Law firm dispute; “No-poaching” referral agreement; Breach of contract; Contract formation; Clark v Al-Amin; Promissory estoppel; Ypsilanti Twp v General Motors Corp; Tortious interference with business expectancy; Dalley v Dykema Gossett; Fiduciary duties of LLC managers; MCL 450.4404(1); Derivative action prerequisites; MCL 450.4510

The court held that plaintiff-attorney failed to present substantively admissible evidence of an enforceable “no-poaching” referral agreement or a clear and definite promise, failed to show defendant-attorney interfered with any business expectancy in the two disputed matters, and failed both to establish a fiduciary breach to the PLLC and to comply with derivative-action prerequisites. The parties, equal members of a personal-injury PLLC, operated for years under multiple written agreements allocating direct expenses to each member and splitting shared expenses. Plaintiff claimed an oral agreement “not [to] step on each other’s toes,” and sued after defendant obtained representation in a fatal-trucking matter and a referred malpractice matter and after defendant created a separate website. The court affirmed dismissal of breach of contract and promissory estoppel claims because plaintiff offered only his own “sparse, vague” testimony and affidavit, could not identify a specific date, and could not define what a “referral source” meant to both parties, so there was no “offer and acceptance” or “meeting of the minds” and no “actual, clear, and definite promise.” Even assuming an agreement existed, the record showed plaintiff was merely “a potential attorney,” the clients chose defendant, and the evidence showed competition rather than interference, including defendant’s fee reduction and the referring lawyer’s prior relationship with defendant. On the fiduciary-duty claim, the court held duties under MCL 450.4404(1) run to the PLLC, not to the other member, and plaintiff failed to show defendant’s website diverted business from the PLLC because the work was done in the PLLC’s name. The court also held plaintiff did not satisfy the derivative-demand prerequisites of MCL 450.4510 and cited no authority excusing compliance where two equal members manage the company. Finally, it affirmed the equal split of tail insurance, rent, and shared employee costs based on the parties’ course of conduct, written agreements, and the bookkeeper’s affidavit, rejecting plaintiff’s late affidavits and attorney correspondence as insufficient to show a new, mutually assented agreement reallocating those expenses. Affirmed.

Alleged violation of Exchange Act § 10(b) (15 USC § 78t(a)) & Rule 10b-5 (17 CFR § 240.10b–5); Private Securities Litigation Reform Act (PSLRA); § 78u-4(b)(1); FedRCivP 9(b); Material misrepresentation element; Scienter element; Scheme liability under Rule 10b–5(a) & (c); “Control person” theory

In this class action, the court affirmed the district court’s dismissal of plaintiff-Newtyn’s complaint for failing to allege any viable allegations of misrepresentation and scienter, necessary elements of a securities fraud claim. Defendant-Alliance Data Systems (ADS) spun off part of its business as a stand-alone-company, Loyalty Ventures (Loyalty), which in turn contained two segments, one of which was AIR MILES, a Canadian-based customer rewards program. ADS executives pitched Loyalty as a good investment. When Loyalty went bankrupt about a year and a half after the spinoff, those who had invested in it, including Newtyn, sued for securities fraud based on alleged misrepresentations regarding AIR MILES. Considering the material misrepresentation element, the court held that the challenged statements regarding the withdrawal of a prominent sponsor of AIR MILES and that the client base was “stable” constituted “little more than the type of puffery that is ubiquitous in the corporate world.” It found that there were “[m]ultiple cautionary warnings in the registration statement” that the program could encounter “sudden sponsor troubles.” The court concluded that “Newtyn failed to allege a single materially false statement or omission.” It also held that Newtyn failed on the scienter element. It was required to plausibly allege either “knowing and deliberate intent” or “recklessness.” It appeared the purported facts supporting Newtyn’s complaint went “beyond Newtyn’s direct personal knowledge, and Newtyn has not otherwise claimed to have verified those assertions.” Such allegations, treated “as in the nature of ‘information and belief[,]’” cannot support a strong inference of scienter under the PSLRA. Further, it was not established that the sponsor’s withdrawal of participation in AIR MILES on which the investors allegedly relied was a “done deal” when defendants were promoting the investment. The court also rejected the contention that they “had motive and opportunity to defraud investors” where this assertion was not supported by defendants’ stock holdings. Newtyn’s claims based on scheme liability and “control person” theory also failed.

Law firm dispute; “No-poaching” referral agreement; Breach of contract; Contract formation; Clark v Al-Amin; Promissory estoppel; Ypsilanti Twp v General Motors Corp; Tortious interference with business expectancy; Dalley v Dykema Gossett; Fiduciary duties of LLC managers; MCL 450.4404(1); Derivative action prerequisites; MCL 450.4510

The court held that plaintiff-attorney failed to present substantively admissible evidence of an enforceable “no-poaching” referral agreement or a clear and definite promise, failed to show defendant-attorney interfered with any business expectancy in the two disputed matters, and failed both to establish a fiduciary breach to the PLLC and to comply with derivative-action prerequisites. The parties, equal members of a personal-injury PLLC, operated for years under multiple written agreements allocating direct expenses to each member and splitting shared expenses. Plaintiff claimed an oral agreement “not [to] step on each other’s toes,” and sued after defendant obtained representation in a fatal-trucking matter and a referred malpractice matter and after defendant created a separate website. The court affirmed dismissal of breach of contract and promissory estoppel claims because plaintiff offered only his own “sparse, vague” testimony and affidavit, could not identify a specific date, and could not define what a “referral source” meant to both parties, so there was no “offer and acceptance” or “meeting of the minds” and no “actual, clear, and definite promise.” Even assuming an agreement existed, the record showed plaintiff was merely “a potential attorney,” the clients chose defendant, and the evidence showed competition rather than interference, including defendant’s fee reduction and the referring lawyer’s prior relationship with defendant. On the fiduciary-duty claim, the court held duties under MCL 450.4404(1) run to the PLLC, not to the other member, and plaintiff failed to show defendant’s website diverted business from the PLLC because the work was done in the PLLC’s name. The court also held plaintiff did not satisfy the derivative-demand prerequisites of MCL 450.4510 and cited no authority excusing compliance where two equal members manage the company. Finally, it affirmed the equal split of tail insurance, rent, and shared employee costs based on the parties’ course of conduct, written agreements, and the bookkeeper’s affidavit, rejecting plaintiff’s late affidavits and attorney correspondence as insufficient to show a new, mutually assented agreement reallocating those expenses. Affirmed.

One-man grand jury law; MCL 767.3 & MCL 767.4; Principle that defendants charged under the one-man grand jury law are entitled to a preliminary exam & that a judge serving as a one-person grand jury may not issue a criminal indictment; People v Peeler; Whether Peeler applies retroactively; Subject-matter jurisdiction; MCL 600.601; People v Washington; New rule of law & retroactivity threshold; League of Women Voters v Secretary of State; Retroactivity on collateral review & successive motions for relief from judgment; MCR 6.502(G)(2)(a); People v Barnes; Linkletter-Hampton factors; People v Hampton; Linkletter v Walker

The court held that Peeler errors do not implicate a circuit court’s subject-matter jurisdiction and that Peeler does not apply retroactively on collateral review, while also holding that Peeler did announce a new rule of law. In 2012, a circuit judge acting as a one-man grand jury filed an indictment charging defendant with open murder and felony-firearm. He was convicted by a jury of first-degree premeditated murder and felony-firearm after the trial court denied his request for a preliminary exam. The trial court later denied his second motion for relief from judgment, ruling among other things that Peeler was not retroactive. The Court of Appeals affirmed in a published opinion, ruling that Peeler does not implicate subject-matter jurisdiction or apply retroactively on collateral review, and did not announce a new rule of law. On appeal, the court held that the Peeler violation did not deprive the circuit court of subject-matter jurisdiction because “subject-matter jurisdiction ‘is the right of the court to exercise jurisdiction over a class of cases, such as criminal cases[,]’” and “improper charging documents do not implicate a circuit court’s subject-matter jurisdiction.” Thus, “the fact that the charging procedure was erroneous . . . did not implicate the circuit court’s subject-matter jurisdiction.” The court also found that Peeler does not apply retroactively on collateral review, explaining that “‘judicial decisions which express new rules normally are not applied retroactively to other cases that have become final.’” It found that the Court of Appeals erred in saying Peeler was not new because it ended an “‘unchallenged assumption’” and “decided ‘an issue of first impression . . . which was not adumbrated by any earlier appellate decision.’” But the court concluded Peeler “did not announce a new substantive rule of constitutional law” because it “concerned the process of getting to trial” and the holding “was ‘statutory,’ not constitutional.” As a result, the federal test for retroactive application was not met. It also did not apply retroactively on state-law grounds under the Linkletter-Hampton factors. The court affirmed the Court of Appeals’ affirmance of the trial court’s denial of defendant’s second motion for relief from judgment but vacated its “analysis holding that Peeler did not announce a new rule of law.”

Admissibility of defendant’s confession; Custodial interrogation; People v Barritt; Voluntariness; Reinitiated contact by defendant; Waiver of rights; People v Clark; Effect of officers misinforming defendant of the extent of her Fifth Amendment rights; Defendant’s statements about considering abortion & lack of prenatal care during pregnancy; Relevance; Unfair prejudice

Holding that defendant’s confession and statements to police about considering abortion and lack of prenatal care during the pregnancy were admissible, the court in this interlocutory appeal affirmed the trial court’s denial of her motion to suppress. Over two decades after a baby’s remains were discovered at a campground, law enforcement officers used recent DNA technology advances “to identify defendant as the probable mother.” At issue on appeal was the admissibility of her statements to police officers confessing to being the baby’s “mother, disposing of the infant’s body, and of other conduct during the pregnancy.” She contended that her confession should be excluded because it was obtained in violation of her Fifth Amendment rights. The court disagreed, concluding she “was not subject to custodial interrogation, and her eventual statements during the second interview were voluntary.” The record showed that she “was not in custody during her initial encounter with officers at her home,” and she did not “make any inculpatory statements during that” encounter. The court also found that the totality of the circumstances showed that “she was not in custody during the first interview at the police station.” She agreed to go with the officers to the station, was advised of her Miranda rights, the officers honored her invocation of her rights, executed the search warrant for her DNA, and returned her “to her home without defendant saying anything incriminating.” As to the second interview and her confession, “defendant made the decision from her own home to reinitiate contact with the police officers voluntarily.” While the officers subsequently “gave her an erroneously limited explanation of the extent of her Fifth Amendment right to counsel[,]” the court found that this error did not invalidate her waiver because “a reasonable person would have believed that she could refuse to speak to the police and that the officers would honor her request to leave, just as they had done earlier that same day.” As to defendant’s other statements, the court held that they were “relevant and not unfairly prejudicial.”

Sentencing; Enhanced 10-year statutory minimum based on a previous “serious drug felony”; 21 USC § 841(b)(1); The procedures for imposing the enhancement; § 851; Whether those procedures violate the Constitution; Whether any constitutional violation in not submitting the requirements for the enhancement to the jury was harmless error; Prosecutorial discretion regarding the enhancement; “Vindictive prosecution”; Whether defendant’s previous conviction was “final” before he committed the crimes in this case; United States v Miller

The court affirmed the imposition of the enhanced 10-year statutory minimum under § 841(b)(1) based on defendant-Loines’s previous serious drug felony, holding that any error in not sending that issue to the jury was harmless. It also rejected his prosecutorial vindictiveness claim and found that his prior conviction had become “final” when he committed the offenses here. Finally, it also upheld his career-offender enhancement. Just before a change-of-plea hearing, Loines was formally notified under § 851 that the government would seek the enhanced 10-year statutory minimum under § 841(b)(1) based on his previous serious drug felony. He still pled guilty to several drug charges in this case. Before sentencing, he objected to various proposed enhancements. As to the one under § 841(b)(1), he argued “that the § 851 procedures for imposing the enhancement violated the Constitution because they required a judge, not a jury, to identify critical facts necessary for the enhancement. He also claimed that the enhancement should not apply because his prior offense had yet to reach finality when he committed his current crimes.” The district court conducted an evidentiary hearing, overruled his objections, and applied the enhancement. It also rejected his challenge to the career-offender enhancement and sentenced him to 160 months. On appeal, the court concluded that it did not have to “decide whether the Fifth and Sixth Amendments require a jury to find” the facts for the § 841(b)(1) enhancement because even “if a constitutional violation occurred, it would have been harmless.” While he claimed that a jury had “to resolve two factual questions for a conviction to qualify as a ‘serious drug felony’ . . . he never contested the answers to these questions.” The circumstances left the court with no doubt that the outcome here would have remained the same. Next, his challenges to the government’s decision to seek the enhancement could not rebut the court’s “presumption that it properly exercised its prosecutor’s discretion.” The facts here did not “trigger a presumption of vindictiveness” where he did not meet either of the requirements to do so. The court also found no merit to his claim that his prior conviction had not become “final” when the current crimes occurred, noting that its “precedent ties finality to the time to appeal, not the completion of sanctions” and his argument on this issue rested “on a legal mistake.”

Subject-matter jurisdiction; Summary disposition under MCR 2.116(C)(4); Exclusive jurisdiction under the Michigan Receivership Act; MCL 554.1015(2); “Related to”; Green Peak Industries (GPI); Asset purchase agreement (APA)

Holding that the court presiding over a related receivership action (the Ingham County Circuit Court) “had exclusive jurisdiction over plaintiffs’ claims under MCL 554.1015(2)[,]” the court affirmed summary disposition for all defendants. In a separate lawsuit, one of the defendants in this case sued two other defendants (GPI and The District Park), among others, in Ingham County Circuit Court, asserting they were in default on a loan. A stipulated order appointing a receiver was entered in that case. Days later, plaintiffs filed this action against GPI, The District Park, and the individual defendants in another trial court, asserting claims against the individual defendants that included fraud in the inducement of an amended APA and a “subscription agreement, breach of fiduciary duties, and shareholder minority oppression.” Plaintiffs argued on appeal that the trial court erred in granting the individual defendants summary disposition “under MCR 2.116(C)(4) on the basis that the Ingham Circuit Court had exclusive jurisdiction.” The court disagreed. MCL 554.1015(2) provides that a “court that appoints a receiver under this act has exclusive jurisdiction to direct the receiver and determine any controversy related to the receivership or receivership property.” The court concluded that, on “its face, the allegations in plaintiffs’ second amended complaint ‘relate to’ the receivership property, which, according to the order appointing the receiver, includes all contracts and service management agreements. Plaintiffs’ claims concern the amended APA, management service agreements, and the subscription agreement. Moreover, plaintiffs conceded in the receivership action that its claims relate to receivership property.” Thus, the court held that, “based on the plain language of the statute, the plain language of the second amended complaint, and plaintiffs’ concessions in the receivership action,” the individual defendants were properly granted summary disposition. Further, “the trial court’s reasoning would extend to the additional defendants[.]”

“Dangerous building” in violation of a township ordinance; MCL 125.539; Competent, material, & substantial evidence

Concluding that appellant-Simonte (homeowner) failed to establish that the circuit court erred by determining that appellee-Township’s decision requiring her to either repair or demolish the home was “supported by competent, material, and substantial evidence,” the court affirmed. Simonte argued that the record failed “to establish that the structure is likely to collapse or that parts of it are likely to fall or become detached.” She asserted “that the photos presented in the circuit court showed discoloration rather than deterioration of the decks, and the photos refute the circuit court’s indication that the metal roof sheeting extends off the roofline by ‘a foot or more.’” But Simonte did not provide the court “with the photos that were presented to the circuit court or to” the Township Board. As the appellant, Simonte bore the burden of providing the court “with a record that verifies the factual bases of her claims. An appellant waives appellate review by failing to provide this Court with ‘a complete record for review.’” The court concluded that without the photos, its “ability to engage in any meaningful review of the circuit court’s decision” was impaired. However, it noted “that the minutes of the [3/5/24] hearing indicate that neighboring residents expressed concern that the roof ‘flops’ around, which is consistent with the Township attorney’s assertion at the circuit court hearing that the roof moves and levitates off the structure during strong winds.” Thus, based on the limited record provided to the court, “it appears that the condition of the home is such that part of the structure is likely to detach and injure persons or property.”

Compensable “taking” under 1963 Const, art 10, § 2; Unjust enrichment claim following a tax-foreclosure sale under the General Property Tax Act (GPTA); Jackson v Southfield Neighborhood Revitalization Initiative; Yono v County of Ingham; Rafaeli, LLC v Oakland Cnty; Foreclosing governmental unit (FGU)

On remand for reconsideration in light of Jackson and Yono, the court held that the “trial court erred by summarily disposing of all of [plaintiff-]Kakalia’s claims asserted in its third amended complaint.” At issue was whether Kakalia had a compensable takings claim under Article 10, § 2 “and/or a claim for unjust enrichment following a tax-foreclosure sale of its property under the former provisions of the” GPTA. Its “property was not sold at a public auction; instead” defendant-county exercised its statutory election to purchase it from defendant-Otsego County Treasurer, “the FGU, for the minimum bid under MCL 211.78m(1), as amended by 2014 PA 501.” In Jackson, the Supreme Court “extended the principles outlined in Rafaeli to cases where the property was not offered for sale at public auction and, instead, a governmental unit other than the state purchased a tax-foreclosed property from the FGU for the minimum bid under former MCL 211.78m(1).” The Supreme Court held “that a minimum-bid transfer between governmental units under former MCL 211.78m constitutes a taking under the Takings Clause of the Michigan Constitution ‘if the value of the property retained exceeds what the government was owed.’” But it “‘reaffirm[ed] the Rafaeli Court’s rejection of the full fair market value of plaintiffs’ properties as the appropriate measure of damages for a tax foreclosure taking when a property was offered for sale at a public auction.’” Thus, the court found that “to the extent that the value of Kakalia’s property exceeded the amount that Kakalia owed in delinquent taxes and attendant fees, the government received a surplus value and thus there was a taking without just compensation in violation of the Michigan Constitution’s Takings Clause.” It noted that “MCL 211.78t, which was added by 2020 PA 256, outlines how a former property owner or other claimant may claim an interest in the remaining proceeds following a sale of foreclosed property and is the ‘exclusive mechanism for a claimant to claim and receive any applicable remaining proceeds under the laws of this state.’ Although MCL 211.78t applies retroactively, it does not apply when a governmental unit has exercised its right of first refusal under former MCL 211.78m(1) and purchased the property from the FGU for the minimum bid.” Thus, the court concluded that “the MCL 211.78t claims process” did not apply here. Instead, Kakalia “should proceed through standard processes of inverse condemnation, separate from the statutory process of MCL 211.78t.” Vacated and remanded.

“Dangerous building” in violation of a township ordinance; MCL 125.539; Competent, material, & substantial evidence

Concluding that appellant-Simonte (homeowner) failed to establish that the circuit court erred by determining that appellee-Township’s decision requiring her to either repair or demolish the home was “supported by competent, material, and substantial evidence,” the court affirmed. Simonte argued that the record failed “to establish that the structure is likely to collapse or that parts of it are likely to fall or become detached.” She asserted “that the photos presented in the circuit court showed discoloration rather than deterioration of the decks, and the photos refute the circuit court’s indication that the metal roof sheeting extends off the roofline by ‘a foot or more.’” But Simonte did not provide the court “with the photos that were presented to the circuit court or to” the Township Board. As the appellant, Simonte bore the burden of providing the court “with a record that verifies the factual bases of her claims. An appellant waives appellate review by failing to provide this Court with ‘a complete record for review.’” The court concluded that without the photos, its “ability to engage in any meaningful review of the circuit court’s decision” was impaired. However, it noted “that the minutes of the [3/5/24] hearing indicate that neighboring residents expressed concern that the roof ‘flops’ around, which is consistent with the Township attorney’s assertion at the circuit court hearing that the roof moves and levitates off the structure during strong winds.” Thus, based on the limited record provided to the court, “it appears that the condition of the home is such that part of the structure is likely to detach and injure persons or property.”

Compensable “taking” under 1963 Const, art 10, § 2; Unjust enrichment claim following a tax-foreclosure sale under the General Property Tax Act (GPTA); Jackson v Southfield Neighborhood Revitalization Initiative; Yono v County of Ingham; Rafaeli, LLC v Oakland Cnty; Foreclosing governmental unit (FGU)

On remand for reconsideration in light of Jackson and Yono, the court held that the “trial court erred by summarily disposing of all of [plaintiff-]Kakalia’s claims asserted in its third amended complaint.” At issue was whether Kakalia had a compensable takings claim under Article 10, § 2 “and/or a claim for unjust enrichment following a tax-foreclosure sale of its property under the former provisions of the” GPTA. Its “property was not sold at a public auction; instead” defendant-county exercised its statutory election to purchase it from defendant-Otsego County Treasurer, “the FGU, for the minimum bid under MCL 211.78m(1), as amended by 2014 PA 501.” In Jackson, the Supreme Court “extended the principles outlined in Rafaeli to cases where the property was not offered for sale at public auction and, instead, a governmental unit other than the state purchased a tax-foreclosed property from the FGU for the minimum bid under former MCL 211.78m(1).” The Supreme Court held “that a minimum-bid transfer between governmental units under former MCL 211.78m constitutes a taking under the Takings Clause of the Michigan Constitution ‘if the value of the property retained exceeds what the government was owed.’” But it “‘reaffirm[ed] the Rafaeli Court’s rejection of the full fair market value of plaintiffs’ properties as the appropriate measure of damages for a tax foreclosure taking when a property was offered for sale at a public auction.’” Thus, the court found that “to the extent that the value of Kakalia’s property exceeded the amount that Kakalia owed in delinquent taxes and attendant fees, the government received a surplus value and thus there was a taking without just compensation in violation of the Michigan Constitution’s Takings Clause.” It noted that “MCL 211.78t, which was added by 2020 PA 256, outlines how a former property owner or other claimant may claim an interest in the remaining proceeds following a sale of foreclosed property and is the ‘exclusive mechanism for a claimant to claim and receive any applicable remaining proceeds under the laws of this state.’ Although MCL 211.78t applies retroactively, it does not apply when a governmental unit has exercised its right of first refusal under former MCL 211.78m(1) and purchased the property from the FGU for the minimum bid.” Thus, the court concluded that “the MCL 211.78t claims process” did not apply here. Instead, Kakalia “should proceed through standard processes of inverse condemnation, separate from the statutory process of MCL 211.78t.” Vacated and remanded.