Opinion
355847
10-21-2021
MASS2MEDIA, LLC, Plaintiff-Appellant, v. DION CIMINI, Defendant-Appellee.
UNPUBLISHED
Oakland Circuit Court LC No. 2020-183943-CB
Before: Murray, C.J., and Jansen and Riordan, JJ.
Per Curiam.
Plaintiff, Mass2Media, LLC, appeals as of right the trial court order granting defendant, Dion Cimini, summary disposition under MCR 2.116(C)(6) in this employment relations matter. Plaintiff argues that the trial court erred in granting defendant summary disposition because plaintiff's 2020 claims for breach of contract and conversion were separate and distinct from its 2019 claims related to commission, the claims did not arise from the same transaction or occurrence so the compulsory joinder rule did not apply, and the trial court erred in assessing sanctions against plaintiff's counsel. We affirm.
I. FACTUAL BACKGROUND
Plaintiff is in the business of designing, manufacturing, and selling machinery to extract oil from plant materials, and provides consulting, site planning, and training services. Defendant was hired by plaintiff in September 2017, to work as a technical specialist at the business headquarters in Royal Oak. The company has a second location in California. In January 2019, defendant transitioned into a new role as salesperson. During defendant's employment, two laptop computers were purchased on company credit cards for him to use. From January to November 2019, defendant traveled from California to Michigan several times, but could not recall during his deposition what clients he met with or the business purpose of each trip. Defendant's girlfriend, who is now his wife, lived in Michigan. Defendant's employment was terminated on November 29, 2019.
II. PROCEDURAL HISTORY
On December 16, 2019, plaintiff filed a complaint in the related lower court case, Lower Court No. 2019-178564-CB ("the 2019 case"). Plaintiff sought to enforce the noncompete agreement between the parties, and sought a declaratory ruling that the commission paid defendant was the correct final amount due. Ten days later, plaintiff sent defendant a letter outlining his final commission, noting that the company determined that defendant engaged in unauthorized spending on his company credit card and retained two company-bought computers. Plaintiff requested that defendant return the property, or plaintiff would take action to recoup same. On January 14, 2020, defendant filed an affidavit stating that he returned all company property, including a computer and company credit card, to his cousin and coworker at the California office after he was terminated. Thus, plaintiff filed a first amended complaint in the 2019 action, removing the count for breach of contract, and keeping the claim for a declaratory judgment regarding commission. Defendant counterclaimed in the 2019 case, alleging several counts of breach of contract.
After being rescheduled several times because of the COVID-19 pandemic, defendant was deposed on July 21, 2020. Thereafter, plaintiff moved for leave to file a second amended complaint in the 2019 action. The trial court denied leave on August 22, 2020, stating:
This case has been proceeding much too slowly, basically due to Plaintiff's refusal to take a Zoom deposition of the Defendant. The Court had to intervene to allow for the Deposition to occur. Now, with the imminent close of discovery, Plaintiff avers that the Deposition provided information allowing it to now seek damages for conversion and breach of contract. To allow these claims to be raised at this late date will require an extension of discovery and trial dates. Additionally, it appears to this Court that the claims, particularly the Conversion claim, are futile. In light of these factors, the Motion to file a Second Amended Complaint is DENIED.
On October 8, 2020, plaintiff filed a new complaint in Lower Court No. 2020-183943-CB ("the 2020 action"), the case subject to this appeal, with the initial required statement that "There is no other pending or resolved civil action arising out of the transactions or occurrences alleged in the complaint." Plaintiff alleged that defendant retained two company-bought computers after being terminated, and charged over $26,000 on his company credit card for nonbusiness-related expenses. Thus, plaintiff alleged breach of contract, statutory conversion, and common law conversion.
In response, defendant moved for summary disposition under MCR 2.116(C)(6) because the 2020 complaint violated compulsory joinder requirements under MCR 2.203(A). Defendant also sought an award of costs and sanctions. Plaintiff filed a response in opposition to summary disposition, raising the same arguments that it does on appeal. The trial court granted defendant summary disposition under MCR 2.116(C)(6), determined that MCR 2.203(A) required plaintiff to join its claims against defendant, and assessed plaintiff's counsel sanctions under MCR 1.109(E). Plaintiff now appeals.
III. SUMMARY DISPOSITION
Plaintiff first argues that the trial court erred in granting defendant summary disposition under MCR 2.116(C)(6) because the 2019 case involved commission, whereas the 2020 case involved business expenses, and therefore did not arise from the same claim. We disagree.
The trial court's decision on a motion for summary disposition is reviewed de novo. El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 159; 934 N.W.2d 665 (2019). Summary disposition is appropriate under MCR 2.116(C)(6) where "[a]nother action has been initiated between the same parties involving the same claim." MCR 2.116(C)(6). In deciding whether summary disposition under MCR 2.116(C)(6) is appropriate, the court must consider "the pleadings, depositions, admissions, and documentary evidence then filed in the action or submitted by the parties[.]" MCR 2.116(G)(5).
"MCR 2.116(C)(6) is a codification of the former plea of abatement by prior action." Fast Air, Inc v Knight, 235 Mich.App. 541, 545; 599 N.W.2d 489 (1999). The purpose of the rule is to prevent parties from being harassed by new suits brought by the same plaintiffs involving the same questions as those in other pending suits. Id. at 546. The court rule "does not require that all the parties and all the issues be identical." Id. at 545 n 1. "The two suits only have to be based on the same or substantially the same cause of action." Id. (quotation marks and citation omitted). A motion based on MCR 2.116(C)(6) is properly granted where resolution of the action will require examination of the same operative facts as the pending action. J.D. Candler Roofing Co, Inc v Dickson, 149 Mich.App. 593, 601; 386 N.W.2d 605 (1986).
This Court is not strictly required to follow uncontradicted opinions decided before November 1, 1990, but such cases are nevertheless precedent and entitled to deference. Woodring v Phoenix Ins Co, 325 Mich.App. 108, 114-115; 923 N.W.2d 607 (2018).
The parties do not dispute that the 2019 and 2020 actions arose between the same parties. The issue is whether the 2019 and 2020 actions involve the same claim. The trial court did not err in granting defendant summary disposition under MCR 2.116(C)(6) because the 2019 and 2020 actions involve the same parties and the same claim.
Although the 2019 action concerned the proper amount of commission owed defendant, and the 2020 action concerned business expenses and company property, the issues need not be identical. Fast Air, 235 Mich.App. at 545 n 1. The two suits are based on the same or substantially the same underlying cause of action-defendant's employment with plaintiff. Id. Resolution of the 2020 action would require examination of the same operative facts as the 2019 action, J.D. Candler Roofing, 149 Mich.App. at 601, namely, the history of defendant's employment during the same time period, 2019, and the same employment agreement. Plaintiff's argument that commissions and business expenses were governed by different parts of the same governing employment agreement and incorporated policies is unavailing. It is clear that the two actions involve the same or substantially the same cause of action, and summary disposition was appropriate under MCR 2.116(C)(6).
IV. COMPULSORY JOINDER
Next, plaintiff argues that the trial court erred in granting defendant summary disposition because it was not required to join the 2020 claims with the 2019 lawsuit. We disagree.
As stated above, a motion for summary disposition is reviewed de novo. El-Khalil, 504 Mich. at 159. The proper interpretation and application of a court rule is also reviewed de novo. Garrett v Washington, 314 Mich.App. 436, 450; 886 N.W.2d 762 (2016).
MCR 2.203(A) provides for the compulsory joinder of claims:
In a pleading that states a claim against an opposing party, the pleader must join every claim that the pleader has against that opposing party at the time of serving the pleading, if it arises out of the transaction or occurrence that is the subject matter of the action and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction.
"In determining whether two claims arise out of the same transaction or occurrence for purposes of MCR 2.203(A), res judicata principles should be applied." Garrett, 314 Mich.App. at 451.
The purpose of res judicata is "to relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and encourage reliance on adjudication, that is, to foster the finality of litigation." Id. at 441 (quotation marks and citation omitted). For the doctrine to apply, three elements must be met: "(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." Id. (quotation marks and citations omitted). The doctrine of res judicata is applied broadly, barring not only claims already litigated, but also "every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not." Id. at 442 (quotation marks and citation omitted). "[T]he determinative question is whether the claims in the instant case arose as part of the same transaction as did the plaintiff's claims in the original action." Id. (quotation marks, brackets, and citation omitted). "Under the transactional test, a claim is viewed in 'factual terms' and considered coterminous with the transaction, regardless of the number of substantive theories, or variant forms of relief flowing from those theories, that may be available to the plaintiff." Id. (quotation marks and citation omitted). "Whether a factual grouping constitutes a 'transaction' for purposes of res judicata is to be determined pragmatically, by considering whether the facts are related in time, space, origin or motivation, and whether they form a convenient trial unit." Id. (quotation marks, brackets, ellipsis, and citations omitted).
The trial court did not err in dismissing plaintiff's complaint because plaintiff failed to abide by the compulsory joinder rule in MCR 2.203(A). It is clear that the 2020 claims for breach of contract and conversion arose from the same transaction or occurrence as the 2019 case- defendant's employment. MCR 2.203(A); Garrett, 314 Mich.App. at 442. The facts underlying each case are related in time, space, origin, or motivation. Garrett, 314 Mich.App. at 442. All of the claims arise from defendant's employment as a salesperson for plaintiff from January to November 2019. The same facts and the same employment agreement and incorporated policies would be examined for both cases, meaning, the two cases form a convenient trial unit. Id.
Additionally, res judicata bars claims that could have been raised in the first instance, but were not, id., and MCR 2.203(A) requires that the pleader join every claim it has "at the time of serving the pleading." Plaintiff asserts that at the time it filed the original complaint and the first amended complaint in the 2019 action, it did not have sufficient facts to plead the 2020 claims of breach of contract and conversion as well-grounded in fact and law, as required by MCR 1.109(E)(5)(b) (the effect of a signature on a document means that it is well-grounded in fact and warranted by existing law). Plaintiff's argument lacks merit.
Plaintiff filed the initial complaint in the 2019 case on December 16, 2019, alleging breach of contract, and seeking a declaratory judgment regarding commission. In this initial complaint, plaintiff stated that the employment agreement required employees "to return all materials provided by [plaintiff] following cessation of employment," and that in defendant's notice of termination, plaintiff "asked for the return of [plaintiff's] property . . . . As of the date of this Complaint, [defendant] has not complied with this request." Additionally, it stands to reason that plaintiff would have received defendant's monthly credit card bills from January to November 2019, making plaintiff aware of defendant's charges. Thus, it appears that plaintiff knew of defendant's alleged failure to return company property and misuse of the company credit card as of the date of the filing of the original complaint, and should have joined these claims. MCR 2.203(A); Garrett, 314 Mich.App. at 442.
Moreover, on December 26, 2019, plaintiff sent defendant a letter outlining his final commission payment, stating that defendant engaged in unauthorized spending on his company credit card and retained company property after his termination. Plaintiff stated that it would take action to recoup same if it was not returned. Thus, plaintiff had knowledge of its claims for breach of contract and conversion that it alleges in the 2020 complaint before it filed the first amended complaint in the 2019 action on February 4, 2020. Thus, compulsory joinder was required under MCR 2.203(A), which plaintiff failed to do, and summary disposition was appropriate.
V. SANCTIONS
Lastly, plaintiff argues that the trial court abused its discretion by sanctioning plaintiff's counsel because the trial court failed to provide any reasoning for the sanctions, and plaintiff's counsel did not engage in conduct meriting a sanction. We disagree.
A trial court's decision regarding sanctions is reviewed for an abuse of discretion. Kaftan v Kaftan, 300 Mich.App. 661, 668; 834 N.W.2d 657 (2013). "An abuse of discretion occurs when the trial court's decision is outside the range of reasonable and principled outcomes." Souden v Souden, 303 Mich.App. 406, 414; 844 N.W.2d 151 (2013) (quotation marks and citation omitted). "A trial court's findings with regard to whether a claim or defense was frivolous, and whether sanctions may be imposed, will not be disturbed unless it is clearly erroneous. A decision is clearly erroneous where, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been made." Meisner Law Group, PC v Weston Downs Condo Ass'n, 321 Mich.App. 702, 730; 909 N.W.2d 890 (2017) (quotation marks and citations omitted). The proper interpretation and application of a court rule is reviewed de novo. Garrett, 314 Mich.App. at 450.
MCR 1.109(E)(2) requires every document to be signed by an attorney or the party if the party is not represented by an attorney. The signature constitutes a certification by the signer that:
(a)he or she has read the document;
(b)to the best of his or her knowledge, information, and belief formed after reasonable inquiry, the document is well grounded in fact and is warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law; and
(c) the document is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. [MCR 1.109(E)(5)(a)-(c).]
If a document is signed in violation of this court rule, the court "shall impose" a sanction, "which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the document, including reasonable attorney fees." MCR 1.109(E)(6).
A party who pleads a frivolous claim is subject to costs under MCR 2.625(A). MCR 1.107(E)(7). Under MCR 2.625(A)(2), "if the court finds on motion of a party that an action or defense was frivolous, costs shall be awarded as provided by MCL 600.2591." MCL 600.2591(1) provides:
Upon motion of any party, if a court finds that a civil action or defense to a civil action was frivolous, the court that conducts the civil action shall award to the prevailing party the costs and fees incurred by that party in connection with the civil action by assessing the costs and fees against the nonprevailing party and their attorney.MCL 600.2951(3)(a) defines "frivolous" to include, as relevant here, that "[t]he party had no reasonable basis to believe that the facts underlying that party's legal position were in fact true," MCL 600.2951(3)(a)(ii), or, "[t]he party's legal position was devoid of arguable legal merit," MCL 600.2951(3)(a)(iii).
The trial court did not abuse its discretion when it imposed $1,500 in sanctions against plaintiff's counsel as reasonable expenses incurred by the defense. Plaintiff filed the 2020 complaint in an attempt to bring claims of breach of contract and conversion that arose out of the same events at issue in the 2019 lawsuit. Plaintiff failed to identify in the 2020 complaint that there was another action pending between the same parties involving the same claims. Plaintiff filed the 2020 complaint after the trial court entered the order in the 2019 action denying plaintiff leave to amend the complaint to add these same claims, and determining that the claims, particularly conversion, were futile. Plaintiff never appealed this order, nor is it before the Court now to analyze the trial court's determination regarding futility. Rather, plaintiff filed the 2020 complaint when the proper course of action would have been to appeal the 2019 order denying leave to amend.
Thus, the trial court did not clearly err in determining that the 2020 complaint violated MCR 1.109(E) because it was not warranted by existing law having already denied leave to add these same claims and the claims having already been deemed futile by the court. MCR 1.109(E)(5)(b). Thus, the court was required to impose sanctions. MCR 1.109(E)(6). Moreover, plaintiff raised no challenge to the sanctions or the reasonableness of the attorney fees in the lower court or on appeal. Defense counsel requested $3,500 in fees, for 10 hours of work at $350 an hour. The court awarded defense counsel $1,500, a lesser amount. The trial court did not abuse its discretion in assessing this sanction against plaintiff's counsel.
Affirmed.
Christopher M. Murray Kathleen Jansen Michael J. Riordan