Sam Tocco v. Richman Greer Professional Assoc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 13a1048n.06

No. 13-1055

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

SAM TOCCO, ) FILED
) Dec 26, 2013
Plaintiff - Appellant, ) DEBORAH S. HUNT, Clerk
)
v. )
) ON APPEAL FROM THE UNITED
RICHMAN GREER PROFESSIONAL ) STATES DISTRICT COURT FOR
ASSOCATION, ET AL., ) THE EASTERN DISTRICT OF
) MICHIGAN
Defendants - Appellees. )

BEFORE: KEITH, GUY, and GIBBONS, Circuit Judges.

KEITH, Circuit Judge. Appellant Sam Anthony Tocco (“Tocco”) appeals the district

court’s grant of summary judgment in favor of attorney John Whittles and the Richman Greer

Professional Association (collectively, “Appellees”), which disposed of Tocco’s claims for

fraudulent misrepresentation, negligent misrepresentation, innocent misrepresentation, and silent

fraud. We now AFFIRM the ruling of the district court.

I. BACKGROUND

The facts are as follows: Tocco met Joseph Zada (“Zada”) in the 1990s, and from

approximately 1998 until 2008, Tocco gave Zada several million dollars in loans and investments.

Zada made periodic payments to Tocco during this time, but began to miss deadlines for payment

in 2007. During that same year, Zada informed Tocco that he would not be able to repay Tocco the

$4, 797, 541 that he owed until he received an expected inheritance from a Saudi royal.

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Tocco retained counsel thereafter but did not file suit against Zada. Meanwhile, Zada

retained Appellees as counsel and informed them that he was to inherit between $1 billion and $1.5

billion from a member of the Saudi royal family. Zada provided Appellees with documentation

supporting his claim. He then asked Appellees to contact his creditors and inform them that he

would repay his debts upon receipt of the inheritance. In March 2008, Appellees commenced

communications with Tocco regarding Zada's debt. According to Tocco, Appellees made a number

of representations to him, over the course of 21 months, that payment of the debt was imminent.

Appellees claim, however, that they never assured Tocco that Zada would repay his debt. In the end,

Zada had spent his assets by April 2009 and never paid Tocco.

In 2011, Tocco filed suit against Appellees, seeking damages in excess of $28 million, in

Wayne County Circuit Court. The case was subsequently removed to the Eastern District of

Michigan. Appellees filed a motion for summary judgment on August 1, 2012, which the district

court granted on December 17, 2012. See Tocco v. Richman Greer Prof’l Ass’n, 912 F. Supp. 2d

494 (E.D. Mich. 2012).

II. ANALYSIS

A. Standard of Review

We review de novo a district court’s grant of summary judgment. ACLU of Ky. v. Grayson

Cnty., 591 F.3d 837, 843 (6th Cir. 2010). Summary judgment is proper “where there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R.

CIV. P. 56(a). “In considering a motion for summary judgment, we must draw all reasonable

inferences in favor of the nonmoving party.” Spees v. James Marine, Inc., 617 F.3d 380, 388 (6th

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Cir. 2010) (citation omitted). The central issue is “whether the evidence presents a sufficient

disagreement to require submission to a jury or whether it is so one-sided that one party must prevail

as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).

B. Tocco and Appellees are adverse parties.

Assuming that Appellees did make assurances to Tocco that Zada would repay his debt as

well as other related assurances, a central question before this Court is whether or not Tocco could

reasonably rely upon Appellees’ representations.

We hold that he could not. A plaintiff’s interests are adverse to those of a defendant and his

counsel. See Friedman v. Dozorc, 312 N.W.2d 585, 591-92 (Mich. 1981). Reasonable reliance by

a party upon an attorney’s representations cannot exist where the interests of that party are adverse

to those of the attorney’s client. See Beaty v. Hertzberg & Golden, P.C., 571 N.W.2d 716, 722

(Mich. 1997) (“As is apparent, it is unreasonable for a nonclient to repose confidence and trust in

an attorney when any of the interests of the client and the nonclient are adverse.”). Indeed,

“placement of trust, confidence, and reliance . . . is unreasonable if the interests of the client and

nonclient are . . . even potentially adverse.” Prentis Family Found. v. Barbara Ann Karmanos

Cancer Inst., 698 N.W.2d 900, 906 (Mich. Ct. App. 2005)(emphasis added)(citation omitted).

Although both Beaty and Prentis involve claims of breach of fiduciary duty, an allegation not made

here, both cases are instructive and are consistent with Michigan authority indicating that reliance

on one with interests adverse to one’s own is generally unreasonable. In the instant case, Tocco had

an interest in having his debt repaid as soon as possible, while Appellees had an interest in helping

their client, Zada, delay his repayment of the money owed to Tocco for as long as possible. Tocco

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therefore could not have reasonably relied upon Appellees’ representations as a matter of law, and

any of Tocco’s claims requiring reasonable reliance upon Appellees must fail.

The second major question before this Court is whether or not Appellees owed Tocco a duty

of care. It is well-settled that an attorney does not owe a duty of care to his client’s adversary. See

Friedman, 312 N.W.2d at 590-92. Any claims requiring that Tocco demonstrate a duty of care owed

to him by Appellees must also fail.

C. Tocco fails to satisfy the elements of a claim for fraudulent misrepresentation.

Tocco alleges that Appellees fraudulently misrepresented to him, among other things, that

Zada would repay him. Fraud must be clearly proven by “‘clear, satisfactory and convincing’

evidence.” Cooper v. Auto Club Ins. Ass’n, 751 N.W.2d 443, 451 (Mich. 2008) (internal citations

omitted). In order to establish a claim of fraudulent misrepresentation under Michigan law, a

plaintiff must prove:

(1)[t]hat defendant made a material representation; (2) that it was false; (3) that
when he made it he knew that it was false, or made it recklessly, without any
knowledge of its truth and as a positive assertion; (4) that he made it with the
intention that it should be acted upon by plaintiff; (5) that plaintiff acted in
reliance upon it; and (6) that he thereby suffered injury. Each of these facts must
be proved with a reasonable degree of certainty, and all of them must be found to
exist; the absence of any one of them is fatal to a recovery.

Titan Ins. Co. v. Hyten, 817 N.W.2d 562, 567-68 (Mich. 2012) (internal citations omitted).

That reliance must occur to sustain a claim for fraud is well-settled in Michigan’s courts, as

is the requirement that the reliance be reasonable. See Novak v. Nationwide Mut. Ins. Co., 599

N.W.2d 546, 554 (Mich. Ct. App. 1999). Tocco cannot demonstrate reasonable reliance upon

Appellees’ representations, as discussed, supra, and he therefore cannot satisfy the elements of a

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claim for fraudulent misrepresentation. See Titan, 817 N.W.2d at 567-68. The fraudulent

misrepresentation claim fails as a matter of law.

D. Tocco fails to satisfy the elements of a claim for negligent misrepresentation.

Under Michigan law, “there is a valid tort cause of action in the nature of negligent

misrepresentation arising from a contract for . . . services in favor of a non-contracting damaged

third-party whose reliance on the [services] could be foreseen.” Williams v. Polgar, 215 N.W.2d

149, 158 (Mich. 1974). “The plaintiff . . . must show that privity of contract existed between the

plaintiff and the defendant. ‘A claim for negligent representation requires plaintiff to prove that a

party justifiably relied to his detriment on information prepared without reasonable care by one who

owed the relying party a duty of care.’” Unibar Maint. Servs, Inc. v. Saigh, 769 N.W.2d 911, 919

(Mich. Ct. App. 2009) (quoting Fejedelem v. Kasco, 711 N.W.2d 436, 437 (Mich. Ct. App. 2006)

(internal citation omitted)).

Here, Tocco cannot satisfy the elements of a negligent misrepresentation claim because he

cannot prove that Appellees owed him a duty of care. To the contrary, “creation of a duty in favor

of an adversary of the attorney’s client would create an unacceptable conflict of interest.” Friedman,

312 N.W.2d at 591. Tocco’s negligent misrepresentation claim fails as a matter of law.

E. Tocco fails to satisfy the elements of a claim for innocent misrepresentation.

Tocco also seeks to establish a claim for innocent misrepresentation against Appellees. “A

claim of innocent misrepresentation is shown where a party detrimentally relies on a false

representation in such a manner that the injury inures to the benefit of the party making the

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misrepresentation.” Forge v. Smith, 580 N.W.2d 876, 883 (Mich. 1998). Privity of contract is a

prerequisite to a claim of innocent misrepresentation. Id.

As discussed, supra, Tocco’s alleged reliance upon Appellees' representations was

unreasonable. Further, there existed no privity of contract between Appellant and Appellees.

Appellant alleges that an implied oral agreement existed between himself and Appellees, but as

there exists no unique duty or implied contractual relationship between a party and opposing

counsel—his adversary—this claim is unavailing. See Beaty, 571 N.W.2d at 722-23. Accordingly,

Tocco’s innocent misrepresentation claim fails as a matter of law.

F. Tocco cannot establish a claim for silent fraud.

“Silent fraud is essentially the same [as fraudulent misrepresentation] except that it is based

on a defendant suppressing a material fact that he or she was legally obligated to disclose, rather

than making an affirmative misrepresentation.” Alfieri v. Bertorelli, 813 N.W.2d 772, 775 (Mich.

Ct. App. 2012). In order to establish a claim for silent fraud, Appellant must offer clear and

convincing evidence of: 1) a pre-existing legal or equitable duty to disclose, see Hord v.

Environmental Research Inst., 617 N.W.2d 543, 550 (Mich. 2000); 2) suppression of information

with the intent to defraud, see U.S. Fidelity & Guaranty Co. v. Black, 313 N.W.2d 77, 87-88 (Mich.

1981); 3) reasonable reliance upon defendant’s performance of the duty; and, 4) damages caused by

the suppression of the information, see Groening v. Opsata, 34 N.W.2d 560, 564-65 (Mich. 1948).

With regard to the first element, Tocco cannot establish a duty to disclose on the part of Appellees.

See Alfieri, 813 N.W.2d at 775. (“Silent fraud and negligent misrepresentation both require a

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defendant to owe a duty to the plaintiff.”). Nor can Tocco establish reasonable reliance. For these

reasons, Tocco’s silent fraud claim fails.

III. CONCLUSION

Because Tocco could not reasonably rely upon Appellees, and because Appellees owed him

no duty of care, Appellees were entitled to judgment as a matter of law as to all of Tocco’s claims.

The district court ruled correctly in awarding summary judgment to Appellees. We AFFIRM.