JOYCE KOSS, DECEASED, BY THE PERSONAL REPRESENTATIVE OF THE ESTATE OF JOYCE KOSS, ROBERT KOSS, PLAINTIFF, V AHEPA 371 II, INC., DEFENDANT/CROSS-DEFENDANT- APPELLEE, AND AMERICAN FIRST AID COMPANY, D/B/A CINTAS FIRE PROTECTION, DEFENDANT/THIRD-PARTY PLAINT
JOYCE KOSS, Deceased, by the Personal Representative of the
Estate of JOYCE KOSS, ROBERT KOSS, Plaintiff, v AHEPA 371
II, INC., Defendant/Cross-Defendant- Appellee, and AMERICAN
FIRST AID COMPANY, d/b/a CINTAS FIRE PROTECTION,
and AHEPA NATIONAL HOUSING CORPORATION and AHEPA MANAGEMENT
COMPANY, Defendants-Appellees, and NATHALIE BOCHET,
COURT OF APPEALS OF MICHIGAN
2012 Mich. App. LEXIS 486
March 15, 2012, Decided
Decision text below is the first available text from the court; it has not
been editorially reviewed by LexisNexis. Publisher's editorial review, including
Headnotes, Case Summary, Shepard's analysis or any amendments will be added in
accordance with LexisNexis editorial guidelines.
Before: O'CONNELL, P.J., and SAWYER and TALBOT, JJ.
Defendant/third-party plaintiff/cross-plaintiff, American First Aid Company,
d/b/a Cintas Fire Protection (Cintas), appeals by right an order granting
summary disposition to defendant/cross-defendant, AHEPA 371 II, Inc. (AHEPA),
and third-party defendant, Nathalie Bochet, and denying summary disposition to
Cintas. We affirm.
Cintas first argues that the trial court erred in granting summary
disposition to AHEPA regarding Cintas's cross-claim for indemnity because
AHEPA's corporate representatives, Bochet and Denise Simmons, were authorized to
bind AHEPA to an indemnity provision on the back of a work order and an invoice
that Cintas presented for its fire alarm inspection services performed on
October 9, 2008, and because AHEPA paid for Cintas's services without objection
after receiving the documents. We disagree.
This Court reviews de novo a trial court's decision on a motion for summary
disposition. Davenport v HSBC Bank, 275 Mich App 344, 345; 739 NW2d 383 (2007).
"In reviewing a motion under MCR 2.116(C)(10), this Court considers the
pleadings, admissions, affidavits, and other relevant documentary evidence of
record [*2] in the light most favorable to the nonmoving party to determine
whether any genuine issue of material fact exists to warrant a trial." Walsh v
Taylor, 263 Mich App 618, 621; 689 NW2d 506 (2004). In addition, "[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).
As an initial matter, we note that it is appropriate to apply Michigan law
rather than Ohio law in determining whether a contract exists. In general,
parties to a contract may agree that all causes of action pertaining to a
particular matter will be subject to the law of a particular jurisdiction.
Offerdahl v Silverstein, 224 Mich App 417, 419; 569 NW2d 834 (1997). However, a
court must first resolve the threshold issue whether a party is bound by a
contract, and thus, by a choice-of-law provision in the purported agreement. Id.
at 420. See also Blackburne & Brown Mtg Co v Ziomek, 264 Mich App 615, 622; 692
NW2d 388 (2004) (a Michigan court may determine whether a binding contract
exists in order to determine whether a choice-of-law provision is enforceable).
Here, although paragraph 15 of the terms and conditions on [*3] the back of
Cintas's work order and invoice provides that Ohio law shall govern the parties'
rights, the provision necessarily cannot apply unless it is part of a contract
between the parties. Because, as discussed below, the terms and conditions do
not constitute a contract, the choice-of-law provision is not part of a contract
and does not govern the resolution of this case. We will therefore rely on
Michigan law in addressing this issue.
"It is hornbook law that a valid contract requires a 'meeting of the minds'
on all the essential terms. . . . 'Meeting of the minds' is a figure of speech
for mutual assent." Kamalnath v Mercy Mem Hosp Corp, 194 Mich App 543, 548-549;
487 NW2d 499 (1992). "[W]hether such a meeting of the minds occurred is judged
by an objective standard, looking to the express words of the parties and their
visible acts. . . . A meeting of the minds can be found from performance and
acquiescence in that performance." Sanchez v Eagle Alloy, Inc, 254 Mich App 651,
665-666; 658 NW2d 510 (2003) (internal quotations and citation omitted).
Mere discussions and negotiation cannot be a substitute for the formal
requirements of a contract. Before a contract can be completed, [*4] there must
be an offer and acceptance. An offer is defined as "the manifestation of
enter into a bargain, so made as to justify another person in understanding
that his assent to that bargain is invited and will conclude it." Acceptance
must be unambiguous and in strict conformance with the offer. [Eerdmans v Maki,
226 Mich App 360, 364; 573 NW2d 329 (1997) (citations omitted).]
"A contract is made when both parties have executed or accepted it, and not
before." Kamalnath, 194 Mich App at 549. "The burden is on [the plaintiff] to
show the existence of the contract sought to be enforced[.]" Id. (internal
quotation and citation omitted).
"An agency relationship may arise when there is a manifestation by the
principal that the agent may act on his account. The test of whether an agency
has been created is whether the principal has a right to control the actions of
the agent." Meretta v Peach, 195 Mich App 695, 697; 491 NW2d 278 (1992)
(citations omitted). An agent's actual authority to bind a principal may be
either express or implied from the circumstances surrounding the transaction.
Hertz Corp v Volvo Truck Corp, 210 Mich App 243, 246; 533 NW2d 15 (1995); Alar v
Mercy Mem Hosp, 208 Mich App 518, 528; 529 NW2d 318 (1995). [*5] "These
circumstances must show thatthe principal actually intended the agent to possess
the authority to enter into the transaction on behalf of the principal." Hertz,
210 Mich App at 246. "The authority of one person to contract for another must
be determined from or by acts of his principal and cannot be proved by
admissions or statements of the alleged agent." Rohe Scientific Corp v Nat'l
Bank of Detroit, 133 Mich App 462, 469; 350 NW2d 280 (1984), mod on other
grounds on reh 135 Mich App 777 (1984).
Here, Bochet's act of signing Cintas's work order fails to establish that
AHEPA and Bochet mutually assented to the indemnity provision. Bochet lacked
authority from AHEPA to agree to the terms and conditions set forth on the back
of the work order. Cintas has failed to identify any acts of AHEPA establishing
that Bochet's authority extended to entering indemnity contracts on AHEPA's
behalf. AHEPA's purchasing and disbursement policy stated that Bochet could make
purchases up to $249.99, and that she could inspect a contractor's work for
quality, accuracy, and completion, for work up to $5,000. The policy is
consistent with Bochet and Simmons's testimony regarding the extent of Bochet's
[*6] authority. Bochet's testimony that she signed the work order to acknowledge
that the work was completed, rather than to accept the terms and conditions on
the back, conforms to the evidence regarding the extent of her authority.
Further, no circumstances surrounding the transaction give rise to an implied
authority of Bochet to enter indemnity agreements. Hertz, 210 Mich App at 246.
In short, Cintas has failed to establish on the basis of any acts by AHEPA that
Bochet possessed authority to contract for AHEPA regarding indemnity. Rohe, 133
Mich App at 469.
Moreover, setting aside the question of agency, mutual assent is lacking
because the terms and conditions on the reverse sides of the work order and the
invoice were presented only after the work was completed. In Krupp PM
Engineering, Inc v Honeywell, Inc, 209 Mich App 104, 109; 530 NW2d 146 (1995),
this Court held that warranty language on the back of an invoice was not
conspicuous, in part because the language, "The Standard Terms and conditions on
the reverse side are a part hereof," appeared in small, italicized print at the
bottom of the front of the invoice, and this Court did not believe that a
reasonable person should be [*7] held to have noticed the language. Although
Krupp is not controlling because this case does not involve a
warranty, it is notable that here, unlike in Krupp, the front of the work
order contained no language referring to the terms and conditions on the back of
the work order.
The portion of Krupp most pertinent here is the Krupp Court's observation
that "the argument could also be made that, because the language only appears on
an invoice for goods and services, the limitation was not bargained for and did
not become part of the bargain. However, the issue is not presented adequately
in the parties' briefs and, consequently, we decline to address it." Krupp, 209
Mich App at 109 n 3. Here, there is no evidence that the terms and conditions
were part of a bargain between the parties. Cintas presented the work order and
the invoice only after the work had been completed. Cintas cites no authority
establishing that a valid contract can be formed on the basis of terms and
conditions presented after a contractor's work is completed.
To be sure, a contractual meeting of the minds can be proved from performance
and acquiescence. Sanchez, 254 Mich App at 665. The evidence here establishes a
meeting [*8] of the minds that AHEPA was to pay Cintas for its fire alarm
maintenance services, given that Cintas performed its maintenance work and AHEPA
acquiesced in that performance. Bochet signed the work order acknowledging the
completion of the work. Cintas, however, does not seek to be paid for its work.
Rather, what Cintas seeks is to insert additional contractual terms on the basis
of terms and conditions on the back of documents presented only after the work
was finished. In these circumstances, Cintas has failed to establish that the
parties mutually assented to Cintas's additional terms and conditions, including
the indemnity clause, on the back of the work order and invoice.
Cintas further contends, however, that even if Bochet's act of signing the
work order did not establish a meeting of the minds, AHEPA nonetheless assented
to the terms and conditions by paying for Cintas's work. In particular, Cintas
argues that because Simmons received the work order and the invoice containing
the terms and conditions, and then arranged for a check to be issued to Cintas
paying for its services, AHEPA thereby accepted the terms and conditions.1 It is
true that Simmons acknowledged possessing authority [*9] to agree to terms and
conditions, and that she caused a check to be issued paying for Cintas's work.
However, this evidence fails to establish mutual assent to adopt the
indemnity provision. Even if AHEPA and Cintas had an ongoing relationship dating
back to 2003 (the year Cintas apparently submitted a written proposal to provide
annual maintenance and monitoring of the fire alarm system), the dispositive
point is not whether a 2003 document constituted a formal contract. The
dispositive point is that Cintas has failed to establish that Simmons's actions
were anything more than a decision to pay for Cintas's annual services.
Moreover, as discussed above, the 2008 work had already been performed when the
terms and conditions were presented to Bochet and Simmons. Thus, Simmons's
decision to pay for those annual services does not establish unambiguous
acceptance of or assent to the after-the-fact terms and conditions that
1 It should be noted that the check was issued by defendant, AHEPA Management
Company. However, for the sake of simplicity and to avoid confusion, and because
it does not affect the analysis, we will refer to AHEPA throughout the
discussion of this issue.
Cintas printed [*10] on the back of the documents. Eerdmans, 226 Mich App at
364; Krupp, 209 Mich App at 109 n 3.
Accordingly, Cintas has failed to establish the existence of a contract
adopting the terms and conditions on the reverse sides of the work order and the
invoice. Because no such contract exists, it is unnecessary for this Court to
address Cintas's arguments that are premised on the existence of a contract,
i.e., that plaintiff's underlying claim fell within the scope of the indemnity
clause, that AHEPA and Bochet waived the right to arbitration, and that the
purported contract was not unconscionable.
Cintas's next argument on appeal is that even if Simmons and Bochet lacked
actual authority to bind AHEPA to an indemnity contract, Bochet possessed
apparent authority to do so. We disagree.
The authority of an agent to bind a principal may be either actual or
apparent. . . .
Apparent authority arises where the acts and appearances lead a third person
reasonably to believe that an agency relationship exists. However, apparent
authority must be traceable to the principal and cannot be established only by
the acts and conduct of the agent. [Alar, 208 Mich App at 528 (citation
In other words, [*11] the third person's belief in the agent's authority
"must be generated by some act or neglect on the part of the principal sought to
be charged." VanStelle v Macaskill, 255 Mich App 1, 10; 662 NW2d 41 (2003)
(internal quotations and citation omitted). Also, "the person relying on the
agent's authority must not be guilty of negligence." Id. (internal quotations
and citation omitted). "In determining whether an agent possesses apparent
authority to perform a particular act, the court must look to all surrounding
facts and circumstances." Meretta, 195 Mich App at 699.
Here, Cintas has failed to present evidence of any act or neglect on the part
of AHEPA that generated a reasonable belief by Cintas that Bochet possessed
authority to enter indemnity agreements on AHEPA's behalf. It is true that AHEPA
granted to Bochet, as the property manager for an apartment building, authority
to make purchases under $ 249.99 and to inspect a contractor's work for quality,
accuracy, and completion, for work up to $5,000. However, Bochet's authority to
negotiate and supervise necessary maintenance contracts required owner and
management approval. Thus, the limited grant of authority to Bochet regarding
purchases [*12] and negotiating contracts d