Court Opinion

ID: 4431537
Source: CourtListenerOpinion
Date Created: 2019-08-21 09:06:03.868406+00
Date Added: 2024-06-11T14:58:19.860465
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

RAYMOND G. JACKMAN,                                               UNPUBLISHED
                                                                  August 20, 2019
              Plaintiff-Appellee,

v                                                                 No. 345002
                                                                  Lapeer Circuit Court
RMD HOLDINGS LTD d/b/a NATIONWIDE                                 LC No. 17-050863-CL
FENCE & SUPPLY COMPANY,

              Defendant-Appellant.

Before: SHAPIRO, P.J., and GLEICHER and SWARTZLE, JJ.

PER CURIAM.

        Following a series of orders that dismissed Raymond Jackman’s various claims, RMD
Holdings LTD unsuccessfully sought sanctions against Jackman for filing a frivolous and
unfounded action. The circuit court observed the proceedings first-hand and determined that
Jackman did not file suit for any improper purpose and that at the time he filed his complaint,
Jackman had a reasonable basis to believe that discovery would support his claims. Given the
high level of deference afforded the lower court in this matter, we affirm.

                                      I. BACKGROUND

       RMD is a fencing company that does large commercial and government jobs around the
country. Jackman worked for RMD for over 30 years, spending his last decade as a project
manager. In that role, Jackman prepared bids for new jobs and managed the day-to-day finances
on his projects. Jackman earned bonuses based on his project margins, which were calculated
not only on finished projects but also works in progress. Jackman became disgruntled and
believed that RMD manipulated when it charged costs to his project accounts to avoid paying
bonuses. Jackman also opined that RMD improperly forced project managers to use a labor
subcontractor owned by an insider and charged above-market prices for this service.

       Jackman quit his employment and filed a complaint with the Michigan Department of
Licensing and Regulatory Affairs, Wage and Hour Division for unpaid sick and vacation days.
That complaint was dismissed and Jackman did not pursue his administrative appellate remedies.
Instead, Jackman filed suit against RMD, seeking statutorily due unpaid sick and vacation time,

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contending that RMD wrongfully docked his pay, and claiming entitlement to unpaid bonuses for
several work years. The circuit court summarily dismissed Jackman’s statutory claims for failure
to exhaust his administrative remedies. In a second summary disposition order, the court
dismissed Jackman’s claims for bonuses related to regularly conducted projects during his
employ based on evidence that the cited amounts were actually paid. The only issue then
remaining was Jackman’s right to bonuses for two extraordinary projects governed by a special
incentive program. When discovery failed to uncover evidence of creative accounting, the court
summarily dismissed that claim as well.

        This litigation was highly contentious and the attorneys battled hard. They accused each
other of strong-arm tactics and wrongdoing and filed cross-motions for sanctions and attorney
fees. Relevant to this appeal, RMD accused Jackman and his attorney, James Toth, of filing a
frivolous lawsuit with no reasonable basis to believe that any facts supported their claims. RMD
noted that a full year of discovery had uncovered no support for Jackman’s ever-evolving
allegations. RMD further contended that Toth had mischaracterized the conduct of its attorney,
Rogue Tyson, throughout the proceedings to garner court sympathy. The court ultimately denied
the request for sanctions, stating “In this particular matter, the Court granted Defendant RMD
Holdings’ motion for summary disposition in an opinion that the Court issued back on June 21,
2018, which hasn’t been challenged or overturned.” The court concluded:

               In this particular matter[,] the Court has considered this matter for a long
       time, and the Court determines that [Jackman’s] claims in this matter were not
       frivolous. The main intent was not to harass [RMD] in this matter. The Court
       determines that the case was hard fought, that the Court made some evidentiary
       rulings which may be the basis of the eventual granting of summary disposition,
       but the Court determines that when pleadings were signed and filed, they were
       signed properly by counsel on behalf of his client.

                                         II. ANALYSIS

       RMD now challenges the circuit court’s denial of its sanctions motion.

                A trial court’s findings regarding whether a claim or defense was frivolous
       and whether sanctions may be imposed are reviewed for clear error. A finding of
       the trial court is clearly erroneous when, although there is evidence to support it,
       this Court is left with a definite and firm conviction that a mistake was made.
       [DC Mex Holdings LLC v Affordable Land LLC, 320 Mich App 528, 546; 907
       NW2d 611 (2017) (cleaned up).1]

1
  This opinion uses the new parenthetical (cleaned up) to improve readability without altering the
substance of the quotation. The parenthetical indicates that nonsubstantive clutter such as
brackets, alterations, internal quotation marks, and unimportant citations have been omitted from
the quotation. See Metzler, Cleaning Up Quotations, 18 J App Pract & Process 143 (2017).

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“Clear error signifies a decision that strikes us as more than just maybe or probably wrong.” In
re Williams, 286 Mich App 253, 271; 779 NW2d 286 (2009). This is a highly deferential
standard—“ ‘To be clearly erroneous, a decision must strike us as more than just maybe or
probably wrong; it must . . . strike us as wrong with the force of a five-week old, unrefrigerated
dead fish.’ ” People v Cheatham, 453 Mich 1, 30 n 23; 551 NW2d 355 (1996), quoting Parts &
Electric Motors, Inc v Sterling Electric, Inc, 866 F2d 228, 233 (CA 7, 1988).

      The circuit court denied RMD’s motion for sanctions on July 30, 2018. At that time,
such motions were governed by MCR 2.114 as follows:

       (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.

       (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.[2]

MCR 2.625(A)(2) provides, “In an action filed on or after October 1, 1986, 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.” MCL 600.2591 in turn provides:

       (1) 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

2
 MCR 2.114 was repealed effective September 1, 2018, and these provisions were moved to
MCR 1.109(E)(5)-(7).

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       the civil action by assessing the costs and fees against the nonprevailing party and
       their attorney.

       (2) The amount of costs and fees awarded under this section shall 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.

       (3) As used in this section:

               (a) “Frivolous” means that at least 1 of the following conditions is met:

                       (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.

               (b) “Prevailing party” means a party who wins on the entire record.

As described by this Court, “To determine whether sanctions are appropriate under MCL
600.2591, it is necessary to evaluate the claims or defenses at issue at the time they were made,
and the factual determination by the trial court depends on the particular facts and circumstances
of the claim involved.” DC Mex Holdings, 320 Mich App at 548 (cleaned up). “The mere fact
that [a] plaintiff[] did not ultimately prevail does not render [his or her pleading] frivolous.”
Kitchen v Kitchen, 465 Mich 654, 662; 641 NW2d 245 (2002).

        Keeping in mind the highly deferential standard of review applicable in this case, RMD
has not established entitlement to appellate relief. When a party and his attorney sign a
complaint, they make certain “certification[s]” under MCR 2.114(D), now MCR 1.109(E)(5).
The party and his counsel certify that they have made a “reasonable inquiry” before forming a
belief that the complaint is factually and legally supported. MCR 2.114(D)(2), now MCR
1.109(E)(5)(b). Jackman had worked at RMD for over 30 years and was well aware of its
operations. Even so, he discussed the matter with former company co-owner, Michael Demil,
and former project manager, Rick Porter, before filing suit. He later submitted affidavits from
Demil and Porter summarizing their conversations. From these conversations and his preexisting
knowledge, Jackman had a reasonable basis to believe that discovery would provide evidence to
support his bonuses claim.

        MCR 2.114(D)(3), now MCR 1.109(E)(5)(c), provides that an attorney and party certify
that the complaint was not filed “for any improper purpose, such as to harass or to cause
unnecessary delay or needless increase in the cost of litigation.” Sanctions for filing the statutory
claims would be overly harsh. Based on RMD’s first motion for summary disposition filed in
lieu of an answer, the circuit court swiftly summarily dismissed those claims due to Jackman’s
failure to exhaust his administrative remedies. As to the remainder of the claims, there is no
record evidence that Jackman filed them for any improper purpose. The circuit court observed
the witnesses first-hand and was in the best position to judge their intentions. “[Q]uestions of
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credibility and intent are properly resolved by the trier of fact,” and we defer to the lower court’s
findings in this regard. Triple E Produce Corp v Mastronardi Produce, Inc, 209 Mich App 165,
174; 530 NW2d 772 (1995), citing MCR 2.613(C). Nothing in this record suggests that the
circuit court clearly erred.

        MCR 2.114(F), now MCR 1.109(E)(7), also permits sanctions when a claim is frivolous.
MCL 600.2591(3) defines a “frivolous” action consistent with MCR 2.114(D). As noted, the
circuit court rejected that Jackman’s and Toth’s “primary purpose in initiating the action . . . was
to harass, embarrass, or injure” RMD. MCL 600.2591(3)(a)(i). Again, we defer to the lower
court’s superior ability to assess Jackman’s and Toth’s intentions. Also as already noted,
Jackman and Toth had a “reasonable basis to believe that the facts underlying [Jackman’s] legal
position were in fact true.” MCL 600.2591(3)(a)(ii). Jackman did not lay out all his cards
immediately, but later stated that he believed RMD had “fudged” the cost numbers on his
projects to avoid paying bonuses (or more money in bonuses). And Jackman formulated his
beliefs based on his years of service for RMD and his discussions with Porter and Demil.
Discovery did not uncover the evidence Jackman sought, but that did not render his action
frivolous. RMD contended that Jackman’s claims for unpaid sick and vacation time were
“devoid of arguable legal merit” because he and Toth were aware that Jackman had not
exhausted his administrative remedies before filing suit. MCL 600.2591(3)(a)(iii). Again, given
the quick resolution of that issue, the trial court did not abuse its discretion by finding that
sanctions were unwarranted.

       We affirm.

                                                              /s/ Douglas B. Shapiro
                                                              /s/ Elizabeth L. Gleicher
                                                              /s/ Brock A. Swartzle

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