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Providing summaries of opinions as they are released from the Michigan Supreme Court, Michigan Court of Appeals (published & unpublished), and selected U.S. Sixth Circuit. Over 60,000 cases summarized to date.
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Mortgage priority; MCL 565.24 & 25; Successor liability; Adequacy of consideration; Reformation of a mortgage; Johnson Family Ltd P’ship v White Pine Wireless, LLC; Mutual mistake; Lenawee Cnty Bd of Health v Messerly; Restatement of Contracts, 2d, § 152(1), p 385; Parol evidence; Frankowich v Frankowich; Materiality; Sherwood v Walker; Caution in reforming written instruments; Requirement that a fraud claim be pled with particularity; MCR 2.112(B)(1); Equitable relief; Lack of diligence; Powers v Indiana & MI Elec Co
The court held that the trial court did not err by finding that a mortgage issued to appellant-Hiatt did not have higher priority than another mortgage that was executed at the same time, or by denying Hiatt’s motion seeking a ruling that appellee-Creek was the successor entity or alter ego of appellee-Prairie Creek. It also held that the trial court did not err by denying appellees’ request to reform the mortgages to exclude a 36-acre parcel from the scope of the mortgages. Hiatt sold his share of golf course property to Prairie Creek in exchange for a promissory note and a mortgage. Prairie Creek later created Creek, a limited liability company, to hold the real estate of the golf course. Hiatt eventually sought to foreclose on the mortgage. On appeal, the court rejected Hiatt’s argument that the trial court erred by finding his mortgage did not have higher priority than another mortgage. “[T]he trial court correctly analyzed the priority of the two mortgages. For the reasons stated by the trial court and in the decisions of the federal bankruptcy court cited by the trial court, there is no question that the two mortgages shared equal priority under the version of the recording statute in effect at the time the mortgages were recorded.” It also rejected Hiatt’s claim that Creek was the successor and alter ego of Prairie Creek such that Creek’s assets should be subject to Hiatt’s judgment against Prairie Creek, noting there was nothing “to suggest that there was a consolidation or merger of the two entities,” or to indicate “the express or implied acceptance of liabilities, except for the assumption of the mortgages by Creek.” Appellants also did not establish “a genuine issue of fact that the transaction was ‘fraudulent.’” Finally, the court rejected Creek’s and Prairie Creek’s contention on cross-appeal that the trial court erred by holding they failed to produce clear and convincing evidence of a mutual mistake to support their claim that the mortgages should be reformed to exclude the 36-acre parcel. While there was “some testimony and evidence that could support a finding that Hiatt intended and mistakenly believed that his mortgage did not include the” 36-acre parcel, the trial court did not err in finding that this evidence “was not clear and convincing.” In addition, “[b]ecause a trial court may consider the lack of diligence of the party seeking reformation, and the evidence support[ed] a finding that cross-appellants lacked diligence here,” the trial court did not err by finding they “did not show that principles of equity required reformation.” Affirmed.
Collateral attack on the business court’s jurisdiction; MCL 600.8033(1)-(3); MCL 600.8035(1) & (3); “Business or commercial dispute”; Probate court jurisdiction; MCL 600.841(1)(a); The Estates & Protected Individuals Code; MCL 700.1302(a)(iii); Concurrent jurisdiction; MCL 700.1303(1); Effect of a judgment in a proceeding in another court; MCL 700.3806(5); Estate property distribution; MCL 700.3805; The Uniform Voidable Transactions Act (UVTA); MCL 566.34(2); The Michigan Limited Liability Company Act; MCL 450.4908(1); Dissolving & winding up a limited liability company; MCL 450.4801; Personal representative (PR); Professional limited liability company (PLC)
The court held that while the probate court erred in not allowing the appellant-former PR’s (Weisman) collateral attack on the business court’s subject-matter jurisdiction, the error was harmless because the business court judgment was not void for lack of jurisdiction and she was not entitled to relief. Further, it rejected her claim “that the probate court’s declaration that her distributions from the PLC to the estate and from the estate to the heirs were improper.” Thus, it affirmed the probate court’s opinion and order. The PR sold the decedent doctor’s PLC’s assets and closed it, but did not pay off its “debts before transferring the proceeds to the estate and distributing them to” the doctor’s heirs. The court concluded that she could not avoid the PLC’s “liabilities in this manner.” The doctor personally guaranteed the PLC’s lease payments to appellee-JAVMO, which filed a claim with the PR for unpaid rents. She denied it but “did not file a disallowance of the proof of claim in the probate action.” JAVMO sued in the business court, and the estate and the PLC agreed to a consent judgment awarding JAVMO approximately $81,000 on breach of contract claims. Its UVTA claim was not addressed. JAVMO “pursued collection of its judgment in” the probate court, which determined the PR “should have paid JAVMO before distributing the PLC’s assets to the estate.” It set aside various transfers and ordered the doctor’s widow “to return funds to the estate, which would permit payment to JAVMO.” The court acknowledged that “the probate court incorrectly stated that the issue of the business court’s subject matter jurisdiction had to be raised for the first time in the business court.” But this error was harmless because the “business court was not divested of jurisdiction to resolve JAVMO’s contractual claims just because JAVMO had already filed a proof of claim as a creditor in the probate court action.” The contract claims did not fall under the probate court’s exclusive jurisdiction. While the claim alleging “the PLC and Weisman made voidable transfers to the estate of assets that were then distributed to its beneficiaries” implicated the probate court’s exclusive jurisdiction, it appeared the UTVA issues was not resolved by the business court. Thus, it “did not invade the probate court’s exclusive jurisdiction and the UVTA claim was properly raised by JAVMO when it returned to the probate court.”
Negligence; Statute of limitations (SOL); MCL 600.5805(2); Accrual; Nuisance; The continuing wrongs doctrine; Contract claim for breach of a lease; MCL 600.5807(9); Duties imposed by MCL 554.139; Alleged violation of the Housing Law; MCL 125.533(1) & 125.536; MCL 125.474 & 125.485; Alleged violation of the Truth in Renting Act (TRA); MCL 554.633(1)(a), (e), (f), (k), & (m); MCL 554.636; Claims under the Michigan Consumer Protection Act (MCPA); Limitations period; MCL 445.911(7); Applicability of the MCPA; MCL 445.904(1)(a); The Michigan State Housing Development Authority (MSHDA); MCL 125.1422; Nonspecific interstitial pneumonia (NSIP)
The court held that plaintiff’s negligence and nuisance claims related to mold in her apartment were barred by the SOL in MCL 600.5805(2). Her claims alleging violations of the Housing Law and the TRA were also barred by this three-year limitations period. But the trial court erred in ruling her claims for breach of the lease and violation of the duties imposed by MCL 554.139 were barred by this statute, as the six-year limitations period in MCL 600.5807(9) applied to them. While it also applied the incorrect SOL to her MCPA claims, it reached the correct result in dismissing them because defendant-Continental Management was not subject to the MCPA as its actions as MSHDA’s management agent “were specifically authorized by law.” The trial court granted Continental summary disposition of all of plaintiff’s claims. As to her negligence claim, given that “it was undisputed that after her biopsy in 2012 plaintiff was informed she had signs of NSIP, and her physician suggested mold as a possible cause and that she should check to see if it was in her apartment, the trial court properly held that” her complaint, filed over four years later, was untimely. The court concluded that by the time she “received her biopsy results, she was aware of an injury (the NSIP) and the potential cause (mold in her apartment). This started the [SOL], and the three years expired well before” she filed suit. As to her nuisance claim, the continuing wrongs doctrine on which she relied has been abrogated. Her claims for violations of the Housing Law and the TRA were also subject to a three-year SOL “because they are based solely on the rights imposed upon defendant by law, as opposed to a contractually consented-to duty.” But the six-year SOL for breach-of-contract actions applied to her contract-related claims. “The lease was a consented-to agreement that created the duties plaintiff claims defendant violated.” Although she alleged “identical damages with her negligence and breach-of-contract claims,” the latter claim was based on alleged breaches of express duties in the lease that were “distinct from defendant’s common-law duties.” Thus, dismissal of Count IV based on the SOL was in error, as was dismissal of “Count VI, for the duties imposed by MCL 554.139 are by law considered a part of every lease agreement.” Affirmed in part, reversed in part, and remanded.
Ineffective assistance of counsel; People v Lockett; Adequate investigation; Trial strategy; Decisions about what evidence to present; Communication with defendant; Failure to make a futile objection; People v Henry (After Remand)
Holding that defendant was not denied the effective assistance of counsel, the court affirmed his convictions of first-degree murder, AWIM, CCW, FIP, and felony-firearm, which arose out of the shooting death of the victim. It rejected his argument that his trial counsel was ineffective, finding each of his claims meritless. It found he could not show that counsel failed to conduct an adequate investigation or failed to communicate adequately. It also found defendant was not denied effective assistance of counsel by trial counsel’s failure to object to the jury pool or his failure to present certain exculpatory evidence at trial. Further, it was apparent that excluding a particular witness (L) “was a matter of trial strategy because counsel was concerned that [L’s] testimony would have hurt defendant’s defense.” Finally, counsel was not ineffective for failing to admit DVD footage containing police interviews with his then-girlfriend, S, to show how she was allegedly influenced and manipulated by the police to implicate him. His “argument that the detective influenced and manipulated [S] was already before the jury, and the jury rejected the argument.”
Motion to bar retrial after a mistrial; Double jeopardy; People v Lett; Prosecutorial misconduct; People v Dawson; Improper expert testimony; People v Thorpe
Holding that the record supported the trial court’s determination that the prosecution “did not intentionally goad defendant into a mistrial,” the court affirmed the denial of his motion to preclude his retrial on CSC charges. It concluded that the evidence supported the trial court’s findings that the prosecutor did not commit misconduct in questioning the expert (Dr. S), did not intentionally try to cause S “to testify as she did, and did not intentionally cause the mistrial.” The prosecutor stated that a mistrial was not his intention, that he was trying to elicit testimony from S “about the inconclusiveness of the physical findings. He explained that he had been referencing the ‘top section’ of the overall assessment and not the ‘very bottom’ of the report. The report includes a sentence about the inconclusiveness of the physical findings and that it was contained closer to the ‘top’ than the diagnosis at the ‘bottom.’” The court noted that the prosecutor also immediately stopped S when she tried “to give the prohibited testimony. The transcript reflects that the prosecutor in fact prevented her from saying ‘sexual abuse.’ The prosecutor also argued against a mistrial, unlike in Dawson,” where the prosecution conceded that one was warranted. Further, the prosecutor here stated “he had discussions with defense counsel about redacting the diagnosis from [S’s] report and simply admitting it as an exhibit. The trial court found” his explanation credible, and the court noted the “trial court was able to hear the audio recording of the prosecutor’s questions and was in the best position to judge the prosecutor’s actions.” Defendant also asserted that his retrial should be precluded because the prosecutor’s actions were “negligent” and “egregious.” He asked the court “to adopt a standard that does not require prosecutorial intent to cause the mistrial. However, our Supreme Court has explicitly held that the prosecutor’s conduct must be intentional.” This was binding on the court. While “the prosecutor may have been unaware of recently decided case law, failed to adequately prepare [S] as a witness, and poorly worded his question,” the court was not left with a definite and firm conviction the trial court made a mistake in finding he did not intend to cause a mistrial.
The Whistleblowers’ Protection Act (WPA); Retaliatory discharge; MCL 15.362; Prima facie case; Direct evidence of discriminatory intent; “Assault”; Detroit Public Schools Community School District (DPSCSD)
Holding that plaintiff-former teacher’s aide (Harlan) created a genuine issue of material fact with direct evidence as to whether her discharge was connected to a discriminatory animus, and that there was no basis for concluding as a matter of law that she lied in her report, the court vacated summary disposition for defendant-DPSCSD in this WPA case, and remanded. She alleged that DPSCSD terminated her employment due to her report of a student’s (TW) violation of the law, an assault, to the DPSCSD police department. The court found that the trial court correctly determined she was engaged in protected activity and the DPSCSD took adverse action against her. But it “made a critical error by employing the burden-shifting analysis” that applies in cases involving circumstantial evidence of a defendant’s discriminatory intent given that “Harlan presented direct evidence of the DPSCSD’s intent.” She reported an assault, and DPSCSD’s superintendent “admitted that Harlan was terminated for her report. This was direct evidence, which if believed, supported that unlawful discrimination was a motivating factor in the termination decision.” The court further found that the trial court made a “second critical error” in concluding as a matter of law that she “knew ‘that the report [was] false’ and therefore was not protected by the WPA. Harlan’s knowledge regarding the veracity or falsity of her report is a matter of credibility.” In addition, viewing the video evidence in the light most favorable to her, as the nonmoving party, “a jury could conclude that TW made contact with Harlan as he moved through the doorway. This touching would be an assault, meaning that Harlan’s report was true.” The court noted that an assault “does not require force or strength; it includes an intentional, unwanted, ‘offensive’ touching. There is no doubt that a touching occurred. A jury could find that this touching was intentional, unwanted, and offensive, supporting Harlan’s initial report.” The court agreed with her that a jury should decide if “she ‘falsified’ her report.” It noted that a “jury may accept that in the heat of the moment, Harlan inaccurately perceived the push as including TW’s hands. The jury may credit that Harlan felt violated and assaulted at that moment in time. An inaccuracy in a report is not necessarily a deliberate falsehood.” Summary disposition was inappropriate.
No-fault action seeking personal injury protection (PIP) benefits & replacement services through the Michigan Assigned Claims Plan (MACP); MCL 500.3107(1)(a); Fraud; MCL 500.3173a; Candler v Farm Bureau Mut Ins Co of MI; “Fraudulent insurance act”; MCL 500.4503; Principle that one who signs a written agreement knows the nature of the instrument & understands its contents; Galea v FCA US LLC; Assignment of rights; First of Am Bank v Thompson; Michigan Automobile Insurance Placement Facility (MAIPF)
The court held that the trial court did not err by granting defendant-insurer summary disposition of plaintiff-healthcare provider’s claim to recover benefits for treatment provided to non-party-T. T was a passenger in an uninsured vehicle that was struck by another vehicle. He declined medical assistance, but later claimed injuries and filed an application with MAIPF, in which he denied having any pre-existing medical conditions, that he was taking any medications, or that he was eligible to receive Social Security benefits. He also sought replacement services with MACP. MACP assigned his claim to defendant. T, meanwhile, received medical treatment at plaintiff’s clinic, and later assigned his rights to coverage to plaintiff. Plaintiff subsequently filed a claim for benefits against defendant, which defendant denied. Plaintiff then sued. The trial court concluded that “there’s no question that [T] committed a fraudulent insurance act in his application to the [MACP] and therefore he’s ineligible for payments of benefits under the [MACP].” On appeal, the court rejected plaintiff’s argument that the trial court erred by granting summary disposition for defendant because the statements made by T “in the application for PIP benefits did not amount to fraud where [T] did not knowingly assert false information and because the medical information in the application was not material to the litigation.” The court concluded that the trial court did not err by finding no genuine issue of material fact remained as to whether T “knew statements regarding his medical history and replacement services on the application for PIP benefits contained false information, and that the statements were material to the claim.” And plaintiff, as T’s assignee, was “equally subject to the consequences of” T’s actions. Affirmed.
Jurisdiction over the children; MCL 712A.2(b)(1); “Neglect”; MCL 722.602(d)(1)
In an order in lieu of granting leave to appeal, the court reversed the Court of Appeals judgment (see e-Journal # 72991 in the 5/21/20 edition) and remanded the case to the trial court. Concluding that there was no showing of harm caused by the children’s school absences, the court agreed with Judge Riordan’s dissent that the trial court erred in assuming jurisdiction on this basis alone. Under MCL 712A.2(b)(1), “a court may assume jurisdiction over a juvenile if his or her parent ‘when able to do so, neglects or refuses to provide proper or necessary . . . education . . . .’ Subsection (B) specifies that ‘neglect’ is defined as it is in MCL 722.602. That provision defines ‘neglect’ as ‘harm to a child’s health or welfare by a person responsible for the child’s health or welfare that occurs through negligent treatment . . . .’” Thus, a showing of harm is required “in order for a court to assume jurisdiction over a juvenile under the ‘neglects’ clause of MCL 712A.2(b)(1).” The court noted that the children in this case “attended school 75% of the time and had several tardies. While that is a greater number of absences than the 85% average attendance rate of their school, the only testimony” offered about their academic performance was from the teacher of one of the children, who “testified that he was performing at grade level. Though she also said that she struggled to get a complete picture of his progress and that she feared he would not be able to maintain his academic level in the future, such testimony is speculative and does not show by a preponderance of the evidence that [he] was actually harmed so as to have been neglected under the statutory definition.”