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### STATE OF MICHIGAN

COURT OF APPEALS

1ST STATE TITLE,

Plaintiff-Appellee, UNPUBLISHED December 1, 2015

v No. 322964 Wayne Circuit Court LP RECORDINGS LLC and PATRICIA TURLEY, LC No. 12-011189-NZ

Defendants-Appellants.

Before: M ETER , P.J., and W ILDER and R ONAYNE K RAUSE , JJ.

P ER C URIAM

. Defendants appeal by right the t rial court’s orders granting p artial summary disposition in favor of plaintiff and awarding da mages to plaintiff. The part ies stipulated to the dismissal of the remainder of the case. Defendants were in the business of reco rding documents in various counties’ registers of deeds and were retained by plaintiff to file a number of such documents. However, defendants failed to reco rd all of them, which plainti ff eventually discovered, resulting in the commencement of the insta nt suit. Complicating the matt er, defendant Patricia Turley (Turley), who is not an attorney, represented herself and defen dant LP Recordings LLC (LP Recordings) in the trial court. Despite an impressive exercise of patience by the trial court, Turley’s representation was not amodel of clarity. We reverse in part, affirm in part, and remand.

Turley is the sole member and owner of LP Recordings, which wa s in the business of recording deeds and conducting pr operty searches. Defendants, presumably through Turley, entered into verbal agreements with plaintiff to file a number of documents on plaintiff’s behalf in various counties’ registers of deeds. Turley testified that over the course of the parties’ relationship, from April of 2007 to April of 2010, plaintiff ga ve defendants more than 2500 documents to file, including approximately 750 deeds. Relevant to the instant suit, defendants failed to file 31 of those deeds , for which plaintiff paid $33, 036.20.

The trial court made valiant efforts to communicate with Turle y during the two motion hearings, but their exchanges can best be described as confused . Turley conceded that a number of the documents that plaintiff gave to defendants for recordin g were, ultimately, not recorded. Turley’s argument, while never clearly articulated, was essenti ally that she was never given sufficient funds with which to record all of the documents, so she recorded as many as she could-2- and set aside the rest. Indeed, Turley asserted that she actua lly lost money and expended more to record documents than she received. Turley further asserted th at her troubles were compounded by plaintiff’s practice of giving her checks that combined the costs for multiple documents at once. However, she conceded that for whatever reason she conti nued to accept plaintiff’s manner of writing the checks, and she continued to accept plain tiff’s jobs. The trial court regarded the situation as “incredible” and concluded that it wa s baffled by what exactly had transpired, calling it “a morass of confusion,” and remarking t hat it was not helped by Turley’s disinclination to answe r direct questions.

The trial court held that there was no genuine question of fac t that defendants committed breach of contract, rejecting Turley’s proffered claim of lack of funds because she admitted that she never advised plaintiff about the lack of funds or put plai ntiff on notice that she was unable to perform. The trial court also held in plaintiff’s favor reg arding conversion, but it did not explain whether it was finding c ommon-law conversion, statutory conversion, or both. It appears that the trial court’s finding of conversion was based on its s heer disbelief that Turley could have operated a business as incompetently as her testimony suggested , its finding that Turley retained the money paid for the filing of the deeds at issue, and Turley ’s inability to provide evidence to show that she had actually used the money for filing purposes. The trial court subsequently found Turley even more incredible at the subsequent damages hea ring, but because defendants do not address damages per se in their appeal, bu t rather only liability, we need not discuss them.

A grant or denial of summary disposition is reviewed de novo o n the basis of the entire record to determine if the moving party is entitled to judgment as a matter of law. Maiden v Rozwood , 461 Mich 109, 118; 597 NW2d 817 (1999). When reviewing a mot ion under MCR 2.116(C)(10), which tests the factual sufficiency of the compla int, this Court considers all evidence submitted by the parties in the light most favorable t o the non-moving party and grants summary disposition only where the evidence fails to establish a genuine issue regarding any material fact. Id . at 120. The proper interpretati on of a contract or of a statute are both questions of law that this Court reviews de novo. See Klapp v United Ins Group Agency
, Inc , 468 Mich 459, 463; 663 NW2d 447 (2003); Weakland v Toledo Engineering Co, Inc , 467 Mich 344, 347; 656 NW2d 175, amended on other grounds 468 Mich 1216 (2003). W e review “de novo a trial court’s decision on whether to pie rce a corporate veil because piercing a corporate veil is an equitable remedy.” Florence Cement Co v Vettraino , 292 Mich App 461, 468; 807 NW2d 917 (2011).

Defendants raise a number of ar guments all to the general effe ct that they should not have been found liable for conversion. An issue raised in the trial court and pursued on appeal is considered preserved, irrespective of whether the trial court a ctually addresses it. Peterman v Dep ’ t of Natural Resources , 446 Mich 177, 183; 521 NW2d 499 (1994). However, issues rais ed for the first time in a motion for reconsideration are not considered preserved. Vushaj v Farm Bureau Gen Ins Co of Michigan , 284 Mich App 513, 519; 773 NW2d 758 (2009). Defendants did challenge from the outset wh ether they had actually committ ed conversion, but many of the specific arguments presented in this issue were not raised unti l defendants’ motion for reconsideration. Nevertheless, defendants’ new arguments are m ore sophisticated but plough relatively little truly new gr ound; furthermore, they are all m atters of law for which the facts necessary to their resolution ar e found in the record. We ther efore choose to exercise our-3- discretion to review defendants’ arguments regarding conversion liability in their entirety. See Steward v Panek , 251 Mich App 546, 554; 652 NW2d 232 (2002).

Initially, defendants nominally challenge their liability for breach of contract, but their argument is patently ridiculous. Other than defendants’ argume nt that Turley should not be held personally liable therefor, which we will discuss infra , defendants contend that the terms of the parties’ contracts was insuffici ently defined. The contracts w ere indeed oral and seemingly handled in an informal manner. However, it was unambiguously established, and Turley in fact directly conceded, that the par ties’ contract was for her to fi le documents in exchange for money and that she failed to perform s ome filings. Defendants’ attem pt to argue that there was merely some delay in filing is equally preposterous; even if some dela y would have been permissible, no reasonable trier of fact could fi nd the delays at issue here to have been reasonable. The trial court properly granted summary disposition in favor of plaintif f regarding breach of contract.

In contrast, it appears at first glance that the trial court’s conclusion regarding the conversion claims was based pur ely on its incredulity that Turl ey could possibly be as incompetent as her testimony clearly indicated. This Court doe s not interfere with courts’ credibility assessments of witnesses except in extreme cases, b ut this matter is before the Court on summary disposition, wherein credibility assessments are imp ermissible. Skinner v Square D Co , 445 Mich 163, 161; 516 NW2d 475 (1994). The trial court’s lo w estimation of Turley’s credibility was therefore an impermissible basis for granting s ummary disposition— notwithstanding our sympathy with t he trial court’s entirely re asonable frustration.

However, to withstand a motion for summary disposition, the no nmoving party, which in this case was defendants, must show that there is a question of fact for trial, not merely that an issue of fact could be established. Maiden , 461 Mich at 121. Generally, this requires some kind of actual documentary evidence. Coblentz v City of Novi , 475 Mich 558, 569; 719 NW2d 73 (2006). There may be situations where no such documentary evidence is needed to make summary disposition appropriate, but such situations would be the exception rather than the norm. See White v Taylor Distributing Co
, Inc , 275 Mich App 615, 625-627; 739 NW2d 132 (2007), aff’d 482 Mich 136 (2008). In White , that situation arose because an issue critically turned on a witness’s credibility. That is not the situation h ere, because the trial court nonetheless properly found that defendants had simply not provi ded any evidence that would make a difference to them.

According to defendants, plaintiff gave them (1) documents to be filed in various counties, and (2) checks payable to those counties. Turley ind icated that some kind of payment to defendants was also included somehow, but failed to articula te how she processed out her share of the checks. Her defens e was essentially that plaintif f did not give her enough money to file all of the documents, but even accepting her otherwise-uns upported and unprovable assertions that she brought the d eficiency to plaintiff’s atten tion, she continued accepting insufficient funds and has not even alleged that she brought to plaintiff’s attention the fact that she did not file some of the documents.

Critically, however, there is apparently no dispute that plain tiff did not provide defendants with individual checks linked to individual document s, but rather “batch checks” that covered multiple documents. Consequently, there can be no obli gation on the part of defendants-4- to return a specific check upon the failure to file any particular document. The complai nt, while terse, indicates that plaintiff’ s conversion claims are based o n defendants’ failure to return money rather than the unrecorded deeds or even any checks. Conversio n of money requires “an obligation on the part of the defendant to return the specific money intrusted to [the defendant’s] care.” Alfred Shrimpton & Sons v Culver , 109 Mich 577, 580; 67 NW2d 907 (1896); see also Dunn v Bennett , 303 Mich App 767, 777-778; 846 NW2d 75 (2013). Plaintiff’s c ommingling of moneys for the various documents, as well as the per-document f ees due to defendants for their services, means there is no way to trace specific funds to the specific unr ecorded documents, and that inability is due to plain tiff’s conduct rather than defend ants’ conduct. Consequently, defendants cannot have committed common-law conversion. Likewi se, statutory conversion cannot be established merely by retaining money, which is all p laintiff asserts that defendants did. Lawsuit Financial LLC v Curry , 261 Mich App 579, 592-593; 683 NW2d 233 (2004).

Accordingly, the trial court e rred in finding defendants liabl e for conversion, and it is unnecessary to address defendants’ remaining arguments to that effect.

Defendants further argue that the trial court erred in allowin g Turley to represent LP Recordings, and they point to the tremendous confusion that ens ued from Turley’s attempts to represent herself and the LLC. This is a blatant attempt to ha rbor defendants’ own mistake, to which nobody below thought to object, as an appellate parachute . In the abstract, of course, defendants are correct: although a corporate entity not techni cally prohibited from representing itself in court, it may only do so through a licensed attorney, and a non-attorney individual does not become authorized to practic e law by virtue of any relation ship that person might have with a corporation. Detroit Bar Ass ’ n v Union Guardian Trust Co , 282 Mich 707, 711-712; 281 NW 432 (1938); Fraser Trebilcock Davis & Dunlap PC v Boyce Trust 2350 , 497 Mich 265, 276-277; ___ NW2d ___ (2015). Consequently, it was impermissible for Tu rley to represent any entity other than herself. Defendants have cited no law to the effect that the trial court was required to rescue defendants from their own foolish or even illegal conduc t. 1 Furthermore, defendants have cited no law to the effect that illegal representation amounts to the kind of error that requires invalidation of the proceedings below. Indeed, defendants do n ot even technically ask this Court to do anything about the matter, but rather simply rest on the argument that the trial court erred. In the absence of any binding rule obligating the trial court to reject Turley’s representation of the LLC sua sponte, however, and in the further absence of any binding rule obligating this Court to undertake any corrective action, we leave defendants to the consequences of their own decision.

Finally, defendants argue that T urley could only be held perso nally liable for the tort of conversion, not for breach of a c ontract between plaintiff and LP Recordings. 2 We note that this

1 Whether Turley’s representation of LP Recordings constituted a n actual crime is outside the scope of this appeal and we make no pronouncement regarding tha t possibility.

2 It is in fact exceedingly unclear from the record whether the contracts were entered into with LP Recordings, with Turley pers onally, or possibly both. We pr esume, without deciding and strictly for the purposes of addr essing this issue, that they w ere entered into solely with the LLC.-5- argument is totally unpreserved; it was not raised at all prior to the motion for reconsideration and it is dubious whether it was even raised there. However, a s a straightforward question of law with sufficient facts in the record, we nevertheless choose to address this issue. See Steward
, 251 Mich App at 554.

A member or manager of a limited liability company is generall y not liable for the acts, debts, or obligations of the LLC. Duray Development LLC v Perrin , 288 Mich App 143, 151; 792 NW2d 749 (2010), citing MCL 450.4501(4). 3 However, the equitable remedy of “piercing the corporate veil” applies to LLCs. Florence Cement , 292 Mich App at 468-469. The trial court did not specifically state that it found piercing the cor porate veil appropriate, but we will affirm a correct result, even if the trial court’s reasoning wa s wrong. Michigan Gas & Elec Co v City of Dowagiac , 278 Mich 522, 526; 270 NW 772 (1936); Mulholland v DEC International Corp , 432 Mich 395, 411 n 10; 442 NW2d 340 (1989).

“In order for a court to order a corporate veil to be pierced, the corporate entity (1) must be a mere instrumentality of another individual or entity, (2) must have been used to commit a wrong or fraud, and (3) there must have been an unjust injury o r loss to the plaintiff.” Florence Cement , 292 Mich App at 469. It appears beyond dispute that plaintif f suffered an unjust injury or loss. A breach of contract has been held to be the kind of wrong that would justify piercing a corporate veil if the corporate form had been abused. See Herman v Mobile Homes Corp , 317 Mich 233, 236; 26 NW2d 757 (1947); Brown Bros Equipment Co v State Highway Comm , 51 Mich App 448, 452-453; 215 NW2d 591 (1974). Consequently, Turl ey’s personal liability depends on whether she treated the LLC as a mere instrumentalit y.
Ultimately, whether to pierce the corporate veil depends on th e totality of the circumstances. Green v Ziegelman , ___ Mich App ___, ___; ___ NW2d ___ (2015) (Docket No. 318989, slip op at p 11). The owner of a corporate entity need not have deliberately used the corporate entity for the purpose of causing harm, but on the ot her hand there is nothing intrinsically wrong with forming a corporate entity to avoid pe rsonal responsibility. Id . at ___ (slip op at pp 10-11). Rather, the owner must have misused the corporate form in some manner by using it as an alter ego, and honoring the corporate entity’ s separate existence must amount to a consummation of some harm to an innocent third party by the c ourts. Id . at ___ (slip op at pp 11-12).

The evidence in the record, while only minimally coherent, sho ws that piercing the corporate veil was appropriate. B y itself, a single owner and operator of a corporation will not defeat the corporate veil. Bourne v Sanford , 327 Mich 175, 191; 41 NW2d 515 (1950). However, the trial court’s findi ngs regarding the sheer sloppin ess and informality of Turley’s operation of her business, as well as the fact that the missing deeds were ultimately found at her personal residence and her apparent belief that the agreements were in some way personal ones, shows that whatever corporate form she employed was effectively in name only. Therefore, although the trial court should have rendered explicit findings justifying Turley’s personal liability, we conclude that the trial court’s ultimate decisionwas correct.

3 At the time, the relevant sta tutory provision was found at MCL 450.4501(3).-6- We reverse the trial court’s grant of summary disposition in f avor of plaintiff on the basis of conversion, and in all other respects we affirm. However, w e remand to the trial court to give it the opportunity to decide wheth er the same award of damages should be maintained in the absence of conversion liability. We leave to the trial court’s discretion how to engage in that determination, and we do not retain jurisdiction. We award no costs, neither party having prevailed in full.

/s/ Patrick M. Meter /s/ Kurtis T. Wilder /s/ Amy Ronayne Krause