Background
Roger Lewis and Nicole Susser agreed to buy Robert Blumberg’s home for $1.275 million, with closing scheduled for January 11 through 15, 2021. After disputes arose over the inspection, title, and closing terms, Blumberg communicated that the purchase agreement was unenforceable and that he would proceed only under different conditions. The January closing did not occur, and Lewis and Susser sued for breach of contract and specific performance.
During post-suit settlement negotiations, the parties discussed a possible March 2021 closing but never reached a settlement. Over the buyers’ objection under Michigan Rule of Evidence 408, the circuit court allowed evidence of those negotiations and the proposed March closing. A jury found that Blumberg had not breached the purchase agreement but that the buyers had. Following a bench trial on damages, the court awarded Blumberg the $1.275 million purchase price, $255,000 in interest damages, the $20,000 earnest-money deposit, statutory interest, costs, and equitable relief, subject to a credit if he sold the property to another buyer.
The Court’s Holding
The Court of Appeals held that the circuit court reversibly erred by admitting evidence of the parties’ settlement efforts. The “undue delay” exception to MRE 408 did not apply because the buyers did not claim that Blumberg merely delayed performance; they claimed that he disavowed the contract and refused to perform by the agreed January closing date. Blumberg instead used the settlement evidence to support his theory that the buyers breached by refusing to close in March—the precise use of compromise negotiations to prove liability that MRE 408 prohibits.
The court also held that the circuit court reversibly erred by refusing to instruct the jury on anticipatory repudiation. Evidence that Blumberg declared the agreement unenforceable, said he could not convey clear title, and proposed materially different timing and terms supported the instruction. The doctrine was central both to the buyers’ claim that Blumberg breached and to their defense that his repudiation excused their further performance. Because both errors were prejudicial and potentially outcome-determinative, the court vacated the liability and damages judgments and remanded for further proceedings.
Key Takeaways
- Settlement communications cannot be admitted to prove contractual liability merely by characterizing them as evidence negating “undue delay” when no party actually asserted an undue-delay theory.
- An anticipatory-repudiation instruction is required when evidence supports a finding that one party unequivocally indicated before performance was due that the party would not perform.
- Because the evidentiary and instructional errors materially affected the competing liability theories, both the jury’s liability judgment and the resulting damages judgment had to be vacated.
Why It Matters
The decision reinforces the protection afforded to compromise negotiations under MRE 408: a litigant may not turn failed settlement efforts into substantive proof that the opposing party breached the underlying agreement. It also confirms that anticipatory repudiation is a breach-of-contract theory with consequences for both liability and the nonrepudiating party’s remaining performance obligations.
For real-estate litigants, the opinion underscores the importance of separating conduct under the original purchase agreement from later settlement proposals and ensuring that the jury is instructed on repudiation when a seller’s pre-closing words or actions arguably excuse the buyer from tendering performance.