Court Opinion

ID: 4416179
Source: CourtListenerOpinion
Date Created: 2019-07-12 09:05:51.335541+00
Date Added: 2024-06-11T14:04:40.651316
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

ZACHARY ALAN VARELA,                                                 FOR PUBLICATION
                                                                     July 11, 2019
               Plaintiff-Appellant,                                  9:00 a.m.

v                                                                    No. 343137
                                                                     Wayne Circuit Court
BRAD SPANSKI and CATHERINE SPANSKI,                                  LC No. 17-006650-CK

               Defendant-Appellees.

Before: TUKEL, P.J., and JANSEN, and RIORDAN, JJ.

JANSEN, J.

       In this civil action involving a contract for the cultivation and distribution of medical
marijuana, plaintiff appeals as of right the order granting summary disposition under MCR
2.116(C)(8) in favor of defendants. We affirm.

                                 I. FACTUAL BACKGROUND

        Plaintiff is registered as a qualifying patient and primary caregiver under the Michigan
Medical Marihuana Act (the MMMA), MCL 333.26421 et seq. In April 2016, defendants
offered to purchase a two-story industrial warehouse building in the city of Detroit and lease it to
plaintiff and his business partner, Derek Powers, “for the purpose of cultivating marihuana.”
Defendants also offered to enter into a partnership agreement where defendants would finance
the start-up costs and operating expenses of a marijuana growing operation in exchange for a
return on the investment over a five-year period. In exchange, plaintiff would be in charge of
growing and harvesting the marijuana. In September 2016, the parties entered into two
agreements: a five-year lease agreement for the warehouse and a five-year partnership
agreement. The whole of the partnership agreement provided:

       1. Anticipated grow start date: July 15, 2016.

       2. Revenue generated from harvests will be initially split as: Investors will
       calculate their total investment as of the first harvest less the cost of the building
       ($150,000) and divide this amount by 12 in order to generate a 1 year payback
       (i.e. $200,000 / 12 = $16,700 per month) – this amount will be fixed and

                                                -1-
      subtracted from the total revenue generated from the harvests for this 1 year
      period, much like the operating expense. Once investors are fully compensated
      for their initial investment total (see investor expense spreadsheet) then revenue
      split reverts to 40% Investors and 60% growers. Investor payback shall
      commence January 2017.

      3. Zach Varela and/or Zach’s LLC will sign a building occupancy lease to be
      effective September 1, 2016 and run for 5 years with month to month renewal
      thereafter.

      4. The express purpose of lease is to allow Investors to create a legal device to
      convert cash revenue from the grow operation into a financial Institution deposit.

      5. After each harvest has been monetized, all operating expenses (i.e. utilities,
      nutrients, soil, etc.) for the next grow cycle will be set aside prior to distribution
      of profits to Investors and Growers in an escrow account or other mutually agreed
      account for the purpose of producing the next harvest. Investors will provide
      documentation of this operating expense (i.e. utilities, etc.).

      6. Investors will pay all applicable taxes and building insurance through the term
      of the lease.

      7. Should the cultivation operation be temporarily or permanently halted for any
      reason (I.e. Government Intervention, Act of God, etc.) prior to Investors being
      fully compensated for their initial investment, Investors will retain ownership of
      the building and cultivation equipment. Otherwise, Investors will transfer
      ownership of all grow equipment once reimbursement takes place.

      8. It is estimated that each plant given a 15 week growing period will produce 2.2
      lbs. per plant and have a market value of $2500 per pound based on initial
      economics provided to Investors.

      9. The maximum number of plants will be strictly enforced based on the Medical
      Marihuana Act of Michigan (2008) or until such time the partners receive a state
      license to produce additional plants upon new legislation.

      10. Grower’s responsibilities: Zach will manage plants on a d-t-d along with
      necessary equipment maintenance. Derek will manage the sales and transfer of
      product to buyer(s) – Derek will also compensate Investors Immediately after the
      sale of product or in another mutually agreeable method and timeframe.

      Last, this document is personal and confidential and is a document to expressly
      state ownership and compensation of the partnership and in no way shall be
      shared with anyone outside of the partnership as stated as “Investors” and
      “Growers” above.

The partnership agreement was signed and dated by plaintiff, his business partner, and
defendants.
                                               -2-
       Initially, the parties’ execution of their contractual obligations went smoothly: defendants
purchased the subject property and cultivation equipment and hired contractors to build out the
warehouse in a manner intended for marijuana cultivation; plaintiff oversaw the build out and set
up a specialized marijuana cultivation system. However, despite plaintiff’s request to do so,
defendants failed to install a security system, and in December 2016, a street gang allegedly
robbed the building of plaintiff’s first harvest.

       After the robbery, plaintiff continued to cultivate 70 marijuana plants, for which he had
valid MMMA registration cards. However, defendants began showing the property and in
March 2017, informed plaintiff that “new investors” were taking over the property. In April
2017, defendants ordered plaintiff to turn over his keys to the building and informed him that he
no longer had authority to use or access the building. Plaintiff was not permitted to retrieve his
marijuana plants or his personal belongings.

        After failed attempts to resolve the dispute and retrieve his possessions, plaintiff filed an
eight-count complaint alleging breach of the lease agreement, breach of the partnership
agreement, tortious interference with contracts, conversion, misappropriation of trade secrets,
unjust enrichment, and breach of implied covenant of good faith and fair dealing. Plaintiff also
sought injunctive relief. However, plaintiff failed to attach the lease agreement and the
partnership agreement to his complaint, claiming that defendants had destroyed evidence of the
agreements in order to thwart all legal obligations to plaintiff.

        Defendants sought summary disposition of all of plaintiff’s claims under MCR
2.116(C)(8), arguing that all of plaintiff’s claims were barred by the wrongful conduct rule.
Defendants argued that plaintiff would have to rely on his illegal conduct to support all of his
claims, the wrongful conduct rule prohibited the trial court from granting him any relief.
Moreover, defendants argued, plaintiff had failed to plead any exception to the wrongful conduct
rule, and therefore his complaint must be dismissed in its entirety.

        The trial court agreed. Specifically, the trial court concluded that “the party’s contracts
would be enforceable if they called for the production of marijuana consistent with the terms of
the MMMA.” However, the MMMA “does not grant caregivers and patients a license to
possess, to manufacture or to distribute marijuana,” and that the MMMA only grants an
affirmative defense for criminal chargers. Moreover, plaintiff was the only party to the contract
with caregiver status under the MMMA, and that under the statute, he was precluded from
growing marijuana for more than five patients. Observing that the party’s agreement required
plaintiff to pay over $16,000.00 in rent each month, the trial court deduced that plaintiff would
have to produce over one pound of marijuana each month for each patient, which would not be
consistent with conduct permitted by the MMMA. Finally, the allegations in plaintiff’s
complaint were conclusory and plaintiff had failed to “establish even a question of fact as to
whether the conduct called for in the party’s agreement would be legal or otherwise consistent
with Michigan Public Policy.” Accordingly, the trial court granted summary disposition in favor
of defendants. This appeal followed.

                                                -3-
                                  II. STANDARD OF REVIEW

       We review a trial court’s decision on a motion for summary disposition under MCR
2.116(C)(8) de novo. Bedford v White, 318 Mich. App. 60, 64; 896 NW2d 69 (2016).

       A motion under MCR 2.116(C)(8) tests whether the opposing party has failed to
       state a claim on which relief can be granted. When deciding a motion under
       (C)(8), this Court accepts all well-pleaded factual allegations as true and construes
       them in the light most favorable to the nonmoving party. A trial court may grant
       summary disposition under MCR 2.116(C)(8) only when the claim is so clearly
       unenforceable as a matter of law that no factual development could possibly
       justify a right of recovery. [Mendelson Orthopedics PC v Everest Nat’l Ins Co,
       ___ Mich App ___, ___; ___ NW2d ___ (2019) (Docket No. 341013); slip op at 4
       (citations and quotation marks omitted).]

                            III. PROPER STANDARD OF REVIEW

       Plaintiff first argues on appeal that the trial court erred in using the standard of review
applicable to summary disposition motions brought under MCR 2.116(C)(10) when deciding
defendants’ summary disposition motion brought under MCR 2.116(C)(8). We disagree.

        Plaintiff correctly notes that in deciding defendants’ motion for summary disposition, the
trial court used language implicating the standard of review applicable to MCR 2.116(C)(10)
motions, repeatedly noting that no material questions of fact existed on the record.1 However,
notwithstanding this slip of language, the trial court does not appear to have considered evidence
outside the pleadings, and therefore the error is harmless.

        The trial court’s reference to the partnership agreement, which is part of the pleadings for
purposes of plaintiff’s claims, draws reasonable inferences from that document. Although
plaintiff suggests that the partnership agreement is not part of the pleadings because it was not
attached to the complaint, MCR 2.113(C)(1)(b) and (2) excuse such failure, and makes the
contract part of the pleadings when the subject contracts are in the possession of the other party
and the pleading so states. Here, plaintiff’s complaint stated that both the lease agreement and
the partnership agreement concern the lease of the property, and that defendants had “destroyed
evidence of the lease agreement in an effort to thwart all legal obligations they have to plaintiff.”
A reasonable inference arises from these allegations that plaintiff did not attach either the lease
agreement or the partnership agreement because they were in defendants’ possession. In fact,
defendants did have the agreements in their possession, and attached the partnership agreement

1
  “A motion brought pursuant to MCR 2.116(C)(10) tests the factual support of a plaintiff’s
claim and is reviewed ‘by considering the pleadings, admissions, and other evidence submitted
by the parties in the light most favorable to the nonmoving party. 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.’ ” Mendelson Orthopedics PC, __ Mich App at __; slip
op at 3, quoting Allison v AEW Capital Mgt, LLP, 481 Mich. 419, 425; 751 NW2d 8 (2008).

                                                -4-
to their reply brief in support of their motion for summary disposition. Therefore, the
partnership agreement was part of the pleadings, and although the trial court articulated the
wrong standard, it did not actually consider evidence outside of the pleadings in deciding
defendants’ motion for summary disposition.

                                IV. § 4 OR § 8 OF THE MMMA

       Second, plaintiff argues that the trial court erroneously interpreted the MMMA when
granting summary disposition in favor of defendants. Specifically, plaintiff argues that the trial
court focused on § 8 of the MMMA, MCL 333.26428, rather than § 4 of the MMMA, MCL
333.26424. We agree. However because we conclude infra that plaintiff has not plead facts
showing that he is entitled to the protections found in § 4, reversal is not required.

        Resolution of this dispute once again puts before this Court questions regarding the
interpretation and application of § 4 and § 8 of the MMMA. While this Court and the Michigan
Supreme Court have opined on this topic in numerous opinions, neither has expressly addressed
the procedural aspects of these sections in the context of the summary disposition phase of a civil
lawsuit between private parties.2 We take the opportunity to do so now.

         Because the MMMA was passed by ballot initiative, this Court “must therefore determine
the intent of the electorate in approving the MMMA, rather than the intent of the Legislature.”
People v Hartwick, 498 Mich. 192, 209-210; 870 NW2d 37 (2015). The most reliable evidence
of the electorate’s intent is the plain language of the statute, which this Court must interpret
consistent with its ordinary meaning. See id. at 210. “If the statutory language is unambiguous,
. . . no further judicial construction is required or permitted because [the Court] must conclude
that the electors intended the meaning clearly expressed.” People v Bylsma, 493 Mich. 17, 26;
825 NW2d 543 (2012) (citation, alterations, footnotes, and quotation marks omitted).

       Our Supreme Court first interpreted the MMMA in People v Kolanek, 491 Mich. 382,
394; 817 NW2d 528 (2012), and explained:

       The MMMA does not create a general right for individuals to use and possess
       marijuana in Michigan. Possession, manufacture, and delivery of marijuana
       remain punishable offenses under Michigan law. Rather, the MMMA’s
       protections are limited to individuals suffering from serious or debilitating

2
  In Ter Beek v City of Wyoming, 495 Mich. 1; 846 NW2d 531 (2014), our Supreme Court
considered whether the MMMA preempts a city ordinance creating civil penalties for medical
use of marijuana, which the trial court below had decided on a MCR 2.116(C)(10) motion. Our
Supreme Court, however, made no express comment on the application of (C)(10) standards to
an assertion of § 4 immunity. This Court, in the context of an MCR 2.116(C)(8) motion, most
recently considered whether the rescission of a governmental agency’s conditional offer of
employment allegedly for medical marijuana use was a “civil penalty.” Eplee v Lansing, __
Mich App __ ; __ NW2d __ (2019), slip op at 4. The Eplee Court likewise made no comment
regarding the application of MCR 2.116(C)(8) standards to an assertion of § 4 immunity.

                                                -5-
       medical conditions or symptoms, to the extent that the individuals’ marijuana use
       “is carried out in accordance with the provisions of the MMMA.” [Kolanek, 491
Mich. at 394, citing MCL 333.26427(a) (alterations and footnote omitted).]

As a whole, “the MMMA defines the parameters of legal medical-marijuana use, promulgates a
scheme for regulating registered patient use and administering the act, and provides for an
affirmative defense, as well as penalties for violating the MMMA.” Kolanek, 491 Mich. at 394.

        The primary mechanism by which the MMMA permits marijuana use is through its
immunity provision, found in § 4. Section 4 grants broad immunity from criminal prosecution
and civil penalties to “qualifying patients” and “primary caregivers” if certain conditions are met.
As our Supreme Court has explained, the immunity found in § 4 is “a unique creature in the law”
and “excuses an alleged offender for engaging in otherwise illegal conduct . . . .” Hartwick, 498
Mich. at 212. In other words, § 4 functions to provide an exception to otherwise illegal conduct;
it does not create affirmative rights and it does not grant registered patients carte blanche in their
use of marijuana. Eplee v Lansing, __ Mich App __; __ NW2d __ (2019), slip op at 7; People v
Koon, 494 Mich. 1, 6; 832 NW2d 724 (2013). Both this Court and the Michigan Supreme Court
have recognized that when a party’s conduct is in accordance with § 4, but another law would
otherwise subject the party to “arrest, prosecution, or penalty in any manner or [deny him] of any
right or privilege[,]” the MMMA operates to insulate that individual from such penalties and
supersedes the competing law. See Koon, 494 Mich. at 8-9 (holding that “the MMMA is
inconsistent with, and therefore supersedes, [the Motor Vehicle Code’s zero tolerance provision,]
MCL 257.625(8)[,] unless a registered qualifying patient loses immunity because of his or her
failure to act in accordance with the MMMA”); Ter Beek v City of Wyoming, 495 Mich. 1, 20;
846 NW2d 531 (2014) (noting that “individuals who satisfy the statutorily specified criteria [of
§ 4]” shall not be subject to . . . penalty in any manner,” and holding that the MMMA preempts a
city ordinance creating civil penalties for medical use of marijuana); Braska v Challenge Mfg
Co, 307 Mich. App. 340, 355; 861 NW2d 289 (2014) (recognizing that “to the extent another law
would penalize an individual for using medical marijuana in accordance with the MMMA, that
law is superseded by the MMMA,” and concluding that denial of unemployment benefits for
testing positive for marijuana under a drug test per the Michigan Employment Security Act is
suspended if the individual is in compliance with the MMMA).

        In this case, plaintiff argues that the trial court erred by granting summary disposition
under MCR 2.116(C)(8) in favor of defendants because it predicated its ruling on an erroneous
interpretation of the MMMA: that plaintiff must establish the elements of the MMMA’s
affirmative defense, § 8, MCL 333.26428, to avoid application of the wrongful conduct rule.
Section 8 provides a statutory affirmative defense to charges involving marijuana for its medical
use in the event the individual facing criminal charges fails to establish the broader immunity
under § 4. Kolanek, 491 Mich. at 396. Because the MMMA is designed to benefit those who
properly register and adhere to its requirements, the elements for establishing a § 8 defense are
more onerous than those of § 4. Hartwick, 498 Mich. at 228.

       We agree with plaintiff that the trial court in this case erred by relying on § 8 in granting
defendants’ motion for summary disposition. Here, the trial court recognized that the partnership
agreement would not be subject to the wrongful conduct rule if the contract complied with the
MMMA. The trial court then concluded that summary disposition was proper because plaintiff

                                                 -6-
had to establish each element of the affirmative defense and had failed to do so. The affirmative
defense found in § 8, however, is only applicable to criminal prosecutions. As our Supreme
Court has explained, “by its own terms, § 8(a) only applies as a defense to any prosecution
involving marihuana . . . . The text and structure of § 8 establish that the drafters and voters
intended that “prosecution” refer only to a criminal proceeding.” State v McQueen, 493 Mich.
135, 159; 828 NW2d 644 (2013) (citation and quotations omitted). The present matter is not a
criminal prosecution, but a civil lawsuit for damages stemming from the termination of the
parties’ contractual relationship. The trial court’s focus, then, on the § 8 affirmative defense was
legal error.

        However, our analysis does not end there. Plaintiff asserted immunity under § 4 and,
indeed, consistent with the language of the MMMA, Michigan courts have recognized that this
immunity may insulate a plaintiff from civil penalties if that plaintiff is in compliance with the
MMMA. See Ter Beek, 495 Mich. at 20; Braska, 307 Mich. App. at 355; cf. Koon, 494 Mich. at 8-
9. Consequently, this Court must consider application of § 4 to the facts of this case. While the
MMMA does not expressly provide for the type of financing arrangement between the parties in
the instant case, plaintiff claims that his conduct falls within the immunity provision contained in
§ 4 of the MMMA and, therefore, application of the wrongful conduct rule is a denial of a right
and cannot be applied to bar his claims. Quoting our Supreme Court’s most recent MMMA
decision considering the application of § 4, Hartwick, plaintiff explains that his “well-pleaded
factual allegations” satisfy the requirement that he prove by a “preponderance of the evidence”
the elements necessary to establish immunity. Hartwick set out in exacting detail the procedural
and substantive requirements of § 4, in relevant part, as follows:

       (1) entitlement to § 4 immunity is a question of law to be decided by the trial
       court before trial;

       (2) the trial court must resolve factual disputes relating to § 4 immunity, and such
       factual findings are reviewed on appeal for clear error;

       (3) the trial court’s legal determinations under the MMMA are reviewed de novo
       on appeal;

       (4) a defendant may claim immunity under § 4 for each charged offense if the
       defendant shows by a preponderance of the evidence that, at the time of the
       charged offense, the defendant

       (i) possessed a valid registry identification card,

       (ii) complied with the requisite volume limitations of § 4(a) and § 4(b),

       (iii) stored any marijuana plants in an enclosed, locked facility, and

       (iv) was engaged in the medical use of marijuana[.] [Hartwick, 498 Mich. at 201.]

      Hartwick was decided in the criminal context, however we conclude that its
pronouncements as to the procedural application of § 4 can be extended to civil cases at the
summary disposition stage. Accordingly, we conclude that a trial court may dismiss a case on a
                                                 -7-
summary disposition motion if a party fails to allege facts that qualify it for immunity under § 4
of the MMMA. Stated differently, a plaintiff must plead facts showing that they were compliant
with the MMMA to avoid summary disposition under MCR 2.116(C)(8).

        Returning to the substantive requirements, § 4 of the MMMA grants broad immunity
from civil penalties, or the denial of a right or privilege, to “qualifying patients” and “primary
caregivers” if the individual complies with the MMMA. Determining the effect of this provision
in the instant case contemplates a two-step analysis. See Braska, 307 Mich. App. at 356; Eplee,
___ Mich App at ___, slip op at 9. The first question this Court must answer is whether the
plaintiff has pleaded facts showing that he complied with the requirements of § 4. If the plaintiff
has successfully pleaded facts showing he complied with the requirements of § 4, then this Court
must next consider whether the plaintiff is subject to a “penalty in any manner, or [the denial of]
any right or privilege” because of the medical use of marijuana. This latter inquiry in this case
requires this Court to determine whether application of the common-law wrongful conduct rule
constitutes a civil penalty or denial of a right or privilege, such that the MMMA would suspend
its application.

        Under this framework, the first query mandates consideration of the elements necessary
to establish immunity under the MMMA. Sections 4(a) and 4(b) of the MMMA contain parallel
immunity provisions that apply to qualifying patients and registered caregivers respectively.
Section 4(a) provides:

       (a) A qualifying patient who has been issued and possesses a registry
       identification card is not subject to arrest, prosecution, or penalty in any manner,
       or denied any right or privilege, including, but not limited to, civil penalty or
       disciplinary action by a business or occupational or professional licensing board
       or bureau, for the medical use of marihuana in accordance with this act, provided
       that the qualifying patient possesses an amount of marihuana that does not exceed
       a combined total of 2.5 ounces of usable marihuana and usable marihuana
       equivalents, and, if the qualifying patient has not specified that a primary
       caregiver will be allowed under state law to cultivate marihuana for the qualifying
       patient, 12 marihuana plants kept in an enclosed, locked facility. Any incidental
       amount of seeds, stalks, and unusable roots shall also be allowed under state law
       and shall not be included in this amount.

Similarly, § 4(b) provides:

       (b) A primary caregiver who has been issued and possesses a registry
       identification card is not subject to arrest, prosecution, or penalty in any manner,
       or denied any right or privilege, including but not limited to civil penalty or
       disciplinary action by a business or occupational or professional licensing board
       or bureau, for assisting a qualifying patient to whom he or she is connected
       through the department’s registration process with the medical use of marihuana
       in accordance with this act. . . . . This subsection applies only if the primary
       caregiver possesses marihuana in forms and amounts that do not exceed any of
       the following:

                                                -8-
       (1) For each qualifying patient to whom he or she is connected through the
       department’s registration process, a combined total of 2.5 ounces of usable
       marihuana and usable marihuana equivalents.

       (2) For each registered qualifying patient who has specified that the primary
       caregiver will be allowed under state law to cultivate marihuana for the qualifying
       patient, 12 marihuana plants kept in an enclosed, locked facility.

       (3) Any incidental amount of seeds, stalks, and unusable roots.

        Our Supreme Court examined the substantive requirements of these provisions in the
criminal context in Hartwick and articulated what elements a party claiming immunity must
establish. We conclude that while the procedural hurdles are different in the civil forum, the
substantive requirements are the same. Namely, a plaintiff seeking immunity in a civil suit must
plead facts showing immunity, as follows:

       A qualifying patient must [allege facts showing] that, at the time [that the claim
       accrued,] he or she (1) possessed a valid registry identification card; (2) possessed
       no more marijuana than allowed under § 4(a); (3) stored any marijuana plants in
       an enclosed, locked facility; and (4) was engaged in the medical use of marijuana.
       If the qualifying patient [alleges sufficient facts of] the first and second elements,
       then a presumption exists that the qualifying patient was engaged in the medical
       use of marijuana, thereby establishing the fourth element.

               Similarly, a primary caregiver must [allege facts showing] that, at the time
       [that the claim accrued], he or she (1) possessed a valid registry identification
       card; (2) possessed no more marijuana than allowed under § 4(b); (3) stored any
       marijuana plants in an enclosed, locked facility; and (4) was assisting connected
       qualifying patients with the medical use of marijuana. If the primary caregiver
       [alleges sufficient facts of] the first and second elements, then a presumption
       exists that the primary caregiver was engaged in the medical use of marijuana,
       thereby establishing the fourth element. [Hartwick, 498 Mich. at 221 (alterations
       made to be consistent with civil procedure).]

       Turning now to the instant case, plaintiff claims that he pleaded facts supporting the
proposition that he met the substantive requirements of § 4 immunity. In particular, plaintiff
quotes the following portions of his complaint in support:

       10. On or about April 2016, Defendants offered to purchase real property located
       at 17507 Van Dyke Street, Detroit, Michigan 48236 (i.e., 2-story industrial
       warehouse building) and lease such real property to Plaintiff and his business
       partner, Derek Powers, for the purpose of cultivating medical marihuana pursuant
       to the MMMA.

                                              * * *

                                                -9-
       17. Plaintiff subsequently cultivated medical marihuana plants as authorized by
       the MMMA inside of the locked, enclosed structure of the subject property.

                                               * * *

       53. Plaintiff at all relevant times lawfully owned and possessed medical
       marihuana plants pursuant to the MMMA, along with other personal property and
       equipment at the subject property.

        According to plaintiff, had the court applied the correct standard applicable to (C)(8)
motions, it would have accepted these allegations as true and denied defendants’ motion. It is
plaintiff, however, who misunderstands his burden. A close reading of the above statements, and
the complaint as a whole, shows that plaintiff does not make allegations of fact, but rather makes
conclusory statements as well as conclusions of law that he acted in a MMMA-compliant
manner. Plaintiff does not support these conclusory statements with any facts. A mere statement
of a pleader’s conclusions and statements of law, unsupported by allegations of fact, will not
suffice to state a cause of action. ETT Ambulance Serv Corp v Rockford Ambulance, Inc, 204
Mich. App. 392, 395; 516 NW2d 498 (1994); Lansing Sch Ed Ass’n v Lansing Bd of Ed (On
Remand), 293 Mich. App. 506, 519; 810 NW2d 95 (2011).

        Indeed, a comprehensive review of plaintiff’s complaint otherwise fails to show any
factual allegations supporting the claim that plaintiff met the limitation requirements or that the
marijuana was for medical use, as required under § 4. In his complaint, plaintiff alleged that he
is a registered patient, a qualified caregiver to five patients, and that he possessed 70 plants when
defendants terminated the agreement. The partnership agreement, which is part of the pleadings
for purposes of plaintiff’s contract action and the motion under MCR 2.116(C)(8), indicated that
plaintiff would pay defendants $16,700 per month, which would be subtracted from the grow
operations’ monthly revenue. The partnership agreement further specified that plaintiff was
expected to produce 2.2 pounds of usable marijuana per plant every 15 weeks, which is
approximately one-half pound per month per plant, or approximately 35 pounds per month for 70
plants. As a qualifying patient and caregiver to five qualifying patients, plaintiff could possess
no more than 15 ounces of usable marijuana and 72 plants at any given time. See Hartwick, 498
Mich. at 218-219, n 54. Given the projected output of the grow operation, as well as the monthly
rental payment, which was to be subtracted from the operation’s revenue, no reasonable
inference could be drawn from the pleadings that plaintiff met the volume limitations of § 4(a)
and § 4(b), or that the production of marijuana under the partnership agreement was for purely
medical use. Accordingly, based on plaintiff’s own “well pleaded allegations,” plaintiff would
be unable to qualify for immunity under the MMMA. Additionally, the partnership agreement
indicates that plaintiff intended to transfer the marijuana to his business partner, Powers, for
Powers to manage the sale and distribution of the product. Such a transfer to a third person, who
is not a registered patient or a patient’s primary caregiver, to facilitate sale and delivery is plainly
not a permissible medical use. See McQueen, 493 Mich. at 156 (“[Section] 4 immunity does not
extend to a registered primary caregiver who transfers marijuana for any purpose other than to
alleviate the condition or symptoms of a specific patient with whom the caregiver is connected
through the MDCH’s registration process.”).

                                                 -10-
        In sum, accepting the factual allegations of plaintiff’s complaint as true, including all
reasonable inferences that can be drawn from them, and in a light most favorable to plaintiff,
plaintiff has failed to plead facts to show that his acts were in compliance with the § 4 immunity
requirements of the MMMA. It follows, even assuming without deciding that plaintiff has been
denied a right, that plaintiff is not entitled to this immunity because his conduct was not
MMMA-compliant.

       Because the trial court reached the correct result, i.e., granting summary disposition in
favor of defendants, albeit for the wrong reasons, we find that reversal is unwarranted and
therefore affirm. Gleason v Dep’t of Transp, 256 Mich. App. 1, 3; 662 NW2d 822 (2003) (an
appellate court may affirm the lower court if that court reached the right result for the wrong
reason).

                               V. WRONGFUL CONDUCT RULE

       Third, plaintiff argues that the wrongful conduct rule is inapplicable here, and the trial
court erroneously relied on it in granting summary disposition in favor of defendants. We
disagree.

        The wrongful conduct rule is well established in Michigan common-law. Orzel v Scott
Drug Co, 449 Mich. 550, 558-559; 537 NW2d 208 (1995). This rule, which bars a claim if a
plaintiff must rely on his own illegal conduct for recovery, stems from the sound public policy
that “courts should not lend their aid to a plaintiff who founded his cause of action on his own
illegal conduct.” Id. at 559. This rule will bar recovery where (1) “the plaintiff’s conduct [is]
prohibited or almost entirely prohibited under a penal or criminal statute[;]” (2) “a sufficient
causal nexus . . . exist[s] between the plaintiff’s illegal conduct and the plaintiff’s asserted
damages[;]” and (3), the defendant’s culpability is not greater than the plaintiff’s culpability. Id.
at 561, 564, 569.

        Here, accepting the factual allegations of the complaint as true, and viewing them in a
light most favorable to plaintiff, we conclude that plaintiff has failed to state a claim because the
wrongful conduct rule applies to bar recovery. First, plaintiff’s conduct—manufacturing,
possessing, and delivering marijuana—is prohibited under the Public Health Code, MCL
333.7401(d). These are serious illegal acts that are punishable as felonies. And, contrary to
plaintiff’s argument on appeal, plaintiff has failed to plead facts showing that his conduct was
lawfully protected medical marijuana activity that warrants immunity under the MMMA.
Therefore, the MMMA will not supersede the wrongful conduct rule where plaintiff has not
acted consistently with the MMMA. Plaintiff’s claim that his conduct was lawful lacks merit.

         Next, a causal nexus exists between plaintiff’s illegal conduct and all of plaintiff’s
claims, which at their core relate to the losses plaintiff suffered when defendants ended the
illegal contractual relationship. Indeed, plaintiff’s losses are a proximate result of entering into
the illegal agreement to cultivate, possess, sell, and deliver marijuana. Absent the existence of
this illegal arrangement and breach of it, plaintiff would have no injury whatsoever. Under these
circumstances, where the illegal act is both the source of the civil right and plaintiff’s criminal
responsibility, a casual nexus is not lacking. Plaintiff, in asserting that a causal connection is

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absent, simply ignores that his recovery is dependent upon enforcement of illegal agreements he
executed.

        Finally, viewing the pleadings most favorably to plaintiff, the factual allegations do not
indicate that defendants were more culpable than plaintiff. Both parties voluntarily entered into
the illegal agreement. Defendants’ role was to finance the operation, while plaintiff was to
oversee the day-to-day operation and cultivate the marijuana. At most, the facts alleged show
that the parties were equally culpable. When both parties are equally at fault, the wrongful
conduct rule still applies.

       Relatedly, plaintiff argues that the circuit court erred by applying the wrongful conduct
rule because defendants themselves had unclean hands. It is well settled that “one who seeks
equitable relief must do so with clean hands.” Attorney General v PowerPick Players’ Club of
Mich, LLC, 287 Mich. App. 13, 52; 783 NW2d 515 (2010). The unclean hands doctrine is “a self-
imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness
or bad faith relative to the matter in which he seeks relief, however improper may have been the
behavior of the [opposing party,]” and is only relevant to equitable actions or defenses. Rose v
Nat’l Auction Group, 466 Mich. 453, 463, 468; 646 NW2d 455 (2002).

        However, the wrongful conduct rule is not an equitable defense. Indeed, plaintiff cites no
law supporting the proposition that the wrongful conduct rule is a form of equitable relief.
Instead, the rule is a common-law maxim that operates to deny relief where the claim is based on
the plaintiff’s illegal conduct, a causal connection exists between that conduct and the damages
sought, and the defendant is not more culpable than the plaintiff. “ [T]he law will not lend itself
to afford relief to one as against the other, [in situations like the present where the plaintiff and
the defendant are equally in the wrong,] but will leave them as it finds them.” Orzel, 449 Mich.
at 558. Consequently, the unclean hands doctrine is inapplicable to this matter. Moreover, even
if the doctrine did apply, it would not function to estop defendants from asserting the wrongful
conduct rule because he who seeks equity must do so with clean hands and plaintiff’s conduct
was likewise illegal.

                      VI. PLAINTIFF’S NONCONTRACTUAL CLAIMS

       Finally, plaintiff argues that the trial court erroneously dismissed his noncontractual
claims without providing any reasoning. We disagree.

        Plaintiff correctly points out that the circuit court did not expressly apply the wrongful
conduct rule to all of plaintiff’s claims when it granted summary disposition to defendants.
Instead, the court only referenced the parties’ agreements in relation to the rule and provided no
analysis as to plaintiff’s remaining claims of tortious interference with contracts, conversion,
misappropriation of trade secrets, unjust enrichment, and breach of implied covenant of good
faith and fair dealing, or as to plaintiff’s request for injunctive relief. On appeal, plaintiff
suggests that these other claims were not subject to the wrongful conduct rule because a party
may raise alternative and even inconsistent claims, which plaintiff asserts he has raised here.
Even a cursory review of those claims, however, shows that they relate to the same illegal
conduct on which plaintiff’s contract actions were based. Plaintiff does not cite any law
supporting the proposition that these other claims, based on the same illegal conduct, are not

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subject to the wrongful conduct rule.   Application of the wrongful conduct rule to all of
plaintiff’s claims was proper.

      Affirmed.

                                                       /s/ Kathleen Jansen
                                                       /s/ Jonathan Tukel
                                                       /s/ Michael J. Riordan

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