Court Opinion

ID: 4704077
Source: CourtListenerOpinion
Date Created: 2021-07-16 09:08:16.336869+00
Date Added: 2024-06-11T08:05:07.957476
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

JOE I.S. ALAMAT, D.D.S., M.D.,                                       UNPUBLISHED
                                                                     July 15, 2021
               Plaintiff-Appellant,

v                                                                    No. 353465
                                                                     Macomb Circuit Court
CHRISTOPHER A. CORNWALL, ROSE WILLIS,                                LC No. 2018-003292-NM
and DICKINSON WRIGHT, PLLC,

               Defendants-Appellees.

Before: RIORDAN, P.J., and M. J. KELLY and SHAPIRO, JJ.

PER CURIAM.

        In this breach of fiduciary duty case, plaintiff appeals as of right the trial court’s order
granting summary disposition in favor of defendants. Plaintiff, a former physician and shareholder
of a corporation represented by defendants, brought this lawsuit after defendants conducted a
review of plaintiff’s procedure and practice in the administration of sedatives. Plaintiff argues on
appeal that the trial court erred when it granted summary disposition in defendants’ favor because
the defendants breached their fiduciary duty to plaintiff as a result of their investigation into his
practice. For the reasons set forth below, we affirm.

                                       I. BACKGROUND

        During the years 2006 through 2016, plaintiff was a practicing physician and shareholder
at Summit Oral and Maxillofacial Surgery (Summit), along with three other shareholders. After
learning from employees that plaintiff had his medical assistants administer sedatives
intravenously while he was not present, the other Summit shareholders engaged defendants to
conduct an investigation and provide recommendations regarding plaintiff’s practices. Defendants
concluded that plaintiff was instructing his medical assistants to administer sedatives when he was
not present, even though they were not trained or licensed to do so. Defendants recommended the
immediate cessation of this practice by plaintiff.

        Summit terminated plaintiff shortly thereafter. Plaintiff then filed his complaint, in which
he alleged defendants breached their fiduciary duties to him and committed fraud when issuing
their report to Summit. Defendants moved for summary disposition and, as relevant here, the trial

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court granted the motion on the basis that plaintiff could not show he reasonably placed trust and
confidence in defendants because the relationship between the parties was adversarial. This appeal
followed.

                                  II. STANDARD OF REVIEW

       This Court “review[s] a motion brought under MCR 2.116(C)(10) by considering the
pleadings, admissions, and other evidence submitted by the parties in the light most favorable to
the nonmoving party.” Latham v Barton Malow Co, 480 Mich 105, 111; 746 NW2d 868 (2008).
“Summary disposition is appropriate . . . if there is no genuine issue regarding any material fact
and the moving party is entitled to judgment as a matter of law.” West v Gen Motors Corp, 469
Mich 177, 183; 665 NW2d 468 (2003). “A genuine issue of material fact exists when the record,
giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which
reasonable minds might differ.” Id.1

        “Questions of law are subject to review de novo.” Prentis Family Foundation v Barbara
Ann Karmanos Cancer Institute, 266 Mich App 39, 43; 698 NW2d 900 (2005). “Whether a duty
exists is a question of law for the court to decide.” Id.

                                         III. DISCUSSION

        The trial court concluded that plaintiff could not have reasonably placed trust and
confidence in defendants because the interests of plaintiff and defendants were adverse. Plaintiff
contends, to the contrary, that the parties’ interests were not adverse because all parties wanted a
fair and complete investigation. Thus, plaintiff claims he was entitled to place trust and confidence
in defendants, and the trial court should not have granted summary disposition in defendants’
favor. We find plaintiff’s argument unpersuasive.

        “[A] fiduciary relationship arises from the reposing of faith, confidence, and trust and the
reliance of one on the judgment and advice of another.” Id. (quotation marks and citation omitted,
alteration in original). “When a fiduciary relationship exists, the fiduciary has a duty to act for the
benefit of the principal regarding matters within the scope of the relationship.” Id. In the context
of a relationship with an attorney, “[a] fiduciary relationship may arise between corporate counsel
and a shareholder when the nonclient shareholder reposed faith, confidence, and trust in the
lawyer’s advice or judgment.” Kern v Kern-Koskela, 320 Mich App 212, 227; 905 NW2d 453
(2017).

       “However, the placement of trust, confidence, and reliance must be reasonable, and
placement is unreasonable if the interests of the client and nonclient are adverse or even potentially
adverse.” Prentis Family Foundation, 266 Mich App at 44. Courts have “repeatedly declined to

1
 Defendants moved for summary disposition under MCR 2.116(C)(8) and MCR 2.116(C)(10).
The trial court did not specify under which subrule it granted summary disposition. However, in
explaining its reasoning, the trial court referred to evidence outside the pleadings. Thus, we
consider the motion as having been decided under MCR 2.116(C)(10). Major v Newberry, 316
Mich App 527, 539 n 2; 892 NW2d 402 (2016).

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recognize a fiduciary obligation running to a potentially adverse party because such a duty would
necessarily permeate all facets of the litigation and have a significantly deleterious effect on the
attorney’s ability to make decisions for the benefit of his client.” Beaty v Hetzberg & Golden, PC,
456 Mich 247, 261; 571 NW2d 716 (1997).

        In Kern, this Court addressed a factually similar case in which a shareholder of a small
corporation asserted claims against the corporation’s counsel for breach of fiduciary duty. Kern,
320 Mich App at 218. As in this case, the plaintiff in Kern brought the claims on his own behalf
and not on behalf of the corporation the attorneys represented. Id. at 228. Concluding the trial
court did not err when it granted summary disposition in the defendants’ favor as to the breach of
fiduciary duty claim, we stated:

       In this case, plaintiff presented no evidence to suggest that he reposed his faith,
       confidence, and trust in the advice or judgment of the corporate counsel. Plaintiff’s
       own affidavit states that he communicated with the corporate attorneys through his
       own personal attorney and did so when demanding to review the corporate financial
       records. He has presented nothing to suggest that he had any other significant
       communications with the corporate attorneys. Given that plaintiff had no
       communications with corporate counsel, he did not place faith, confidence, or trust
       in their advice or judgment. Even if plaintiff had relied on communications or
       advice from the attorney defendants, that reliance would not have been reasonable
       under the circumstances. The context of plaintiff’s contacts with corporate counsel,
       in which he communicated through his own counsel and demanded to review the
       corporations’ financial records, indicates a potentially adverse relationship with
       corporate counsel. [Id.]

        Similarly here, plaintiff’s relationship with defendants potentially was adverse from the
moment he learned of the investigation. Upon hearing the rumors that he was being investigated
by defendants, plaintiff researched the laws he believed were relevant to his practice in an effort
to refute defendants’ assertion that the way sedatives were administered to his patients was illegal.
At a meeting conducted on October 12, 2016, plaintiff prepared to, and in fact did, record the
meeting to memorialize the discussion between the parties during the meeting. At that meeting,
plaintiff openly stated his displeasure for defendants’ work and attempted to terminate them as
Summit’s corporate counsel. Although plaintiff stated he believed that defendants would change
their position after the meeting, defendants did not. Instead, they issued a compliance report
recommending immediate cessation of allowing unlicensed professionals to administer sedatives
intravenously. Plaintiff also stated he felt undermined by defendants, who left him out of
communications regarding the investigation with the other shareholders.

        These facts, uncontradicted by plaintiff, demonstrate that plaintiff had a “potentially
adverse relationship with corporate counsel.” Id. Thus, the trial court correctly concluded that
plaintiff, by his actions, could not establish a fiduciary relationship between defendants and
plaintiff because any placement of trust in defendants by plaintiff was unreasonable in this matter.
See Prentis Family Foundation, 266 Mich App at 44.

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        In arguing the trial court erred, plaintiff contends this case is controlled by Fassihi v
Sommers, Schwartz, Silver, Schwartz & Tyler, PC, 107 Mich App 509; 309 NW2d 645 (1981).2
In that case, this Court concluded that because shareholders are not clients of their corporation’s
attorneys, there is no per se fiduciary relationship between the attorney and the shareholders. Id.
at 514-515. However, the Court stated that even though the shareholders may not be the client of
the corporation’s attorney, the attorney may still owe fiduciary duties to the shareholder if the
shareholder “reposes faith, confidence, and trust in another’s judgment and advice.” Id. at 515.

         Fassihi did not address the issue of whether a fiduciary relationship continues to exist once
there is a potential adversarial relationship between the shareholder and the attorney. However,
this Court addressed that issue in Prince Family Foundation and in Kern and concluded that when
a potentially adversarial situation arises, it is unreasonable as a matter of law for a shareholder to
place such trust and confidence in the attorney. In other words, Fassihi set forth the general
proposition—that a fiduciary relationship can exist between attorney and shareholder—which was
later refined by Prince Family Foundation and Kern.

                                        IV. CONCLUSION

       The trial court did not err when it granted summary disposition in defendants’ favor
because plaintiff could not show it was reasonable for him to place trust or confidence in
defendants.

       Affirmed.

                                                              /s/ Michael J. Riordan
                                                              /s/ Michael J. Kelly
                                                              /s/ Douglas B. Shapiro

2
 Opinions from this Court published prior to November 1, 1990, are not binding on this Court.
MCR 7.215(J)(1).

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