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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

BEARING360 LLC,

Plaintiff/Counter-DefendantAppellee,

UNPUBLISHED

August 31, 2017

v No. 330812

Emmet Circuit Court

LARRY CAMERON,

Defendant,

and

BRAD THOR,

Defendant/Counter-PlaintiffAppellant,

and

STRATEGIS SYSTEMS LLC and THOR 

ENTERTAINMENT GROUP, LLC,

LC No. 14-104498-CZ

Defendant-Appellants.

Before: MARKEY, P.J., and RONAYNE KRAUSE and BOONSTRA, JJ.

PER CURIAM.

Defendants appeal by right the trial court’s opinion and order denying their postjudgment motion for sanctions. We affirm.

I. BACKGROUND

This civil action arises from an acrimonious relationship between Barrett H. Moore and 

his former friend and client, defendant Brad Thor. Moore’s company, plaintiff Bearing360 LLC, 

provided consulting services (referred to as “life continuity” services) to high net worth 

individuals to assist them in preparing for possible catastrophic events, such as natural disasters, 

war and terrorism, that might disrupt the product supply chain. Thor became an investor in 
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plaintiff and other entities related to Moore. After the relationship between Moore and Thor 

soured and ended, plaintiff brought suit against Thor and his companies, defendants Strategis 

Systems, LLC and Thor Entertainment Group, LLC (TEG), as well as defendants Larry Cameron 

and Rodney Cox.

1 The complaint contained five counts: Misappropriation of Trade Secrets, 

Civil Conspiracy, Conversion, Tortious Interference, and Defamation. Plaintiff alleged in part 

that defendants had worked together to steal plaintiff’s confidential information and trade secrets 

related to life continuity and risk management, that Cox had abruptly discontinued his services 

for plaintiff after taking “his laptop, cellular phone, [and] work product,” and after having 

“downloaded onto his computer” plaintiff’s “propriety data/trade secrets,” and that defendants 

were constructing a safe haven facility using plaintiff’s confidential information and trade 

secrets.

Defendants moved for summary disposition. Plaintiff amended its complaint twice, 

adding factual allegations, removing the claims for tortious interference and defamation, and 

adding other claims. After plaintiff removed the tortious interference and defamation claims, 

defendants filed a February 5, 2015 Motion for Relief Pursuant to MCR 2.114(E) and (F), and 

MCR 2.625(A) (motion for sanctions), asserting that plaintiff had failed to make a reasonable 

inquiry into whether those claims were well grounded in fact and that it lacked a good faith basis 

for asserting them. Ultimately, the trial court denied the motion for sanctions, “[b]ased on the 

competing documents presented by both sides,” and denied defendants’ motion for summary 

disposition on plaintiff’s claims for misappropriation of trade secrets, conversion, and civil 

conspiracy.

Defendants thereafter sought discovery regarding plaintiff’s alleged trade secrets. 

Defendants filed multiple motions to compel or dismiss. Plaintiff, however, repeatedly refused 

to produce the requested documents, even after the court ordered it to “provide full and complete 

responses by” a certain date. 

The parties negotiated a proposed stipulated protective order and presented to the court,

for its resolution, defendants’ objection to the last two sentences of paragraph 14, as indicated in 

strikethrough text:

14. In the event any party intends to utilize documents or information subject 

hereto at any hearing or at trial in this action, that party shall notify counsel who 

has asserted confidentiality with respect to such materials of such intention, with 

specificity, at least ten (10) days in advance of the hearing or trial. Said 

documents are to be marked Confidential and the hearing, or portion of the trial, 

involving the documents or information shall be conducted “in camera”, and 

spectators shall be barred from the courtroom. Further, at trial if the validity of 

Bearing360, LLC’s Trade Secrets are at issue, that question shall be resolved by 

the Court “in camera”, out of the presence of the Jury, and the Court shall advice 

 1 Cameron and Cox worked as independent contractors on behalf of plaintiff. Plaintiff alleged 

that Thor had pressured him to engage Cox in that capacity. Plaintiff was unable to serve Cox

with process, and the clerk therefore entered an order dismissing him from the case.
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the Jury as to the validity or invalidity of Bearing360, LLC’s Trade Secrets. This 

is to avoid Bearing360 LLC’s Trade Secrets becoming public on the record or to 

the jury.

Relying on secondary authority, and in light of section 62 of the Michigan Uniform Trade 

Secrets Act (MUTSA), MCL 445.1901, et seq., plaintiff argued that the protection of its trade 

secrets through trial was necessary because once “documents find their way to the public record, 

they are no longer trade secrets.” Plaintiff contended that no guarantee of protection existed if 

the jury would be allowed to consider the trade secrets and that the court had the authority to 

review the documents in camera. Defendants asserted that it was premature to extend such trialrelated protections in a discovery order and that plaintiff’s request that the jury never view the 

documents would preclude a jury trial on the critical issue of whether trade secrets existed. They 

also alleged that plaintiff had not identified the specific nature of the trade secrets, but rather, had 

only given a broad description. The trial court concluded that “Plaintiff’s complaint [did] allege 

the specific nature of the trade secrets, i.e., ‘research data, formulas, calculations, and processes’ 

dealing with plaintiff’s business of providing advice to individuals and corporations about how 

to mitigate their risks from the occurrence of supply chain disruptions, etc. To the extent that 

Defendants assert that the pleading requirements require pleading of the actual secret information 

that constitutes the alleged trade secret, [they are] clearly incorrect.” However, the trial court 

also rejected plaintiff’s position, stating:

With respect to the language in paragraph 14, specifically the last two sentences 

of paragraph 14, the Court finds that language to be unnecessary in a 

confidentiality order pertaining to discovery. The Court will note for this record 

that Plaintiff has expressed and continues to express that there are trade secrets 

that are not to be disclosed, and that Plaintiff is even maintaining that 

notwithstanding a jury trial demand presented by Plaintiff that somehow the trial 

should be conducted without the jury viewing these trade secret materials. That is 

an issue that the Court will hear and decide if an appropriate motion is made, and 

there is support for that. [Emphasis added.]

After entry of the stipulated protective order, as modified by the court, plaintiff remained 

steadfast in its refusal to produce the information based on concerns that the trade secrets would 

not be protected at trial. The trial court entered an order compelling production of the 

documents, but on the date the responses were due plaintiff moved for reconsideration of that 

order, again arguing that the failure to provide protection for the trade secrets at trial provided 

plaintiff with no sense of security. The trial court denied reconsideration and entered another 

order granting defendants’ motion to compel or to dismiss, holding that plaintiff’s complaint 

would be dismissed with prejudice if plaintiff did not, within seven days, fully comply with all 

outstanding discovery requests. Ultimately, plaintiff’s failure to produce discovery disclosing its 

alleged trade secrets as required by MCL 445.1906 resulted in the dismissal of plaintiff’s 

 2 MCL 445.1906.
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complaint. Thus, despite 15 months of litigation, this matter never made it past the discovery 

stage.

Thereafter, defendants filed a post-judgment motion for sanctions under MCR 2.114, 

MCR 2.625, MCL 600.2591, and MCL 445.1905, asserting that plaintiff had filed a frivolous 

complaint, had not made a reasonable inquiry into the existence of trade secrets, and had 

therefore acted in bad faith in filing suit. The trial court denied the motion.

II. STANDARD OF REVIEW

We review for clear error a trial court’s determination regarding whether to impose 

sanctions for failure to make a reasonable inquiry under MCR 2.114 and whether a claim was 

frivolous under MCR 2.625 and MCL 600.2591. Guerrero v Smith, 280 Mich App 647, 677; 

761 NW2d 723 (2008); Ladd v Motor City Plastics Co, 303 Mich App 83, 103; 842 NW2d 388 

(2013). “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.” 1300 

LaFayette E Coop, Inc v Savoy, 284 Mich App 522, 534; 773 NW2d 57 (2009). Under the clearerror standard, “a reviewing court should not substitute its judgment on questions of fact unless 

the factual determination clearly preponderates in the opposite direction.” In re COH, 495 Mich 

184, 204; 848 NW2d 107 (2014).

III. APPLICABLE LAW

Sanctions are mandatory under MCR 2.114 and MCR 2.625 if a court finds that a 

violation of those provisions has occurred. Guerrero, 280 Mich App at 678; MCR 2.625(2). 

MCR 2.114 provides in relevant part:

(D) Effect of Signature. The signature of an attorney or party, whether or not the 

party is represented by an attorney, constitutes a certification by the signer that

 (1) he or she has read the document;

 (2) 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

 (3) 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.

(E) Sanctions for Violation. If a document is signed in violation of this rule, the 

court, on the motion of a party or on its own initiative, shall impose upon the 

person who signed it, a represented party, or both, an appropriate 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. The court may not assess punitive damages.
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(F) Sanctions for Frivolous Claims and Defenses. In addition to sanctions under 

this rule, a party pleading a frivolous claim or defense is subject to costs as 

provided in MCR 2.625(A)(2). The court may not assess punitive damages. 

[Emphasis added.]

MCR 2.625(A)(2), which MCR 2.114 cross-references, provides that “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.” (Emphasis added). In turn, MCL 600.2591(1) entitles a party to recover 

attorney fees and costs for a frivolous action:

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.

Under MCL 600.2591(3)(a), a claim is frivolous if any of the following conditions are satisfied:

(i) The party’s primary purpose in initiating the action or asserting the defense 

was to harass, embarrass, or injure the prevailing party.

(ii) The party had no reasonable basis to believe that the facts underlying that 

party’s legal position were in fact true.

(iii) The party’s legal position was devoid of arguable legal merit.

Under these provisions, “[a]n attorney has an affirmative duty to conduct a reasonable 

inquiry into the factual and legal viability of a pleading before it is signed.” LaRose Mkt v 

Sylvan Ctr, 209 Mich App 201, 210; 530 NW2d 505 (1995). “The reasonableness of the inquiry 

is determined by an objective standard.” AG v Harkins, 257 Mich App 564, 576; 669 NW2d 296 

(2003). Further,

[t]he focus is on the efforts taken to investigate a claim before filing suit, and a 

determination of reasonable inquiry depends on the facts and circumstances of the 

case. Id. The attorney’s subjective good faith is irrelevant. Lloyd v Avadenka, 

158 Mich App 623, 630; 405 NW2d 141 (1987). That the alleged facts are later 

discovered to be untrue does not invalidate a prior reasonable inquiry. Lockhart v 

Lockhart, 149 Mich App 10, 14-15; 385 NW2d 709 (1986). [Harkins, 257 Mich 

App at 576.]

IV. FEBRUARY 5, 2015 MOTION FOR SANCTIONS

Defendants first argue that the trial court erred by denying their February 5, 2015 motion 

for sanctions (relating to defendants’ claim that plaintiff’s tortious interference and defamation 

claims were frivolous). We disagree.

By filing its second amended complaint early on in this litigation, plaintiff effectively 

withdrew the tortious interference and defamation claims that it had earlier pled, and thus 
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narrowed the triable issues in the case. In granting leave for plaintiff to file the second amended 

complaint, the trial court expressly did not make any determination at that time regarding 

whether the earlier filing of the withdrawn claims violated MCR 2.114. But the withdrawal of 

the claims does not itself equate to an acknowledgement that those claims were filed in violation 

of MCR 2.114, and we should not in any event discourage a voluntary narrowing of the issues.

Defendants later filed the February 5, 2015 motion, thereby putting the issue once again 

front and center, and the trial court held a hearing on the motion. At the hearing, plaintiff’s 

counsel represented that the two counts were withdrawn “because we didn’t want to incur the 

time and energy and expense of pursuing that when we had more important matters to pursue, 

trade secret and theft of confidential information and conspiracy, so we dropped those and 

proceeded with others.” After entertaining arguments from counsel and considering the written 

materials that the parties had submitted, and having lived with this litigation over many months, 

presided over numerous motion hearings, and being intimately familiar with the case, the parties, 

their counsel, and counsel’s endless acrimony, the trial court denied the motion, ruling as 

follows:

In this case we have a complaint that was filed by the Plaintiff that 

contained two counts which the Defendants objected to. I believe the 

Defendants brought their initial summary disposition motion without any 

dialog[ue] with Plaintiff's Counsel about any complaints or concerns they 

had regarding the viability of those claims. In any event, before the 

necessity to hear and decide a motion for summary disposition, the 

Plaintiff withdrew those counts, of course over the objection of 

Defendants, his primary interest seemed to be in pursuing sanctions with 

respect to those counts.

Based on the competing documents presented by both sides, this 

Court can't on this record make a finding that they are such to authorize 

the imposition of sanctions under 2.114, and therefore the motion is 

denied.

Although sanctions are mandatory where the trial court finds that a document was signed 

in violation of MCR 2.114, it is for the trial court to determine in the first instance whether such 

a violation has occurred. That determination is subject to review for clear error. Ladd v Motor 

City Plastics Co, 303 Mich App 83, 103; 842 NW2d 388 (2013).

We discern no clear error in the trial court’s determination. The trial court was in the best 

position to evaluate the facts and circumstances before it, and to ascertain whether there had been 

a violation of MCR 2.114. Although MCR 2.114 obligates attorneys to make “reasonable 

inquiry” before signing any document in court proceedings, we are aware of no authority 

establishing that an attorney must independently verify all factual allegations before filing a 

complaint. We therefore affirm the trial court’s denial of defendants’ February 5, 2015 motion 

for sanctions.
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V. POST-JUDGMENT MOTION FOR SANCTIONS

Defendants further argue that the trial court erred by denying their post-judgment motion 

for sanctions because (1) plaintiff’s counsel failed to make a reasonable inquiry into whether any 

trade secrets existed, (2) plaintiff relied on a position devoid of any legal merit, and (3) the 

circumstances demonstrate that plaintiff’s claim was made for the improper purpose of harassing 

defendants.

In its opinion and order denying defendants’ request for post-judgment sanctions, the trial 

court found that defendants had not “shown conduct so egregious as to warrant imposition of the 

sanctions sought.” First, the court found that defendants had failed to produce any direct 

evidence of an “improper purpose.” In this regard, the trial court rejected defendants’ argument 

that the delay between the alleged theft and the date the suit was filed, as well as plaintiff’s 

inclusion of defendants Strategis and TEG in the lawsuit, evinced an improper motive. The court 

reasoned that plaintiff had presented a plausible explanation for the timing of the suit and the 

inclusion of Thor’s companies, and that the latter did not increase litigation expenses. Next, the 

court found that defendants had failed to prove that plaintiff’s claims were frivolous. The trial 

court acknowledged that plaintiff’s counsel had admitted that he had not “looked” at the trade 

secret documents. However, the court did not view this statement as discrediting counsel’s other 

means of investigation—including touring plaintiff’s safe haven facility and both discussing and 

reviewing the trade secrets licensed to plaintiff—which the trial court viewed as sufficient to 

satisfy counsel’s duty of making a reasonable inquiry.

A. REASONABLE INQUIRY INTO TRADE SECRETS

In response to defendants’ post-judgment motion for sanctions, plaintiff’s counsel 

averred in his affidavit that he had reviewed the trade secrets before filing the complaint, stating 

in part:

At the onset of this litigation, I spent multiple hours discussing and reviewing the 

broad subject matter concerning this litigation, including the body of intellectual 

property, to include trade secrets, licensed to Bearing360 LLC. I also visited the 

facility operating in Northern Michigan. I toured the facility and became 

familiarized with many of the unique aspects of the facility and how it protects 

individuals from supply chain disruption. [Emphasis added.]

Based on counsel’s affidavit, we cannot conclude that the trial court clearly erred by concluding 

that counsel had made a reasonable inquiry into the existence of trade secrets before filing the 

complaint.3

 3 Defendants’ argument with respect to whether a reasonable inquiry was made, both before this 

Court and the trial court, focuses on whether an inquiry was made into the existence of trade 

secrets (because proving plaintiff’s claims for misappropriation of trade secrets, conversion, and 

civil conspiracy requires the existence of such secrets). To the extent that defendants suggest, 
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On appeal, defendants point out that no trade secrets were ever produced and that 

plaintiff’s attorney, at one point during the litigation, stated that he had not reviewed the trade 

secret documents. With reference to counsel’s affidavit, defendants contend that counsel blindly 

relied on Moore and merely toured a facility where he was shown reams of documents. A closer 

reading of the affidavit reveals, however, that counsel did review the trade secrets and that 

defendants have simply not characterized counsel’s statements accurately. Further, while we 

acknowledge that a conflict exists between counsel’s statement at a motion hearing—that he had 

not reviewed the trade secret documents—and his affidavit, the trial court was in the best 

position to judge counsel’s credibility, and we will not displace the trial court’s judgment absent 

evidence that preponderates in the opposite direction. See In re Noecker, 472 Mich 1, 9-10; 691 

NW2d 440 (2005) (the trier of fact is in the best position to judge a witness’s credibility). 

Accordingly, based on the present record, we lack the definite and firm conviction necessary to 

conclude that the trial court clearly erred by finding that counsel made a reasonable inquiry.

B. POSITION DEVOID OF LEGAL MERIT

Throughout discovery, it was plaintiff’s position that section 6 of the MUTSA should be 

interpreted to require trial protections of trade secrets from the outset of discovery and function 

to preclude review of such secrets by a jury, even when a jury trial is requested. On appeal, 

defendants assert that the trial court erred by denying sanctions because this position is devoid of 

legal merit, as the trial court recognized in the proceedings below.

Section 6 of the MUTSA provides:

In an action under this act, a court shall preserve the secrecy of an alleged trade 

secret by reasonable means, which may include granting protective orders in 

connection with discovery proceedings, holding in camera hearings, sealing the 

records of the action, and ordering any person involved in the litigation not to 

disclose an alleged trade secret without prior court approval. [MCL 445.1906.]

No Michigan court has construed the meaning of this provision, but its language is 

straightforward: Section 6 requires a trial court to “preserve the secrecy of an alleged trade secret 

by reasonable means,” which may be accomplished by any of the non-exhaustive ways 

enumerated in the statute. The parties, however, disagreed over the meaning of what measures 

of protection would be “reasonable” in a discovery order. The trial court sided with defendants, 

concluding that the inclusion in a discovery order of protections applicable at trial would be 

premature.

That the trial court rejected plaintiff’s view of the statute, reasoning that it would address 

the issue again before trial, does not render plaintiff’s argument totally devoid of legal merit. 

Plaintiff presented a legitimate argument, indirectly supported by secondary authority and the 

statute, that the protective order did not comply with section 6 of the MUTSA because the statute 

for the first time on appeal, that plaintiff did not investigate the other elements of its claims, e.g., 

that its counsel failed to investigate the involvement of the defendant LLCs, this argument is not 

preserved and is waived. See Walters v Nadell, 481 Mich 377, 387-388; 751 NW2d 431 (2008).
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provides for in camera review, and the revelation of trade secrets to a jury would make the 

information lose its secret character. See Thomas Indus v C & L Elec, 216 Mich App 603, 610-

611; 550 NW2d 558 (1996) (a claim is not devoid of legal merit if it is feasible). Therefore, 

plaintiff’s argument was not without arguable legal merit and was sufficient to avoid a finding of 

frivolousness. More significantly, and although plaintiff’s position did not prevail, it was 

advanced under circumstances in which the law is undeveloped and unclear, and a state of 

ambiguity does not warrant the imposition of sanctions. See Harkins, 257 Mich App at 669; 

Kitchen v Kitchen, 465 Mich 654, 662; 641 NW2d 245 (2002) (declining an award of sanctions 

where the law was unclear). Accordingly, we have no definite and firm conviction that the trial 

court erred by concluding that plaintiff’s position was not devoid of legal merit.

C. IMPROPER PURPOSE

Finally, as defendants recognize, the record contains no direct evidence that plaintiff 

commenced this suit for an improper purpose of harassing, embarrassing, or increasing plaintiff’s 

litigation costs. While plaintiff’s counsel was dilatory in some of his filings, the record indicates 

that plaintiff was genuinely concerned about the alleged theft of trade secrets and of any 

possibility (reasonable or not) that they could be “leaked” during litigation. Defendants 

nonetheless contend that the circumstances of this case, taken together, reveal an intent to harass 

and that the trial court, therefore, erred by denying sanctions.

Defendants suggest that certain circumstances support their position that plaintiff initiated 

this litigation to harass defendants, including that (a) plaintiff waited nearly a year to file suit 

after the alleged theft of the property; (b) defendant LLCs were named as defendants although no 

evidence supported their inclusion; (c) plaintiff vacated its facility allegedly to thwart discovery; 

and (d) plaintiff listed Thor’s children on its witness list.4 None of these facts, however, alone or 

together, give rise to a reasonable inference of improper motivation. As the trial court noted, 

other reasonable explanations exist on the record for these occurrences.5 In other words, it was

equally plausible under the factual circumstances presented that plaintiff’s initiation of the suit 

was properly motivated. Speculative and conjectural musings are insufficient evidence to 

support a finding of improper purpose. See Skinner v Square D Co, 445 Mich 153, 164; 516 

NW2d 475 (1994) (describing conjectural evidence as that which is subject to more than one 

 4 To the extent that defendants raise other circumstances not raised in the trial court to support 

their position that plaintiff initiated this suit for an improper purpose, those claims are not 

properly before the Court and we deem them waived. See Walters, 481 Mich at 387-388.

5 For example, Moore explained in his affidavit that plaintiff did not immediately file suit upon 

discovering the alleged theft of property because he first attempted to retrieve the property from 

Thor and did not discover the conspiracy until approximately nine months after the theft

occurred. Further, the lease on plaintiff’s facility had allegedly ended during the pendency of the 

litigation and plaintiff had moved its contents into storage. Plaintiff allegedly believed that the 

LLCs were involved in the conspiracy due to their relation to defendant. And Thor’s children 

appear to have been included on the witness list inadvertently, when counsel used a list from 

another lawsuit between the parties.
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equally plausible explanation). Finally, even if some of these events could be viewed as 

supporting an improper purpose, this evidence, in light of evidence to the contrary, did not so 

clearly preponderate in the opposite direction as to warrant displacing the trial court’s judgment. 

In re COH, 495 Mich at 204. The trial court did not clearly err by finding that plaintiff did not 

initiate this suit for an improper purpose.

Affirmed. As the prevailing party, plaintiff may tax costs. MCR 7.219(A).

/s/ Jane E. Markey

/s/ Amy Ronayne Krause

/s/ Mark T. Boonstra