Whether a party committed “fraud on the court”; Buell v Anderson; Direct & vicarious liability for fraud on the court; Damages/award of only partial attorney fees; Whether post-petition transfers were avoidable under 11 USC § 549(a); Claims for conversion of bankruptcy estate assets

[This appeal was from the ED-MI.] The court affirmed the district court decision that affirmed the bankruptcy court’s grant of summary judgment to appellees, concluding that appellee-creditor (Comerica) could not be held directly liable for fraud on the court where it was not an “officer of the court” and that it was also not vicariously liable. The court further held that (1) the bankruptcy court did not abuse its discretion by awarding appellant-trustee (Vining) only partial attorney’s fees for fraud on the court committed by two other appellees, and (2) the bankruptcy court properly rejected his avoidance and conversion claims. Vining is the current trustee of the Chapter 7 debtor, MTG, Inc. He challenged some of the actions taken during the prior disqualified trustee’s (appellee-Taunt) tenure, but the bankruptcy court largely granted appellees summary judgment. On appeal, the court first rejected Vining’s argument that the bankruptcy court erred by ruling that Comerica was not liable for fraud on the court based on Taunt’s nondisclosure of a conflict of interest involving Comerica. As to direct liability, “only an ‘officer of the court’ can commit fraud on the court and” Comerica was not itself an officer of the court in this proceeding. It also could not be held vicariously liable because under Michigan law, “the bankruptcy court did not clearly err in concluding that Comerica did not have the ‘right to control’ Taunt under the Comerica Fee Agreement,” and thus, they did not have an agency relationship. Further, even if “Comerica could be liable for fraud on the court based on its attorney’s actions here, Vining” failed to show “the bankruptcy court abused its discretion in denying relief.” The court also upheld the award of only partial attorney’s fees to Vining for two appellees’ fraud on the court, where Vining’s pursuit of this litigation resulted in “only a ‘small financial benefit’ to the estate.” As to his avoidance claims, the post-petition transfers at issue “were authorized when made” and remained “authorized to this day.” Finally, it rejected Vining’s claim for “conversion of estate assets” where it was foreclosed by the fact that “Taunt, as trustee, was entitled to control the property at issue.”

Hostile work environment; Statute of limitations; Garg v Macomb Cnty Mental Health; Campbell v Department of Human Servs; Hester v Department of Corr (Unpub); Elliott-Larsen Civil Rights Act (ELCRA) retaliation; Exclusion of most evidence related to dismissed discrimination & hostile work environment claims; Hearsay; Quashing of multiple trial subpoenas; Exclusion of the evidence of plaintiff’s internal complaints of discrimination; Motion to exclude future damages; Disqualification of the trial judge; Second Amended Complaint (SAC)

The court upheld the trial court’s dismissal of plaintiff’s hostile work environment claim. But it concluded that “defendant’s purported termination of plaintiff’s employment, in addition to [her] other protected activity for which she contends she has also suffered continued retaliation, provides evidence of it being retaliation for her ongoing protected activity.” Thus, it reversed in part, affirmed in part, and remanded, but it found there was no basis for disqualification of the trial judge. Plaintiff, an African-American woman, contended “the hostile and abusive environment substantially interfered with her employment where she went on medical leave in [9/19] and went on anxiety and depression medication and began therapy due to her work environment.” The court noted that in Campbell, it “held that ‘acts occurring outside the limitations period, although not actionable, may, in appropriate cases, be used as background evidence to establish a pattern of discrimination.’” Defendant asserted that plaintiff did not establish an issue of material fact as to the purported harassment. The court found that while she relied “on Hester in support of the second element of a prima facie case, in that unpublished decision four co-workers testified that the plaintiff received more and less desirable work that Caucasian employees refused.” It found that here, “corroborative evidence that plaintiff was singled out in the manner claimed on the basis of her protected status is lacking. That said, ‘[a] party’s own testimony, standing alone, can be sufficient to establish a genuine question of fact.’ Nonetheless, even considering the age-and-race-based discrimination evidence from outside the statute of limitations as potentially demonstrating a pattern, we find no genuine issue of material fact connecting plaintiff’s complaints of communication and conduct within the statute of limitations period to her protected status.” Further, the court found “no genuine issue of material fact as to whether [her] complaints of communication and conduct within the three-year statute of limitations period, amount to her workplace being ‘permeated with discriminatory intimidation, ridicule and insult[] that is sufficiently pervasive or severe’ to constitute a hostile work environment considering the totality of the circumstances, including co-workers not liking the scent of her lotion, avoiding working with her, a Caucasian man being promoted more quickly than her, a year-end performance review having a perceived negative tone, the whiteboard push incident that was unreported for two years, and being accused of tampering with a manager’s chair.” But the court agreed with her that the trial court erred in granting defendant summary disposition of her retaliation claim and in limiting the scope of her “claim to retaliatory termination for filing her initial civil complaint in this matter on” 1/31/20.

Sentencing; Authority to resentence; Judgment of sentence (JOS) validity; Whether the original sentence was “imposed” within the meaning of MCR 6.429(A); Failure to appear at the Michigan Department of Corrections (MDOC) to serve the sentence; People v Stewart; Whether defendant should have been allowed to withdraw his plea; Misconduct under MCR 6.310(B)(3)

In a modified opinion, the court again held that while defendant-Sims’s original 2022 sentence was valid, it was not “imposed” due to his “failure to report to the MDOC and to be within the physical custody of the court.” Thus, the trial court did not err in resentencing him in 2024. Further, he “did not have the right to withdraw his plea because he committed misconduct” under MCR 6.310(B)(3). He was convicted via plea of felony-firearm, second or subsequent offense, and meth possession. He was sentenced in 2022 to five years for felony-firearm and no term of incarceration for his meth conviction. He was ordered to report to the MDOC one week after sentencing. The trial court then entered the JOS. But “Sims failed to appear, resulting in his subsequent arrest and resentencing before the trial court” in 2024. He was then sentenced to five years for felony-firearm and 38 months to 10 years for meth possession, to be served consecutively. He argued that the trial court did not have the authority to resentence him in 2024 because his 2022 JOS remained valid. The parties did “not dispute that the 2022 sentence was valid.” The court then considered “whether Sims’s sentence commenced after the 2022 [JOS] was entered, despite [his] failure to appear at the MDOC to serve his sentence. The trial court concluded that Sims had not commenced serving his sentence and resentencing was appropriate[.]” The court agreed with the trial court that a pre-1990 case, Stewart, “was ‘substantially similar’ to” this case, and it did not err by resentencing Sims in 2024. “Like the defendant in Stewart, Sims was ‘not in the custody of jail officials’ for the 2022 sentence, such that that he ‘had not yet commenced serving his sentence.’ . . . Sims was sentenced remotely via Zoom and given a week to get his affairs in order and report to the MDOC. [His] failure to initiate serving the 2022 sentence indicates that it was never ‘imposed’ within the meaning of MCR 6.429(A).” The court held that while “a trial ‘court may not modify a valid sentence after it has been imposed,’ . . . the trial court maintains the authority to modify a sentence before the defendant begins serving it[.]” Affirmed.

Admission of a victim’s verified statements in support of a personal protection order (PPO) petition; Right of confrontation; Whether the statements were testimonial; People v Washington; The primary-purpose test; Ohio v Clark; Smith v Arizona; Hearsay; Whether the victim’s statements to others were admissible under MRE 803(3); People v Propp (Propp II)

On remand from the Supreme Court for reconsideration in light of Washington and Propp II, the court held that the trial court did not commit constitutional or evidentiary error in admitting the decedent victim’s (Rory) verified statements in support of a PPO petition and his hearsay statements. Defendant was convicted of first-degree felony murder and felony-firearm. In its prior opinion, the court affirmed. The Supreme Court entered an order vacating the part of the court’s opinion that addressed whether the trial court erred in admitting Rory’s statements, and remanded for the court “to reconsider (1) whether Rory’s verified statements in support of the PPO petition were testimonial in light of Washington, and (2) whether Rory’s statements to” three witnesses “were admissible under MRE 803(3) in light of Propp II.” The court first concluded that because “an ongoing emergency existed when Rory made his verified statements in support of the PPO petition, the primary-purpose test applies and” it did not have to “decide whether Washington correctly confined that test to statements made during ongoing emergencies.” Further, assuming that the Washington standard for determining whether a statement is testimonial “applies outside the context of an ongoing emergency,” the court determined “that Rory’s verified statements in support of the PPO petition were not testimonial.” The Michigan Supreme Court held that the statement at issue in Washington was testimonial “because it was made by one law-enforcement officer to another while transferring custody of the defendant after having arrested him for engaging in criminal activity.” There was no law-enforcement officer involvement in the statement “here. Rather, Rory wrote a verified addendum to a family court in an effort to obtain a PPO.” The court concluded that under the “circumstances, there was no reasonable basis to believe Rory’s verified statements in support of the PPO petition would be available for use at a later trial.” As to the admissibility of the hearsay statements, “consideration of the nature of each of Rory’s statements and the purpose for their admission supports the conclusion that [they] were admissible under MRE 803(3).” The court added that, even if the trial court abused its discretion by admitting any of them, reversal was unwarranted given the overwhelming other evidence of defendant’s guilt. Affirmed.

Prosecutorial misconduct; People v Bennett; Domestic violence elements; MCL 750.81(2); People v Cameron; Burden shifting; People v Fyda; Missing-witness instruction & due diligence; MCR 2.506(C)(1); People v Pearson; Harmless error; MCL 769.26; People v Riddle

The court held that no reversal was warranted because, although the prosecutor made an improper burden-shifting argument about whether a device was a taser and the prosecution failed to exercise due diligence to produce an endorsed witness, neither error was outcome determinative as to the domestic-violence conviction. Defendant was convicted of domestic violence under MCL 750.81(2) after an incident in which the victim testified defendant threatened to “zap” him with a device, and the trial court denied a requested missing-witness instruction after finding due diligence. On appeal, the court held the closing argument did not misstate domestic-violence law, emphasizing the offense requires “(1) the commission of an assault or an assault and battery and (2) a dating relationship between the parties,” and the prosecutor “accurately identified and described both requisite elements.” The court next held that the prosecutor improperly tried to shift the burden of proof on the taser-related question, concluding the remarks were “plainly improper,” but found no prejudice because defendant was acquitted of the taser and felonious-assault counts and, as to domestic violence, “whether the device was a taser was not a requisite element of that offense.” The court also held that the trial court erred in finding due diligence for an endorsed witness because the subpoena was served the day before trial in violation of MCR 2.506(C)(1), explaining the “clear and mandatory requirement” was “undisputedly not met” and “plainly constitutes a failure to exercise due diligence,” and therefore the trial “court should have provided the requested missing-witness instruction.” The court next held defendant was not entitled to relief because she did not establish prejudice from a witness’s absence or that failure to give the instruction caused a miscarriage of justice, stating the record left the court “to speculate about what the witness’s testimony might have been,” and “it does not ‘affirmatively appear[] that it is more probable than not that the [error] was outcome determinative.’” Affirmed.

Due process; Referring to jurors only by numbers; Confrontation Clause; Witness testifying with her face obscured; Consecutive sentencing; MCL 750.520b(3); Judgment of sentence (JOS)

The court held that the trial court did not violate defendant’s due-process rights by referring to jurors only by numbers or infringe his confrontation right by allegedly permitting the victim to testify with her face obscured. It also found that the two events he “was convicted of were not ‘part of a continuous time sequence,’ and the statutory discretion to impose a consecutive sentence under MCL 750.520b(3) was not triggered.” Thus, it affirmed his convictions, vacated his sentence, and remanded for resentencing for the purpose of amending his JOS to reflect that his sentences are concurrent rather than consecutive. He was convicted of CSC I and sentenced to 25 to 80 years for each conviction, to be served consecutively. On appeal, defendant first argued “that his constitutional due-process rights were violated because the trial court referred to the potential jurors by number instead of their names during voir dire.” He argued “that the trial court should have instructed the jurors to ensure that they did not consider this fact as a negative against his presumed innocence.” He relied “heavily on several federal cases, quoting portions that discuss considerations relevant to addressing jurors by name rather than by number. Although those quotations appear to support his position, the cases themselves do not. Each of the authorities he cites ultimately holds that the use of juror numbers, in the absence of demonstrated prejudice, does not constitute reversible error.” In this case, defendant had “offered no evidentiary basis to substantiate his assertion that he suffered prejudice from the trial court’s decision to refer to jurors by number rather than by name. Contrary to his implicit assertion that he was unable to conduct meaningful voir dire, the record establishe[d] that his trial counsel received a ‘juror packet’ containing pertinent biographical information related to the potential jurors.” Moreover, the record established “that defense counsel conducted extensive voir dire; in particular, defense counsel exercised several peremptory challenges.” Therefore, there was “no evidence to support defendant’s argument that his ability to conduct voir dire was obstructed.” Defendant also argued “that his presumption of innocence was compromised because the trial court did not properly instruct the jurors as to how they should perceive reference to them by number instead of by name. We have cautioned trial courts to give such an instruction and to limit the cases where juror numbers are used instead of names.” The court has “also held that it is proper to decline to review claims of prejudice in the withholding of jurors’ names when there is no evidence in the record of prejudice.” In this case, there was “no evidence in the record to suggest that the jurors construed the use of numbers as a negative to be held against defendant.” The record suggested “that both the trial court and the jurors understood the use of numbers as a purely logistical choice devoid of any greater meaning.” Thus, the court concluded that his “due-process rights were not violated by using juror numbers instead of names at trial.”

Sufficiency of the evidence for wire fraud &money laundering convictions; Whether the trial evidence impermissibly varied from the allegations in the indictment; Evidence related to defendant’s purchase of firearms & payments to a prostitute; FRE 403; Cross-examination about whether defendant falsely impersonated a police officer; FRE 608(b); Admission of character evidence; FRE 404(a)(2)(A) & 405(a); Sentencing; Procedural reasonableness; Two-level enhancement for obstruction of justice (USSG § 3C1.1); “Amount of loss” calculation under § 2B1.1; Two-level enhancement because the offense involved 10 or more victims (§ 2B1.1(b)(2)(A)(i))

The court affirmed defendant-Page’s convictions for wire-fraud and money-laundering where he used the money donated by members of an organization he founded for personal use. Page’s scheme involved using the Black Lives Matter cause to steal contributions made to his nonprofit tax-exempt entity called Black Lives Matter of Greater Atlanta (BLMGA). The tax-exempt status was revoked. Records showed that he used the donations for personal gain, including hiring a prostitute and buying firearms and a house. The district court imposed a below-the-guidelines sentence of 42 months on each count, to run concurrently, followed by three years of supervised release. He argued that there was insufficient evidence to convict him of wire fraud and money laundering. But the court held as to the wire-fraud conviction that the “government presented overwhelming proof that Page carried out a scheme to defraud donors of more than $490,000 by misrepresenting that BLMGA would use those donations to combat racial and social injustice.” Further, he had direct contact on Facebook with donors to whom he averred that he was not using the funds for personal benefit, thus “willfully” defrauding them. A jury could find that his “disclaimer about BLMGA’s nonprofit status didn’t warn donors that he was going to spend the funds on personal expenses.” It also held that there was sufficient evidence to support his money-laundering convictions. The funds he used to purchase the “home and furniture were derived from an already completed offense, even if his scheme lasted longer.” And given his central role in the “scheme, the record certainly isn’t devoid of evidence that Page knew the funds were illegally derived.” It also rejected his claim that evidence at trial “impermissibly varied from the allegations in the indictment.” As to his assertion the evidence that he used the money to hire prostitutes and purchase firearms was “unduly prejudicial,” the court held that it “had substantial probative value” and noted that “painting a defendant in a bad light isn’t the same as evidence causing unfair prejudice.” As to the cross-examination “about whether he falsely impersonated a police officer[,]” his decision to testify allowed the government to ask about the incident. And the two errors the court found related to character evidence were not “sufficiently prejudicial to render Page’s trial fundamentally unfair because there was substantial evidence of his guilt.” The court also affirmed his sentence, upholding the imposition of enhancements for obstruction of justice and for an offense involving 10 or more victims, as well as the “amount of loss” calculation.

Hostile work environment; Statute of limitations; Garg v Macomb Cnty Mental Health; Campbell v Department of Human Servs; Hester v Department of Corr (Unpub); Elliott-Larsen Civil Rights Act (ELCRA) retaliation; Exclusion of most evidence related to dismissed discrimination & hostile work environment claims; Hearsay; Quashing of multiple trial subpoenas; Exclusion of the evidence of plaintiff’s internal complaints of discrimination; Motion to exclude future damages; Disqualification of the trial judge; Second Amended Complaint (SAC)

The court upheld the trial court’s dismissal of plaintiff’s hostile work environment claim. But it concluded that “defendant’s purported termination of plaintiff’s employment, in addition to [her] other protected activity for which she contends she has also suffered continued retaliation, provides evidence of it being retaliation for her ongoing protected activity.” Thus, it reversed in part, affirmed in part, and remanded, but it found there was no basis for disqualification of the trial judge. Plaintiff, an African-American woman, contended “the hostile and abusive environment substantially interfered with her employment where she went on medical leave in [9/19] and went on anxiety and depression medication and began therapy due to her work environment.” The court noted that in Campbell, it “held that ‘acts occurring outside the limitations period, although not actionable, may, in appropriate cases, be used as background evidence to establish a pattern of discrimination.’” Defendant asserted that plaintiff did not establish an issue of material fact as to the purported harassment. The court found that while she relied “on Hester in support of the second element of a prima facie case, in that unpublished decision four co-workers testified that the plaintiff received more and less desirable work that Caucasian employees refused.” It found that here, “corroborative evidence that plaintiff was singled out in the manner claimed on the basis of her protected status is lacking. That said, ‘[a] party’s own testimony, standing alone, can be sufficient to establish a genuine question of fact.’ Nonetheless, even considering the age-and-race-based discrimination evidence from outside the statute of limitations as potentially demonstrating a pattern, we find no genuine issue of material fact connecting plaintiff’s complaints of communication and conduct within the statute of limitations period to her protected status.” Further, the court found “no genuine issue of material fact as to whether [her] complaints of communication and conduct within the three-year statute of limitations period, amount to her workplace being ‘permeated with discriminatory intimidation, ridicule and insult[] that is sufficiently pervasive or severe’ to constitute a hostile work environment considering the totality of the circumstances, including co-workers not liking the scent of her lotion, avoiding working with her, a Caucasian man being promoted more quickly than her, a year-end performance review having a perceived negative tone, the whiteboard push incident that was unreported for two years, and being accused of tampering with a manager’s chair.” But the court agreed with her that the trial court erred in granting defendant summary disposition of her retaliation claim and in limiting the scope of her “claim to retaliatory termination for filing her initial civil complaint in this matter on” 1/31/20.

Res judicata; Foster v Foster; Riparian rights; MCL 324.30101(s); Thies v Howland; Public easement scope; Malicious prosecution; Special injury; Friedman v Dozorc; Sanctions for a frivolous action; MCL 600.2591(3)(a)

The court held that plaintiffs’ riparian-rights claims were barred by res judicata because prior litigation involving the same property through privies in title resolved, or could have resolved, the riparian-rights dispute by establishing a public easement to the water’s edge. But the trial court erred by granting summary disposition on defendants’ malicious prosecution claim and by imposing attorney-fee sanctions on plaintiffs. Plaintiffs sought declarations and injunctions after installing private docks and blocking a boat launch, while defendants relied on decades-old litigation establishing a highway-by-user easement. On appeal, the court held that res judicata applied. A second action is barred when “(1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first,” and Michigan uses a transactional test where “the assertion of different kinds or theories of relief still constitutes a single cause of action if a single group of operative facts give rise to the assertion of relief.” Earlier decisions established a public easement on the property “from a point six feet east of the hard top surface to the waters of” the lake, and the prior court’s reasoning expressly recognized public use for shoreline activities “including the launching of boats, swimming, shore fishing, parking and washing of automobiles[.]” This supported the conclusion that “riparian rights do not exist” for plaintiffs because “a contrary intention” appeared in the chain of title by court decree. The court also held that plaintiffs’ remaining claims failed because each required interference with established property rights, and the public easement authorized the road commission’s entry and enforcement actions, including removing boulders and prohibiting unpermitted docks. The court next held that defendants’ malicious prosecution claim failed for lack of special injury, noting the required element is “special injury that flows directly from the prior proceedings,” and the cited injury preceded the lawsuit and thus, could not satisfy that requirement. The trial court erred by granting summary disposition on that counterclaim. The court also held that sanctions were improper because the record did not support a finding plaintiffs’ action was frivolous, emphasizing prior cases were not so obvious that plaintiffs’ position was “devoid of arguable legal merit,” making sanctions “outside the range of reasonable and principled outcomes.” Affirmed in part, vacated in part.

Class certification under the Telephone Consumer Protection Act (TCPA); 47 USC § 227(b); Permission to appeal a district court order certifying a class; FedRCivP 23(f); In re Delta Air Lines; Class wide consent; Predominance of common questions; Whether the district court created an impermissible “fail-safe class”; Lack of data to support defendant’s financial harm claim; Effect of the district court’s statements it may reconsider certification

In an order, the court applied the four Delta Air Lines factors that guide consideration of a Rule 23(f) petition and denied defendant-Humana’s petition to appeal the district court’s order certifying a class in this action alleging violations of the TCPA. Among other things, it held that Humana failed to show that the district court abused its discretion in finding that the predominance of common questions requirement was satisfied. The court first held that Humana failed to show “that the district court abused its discretion in finding that predominance is satisfied even if the issue of consent cannot be determined on a class-wide basis.” Regarding the methodology that plaintiff’s expert “submitted for ascertaining and notifying potential class members[,]” the court noted that Humana only offered 13 instances of potential class members who would be excluded under this methodology. This was insufficient to affect the court’s deference to the district court’s rulings. Humana also argued that the district court created an impermissible “fail-safe class when it modified the class definition to exclude those who consented to receive calls on behalf of a Humana account holder.” The court explained that a fail-safe class “would include only recipients who did not consent to receive calls—because consent is an element of the TCPA claim, membership depends on proving liability. Here, the class definition excludes individuals who are current account holders of Humana, or persons who consented to receiving calls on the account holder’s behalf, meaning that the definition is not defined entirely in terms of consent or lack thereof.” Additionally, as to the “death-knell” factor, the court noted that Humana failed to submit data supporting its claim of potential financial harm. Finally, the court found that the posture of the case weighed against granting the petition. The district court repeatedly stated that it “might reconsider class certification.”

Whether a party committed “fraud on the court”; Buell v Anderson; Direct & vicarious liability for fraud on the court; Damages/award of only partial attorney fees; Whether post-petition transfers were avoidable under 11 USC § 549(a); Claims for conversion of bankruptcy estate assets

[This appeal was from the ED-MI.] The court affirmed the district court decision that affirmed the bankruptcy court’s grant of summary judgment to appellees, concluding that appellee-creditor (Comerica) could not be held directly liable for fraud on the court where it was not an “officer of the court” and that it was also not vicariously liable. The court further held that (1) the bankruptcy court did not abuse its discretion by awarding appellant-trustee (Vining) only partial attorney’s fees for fraud on the court committed by two other appellees, and (2) the bankruptcy court properly rejected his avoidance and conversion claims. Vining is the current trustee of the Chapter 7 debtor, MTG, Inc. He challenged some of the actions taken during the prior disqualified trustee’s (appellee-Taunt) tenure, but the bankruptcy court largely granted appellees summary judgment. On appeal, the court first rejected Vining’s argument that the bankruptcy court erred by ruling that Comerica was not liable for fraud on the court based on Taunt’s nondisclosure of a conflict of interest involving Comerica. As to direct liability, “only an ‘officer of the court’ can commit fraud on the court and” Comerica was not itself an officer of the court in this proceeding. It also could not be held vicariously liable because under Michigan law, “the bankruptcy court did not clearly err in concluding that Comerica did not have the ‘right to control’ Taunt under the Comerica Fee Agreement,” and thus, they did not have an agency relationship. Further, even if “Comerica could be liable for fraud on the court based on its attorney’s actions here, Vining” failed to show “the bankruptcy court abused its discretion in denying relief.” The court also upheld the award of only partial attorney’s fees to Vining for two appellees’ fraud on the court, where Vining’s pursuit of this litigation resulted in “only a ‘small financial benefit’ to the estate.” As to his avoidance claims, the post-petition transfers at issue “were authorized when made” and remained “authorized to this day.” Finally, it rejected Vining’s claim for “conversion of estate assets” where it was foreclosed by the fact that “Taunt, as trustee, was entitled to control the property at issue.”

The Social Services Agency Liability Act (SSALA); Applicability of the SSALA; Immunity under the SSALA; MCL 691.1635(3) & (4); “Gross negligence” (MCL 691.1633(b)); Rule 400.4127(4) of the Michigan Administrative Code; Piercing the corporate veil; Causation & foreseeability; Negligence or gross negligence; Negligent hiring or retention; Comparative fault

The court concluded that the SSALA applied “and that the evidence established a genuine issue of material fact regarding gross negligence,” precluding immunity under the SSALA. Also, questions of material fact existed for trial as to “piercing the corporate veil, causation and foreseeability, negligent hiring or retention, and comparative fault.” Thus, it affirmed the trial court’s orders in part, reversed in part, and remanded. Defendant-SJJS operates a home that “houses boys and girls ages 12 through 17. The decedent, 15-year-old JQ, became a resident [] after engaging in criminality and leaving a prior facility. JQ committed suicide by using a sheet to hang himself from a vent in his room.” Plaintiffs, his parents, alleged “that staff members at the facility failed to properly supervise residents and falsified room-monitoring logs to reflect room checks of residents that were not performed as required under state of Michigan regulations. Plaintiffs further asserted that defendants’ failure to monitor residents made it possible for JQ to take his own life. [They] filed this negligence action against SJJS and its parent company,” defendant-SHS. The court found that the evidence created a genuine issue of material fact as to “whether the actions and inactions of staff members amounted to gross negligence such that SJJS is not immune under the SSALA.” The evidence supported “plaintiffs’ allegations that staff members failed to conduct room checks at varying intervals not to exceed 15 minutes as required under Rule 400.4127(4) notwithstanding that the purpose of the room checks was to ensure resident safety. Further, JQ’s journal entries indicate that he became increasingly more depressed and anxious as the days passed. The testimony also establishes a genuine issue of material fact regarding youth-care workers being trained to fill out the pink sheets at the beginning of their shifts before the room checks could possibly be made, that some supervisors also prefilled out the pink sheets, and that some workers forged their supervisor’s signature.” Further, witnesses “testified that they did not know about JQ’s history of depression, anxiety, panic attacks, and self-harm, and, if they had known, they could have been more watchful of him. In fact, [one] testified that if she had been informed of JQ’s psychiatric history, his suicide could have been prevented. Staff members testified that they were also unaware that JQ had been cutting himself, although [another resident] was aware and testified that JQ’s cuts were visible. Therefore, at a minimum, there” was a genuine issue of material fact as to “whether the evidence demonstrates ‘a substantial lack of concern for whether an injury will result.’” Thus, the court held that “the trial court properly denied summary disposition with respect to immunity under the SSALA.”

Tenant injury from a falling kitchen cabinet; Premises liability; Common law duty; Control over the leased premises; Bailey v Schaaf; Distinguishing Mobil Oil Corp v Thorn; 2 Restatement Torts, 2d, § 357; Notice of the defect; Statutory duty under MCL 554.139; Leave to amend the complaint

The court held that defendant-landlord was properly granted summary disposition of plaintiff-tenant’s common law premises liability claim arising from a falling kitchen cabinet. But the trial court abused its discretion when it failed “to address plaintiff’s request for leave to amend her complaint” to raise a statutory premises liability claim under MCL 554.139. As to the common law claim, while “a landlord owes a duty to tenants to keep areas under its control reasonably safe, that duty does not extend to areas leased to the tenant, over which the landlord has relinquished control.” In this case, the kitchen “was within plaintiff’s exclusive leasehold, not a common area under defendant’s control. The lease provisions” confirmed this. She argued that defendant nonetheless owed her a duty under Mobil Oil, which adopted 2 Restatement Torts, 2d, § 357. But in that case, “the plaintiff landlord had a contractual obligation to repair the tenant’s roof.” In this case, “the lease agreement established plaintiff was responsible to ‘keep the fixtures in the house or on or about the leased premises in good order and repair,’ and that defendant was responsible for ‘major maintenance.’ Cabinets and their mounting fasteners are fixtures. Maintenance and routine repairs remain with the tenant under” the lease. Plaintiff did not identify any “evidence that the cabinet condition was a ‘major’ repair within the lease’s meaning.” While she pointed “to defendant’s deposition statement that he considered himself ‘responsible’ for cabinets and did not expect plaintiff to repair them, and that he had previously arranged a cabinet repair[,]” the court found that “occasional voluntary repairs or the landlord’s right of entry do not equal a contractual covenant to keep the entire premises in repair. The Restatement standard is contractual and cannot be satisfied by ad hoc repairs or a general practice.” The court also concluded the trial court did not err in ruling “that defendant did not have actual or constructive notice of the defective cabinet.” However, while plaintiff’s common law premises liability claim failed, “MCL 554.139 provides a separate avenue for recovery” and her claim under this statute “does not require her to establish actual or constructive notice.” Affirmed in part, reversed in part, and remanded for the trial court to specifically address her request to amend.

Res judicata; Foster v Foster; Riparian rights; MCL 324.30101(s); Thies v Howland; Public easement scope; Malicious prosecution; Special injury; Friedman v Dozorc; Sanctions for a frivolous action; MCL 600.2591(3)(a)

The court held that plaintiffs’ riparian-rights claims were barred by res judicata because prior litigation involving the same property through privies in title resolved, or could have resolved, the riparian-rights dispute by establishing a public easement to the water’s edge. But the trial court erred by granting summary disposition on defendants’ malicious prosecution claim and by imposing attorney-fee sanctions on plaintiffs. Plaintiffs sought declarations and injunctions after installing private docks and blocking a boat launch, while defendants relied on decades-old litigation establishing a highway-by-user easement. On appeal, the court held that res judicata applied. A second action is barred when “(1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first,” and Michigan uses a transactional test where “the assertion of different kinds or theories of relief still constitutes a single cause of action if a single group of operative facts give rise to the assertion of relief.” Earlier decisions established a public easement on the property “from a point six feet east of the hard top surface to the waters of” the lake, and the prior court’s reasoning expressly recognized public use for shoreline activities “including the launching of boats, swimming, shore fishing, parking and washing of automobiles[.]” This supported the conclusion that “riparian rights do not exist” for plaintiffs because “a contrary intention” appeared in the chain of title by court decree. The court also held that plaintiffs’ remaining claims failed because each required interference with established property rights, and the public easement authorized the road commission’s entry and enforcement actions, including removing boulders and prohibiting unpermitted docks. The court next held that defendants’ malicious prosecution claim failed for lack of special injury, noting the required element is “special injury that flows directly from the prior proceedings,” and the cited injury preceded the lawsuit and thus, could not satisfy that requirement. The trial court erred by granting summary disposition on that counterclaim. The court also held that sanctions were improper because the record did not support a finding plaintiffs’ action was frivolous, emphasizing prior cases were not so obvious that plaintiffs’ position was “devoid of arguable legal merit,” making sanctions “outside the range of reasonable and principled outcomes.” Affirmed in part, vacated in part.