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### STATE OF MICHIGAN

COURT OF APPEALS

TIMOTHY LENNON,

Plaintiff-Appellant/Cross-Appellee, UNPUBLISHED April 19, 2016

v No. 324803 Oakland Circuit Court EDWARD G. LENNON and EDWARD G. LENNON, PLLC, LC No. 2014-142392-CZ

Defendants-Appellees/CrossAppellants.

Before: J ANSEN , P.J., and S ERVITTO and M. J. K ELLY , JJ.

P ER C URIAM

. Plaintiff appeals as of right t he trial court’s order granting summary disposition in favor of defendants. Defendants filed a cross-appeal on the basis of the trial court’s orders denying their requests for sanctions. We affirm the trial court’s orde r granting summary disposition in favor of defendants, reverse the trial court’s order denying de fendants’ motion for sanctions for the filing of a frivolous action, and remand for a determinatio n of the award of costs to defendants.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff, a nonlawyer, filed a lawsuit against defendants see king to recover amounts owed from defendant Edward G. Lennon (Edward), a licensed Michi gan attorney, relating to an alleged agreement to compensate plaintiff for a referral throug h the sharing of the legal fees collected. Plaintiff is employed as a private investigator wit h clientele in the legal field. Edward is his brother and has a legal practice in the state of Michiga n. Plaintiff receive d a request from a friend and business associate for a referral to a divorce attor ney. In his complaint, plaintiff alleged that he consulted Edward in the matter, and Edward sugg ested referral to a colleague of his. Plaintiff claimed that Edw ard assured him that he would r eceive payment for the referral if the client retained Edward’s col league for the divorce. Plaint iff alleged that he referred the client to Edward’s colleague under those terms. Plaintiff asserts tha t Edward subsequently received payment for the referral, but did not share any of the payment with plaintiff.

Plaintiff brought suit to recover his share of the fee, under theories of breach of contract, unjust enrichment, and fraud. Def endants moved for summary dis position pursuant to MCR 2.116(C)(8) and sought sanctions against plaintiff under MCR 2. 114 and MCL 600.2591 for-2- filing frivolous claims. The trial court ruled that the allege d contract between plaintiff and Edward was contrary to the rule s of professional conduct preclu ding a nonlawyer from recovering legal fees from a lawyer and violated public policy, and therefore it was unenforceable. The trial court granted the motion for summary disposition, but denied the motion for sanctions. Subsequently, the trial court denied pla intiff’s motion for reconsideration and defendants’ motion for offe r of judgment sanctions.

II. PLAINTIFF’S LAWSUIT

Plaintiff contends that he should be able to recover a portion of the referral fee on the basis of his agreement w ith Edward. We disagree.

We review de novo a trial court’s grant or denial of summary d isposition pursuant to MCR 2.116(C)(8). Haynes v Neshewat , 477 Mich 29, 34; 729 NW2d 488 (2007). “ ‘A motion under MCR 2.116(C)(8) tests the legal sufficiency of the claim on the pleadings alone to determine whether the plaintiff has stated a claim on which rel ief may be granted. Summary disposition under subrule (C)(8) is appropriate if no factual d evelopment could justify the plaintiff’s claim for relief.’ ” Summer v Southfield Bd of Ed , 310 Mich App 660, 669; 874 NW2d 150 (2015) (citation omitted). We accept as true all well -pleaded factual allegations and construe them in the light most favorable to the nonmovant. Genesee Co Drain Comm’r v Genesee Co , 309 Mich App 317, 323; 869 NW2d 635 (2015).

Plaintiff also challenges the trial court’s denial of his moti on for reconsideration. “We review a trial court’s decision regarding a motion for reconsid eration for an abuse of discretion.” Sanders v Perfecting Church , 303 Mich App 1, 8; 840 NW2d 401 (2013). “A court abuses its discretion when its decision falls outside the range of reasona ble and principled outcomes.” Jenson v Puste , 290 Mich App 338, 341; 801 NW2d 639 (2010). A trial court ge nerally does not grant a motion for reconsideration that merely presents the sam e issues that the court already decided. MCR 2.119(F)(3). “The moving party must demonstrate a palpable error by which the court and the parties have been m isled and show that a differen t disposition of the motion must result from correction of the error.” Id

. MRPC 5.4(a) provides, in relevant part, “A lawyer or law firm shall not share legal fees with a nonlawyer.” A contract tha t violates the Michigan Rules of Professional Conduct is unethical, and as such it violates public policy and is unenfor ceable. Evans & Luptak, PLC v Lizza , 251 Mich App 187, 189; 650 NW2d 364 (2002). In Morris & Doherty, PC v Lockwood
, 259 Mich App 38, 51-52, 58-60; 672 NW2d 884 (2003), this Court refused to enforce a referral fee agreement between a lawyer and a lawyer deemed a nonlawyer by inactive membership in the State Bar of Michigan because it violated the Michigan Rule s of Professional Conduct and was, therefore, void as a violation of public policy.

Plaintiff attempts to distinguish the facts of this case by as serting that he is a nonlawyer and, as such, he cannot be required to have knowledge of the ru les of professional conduct and his conduct is not governed by the rules. This Court has made no exception for a nonlawyer to recover any portion of referral fees paid to a lawyer. Rather, this Court has affirmed the established rule under MRPC 5.4( a) that such a fee cannot be sh ared with a nonlawyer. See Morris & Doherty, PC , 259 Mich App at 59-60. In choo sing to do business with a law yer,-3- plaintiff placed himself under the rules that govern the legal profession. Thus, the Michigan Rules of Professional Conduct govern the transaction regardless of plaintiff’s knowledge of the rules or status as a nonlawyer. Because MRPC 5.4(a) prohibits defendants from fee sharing with a nonlawyer, that rule prevents plaintiff from recovering for b reach of an agreement to do just that.

Plaintiff further argues that, even assuming the unenforceabil ity of the fee sharing agreement, he remains entitled to recover under the theories of unjust enrichment and fraud. We disagree.

A claim of unjust enrichment sounds in equity and requires the receipt of a benefit by the defendant from the plaintiff and an inequity to the plaintiff f rom the defendant’s retention of the benefit. Bellevue Ventures, Inc v Mo rang-Kelly Investment, Inc , 302 Mich App 59, 64; 836 NW2d 898 (2013). However, a contract will only be implied to p revent unjust enrichment if there is no express contract on the same subject matter. Belle Isle Grill Corp v Detroit , 256 Mich App 463, 478; 666 NW2d 271 (2003). The elements of actionable fraud are:

(1) That defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessl y, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by plaintiff; (5) that p laintiff acted in reliance upon it; and (6) that he thereby suffered injury. [ Titan Ins Co v Hyten
, 491 Mich 547, 555; 817 NW2d 562 (2012).]

In general, a claim for fraud in cludes a statement involving a past or existing fact. Samuel D Begola Servs, Inc v Wild Bros , 210 Mich App 636, 639; 534 NW2d 217 (1995). However, “[f]raud in the inducement occurs where a party materially misr epresents future conduct under circumstances in which the assertions may reasonably be expecte d to be relied upon and are relied upon.” Id

. The remedy for both theories p recludes their viability in this case. Plaintiff alleged that defendants agreed to pay him “a portion of the referral fee rec eived” if he referred his client, and he did not receive the payment. Plaintiff did not claim any da mages other than the amount he claimed he was entitled to under the referral agreement. Regar ding the unjust enrichment claim, plaintiff alleged that he “had agood-faith expectation of comp ensation in the form of a referral fee upon completing the referral to [the divorce attorney].” L ikewise, regarding the fraud claim, plaintiff alleged that Edward “r epresented to Plaintiff that he would pay Plaintiff a portion of the referral fee received if Plaintiff referred [his friend and ass ociate] to [the divorce attorney],” and plaintiff “is now owed money for t he referral fee paid to” Edwa rd. The trial court dismissed both claims, holding that the damages plaintiff sought were “to reco ver attorney fees in violation of public policy.” As the trial court properly ruled, the relief requested is nothing more than plaintiff’s expected payment unde r the unenforceable agreement. Furthermore, as noted by the trial court, plaintiff is in the same position that he would ha ve been in regardless of whether the referral went to the divorce attorney that Edward recommended o r another attorney that plaintiff selected since plaintiff would not have been compensated under either scenario. Thus, plaintiff is not entitled to r ecovery for unjust enrichment or fraud sinc e he fails to show a n inequity or that he relied on Edward’s alleged sta tements to his detriment.-4- Furthermore, we find no validity to the new relief articulated in plaintiff’s motion for reconsideration. Plaintiff conte nded that in reliance on Edwar d’s misrepresentation of future payment, he did not refer his c lient to a different lawyer or l awyers and lost business from that lawyer or group of lawyers. Pla intiff’s referral to a differen t lawyer could only result in the same preclusion of fee sharing. In a ddition, plaintiff’s remedy for a claim of fraud in the inducement to enter a contract is to void the alleged contract, which does not provide a cognizable remedy to plaintiff. Samuel D Begola Servs, Inc , 210 Mich App at 639. Therefore , plaintiff’s fraud claim under the new allegations likewis e fails as a matter of law. T he trial court did not err in granting summary disposition, and it did not abuse its discretion in den ying the motion for reconsideration.

III. SANCTIONS

Defendants argue that the trial court erred in refusing to gra nt their motion for sanctions for the filing of a frivolous pleading. We agree.

We review for clear error a tria l court’s decision that a clai m was not frivolous and thus not subject to sanctions. See Kitchen v Kitchen , 465 Mich 654, 661; 641 NW2d 245 (2002). “A decision is clearly erroneous w here, although there is evidence to support it, the reviewing court is left with a definite and fir m conviction that a mistake has been made.” Id . at 661-662.

On cross-appeal, defendants asse rt that the trial court should have imposed sanctions against plaintiff for filing a frivolous lawsuit or, in the alt ernative, for rejecting the offer of judgment. Regarding legal sanctio ns, a trial court must impose sanctions if it determines that a civil action or defense was f rivolous, MCL 600.2591(1), or that a document was signed in violation of MCR 2.114(D), Guerrero v Smith , 280 Mich App 647, 678; 761 NW2d 723 (2008); MCR 2.114(E). The costs and fees assessed for the filing of a frivolous civil action include “all reasonable costs actually incurred by the prevailing party and any costs allowed by law or by court rule, including court costs and reasonable attorney fees. ” MCL 600.2591(2). The mere fact that a party does not ultimately prevail does not mean that the party’s position was frivolous. See Kitchen , 465 Mich at 662. Rathe r, a claim is frivolous when: (1) the party’s primary purpose in bringing the action was to harass, embarrass, or injure the prevailing party; (2) the party had no reasonable basis to believe t hat the underlying facts supporting its legal position were true; or (3) the party’s legal position was devoid of arguable merit. M CL 600.2591(3)(a); Kitchen , 465 Mich at 662. The determination whether a claim or defense was frivolous is based on the circumstances at the time it was asserted. Hansen Family Trust v FGH Indus, LLC , 279 Mich App 468, 486; 760 NW2d 526 (2008).

The trial court denied defendant s’ motion for sanctions. The trial court noted that plaintiff failed to cite caselaw to support his position that h e was entitled to share legal fees as a nonlawyer merely because he believed he would receive them. It further found that plaintiff would not have been compensated for any referral to an attorney regardless of defendants’ conduct. However, the trial cou rt did not rule that plaintiff’ s action was frivolous.

As previously noted, MRPC 5.4(a) prohibits a lawyer from shari ng legal fees with a nonlawyer. We have ruled that vi olation of a rule of professio nal conduct violates public policy and voids a contract premised thereon. Evans & Luptak, PLC , 251 Mich App at 189. In-5- addition, we have addressed the validity of a referral fee cont ract between an attorney and an attorney with inactive status, who was deemed a nonlawyer, and concluded that the contract was unenforceable as precluded under MRPC 5.4(a). Morris & Doherty, PC , 259 Mich App at 60. Therefore, we disagree with plaintiff’s argument that this Cour t has not addressed the factual scenario in this case. There is no question that plaintiff is not a lawyer. Thus, he is not entitled to share Edward’s legal fees, a nd any contract b etween plaintif f and Edward was void as a matter of public policy. We therefore c onclude that plaintiff’s claim was devoid of arguable legal merit. See MCL 600.2591(3)(a); Kitchen , 465 Mich at 662. Accordingly, defendants are entitled to costs. See MCL 600.2591(1). However, we note that, contrary t o defendants’ argument in their brief on appeal, defendants are not entitled to attorney fees s ince Edward represented himself in this action. See Fraser Trebilcock Davis & Dunlap PC v Boyce Trust 2350 , 497 Mich 265, 273- 274; 870 NW2d 494 (2015) (noting that an attorney cannot recove r attorney fees for representing himself).

Defendants further argue that t he trial court improperly invok ed the “interest of justice” exception to the offer of judgment rule to deny their motion fo r offer of judgment sanctions. We need not address this issue as defendants argue for offer of ju dgment sanctions as an alternative to their request for sanctions for the filing of a frivolous co mplaint, and we conclude that the costs incurred in connection with the civil action would includ e the costs incurred because of the failure to stipulate to the e ntry of judgment. See MCL 600.259 1(1) and (2); MCR 2.405(A)(3).

Affirmed in part, reversed in part, and remanded for further p roceedings consistent with this opinion. We do not retain jurisdiction. As the prevailin g party, defendants may tax costs pursuant to MCR 7.219(A).

/s/ Kathleen Jansen /s/ Deborah A. Servitto /s/ Michael J. Kelly