Court Opinion

ID: 4026218
Source: CourtListenerOpinion
Date Created: 2016-08-18 07:06:48.872687+00
Date Added: 2024-06-11T14:33:46.474355
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

LARDNER ELEVATOR COMPANY,                                           UNPUBLISHED
                                                                    August 16, 2016
               Plaintiff/Counter-Defendant-
               Appellant,

v                                                                   No. 326319
                                                                    Wayne Circuit Court
GERALD S. CLIXBY, NORTH MANAGEMENT                                  LC No. 13-002342-CH
CORPORATION, THE NORTH
CORPORATION, and SILLSON APARTMENTS,
a/k/a STILLSON APARTMENTS,

               Defendants/Counter-Plaintiffs-
               Appellees.

LARDNER ELEVATOR COMPANY,

               Plaintiff/Counter-Defendant-
               Appellant/Cross-Appellee,

v                                                                   No. 327509
                                                                    Wayne Circuit Court
GERALD S. CLIXBY, NORTH MANAGEMENT                                  LC No. 13-002342-CH
CORPORATION, THE NORTH
CORPORATION, and SILLSON APARTMENTS,
a/k/a STILLSON APARTMENTS,

               Defendants/Counter-Plaintiffs-
               Appellees/Cross-Appellants.

Before: BECKERING, P.J., and CAVANAGH and GADOLA, JJ.

PER CURIAM.

       In Docket No. 326319, plaintiff, Lardner Elevator Company, appeals as of right a
judgment requiring defendant, The North Corporation, to pay $163.80 to plaintiff for breach of
contract involving an elevator repair, ordering plaintiff to discharge a claim of lien, and finding
no cause of action against defendants Gerald S. Clixby, North Management Corporation, and

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Sillson Apartments, a/k/a Stillson Apartments. To reach its final $163.80 damages calculation,
the trial court found The North Corporation liable for $4,438.80 in damages, but credited the
corporation for (1) $2,275 paid to another elevator repair company for repairs, and (2) $2,000
that it had already paid to plaintiff for repairs. In Docket No. 327509, plaintiff appeals by leave
granted an order requiring it to pay $5,000 in case evaluation sanctions to Clixby and North
Management Corporation. Plaintiff argues on appeal that it is not liable for case evaluation
sanctions to these parties. On cross-appeal, defendants challenge the amount of the award,
arguing that the trial court should have also awarded $302.77 in taxable costs and $2,325 more in
attorney fees. We affirm in part, reverse in part, and remand for further proceedings.

                       I. FACTS AND UNDERLYING PROCEEDINGS

        Clixby and his father purchased an apartment complex in Detroit in 1979 under Sillson
Apartments Copartnership. The copartnership transferred ownership of the complex to Sillson
Apartments, LLC, in 2005 or 2006. North Management Corporation previously managed real
estate, including the apartment complex, but it was dissolved and later The North Corporation
managed the property. Clixby served as the manager of Sillson Apartments, LLC, North
Management Corporation, and The North Corporation.

       In 1984, plaintiff entered into a three-year maintenance agreement with North
Management Corporation for the elevator at the apartment complex. After the contract period
ended, plaintiff continued to provide monthly service until 2012.

        On February 27 and 28, 2012, plaintiff completed additional repairs on the elevator,
including the installation of a new selector cable. Clixby claimed that plaintiff’s manager, Jerry
Minchella, promised the repairs would cost between $3,000 and $5,000. Afterward, plaintiff
billed $7,583.15 for the project, and Clixby objected and refused to pay. Later, although Clixby
continued to challenge the total invoice, The North Corporation paid $2,000 to plaintiff to
demonstrate good faith.

        In April 2012, the elevator broke down again several times. Clixby testified that, on the
last occasion, plaintiff did not respond to calls for service and he hired Elevator Technology,
which installed another new selector cable for $2,275.

       Around the same time, plaintiff filed a claim of lien against the apartment complex for
the amount of unpaid repairs. When defendants still did not pay, plaintiff filed the instant suit.

                           II. PIERCING THE CORPORATE VEIL

        In Docket No. 326319, plaintiff argues that the trial court erred by entering a judgment
against The North Corporation. For the first time on appeal, plaintiff claims that The North
Corporation has been dissolved for more than a decade. Plaintiff maintains that the trial court
should have alternatively pierced the corporate veil to reach Clixby. We decline to address
plaintiff’s claim. First, plaintiff’s claim that The North Corporation is dissolved is an improper
attempt to expand the record. See MCR 7.210(A)(1); People v Powell, 235 Mich. App. 557, 561
n 4; 599 NW2d 499 (1999). And the record before us demonstrates a corporation actively
managing real estate, and conducting business with plaintiff—including writing checks that
plaintiff cashed.
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        Second, “an issue is not properly preserved if it is not raised before, addressed, or decided
by the circuit court or administrative tribunal.” Polkton Charter Twp v Pellegrom, 265 Mich
App 88, 95; 693 NW2d 170 (2005). “ ‘Issues raised for the first time on appeal are not
ordinarily subject to review.’ ” Wells Fargo Bank, NA v Null, 304 Mich. App. 508, 518; 847
NW2d 657 (2014), quoting Booth Newspapers, Inc v Univ of Mich Bd of Regents, 444 Mich. 211,
234; 507 NW2d 422 (1993). This Court will only consider issues not raised below in
exceptional circumstances. Id. Though “[t]his Court may review an unpreserved issue if it is an
issue of law for which all the relevant facts are available.” Vushaj v Farm Bureau Gen Ins Co of
Mich, 284 Mich. App. 513, 521; 773 NW2d 758 (2009).

        In the complaint, plaintiff did not allege any misuse of the corporate form requiring the
court to pierce the corporate form of The North Corporation to reach Clixby. At trial, plaintiff’s
arguments that Clixby was liable arose from his role as a partner in the entity that formed the
maintenance agreement in 1984, not because The North Corporation was a mere instrumentality
of Clixby when the oral contract for repairs was entered. The trial court therefore did not address
a corporate veil claim. Because piercing the corporate veil is an equitable remedy, Florence
Cement Co v Vettraino, 292 Mich. App. 461, 468; 807 NW2d 917 (2011), not a question of law,
Vushaj, 284 Mich. App. at 521, and all the relevant facts are not available, we decline to address
plaintiff’s claim.

                                  III. AWARD OF DAMAGES

       Next in Docket No. 326319, plaintiff challenges the trial court’s findings regarding the
breach of contract claim. The trial court’s determination of the amount of damages is a factual
finding reviewed for clear error, but conclusions of law are reviewed de novo. Mettler Walloon,
LLC v Melrose Twp, 281 Mich. App. 184, 195; 761 NW2d 293 (2008). A finding is clearly
erroneous if this Court is left with a definite and firm conviction that a mistake has been made.
Id.

        Plaintiff argues that the trial court clearly erred in finding that the parties only agreed to
repairs costing between $3,000 to $5,000. We disagree. Although plaintiff cites its own invoice
that detailed the costs of the project totaling $7,583.15, it does not cite any evidence to
specifically refute the trial court’s finding that the agreement was formed orally between Clixby
and Minchella, and limited the cost of repairs to $3,000 to $5,000, based on Clixby’s testimony,
which the trial court found to be credible. Clixby was the only witness to testify about this
particular oral contract. No one ever called Minchella to testify. Plaintiff’s owner, Michael
Lardner, did not participate in that agreement and could only testify regarding his typical course
of conduct when talking to customers about repairs. Therefore, any testimony from Lardner that
he only offers a “ballpark” price and warns customers that other costs could arise does not leave
this Court with a definite and firm conviction that a mistake was made.

        Plaintiff also argues that the trial court clearly erred in failing to reimburse it for
$2,158.20 in monthly maintenance. Plaintiff does not make any arguments why the trial court’s
award of $1,438.80 is clearly erroneous. See People v Kevorkian, 248 Mich. App. 373, 389; 639
NW2d 291 (2001) (“It is not enough for an appellant in his brief simply to announce a position
or assert an error and then leave it up to this Court to discover and rationalize the basis for his
claims, or unravel and elaborate for him his arguments, and then search for authority either to

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sustain or reject his position.”) (citation and quotation marks omitted). The trial court found that
the monthly maintenance fee was $359.70 and that plaintiff was not paid for maintenance from
January to April 2012—totaling $1,438.80. Based on Clixby’s testimony that he had changed
the locks and plaintiff did not have access to the elevator by May and June 2012, the trial court
refused to reimburse plaintiff for invoices for those months. Aside from its invoices, plaintiff did
not offer any proof that it, in fact, provided the maintenance. Therefore, plaintiff cannot
establish that a mistake was made regarding the monthly maintenance fees.

         Next, plaintiff argues that it should have been reimbursed for the $75 it paid to file the
claim of lien. Given that the purpose of damages in a breach of contract action is to place the
injured party in as good a position it would have been had the contract been fully performed, the
trial court should have awarded the additional $75. See Om-El Export Co, Inc v Newcor, Inc,
154 Mich. App. 471, 478; 398 NW2d 440 (1986). Plaintiff would not have had to file the claim of
lien if The North Corporation had paid for the repairs.

       Last, plaintiff argues that the trial court clearly erred by awarding $2,275 to The North
Corporation for repairs that Elevator Technology performed. Plaintiff argues that there was no
evidence that it failed to properly repair the selector cable in February 2012, which in turn
caused Elevator Technology’s repairs to be necessary. We agree.

        In their countercomplaint, defendants alleged that the selector cable broke the second
time because plaintiff failed to properly install the new cable. Clixby testified that, when
Elevator Technology was performing its repairs, he and an Elevator Technology technician
discovered that the elevator’s oil ports had not been oiled. But no one testified that the lack of
oil caused the selector cable to break. In fact, there is no evidence at all in the record regarding
the cause of the break. Rather, Lardner testified that the Elevator Technology invoice did not
provide a reason for the break. Lardner further testified that repairing the selector cable could
not prevent a subsequent break months later, explaining that such breaks are typically caused by
human error (such as throwing garbage into the shaft), animal infestation, or the age of the
elevator. He also testified that, for safety reasons, plaintiff does not lubricate selector cables.
Absent any evidence regarding the cause of the second break in the selector cable, there is no
proof that reimbursement for those repairs was necessary to put The North Corporation in the
same position it would have been had the contract been fully performed. The trial court clearly
erred by awarding $2,275 in damages to The North Corporation.

        Accordingly, in Docket No. 326319, the judgment in the amount of $163.80 is vacated
and the trial court is instructed to enter a judgment in plaintiff’s favor in the amount of $2,513.80
[$4,438.80 for services performed by plaintiff minus $2,000.00 already paid plus $75 for filing
the lien claim] against The North Corporation. In all other respects, the judgment is affirmed.

                  IV. LIABILITY FOR CASE EVALUATION SANCTIONS

        In Docket No. 327509, plaintiff argues that the trial court should not have found it liable
for case evaluation sanctions to either Clixby or North Management Corporation, and the trial
court should have granted its motion for reconsideration. We disagree.

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       “A trial court’s interpretation of a court rule and decision to award case evaluation
sanctions are questions of law we review de novo.” Ayre v Outlaw Decoys, Inc, 256 Mich. App.
517, 520; 664 NW2d 263 (2003). This Court reviews a trial court’s decision on a motion for
reconsideration for an abuse of discretion. Woods v SLB Prop Mgt, LLC, 277 Mich. App. 622,
629; 750 NW2d 228 (2008).

       MCR 2.403(O)(1) provides:
              If a party has rejected an evaluation and the action proceeds to verdict, that
       party must pay the opposing party’s actual costs unless the verdict is more
       favorable to the rejecting party than the case evaluation. However, if the opposing
       party has also rejected the evaluation, a party is entitled to costs only if the verdict
       is more favorable to that party than the case evaluation.

In this case, plaintiff sued four defendants. MCR 2.403(O)(4) provides:
               (a) Except as provided in subrule (O)(4)(b), in determining whether the
       verdict is more favorable to a party than the case evaluation, the court shall
       consider only the amount of the evaluation and verdict as to the particular pair of
       parties, rather than the aggregate evaluation or verdict as to all parties. However,
       costs may not be imposed on a plaintiff who obtains an aggregate verdict more
       favorable to the plaintiff than the aggregate evaluation.

              (b) If the verdict against more than one defendant is based on their joint
       and several liability, the plaintiff may not recover costs unless the verdict is more
       favorable to the plaintiff than the total case evaluation as to those defendants, and
       a defendant may not recover costs unless the verdict is more favorable to that
       defendant than the case evaluation as to that defendant.

        The trial court found plaintiff liable for case evaluation sanctions to Clixby and North
Management Corporation. Considering only those particular parties pursuant to MCR
2.403(O)(4)(a), Clixby and North Management Corporation accepted the case evaluation award
of zero and plaintiff rejected the award. At trial, the court found no cause of action against
Clixby and North Management Corporation. According to MCR 2.403(O)(3), “[i]f the
evaluation was zero, a verdict finding that a defendant is not liable to the plaintiff shall be
deemed more favorable to the defendant.” Therefore, the verdict was more favorable to Clixby
and North Management Corporation than plaintiff. Because plaintiff rejected the evaluation
against Clixby and North Management Corporation, plaintiff must pay their actual costs pursuant
to MCR 2.403(O)(1).

       Where plaintiff failed in its motion for reconsideration to identify a palpable error by
which the trial court was misled, the trial court did not abuse its discretion by denying the
motion. MCR 2.119(F)(3); Woods, 277 Mich. App. at 629.

                                      V. TAXABLE COSTS

        On cross-appeal, defendants argue that the trial court erred by refusing to order plaintiff
to pay $302.77 in taxable costs. We disagree.

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       MCR 2.403(O)(6) provides:
               For the purpose of this rule, actual costs are

               (a) those costs taxable in any civil action, and

               (b) a reasonable attorney fee based on a reasonable hourly or daily rate as
       determined by the trial judge for services necessitated by the rejection of the case
       evaluation, which may include legal services provided by attorneys representing
       themselves or the entity for whom they work, including the time and labor of any
       legal assistant as defined by MCR2.626.

        The trial court refused to award taxable costs to Clixby and North Management
Corporation because they only attached invoices for attorney fees and costs to their motion, and
failed to break down which costs were taxable under MCR 2.403(O)(6). Under MCR
2.119(A)(1)(b), a motion must “state with particularity the grounds and authority on which it is
based.” At the motion hearing, defendants did not clarify which expenses were taxable under the
court rule and only noted that it added up all the “out-of-pocket” costs to be $738.01. Because
defendants failed to state with particularity which costs were “taxable costs” according to MCR
2.403(O)(6), the trial court did not err by refusing to award those costs.

                    VI. AMOUNT OF CASE EVALUATION SANCTIONS

        Defendants also argue on cross-appeal that the trial court determined that attorney fees in
the amount of $7,325 was reasonable, but then improperly reduced the award to $5,000.
Defendants argue that, where a rejecting plaintiff asserts the same theories of liability against all
defendants, the rejecting plaintiff is responsible for all the fees associated with the defense of
those theories. We agree that the $2,325 reduction was improper, but conclude that plaintiff is
only liable to North Management Corporation for those services.

       To determine the reasonable attorney fee based on a reasonable rate for services
necessitated by the rejection of the case evaluation, the trial court is required to apply the
framework established in Smith v Khouri, 481 Mich. 519, 537; 751 NW2d 472 (2008):

       [A] trial court should first determine the fee customarily charged in the locality
       for similar legal services. In general, the court shall make this determination
       using reliable surveys or other credible evidence. Then, the court should multiply
       that amount by the reasonable number of hours expended in the case. The court
       may consider making adjustments up or down to this base number in light of the
       other factors listed in Wood [v Detroit Auto Inter Ins Exch, 413 Mich. 573; 321
       NW2d 653 (1982)] and MRPC 1.5(a). In order to aid appellate review, the court
       should briefly indicate its view of each of the factors.

       The trial court found that 19.3 hours for pretrial and trial proceedings were reasonable,
and 10 hours for proceedings after trial were reasonable. At $250 an hour, $7,325 in attorney
fees were reasonable for defending this case. The trial court then reduced the amount of attorney
fees owed to $5,000, reasoning:

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              However as I indicated and as we discussed, Mr. Wasvary was
       representing both Clixby and the Corporation and there was a Judgment against
       the Corporation as well. And much of the post-judgment work didn’t address Mr.
       Clixby individually, but addressed whether the Judgment would be against North
       Management Corporation or North Corporation.

                                               ***

              So it didn’t really relate to time that would be specifically addressed to
       Mr. Clixby and Mr. Clixby is the one who’s entitled to the case evaluation
       sanctions . . . .

Defense counsel interjected, “Not Mr. Clixby, it would’ve effected North Management Company
which is entitled also ‘cause we also obtain a zero case eval for North Management.” The trial
court then concluded, “At any rate, Gentlemen, I think when you take all of these issues into
consideration in everything, that the reasonable hourly or the reasonable amount of hours for this
case is 20 hours times $250 an hour is $5,000 in attorney fees.”

        The confusion resulted here because only two out of four defendants moved for case
evaluation sanctions—Clixby and North Management Corporation. A rejecting plaintiff is
responsible for the attorney fees necessitated by the defense of the rejecting plaintiff’s claims.
Ayre, 256 Mich. App. at 525-526. If a defendant incurred attorney fees defending against another
of plaintiff’s theories, the rejecting plaintiff is not responsible for those fees. Id.

        In the complaint, plaintiff asserted the same theories of liability against Clixby, North
Management Corporation, The North Corporation, and Sillson Apartments. Therefore, the cost
of defending the allegations in the complaint against Clixby or North Management Corporation,
individually, would have been the same as to defend the allegations against all four defendants.
The trial court found that all of these expenses totaled $5,000 (19.3 for pretrial and trial
expenses, and .7 hours for expenses incurred after trial). Following Ayre, the trial court did not
err in ordering plaintiff to pay $5,000 to Clixby and North Management Corporation for these
expenses.

        The problem with the trial court’s award lies in the attorney fees for 9.3 hours after trial,
which the trial court deemed reasonable, but did not order plaintiff to pay. According to the trial
court, these hours were used to defend plaintiff’s post-trial claim that North Management
Corporation, not The North Corporation, was the entity that the trial court ordered to pay the
judgment. Although these attorney services appear to only involve North Management
Corporation and The North Corporation, no one argued below that they were not necessitated by
the rejection of the case evaluation under MCR 2.403(O)(6)(b). This Court explained in Ayre
that a defendant could incur separate expenses defending against various plaintiffs’ damages
claims, so here North Management Corporation required separate post-trial services. Because
North Management Corporation, not just Clixby, moved for case evaluation sanctions, the trial
court erred by failing to order plaintiff to pay $2,325 to North Management Corporation.

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                                      VII. CONCLUSION

        In Docket No. 326319, the judgment in the amount of $163.80 is vacated and the trial
court is instructed to enter a judgment in plaintiff’s favor in the amount of $2,513.80 against The
North Corporation. In all other respects, the judgment is affirmed. In Docket No. 327509, we
affirm the trial court’s order granting case evaluation sanctions to Clixby and North Management
Corporation and against plaintiff in the amount of $5,000, representing attorney fees and no
taxable costs, but reverse the court’s determination that plaintiff was not required to pay an
additional $2,325 in sanctions to North Management Corporation for post-trial services, and
remand for entry of an order in that amount in favor of North Management Corporation.

        Affirmed in part, reversed in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.

                                                            /s/ Jane M. Beckering
                                                            /s/ Mark J. Cavanagh
                                                            /s/ Michael F. Gadola

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