Court Opinion

ID: 4426177
Source: CourtListenerOpinion
Date Created: 2019-08-16 09:05:35.689857+00
Date Added: 2024-06-11T14:27:50.573347
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                          STATE OF MICHIGAN

                           COURT OF APPEALS

ABRAHAM KOLNIERZ,                                                   UNPUBLISHED
                                                                    August 15, 2019
               Plaintiff-Appellant,

v                                                                   No. 342755
                                                                    Oakland Circuit Court
NORMAN KOBYLARZ,                                                    LC No. 2016-154156-NZ

               Defendant-Appellee.

Before: GADOLA, P.J., and BOONSTRA and SWARTZLE, JJ.

PER CURIAM.

        Plaintiff appeals by right the trial court’s order granting summary disposition in favor of
defendant under MCR 2.116(C)(8) and denying plaintiff’s motion to amend his complaint. We
affirm.

                   I. PERTINENT FACTS AND PROCEDURAL HISTORY

       Plaintiff is defendant’s father-in-law by virtue of defendant’s marriage to plaintiff’s
daughter Linda (Linda), now deceased. Plaintiff is in his nineties and is retired from his
commercial painting business. Beginning in 2003, plaintiff gave Linda money that she placed in
various accounts either in her name or jointly in her and defendant’s names. Plaintiff and Linda
never had a formal agreement concerning the funds, but plaintiff asserted in his complaint that
the money he gave to Linda1 was to be held for plaintiff’s benefit.

        Linda died unexpectedly in 2015. Of the various accounts owned by Linda at the time of
her death, plaintiff asserted that a brokerage account at Raymond James contained annuities and
securities valued at approximately $400,000 purchased with the funds that he had given to Linda

1
  The Complaint suggested that the amount totaled approximately $400,000, but the Complaint
sought judgment in the principal amount of $181,604.47.

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to hold on his behalf. The brokerage account was a “transfer on death” (TOD) account that,
upon Linda’s death, transferred to defendant and Linda’s sister as joint beneficiaries.

        Plaintiff filed suit in July 2016, requesting that the trial court impose a constructive trust
on the proceeds of the brokerage account, and issue a money judgment in favor of plaintiff for
the $181,604.47 that plaintiff asserted defendant had obtained from the account. Plaintiff’s
complaint alleged that defendant had failed to respond to requests to voluntarily tender that sum
to plaintiff. The trial court issued a scheduling order stating that discovery was to be completed
by April 21, 2017. The parties conducted discovery during the intervening time period.

         In May 2017, plaintiff moved the trial court for permission to amend his complaint to add
a claim against defendant for conversion, asserting that defendant had acknowledged at his
deposition that the money in the brokerage account belonged to plaintiff and that he thus was
intentionally and wrongfully withholding those funds. After a hearing that was combined with
plaintiff’s motion to adjourn case evaluation, the trial court issued an order granting an
adjournment of the case evaluation, denying without prejudice plaintiff’s motion to amend, and
directing that the parties proceed with selecting a case facilitator and a location for facilitation.
In June 2017, defendant moved for summary disposition under MCR 2.116(C)(8) and (C)(10);
the hearing on this motion was ultimately delayed for several months due to issues regarding
facilitation and regarding plaintiff’s relationship with his retained counsel. In July 2017, after an
unsuccessful facilitation, plaintiff hired new counsel; however, that counsel moved to withdraw
as counsel a month later; the trial court granted the motion to withdraw on August 9, 2017, and
also stayed the matter for 21 days to allow plaintiff to find new counsel. Plaintiff obtained new
counsel in September 2017. Later that same month, the trial court issued a calendar conference
order indicating that discovery was to be completed by November 20, 2017. During the
additional discovery period, plaintiff’s attorney responded to requests for admissions by
defendant and responded to defendant’s motion to quash document production subpoenas to
various financial institutions. The trial court denied defendant’s motion in part, permitting
plaintiff to subpoena the requested financial records provided that they were kept confidential.
The trial court ultimately accepted plaintiff’s proposed order regarding these subpoenas, which
stated that any documents received as a result of a subpoena would be “for attorney eyes only
unless those documents are filed with the court as a relevant exhibit.”

        In November 2017, plaintiff responded to defendant’s motion for summary disposition.
In that response, plaintiff requested that the trial court allow plaintiff to amend his complaint to
“cure any deficiencies in the complaint” and stated that plaintiff would “submit a proposed
amended complaint with a separate motion to amend.” Plaintiff subsequently filed a motion for
leave to file an amended complaint that proposed to “add new counts for Fraud and Conversion
and more precisely describe the allegations of this litigation.”

        On November 29, 2017, the trial court held a hearing on defendant’s motion for summary
disposition and plaintiff’s motion to amend. Defendant argued that plaintiff’s complaint had
failed to plead the elements of a constructive trust and had admitted that plaintiff had sought to
divest himself of the funds at issue in order to qualify for Medicaid. Defendant also argued that
he was not involved in plaintiff’s decision to provide funds to Linda. Defendant also argued that,
under MCR 2.116(C)(10), plaintiff could not establish that all of the funds in question had in fact
originally belonged to plaintiff. Plaintiff argued that amending the complaint would cure any

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issues. While the trial court described plaintiff’s motion to amend as “really late,” plaintiff
denied having delayed in moving to amend.

        Following the hearing, the trial court issued an opinion and order granting defendant’s
motion for summary disposition under MCR 2.116(C)(8), stating that plaintiff had “failed to
establish the elements necessary to state a viable claim for constructive trust.” The trial court
also denied plaintiff’s motion to file an amended complaint, stating:

               The Court finds that the proposed amended complaint would be futile
       because Plaintiff cannot show a fiduciary duty owed by Defendant to Plaintiff and
       there is no evidence that Defendant was involved with the transfer of money or
       participated in any fraud or conversion. Discovery is closed in this case and the
       new allegations are inconsistent with the discovery responses. In addition, the
       Court finds that allowing the amended complaint at this late date would cause
       actual prejudice to Defendant through undue delay and expense. [Summary
       disposition opinion and order, 1.]

       The trial court denied plaintiff’s motion for reconsideration. This appeal followed.

                                 II. STANDARD OF REVIEW

        We review de novo a trial court’s decision to grant summary disposition under
MCR 2.116(C)(8). Oesterle v Wallace, 272 Mich. App. 260, 264; 725 NW2d 470 (2006). A
motion for summary disposition under MCR 2.116(C)(8) “tests the legal sufficiency of the
pleadings alone, and the motion must be granted if no factual development could justify the
plaintiff’s claim for relief.” Id. All well-pleaded factual allegations in the complaint are
accepted as true and construed in a light most favorable to the nonmovant. See Maiden v
Rozwood, 461 Mich. 109, 119; 597 NW2d 817 (1999).

        We review for an abuse of discretion a trial court’s decision whether to permit
amendment of a pleading. See Weymers v Khera, 454 Mich. 639, 654; 563 NW2d 647 (1997).
When granting summary disposition based on MCR 2.116(C)(8), the trial court shall give the
parties an opportunity to amend their pleadings, unless the evidence before it shows that the
amendment would not be justified. MCR 2.116(I)(5).

                                III. SUMMARY DISPOSITION

       Plaintiff first argues that the trial court erred by granting summary disposition in favor of
defendant under MCR 2.116(C)(8). We disagree. Plaintiff does not argue that the trial court
erred by determining that plaintiff’s complaint had failed to state a viable claim for a
constructive trust; rather, plaintiff argues only that factual issues exist concerning whether
defendant converted the funds at issue, breached a fiduciary duty to plaintiff, or committed fraud.
However, plaintiff pled none of those causes of action in his complaint. Indeed, the complaint is
devoid of any counts, and it makes no effort to plead the elements of those claims; to the

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contrary, it consists entirely of 16 numbered paragraphs preceded by an introductory paragraph
and followed by a conclusory paragraph, both of which request only that the trial court impose a
constructive trust and issue a money judgment.2

       Moreover, and as plaintiff does not contest, plaintiff failed to validly plead a claim for
constructive trust. A constructive trust may be imposed as an equitable remedy when “property
has been obtained through fraud, misrepresentation, concealment, undue influence, duress,
taking advantage of one's weakness, or necessities, or any other similar circumstances which
render it unconscionable for the holder of the legal title to retain and enjoy the property.”
Kammer Asphalt Paving Co, Inc v East China Twp Sch, 443 Mich. 176, 188; 504 NW2d 635
(1993) (quotation marks and citation omitted). In other words, a party seeking a constructive
trust must establish that it is necessary to “do equity or prevent unjust enrichment. Id. (citation
omitted). However, a constructive trust may not be imposed on a party who has “in no way
contributed to the reasons for imposing a constructive trust.” Id.

        Here, plaintiff’s complaint does not allege that funds belonging to plaintiff had been
obtained by defendant through fraud, misrepresentation, undue influence, duress, etc. To the
contrary, the complaint states that plaintiff “will testify that he gave his daughter, Linda
Kolnierz, the money which is the subject of the dispute herein.” It further states that defendant
withdrew funds from the annuities in the account after his wife passed away and he became the
joint beneficiary of the TOD account. Although the complaint alleges that defendant knew the
funds were intended to benefit plaintiff, it does not allege that defendant was in any way
involved in the transfer of funds from plaintiff to Linda, or even in having himself named as a
joint beneficiary on the brokerage account. The mere acts of withdrawing funds from an account
in defendant’s name, or refusing to tender those funds voluntarily, cannot support the imposition
of a constructive trust; at either of those points in time, any transfer of funds from plaintiff to
Linda, and then from Linda to defendant by operation of law, had already occurred.

       Further muddying the waters in plaintiff’s complaint is the allegation that the funds in the
brokerage account were “clearly intended to be part of an irrevocable trust for the benefit of
Abraham Kolnierz as part of his Medicaid planning.” We find it unnecessary to explore this
point at length in light of the other deficiencies in the complaint, but we note that an
“irrevocable” trust for the purposes of qualifying for Medicaid is generally one in which the
grantor forgoes the right to and availability of the assets used to form the trust in return for

2
  At best, plaintiff’s complaint contains allegations that defendant requested and obtained funds
from the brokerage account while knowing that they belonged to plaintiff, and had “failed,
neglected and refused” to tender them to plaintiff. While those allegations might partially
support a claim for statutory or common law conversion, see Aroma Wines & Equip, Inc v
Columbian Distrib Services, Inc, 497 Mich. 337, 352-360; 871 NW2d 136 (2015), even the most
charitable reading of plaintiff’s complaint would not allow us to hold that plaintiff successfully
pleaded the elements of conversion. The case for breach of fiduciary duty and fraud is even
thinner, especially considering that fraud must be pleaded with specificity. See MCR 2.112(B).
Plaintiff did not plead the elements of claims for conversion, breach of fiduciary duty, or fraud.

                                                -4-
Medicaid eligibility. Hegadorn v Dep’t of Human Services Director, ___ Mich ___, ___; ___
NW2d ___ (2019) (Docket Nos. 156132, 156133, 156134), slip op at 10. While no such trust
was ever formed, this allegation in plaintiff’s complaint does not support plaintiff’s claim to the
return of the funds, if indeed they were intended to be removed from plaintiff’s estate for the
purposes of qualifying for Medicaid in the future.

       In sum, the trial court did not err by granting summary disposition in favor of defendant
under MCR 2.116(C)(8) with respect to the claims asserted in plaintiff’s complaint.

                                IV. DENIAL OF AMENDMENT

      Plaintiff also argues that, even if the trial court correctly held that summary disposition
was warranted on plaintiff’s original complaint, it erred by denying plaintiff’s motion to file an
amended complaint. We disagree.

        Again, if a trial court finds that grounds exist for summary disposition under
MCR 2.116(C)(8), it should grant the parties leave to amend unless the evidence before it shows
that the amendment would not be justified. MCR 2.116(I)(5). MCR 2.118(A)(2) provides that
leave to amend “shall be freely given when justice so requires.” Motions to amend should
ordinarily be granted, unless one or more of the following “particularized reasons” exists:

       [1] undue delay, [2] bad faith or dilatory motive on the part of the movant, [3]
       repeated failure to cure deficiencies by amendments previously allowed, [4]
       undue prejudice to the opposing party by virtue of allowance of the amendment,
       [and 5] futility. . . .[Weymers, 454 Mich. at 658 (citation omitted; alterations in the
       original).]

Although delay alone is not sufficient to warrant denial of a motion to amend, denial on the basis
of delay may be permitted if the opposing party would suffer actual prejudice from permitting
the delayed amendment. Id. at 659. Actual prejudice may be found, for example, when “the
moving party seeks to add a new claim or a new theory of discovery on the basis of the same set
of facts, after discovery is closed, just before trial” and the opposing party shows that he did not
have reasonable notice that the moving party would rely on the new claim or theory at trial. Id.

        Here, plaintiff notes that he attempted to amend his complaint once before, after the close
of discovery, and that the trial court denied the motion without prejudice. Plaintiff asserts that
the motion was denied because “the parties agreed to facilitate the matter.” Plaintiff further
claims that issues with his legal representation, and the need for additional discovery, prevented
any further attempts to amend the complaint until the issue was raised in plaintiff’s November
2017 answer to defendant’s motion for summary disposition and accompanying motion to
amend. Plaintiff argues, therefore, that there was no undue delay. Further, plaintiff argues that
defendant had notice of a possible claim for conversion after the May 2017 attempt to amend the
complaint. Plaintiff also argues that defendant should have been on notice regarding possible
claims for fraud and breach of fiduciary duty because the basis of such claims would be the same
intentionally wrongful retention of funds by defendant that were alleged as the basis of the
conversion claim. We disagree.

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        With regard to the claim for breach of fiduciary duty, we note that, prior to his proposed
amendment, plaintiff never alleged that defendant had a fiduciary duty to plaintiff, and even the
proposed amended complaint only bases the source of a duty on defendant’s status as a “joint
account owner” with Linda, and, in a circular argument, on plaintiff’s claim that defendant was
“part of a constructive trust” involving plaintiff’s funds. We conclude that the trial court did not
err by concluding that defendant would be actually prejudiced by the addition of claims for
breach of fiduciary duty, see Weymers, 454 Mich. at 658, 659; further, we agree with the trial
court that such an amendment would be futile. Plaintiff has simply not pleaded any facts, even
in the proposed amended complaint, that would support a conclusion that defendant had a “duty
to act for the benefit of” plaintiff “on matters within the scope of the relationship,” such as the
duty that arises when one is a trustee, guardian, agent, or attorney of another. See In re Karmey
Estate, 468 Mich. 68, 74 n 2; 658 NW2d 796 (2003).

        With regard to the claim for fraud, plaintiff’s proposed amended complaint sought to add
the claim premised not only on defendant’s failure to tender funds from the brokerage account,
but on defendant allegedly having forged checks from plaintiff’s accounts or fraudulently
altering checks written by plaintiff to Linda. In other words, on the eve of trial, and after more
than a year of litigation, plaintiff sought to amend his complaint to add an entirely new claim,
based on different factual allegations, against which defendant could not have been expected to
be prepared to defend. Although plaintiff argues that the alleged forged checks were only
discovered during the extended discovery period, he does not explain why they could not have
been discovered during the initial discovery period. Therefore, we are not convinced that
plaintiff litigated this matter “as expeditiously as possible.” More importantly, we reject
plaintiff’s argument that the addition of a fraud claim based on allegedly forged checks is “a
simple amendment of a recovery theory” that would not prejudice defendant. The fraud claim
not only involves a distinct legal theory, but a substantially different factual underpinning—
plaintiff argues on appeal that two checks drawn from plaintiff’s Chase Bank account (which
was not an account at issue previously) were allegedly forged or fraudulent. We conclude under
these circumstances that the trial court did not err by finding defendant would be actually
prejudiced by allowing amendment of the complaint to add plaintiff’s proposed claim for fraud.
Weymers, 454 Mich. at 658, 659.

        Regarding the proposed amendment to add a claim for conversion, it is true that
defendant should have known in May 2017 that plaintiff was considering adding such a claim.
However, for the same reason, it is not clear why plaintiff waited an additional six months, until
the eve of trial, after the close of not only the original discovery period but the extended
discovery period, to attempt to add such a claim after his first attempt was denied without
prejudice. Plaintiff’s attempt to resurrect this claim at the eleventh hour smacks of bad faith or
dilatory motive. Weymers, 454 Mich. at 658. Further, as the trial court noted, there was no
evidence that defendant was involved in the transfer of money from plaintiff to Linda, other than
simply being the beneficiary of the brokerage account. And to the extent plaintiff seeks to base a
claim for conversion on allegedly forged checks, defendant would be prejudiced by the addition
of this claim at this late hour for the same reason as he is prejudiced by the proposed late

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addition of a fraud claim. We conclude that the trial court did not err by declining to allow
plaintiff to amend his complaint to add a claim for conversion on the eve of trial, nearly a year
and a half after the litigation began.3

       Affirmed.4

                                                            /s/ Michael F. Gadola
                                                            /s/ Mark T. Boonstra
                                                            /s/ Brock A. Swartzle

3
  This conclusion is strengthened by the nature of the alterations that plaintiff proposed to make
to many of the factual allegations in the complaint—for example, rather than asserting that the
funds at issue were earmarked for an irrevocable trust as part of plaintiff’s Medicaid planning,
the proposed amended complaint states—quite to the contrary—that “Plaintiff was not divesting
assets to become eligible for social services.” And instead of seeking a constructive trust as a
form of relief, the proposed amended complaint merely presupposes that such a trust already
existed and formed the basis for a breach of fiduciary duty claim. Therefore, much of the work
performed by defendant to answer plaintiff’s original allegations would be absolutely wasted by
plaintiff’s extreme modification, or some cases reversal, of both his legal theories and factual
allegations.
4
   We note that, according to plaintiff, contemporaneously with filing this lawsuit against
defendant he also made a “claim in the Probate Court against Linda’s estate which resulted in the
return of $274,000.” It is not clear from the record before us in this case whether there is any
“overlap” between the funds returned in that case and the funds plaintiff sought returned here. In
any event, plaintiff was apparently able to recover through that process some funds to which he
felt he had a legal right.

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