Choice of law; MCR 2.112(J); Sutherland v Kennington Truck Serv, Ltd; Alter ego liability; Florence Cement Co v Vettraino; Voidable transfer; The Uniform Voidable Transfers Act (UVTA); MCL 566.35; Matter of Oakland Physicians Med Ctr, LLC (Bankr ED MI); Attorney fees under a lease provision; Reasonableness; Pirgu v United Servs Auto Ass’n; Marketplace Home Mortgage, LLC (MHM)

The court held that (1) Michigan law governed, (2) the trial court properly pierced the corporate veil of defendant’s company (MHM), (3) it properly treated the $50,000 payment from MHM to defendant as a voidable transfer, and (4) it properly awarded attorney fees to plaintiff. Plaintiff leased office space to MHM. After MHM defaulted, sold its assets, ceased operations, and left the lease unpaid, plaintiff obtained a default judgment against MHM and then sued defendant, MHM’s sole decisionmaker, individually. On appeal, the court held that Michigan law applied because defendant “did not raise the potential application of Minnesota law until after the trial” and failed to overcome the presumption that Michigan law governs. The court next held that veil piercing was warranted because defendant “‘blurred the lines between himself and MHM’” and treated MHM “‘as a mere instrumentality for [himself] as [an] individual[].’” It also held that the $50,000 payment was voidable under the UVTA because the payment was “simply a check that defendant had MHM write him after it had become insolvent,” while he provided “nothing to MHM in exchange for doing so.” The court further held that attorney fees were authorized by the lease because this action was one plaintiff was forced to undertake to collect what it was owed under the lease, and thus fell within “‘any suit or action instituted by or involving Landlord to enforce the provisions of, or the collection of the rentals due Landlord under this Lease.’” Affirmed.

Choice of law; MCR 2.112(J); Sutherland v Kennington Truck Serv, Ltd; Alter ego liability; Florence Cement Co v Vettraino; Voidable transfer; The Uniform Voidable Transfers Act (UVTA); MCL 566.35; Matter of Oakland Physicians Med Ctr, LLC (Bankr ED MI); Attorney fees under a lease provision; Reasonableness; Pirgu v United Servs Auto Ass’n; Marketplace Home Mortgage, LLC (MHM)

The court held that (1) Michigan law governed, (2) the trial court properly pierced the corporate veil of defendant’s company (MHM), (3) it properly treated the $50,000 payment from MHM to defendant as a voidable transfer, and (4) it properly awarded attorney fees to plaintiff. Plaintiff leased office space to MHM. After MHM defaulted, sold its assets, ceased operations, and left the lease unpaid, plaintiff obtained a default judgment against MHM and then sued defendant, MHM’s sole decisionmaker, individually. On appeal, the court held that Michigan law applied because defendant “did not raise the potential application of Minnesota law until after the trial” and failed to overcome the presumption that Michigan law governs. The court next held that veil piercing was warranted because defendant “‘blurred the lines between himself and MHM’” and treated MHM “‘as a mere instrumentality for [himself] as [an] individual[].’” It also held that the $50,000 payment was voidable under the UVTA because the payment was “simply a check that defendant had MHM write him after it had become insolvent,” while he provided “nothing to MHM in exchange for doing so.” The court further held that attorney fees were authorized by the lease because this action was one plaintiff was forced to undertake to collect what it was owed under the lease, and thus fell within “‘any suit or action instituted by or involving Landlord to enforce the provisions of, or the collection of the rentals due Landlord under this Lease.’” Affirmed.

Contract enforcement; Breach of contract; Patel v FisherBroyles, LLP; Claim preclusion; Release & res judicata; Adair v Michigan; Conversion; Insurance proceeds; Treble damages

The court held that defendants breached the 2004 development and loan agreement, wrongfully converted insurance proceeds in which plaintiff-city held a contractual ownership interest, and were not protected by the 2021 nuisance-abatement stipulated order or res judicata. The city loaned defendant-Eastside $1,428,000 for a senior low-income housing project secured by a mortgage, and the loan documents required city consent before any transfer, named the city as an additional insured and loss payee, and assigned insurance proceeds to the city for repayment of the loan. After the property was destroyed by fire in 2019, defendants received $8.3 million in insurance proceeds, failed to remit any of those funds to the city, and instead used the money on other projects. The court held that the 2021 nuisance-abatement case did not bar this action because that earlier suit concerned blight, nuisance abatement, demolition, and unpaid property taxes, while this case arose from defendants’ breaches of the loan agreement and their retention of insurance proceeds. It explained that the two matters did not arise from the same transaction and did not form a convenient trial unit. The court next held that defendants were liable for common-law and statutory conversion because the loan documents gave the city an ownership interest in $1,428,000 of the insurance proceeds, defendants failed to pay that amount after demand, and they deposited and used the proceeds for their own purposes. It also upheld the award of treble damages, concluding that the trial court did not abuse its discretion in awarding them. Affirmed.

Ineffective assistance of counsel; Witness issues; Failure to object to a statement in the prosecutor’s closing argument; Prosecutorial error; Jury instruction related to flight; Failure to raise a futile objection; Sentencing; Scoring of OV 9; MCL 777.39(1)(c); Claim the trial court was required to conduct de novo resentencing; People v Rosenberg

In these consolidated appeals, the court rejected defendant’s ineffective assistance of counsel claims and his challenge to the scoring of OV 9 at 10 points. He was convicted of discharge of a firearm in or at a building, causing injury; FIP; and felony-firearm (second offense). The trial court found that defense counsel (M) tried to investigate a woman (F) “as a potential defense witness, but she would not cooperate because she thought that he was the prosecutor. The trial court’s finding of fact was not clearly erroneous. Thus, [M] did not act in an objectively unreasonable manner, as he in fact followed up with defendant’s recommendation.” In addition, M “made a strategic choice to attack the prosecutor’s case in closing argument by commenting, ‘We haven’t heard from [F].’” As a result, the court concluded that defendant failed to show that M “made an objectively unreasonable error in failing to call” F. Next, the court found that the prosecutor’s closing argument “statement that defendant ‘takes off’ was supported by evidence that defendant left the location, but the statement, ‘he goes into hiding for about two years’ was not. Although defendant was not arrested until [3/12/22], there was no evidence that [he] purposefully concealed his whereabouts or obstructed law enforcement.” Thus, there was a legitimate basis to object and request a curative instruction. But defendant did not show that M’s failure to do so was an objectively unreasonable error. M “testified that he generally pursues a strategy of not objecting during closing arguments, which the trial court acknowledged in its findings of fact. Additionally, defense counsel could, as [M] did, rely on the trial court to instruct the jury that attorneys’ arguments are not evidence.” The jury instruction on flight “made no reference to hiding, which was the objectionable aspect of the closing.” As a result, “there was no firm basis for counsel to object to” it. As to OV 9, any error was harmless because rescoring it at 0 points would not change defendant’s OV level. Further, there was no scoring error. The score was “supported by evidence relating to the sentencing offense of discharge of a firearm at a building, causing injury.” While only one person was injured, the others “on the porch were at risk of injury from” the shooting. Affirmed.

Sufficiency of the evidence for reckless driving causing death & reckless driving causing serious impairment of a body function convictions; People v Otto; People v Carll; Miles per hour (mph); Crash Data Retrieval (CDR)

Holding that there was sufficient evidence to support defendant’s convictions of reckless driving causing death and reckless driving causing serious impairment of a body function, the court affirmed. She contended the evidence “was insufficient to establish that her driving was reckless and caused the fatal accident.” The court disagreed. She asserted that it was not “because she was traveling close to the 35 [mph] speed limit at the time of the collision. Defendant testified to that effect at trial and, on appeal, she” pointed to an eyewitness’s (F) testimony as further support. But F did not “testify that she ‘was certain that [defendant’s] vehicle was not traveling more than 5 to 15 miles over the posted speed limit.’ Rather, [F] estimated that defendant’s vehicle was ‘at least going 40 to 50,’ and that ‘it was pretty fast to the point where it caught my attention and my car was not even facing that way. I seen them traveling very fast.’” In addition, the court found that “the overwhelming weight of the evidence presented at trial demonstrated that defendant was traveling not in the range of 40 to 50 [mph], but instead at a much higher rate of speed. Evidence to this effect included: that the speedometer stick on [her] vehicle was found to be pointed at 101 [mph] following the collision; that the CDR precrash data indicated that the speed of [her] vehicle in the moments prior to the collision ranged from 104 to 106 [mph]; that the vehicles’ respective changes in speed upon collision and post-collision conditions were indicative of speeds higher than 40 to 50 [mph]; and that the gas station video camera did not pick up defendant’s vehicle until the collision because it ‘was moving too fast’ to be visible in the pre-collision footage.” The trial evidence also showed not only that she “was traveling at a very high rate of speed at the time of the collision, but that she ran through a red light while doing so.” Thus, the court held that the evidence “was more than sufficient to permit the jury to rationally conclude, beyond a reasonable doubt, that defendant was driving ‘in willful or wanton disregard for the safety of persons or property.’” The record also made it “clear that there was ample evidence from which the jury could rationally conclude, beyond a reasonable doubt, that defendant’s reckless driving caused the fatal accident.”

Ineffective assistance of counsel; Drug sniff; People v Kavanaugh; Sufficiency of the evidence; Intent to deliver meth; People v Fetterley; Corpus delicti; Defendant’s statements; People v Konrad; Sentencing; Scoring of OV 14; Leadership role; People v Earl; Proportionality; Within-guidelines sentence; People v Posey

The court held that (1) defense counsel was not ineffective, (2) the evidence was sufficient to support defendant’s conviction of possession with intent to deliver meth, (3) the corpus delicti rule did not bar admission of defendant’s statements, and (4) defendant’s sentence was properly scored and proportionate. The police stopped defendant’s truck after learning through LEIN that its registration was expired and it lacked valid insurance. After the drug dog alerted, officers found meth on the passenger-side floor, additional meth in his girlfriend’s underwear, and scales with residue in the truck and apartment. On appeal, the court held that counsel was not ineffective for failing to seek suppression because Deputy P “had probable cause to believe that the vehicle’s owner had violated traffic laws and to detain the vehicle to address the violation,” there was “no indication that the drug sniff prolonged the traffic stop,” and the dog’s alert “provided probable cause to search every part of the vehicle that might have contained contraband.” The court next held that the evidence of intent to deliver was sufficient because “[p]roof of actual delivery is not required,” the element of intent “to deliver can be inferred from the quantity of the controlled substance in the defendant’s possession and from the way in which the controlled substance is packaged,” and defendant admitted he was on his way to sell meth while his girlfriend testified that she was helping him sell drugs. The court also held that the corpus delicti rule did not bar Detective E’s testimony because defendant “was not charged with crimes related to his statements about his history of buying and selling large amounts” of meth and “there was ample independent evidence that the meth[] for which defendant was charged existed and was possessed by someone.” Finally, the court held that OV 14 was properly scored because the trial court could infer that defendant “was the driving force behind his and” his girlfriend’s possession and sale of meth, and it held that defendant’s within-guidelines sentence was presumptively proportionate and that he had not rebutted that presumption. Affirmed.

The General Sales Tax Act (GSTA); MCL 205.52(1); “Sale at retail” (MCL 205.51(1)(b)); Resale exemption; Andrie Inc v Department of Treasury; Documentation required by MCL 205.68(1); Whether the dental prosthesis exemption (MCL 205.54a(1)(r)) was properly pled; Dental lab status; MCL 333.16643 & 333.16647; Consideration of exhibits attached to a summary disposition motion; Barnard Mfg Co, Inc v Gates Performance Eng’g, Inc; Sufficiency of an affidavit; Personal knowledge; MRE 602 & 901(a); “Hearsay”; MRE 803(6) exception; Due process; Standard of review for a MCR 2.116(C)(10) motion

The court rejected plaintiff’s argument “that the trial court improperly relied on inadmissible evidence in granting” defendant-Department of Treasury’s summary disposition motion. It also disagreed with its claim that the material facts showed it was entitled to an exemption from the GSTA. Thus, it affirmed summary disposition for defendant. “While most of plaintiff’s products were tax-exempt dental prostheses, defendant’s auditor determined that some, including ‘bite splints, bleaching trays, and sport guards,’ were subject to the sales tax.” Defendant assessed sales taxes, penalties, and interest for tax years 2017 and 2018. The court first addressed plaintiff’s evidentiary challenges to the trial court’s ruling. It disagreed that the trial court relied on hearsay. It found that the MRE 803(6) exception applied to the audit report, noting that the “report was not generated in anticipation of litigation, but was prepared prior to the informal conference.” Further, the trial court did not deny plaintiff due process in granting the MCR 2.116(C)(10) motion. It “did not overstep by analyzing the evidence the parties provided, analyzing what the law requires, and noting the gaps that existed.” As to the exemption issue, the court noted that to receive an exemption from the GSTA, “a seller must provide evidence that the sales tax is being ultimately collected on the sales. The trial court correctly ruled that plaintiff failed to do” so. It contended that “none of its sales fit the definition in MCL 205.51(1)(b), as they fell under the resale exemption from the sales tax[.]” While it did not dispute that there were gaps in the information it provided, it claimed that “any of the missing state tax identification numbers involved customers who did not have them, and therefore MCL 205.68(1) required nothing of plaintiff” as to them. However, if the dentists that it “was selling these prostheses products to were unlicensed retail sellers, MCL 205.68(3) explicitly puts the sales tax back on the original seller when knowingly selling to an unlicensed retail seller.” Finally, while plaintiff correctly asserted it was “a dental laboratory, this does not totally exempt [it] from the obligation to collect sales tax.”

Contract enforcement; Breach of contract; Patel v FisherBroyles, LLP; Claim preclusion; Release & res judicata; Adair v Michigan; Conversion; Insurance proceeds; Treble damages

The court held that defendants breached the 2004 development and loan agreement, wrongfully converted insurance proceeds in which plaintiff-city held a contractual ownership interest, and were not protected by the 2021 nuisance-abatement stipulated order or res judicata. The city loaned defendant-Eastside $1,428,000 for a senior low-income housing project secured by a mortgage, and the loan documents required city consent before any transfer, named the city as an additional insured and loss payee, and assigned insurance proceeds to the city for repayment of the loan. After the property was destroyed by fire in 2019, defendants received $8.3 million in insurance proceeds, failed to remit any of those funds to the city, and instead used the money on other projects. The court held that the 2021 nuisance-abatement case did not bar this action because that earlier suit concerned blight, nuisance abatement, demolition, and unpaid property taxes, while this case arose from defendants’ breaches of the loan agreement and their retention of insurance proceeds. It explained that the two matters did not arise from the same transaction and did not form a convenient trial unit. The court next held that defendants were liable for common-law and statutory conversion because the loan documents gave the city an ownership interest in $1,428,000 of the insurance proceeds, defendants failed to pay that amount after demand, and they deposited and used the proceeds for their own purposes. It also upheld the award of treble damages, concluding that the trial court did not abuse its discretion in awarding them. Affirmed.

The General Sales Tax Act (GSTA); MCL 205.52(1); “Sale at retail” (MCL 205.51(1)(b)); Resale exemption; Andrie Inc v Department of Treasury; Documentation required by MCL 205.68(1); Whether the dental prosthesis exemption (MCL 205.54a(1)(r)) was properly pled; Dental lab status; MCL 333.16643 & 333.16647; Consideration of exhibits attached to a summary disposition motion; Barnard Mfg Co, Inc v Gates Performance Eng’g, Inc; Sufficiency of an affidavit; Personal knowledge; MRE 602 & 901(a); “Hearsay”; MRE 803(6) exception; Due process; Standard of review for a MCR 2.116(C)(10) motion

The court rejected plaintiff’s argument “that the trial court improperly relied on inadmissible evidence in granting” defendant-Department of Treasury’s summary disposition motion. It also disagreed with its claim that the material facts showed it was entitled to an exemption from the GSTA. Thus, it affirmed summary disposition for defendant. “While most of plaintiff’s products were tax-exempt dental prostheses, defendant’s auditor determined that some, including ‘bite splints, bleaching trays, and sport guards,’ were subject to the sales tax.” Defendant assessed sales taxes, penalties, and interest for tax years 2017 and 2018. The court first addressed plaintiff’s evidentiary challenges to the trial court’s ruling. It disagreed that the trial court relied on hearsay. It found that the MRE 803(6) exception applied to the audit report, noting that the “report was not generated in anticipation of litigation, but was prepared prior to the informal conference.” Further, the trial court did not deny plaintiff due process in granting the MCR 2.116(C)(10) motion. It “did not overstep by analyzing the evidence the parties provided, analyzing what the law requires, and noting the gaps that existed.” As to the exemption issue, the court noted that to receive an exemption from the GSTA, “a seller must provide evidence that the sales tax is being ultimately collected on the sales. The trial court correctly ruled that plaintiff failed to do” so. It contended that “none of its sales fit the definition in MCL 205.51(1)(b), as they fell under the resale exemption from the sales tax[.]” While it did not dispute that there were gaps in the information it provided, it claimed that “any of the missing state tax identification numbers involved customers who did not have them, and therefore MCL 205.68(1) required nothing of plaintiff” as to them. However, if the dentists that it “was selling these prostheses products to were unlicensed retail sellers, MCL 205.68(3) explicitly puts the sales tax back on the original seller when knowingly selling to an unlicensed retail seller.” Finally, while plaintiff correctly asserted it was “a dental laboratory, this does not totally exempt [it] from the obligation to collect sales tax.”

Termination under §§ 19b(3)(i) & (j); Jury trial; MCR 3.911; In re Sanders; Aggravated circumstances; MCL 722.638(1)(b)(i); In re Barber/Espinoza; Best interests; Anticipatory neglect; In re Mota

The court held that respondents’ parental rights were properly terminated because: (1) respondent-father waived any jury-trial right; (2) aggravated circumstances excused reunification efforts; (3) clear and convincing evidence supported termination under §§ (i) and (j); and (4) termination was in the child’s (AU) best interests. Two days after AU was born in 8/24, the DHHS petitioned to take the child into protective custody and terminate respondents’ rights, relying in part on the 9/23 termination of their rights to five other children because of chronic unstable housing, domestic violence, mental-health problems, substance abuse, and failure to meet the children’s needs. The court held that the father waived a jury trial by failing to file the written demand required by MCR 3.911(B), and it rejected his ineffective-assistance claim because he did not show that counsel’s decision to proceed with a bench trial was unsound strategy or outcome determinative. The court next held that the trial court properly exercised jurisdiction and found aggravated circumstances because respondents still had no verified housing, had not meaningfully engaged in services, and had failed to rectify the conditions that led to the prior terminations. The court further held that statutory grounds were established under §§ (i) and (j), emphasizing the prior terminations, respondents’ ongoing instability, and the doctrine of anticipatory neglect. On best interests, the court held that termination was warranted despite respondents’ complaints about bonding because the evidence showed continuing substance-abuse, mental-health, domestic-violence, housing, and financial problems, while AU’s foster placement provided safety, stability, and care. Affirmed.

Jurisdiction over the child; MCL 712A.2(b)(1)

The court affirmed the trial court’s order assuming jurisdiction over the child, NSLW. On appeal, respondents-parents challenged “the trial court’s assumption of jurisdiction under MCL 712A.2(b)(1), arguing that there was not a preponderance of the evidence establishing that they had neglected or abused NSLW or that they were, consistent with the language in that provision, actually able to provide proper care for NSLW given her severe mental-health and behavioral issues.” The court concluded that “the trial court found that a preponderance of the evidence established all four possible grounds for assuming jurisdiction under MCL 712A.2(b)(1). Respondents did not directly challenge the [trial] court’s assumption of jurisdiction under any of the three alternative grounds,” and the court did “not see reversible error in the [trial] court’s conclusion that at least one of them was satisfied.” In particular, it found “no reason to disrupt the trial court’s determination that assumption of jurisdiction under MCL 712A.2(b)(1) was appropriate because NSLW was ‘without proper custody or guardianship.’” Although the court, “like the trial court, fully recognize[d] the difficult position respondents were in due to NSLW’s behavioral and mental-health issues,” it was “also ‘mindful of the deference owed to the trial court’s decision.’” It held that “in light of the evidence before the trial court when making its decision regarding jurisdiction, it is apparent that no guardianship of NSLW was ever established and that NSLW’s sister was both unwilling and legally unable to provide proper care and custody to NSLW, thereby satisfying the ‘without proper custody or guardianship’ language in MCL 712A.2(b)(1).”