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Michigan Builders Trust Fund Act does not apply to some out-of-state contractors

Plaintiff performed work for defendant on a Michigan project. The parties are located in Kansas and Tennessee. The parties’ “Purchase Order” contained a Tennessee choice-of-law provision. When the defendant did not pay the plaintiff, it sued for payment in Michigan under the Trust Fund Act. The court affirmed the district court’s ruling granting the defendant summary judgment. As a threshold matter, the district court correctly determined that Michigan’s choice of law rules applied. The court held that the Act may apply irrespective of a contract, but that it “requires sufficient contacts between the parties and the State of Michigan.” The Trust Fund Act’s “stated purpose was to ‘protect the people of state [of Michigan] from imposition and fraud in the building construction industry[,]’ and relying on a sufficient contacts test in cases of extraterritorial application fulfills that purpose.” The court held that, in this case where both parties are “out-of-state,” they “remained at all times out-of-state in connection with the project, their contracts were executed out-of-state, their choice of law was out-of-state, the work was completed out-of-state, the funds were mishandled out-of-state, the payment plan was negotiated out-of-state, and the payment plan was executed out-of-state, but the work product was eventually shipped to Michigan, where it was installed by a third party[,]” there were insufficient contacts with the state of Michigan, and the Trust Fund Act did not apply.