Divorce; Property classification; MCL 552.23(1) & 552.401; Cunningham v Cunningham; Valuation of disputed assets; Olson v Olson; Retirement accounts; MCL 552.18(1); Attorney fees; MCR 3.206(D); Reed v Reed; Reassignment on remand; MCR 7.216(A)(7); Bayati v Bayati

The court held that the trial court properly treated the Charles Schwab account, Apple stock, and down-payment funds as marital property and properly awarded attorney fees, but erred by failing to determine the premarital value of defendant’s Pricewaterhouse retirement accounts and the value of plaintiff’s Chase Bank account. The parties were married in 2012, plaintiff left outside employment after their children were born, and defendant later became a highly compensated equity partner. Defendant transferred joint funds into accounts plaintiff could not access. The divorce centered on disputed financial accounts, the marital home, and attorney fees. The trial court entered a divorce judgment dividing the estate, awarding plaintiff additional Apple shares in lieu of spousal support, and requiring defendant to pay $40,000 toward plaintiff’s attorney fees. On appeal, the court held that the retirement ruling was erroneous because the trial court “erred by not recognizing that a portion” of defendant’s retirement accounts “was premarital property” and by not valuing that portion. The court next held that the Charles Schwab account and Apple stock were marital property because the parties commingled funds and treated them as marital, explaining that “‘[t]he actions and course of conduct taken by the parties are the clearest indicia’” of marital rather than separate treatment. The court also held that the Chase account ruling required remand because the trial court awarded it to plaintiff without valuing it. The court held that the attorney fee award was within the range of principled outcomes because plaintiff was unable to bear the expense and defendant was in the “‘stronger position to pay[.]’” It also held that reassignment on remand was unwarranted because defendant failed to overcome the presumption of judicial impartiality. Affirmed in part, vacated in part, and remanded.

42 USC § 1983 action asserting violation of due process rights under the Fourteenth Amendment; Subject-matter jurisdiction; Screening pursuant to 28 USC § 1915(e)(2); Dismissal under the “domestic-relations exception” to federal jurisdiction; Ankenbrandt v Richards

[This appeal was from the WD-MI.] In an order, the court held that the district court’s dismissal of plaintiff-Johnson’s due process claim based on the “domestic-relations exception” was premature at the screening stage under § 1915(e)(2). A Michigan state court issued a custody order removing Johnson’s child from her care. Proceeding in forma pauperis, she sued under § 1983, alleging among other claims that defendant-state court judge and others violated her due process rights. The district court dismissed her case, ruling that it lacked jurisdiction over her federal claim under the domestic-relations exception to federal jurisdiction, which prohibits a federal court from reviewing divorce, alimony, or child custody decrees. On appeal, the court noted that it has yet to determine whether the domestic-relations exception applies to federal-question cases, but that it did not need to decide the issue here. Johnson asserted “that the state court ordered her child removed from her custody without notice, without a ‘finding of parental unfitness’ or a hearing, and without other ‘adequate procedural protections,’ thus violating of her due process rights under the Fourteenth Amendment. On its face, this is a constitutional claim not subject to the domestic-relations jurisdiction exception to jurisdiction.” Even though she asked the district court to issue an order requiring that her full parental rights be restored, “a remedy that would presumably require findings as to Johnson’s parental fitness and the best interest of her child, [her] federal claim is not obviously ‘a mere pretense’ rather than a legitimate constitutional complaint.” Vacated and remanded.

Breach of a promissory note; Breach of a guaranty; Arbitrability; First-filed doctrine; First-substantial-breach doctrine; Operating Agreement (OA)

The court affirmed a judgment entered by the trial court for plaintiff-Ari-El Financial, in the amount of $2,765,942.47, plus interest. “The trial court entered the judgment after it ruled that plaintiff was entitled to summary disposition under MCR 2.116(C)(10) on plaintiff’s claims for breach of a promissory note and breach of a guaranty.” The case concerned an alleged $2.1 million loan default. Defendants advanced “multiple grounds for reversal of the trial court’s judgment. However, all arguments ultimately reduce to a single dispositive issue: whether the trial court erred in declining to compel arbitration pursuant to the arbitration clause contained in the River Houze” OA. The court found that plaintiff was “not a signatory to the [OA] containing the arbitration provision, and” thus lacked privity as to it. “The principle of corporate separateness precludes extension of the arbitration clause to non-parties absent circumstances warranting veil-piercing.” Defendants did not show “any basis for disregarding plaintiff’s separate corporate existence.” Further, the court noted that “neither the note nor the guaranty contains an arbitration provision.” Defendants contended “that the note incorporated by reference the [OA’s] arbitration clause through the parties’ adoption of ‘the provisions of the [OA] relating to the Capital Contribution Loan.’” This argument failed. The court agreed “with the trial court that, based on the plain terms of the note and [OA], the parties’ selective incorporation of the portion of the [OA] specified in the note does not extend to § 12.10, which contains the arbitration provision.” The court held that the “trial court properly concluded that no agreement to arbitrate exists between these parties.” The court also found that “the guaranty contains an express forum-selection provision authorizing plaintiff to initiate proceedings in any court within this state, thereby negating any implied arbitration obligation.” The court noted that defendants “alternatively moved for dismissal pursuant to the first-filed doctrine, contending that the pending arbitration proceeding constituted a prior-filed action involving identical parties and substantially similar claims.” But they failed to establish “sufficient identity of parties and claims in both proceedings. Defendants therefore failed to establish entitlement to summary disposition under MCR 2.116(C)(6) and (I)(2).” The court further rejected their claim that plaintiff’s manager “committed the first breach between the parties,” barring plaintiff “from pursuing this action under the first-substantial-breach doctrine.” Their allegations did “not directly implicate plaintiff’s liability for any breach of the note.”

Motion for removal from the registration requirements of the Sex Offenders Registration Act (SORA); People v Kardasz; Whether lifetime registration under SORA constitutes cruel or unusual punishment under the Michigan Constitution for juvenile offenders convicted & sentenced as adults; Facial & as-applied challenges

In an order in lieu of granting leave to appeal, the court vacated Part III of the Court of Appeals judgment (see eJournal # 80225 in the 9/25/23 edition for the published opinion) concerning defendant’s motion for removal from SORA’s registration requirements, and remanded to that court for reconsideration in light of Kardasz. In particular, the court directed the Court of Appeals to consider distinctly defendant’s facial and as-applied challenges to the application of the 2021 SORA “to offenders who were under the age of 18” when they committed their crimes.

Divorce; Property classification; MCL 552.23(1) & 552.401; Cunningham v Cunningham; Valuation of disputed assets; Olson v Olson; Retirement accounts; MCL 552.18(1); Attorney fees; MCR 3.206(D); Reed v Reed; Reassignment on remand; MCR 7.216(A)(7); Bayati v Bayati

The court held that the trial court properly treated the Charles Schwab account, Apple stock, and down-payment funds as marital property and properly awarded attorney fees, but erred by failing to determine the premarital value of defendant’s Pricewaterhouse retirement accounts and the value of plaintiff’s Chase Bank account. The parties were married in 2012, plaintiff left outside employment after their children were born, and defendant later became a highly compensated equity partner. Defendant transferred joint funds into accounts plaintiff could not access. The divorce centered on disputed financial accounts, the marital home, and attorney fees. The trial court entered a divorce judgment dividing the estate, awarding plaintiff additional Apple shares in lieu of spousal support, and requiring defendant to pay $40,000 toward plaintiff’s attorney fees. On appeal, the court held that the retirement ruling was erroneous because the trial court “erred by not recognizing that a portion” of defendant’s retirement accounts “was premarital property” and by not valuing that portion. The court next held that the Charles Schwab account and Apple stock were marital property because the parties commingled funds and treated them as marital, explaining that “‘[t]he actions and course of conduct taken by the parties are the clearest indicia’” of marital rather than separate treatment. The court also held that the Chase account ruling required remand because the trial court awarded it to plaintiff without valuing it. The court held that the attorney fee award was within the range of principled outcomes because plaintiff was unable to bear the expense and defendant was in the “‘stronger position to pay[.]’” It also held that reassignment on remand was unwarranted because defendant failed to overcome the presumption of judicial impartiality. Affirmed in part, vacated in part, and remanded.

Negligence & vicarious liability claims against an insurer, agency, & agent; Duty; “Special relationship” exception to the “general no-duty-to-advice rule”; Harts v Farmers Ins Exch; Holman v Farm Bureau Gen Ins Co of MI (Holman II & III); Dictum

Holding that plaintiff-Holman failed to establish a special relationship with defendant-insurance agent (Heinzman) and that this foreclosed his claims against defendants, the court affirmed summary disposition for defendants. The case arose from an auto insurance transaction between plaintiff and defendant-Farm Bureau General Insurance Company of Michigan. He “thought he was insured when he suffered serious injuries in an automobile accident. After discovering he was not, he” filed this suit, alleging that Heinzman (and defendant-agency) was “responsible for his negligently filling out the application of insurance and that Farm Bureau” was vicariously liable for that negligence. The court previously considered the case in Holman II, the Supreme Court considered it in Holman III, and remanded the case to the trial court. On remand, defendants successfully “moved for summary disposition on plaintiff’s negligence claim. They asserted that under Harts, Heinzman had no duty to advise plaintiff of a pending or recent cancellation and that [he] and plaintiff did not form a special relationship sufficient to impose such a duty as an exception to the general no-duty-to-advise rule.” The court noted that, under “Harts, an ‘ordinary relationship between an agent and insured’ can change into a ‘special’ one so as to give ‘rise to a duty to advise on the part of the agent.’” Harts set forth four ways this can occur. Plaintiff asserted that material facts showed “he formed a special relationship with Heinzman under the first and fourth scenarios.” But as to the first, there was “no evidence that Heinzman misrepresented the nature of the coverage to plaintiff.” The most favorable reading of the record for plaintiff was that Heinzman told him “coverage would probably terminate without the proof of insurance—factual statements that plaintiff understood to be true. Thus, Heinzman made no material, false representations to [him] regarding the duration of his coverage that established a special relationship to impose a duty to advise on Heinzman.” There was also no record evidence showing he “assumed an additional duty by express agreement or promise to plaintiff under the fourth” Harts scenario. Thus, plaintiff’s negligence claim against Heinzman and his agency failed for lack of duty, which meant there could “be no vicarious liability on the part of Farm Bureau.”

42 USC § 1983 action asserting violation of due process rights under the Fourteenth Amendment; Subject-matter jurisdiction; Screening pursuant to 28 USC § 1915(e)(2); Dismissal under the “domestic-relations exception” to federal jurisdiction; Ankenbrandt v Richards

[This appeal was from the WD-MI.] In an order, the court held that the district court’s dismissal of plaintiff-Johnson’s due process claim based on the “domestic-relations exception” was premature at the screening stage under § 1915(e)(2). A Michigan state court issued a custody order removing Johnson’s child from her care. Proceeding in forma pauperis, she sued under § 1983, alleging among other claims that defendant-state court judge and others violated her due process rights. The district court dismissed her case, ruling that it lacked jurisdiction over her federal claim under the domestic-relations exception to federal jurisdiction, which prohibits a federal court from reviewing divorce, alimony, or child custody decrees. On appeal, the court noted that it has yet to determine whether the domestic-relations exception applies to federal-question cases, but that it did not need to decide the issue here. Johnson asserted “that the state court ordered her child removed from her custody without notice, without a ‘finding of parental unfitness’ or a hearing, and without other ‘adequate procedural protections,’ thus violating of her due process rights under the Fourteenth Amendment. On its face, this is a constitutional claim not subject to the domestic-relations jurisdiction exception to jurisdiction.” Even though she asked the district court to issue an order requiring that her full parental rights be restored, “a remedy that would presumably require findings as to Johnson’s parental fitness and the best interest of her child, [her] federal claim is not obviously ‘a mere pretense’ rather than a legitimate constitutional complaint.” Vacated and remanded.

Negligence & vicarious liability claims against an insurer, agency, & agent; Duty; “Special relationship” exception to the “general no-duty-to-advice rule”; Harts v Farmers Ins Exch; Holman v Farm Bureau Gen Ins Co of MI (Holman II & III); Dictum

Holding that plaintiff-Holman failed to establish a special relationship with defendant-insurance agent (Heinzman) and that this foreclosed his claims against defendants, the court affirmed summary disposition for defendants. The case arose from an auto insurance transaction between plaintiff and defendant-Farm Bureau General Insurance Company of Michigan. He “thought he was insured when he suffered serious injuries in an automobile accident. After discovering he was not, he” filed this suit, alleging that Heinzman (and defendant-agency) was “responsible for his negligently filling out the application of insurance and that Farm Bureau” was vicariously liable for that negligence. The court previously considered the case in Holman II, the Supreme Court considered it in Holman III, and remanded the case to the trial court. On remand, defendants successfully “moved for summary disposition on plaintiff’s negligence claim. They asserted that under Harts, Heinzman had no duty to advise plaintiff of a pending or recent cancellation and that [he] and plaintiff did not form a special relationship sufficient to impose such a duty as an exception to the general no-duty-to-advise rule.” The court noted that, under “Harts, an ‘ordinary relationship between an agent and insured’ can change into a ‘special’ one so as to give ‘rise to a duty to advise on the part of the agent.’” Harts set forth four ways this can occur. Plaintiff asserted that material facts showed “he formed a special relationship with Heinzman under the first and fourth scenarios.” But as to the first, there was “no evidence that Heinzman misrepresented the nature of the coverage to plaintiff.” The most favorable reading of the record for plaintiff was that Heinzman told him “coverage would probably terminate without the proof of insurance—factual statements that plaintiff understood to be true. Thus, Heinzman made no material, false representations to [him] regarding the duration of his coverage that established a special relationship to impose a duty to advise on Heinzman.” There was also no record evidence showing he “assumed an additional duty by express agreement or promise to plaintiff under the fourth” Harts scenario. Thus, plaintiff’s negligence claim against Heinzman and his agency failed for lack of duty, which meant there could “be no vicarious liability on the part of Farm Bureau.”

Termination under § (b)(i); Sexual abuse of sibling; In re Sours; Best interests; Relative placement; MCL 712A.19b(5); In re Olive/Metts; Anticipatory neglect; In re Mota

The court held that clear and convincing evidence supported termination under § (b)(i), and that the trial court did not err by finding termination was in AJB’s best interests. The case arose after CPS investigated allegations that respondent-father sexually abused AJB’s 16-year-old half-sibling, AB, who disclosed in a forensic interview that respondent gave her alcohol and raped her during an out-of-town trip. The trial court took jurisdiction, found statutory grounds under §§ (b)(i), (j), and (k)(ii), and terminated respondent’s parental rights after also finding that AJB’s best interests favored termination. On appeal, the court held that AB’s testimony alone could establish sexual abuse, and it deferred to the trial court’s finding that her testimony was “extremely credible.” The court next held that respondent’s sexual assault of AB supported a finding under § (b)(i) because his treatment of her was probative of how he would treat AJB in the future. Having upheld that statutory ground, the court declined to address the other grounds. On the best-interests issue, the court held that the trial court properly considered the bond between respondent and AJB, his apparent ability to provide stability, his compliance with supervised visitation, and AJB’s placement with her mother as a relative placement. But it agreed that those factors were outweighed by the risk of harm to AJB and that a “wait-and-see” approach was not a meaningful alternative. The court emphasized that respondent’s sexual assault of a child who looked to him as a father figure was “an especially egregious violation,” and that this supported the conclusion that he lacked the parenting judgment necessary to safely parent AJB. Affirmed.

Termination under § 19b(3)(m)(i); Child’s best interests; Criminal sexual conduct (CSC)

Holding that § (m)(i) supported terminating respondent-father’s parental rights and that doing so was in his child’s best interests, the court affirmed the termination order. Respondent “physically and sexually assaulted his minor niece,” and pled guilty to two counts of CSC. “The trial court took judicial notice of [his] uncontested criminal record reflecting his two CSC convictions under MCL 750.520b(1)(a) and MCL 750.520c(2)(b). Those plainly satisfy the statutory grounds for termination” in § (m)(i). Thus, the court held that the “trial court properly considered the CSC convictions and was not required to find clear and convincing evidence in any other statutory ground to proceed to a best-interest determination.” As to his child’s best interests, respondent’s “history of CSC and physical abuse of young girls related to [his child] not only reflects his questionable parenting abilities but may also be indicative of how respondent might treat [her]. He beat his minor nieces by marriage with belts and hangers and forced them to do exercises as punishment, admitting his efforts were ‘heavy handed.’ Most significantly, one niece testified he ‘fondled her and penetrated her mouth and anus.’” The court concluded that this “conduct was sufficiently severe to warrant termination of his parental rights to his biological sons despite no allegations of physical or sexual abuse against them. It is not unreasonable—as several witnesses opined—to anticipate” that his treatment of his daughter “might closely resemble his maltreatment of the nieces.” The court also noted that his “parole conditions flowing from his CSC convictions prohibited him from having contact with minor children—his own actions prevented him from having parenting time with” his daughter, with the result that “they lacked a meaningful bond.”

Jurisdiction over the children; MCL 712A.2(b)(1) & (2); Statutory grounds; Abandoned issue; Children’s best interests

The court held the trial court did not err by taking jurisdiction over the children, NC and LM. It also could not “find that the trial court clearly erred in concluding that termination of respondent-mother’s parental rights was in their best interests.” She contended “the trial court erroneously took jurisdiction over her children and then terminated her rights to them following her teenage daughter’s reporting of sexual abuse by respondent’s partner.” The court concluded there was “no clear error in the trial court’s exercise of jurisdiction over NC, as the preponderance of evidence supports jurisdiction under both MCL 712A.2(b)(1) and (2).” It also found that the trial court did not “err in taking jurisdiction over LM by application of the anticipatory neglect doctrine.” The court further noted that “the trial court found credible NC’s testimony.” It could not “conclude that represented clear error requiring reversal.” Affirmed.