Opinion
No. 334917
11-21-2017
LANCE WEBLEY and L. A. WEBLEY CONSULTING, PLC, Plaintiffs-Appellants, v. KALAMAZOO COUNTY FRIEND OF THE COURT, KEVIN NIGEL CRUM, and MEAGAN KOZIATEK, Defendants-Appellees.
UNPUBLISHED Kalamazoo Circuit Court
LC No. 2016-000158-CD Before: SWARTZLE, P.J., and SAWYER and MARKEY, JJ. PER CURIAM.
Plaintiffs, Lance Webley and L. A. Webley Consulting, PLC, appeal as of right the trial court's judgment granting defendants, Kalamazoo County Friend of the Court (FOC), Kevin Nigel Crum, and Meagan Koziatek, summary disposition and awarding them sanctions. We affirm.
I. BACKGROUND
Webley entered into an agreement with Kalamazoo FOC in 2008, under which he provided custody evaluations and psychological testing for FOC clients and was paid $85 per hour for his services, capped at a defined limit per case and dependent upon the type of services provided. This agreement ended on December 31, 2008, but plaintiffs alleged that the parties continued operating as if that agreement remained in force until January 2016, when Webley was informed that his contract was terminated.
On May 17, 2016, plaintiffs sued defendants alleging that Webley's termination was actionable under the Whistleblower's Protection Act (WPA), MCL 15.361 et seq. According to plaintiffs' complaint, Webley was fired as retaliation after he accused defendant Koziatek, a non-attorney employee of the Kalamazoo FOC, of engaging in the unauthorized practice of law by advising Kalamazoo FOC clients to seek professional parenting-time supervision.
Defendants sought summary disposition under MCR 2.116(C)(8) arguing that neither plaintiff was an employee of the Kalamazoo FOC under the WPA, as applied by this Court in Chilingirian v City of Fraser (On Remand), 200 Mich App 198, 200; 504 NW 2d 1 (1993) (Chilingirian II). Plaintiffs responded that they pleaded sufficient facts to survive summary disposition under Chilingirian II and that, in any event, Chilingirian II was wrongly decided and should be reversed. The trial court disagreed and concluded that, as pleaded in plaintiffs' complaint, plaintiffs were not employees of the Kalamazoo FOC under the economic-realities test adopted by Chilingirian II. The trial court then sanctioned plaintiffs for filing a claim devoid of arguable legal merit. Plaintiffs appealed.
II. ANALYSIS
A. The Trial Court Properly Granted Summary Disposition to Defendants
Plaintiffs first argue that the trial court improperly granted summary disposition because plaintiffs' complaint sufficiently pleaded facts from which a reasonable jury could conclude that plaintiffs were "employees" under the WPA. We disagree.
"This Court reviews de novo issues of statutory interpretation and orders granting summary disposition." Bedford v Witte, 318 Mich App 60, 64; 896 NW2d 69 (2016). Summary disposition is appropriate under (C)(8) when "[t]he opposing party has failed to state a claim on which relief can be granted." MCR 2.116(C)(8). "A motion brought under subrule (C)(8) tests the legal sufficiency of the complaint solely on the basis of the pleadings." Dalley v Dykema Gossett, 287 Mich App 296, 304; 788 NW2d 679 (2010). "A reviewing court must accept all well-pleaded allegations as true and construe them in the light most favorable to the nonmoving party." Hackel v Macomb Co Comm, 298 Mich App 311, 316; 826 NW2d 753 (2012).
Plaintiff's Complaint Failed to Comply with MCR 2 .113(F). Initially, we conclude that plaintiffs failed to adhere to the requirements of MCR 2.113(F), which provides as follows:
(1) If a claim or defense is based on a written instrument, a copy of the instrument or its pertinent parts must be attached to the pleading as an exhibit unless the instrument is
(a) a matter of public record in the county in which the action is commenced and its location in the record is stated in the pleading;
(b) in the possession of the adverse party and the pleading so states;
(c) inaccessible to the pleader and the pleading so states, giving the reason; or
(d) of a nature that attaching the instrument would be unnecessary or impractical and the pleading so states, giving the reason.
(2) An exhibit attached or referred to under subrule (F)(1)(a) or (b) is a part of the pleading for all purposes.
Attachment of the written agreement underlying a claim is mandatory under MCR 2.113(F)(1) unless an exception to this mandate applies and is pleaded by the plaintiff. Plaintiffs' complaint referenced a written agreement between the parties, and plaintiffs' claim was based, in part, on this written agreement. Plaintiffs, however, failed to attach the written agreement to the complaint. Moreover, plaintiffs' complaint did not plead any exception to MCR 2.113(F)(1). Accordingly, plaintiffs' complaint was insufficient as a matter of law, and summary disposition was appropriate.
The Economic Realities Test Applies to the WPA. Even assuming plaintiffs had complied with MCR 2.113(F), we conclude plaintiffs' complaint was insufficient under our long-standing precedent to support a claim that Webley was an employee of the Kalamazoo FOC.
Section 2 of the WPA provides as follows:
An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because the employee, or a person acting on behalf of the employee, reports or is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body, unless the employee knows that the report is false, or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action. [MCL 15.362.]"The underlying purpose of the WPA is protection of the public," and the WPA "meets this objective by protecting the whistleblowing employee and by removing barriers that may interdict employee efforts to report violations or suspected violations of the law." Anzaldua v Neogen Corp, 292 Mich App 626, 631; 808 NW2d 804 (2011) (internal quotation marks and citation omitted).
The WPA defines "employee" as "a person who performs a service for wages or other remuneration under a contract of hire, written or oral, express or implied" including "a person employed by the state or a political subdivision of the state except state classified civil service." MCL 15.361(a). The WPA defines "person" as "an individual, sole proprietorship, partnership, corporation, association, or any other legal entity." MCL 15.361(c).
In Chilingirian v City of Fraser, 194 Mich App 65, 69-70; 486 NW2d 347 (1992) (Chilingirian I), this Court concluded that, in determining whether a person is an employee under the WPA,
[t]he test to be employed is one of "economic reality."
The economic reality test looks to the totality of the circumstances surrounding the work performed. Relevant factors to consider under the test include: (1) control of a worker's duties; (2) payment of wages; (3) right to hire, fire, and discipline; and (4) performance of the duties as an integral part of the employer's business toward the accomplishment of a common goal. All the factors are viewed as a whole and no single factor is controlling.
Applying the economic-realities test, this Court concluded that the plaintiff "was an independent contractor engaged in his own independent business" and was not an employee of the defendant city. Id. at 70. Our Supreme Court then remanded Chilingirian I to this Court to consider whether the plaintiff could be an employee under the WPA despite being an independent contractor. Chilingirian v City of Fraser, 442 Mich 874 (1993).
On remand, in Chilingrian II, this Court clarified that an independent contractor was not necessarily precluded in every circumstance from being an employee under the WPA. Chilingirian II, 200 Mich App at 200. Nonetheless, this Court affirmed that, under the economic-realities test, the plaintiff was not an employee of the defendant city. Id., citing Chilingirian I, 194 Mich App at 70.
Our Supreme Court denied the plaintiff leave to appeal from this Court's holding in Chilingirian II. Chilingirian v City of Fraser (On Remand), 443 Mich 853 (1993). The Chilingirian line of cases remains controlling precedent. Accordingly, since 1993, the economic-realities test has controlled this Court's, as well as trial courts', determinations of whether a person is an employee under the WPA. We are without authority to overrule the Chilingirian line of cases, and we are therefore bound to apply the economic-realities test to this appeal. MCR 7.215(C)(2), (J)(1).
We Decline to Declare a "But For" Conflict with Chilingirian. Plaintiffs argue that summary disposition was not appropriate because Chilingirian II was wrongly decided. Again, we note that the Chilingirian line of cases is binding on this Court under MCR 7.215(J)(1). Accordingly, we consider plaintiffs' argument as a request for this Court to declare a "but-for" conflict with the Chilingirian line of cases. See MCR 7.215(J)(2).
On appeal, plaintiffs provide this Court with three arguments that the Chilingirian line of cases was wrongly decided. We find each of these reasons unpersuasive and decline to declare a "but-for" conflict with the Chilingirian line of cases.
First, plaintiffs argue that our Supreme Court has increased its emphasis on textual construction since Chilingirian II was decided and our Supreme Court denied leave to appeal. In their brief on appeal, plaintiffs support their assertion that our Supreme Court has more heavily relied on textualism in the years following Chilingirian II with only a single quotation:
"the objective of statutory interpretation is to give effect to the Legislature's intent. . . . When that language is unambiguous, no further judicial construction is required or permitted, because the Legislature is presumed to have intended the meaning it plainly expressed." [In re AJR, 496 Mich 346, 352-353; 852 NW2d 760 (2014) (internal quotation marks and citations omitted)].
One quotation is hardly sufficient to serve as evidence of a new trend in our Supreme Court's jurisprudence. Moreover, to the extent that, when interpreting a statute, the courts of this state are to give primary consideration to the unambiguous language employed in the statute, that precedent equally applied at the time the Chilingarian cases were decided. See Lorencz v Ford Motor Co, 439 Mich 370, 376; 483 NW2d 844 (1992) ("When a statute is clear and unambiguous, judicial construction or interpretation is unnecessary and therefore, precluded."). Indeed, this precedent is a bedrock principle of our jurisprudence. See Crary v Marqueette Circuit Judge, 197 Mich 452, 454; 163 NW 905 (1917) ("Where the language of a statute makes its meaning obscure, it is the duty of the courts to construe, giving it a reasonable and sensible interpretation; but where the language is clear and unambiguous, it is only for the courts to obey and enforce it.").
Therefore, that our Supreme Court may have subsequently affirmed this long-standing principle of statutory instruction after the Chilingirian cases provides no justification for this Court to question the legitimacy of the Chilingirian cases.
Next, plaintiffs argue that Chilingirian II was found unpersuasive by the New Jersey Supreme Court when interpreting a provision in New Jersey law similar to the WPA. See D'Annunzio v Prudential Insurance Co of America, 383 NJ Super 270, 283 n 3, 891 A2d 673 (2006). The fact that New Jersey statutes and precedent are not binding in this jurisdiction is enough reason to deny this argument.
Nonetheless, New Jersey's whistleblower protection statute defines an employee as "any individual who performs services for and under the control and direction of an employer." Id. at 277, citing NJSA 34:19-2(b). In rejecting a test similar to the economic-realities test used in our jurisdiction, the New Jersey Supreme Court found dispositive the New Jersey legislature's "control and direction" language, and ultimately adopted a test focusing on the control and direction an employer has over the person. Id. at 275, 281. As noted above, the WPA defines "employee" differently as "a person who performs a service for wages or other remuneration under a contract of hire, written or oral, express or implied" including "a person employed by the state or a political subdivision of the state except state classified civil service." MCL 15.361(a). Our statute makes no explicit reference to the employer's control over the person; therefore, we find any comparison to New Jersey law or cases interpreting New Jersey law inapposite. Simply put, the Chilingarian cases definitively interpreted our Legislature's intent in the WPA and that interpretation has held for more than 23 years. That New Jersey's legislature has chosen a different policy outcome, utilizing different statutory language, is of no moment to this Court.
Finally, plaintiffs argue that we should construe the WPA consistently with the Michigan Employment Security Act (MESA) because both statutes use the term "renumeration." Accordingly, because our Supreme Court has read the term "renumeration" expansively in the unemployment context to include earnings made as an independent contractor, plaintiffs argue that the Chilingarian cases erred by reading the WPA more narrowly. Again, we find plaintiffs' comparison inapposite.
The MESA and the WPA are separate acts codified in separate chapters. The MESA is codified under chapter 421, which pertains to employment security, while the WPA is codified under chapter 15, which pertains to public officers and employees. Moreover, the statutes were enacted for different purposes. The MESA was enacted to combat the "serious menace" that "economic insecurity due to unemployment" poses "to the health, morals, and welfare of the people of this state." MCL 421.2(1). The WPA was enacted to prevent barriers to encourage employees to report violations of law. See Anzaldua, 292 Mich App at 631.
Further, while both definitions utilize the term "remuneration," the WPA definition is facially narrower than the MESA definition as the WPA requires that the remuneration be provided to the worker "under a contract for hire." MCL 15.361(a). As noted by this Court in Chilingarian II, 200 Mich App at 200, " 'contract of hire' is a legal term of art consonant with the term employee but not broad enough to include professionals" classified as independent contractors under the economic-realities test. Early versions of the Workers Disability Compensation Act similarly utilized the term "contract of hire," and our Supreme Court concluded that the term referenced the dichotomy between employees and independent contractors as determined by the economic-realities test. See Hoste v Shanty Creek Management, Inc, 459 Mich 561, 571-572; 592 NW2d 360 (1999).
Moreover, the "[t]he WPA is a remedial statute," Anzaldua, 292 Mich App at 631, and "Michigan courts have consistently applied the economic reality test in the context of social remedial legislation," Buckley v Professional Plaza Clinic Corp, 281 Mich App 224, 235; 761 NW2d 284 (2008). Accordingly, when read in the appropriate contexts, and focusing on the operative wording, applying the economic-realities test under the WPA, but not under the MESA, is entirely appropriate.
For these reasons, we decline plaintiffs' invitation to declare a "but-for" conflict with the Chilingarian cases.
Plaintiffs Are Not Employees Under the WPA. Next, we address plaintiffs' argument that the trial court erred in finding that plaintiffs' complaint did not plead sufficient facts from which a reasonable jury could conclude that plaintiffs were employees of the Kalamazoo FOC. Because we find that each factor of the economic-realities test undermines plaintiffs' assertion of employment, we conclude that the trial court did not err in granting summary disposition to defendants.
Under the first factor ("control of a worker's duties"), the parties' agreement required Webley to provide the requested services and to do so in a timely manner. The complaint alleged that his work was closely scrutinized and that there would be demands to make changes to his reports on occasion. Webley, however, was allowed to provide additional services to individuals on a private-client basis. Further, the agreement did not restrict the manner in which Webley exercised his independent professional judgment in performing evaluations. Accordingly, this factor favors defendants.
With respect to the second factor ("payment of wages"), the complaint alleged that Webley was paid on "a fixed schedule" based on the amount of work assigned. Under the agreement, the payments to Webley were not subject to any withholdings for income taxes or social security. Further, as alleged in the complaint, Webley was issued a 1099, and "Webley and Webley Consulting used one checking account for business and personal expenses." Again, this factor favors defendants.
With respect to the third factor ("right to hire, fire, and discipline"), either party had the ability to terminate the agreement at will with 30 days' written notice. Webley also had the ability to hire his own employees. The contract provided that "[t]he Service Provider shall exercise all supervisory control and general control over all workers' duties, payment of all wages to Service Provider's employees, and the right to hire, fire, and discipline all of its employees." In fact, Webley paid Tim Howard, a fully licensed psychologist, to review his work when necessary, and Webley's significant other greeted patients at Webley's office. This factor also favors defendants.
Regarding the fourth factor ("performance of the duties as an integral part of the employer's business toward the accomplishment of a common goal"), we note that the Kalamazoo FOC contracted with numerous individuals who performed evaluations and testing, and Webley was merely one of these individuals. Accordingly, this factor favors defendants.
Finally, the parties' characterization of their relationship is a relevant consideration in our analysis. Mantei v Michigan Public School Employees Retirement System, 256 Mich App 64, 85-86; 663 NW2d 486 (2003). Here, the parties' agreement characterized Webley as an "independent service provider" and expressly stated that he shall not be considered a court or county employee. Again, this consideration favors defendants.
Based on the considerations above, the facts alleged in plaintiffs' complaint are insufficient to state a claim under the WPA. Accepting plaintiffs' well-pleaded allegations as true and construing them in a light most favorable to plaintiffs, we agree plaintiffs were not performing services under "a contract of hire" per the economic-realities test. Therefore, the trial court did not err in granting defendants' motion for summary disposition under MCR 2.116(C)(8). B. The Trial Court's Sanctions Were Not an Abuse of Discretion
Finally, plaintiffs argue that the trial court erred in granting costs and fees to defendants. "This Court reviews a trial court's ruling on a motion for costs and attorney fees for an abuse of discretion." Keinz v Keinz, 290 Mich App 137, 141; 799 NW2d 576 (2010). "A trial court abuses its discretion when its decision results in an outcome falling outside the range of principled outcomes." Dep't of Transp v American Motorists Ins Co, 305 Mich App 250, 254; 852 NW2d 645 (2014). "A trial court's findings of fact, such as whether a party's position was frivolous, may not be set aside unless they are clearly erroneous." Keinz, 290 Mich App at 141. A "trial court's decision is clearly erroneous when, although there is evidence to support it, the reviewing court is left with a definite and firm conviction that a mistake has been committed." Holton v Ward, 303 Mich App 718, 734 n 20; 847 NW2d 1 (2014) (internal quotation marks and citation omitted).
A party is generally "not entitled to an award of attorney fees and costs unless such an award is expressly authorized by statute or court rule." Kennedy v Robert Lee Auto Sales, 313 Mich App 277, 285-286; 882 NW2d 563 (2015). MCL 600.2591(1) provides as follows:
(1) 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.The trial court found that plaintiffs' action was frivolous under MCL 600.2591(3)(a)(iii). An action is "frivolous" under MCL 600.2591(3)(a)(iii) when "[t]he party's legal position was devoid of arguable legal merit." "[A] claim is devoid of arguable legal merit if it is not sufficiently grounded in law or fact, such as when it violates basic, longstanding, and unmistakably evident precedent." Adamo Demolition Co v Dep't of Treasury, 303 Mich App 356, 369; 844 NW2d 143 (2013).
The Chilingarian line of cases has been controlling precedent in this jurisdiction since 1993. Plaintiffs acknowledged this precedent in their reply to defendant's motion for summary disposition, but argued that Chilingirian II was wrongly decided such that it should be overruled. As support for this assertion, however, plaintiffs provided only a cursory argument that the term "employee" should be interpreted expansively in the WPA context, similarly to how the term has been interpreted in other statutes. Plaintiffs did not address the differences in context or purpose between those statutes and the WPA, and, although plaintiffs relied heavily on the text of the WPA as evidence that Chilingarian II was wrongly decided, plaintiffs failed to address important textual differences between the WPA and the other statutes. Moreover, plaintiffs failed to cite to or discuss the New Jersey decision upon which they place so much emphasis now on appeal. Therefore, based on the arguments made to the trial court, we are not left with a definite and firm conviction that the trial court made a mistake in concluding that plaintiffs' position was devoid of arguable legal merit. Accordingly, we do not find that the trial court abused its discretion in awarding sanctions.
III. CONCLUSION
We affirm the trial court's grant of summary disposition to defendants. In doing so, we conclude that the trial court properly applied the controlling economic-realities test and decline to declare a "but for" conflict with the Chilingarian line of cases. We also affirm the trial court's award of costs and fees.
/s/ Brock A. Swartzle
/s/ David H. Sawyer
/s/ Jane E. Markey