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summaries of opinions as they are released from the Michigan Supreme Court, Michigan Court of Appeals (published & unpublished), and selected U.S. Sixth Circuit.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.
View Text Opinion Full PDF Opinion
Appellate jurisdiction; MCR 7.202(6)(a)(i) & 7.203(A)(1); Effect of dismissal without prejudice & arbitration agreement; Rooyakker & Sitz v Plante & Moran; The Uniform Arbitration Act (UAA); MCL 691.1687 & 691.1708
The court held that it lacked jurisdiction because the stipulated dismissal entered below was not a final order and did not adjudicate the remaining claims, requiring dismissal of the appeal and remand for the trial court to stay proceedings pending arbitration. Plaintiff purchased defendants’ concrete-step business assets through a bankruptcy sale, leading to years of litigation, including counterclaims and competing summary-disposition motions. The trial court dismissed the counterclaims and the parties then executed an arbitration agreement requiring dismissal without prejudice and expressly allowing the case to be reopened to enter an arbitration award. The trial court entered the stipulated order as drafted and labeled it “final,” and defendants appealed. On appeal, the court found that the trial court’s disposition left all remaining claims unresolved on the merits and allowed the case to be revived, so it was not a final order disposing of all rights and liabilities. The order “did not ‘resolve the merits’ of the remaining claims” and the parties “‘cannot create a final order by stipulating the dismissal of remaining claims without prejudice’” after entry of an order denying summary disposition addressing only some claims. An order containing language “that it was final, resolved all pending claims, and closed the case . . . ‘does not control this Court’s jurisdiction.’” The court further explained that the UAA lists the only arbitration-related orders appealable by right and that the order here is “[n]oticeably absent from” that list. The court also emphasized that the trial court retained jurisdiction because the order permitted the case to be reopened to enforce the arbitration award. The court held that the appropriate action on remand is to enter an order staying the proceedings under MCL 691.1687(7) and MCR 3.602(C) and dismissed the appeal for lack of jurisdiction.
The First Amendment; Free speech in schools; Ban on “biological pronouns”; Preliminary injunction; Likelihood of success on the merits; Tinker v Des Moines Indep Cmty Sch Dist; Evidentiary burden; Personal speech; Viewpoint discrimination; Associational standing; Mootness
In an en banc opinion, the court reversed the district court’s denial of plaintiff-Defending Education’s motion to enjoin defendant-school board from enforcing a “ban on biological pronouns,” holding that plaintiff was entitled to “an appropriately tailored preliminary injunction barring the district from punishing students for the commonplace use of biological pronouns.” The school board required students to use a classmate’s “preferred pronoun.” Plaintiff sued under the First Amendment’s Free Speech Clause. The school district argued that it had a duty to protect all students from being harassed and bullied, justifying a restriction on speech. Considering the likelihood-of-success factor, the court rejected the district’s standing and mootness arguments, concluding plaintiff had associational standing. It held that, given the district’s “warning that its policies bar the speech, the lack of any enforcement history cannot eliminate the credible threat of enforcement.” The court also rejected defendants’ mootness argument based on the fact the policies had been amended, finding the “modest changes do not moot the threatened freedom-of-speech injury.” Turning to the merits of the likelihood-of-success question, the court focused on the Supreme Court’s ruling in Tinker, which held that “schools generally may not restrict this personal speech unless the speech ‘substantially interfere[s] with the work of the school or impinge[s] upon the rights of other students.’” It held that the school district failed to meet “Tinker’s test for silencing personal (non-school-sponsored) speech on school grounds.” Tinker provides that school officials “may silence speech if the speech will either cause a ‘substantial disruption’ or infringe ‘the rights of others.’” Applying a “context-specific approach,” the court held that the district did not “satisfy either part of Tinker’s test.” It concluded that the “ban on the use of biological pronouns regulates speech on a public concern in a way that discriminates based on viewpoint.” Thus, the district bore “a heavy evidentiary burden to justify its ban. But it presented no evidence at all that the use of biological pronouns would disrupt school functions or violate anyone’s rights.” Defendants did not “present substantial evidence establishing the harmful effects that Tinker requires to justify its ‘targeted ban’ on student speech about an issue of important public concern.” The court held that plaintiff was “likely to succeed on the merits of its claim that the District may not punish students solely for the use of biological pronouns at school.” It also found that the other preliminary injunction factors weighed in plaintiff’s favor. Reversed and remanded.
Mootness; Whether there was still a live Article III “case or controversy”; Claim seeking disclosure of search warrant affidavits; Whether the absence of an applicable cause of action can be the basis for a sua sponte dismissal for lack of subject matter jurisdiction; FedRCivP 12(h)(3)
The court held that the district court erred by sua sponte dismissing as moot the suit by plaintiffs-California Palms and its owner seeking recovery of funds seized by defendant-Government and disclosure of the warrant affidavits relied on to seize the funds. While the issue as to the funds was mooted by the Government’s voluntary return of them, the issue of the affidavit disclosure had not been resolved. The FBI conducted a criminal investigation involving California Palms (an Ohio rehabilitation center), executing warrants and seizing $603,902.89. Plaintiffs sued seeking return of the funds, arguing that the warrants were defective and seeking to inspect the warrant affidavits. The Government moved for a stay to file a civil forfeiture claim, and moved to dismiss plaintiffs’ case. The court noted that the motion did not refer to Rule “12, nor did it identify any specific Rule 12(b) ground for dismissal.” The district court granted the stay and denied the motion to dismiss without prejudice. However, the Government later moved to voluntarily dismiss the forfeiture case, stating that it was returning the seized funds to plaintiffs with interest. The same day the forfeiture case was dismissed, the district court issued an order to show cause why this case should not be dismissed as moot. Plaintiffs opposed dismissal but the district court later issued an order dismissing the case as moot. On appeal, while the parties’ briefs focused on the merits as to the disclosure of the warrant affidavits, the court did not reach the merits because it concluded “the district court erred in dismissing the case as moot.” It agreed that the case was “clearly moot as to the funds.” But the complaint also sought the disclosure of the warrant affidavits, and nothing in the record indicated the Government had disclosed their contents to plaintiffs in any manner. The facts did “not support a determination that the request for disclosure of the warrant affidavits is moot.” The court rejected the Government’s alternative explanation for the dismissal, holding that “the absence of an applicable cause of action cannot be the basis for a sua sponte dismissal for lack of subject matter jurisdiction.” It concluded that “Rule 12 does not allow for sua sponte dismissal for failure to state a claim. . . . A finding of mootness must be based on a factual occurrence in the world, not the legal unavailability of a remedy.”
Class action settlement objectors’ failure to pay an appeal bond; FedRAppP 7; Untimely motion to extend the time to appeal the bond order; 28 USC §§ 2107(a), (b), & (c)(1); FedRAppP 4(a)(1)(A), (a)(5)(A), & 26(a)(1)(C); Jurisdiction; Challenge to the district court’s approval of the settlement notice; Reasonableness of the settlement
The court held that it lacked jurisdiction over the class action objectors’ appeal regarding their motion to extend time to appeal the district court’s bond order where they filed their motion one day late. And it dismissed their appeals of the settlement for failure to pay the bond. When a Norfolk Southern Railway train derailed in East Palestine, Ohio, several suits were brought by residents and businesses against Norfolk. They were consolidated into one class action. A settlement was reached, but some class members objected. The district court ordered them to post an appeal bond of $850,000 by 1/30/25. They never posted the bond. Three days after the bond order issued, they filed a motion to appeal the bond, but they asked the court “to construe the motion as a request for a review of the merits of the appeal, not a stay of the bond order.” The court took them at their word. The same day that it issued its order on that motion, they filed a motion “in the district court to extend the time to appeal the bond order.” However, the 30-day deadline to file a notice of appeal of the bond order had passed, as had the 30 days to request an extension. The district court viewed the motion as untimely and denied it. On appeal, the court held that since “the deadline to request an extension to file an appeal is jurisdictional, the district court correctly declined to grant the objectors’ untimely motion.” They argued that it had to extend the time because the court’s previous statement that “the objectors ‘could still obtain review of the bond order by filing a direct appeal’ is binding law of the case.” But the court held that it was not, and even if it were, the court’s “judgment couldn’t expand the district court’s jurisdiction with an equitable extension that would override ‘mandatory’ time limits.” It did not “matter whether the motion to extend was one day, one hour, or one minute late. When the 30 days ended, the district court lost jurisdiction over the objectors’ motion to extend their time to appeal the bond order.” It noted that they were “over eight months late in paying an appeal bond.” As the failure to execute a bond was grounds for dismissal, the court considered the relevant factors in determining whether to dismiss. First, the objectors had delayed payouts to about 55,000 injured claimants. Second, they had given “no valid justification for” not paying the bond. The court noted that their “alleged inability to pay the ordered bond in full doesn’t justify their refusal to post any amount.” Third, they were “unlikely to succeed on the merits of their challenge to (1) the class notice or (2) the reasonableness of the settlement.”
Charitable donation tax deduction: Whether a petitioner could claim a “partnership-level deduction” in the tax year in question for the “conservation easement” granted to a charity; Untimely correction; Whether the deduction was overstated; Documentation of related expenses; Underpayment penalties
The court held that because petitioner-Corning Place improperly claimed a partnership-level charitable deduction that belonged to its sole partner, and did not correct the error in a timely manner, the Tax Court properly upheld the IRS’s denial of the deduction. In 2015, Corning Place paid $6 million to buy a property in downtown Cleveland. Sixteen months later, it created an “Historic Preservation and Conservation Easement” (the Garfield easement) and donated the right to modify the building to a charity. On its 2016 tax return, it claimed a $22 million tax deduction for the donation, and a deduction for its easement-related expenses. The IRS disallowed the deduction and imposed penalties, asserting that Corning Place had claimed the deduction for the wrong tax year, overstated the value of the easement, and failed to adequately document its expenses. It assessed $8,993,400 in penalties. After a trial, the Tax Court found for the IRS. Corning Place is an LLC. The court explained that it had donated the easement on 5/25/16. But its taxable year began on 7/7/16. On 5/15/16, petitioner-Corning Place Investment had become its sole partner, and it remained so until 7/7/16. Thus, for those seven weeks, “Corning Place did not exist as a taxable partnership. The correct taxpayer with respect to the deduction thus was Investment, not Corning Place.” Corning Place acknowledged that claiming the deduction in its 2016 return was a “reporting mistake.” The court rejected its arguments that the deduction should be allowed anyway. “The question is whether Corning Place may claim the deduction for a period of time that its tax year did not cover.” While it was possible that Investment could claim a deduction during those weeks, this “speaks to any future partner-level tax proceedings, not to the propriety of Corning Place’s return.” Further, the court found that Investment’s attempt to correct the error in 9/20 was “untimely.” The court also upheld the Tax Court’s ruling that Corning Place had overstated the deduction. “The Tax Court did not err, let alone clearly err, in rejecting a valuation premised on a 34-story addition to the Garfield. [It] appropriately” expressed concern whether the proposed construction was “physically possib[le],” and that the chances were slim for regulatory approval. It “did not err, clearly or otherwise, in rejecting Corning Place’s $22 million valuation for a charitable easement with respect to a property that it just purchased for $6 million.” The court also upheld the Tax Court’s rulings as to insufficient documentation of expenses and the imposition of negligence and overstatement penalties. Affirmed.