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Pransky v. Falcon Group, Inc.

Court of Appeals of Michigan

June 18, 2015

JAIME PRANSKY, Plaintiff-Appellant,
v.
FALCON GROUP, INC., Defendant-Appellee

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[Copyrighted Material Omitted]

Page 369

Oakland Circuit Court. LC No. 2013-134611-CK.

For JAIME PRANSKY, PLAINTIFF-APPELLEE: DOUGLAS G MCCLURE, ANN ARBOR, MI.

For FALCON GROUP INC, DEFENDANT-APPELLANT: JAMES W ROSE, SOUTHFIELD, MI.

Before: WILDER, P.J., and OWENS and M. J. KELLY, JJ.

OPINION

Page 370

[311 Mich.App. 167] Michael J. Kelly, J.

In this dispute over the validity of a consulting agreement, plaintiff, Jaime Pransky, appeals by right the trial court's opinion and order dismissing her claims against defendant, Falcon Group, Inc., under MCR 2.116(C)(8) and MCR 2.116(C)(10).[1] She argues the trial court erred when it determined that the consulting agreement did not require Falcon Group to provide any services that would require it to be registered under Michigan's Uniform Securities Act (2002), MCL 451.2101 et seq. Contrary to the trial court's determination, Pransky maintains, the consulting agreement required Falcon Group to provide services that could only be provided by someone registered under the Securities Act and, because Falcon Group was not registered under the act, the agreement was illegal and could be rescinded. For similar reasons, she contends the trial court erred when it determined that her remaining claims were invalid. Pransky also argues that the trial court did not have the authority to order her to pay Falcon Group's attorney fees as damages under the agreement because Falcon Group did not file a counterclaim for damages. [311 Mich.App. 168] For the reasons more fully explained below, we conclude that the trial court did not err when it dismissed Pransky's claims against Falcon Group. However, we agree that the trial court did not have the authority to award Falcon Group damages under the consulting agreement because Falcon Group did not sue Pransky for breach of contract. Accordingly, we affirm the trial court's opinion and order dismissing Pransky's claims, but vacate the trial court's order compelling her to pay Falcon Group's attorney fees.

I. BASIC FACTS

Pransky averred that she intended to open and operate a health and wellness spa in her home state of Vermont. She claimed that Falcon Group's principal, David Maciejewski, promised to find investors for her spa. She said Maciejewski introduced her to a potential investor, who told her that he wanted to invest $20 million in a franchised version of her spa. She felt pressured to sign a consulting agreement in order to obtain the financing.

Pransky executed the consulting agreement with Falcon Group in August 2012. As part of the agreement, Falcon Group represented that it was " in the business of providing non-legal advice and consulting services to individuals and to business entities concerning, among other matters: mergers and acquisitions, marketing techniques and ideas, business opportunities, business operations, business management, financial issues and concerns, and business assets and liabilities[.]" Falcon Group recited that it would provide consulting services to Pransky in an effort to help her " build a publicly traded franchised company . . . ." Although Falcon Group stated that it was in the business of providing advice and consultation, the agreement primarily involved [311 Mich.App. 169] compensating Falcon Group for its efforts to obtain investments or financing for Pransky's business.

As a preliminary matter, Pransky agreed to pay Falcon Group a $50,000 retainer, which was not refundable. The

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first $20,000 was due upon signing the agreement, and the remaining $30,000 was due upon receipt of the first investment. Pransky apparently added a handwritten provision that made the $30,000 payment contingent on the first investment being at least $30,000. Pransky also agreed to pay Falcon Group a " Success Fee" if she was able to sell her business through Falcon Group's efforts under the agreement. She agreed to pay a fee equal to 10% of " any monies [Falcon Group] raises or causes to be raised by [Falcon Group] or through [Falcon Group's] connections . . . ." She similarly agreed to pay Falcon Group a fee equal to 3% of any financing that Pransky might obtain through Falcon Group's " efforts or connections," which included any " line of credit or mortgage through a bank or financial institution introduced by [Falcon Group]." These fees were to be paid out of the escrowed funds at the closing of the funding or financing. Finally, according to Pransky, she hand wrote a ...


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