Where a defendant has moved for summary disposition, that motion should be denied, despite the defendant’s argument that the plaintiff’s claimed reliance on the defendant’s alleged misrepresentation was unreasonable as a matter of law.
“On April 23, 2006, John Zervas moved for partial Summary Disposition. …
“… The court denies the motion with respect to the fraud and misrepresentation claims found in Count I. The court grants the motion with respect to the conversion claim found in Count II. …
“Although the complaint alleges additional wrongdoing, its essential claims are straightforward. Doug Obiedzinski and John Zervas formed Perfect Touch Detailing LLC and entered into an operating agreement. Obiedzinski alleges that Zervas represented he would amend the operating agreement to increase his interest from 12% to an agreed-upon 15% but instead changed his interest to 25%. Obiedzinski claims he relied on Zervas’ oral representation and signed the amended agreement without reading it. He also alleges that Zervas represented he would take only his agreed-upon share of the company’s monthly profits but then used his access to the company’s bank account to withdraw more than that amount. …
“In this case, the final operating agreement stated the profit-distribution percentages in plain and unambiguous language. In fact, the relevant provision was set forth in block form, making it particularly conspicuous on the page. This raises an obvious question: Can a party to an operating agreement reasonably rely on an oral representation by the person who drafted the agreement when the agreement itself, containing the correct information, is in that party’s hands as he signs it without reading it?
“As a general proposition, the law presumes that whoever signs a contract knows the nature of the document and understands its contents, even if he or she has not read the agreement. …
“This sensible mile however is subject to some exceptions. Among the exceptions is fraud in the execution. See Rood v. Midwest Matrix Mart, Inc., 350 Mich. 559, 87 N.W.2d 186 (1957). …
“The Supreme Court held that a party who signs a written instrument may nevertheless present evidence that his signature was procured through fraud concerning the contents of the instrument. The Court distinguished such fraud in the execution from ordinary fraud in the inducement, explaining that the former occurs when a person is deceived about the nature or contents of the writing he is signing. … The Court further held that a party is not barred as a matter of law from asserting such fraud merely because he failed to read the document before signing it. Although that failure may constitute negligence, negligence is not a defense to intentional fraud when the failure to read was induced by the other party’s trick, stratagem, or artifice. Accordingly, where a party alleges and can present evidence that he relied upon misrepresentations concerning the contents of a document and was thereby induced to sign it without reading it, the issue is one for the factfinder rather than a matter that can be resolved solely because the party signed the writing.
“In other words, a party who signs a written instrument may introduce evidence that he was fraudulently induced to sign it when the alleged fraud concerns the contents of the instrument itself. This is fraud in the execution, rather than ordinary fraud in the inducement.
“Although Rood was decided in 1957, it still represents Michigan law. …
“The fraud in the execution part of Count I therefore survives the motion for summary disposition. …”