokes would reject that approach and return the Legislature to its
the equitable principle “one who seeks equity must first do equity”, proper role. Under the legislative approach, an unlicensed builder
it ignored the equitable doctrine of clean hands. should never be able sue to collect or put liens on residential prop-
erty. The argument in favor of deference to the legislative role is
The clean hands doctrine closes the doors of a court of that any exceptions to the legislative approach should be specified
equity to a party tainted by inequitable conduct or bad faith in the statutes themselves rather than added by “judicial gloss”.34 In
relative to the matter for which equity is sought, however the opinion of the Stokes panel, once the courts use their equity
improper the behavior of the other party. The doctrine is power to provide relief for unlicensed builders, the entire legisla-
intended to protect the integrity of the court, and any wil- tive plan is put in jeopardy.
ful act that transgresses equitable standards of conduct is
sufficient cause to invoke the doctrine of clean hands. It appears that the analysis of Stokes is better reasoned than that
of Republic Bank; however, the best legal position might lie some-
In both Republic Bank and the present case, the defendant where in between. Certainly, the Legislature has demonstrated a clear
residential builder had unclean hands. Both defendants intent to require builders to obtain licenses. To the extent that Re-
violated the law by engaging in the practice of residential public Bank has indeed established, in the words of Stokes, a “road
construction or improvement without a license. . . Clearly, map” for unlicensed builders to collect, it will unquestionably de-
these defendants came to the court with unclean hands and, feat the legislative purpose. On the other hand, the Stokes position
as such, were not entitled to equitable relief.30 that all unlicensed builders lack clean hands and should never be
The Stokes Court also expressed its deep concern
regarding the precedent set by Republic Bank.31
Through its decision in Republic Bank, this
After distinguishing Kirkendall, the Stokes Court turned its
Court drew a road map for residential builders attention to a critique of Republic Bank’s decision. It found
and contractors who want to avoid the licens- Republic Bank incorrectly decided for several reasons.
ing requirements of the act. If the homeowner
does not pay the unlicensed builder or contrac-
tor, the builder or contractor need only file a lien on resi- entitled to relief in equity may go too far. If, as acknowledged by
dential property. Even though the lien is invalid and unen- the Stokes Court, Kirkendall is good law, there must be at least some
forceable, the homeowner or, as in the case of Republic circumstances where the power of equity can be invoked to provide
Bank, the subsequent purchaser of the property is forced relief to an unlicensed builder. The question is under what circum-
to file suit to remove the cloud that the lien has placed on stances equitable relief should be granted.
the title. Because an action to quiet title invokes the equi- Unfortunately, the line of cases that would allow unlicensed build-
table powers of the court, the homeowner or subsequent ers to obtain a remedy in equity provides no guidance for courts to
purchaser must now “do equity” by paying the contractor, exercise their equitable powers. By failing to do so, these cases
thereby defeating the statutory licensing scheme and its offer no disincentive to builders who are unwilling to secure licenses.
resultant penalties.32 Absent legislative action, this result can be avoided through subse-
Last, the Stokes Court indicated its concern over Republic Bank’s quent cases that incorporate the Stokes principle of clean hands.
lack of deference to the Legislature. These courts should make clear that any unlicensed builder seeking
to recover anything in equity would have a heavy burden in over-
Although the holding of Republic Bank did not involve
coming the presumption that he comes into equity without clean
direct interpretation of a statute, this Court’s extension of
hands. Unlicensed builders who illegally perform work and then
the equitable exception of Kirkendall to all situations where
illegally place liens on a residential property should generally be
a property owner attempts to remove an invalid construc-
unable to recover. Unless and until a higher court establishes this
tion lien from the property’s title had the same result as
type of approach, home owners will be at the mercy of unlicensed
inappropriate judicial interpretation in that it subverted the
clear intent of the Legislature.33
Continued on page 12
6
May 2002
Lesson on Consumer Legislation:
Less May be Better
By Josh Ard
In general the most Michigan consumers can hope for from the Recently, the section council has taken positions on some of these
current legislative session is benign neglect. The Legislative Ser- bills. During the November meeting, the council voted to oppose
vice Bureau classified the 172 public acts enacted in 2001 and the HB 5135 and recommended that the Bar oppose the bill. The coun-
166 enacted by April 26, 2002. None are classified under the sub- cil reiterated its opposition to SB 503. Consideration of SB 708
jects of consumer protection or consumer credit. was tabled until the January meeting, when the council voted to
Many consumer friendly bills have been introduced but none have oppose it. Both Fred Miller, representing the section council, and
passed both houses of the legislature. Even more discouragingly, council member Josh Ard, representing the Elder Law and Advo-
some of these bills have been amended into substitute bills that are cacy Section Council, testified before a senate committee arguing
much less friendly. For example, bills that were introduced to create for a bill with teeth aimed at combating predatory lending.
a Michigan do-not-call register for telemarketing solicitation, such It must be recognized that the categories used by the Legislative
as HB 4042, have been laced with exceptions which would remove Service Bureau do not include all bills relevant to consumers. For
most of the relief originally promised, including the very existence example, bills affecting financial institutions and insurance may be
of a the state registry. Introduced as an amendment to the Michigan of major importance to consumers. More bills are classified under
Home Solicitation Sales Act [HSSA], HB 4042, as passed by the these categories than either consumer protection or consumer credit.
Senate on December 13, 2001, also diminishes existing consumer In fact, bills of relevance to consumers are classified under many
cancellation rights afforded by the HSSA to exempt most telecom- under subjects as well: health facilities, housing, liens, mobile homes,
munication companies from the requirement of a written contract public utilities, etc. The section council and consumer groups may
and notice of a three day right to cancel otherwise required of a not always monitor these bills as closely. One bill that has been
home solicitation sale. enacted, SB 674, may have negative impact on consumers. It al-
Legislators who believe that the state supreme court in Smith v lows insurance companies to conduct self-evaluative audits, which
Globe left parts of the Consumer Protection Act alive have attempted are privileged. HB 5313 prohibits the Office of Financial and Insur-
to further its evisceration. HB 5135, as introduced, would weaken ance Services from presenting evidence against an insurance com-
the prohibition against misleading marketing of “free” or “without pany in any action brought by a consumer. Consumers now have
charge” by eliminating the requirement that the conditions atten- additional hurdles to jump to obtain relevant information from in-
dant to the use or retention of the advertised goods be disclosed surance companies. HB 5223 would reduce the 7-day notice to quit
with equal prominence in immediate conjunction with the use of to just one day, negatively impacting renters.
these words. The conditions would merely have to be disclosed con- Perhaps the only bright spot is that the legislature has been more
spicuously somewhere. sympathetic to certain groups of vulnerable consumers. HB 4345,
Likewise, an attempt has been made to weaken the Item Pricing enacted into law on October 29, 2001, affords additional protec-
Act by substantially increasing exceptions to the requirement that tions to consumers that a nursing home attempts to discharge for
the price of goods be affixed to each individual item. HB 5544, nonpayment and other reasons.
introduced December 21, 2001. The council voted to oppose this Certain changes to the Uniform Commercial Code also affect
bill during the January meeting, but agreed to support HB 5562, consumers. HB 4774 (PA 145 of 2001) supposedly cleans up some
which increases the potential awards to aggrieved consumers on the confusion about how security interests in cars and boats can be per-
condition that it be amended to allow reasonable attorney fees, rather fected. HB 4487 (PA 15 of 2002) raises the statute of frauds cut-off
than a maximum of $600. for the sale of goods to $1000.00.
A related phenomenon has occurred by legislative introduction The council has not taken any actions on bills introduced in 2002.
of bills that purport to remedy unfair and deceptive acts and prac- Several would weaken item-pricing laws (SB 1211, SB 1226, HB
tices by regulation. SB 503, for example, purports to provide the 5933). Some would expand the CPA to reflect Internet and e-mail
first regulation of delayed presentment services, aka payday lend- concerns (HB 5774, HB 5777). Some seek to limit the use of credit
ing. In fact, one effect of the bill would be to authorize certain rates scoring in setting insurance rates (SB 1227, HB 5882). One (HB
that would otherwise constitute criminal usury. SB 708-714 and SB 5926) would allow persons 65 the option of unlisted phone num-
768-774 may be of the same ilk. These bills introduce two different bers at no extra charge. It is not clear why the legislative web site
proposals for regulation of predatory lending. While each proposal, considers this a consumer protection bill.
in its present form, provides some greater protection to consumers The council and the legislative committee would appreciate any
than presently afforded under current law, the SB 708 proposal con- information section members have about relevant pending legisla-
tains no private right of action, leaving enforcement to county pros- tion. This is especially important because (1) bills may move quickly
ecutors (a violation is a 1 year misdemeanor) or state licensing au- in the current legislature and (2) bills of vital interest to consumers
thorities that may or may not seek consumer restitution. SB 471, and consumer advocates may not be classified by the Legislative Ser-
introduced by a bipartisan coalition, enacted as PA 4 of 2002, pro- vice Bureau in a manner that might otherwise attract our attention. n
vides that so-called residential mortgage originators must be licensed.
7
Consumer Law Section Newsletter
Using the Michigan Consumer Protection Act
to Build your Practice:
Even “Small” Cases can be Good Cases
By Clarence R. Constantakis
The Michigan Consumer Protection Act, which became effective MCL 445.911(2). The Court of Appeals has interpreted MCL
April 1, 1977, is an attempt to level the playing field for the con- 445.911(2), to also include attorney fees incurred on appeal. Smolen
sumer. This remedial statute provides for declaratory relief, injunc- v Dahlmann Apartments, 186 Mich App 292 (1990).
tions, individual relief and class relief. The act’s individual remedy There are several “small cases” from my practice that I can cite
provides for $250, or actual damages, whichever is greater, together as examples:
with reasonable attorney fees. MCL 445.911(2). This fee shifting
provision should encourage practitioners to add MCPA litigation as In one case, a seven-dollar purchase of a bottle of nationally ad-
part of their practice. vertised hair tint, which was supposed to be amber, turned out to be
unflattering black. The company offered the purchaser a coupon for
The purpose of this article is to provide counsel with background another bottle of the same tint, but the distressed lady came to me. I
information and examples from my MCPA practice over the years, started suit to the amazement of the defendant (case too small for
to encourage attorneys who have shied away from this area of law. any lawyer to take to court) and I got the client the cost of a high-
*“It’s too complicated.” This is not rocket science. The Michi- fashioned hair dresser to redo and tint her hair, plus money dam-
gan Consumer Protection Act is relatively short, straightforward and ages for missing a holiday party she would not go to with the very
easily understood and is found at MCL 445.901 et seq. The core of unflattering black hair caused by the defective tint. I earned a fee
the Act is MCL 445.903, which lists the deceptive practices under based on a very respectable hourly rate, and got a client who appre-
which a claim can be made in nearly any consumer transaction for ciated me taking her “small” case, which resulted in some very nice
personal, family or household use. The Act covers a myriad of con- referrals of other cases in different areas of the law.
sumer transactions, including situations where the plaintiff suffers A client in another case I handled took his boat to a marina for
no monetary loss, only an unfulfilled expectation. Mayhall v. Pond, storage and winterizing. The marina failed to put in anti-freeze, caus-
129 Mich App 178 (1983). ing damage to the motor. The marina agreed to pay only half of the
The recent case of Avery v Industry Mortgage, 135 F Supp 2d repair cost, claiming the owner was negligent for not checking to be
840 (WD MI 2001), provides an additional avenue for recourse for sure the boat was winterized. Suit was instituted under MCL
the practitioner representing a client who has suffered non-economic 445.903(1)(y), and the jury awarded in $4,500 repair cost, and the
loss – the potential for emotional distress damages. court awarded $4750 in attorney fees.
Virtually all retail transactions are covered by the Act (depend- Another interesting case involved a injured worker who made an
ing, of course, on how broad the appellate court’s end up interpret- office call to a hand surgery group, and paid $45, for the office call
ing Smith v Globe, 460 Mich 446 (1999)). A bread and butter pro- and a short letter which was sent to the plaintiff’s employer. Subse-
vision is MCL 445.903(1)(y), “failure to provide the promised ben- quently, the worker filed a workers compensation claim, and her
efits,” which covers almost any retail transaction, for personal fam- lawyer requested a report of the exam from the surgery group. The
ily, or household use, since any breach of the seller’s promises may report consisted of the same letter previously sent to the employer,
constitute a violation. See Mikos v Chrysler Corp., 158 Mich App with only one sentence added, but the worker was charged $200.
781 (1987). The worker saw me on another matter and mentioned her distress
*“I don’t want to start from scratch on a new area of law.” over the $200 fee. I contacted the doctor and suggested that $200
You don’t have to start from scratch. This newsletter, and the sec- was excessive for adding one line to a previous letter for which he
tion listserv, allow attorneys to network with other consumer law- already been paid. I suggested that the doctor retain $25 for the
yers regarding a case they are handling or would like to handle. You added line, and refund the $175 difference. The doctor said he would,
can join the listserv by sending your e-mail address to but never did, and I sued him and the hand surgery group under the
ianlaw@pop.net. MCPA, for overcharging, pursuant to MCL 445.903(1)(z). The jury
awarded the worker her statutory damages of $250, and the court
*“It’s not worth it.” There is no such thing as a small case. I awarded $1,800 in attorney fees.
have handled many “small cases,” which have earned me respect-
able fees and I have enjoyed them. The MCPA provides for the
payment of $250 in statutory damages, or the actual damages proved,
whichever is greater, plus attorney fees to the successful plaintiff. Continued on page 9
8
May 2002
Using the Michigan Consumer Protection Act
to Build your Practice:
Even “Small” Cases can be Good Cases
Continued from page 8
I had another case where a senior citizen plaintiff bought a con- sausage. The insurance adjuster agreed to pay only $75 for the den-
dominium from a builder, and wanted the condominium to be as tist bill not covered by dental insurance, nothing for wages lost while
maintenance-free as possible. The salesperson “bait and switched” undergoing dental treatment, or for unpleasant experience of hav-
the plaintiff buyer from a wood floor to a Prego floor, which is a ing the needle inserted several times into her gums. On filing suit,
high maintenance synthetic material. The floor not only required the plaintiff received $1,000 in damages and $1,000 for attorney
high maintenance, but also curled at the edges due to improper in- fees. This client later referred me an injury case that produced a
stallation. I sued the builder, and the unregulated bait and switch very substantial fee.
salesperson who sold the condominium, and the unregulated com- The MCPA has produced consistent results for me. “Small cases”
pany who installed the floor. The same lawyer represented all the under the MCPA can be good cases to build your practice.
defendants, and raised Smith v Globe on behalf of the builder. How-
ever, the defendants ended up paying the claim in full, plus attorney
fees, because I was able to point out that, even if Smith applied to
the licensed builder, it didn’t apply to the other defendants, who had Mr. Constantakis has been handling consumer protection cases
no defense. for fifteen years. He has been a member of the Consumer Law Sec-
As a final example, a client purchased sausage from a major food tion since its inception and was a member of the Section’s prede-
chain store, and broke her bridge on an undisclosed bone in the cessor, the Consumer Law Committee.
Aiding and Abetting the Consumer Client:
Using Theories of Joint Liability to Find a Collectable Defendant
Continued from page 3
Late-night television is full of ads from psychics. Do our television escape liability by claiming a mistake in interpreting the law?
networks and cable operators reasonably believe a phone call will
put their viewers in touch with a “talented psychic” or are they con- INDUCING BREACH OF
tent to accept ad dollars turning a blind eye to the gullible consum- FIDUCIARY DUTY
ers who are regularly suckered? At what point after government
officials have revealed a scam does it become improper to continue In addition, liability has been held to exist for inducing a breach
placing advertisements? These are fact specific questions without of fiduciary duty. To establish a claim of aiding and abetting a breach
precise answers. This is an area for talented plaintiff attorneys to of fiduciary duty, a plaintiff must show: (1) a breach of fiduciary
help define answers. duty owed to another; (2) knowledge of the breach by the aider or
abettor; and (3) substantial assistance or encouragement by the aider
THE PROFESSIONAL ADVISORS or abettor in effecting that breach. SDK Investments, Inc. v. Ott, No.
CIV. A. 94-1111, 1996 WL 69402, at *12 (E.D. Pa. Feb. 15, 1996).
We as lawyers are not beyond the reach of the doctrines giving This doctrine has special relevance regarding investment scams
rise to joint and several liability. Neither are accountants. In re where investment advisors hold a fiduciary duty.
American Continental Corporation/Lincoln Savings and Loan Se-
curities Litigation, 794 F Supp 1424 (D. Az. 1992), held that law- CONCLUSION
yers’ and accountants’ inaction and silence made them liable for
aiding and abetting a securities fraud and RICO scheme, because Lack of a collectability is still one of the most effective defenses
they breached their duty to disclose wrongdoing by their client sav- to a lawsuit. The remedy is not always to tell your client that there is
ings and loan institution. See also, Petro-Tech, Inc v Western Co, nothing that can be done to remedy the wrongdoing. Oftentimes,
824 F2d 1349 ( 3rd Cir1987) (aiding and abetting a RICO violation there are others who have made the wrongdoing possible. Careful
gives rise to civil liability). If a lawyer were to knowingly help hide attention should be paid to a client’s legal rights under Restatement
profits from a drug smuggling operation, wouldn’t he be held to be (Second) of Torts §876 to find additional defendants who are jointly
part of the conspiracy? Perhaps then, if a payday loan company is and severally liable for conspiring, aiding and abetting, or acting in
deemed to be a loan sharking operation, then the lawyer who wrote concert with the wrongdoer.
up the inadequate Truth In Lending Act disclosures may share in the
liability for the corporation’s wrongdoing. After all, should a law-
yer who knowingly helps establish an illegal business be able to
9
10
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Good luck!
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nal (February 1986) provides background that may help you get started.
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Note: The article “Michigan’s Consumer Protection Act Ten Years Later” in the Michigan Bar Jour-
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Section Essay Committee
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The winning entries will be selected by judges from the Consumer Law Section. Consumer Law
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Entries must be received by July 15, 2002.
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Lansing, Ml 48901
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P.O. Box 13038
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Cooley Law School
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Josh Ard
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Entries should be submitted to:
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your signature code, on a separate piece of paper in a sealed envelope and enclose it with the essay.
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your last name, followed by your birth date in numerals. Write your name and address, followed by
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In order to insure the anonymity of the contestants, you are to sign the essay with the last initial of
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appellate brief format.
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Essays should be no longer than twenty pages and may follow either a law review format or an
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topic is to be concerned only with the MCPA issue addressed by the court in Smith.
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regulated businesses doing business with consumers. Smith raised several issues, however the essay
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holding have been widely debated among business and consumer attorneys as it may apply to other
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insurance transactions from coverage. The Court’s logic in this decision and the reach of the Court’s
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Smith v Globe, 460 Mich. 446 (1999) interprets an exemption section of the MCPA to exempt credit
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to level the playing field for consumers and is the main Michigan statute addressing Consumer rights.
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The Michigan Consumer Protection Act (MCPA), enacted in 1976, was an attempt by the legislature
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what can be done?
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The topic for the essay is: Understanding Smith v Globe: Did the exception eat the rule and if so,
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and will receive a copy of the Section Newsletter.
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All entrants will automatically be enrolled in the student law section of the Consumer Law Section,
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ners will be notified in advance so that they can make arrangements to accept their awards in person.
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during the Annual Meeting of the State Bar of Michigan in Grand Rapids in September, 2002. Win-
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Winners will be announced at the Consumer Law Section Annual Meeting, which will be held
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In addition, the Section will publish the first place essay (or excerpts) in its Newsletter.
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Third place: $150
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Second place: $250
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First Place: $500
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all students currently enrolled in Michigan law schools. The section will offer three prizes as follows:
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The Consumer Law Section of the State Bar of Michigan is sponsoring an Essay contest that is open to
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CONSUMER LAW ESSAY CONTEST
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Attention Law School Students
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987654321098765432121098765432109876543210987654321 1
Consumer Law Section Newsletter
May 2002
S e c t i o n N o te s
Section Section Amicus Brief Addresses
Co-Sponsors MCPA Application To Contractors
ICLE Seminar The Consumer Law Section Council filed its first amicus curiae brief
this winter, supporting a consumer suing a residential building contrac-
The Consumer Law Sec- tor. The Circuit Court in Winans v Grand Value Homes ruled that Smith
tion co-sponsored ICLE’s v Globe does not require exclusion of contractors from coverage of the
February consumer law MCPA, and the contractor appealed to the Court of Appeals.
seminar, a first for the section and a milestone for consumer law in
Joining the Section Council in its brief were the AARP, the Na-
Michigan. The seminar was the first ICLE program to cover a broad
tional Consumer Law Center, the Michigan Consumer Federation
section of consumer law practice. Titled “Making Consumer Law
and UAW-GM Legal Services Plan. The brief argued that the analy-
Part of Your Practice: How to Recognize and Pursue Fee-Generat-
sis of the Supreme Court in Smith excluding credit insurance com-
ing Cases,” the program sought to interest private practitioners with-
panies from MCPA application did not apply, since insurance com-
out a lot of experience in handling consumer cases.
panies are more closely regulated, with documents for each trans-
Section council member Lynn Shecter chaired the session, with action approved by the state before they can be used.
council members Gary Victor, Ian Lyngklip and Fred Miller mak-
The Michigan Attorney General’s office filed its own amicus brief,
ing presentations. Federal District Judge John Corbett O’Meara gave
taking a similar position. After these briefs were filed, the Michigan
practical tips on federal court practice in consumer cases. The semi-
Association of Home Builders and the Michigan Association of
nar covered Michigan consumer statutes, the Truth-in-Lending Act
Realtors sought leave to file their own amicus briefs, supporting the
and the Fair Credit Reporting Act.
appealing contractor.
ICLE was pleased with attendance, with over 75 participants, and
particularly pleased that the program attracted many younger and newer
attorneys, who aren’t often well-represented at ICLE seminars.
Focus on Predatory Lending Nominations Sought for the
So fo th
Predatory mortgage lending issues have recently caught the at-
tention of state legislators and the Michigan Attorney General. Two J. Ke Aw
Frank J. Kelley Award
bills were introduced in the State Senate, SB 708 and SB 773. Both
would strengthen state high-rate and high-fee mortgage disclosure
requirements, though the Section Council voted to oppose SB 708
based on limited enforcement remedies. SB 708 could only be en- The Consumer Law Section seeks nominations for
forced by misdemeanor prosecution. the fifth annual Frank J. Kelley Consumer Advocacy
Award, to be given out at the Section Annual Meet-
Meanwhile, Attorney General Jennifer Granholm has sponsored fo-
rums in Flint and Detroit examining mortgage lending problems and ing in September. Each year the Section honors some-
consumer rights, co-sponsored by local state representatives. Section one who has shown long-standing dedication and ser-
council members have joined NAACP, Legal Aid and mortgage broker vice to consumers and their rights. The first honoree
association representatives on panels addressing these issues. was the award’s namesake, former Attorney General
Frank J. Kelley.
Michigan Poverty Law Program Hires We invite members to submit their nominee to the
Annual Meeting Committee, which will make a rec-
Consumer Law Specialist ommendation to the Section Council. Write or e-mail
Kathy Fitzgerald, at Consumer Protection Division,
Following an extensive search, the Michigan Poverty Law Pro-
gram has hired a consumer law specialist to assist legal aid and legal Dept. of Attorney General, PO Box 30213, Lansing,
services attorneys throughout the state in handling consumer law cases. MI 48909, fitzgeraldk@ag.state.mi.us
Lorray Brown has had experience in utility rate litigation and has
handled predatory lending issues for Legal Aid and Defender Asso-
ciation of Detroit. She will be devoting half her time to consumer law
issues, while also working as a managing attorney for the program.
11
Michigan Cases Allow Unlicensed Builders to Collect...
Continued from page 6
builders, unlicensed builders will not be encouraged to get licenses 17
Id at 179-180
and licensed builders will be put at an economic disadvantage.35 18
Id.
19
Id at 182.
20
Id at 182-183.
Endnotes 21
Id at 185.
1
MCL §339.2412. 22
Id at 192.
2
MCL §570.1114. 23
232 Mich App 444 (1998).
3
See, e g, Stokes v Millen Roofing Co, 245 Mich App 44 (2001); Re- 24
Id at 446.
public Bank v. Modular One LLC, 232 Mich App 444 (1998); Barbour 25
Id at 455.
v. Handlos Real Estate & Building Corp, 152 Mich App 174 (1986); 26
245 Mich App 44 (2001).
Green v Ingersoll, 89 Mich App 228 (1979); and Kirkendall v. Heckinger, 27
Id at 48-49.
403 Mich. 371 (1978). See also, Parker v. McQuade Plumbing & Heat- 28
Under MCR 7.215(I) (1) a Court of Appeals panel is bound by a rule
ing, Inc, 124 Mich App 469 (1983) wherein the Court held that an unli-
of law established in a prior Court of Appeals decision published on or
censed builder was not prohibited from defending himself in a breach of
after November 1, 1990.
contract action. 29
245 Mich App at 51-53.
4
403 Mich 371 (1978). 30
Id at 54-55
5
Id at 372. 31
Id at 55.
6
Id. 32
Id at 57.
7
Id at 373. 33
Id at 58.
8
Id at 374. 34
Id.
9
Id at 373 35
The change will not happen through Stokes at the Court of Appeals
10
Id at 374 citing Goodenow v Curtis, 33 Mich 505, 509 (1876).
level. Pursuant to MCR 7.215, the Stokes decision was reviewed and a
11
Id at 374.
majority of judges polled voted against convening a special panel to
12
89 Mich App 228 (1979).
resolve conflicts between Stokes and Republic Bank, 245 Mich App
13
Id at 231-232
801 (2001).
14
Id at 237.
15
152 Mich App 174 (1986).
16
Id at 179. A residential builder’s license was obtained by the corpora-
tion after the suit was begun.
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