This summary also appears under Attorneys
Issues: The Uniform Fraudulent Transfer Act (UFTA)(MCL 566.31 et seq.); UFTA action filed by plaintiffs-law firms against former clients; Use of confidential information obtained during the course of the attorney-client relationship; "Conflict of interest" under MRPC 1.9; Applicability of the exceptions in MRPC 1.6(c)(3) & (5); Denial of plaintiffs' motion for summary disposition after a preliminary injunction/receivership hearing; Whether plaintiffs set forth any specific "transfer" that was being challenged as fraudulent; MCL 566.34; Whether plaintiffs established a likelihood that they would prevail on the merits; Michigan AFSCME Council 25 v. Woodhaven-Brownstown Sch. Dist.; Whether a receiver was properly appointed; Reed v. Reed; MCL 600.2926; Discovery; MCR 2.302(B); Sanctions; MCL 600.2591(3)(a)(i); Whether the action was "frivolous"; MCR 2.114(D)(3); MCR 2.313(B)(2)(c); Attorney Grievance Commission (AGC)
Court: Michigan Court of Appeals (Unpublished)
Case Name: Mark Chaban, P.C. v. Rathore
e-Journal Number: 55862
Judge(s): Per Curiam – M.J. Kelly, Cavanagh, and Shapiro
The court held, among other things, that the plaintiffs-law firms "violated MRPC 1.6 and 1.9 by bringing this UFTA action and by revealing and using confidential information acquired by" the firms' attorneys (T and C) "during the course of their attorney-client relationship with" defendants-Ishtadev Rathore (Ray) and DOABA Truck Stop. It concluded that this case should have been dismissed shortly after it was filed. Further, the court upheld the trial court's decision to award the defendants sanctions, held that they were "entitled to assess actual damages and expenses associated with this vexatious appeal," and directed the trial court to refer T and C to the AGC for investigation. Plaintiffs appealed the trial court's order dismissing their fraud action against the defendants. C represented Ray and DOABA in a lawsuit filed by DOABA's fuel supplier. Ray retained T to file a chapter 11 bankruptcy petition for DOABA. A settlement was reached with the supplier and the bankruptcy petition was voluntarily dismissed. The court noted that it was undisputed that both T and C, and their law firms, formerly represented DOABA and Ray in legal matters. The "firms brought this UFTA action against DOABA and Ray, as well as Ray's relatives," after a dispute as to outstanding legal fees arose. T and C "pursued this action against DOABA and Ray on behalf of their law firms - alleged creditors of DOABA and Ray as a consequence of those alleged outstanding legal fees. The plain language of MRPC 1.9(a) specifically prohibited - as denoted by the words 'shall not' - both" T and C from representing their firms "in this substantially related matter in which their law firms' interests were materially adverse to the interests of their former clients, DOABA and Ray." Further, they "revealed and used financial and other confidential information acquired during their legal representations of DOABA and Ray in this fraud action filed against DOABA and Ray by their law firms." While they argued that the exceptions in MRPC 1.6(c)(3) and (5) applied, the court disagreed. First, T and C "never claimed that their legal services were used by Ray and DOABA to fraudulently transfer any assets owned by DOABA in violation of MCL 566.34(1)(a)." Second, they "did not reveal confidences of Ray and DOABA 'to establish or collect a fee.'" This was not an action to establish or collect attorney fees - it was a UFTA action. Further, T and C "did not reveal the confidences of Ray and DOABA to prove 'the services rendered' for purposes of collecting" their firms' claimed fees. Plaintiffs "brought this UFTA action 'derivatively,' on behalf of all of the 'creditors' of Ray and DOABA," although T "was not retained to represent any of these alleged 'creditors' which he learned about during the course of his representation of Ray and DOABA." Affirmed.
This summary also appears under Municipal
Issues: Trial court's options when ruling on discovery matters; Cabrera v. Ekema; Augustine v. Allstate Ins. Co.; Freedom of Information Act (FOIA) requests; MCL 15.231(2); Detroit Free Press, Inc. v. Southfield; Hopkins v. Duncan Twp.; Coblentz v. Novi; Mootness of FOIA request when disclosure has been made; Herald Co., Inc. v. Ann Arbor Pub. Sch.; Densmore v. Department of Corr.; Traverse City Record Eagle v. Traverse City Area Pub Sch.; "Actual case and controversy"; Morales v. Parole Bd.; Mootness; General Motors Corp. v. Department of Treasury; Trial court's discretion to consider a late affidavit as evidence; Prussing v. General Motors Corp.; Plaintiff's claim that he was entitled to a duty disability pension from the defendant-city retirement system; Failure to brief a question on appeal; State Treasurer v. Sprague; Superintending control; In re Credit Acceptance Corp.; Pension protections; Const. 1963, art. 9, § 24; Seitz v. Probate Judges Ret. Sys.; Whether plaintiff's state constitutional claims were barred; Jones v. Powell; Governmental immunity as to plaintiff's tort claims; Odom v. Wayne Cnty.; Latits v. Phillips; Mack v. Detroit; A "governmental function"; Ultra vires activity; Richardson v. Jackson Cnty.; Ward v. Michigan State Univ. (On Remand); Scope of governmental immunity; Linton v. Arenac Cnty. Rd. Comm'n; Borg-Warner Acceptance Corp. v. Department of State; Breach of contract; MCL 600.5807(8); Blazer Foods, Inc. v. Restaurant Props., Inc.; Revival of contract claim based on partial payment; Yeiter v. Knights of St. Casimir Aid Soc'y; Statute of limitations for breach of a fiduciary duty; Wayne Cnty. Employees Ret. Sys. v. Wayne Cnty.; The Meyer & Anna Prentis Family Found., Inc. v. Barbara Ann Karmanos Cancer Inst.; Unjust enrichment; Belle Isle Grill Corp. v. Detroit
Court: Michigan Court of Appeals (Unpublished)
Case Name: Trudel v. City of Allen Park
e-Journal Number: 55773
Judge(s): Per Curiam – Sawyer, O’Connell, and K.F. Kelly
In Docket No. 304507, the court held that the trial court properly denied plaintiff's motion for various orders regarding discovery. In Docket No. 304567 (the FOIA case), the court held that the trial court properly granted summary judgment to defendants because they provided the requested documents, thus making the substance of the controversy moot. In Docket No. 312351 (the pension case), the court held that the trial court erred in granting summary disposition to plaintiff, and partially erred in denying defendants' motion for summary disposition because the entity defendants (the city, the retirement system, and the board) were entitled to governmental immunity as to plaintiff's tort claims. In Docket No. 304507, the court rejected plaintiff's argument that the trial court abused its discretion in limiting him to 50 discovery requests and in declining to determine the sufficiency and propriety of defendants' objections, admissions, and responses to discovery requests, concluding that the trial court's decision "fell within the range of principled outcomes." In the FOIA case, it rejected his argument that the trial court erred in granting summary disposition to defendants, finding that "the substance of the controversy regarding plaintiff's FOIA claim is moot" because defendants provided the requested documents. It rejected plaintiff's claim that the city clerk's affidavit should not have been considered because it was not filed in a timely fashion, concluding that "the trial court did not abuse its discretion in considering [the] late affidavit as evidence." Finally, in the pension case, which involved a former judge seeking to recover a duty disability pension from the city retirement system based on an alleged total and permanent disability, the court agreed with defendants that the trial court erred in granting summary disposition to plaintiff, and partially agreed that it erred in denying their motion for summary disposition. It found that plaintiff identified no evidence establishing that his disability resulted from the performance of his duties and thus, "the existing record does not establish as a matter of law that defendants were obligated to pay duty disability benefits to plaintiff." It found that the entity defendants were entitled to governmental immunity as to plaintiff's tort claims, but that in all other respects defendants failed to establish entitlement to summary disposition. It held that the entity defendants were immune because the city ordinance expressly authorized the board to "administer, manage and operate the retirement system[,]" which plaintiff conceded defendants had the authority to do. Thus, "the operation of the retirement program comprises a governmental function because it is expressly or impliedly mandated or authorized by law" and plaintiff "failed to state a claim that falls within a statutory exception to immunity or to plead any facts establishing that defendants engaged in ultra vires activities." While he claimed that defendants failed to perform their duties in a lawful manner and to properly administer the retirement program, at most, "plaintiff's allegations establish that defendants performed the activity in an improper manner, not that defendants lacked legal authority to perform the activity in any manner." Affirmed in Docket Nos. 304507 and 304567. Affirmed in part, reversed in part, and remanded in Docket No. 312351.
© 2013 State Bar of Michigan