Equitable relief may be granted if a legal remedy is not available. Tkachik v Mandeville, 487 Mich 38, 45 (2010). A complete, ample, and certain remedy at law that is as effectual as equitable relief precludes a suit in equity. Id. When granting equitable relief, the court may fashion a remedy warranted by the circumstances. Three Lakes Ass’n v Kessler, 91 Mich App 371, 377-378 (1979). The remedy must be specific and enforceable, or it will not be granted. Id. at 378.
The court’s broad discretionary powers regarding equity are not to be used to enlarge a party’s statutory rights. Dumas v Helm, 15 Mich App 148, 152 (1968).
Generally, the circuit court has jurisdiction over actions in equity. MCL 600.601. However, district courts also have limited jurisdiction over certain actions in equity. MCL 600.8302. See Section 2.4 for more information on circuit court jurisdiction and Section 2.3 on district court jurisdiction.
“There is no right to a jury trial where the relief sought is solely equitable in nature.” Thomas v Steuernol, 185 Mich App 148, 155-156 (1990). However, MCR 2.509(D) permits equitable claims to be decided by a jury with the consent of the parties. McPeak v McPeak, 457 Mich 311, 315 (1998). Where a party includes a jury demand with his or her complaint and pays a jury demand fee, but the complaint contains equitable counts, “the filing of the jury demand, standing by itself, certainly is not conclusive evidence that the [party] ‘consented’ to a jury trial on [the] equitable claims[.]” Zurcher v Herveat, 238 Mich App 267, 302-303 (1999) (the complaint contained equitable and nonequitable claims, and the record indicated that plaintiff intended for the court to decide the equitable claims).
“[I]n cases involving both equitable and legal issues, juries may decide factual issues relating to a claim for money damages, while judges retain the authority to determine the facts as they relate to equitable remedies[.]” ECCO Ltd v Balimoy Mfg Co, 179 Mich App 748, 751 (1989). “[E]quity jurisdiction is appropriate for all actions based on ‘traditionally equitable’ doctrines[.]” Id. at 750. “However, in addition to the assertion of a traditionally equitable claim, equity jurisdiction also requires that a plaintiff seek traditionally equitable relief.” Id. (holding the trial court erred in not sending plaintiff’s action for promissory estoppel to the jury where money damages were the only relief requested). See Section 9.6(F) for more information on promissory estoppel.
“The unclean-hands doctrine is ‘a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitablenss or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the [opposing party].’” New Products Corp v Harbor Shores BHBT Land Dev, LLC, 331 Mich App 614, 627 (2020) (alteration in original), quoting Rose v Nat’l Auction Group, 466 Mich 453, 463 (2002). “Any willful act that transgresses equitable standards of conduct is sufficient to allow a court to deny a party equitable relief.” New Products Corp, 331 Mich App at 627. In Rose, the plaintiffs were attempting to sell a piece of property they owned using the defendant-auction company. Rose, 466 Mich at 456. In an effort to secure a higher bid, the plaintiffs agreed to allow the defendant to use a planted bidder (who had no intention of buying the property) to drive up the bid. Id. at 457-458. When the planted bidder failed to make a bid, and the property sold for much less than the plaintiff expected, the plaintiffs sued the defendant. Id. at 458-460. The Court concluded that the plaintiffs’ involvement in the planted bidder scheme precluded them from bringing suit against the defendant, citing the clean hands doctrine. Id. at 464.
“‘Estoppel by laches is the failure to do something which should be done under the circumstances or the failure to claim or enforce a right at a proper time.’” Wells Fargo Bank, NA v Null, 304 Mich App 508, 537 (2014), quoting Schmude Oil Co v Omar Operating Co, 184 Mich App 574, 583 (1990). “A party guilty of laches is estopped from asserting a right it could have and should have asserted earlier.” New Products Corp v Harbor Shores BHBT Land Dev, LLC, 331 Mich App 614, 627 (2020) (quotation marks and citation omitted). “The application of the doctrine of laches requires a passage of time combined with a change in condition which would make it inequitable to enforce the claim against the defendant. In determining whether a party is guilty of laches, each case must be determined on its own particular facts.” Sedger v Kinnco, Inc, 177 Mich App 69, 73 (1988) (internal citations omitted). “‘To successfully assert laches as an affirmative defense, a defendant must demonstrate prejudice occasioned by the delay.’” Wells Fargo Bank, NA, 304 Mich App at 538, quoting Schmude Oil Co, 184 Mich App at 583.
The statutes of limitations apply equally to all legal and equitable actions, and“[t]he equitable doctrine of laches shall also apply in actions where equitable relief is sought.” MCL 600.5815. “The doctrine of laches may bar a claim even where the action is brought within the applicable limitations period.” New Products Corp, 331 Mich App at 627. “The application of laches can shorten but never lengthen, the analogous statute of limitations.” Tenneco, Inc v Amerisure Mut Ins Co, 281 Mich App 429, 456-457 (2008).
“‘Estoppel arises where a party, by representations, admissions or silence, intentionally or negligently induces another party to believe facts, and the other party justifiably relies and acts on this belief, and will be prejudiced if the first party is permitted to deny the existences of the facts.’” Wigfall v Detroit, 322 Mich App 36, 43, 44 (2017) (holding that equitable estoppel did not apply where the plaintiff “relied on information provided by defendant through its law department that was meant to relate solely to informal claims against defendant,” and that the plaintiff could not rely on the defendant’s “interpretation or misinterpretation” of notice requirements “as a justification or excuse for his failure to act in conformity with [the notice] requirements”), quoting Casey v Auto Owners Ins Co, 273 Mich App 388, 399 (2006).
“[E]quitable estoppel is not a cause of action unto itself; it is available only as a defense.” Casey, 273 Mich App at 399 (affirming the trial court’s dismissal of the plaintiffs’ equitable estoppel claim where the plaintiffs attempted to assert it as a cause of action). Equitable estoppel is “a doctrine that may assist a party by precluding the opposing party from asserting or denying the existence of a particular fact.” New Products Corp v Harbor Shores BHBT Land Dev, LLC, 331 Mich App 614, 627-628 (2020) (quotation marks and citation omitted).
The doctrine of promissory estoppel means:
“‘A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.’” State Bank of Standish v Curry, 442 Mich 76, 83 (1993), quoting 1 Restatement Contracts, 2d, § 90, p 242.
The reliance must be reasonable, and it is only reasonable if it was based on an actual promise. State Bank, 442 Mich at 84. “To determine the existence and scope of a promise, [courts should] look to the words and actions of the transaction as well as the nature of the relationship between the parties and the circumstances surrounding their actions.” Id. at 86.
A contract must be both procedurally and substantively unconscionable for it to be unenforceable. Hubscher & Son, Inc v Storey, 228 Mich App 478, 481 (1998). “[T]here is a two-pronged test for determining whether a contract is unenforceable as unconscionable, which is stated as follows:
(1) What is the relative bargaining power of the parties, their relative economic strength, the alternative sources of supply, in a word, what are their options?;
(2) Is the challenged term substantively unreasonable?” Hubscher & Son, Inc, 228 Mich App at 481 (quotation marks and citations omitted).
In evaluating the unconscionability of a contract, “[r]easonableness is the primary consideration.” Hubscher & Son, Inc, 228 Mich App at 481.
See Section 9.4 for additional information on contract actions.
“The theory underlying quantum meruit recovery is that the law will imply a contract in order to prevent unjust enrichment when one party inequitably receives and retains a benefit from another.” Morris Pumps v Centerline Piping, Inc, 273 Mich App 187, 194 (2006). In order to prevail on a quantum meruit claim, a plaintiff must establish:
•that the defendant received a benefit from the plaintiff, and
•the defendant retained the benefit, which resulted in an inequity to the plaintiff. Morris Pumps, 273 Mich App at 195.
A quantum meruit claim is not appropriate where an express contract exists between two parties. Morris Pumps, 273 Mich App at 199.
“In a tort action, an injured party may seek damages for an injury caused by the breach of a legal duty.” Genesee Co Drain Comm’r v Genesee Co, 504 Mich 410, 419 (2019). “As in tort, the remedy for [a breach-of-contract action] may be compensatory damages.” Id. “Unjust enrichment, by contrast, doesn’t seek to compensate for an injury but to correct against one party’s retention of a benefit at another’s expense, [a]nd the correction, or remedy, is therefore not compensatory damages, but restitution.” Id. “Because unjust enrichment sounds in neither tort nor contract and seeks restitution rather than compensatory damages,” “the [Governmental Tort Liability Act, MCL 691.1401 et seq.,] does not bar [an unjust enrichment] claim.” Genesee Co Drain Comm’r, 504 Mich at 423-424.
While a quantum meruit claim is equitable in nature, it is not automatically a purely equitable claim that must be brought in circuit court where the relief sought is money damages in an amount less than $25,000. Meisner Law Group, PC v Weston Downs Condo Ass’n, 321 Mich App 702, 726-728 (2017). In Meisner, “because plaintiff sought only legal relief—money damages—the district court ‘ha[d] exclusive jurisdiction’ of plaintiff’s civil action involving contract and quasi-contract claims because the undisputed evidence show[ed] that ‘the amount in controversy [did] not exceed $25,000.00.’” Id. at 730, quoting MCL 600.8301. “Although plaintiff’s theory of recovery rest[ed] on equitable principals of unjust enrichment,” its “complaint [did] not sound primarily in equity or seek equitable relief,” and “the relief sought by a plaintiff determines its procedural rights.” The Meisner Law Group, PC, 321 Mich App at 726, 729.
The court, in equity, may grant complete relief to a party in the form of specific performance, including an award of damages. Reinink v Van Loozenoord, 370 Mich 121, 127 (1963). “The granting of specific performance lies within the discretion of the court and whether or not it should be granted depends upon the particular circumstances of each case.” Derosia v Austin, 115 Mich App 647, 652 (1982).
Ordinarily, specific performance will not be granted “unless the party seeking the decree has tendered full performance.” Derosia, 115 Mich App at 652. However, formal tender is not required “where the defendant by his words or acts has shown that it would not be accepted.” Frakes v Eghigian, 358 Mich 327, 333 (1960). In Frakes (a real property case), the Court concluded that tender of performance was unnecessary where the defendant intentionally failed to attend several scheduled meetings at which the parties were supposed to close on the property. Id.
“Rescission abrogates [a] contract completely.” Cushman v Avis, 28 Mich App 370, 372 (1970). “Rescission is an equitable remedy which is granted only in the sound discretion of the court.” Lenawee Co Bd of Health v Messerly, 417 Mich 17, 26, 31 (1982).
There is no all-embracing rule governing rescission; “[e]ach case must stand on its own facts.” Dolecki v Perry, 277 Mich 679, 682 (1936). A case-by-case approach must also be employed when determining whether rescission is equitable as to third parties; “‘an absolute approach would unduly hamper and constrain the proper functioning of such remedies.’” Farm Bureau Gen Ins Co v Ace American Ins Co, 337 Mich App 88, 99 (2021), quoting Bazzi v Sentinel Ins Co, 502 Mich 390, 411 (2018). Rescission is an acceptable remedy when there has been a failure to perform a substantial part of the contract or one of its essential items, or where the parties would have never created the contract had they expected or contemplated the default that occurred. Adell Broadcasting Corp v Apex Media Sales, Inc, 269 Mich App 6, 13-14 (2005).
“A contract may be rescinded because of a mutual mistake of the parties[.]” Dingeman v Reffitt, 152 Mich App 350, 355 (1986). The determination of whether a party is “entitled to rescission [due to mutual mistake] involves a bifurcated inquiry: (1) was there a mistaken belief entertained by one or both of the parties to a contract? and (2) if so, what is the legal significance of the mistaken belief?” Id. “[R]escission is indicated when the mistaken belief relates to a basic assumption of the parties upon which the contract is made, and which materially affects the agreed performances of the parties.” Lenawee Co Bd of Health, 417 Mich at 29. However, “a party who has assumed the risk of loss in connection with [a] mistake” is not entitled to rescission. Id. at 30.
Fraud is a basis for rescission. See Ball v Sweeney, 354 Mich 616 (1958). “Fraud in the application for an insurance policy may allow the blameless contracting party to avoid its contractual obligations” through the equitable remedy of rescission, which “requires proof of a fraudulent misrepresentation that was material.” Mota-Peguero v Falls Lake Nat’l Ins Co, ___ Mich App ___, ___ (2024) (cleaned up). “The generally accepted test for determining the materiality of a fact or matter as to which a representation is made to the insurer by an applicant for insurance is to be found in the answer to the question whether reasonably careful and intelligent underwriters would have regarded the fact or matter, communicated at the time of effecting the insurance, as substantially increasing the chances of loss insured against so as to bring about a rejection of the risk or the charging of an increased premium.” Id. at ___ (quotation marks and citation omitted). “In other words, the proper materiality question is whether ‘the’ contract issued, at the specific premium rate agreed upon, would have been issued notwithstanding the misrepresented facts.” Id. at ___ (cleaned up) (holding that the insured’s “failure to disclose that she used the vehicle to drive for Uber and Lyft was a material misrepresentation”).
“When addressing the intervening interests of parties other than the fraudulent insured,” “rescission does not function by automatic operation of the law.” Id. at ___ (quotation marks and citation omitted). However, “just as rescission does not automatically apply to parties other than the insured, rescission is likewise not barred as to those parties.” Id. at ___. Instead, trial courts have an “obligation to balance the equities of rescission” when “faced with a direct claim by a provider[.]” Id. at ___. Accordingly, the Mota-Peguero Court held that the trial court “erred when it automatically dismissed [intervening plaintiff’s] claim based on [the insured’s] material misrepresentations.” Id. at ___. “By automatically awarding rescission to preclude [intervening plaintiff’s] claim, the trial court failed to consider [intervening plaintiff’s] interests.” Id. at ___ (remanding for the trial court to determine whether, in its discretion, rescission is available as between defendant and intervening plaintiff).
There is a contradiction in the caselaw on the burden of proof for rescission based on fraud. See Mina v Gen Star Indemnity Co, 218 Mich App 678, 681-685 (1996), rev’d in part on other grounds 455 Mich 866 (1997).1 In recognizing this conflict, the Michigan Court of Appeals stated:
“[W]e are unable to say with any degree of certainty exactly what standard of proof courts should apply in fraud cases. The Supreme Court has alternately required fraud to be established by a preponderance of the evidence and by clear and convincing proof, with little consistency and no detailed analysis. While the most recent Supreme Court pronouncements regarding the question have stated that fraud must be proved by clear and convincing evidence, we think it unlikely that the Supreme Court would overrule a significant body of case law without at least mentioning that it was doing so.” Mina, 218 Mich App at 684-685.
Examples of cases that required fraud to be proven by a preponderance of the evidence include Hayes v Weitzel, 251 Mich 129, 130 (1930); Campbell v Great Lakes Ins Co, 228 Mich 636, 641 (1924); and Stein v Home-Owners Ins Co, 303 Mich App 382 (2013). Cases that indicate a clear and convincing burden of proof include Flynn v Korneffel, 451 Mich 186, 201 (1996); and Foodland Distrib v Al-Naimi, 220 Mich App 453, 459 (1996).
“When reviewing a grant of equitable relief, an appellate court will set aside a trial court’s factual findings only if they are clearly erroneous, but whether equitable relief is proper under those facts is a question of law that [is] . . . review[ed] de novo.” McDonald v Farm Bureau Ins Co, 480 Mich 191, 197 (2008).
1 For more information on the precedential value of an opinion with negative subsequent history, see our note.