STATE OF MICHIGAN
COURT OF APPEALS
LANCIA JEEP HELLAS S.A., UNPUBLISHED
March 24, 2016
Plaintiff-Appellant,
v No. 329481
Oakland Circuit Court
CHRYSLER GROUP INTERNATIONAL LLC, LC No. 2014-142918-CZ
FIAT S.P.A., and FIAT GROUP AUTOMOBILES
S.P.A.,
Defendants-Appellees.
Before: K. F. KELLY, P.J., and FORT HOOD and BORRELLO, JJ.
PER CURIAM.
In this contract dispute, plaintiff, Lancia Jeep Hellas S.A., appeals by leave granted1 the
trial court’s opinion and order granting partial summary disposition to defendants2 under MCR
2.116(C)(8) (failure to state a claim on which relief can be granted). For the reasons set forth in
this opinion, we affirm.
A. FACTS
This case arises out of a Settlement Agreement reached by the parties in a prior action,
which was ultimately dismissed with prejudice pursuant to the terms of the Settlement
Agreement. Because this contractual dispute involves the trial court’s partial grant of summary
disposition under MCR 2.116(C)(8)—without consideration of documentary evidence—the
pertinent “facts” are largely comprised of the allegations in plaintiff’s complaint.
According to its complaint, plaintiff is a Greek business organization, which formerly
distributed Chrysler, Dodge and Jeep branded vehicles in Greece. As of May 2010, plaintiff had
1
Lancia Jeep Hellas SA v Chrysler Group International LLC, unpublished order of the Court of
Appeals, entered October 29, 2015 (Docket No. 329481).
2
During the pendency of this action, the three defendant business organizations were effectively
extinguished via merger. Nevertheless, for the sake of clarity, we refer to those organizations
and their successors in interest collectively as “defendants.”
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distributed the vehicles for nearly 20 years. In April 2010, defendants announced that many
Chrysler products would be rebranded and marketed on an exclusive basis under the Lancia
brand. One month later, defendants sent a letter to LJH terminating LJH as an importer and
distributor for Chrysler and Dodge effective May 31, 2011. In response, LJH instituted the prior
action for, inter alia, breach of contract.
Ultimately, the parties executed a lengthy Settlement Agreement, in which they agreed to
dismissal of the prior action with prejudice. The Settlement Agreement contained the following
release clause wherein LJH agreed to release its claims against defendants “arising out of or
relating to” the prior action, with the following exceptions:
(l) any potential warranty or product liability claims for vehicles or parts
sold prior to the date of this Agreement, (2) any claims, demands, actions, causes
of action of any nature whatsoever, at law or in equity, related to the negotiation
or breach of this Agreement, or (3) any claims, demands, actions, causes of action
of any nature whatsoever, at law or in equity, relating to future business
operations.
The Settlement Agreement also contained a merger/integration clause which provided as
follows:
9.1 Entire Understanding. This Agreement with its Exhibits shall be
deemed to contain the final, complete and exclusive agreement and understanding
between the parties hereto and their Affiliates in respect of the transactions
contemplated hereby and thereby and supersedes and replaces all prior
agreements, arrangements, negotiations, representations and understandings
among the parties hereto and their Affiliates, actual, proposed or otherwise,
whether written or oral, concerning the subject matter hereof and thereof. The
terms of this Agreement shall control over the terms of any of the Exhibits hereto.
In return, defendants agreed, in pertinent part, to appoint plaintiff “as a distributor for
Greece to sell and resell new Lancia branded vehicles and relevant parts, and to service Lancia
branded vehicles in the Greek market and sell relevant parts,” subject to the “pricing terms and
policies generally applied by FGA [Fiat] to its distributors.” Under the terms of the agreement,
plaintiff retained the rights to distribute Jeep branded vehicles and parts and to service existing
Chrysler and Dodge vehicles in Greece. Defendants also agreed to appoint plaintiff “as a dealer
in two locations in Athens to sell and service Fiat, Alfa Romeo, and Fiat Professional branded
vehicles and relevant parts, and as a dealer in one location in Athens to sell and service Abarth
branded vehicles and relevant parts.”
The Settlement Agreement incorporated a “Lancia Distribution Agreement,” which
governed the terms by which plaintiff would distribute Lancia vehicles in Greece. The final
version of the Lancia Distribution Agreement set forth terms under which LJH would distribute
certain Lancia “Contract Vehicles.” However, the Lancia Distribution Agreement also contained
a clause wherein defendants retained the rights to alter, modify, stop production of, or withdraw
from the market any of the Contract Vehicles or any “derivative” of the Contract Vehicles.
-2-
On December 26, 2014, plaintiff filed the instant action against defendants alleging
several causes of action, including fraud and breach of the Settlement Agreement based on
breach of the duty of good faith and fair dealing. Plaintiff alleged that defendants represented
during the settlement negotiations that they intended to produce a full line of Lancia vehicles and
that the Lancia brand would be expanded with eight new models from 2011 through 2014.
Plaintiff further alleged that, in deciding whether to enter into the Settlement Agreement, it
considered the right to distribute the Lancia product line to be the primary compensation for
defendants’ termination of the Chrysler distribution agreement with plaintiff. Plaintiff asserted
that it relied on defendants’ representations and that it would not have agreed to distribute Lancia
products in Greece absent defendants’ representations that the Lancia line of products would be
expanded and improved. Plaintiff alleged that defendants did not expand and improve the
Lancia line and that, contrary to defendants’ representations, they never intended to introduce an
expanded line of Lancia vehicles. According to plaintiff, several of the promised models should
have been far along in development at the time of the representations because the development
process in the automobile industry is typically two to three years. Plaintiff alleged that the fact
that not one of the promised new models ever entered the market indicates that they were never
being developed. Plaintiff further asserted that it relied on defendants’ representations and began
preparing its distribution network for the promised Lancia line, spending millions of Euros.
Finally, plaintiff alleged that in 2014 it became clear that defendants intended to discontinue the
Lancia brand in every European country except Italy.
Defendants filed a motion for partial summary disposition pursuant to MCR 2.116(C)(8),
arguing, in relevant part, that the Settlement Agreement contained an integration clause and
contained no representations regarding developing an expanded line of Lancia models.
Defendants maintained that the integration clause nullified any alleged representation that
defendants would develop an expanded line of Lancia automobiles. Defendants asserted that if it
was important to plaintiff that defendants develop a full line of Lancia vehicles, plaintiff should
have ensured that the alleged promise was included in the Settlement Agreement. Defendants
further argued that the Settlement Agreement gave defendants complete control regarding the
products that plaintiff was entitled to sell and allowed defendants to withdraw any vehicle from
the market. Finally, defendants argued that Michigan does not recognize a cause of action for
breach of an implied covenant of good faith and fair dealing.
In response, plaintiff argued that defendants conveniently neglected to mention article
2.2, i.e., the release clause, of the Settlement Agreement, which explicitly preserved plaintiff’s
right to file suit regarding claims related to the negotiation of the Settlement Agreement.
Plaintiff asserted that the plain language of the release clause preserved its fraud claim and
defeated defendants’ argument regarding integration. Plaintiff also argued that Michigan law
recognizes a breach of contract claim based on the violation of the duty of good faith and fair
dealing.
Following oral argument, the trial court granted defendants’ motion and dismissed
several counts of plaintiff’s complaint. Only count 1 (fraud) and count 2 (breach of the duty of
good faith and fair dealing) are at issue in this appeal. With respect to plaintiff’s fraud claim, the
trial court explained:
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Here, [plaintiff] is claiming that it was fraudulently induced to enter into
the settlement agreement based on Defendants’ representation that they intended
to develop a complete line of Lancia vehicles. Although Lancia is not claiming
that the parties entered into a collateral agreement, it is claiming that it relied on
Defendants’ promises to perform obligations not included in the settlement
agreement. Thus, this case is nearly indistinguishable from [Hamade v Sunoco,
Inc, 271 Mich App 145; 721 NW2d 233 (2006)], where the plaintiff also alleged
fraudulent inducement based on his reliance on certain promises Defendants made
before they entered into the agreement. Because the integration clause renders
[plaintiff’s] reliance on Defendants’ pre-contractual promises unjustifiable, the
fraud claim fails as a matter of law.
The court also reasoned that the release clause did not save plaintiff’s fraud claim,
explaining:
If the Court were to conclude that the release language allows [plaintiff] to
pursue damages based on Defendants’ alleged pre-contractual promises, that
interpretation would render the integration clause meaningless. Contrary to
[plaintiff’s] claim, the integration clause does not negate the release language.
[Plaintiff] still has the right to pursue a claim based on the settlement negotiations,
provided that the claim is not barred by the integration clause. Because
[plaintiff’s] fraud claim based on alleged pre-contractual promises of performance
is barred by the integration clause, it cannot be salvaged by the release language.
For all of these reasons, Defendants are entitled to summary disposition of
[plaintiff’s] Count 1 claiming fraud.
Regarding plaintiff’s breach of contract claim, the court stated that although it may imply
a covenant of good faith and fair dealing where one party to a contract has complete discretion
regarding how to perform its obligations, plaintiff failed to cite to any portion of the Settlement
Agreement that gave defendants “unfettered discretion on how to perform their obligations.”
The court proceeded to grant defendants’ motion for summary disposition in its entirety.
Subsequently, this Court granted plaintiff’s motion for immediate consideration and its
application for leave to appeal, but denied plaintiff’s motion for preemptory reversal.3
B. STANDARDS OF REVIEW
On appeal, plaintiff argues that the trial court erred in granting defendant’s motion for
summary disposition.
3
Lancia Jeep Hellas SA v Chrysler Group International LLC, unpublished order of the Court of
Appeals, entered October 29, 2015 (Docket No. 329481). LJH later filed a motion to expedite
the consideration of this appeal, which this Court also granted. Lancia Jeep Hellas SA v
Chrysler Group International LLC, unpublished order of the Court of Appeals, entered
November 20, 2015 (Docket No. 329481).
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A trial court’s ruling on a motion for summary disposition is reviewed de novo. Johnson
v Pastoriza, 491 Mich 417, 428; 818 NW2d 279 (2012). “A motion for summary disposition
under MCR 2.116(C)(8) tests the legal sufficiency of the complaint.” Id. at 434-435. A motion
is properly granted under MCR 2.116(C)(8), where “[a]ll well-pleaded factual allegations are
accepted as true and construed in a light most favorable to the nonmovant . . . the claims alleged
are so clearly unenforceable as a matter of law that no factual development could possibly justify
recovery.” Id. To the extent that our review requires interpretation and application of the
Settlement Agreement, “[t]he existence and interpretation of a contract are questions of law
reviewed de novo.” Kloian v Domino’s Pizza LLC, 273 Mich App 449, 452; 733 NW2d 766
(2006).
“A party may not support a motion under subrule (C)(8) with documentary evidence[.]”
Dalley v Dykema Gossett, 287 Mich App 296, 305; 788 NW2d 679 (2010). However, under
MCR 2.113(F), “[w]hen an action is based on a written contract, it is generally necessary to
attach a copy of the contract to the complaint.” Laurel Woods Apartments v Roumayah, 274
Mich App 631, 635; 734 NW2d 217 (2007). “Accordingly, the written contract becomes part of
the pleadings themselves, even for purposes of review under MCR 2.116(C)(8).” Id.
In this case, the parties failed to attach to their respective pleadings the written
instruments on which their claims and defenses in this action are based, and they also failed to
allege facts sufficient to satisfy the exceptions listed under MCR 2.113(F)(1)(a) or (b).
Nevertheless, because the parties should have done so, and in the interest of judicial economy,
we will consider the written instruments at issue in this case as part of the pleadings for purposes
of review under MCR 2.116(C)(8).
C. ANALYSIS
I. FRAUDULENT INDUCEMENT
A settlement agreement is a contract and is interpreted as such. Gramer v Gramer, 207
Mich App 123, 125; 523 NW2d 861 (1994). “The cardinal rule in the interpretation of contracts
is to ascertain the intention of the parties.” Shay v Aldrich, 487 Mich 648, 660; 790 NW2d 629
(2010) (quotation marks and citation omitted). If contractual language is unambiguous, it must
be interpreted in accordance with its plain meaning. Id. “[C]ourts must also give effect to every
word, phrase, and clause in a contract and avoid an interpretation that would render any part of
the contract surplusage or nugatory.” Klapp v United Ins Group Agency, Inc, 468 Mich 459,
468; 663 NW2d 447 (2003).
A claim of fraud in the inducement may arise “where a party materially misrepresents
future conduct under circumstances in which the assertions may reasonably be expected to be
relied upon and are relied upon.” Custom Data Solutions, Inc v Preferred Capital, Inc, 274 Mich
App 239, 242-243; 733 NW2d 102 (2006). “Fraud in the inducement to enter a contract renders
the contract voidable at the option of the defrauded party.” Samuel D Begola Servs, Inc v Wild
Bros, 210 Mich App 636, 640; 534 NW2d 217 (1995).
Plaintiff argues that it was fraudulently induced to enter into the Settlement Agreement
by defendants’ pre-settlement representations that they would produce an expanded line of
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Lancia vehicles, including eight new models. Defendants, on the other hand, argue that the
Settlement Agreement did not contain any provisions regarding the alleged representations and
rely on the following integration, or merger, clause:
9.1 Entire Understanding. This Agreement with its Exhibits shall be
deemed to contain the final, complete and exclusive agreement and understanding
between the parties hereto and their Affiliates in respect of the transactions
contemplated hereby and thereby and supersedes and replaces all prior
agreements, arrangements, negotiations, representations and understandings
among the parties hereto and their Affiliates, actual, proposed or otherwise,
whether written or oral, concerning the subject matter hereof and thereof. The
terms of this Agreement shall control over the terms of any of the Exhibits hereto.
The central issue, therefore, is whether, the integration clause barred the introduction of
parol evidence such that plaintiff could not prove that it justifiably relied on defendants’ alleged
pre-settlement representations. To resolve this issue, we turn to Hamade, 271 Mich App 145.
In Hamade, the plaintiff owned a Sunoco gas station. Id. at 149. In 1997, the plaintiff
sought to enter into a new franchise agreement with Sunoco; however, Sunoco insisted that the
plaintiff make numerous improvements to his existing station before it would agree to enter into
a new franchise agreement. Id. After making the requested improvements, the plaintiff began
negotiations with Sunoco for a new franchise agreement. Id. According to the plaintiff, during
the negotiations he requested that Sunoco include a provision in the new agreement that would
prevent Sunoco from approving a competing station within a certain distance from the plaintiff’s
station. Id. at 149-150. The plaintiff alleged that, before he signed the new agreement, a Sunoco
representative assured him that Sunoco would never approve another station near the plaintiff’s
station. Id. at 150. However, three years after the plaintiff signed the new franchise agreement
Sunoco approved a competing Sunoco gas station approximately one mile from the plaintiff’s
station. Id. The plaintiff sued Sunoco alleging, inter alia, that Sunoco fraudulently induced him
to enter the new franchise agreement. Id. at 151, 166. The trial court dismissed the plaintiff’s
fraud claims on grounds that the franchise agreement’s merger clause barred parol evidence to
support the claims; the plaintiff appealed. Id. at 152.
On appeal, the issue was whether the plaintiff could introduce parol evidence to prove
that he was fraudulently induced into entering the franchise agreement, which contained a
merger clause. Id. at 166-168. The Hamade Court explained how the parol evidence rule
operates in the context of a merger clause as follows:
Parol evidence is generally admissible to demonstrate fraud, which, if
proved, would render the contract voidable by the innocent party.
‘However, in the context of an integration clause, which releases all
antecedent claims, only certain types of fraud would vitiate the contract.’ 3
Corbin, Contracts, § 578, p. 411, states in part:
‘To establish fraud, it is not sufficient merely to show that the writing
states that there was no antecedent agreement when the fact is that there had been
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one. If by artifice or concealment, one party induces the other to suppose that the
antecedent agreement is included in the writing, or to forget that agreement and to
execute an incomplete writing, while describing it as complete, the written
provision may be voidable on the ground of fraud.’
In other words, while parol evidence is generally admissible to prove
fraud, fraud that relates solely to an oral agreement that was nullified by a valid
merger clause would have no effect on the validity of the contract. Thus, when a
contract contains a valid merger clause, the only fraud that could vitiate the
contract is fraud that would invalidate the merger clause itself, i.e., fraud relating
to the merger clause or fraud that invalidates the entire contract including the
merger clause. 3 Corbin, Contracts, § 578. [Hamade, 271 Mich App at 169-170,
quoting UAW-GM Human Resource Ctr v KSL Recreation Corp, 228 Mich App
486, 503; 579 NW2d 411 (1998).]
Relying on UAW-GM, the Hamade Court explained that the plaintiff’s fraud claim was
based “on an oral representation” and therefore, “[b]ecause this representation was expressly
nullified by the integration clause, if the integration clause is valid, fraud based on this
representation will have no effect on the validity of the contract. Thus, plaintiff must
demonstrate that the fraud in question invalidated the integration clause itself.” Hamade, 271
Mich App at 170. This Court concluded that the plaintiff could not demonstrate fraud “that
would invalidate the integration clause or otherwise the entire contract,” explaining:
Hamade knew that the agreement he signed did not contain a clause
granting him an exclusive territory. His only claim on appeal is that he was led to
believe that he did not need such a clause. Furthermore, the [franchise]
Agreement actually contains an express term applicable to Sunoco’s decision to
authorize another Sunoco station near Hamade’s station. Pursuant to § 3.24(a)(2),
Hamade warranted to Sunoco that
‘[t]here have been no promises, claims or representations made to
[Hamade] by [Sunoco] or its representatives of any kind, including but not limited
to promises (i) concerning price, quality or quantity of products and services sold
or supplied by [Sunoco]; (ii) the condition, future repairs to or replacement of
Loaned Equipment; (iii) present or future market conditions or competitive
activities other than as set forth in this Agreement or any other written documents
signed by the parties as a part of the Franchise relationship.
***
Plaintiff failed to demonstrate fraud that would invalidate the integration
clause or otherwise invalidate the entire contract. Furthermore, because the valid
integration clause nullified all prior and contemporaneous agreements,
understandings, representations, and warranties, plaintiff may not use parol
evidence to contradict the explicit terms of the integration clause . . . Likewise,
the valid integration clause renders reliance on the representation unreasonable as
a matter of law. [Hamade, 271 Mich App at 170-171.]
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In contrast to Hamade, in Custom Data v Preferred Capital, 274 Mich App 239, 733
NW2d 102 (2006), this Court rejected the defendant’s argument that an integration clause barred
the plaintiff from introducing evidence to prove fraud. In Custom Data, the plaintiff entered into
telecommunications service and equipment rental agreements (ERAs) with Norvergence. Id. at
240-241. Norvergence then assigned some of the ERAs to the defendant, Preferred Capital. Id.
According to the plaintiff, Norvergence was unable to perform the promised services, yet
Norvergence and its assigns sought to collect on the contracts. Id. at 241. The plaintiff
commenced suit, alleging, inter alia, fraud in the inducement. Id. During discovery, the plaintiff
produced “uncontroverted evidence that the agreement . . . [was] the result of a fraudulent
scheme by Norvergence to finance the services that Norvergence was promising to provide to
Plaintiff and others,” which “invalidates the entire contract including the merger clause.” Id. at
244 (emphasis added). The circuit court explained:
‘The Court is satisfied that Plaintiff’s reliance upon the representations
made by Norvergence was reasonable, and that the UCC and the provisions
regarding rejection of goods does [sic] not apply to the case at hand.
Consequently, the merger clause in the equipment rental agreements is
insufficient to prevent Plaintiff from introducing evidence of fraud, and Plaintiff’s
motion for summary disposition to void the contract should be granted.’ [Custom
Data, 274 Mich App at 244.]
On appeal, Norvergence argued that the plaintiff’s reliance on pre-contract
representations was “patently unreasonable” because the representations were not contained
within the written ERAs, which contained merger clauses. Id. at 242. This Court rejected
Norvergence’s argument, explaining:
plaintiff presented unrefuted evidence in support of its motion for partial
summary disposition that Norvergence’s statements regarding its ability to
provide plaintiff with a total telecommunications and products package induced
plaintiff to enter into the agreement with Norvergence . . . Defendant came
forward with no evidence to refute that Norvergence made these representations,
that these representations induced plaintiff to enter into a contract that included
the ERAs for the matrix boxes (those at issue were assigned to defendant by
Norvergence), that the matrix boxes were never installed and never functioned,
and that Norvergence knew at the time it made the representations to plaintiff that
it was incapable of providing the services promised. Defendant’s argument thus
fails. [Id. at 245.]
In this case, plaintiff contends that Custom Data is controlling and that the trial court
erred in relying on Hamade. Plaintiff’s argument is unpersuasive. The critical difference that
distinguishes this case from Custom Data is that, contrary to the plaintiff in Custom Data, in this
case, plaintiff did not seek to void the merger clause or the Settlement Agreement in its entirety.4
4
Indeed, it its brief on appeal, plaintiff states that it “stands on the agreement and brings an
action for damages.”
-8-
Rather, like in Hamade, plaintiff seeks to recover damages and enforce the Settlement
Agreement. As previously noted, “when a contract contains a valid merger clause, the only fraud
that could vitiate the contract is fraud that would invalidate the merger clause itself, i.e., fraud
relating to the merger clause or fraud that invalidates the entire contract including the merger
clause.” Hamade, 271 Mich App at 169-170 (quotation marks and citations omitted, emphasis
added). In this case, like the plaintiff in Hamade, plaintiff’s claim is based on the assertion that
the parties had an agreement that was not within the integrated terms of the Settlement
Agreement—i.e. that defendants would develop a full-line of Lancia vehicles. Plaintiff does not
seek to void the agreement in its entirety, but rather seeks to add a term to the agreement
guaranteeing that defendant will develop a full-line of Lancia vehicles and then recover for
defendants’ breach of that term. Because the Settlement Agreement contained a merger clause,
this claim failed as a matter of law. Hamade, 271 Mich App at 167-170.
Moreover, the Settlement Agreement, by incorporation, included a clause that provided
defendants discretion to withdraw all contract vehicles from the market. Similar to the plaintiff
in Hamade, where the franchise agreement provided Sunoco with the authority to approve
another gas station, here, defendants reserved the right to withdraw any and all contract vehicles
from the market. Plaintiff cannot now introduce parol evidence to counter those plain terms.
Because plaintiff has not alleged facts that would void the merger clause or the Settlement
Agreement in its entirety, like in Hamade, plaintiff’s fraud claim fails as a matter of law. Id.;
UAW-GM, 228 Mich App at 503.
Plaintiff argues that the release clause preserved its right to pursue claims related to the
negotiation of the Settlement Agreement. The release clause provided as follows:
[Plaintiff] releases and forever discharges [defendants] and their Affiliates
. . . from any and all claims . . . whatsoever, in law or in equity, that it had, now
has or may have in the future, whether known or unknown . . . including without
limitation, all claims arising out of or relating to the Litigation, the
Chrysler/[Plaintiff] General Distributor Agreement, and/or the notice of
termination, effective May 31, 2011, of the Chrysler/[Plaintiff] General
Distributor Agreement, except for . . . (2) any claims, demands, actions, causes of
action of any nature whatsoever, at law or in equity, related to the negotiation or
breach of this Agreement . . . .
Here, even if this language preserved plaintiff’s right to bring a claim based on the
negotiation, as discussed above, plaintiff’s claim failed as a matter of law. In other words, the
fact that LJH’s alleged claim for fraud in the inducement is not barred by the release clause has
no bearing on whether that claim is, under MCR 2.116(C)(8), one on which recovery can be
granted. Accordingly, the trial court properly held that the release clause did not save plaintiff’s
claim, albeit it did so for different reasons. Gleason v Mich Dept of Transp, 256 Mich App 1, 3;
662 NW2d 822 (2003) (“A trial court’s ruling may be upheld on appeal where the right result
issued, albeit for the wrong reason.”)
In short, plaintiff’s fraudulent inducement claim was “so clearly unenforceable as a
matter of law that no factual development could possibly justify recovery” and summary
disposition as to the claim was proper under MCR 2.116(C)(8). Maiden, 461 Mich at 119.
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II. BREACH OF CONTRACT
Plaintiff also argues that the trial court erroneously dismissed its claim of breach of
contract based on defendants’ breach of the duty of good faith and fair dealing. This argument
lacks merit.
Under the common law, it is well-settled that, “[u]nlike some other jurisdictions,
Michigan does not recognize a cause of action for breach of the implied covenant of good faith
and fair dealing.” In re Leix Estate, 289 Mich App 574, 591; 797 NW2d 673 (2010) (quotation
marks and citations omitted). The same is true regarding the duty of good faith imposed, under
MCL 440.1304, on “[e]very contract or duty” that is governed by the UCC. “[W]hile the
obligation of good faith under the UCC may affect the construction and application of UCC
provisions governing particular commercial transactions in various situations, it has no life of its
own that may be enforced by an independent cause of action.” Gorman v American Honda
Motor Co, Inc, 302 Mich App 113, 133; 839 NW2d 223 (2013).
Nevertheless, plaintiff argues that because defendants had discretion regarding
development of the Lancia line, there was an implied duty of good faith and fair dealing that
attached to that discretion. This argument is not persuasive.
This Court has recognized that a covenant of good faith and fair dealing may attend
contracts that make the manner of one party’s performance “a matter of its own discretion.”
Burkhardt v City Nat'l Bank of Detroit, 57 Mich App 649, 652; 226 NW2d 678 (1975).
Applying Michigan law, the Fifth Circuit Court of Appeals5 has explained that “[t]he implied
covenant of good faith and fair dealing essentially serves to supply limits on the parties’ conduct
when their contract defers decision on a particular term, omits terms or provides ambiguous
terms.” Hubbard Chevrolet Co v Gen. Motors Corp, 873 F2d 873, 876-877 (CA 5, 1989).
However, there is no implied duty of good faith where the parties have “unmistakably expressed
their respective rights,” because the implied duty “cannot override express contract terms.”
Stephenson v Allstate Ins Co, 328 F3d 822, 827 (CA 6, 2003).
In this case, the Settlement Agreement did not omit terms, provide ambiguous terms, or
defer decision on a particular term. Hubbard, 873 F2d at 876-877. As noted above, the
integration clause provided that the agreement contained all of the terms and conditions of the
contract. Furthermore, the express terms of the contract provided defendants the option to
withdraw contract vehicles from the Greek market. Accordingly, plaintiff cannot argue that an
implied duty of good faith overrides these plain terms. Stephenson, 328 F 3d at 827; see also
Hubbard, 873 F 3d at 877-878 (holding that there was no implied duty of good faith and fair
dealing where the dealer franchise agreement “gave GM the authority to approve or disapprove
relocation for its own reasons, and thus set out the limits of what the contract requires of these
parties.”)
5
“Though not binding on this Court, federal precedent is generally considered highly persuasive
when it addresses analogous issues.” Fed Home Loan Mtg Ass’n v Kelley (On Reconsideration),
306 Mich App 487, 494 n 7; 858 NW2d 69 (2014).
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In sum, the trial court did not err in dismissing plaintiff’s breach of contract claim based
on defendants’ breach of the duty of good faith and fair dealing. Maiden, 461 Mich at 119; MCR
2.116(C)(8).
Affirmed. Defendants having prevailed, may tax costs. MCR 7.219(A).
/s/ Kirsten Frank Kelly
/s/ Karen M. Fort Hood
/s/ Stephen L. Borrello
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