Sarah Lauback and David Lauback v State Farm Fire and Casualty Company and Belfour USA Group, C06, 2021-187270-CB

STATE OF MICHIGAN

IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND

SARAH LAUBACK and DAVID LAUBACK,

Plaintiffs/

Counter-Defendants,

Case No. 21-187270-CB

v Hon. Michael Warren

STATE FARM FIRE AND CASUALTY

COMPANY

Defendant/Cross-Defendant,

and

BELFOUR USA GROUP

INC. d/b/a BELFOR PROPERTY

RESTORATION,

Defendant/Counter-Plaintiff/

Cross-Plaintiff.

_____________________________________________________________________________/

OPINION & ORDER REGARDING

DEFENDANT BELFOR USA GROUP INC.’S MOTION IN LIMINE TO LIMIT

EVIDENCE OF PLAINTIFFS’ PURPORTED DAMAGES

At a session of said Court, held in the

County of Oakland, State of Michigan

August 15, 2022.

PRESENT: HON. MICHAEL WARREN

____________________________________________________________________________/

OPINION

Overview

Before the Court is Defendant Belfor USA Group Inc.’s Motion in Limine to Limit

Evidence of Plaintiffs’ Purported Damages. Having reviewed the Motion, the Response,

and entertaining exhaustive oral argument, the Court issues this Opinion and Order.

Because all of the Plaintiffs’ claims have been dismissed other than a breach of contract

claim involving defective workmanship of construction services to rebuild the Plaintiffs’

home, Defendant Belfor argues that the Plaintiffs cannot pursue most of the categories of

damages which they seek. In an emphatic but less than precise fashion, the Plaintiffs

counter that Defendant Belfor should pay for everything the Plaintiffs seek.

At stake are:

• Whether the Plaintiffs may seek $418,013 in damages which will allegedly be

incurred to rebuild the house when the Plaintiffs demanded that Defendant

Belfor stop its construction services? Because the Court has already narrowed

the Plaintiffs’ claims to breach of defective workmanship under the contract,

only damages relating directly to the defective workmanship can be pursued

and the remaining damages (i.e., those required to complete reconstruction of

the home as opposed to repairing defective construction) are barred.

• Whether the Plaintiffs may seek $84,281.20 in damages for breach of contract,

neglect, and misrepresentations when any claims for negligence and

misrepresentations have been dismissed and the remedy the Plaintiffs seek in

essence is rescission? Because the negligence and misrepresentations claims have

already been dismissed, and the remaining relief of rescission is impossible to

grant, the answer is “no,” and these damages are barred.

• Whether the Plaintiffs may seek damages for $11,308.83 under an emergency

services contract when this claim has never been pled? Because no party is

entitled to seek relief for unpled claims, the answer is “no,” and these damages

are barred.

• Whether the Plaintiffs may seek $84,600 for damages in adjusted living expenses

caused by the alleged breach of contract involving defective workmanship when

the argument is cursorily made? Because the argument is deemed abandoned

and in any event such damages could be considered by the jury to be

consequential damages, the answer is “yes,” and these damages may be sought.

• Whether the Plaintiffs may seek $650,000 for pain and suffering damages under

the remaining breach of contract claim? Because generally breach of contract

claims do not support such damages and the allegations here fall short of

exemplary damages, the answer is “no,” and these damages are barred.

• Whether the Plaintiffs may seek damages of $28,000 in connection with a water

pipe repair, $15,000 in costs incurred by Murphy Homes, and $20,018 for

remediation/restoration work by 1 Environmental and FRR, even if the

contractors who repaired the water pipe, Murphy Homes, and FRR are barred

from testifying? Because duly noticed witnesses may be able to quantify such

damages at trial, the answer is “yes,” and these damages may be pursued,

subject to the ability to present admissible evidence at trial.

Breach of Contract Damages Generally

To prevail on a claim for breach of contract, the plaintiff must establish by a

preponderance of evidence that (1) a contract existed, (2) the terms of the contract, (3) that

the Defendant breached the contract, and (4) that the breach caused injury to the Plaintiff.

See e.g., Miller-Davis Co v Ahrens Constr, Inc, 495 Mich 161, 178 (2014); Bank of Am v First

Am Title Ins Co, 499 Mich 74, 100 (2016).

“The proper measure of damages for a breach of contract is the pecuniary value of

the benefits the aggrieved party would have received if the contract had not been

breached.” Ferguson v Pioneer Sate Mut Ins Co, 273 Mich App 47, 54 (2006). Only those

damages “that are the direct, natural, and proximate result of the breach[ ]” may be

recovered. Alan Custom Homes Inc v Krol, 256 Mich App 505, 512 (2003). Therefore, “[t]he

party asserting a breach of contract has the burden of proving its damages with

reasonable certainty, and may recover only those damages that are the direct, natural,

and proximate cause of the breach,” Doe v Henry Ford Health Sys, 308 Mich App 592, 601

(2014), or those “that are contemplated by the parties at the time the contract was made.”

Lane v KinderCare, 231 Mich App 689, 693 (1998) (citations omitted). In other words, the

plaintiff must establish a causal link between the alleged improper conduct of the

defendant and the plaintiff’s damages with reasonable certainty. See Miller-Davis Co, 495

Mich at 180; Alan Custom Homes, 256 Mich App at 512; Gorman v American Honda Motor

Co, 302 Mich App 113, 118-119 (2013); Doe, 308 Mich App at 601-602. In addition, the

damages must be reasonably foreseeable and “must not be conjectural or speculative in

their nature, or dependent upon chances of business or other contingencies.” Doe, 308

Mich App at 602. Although the amount of damages need not be determined with

mathematical precision, Severn v Sperry Corp, 212 Mich App 406, 415 (1995), there must

be a reasonably certain basis for computing them. Doe, Mich App at 601-602. See also

Chelsea Inv Group LLC v Chelsea, 288 Mich App 239, 255 (2010). “[U]ncertainty as to the

fact of the amount of damage caused by the breach of contract is fatal.” Van Buren Twp v

Visteon Corp, 319 Mich App 538, 551 (2017), citing Home Insurance Company v Commerical

and Industrial Security Services, Inc, 57 Mich App 143, 147 (1974).

Michigan has long held that “[u]nder the rule of Hadley v Baxendale, 9 Exch 341;

156 Eng Rep 145 (1854), the damages recoverable for breach of contract are those that

arise naturally from the breach or those that were in the contemplation of the parties at

the time the contract was made. 5 Corbin, Contracts, § 1007. Application of this principle

in the commercial contract situation generally results in a limitation of damages to the

monetary value of the contract had the breaching party fully performed under it. Thus, it

is generally held that damages for mental distress cannot be recovered in an action for

breach of a contract.” Kewin v Massachusetts Mutual Life Ins Co, 409 Mich 401, 414-415

(1980). Thus, “in breach of contract cases, the general rule is that exemplary damages are

not recoverable absent allegation and proof of tortious conduct that is independent of the

breach.” Casey v Auto Owners Ins Co, 273 Mich App 388, 402 (2006) (quotation marks and

citation omitted). To award exemplary damages, “the act or conduct must be voluntary.

Detroit Daily Post Co v McArthur, [16 Mich 447, 453 (1868).] This voluntary act must inspire

feelings of humiliation, outrage, and indignity. Kewin, [409 Mich 401]. The conduct must

be malicious or so willful and wanton as to demonstrate a reckless disregard of plaintiff’s

rights. Wise v Daniel, 221 Mich 229 (1922); McFadden v Tate, 350 Mich 84 (1957); Bailey v

Graves, 411 Mich. 510 (1981).” Veselenak v Smith, 414 Mich 567, 574-575 (1982) (several

citations omitted). Accordingly, “[a]s a practical matter, the conduct [which the Supreme

Court] has found sufficient to justify the award of exemplary damages has occurred in

the context of the intentional torts, slander, libel, deceit, seduction, and other intentional

(but malicious) acts. Due to the required mental element, negligence is not sufficient to

justify an award of exemplary damages.” Id. at 575 (footnote omitted). Even a bad faith

breach of a contract is insufficient to establish the basis for tortious conduct that would

lead to the recovery of exemplary damages. Kewin, 409 Mich at 423.

Further, “Rescission abrogates a contract and restores the parties to the relative

positions that they would have occupied if the contract had never been made.” Bazzi v

Sentinel Ins Co, 502 Mich 390, 408 (2018). Rescission is also a legal remedy granted in the

sound exercise of a trial judge’s discretion. University of Michigan Regents v Michigan

Automobile Insurance Placement Facility, unpublished per curiam opinion of the Court of

Appeals, issued January 20, 2022 (Docket No. 354808), p 4.

III

Application of the Law to the Remaining Breach of Contract Claim

The Plaintiffs are not entitled to pursue damages for the cost of completion of

construction because the predicate for these damages has been dismissed; however,

the Plaintiffs may pursue the cost of replacing those items for which there was

defective workmanship

The Court has previously dismissed the Plaintiffs’ claim that Defendant Belfor is

liable for failing to complete the reconstruction of the Plaintiffs’ home. Yet, the Plaintiffs

claim damages for exactly that. Because these are not damages that stem from defective

workmanship, they are barred. Those damages far exceed the “[t]he proper measure of

damages for a breach of contract” which “is the pecuniary value of the benefits the

aggrieved party would have received if the contract had not been breached.” Ferguson,

273 Mich App at 54. Moreover, because the Plaintiffs ordered Defendant Belfor to cease

and desist construction of the home, the Plaintiffs broke any chain of causation between

the defective workmanship and the completion of construction. Such damages are not

the direct, proximate result of Defendant Belfor. Home Ins Co, 57 Mich App at 146-147. As

such, this category of damages is barred.

On the other hand, any damages incurred to replace any defective work are proper

damages - this is exactly the proper measure of damages and such damages would be

proximately caused by Defendant Belfor’s alleged breach of contract.

The Plaintiffs may not seek $84,281.20 for breach of contract, neglect, delay, and

misrepresentations because claims for negligence and misrepresentations have been

dismissed and the remedy the Plaintiffs seek in essence is rescission

which is impossible to grant

Repeating the pattern of asking for damages for claims that have already been

dismissed, the Plaintiffs assert they are entitled to seek damages for neglect,

misrepresentations, and delays. Because the underlying premise of such liability has been

dismissed, no such damages may be pursued.

In addition, the Plaintiffs ask this Court in essence for the remedy of rescission -

i.e., the Plaintiffs want a refund of the money paid to Belfor to return the parties to a pre-

contractual basis. However, Belfor has constructed a roof

and otherwise performed a

At oral argument, in an apparent misguided attempt to ignore the record, the Plaintiffs argued in passing

that there were issues with the roof. Maybe there were - but those issues are not part of the Complaint and

as far as this Court is aware, never made part of the record. The Court has been repeatedly graceful to the

Plaintiffs and that grace has been returned with repeated discovery violations and dubious - if not specious

great deal of work - it is impracticable, if not impossible, to return the parties to their

respective positions had the contract never been entered. As such, these damages are

barred. Bazzi, 502 Mich at 408. See also Pioneer State Mutual Ins Co v Wright, 331 Mich App

396, 409 (2020) (“Rescission abrogates a contract and restores the parties to the relative

positions they would have occupied if the contract had never been made” [citation

omitted]).

Finally, rescission damages are a matter of judicial discretion. Even viewing the

evidence in the light most favorable to the Plaintiffs, the equities here do not warrant the

remedy of rescission. To hold otherwise would basically grant the Plaintiffs a windfall of

receiving a new roof and other work for free.

In sum, these damages are barred.

- arguments, exemplified by their request for damages on claims already dismissed and apparently weaved

from whole cloth new allegations of liability during oral argument. The Plaintiffs have been skirting the

edge of unethical conduct throughout these proceedings. They are hereby warned that any additional

manufacturing of the facts without a record basis could very well result in additional sanctions if not a

referral to the Attorney Grievance Commission. The Plaintiffs’ counsel zeal for the Plaintiffs does not

warrant such conduct. This is especially true for the upcoming jury trial. Enough is enough.

The Plaintiffs may not seek damages for $11,308.83 under an emergency services

contract when this claim has never been pled

The Plaintiffs not only seek damages on claims that have been dismissed, they also

seek damages on claims that have never been pled. The Complaint has never sought

damages under the emergency services contract. As such, those damages are barred.

MCR 2.111(B)(1) & (2).

The Plaintiffs may seek $84,600 in adjusted living expenses caused by the

alleged breach of contract involving defective workmanship because the argument

is deemed abandoned and in any event these damages could be considered

consequential damages

The Plaintiffs argue that they have incurred $84,600 in adjusted living expenses

incurred because of the defective workmanship of Defendant Belfor. Defendant Belfor

argues that these damages are premised on the now dismissed theory of promissory

estoppel and they were not contemplated of the parties at the time the contract was made.

However, Defendant Belfor only cursorily argues this point and baldly asserts that

adjusted living expenses were not contemplated. Why the Defendant is correct is not

obvious.

The cursory argument constitutes abandonment of the argument. Houghton v

Keller, 256 Mich App 336, 339-340 (2003) (“failure to properly address the merits of [one’s]

assertion of error constitutes abandonment of the issue”; a party “may not merely

announce his position and leave it to this Court to discover and rationalize the basis for

his claims . . . nor may he give issues cursory treatment with little or no citation of

supporting authority” [citations omitted]); People v Bennett, unpublished per curiam

opinion of the Court of Appeals, issued April 8, 2008 (Docket No. 274390), p. 3 (“We

similarly decline to address whether the application of MCL 768.27a in this case violated

defendant’s right to due process. . . . [H]e devotes a single, short paragraph to this issue

with no analysis and little citation to relevant authority. A party cannot assert a position

and then it to this Court to search for authority to sustain or reject that position, or to

unravel and elaborate for him his arguments” [citations omitted]). After all, “[t]rial

Courts are not the research assistants of the litigants; the parties have a duty to fully

present legal arguments for its resolution of their dispute.” Walters v Nadell, 481 Mich 377,

388 (2008).

Moreover, Defendant Balfor ignores that Michigan jurisprudence has provided

two bases on which to ground consequential contract damages - only one of which is that

the contract contemplates them. The other is that the damages are the “direct, natural,

and proximate cause of the breach.” Doe, 308 Mich App at 601. See also Kewin 409 at 414

(“damages recoverable for breach of contract are those that arise naturally from the

breach or those that were in the contemplation of the parties at the time the contract was

made” [emphasis added]). That a family who is unable to occupy a home because of

defective workmanship during reconstruction would need to incur alternative living

expenses on its face appears to be the direct, natural, and proximate cause of the breach

of contract. The jury could very well find this is so. This category of damages is

appropriate.

The Plaintiffs may not seek $650,000 for pain and suffering damages because

generally breach of contract claims do not support such damages and the allegations

here fall short of any conduct warranting the award of exemplary damages

The Plaintiffs seek $650,000 for pain in suffering arising from the alleged breach of

the contract for defective workmanship. However, Michigan law has long generally

barred such damages for breach of contract claims. Kewin, 409 Mich at 414-415. The

Plaintiffs have not asserted claims that could possibly sustain the exception of exemplary

damages. At best their allegations rise to the level of bad faith breach of the contract,

which is not enough. Id. at 423. Because of the absence of allegations and proof of

purposeful, willful, tortious conduct that inspires feelings of humiliation, outrage, and

indignity that is independent of the breach of contract, the Plaintiffs may not seek

damages for pain and suffering. Id. at 423. See also Bailey, 411 Mich at 515-516; Veselenak,

414 Mich at 574-575; Casey, 273 Mich App at 402.

The Plaintiff may seek $28,000 in connection with a water pipe breakage, $15,000 by

Murphy Homes, and $20,018 for remediation/restoration work by 1 Environmental

and FRR even if the contractors who worked on water pipe, Murphy Homes, and

FRR are barred from testifying because duly noticed witnesses may be able to

quantify the damages

The Plaintiffs argue they are entitled to seek $28,000 of damages in light of repairs

necessitated from a broken frozen water pipe in the home, $15,000 from Murphy Homes

for construction work, and $20,018 for remediation/restoration work by 1 Environmental

and FFR. The Defendants argue that these damages must be barred because this Court

has struck the contractors who repaired the water pipe and Murphy Homes from the

witness list, and FRR was never listed on the witness list.

True, the Court’s prior rulings on the witnesses stand, which means the water pipe

contractor, Murphy Homes, and FRR will not be able to testify. However, that is not

necessarily fatal to the Plaintiffs’ ability to prove these damages. There may have other

duly noticed witnesses who can testify to the extent of those repairs and the amount of

damages. Simply put, both parties only cursorily address this argument. The proof will

have to be in the pudding at trial. As such, this portion of the Motion is denied.

ORDER

Based on the foregoing Opinion,

1. Other than damages relating directly to the alleged defective workmanship, the

Plaintiffs are barred from seeking $418,013 to rebuild the house.

2. The Plaintiffs are barred from seeking damages of $84,281.20 for breach of

contract, neglect, and misrepresentations.

3. The Plaintiffs are barred from seeking damages of $11,308.83 under the

emergency services contract.

4. The Plaintiffs may seek damages of $84,600 in adjusted living expenses caused

by the alleged breach of contract involving defective workmanship.

5. The Plaintiffs are barred from seeking damages of $650,000 for pain and

suffering.

6. The Plaintiff may seek damages of $28,000 in connection with a water pipe

repair, $15,000 in costs incurred by Murphy Homes, and $20,018 for

remediation/restoration work by 1 Environmental and FRR, subject to the

ability to present admissible evidence of such damages at trial.