A Michigan appeals court has overturned a $1.55 million (£1.19 million) judgment against a couple who backed out of buying a luxury home after discovering that the seller did not have sole ownership of the property. In an unpublished opinion under docket number 373967 (Roger Lewis and Nicole Susser v. The legal dispute began in November 2020, when Roger Lewis and Nicole Susser looked to buy a new home for their growing family.
Robert Blumberg), the Michigan Court of Appeals set aside the trial court’s decision. The three-judge panel found that the trial judge had made serious legal errors involving jury instructions and the use of settlement discussions as evidence.
On 22 November 2020, Mr Lewis and Ms Susser signed a binding agreement to buy a home in Franklin Village, Michigan, from owner Robert Blumberg for $1,275,000. The trial court then issued a final judgment ordering Mr Lewis and Ms Susser to pay $1.55 million in damages for breach of contract. Under the agreement, the buyers paid earnest money into an escrow account. Court documents filed with the Michigan Court of Appeals showed that public land records still listed Mr Blumberg’s former wife as having an ownership interest in the property. After discovering the ownership issue, the buyers raised concerns about whether the seller could legally transfer full ownership by the agreed closing date. The parties disagreed over how to resolve the title problem, and their communications broke down. Mr Lewis and Ms Susser eventually stopped the purchase and asked for their deposit to be returned. After a civil trial in the Oakland Circuit Court, a jury ruled in favour of Mr Blumberg on his counterclaims. The buyers filed further motions asking the court to change the amount awarded and temporarily stop enforcement of the judgment. After the circuit court rejected their requests, the couple appealed to the state appeals court.
However, title searches carried out before the sale was completed uncovered an unexpected legal issue with the property’s ownership. This led both sides to bring competing claims before the Oakland Circuit Court.
Because the trial court had applied the evidence rules incorrectly and failed to give the jury important instructions about the seller’s obligations regarding property title, the Court of Appeals concluded that the $1.55 million judgment against Mr Lewis and Ms Susser could not stand. The appeals court overturned the Oakland Circuit Court’s damages judgment in full and sent the case back to the trial court for further proceedings in line with its legal findings.
Under Rule 408 of the Michigan Rules of Evidence (MRE 408), statements made during settlement talks generally cannot be used to prove or disprove legal responsibility or the validity of a disputed claim.
“We agree,” the appeals panel stated in its opinion. “As has long been recognized, when a seller of land anticipatorily repudiates an agreement for its sale, ‘[t]hat refusal . . . to perform excuse[s] performance by the [purchaser] and excuse[s] tender of performance by the [purchaser],'” the panel wrote, citing established Michigan real estate law. The Michigan Court of Appeals panel included Presiding Judge Michael F. Gadola, Judge Colleen A. O’Brien, and Judge Philip P. Mariani. After reviewing the trial record, all three judges agreed to overturn the lower court’s decision. The appeals court found that the trial judge had made a serious legal error by allowing the jury to hear protected settlement discussions. It found that allowing this evidence had unfairly harmed the buyers’ case and prevented them from receiving a fair trial. The court also found problems with the instructions given to the jury about real estate contracts. The opinion explained that when a property seller refuses in advance to complete an agreed sale, or fails to provide a title that can legally be transferred without unresolved claims, the buyer may be excused from completing the purchase.