Court Opinion

ID: 7800006
Source: CourtListenerOpinion
Date Created: 2022-08-12 05:07:33.022065+00
Date Added: 2024-06-11T16:29:01.345636
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

VICTOR ORAHA,                                                         UNPUBLISHED
                                                                      August 11, 2022
                Plaintiff-Appellant,

v                                                                     No. 358183
                                                                      Oakland Circuit Court
TROY MOTORS, INC., doing business as ELDER                            LC No. 2020-184962-CD
FORD,

                Defendant-Appellee.

Before: RIORDAN, P.J., and BORRELLO and LETICA, JJ.

PER CURIAM.

        In this action alleging wrongful discharge in violation of public policy, plaintiff appeals as
of right the trial court’s order granting summary disposition in favor of defendant. We reverse and
remand for further proceedings.

                       I. BASIC FACTS AND PROCEDURAL HISTORY

        Plaintiff was the general sales manager at defendant’s car dealership, Elder Ford, in Troy,
Michigan. In March 2019, the Ford Motor Company allegedly audited defendant and found that
it mishandled customer rebates resulting in defendant’s payment of fines and refunds to customers.
In May 2019, defendant allegedly announced a new sales policy that involved adding accessories
onto customers’ vehicle purchases without the customers’ approval in order to offset the profit loss
from the rebate adjustments. Plaintiff claimed that the new policy would perpetrate a fraud upon
customers and refused to participate in it. Instead, he proposed the creation of an accessory menu
to sell car accessories to customers with their consent and a deal checklist to ensure that rebate
guidelines were followed. Approximately five weeks later, plaintiff received a negative
performance review. Shortly thereafter, defendant terminated plaintiff’s employment purportedly
because of his unwillingness to follow the new sales policies.

         Plaintiff filed a one-count complaint alleging that defendant instructed him to commit
illegal fraud through the new sales policy, which he refused to do, and claimed he was discharged
in violation of public policy. In lieu of filing an answer to plaintiff’s complaint, defendant moved
for summary disposition under MCR 2.116(C)(8). In the motion, defendant alleged that plaintiff

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failed to identify sufficient facts to establish that he was terminated in violation of public policy in
light of the conclusory reference to common-law fraud. Because any contractual agreement was
reduced to a writing, defendant contended that fraud could not occur when the written contract
apprised the customer of any accessories. Further, defendant claimed that plaintiff failed to
identify an objective source from which a public policy could be derived, and therefore, his claim
must be dismissed.

        Plaintiff opposed the dispositive motion, asserting that he identified and pleaded an
objective source of law that he refused to violate, which led to his termination in violation of public
policy. He further contended that he was not required to bring forth evidence of every element of
common-law fraud, and defendant’s factual arguments regarding the contents of the sales contracts
were improper in a motion brought pursuant to MCR 2.116(C)(8). The trial court granted summary
disposition in favor of defendant, reasoning that plaintiff failed to plead facts which, if true,
demonstrated that he was fired for refusing to violate a clear public policy. It further concluded
that plaintiff “failed to show how the alleged ‘scheme’ amounts to either statutory or common-law
fraud.” The trial court also denied plaintiff’s motion for reconsideration.

                                   II. STANDARD OF REVIEW

        Summary disposition under MCR 2.116(C)(8) is properly granted when the plaintiff fails
to state a claim under which relief can be granted. “A motion under MCR 2.116(C)(8) tests the
legal sufficiency of a claim based on the factual allegations in the complaint.” El-Khalil v
Oakwood Healthcare, Inc, 504 Mich 152, 159-160; 934 NW2d 665 (2019) (emphasis omitted).
When considering such a motion, a court must decide the motion on the pleadings alone, accepting
as true all factual allegations. Id. at 160. A trial court properly grants a motion under
MCR 2.116(C)(8) when a plaintiff’s claims are so clearly unenforceable as a matter of law that no
factual development could entitle the plaintiff to recovery. Maple Manor Rehab Ctr, LLC v Dep’t
of Treasury, 333 Mich App 154, 162-163; 958 NW2d 894 (2020).

                                         III. DISCUSSION

       Plaintiff asserts that the trial court erred when it granted summary disposition in favor of
defendant on his claim that he was discharged in violation of public policy. We agree.

        Under Michigan law, a contract for employment is generally at-will. Lewandowski v
Nuclear Mgt Co, 272 Mich App 120, 127; 724 NW2d 718 (2006). This means that “either party
to an employment contract for an indefinite term may terminate it at any time for any, or no,
reason.” Suchodolski v Mich Consol Gas Co, 412 Mich 692, 695; 316 NW2d 710 (1982).
However, an exception to this general rule occurs when the reason for the employee’s discharge is
contrary to public policy. Id. An employee’s discharge violates public policy under three
circumstances: “(a) a statute specifically prohibits the discharge, (b) the employee is discharged
for refusing to violate the law, or (c) the employee is discharged for exercising a well-established
statutory right.” Lewandowski, 272 Mich App at 127.

        Plaintiff claims that he was discharged in violation of public policy for refusing to violate
the common-law prohibition on committing fraud and refusing to violate the Michigan Consumer
Protection Act (MCPA), MCL 445.901 et. seq. Preliminarily, it is necessary to determine whether

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it is the public policy of Michigan that an employee is protected from the termination of his
employment for refusing to engage in fraud or MCPA violations. The Supreme Court has
cautioned that “the proper exercise of the judicial power is to determine from objective legal
sources what public policy is, and not to simply assert what such policy ought to be on the basis
of the subjective views of individual judges.” Terrien v Zwit, 467 Mich 56, 66; 648 NW2d 602
(2002). Policies that can support a claim for wrongful discharge in violation of public policy are
those that “have been adopted by the public through our various legal processes, and are reflected
in our state and federal constitutions, our statutes, and the common law.” Id. at 66-67. There are
no decisions that are precedentially-binding on this Court that have considered whether an
employee’s refusal to commit fraud against a customer can support a claim of wrongful discharge
in violation of public policy. However, this Court has acknowledged that discharge for the refusal
to engage in a price-fixing scheme is actionable under the public-policy exception. See Landin v
Healthsource Saginaw, Inc, 305 Mich App 519, 524; 854 NW2d 152 (2014). If a scheme to engage
in anticompetitive price-fixing to raise the market price of goods is contrary to the public policy,
it is not judicial overreach to conclude a scheme directly targeting consumers to raise the prices of
their purchases can support a claim of discharge in violation of public policy.

        Violations of the MCPA can likewise support a claim of discharge in violation of public
policy. Under the MCPA, “[u]nfair, unconscionable, or deceptive methods, acts, or practices in
the conduct of trade or commerce are unlawful . . . .” MCL 445.903(1). The act enumerates a
number of commercial practices that are unlawful under the act. MCL 445.903(1)(a) through (kk).
Under the MCPA, alleged violations of the act are investigated by the attorney general,
prosecutors, and law enforcement. MCL 445.905(1); MCL 445.914; MCL 445.915. It also allows
individuals subjected to violations of the act to bring an action for damages. MCL 445.911(3).
However, there is no provision relating to retaliatory discharge for refusal to violate the MCPA.
“[A] public-policy claim may only be sustained if there is no applicable statute prohibiting
retaliatory discharge for the conduct at issue.” Lewandowski, 272 Mich App at 127. Thus, because
the MCPA sets forth the state’s public policy against certain commercial practices without a
remedy for retaliation against an employee, refusing to violate the act can support a claim for
discharge in violation of public policy.

       Regarding the premise of his claim, plaintiff first alleges that he was wrongfully discharged
because he refused to engage in what amounted to unlawful common-law fraud.1 To succeed on
a claim of common-law fraud, a plaintiff must show:

       (1) the defendant made a material representation; (2) the representation was false;
       (3) when the representation was made, the defendant knew that it was false, or made
       it recklessly, without knowledge of its truth, and as a positive assertion; (4) the

1
  Relevant to this aspect of the issue, defendant submits that plaintiff is actually pleading that he
refused to enter into a conspiracy to defraud customers because he has not alleged he refused to
engage in a specific fraudulent transaction. In addition to alleging the nature of the sales scheme,
plaintiff pleaded that “he refused to participate in charging customers for car accessories without
their approval.” This can be construed as an allegation that there were multiple transactions in
which plaintiff refused to engage. Consequently, defendant’s argument lacks merit.

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       defendant made it with the intention that the plaintiff should act upon it; (5) the
       plaintiff acted in reliance upon the representation; and (6) the plaintiff thereby
       suffered injury. [Roberts v Saffell, 280 Mich App 397, 403; 760 NW2d 715
       (2008).]

        Plaintiff further asserts that his allegations describe fraud in the inducement. The elements
of fraud in the inducement are the same as the elements for common-law fraud. Custom Data
Solutions, Inc v Preferred Capital, Inc, 274 Mich App 239, 243; 733 NW2d 102 (2006). The
difference between the two claims is that, while common-law fraud relates to misrepresentations
of past or existing fact, fraud in the inducement “occurs where a party materially misrepresents
future conduct under circumstances in which the assertions may reasonably be expected to be
relied upon and are relied upon.” Id. at 242-243 (quotation marks omitted).

        Plaintiff also submits that his allegations stated a claim for innocent misrepresentation. To
establish innocent misrepresentation, a plaintiff must show “(1) the defendant made a material
representation, (2) the representation was false, (3) the defendant made it with the intention of
inducing reliance by the plaintiff, (4) the plaintiff acted in reliance on the representation, and
(5) the plaintiff thereby suffered an injury that benefited the defendant.” Zaremba Equip, Inc v
Harco Nat’l Ins Co, 280 Mich App 16, 39; 761 NW2d 151 (2008). A plaintiff “alleging innocent
misrepresentation is not required to prove that the party making the misrepresentation intended to
deceive or that the other party knew the representation was false.” M&D, Inc v McConkey, 231
Mich App 22, 28; 585 NW2d 33 (1998).

       A plaintiff’s reliance on a defendant’s misrepresentation must be reasonable. Foreman v
Foreman, 266 Mich App 132, 141-142; 701 NW2d 167 (2005). “There can be no fraud where a
person has the means to determine that a representation is not true.” Nieves v Bell Indus, Inc, 204
Mich App 459, 464; 517 NW2d 235 (1994). “[A] plaintiff cannot claim to have been defrauded
where he had information available to him that he chose to ignore.” Id. at 465. And “alleged
misrepresentations regarding the terms of written documents that are available to the plaintiff
cannot support the element of reasonable reliance.” Cummins v Robinson Twp, 283 Mich App
677, 698; 770 NW2d 421 (2009).

       A plaintiff alleging fraud must state with particularity the circumstances constituting the
fraud. MCR 2.112(B)(1). This is true when pleading a fraud claim as well as pleading a different
type of claim on the basis of an underlying fraud. Michigan ex rel Gurganus v CVS Caremark
Corp, 496 Mich 45, 63; 852 NW2d 103 (2014). A well-pleaded fraud claim addresses each
element of the tort. Stephens v Worden Ins Agency, 307 Mich App 220, 229-230; 859 NW2d 723
(2014). The particularity required to plead fraud has been described as “the who, what, when,
where, and how of the alleged fraud.” Gurganus, 496 Mich at 70 (CAVANAGH, J., concurring).
“Thus, it is insufficient simply to state that a [party’s] conduct was fraudulent.” Glasker-Davis v
Auvenshine, 333 Mich App 222, 232; 964 NW2d 809 (2020).

        Plaintiff’s first amended complaint does not include the necessary detail to properly state
a claim on the basis of an underlying fraud. In his brief on appeal, plaintiff submitted he was
directed to engage in a “bait and switch” scheme. The facts pleaded in plaintiff’s first amended
complaint are not necessarily consistent with how he describes the sales scheme in his brief on
appeal. Plaintiff’s complaint implies a customer agrees to purchase a particular vehicle and

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accessories are added to that vehicle without the customer being told, while his brief on appeal
describes defendant’s practice of showing customers a vehicle without accessories that it has no
intention to sell and then selling the customer a different, more expensive vehicle with accessories.

        Irrespective of the sufficiency of the pleading in the first amended complaint, summary
disposition under MCR 2.116(C)(8) is inappropriate at this stage in the proceedings. “If a trial
court grants summary disposition pursuant to MCR 2.116(C)(8), (C)(9), or (C)(10), the court must
give the parties an opportunity to amend their pleadings pursuant to MCR 2.118, unless the
amendment would be futile.” Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, 324 Mich
App 182, 209; 920 NW2d 148 (2018). Although plaintiff has not pleaded his claim with sufficient
particularity, the trial court should have allowed him the opportunity to amend his complaint
because it is possible that factual development could entitle him to relief.

        Plaintiff’s allegations, if expanded, could delineate the specificity required for a public
policy violation alleging fraud committed by defendant. Regarding common-law fraud, adding
onto a customer’s purchase extra accessories at a cost could entail one of defendant’s employees
knowingly misrepresenting the terms of the sale with the intent the customer would rely on it, the
customer reasonably relying on that misrepresentation, and the customer suffering damages as a
result. This could be accomplished, for instance, by alleging facts showing employees lied about
the source of the added cost and concealed from the customer the true reason for the cost increase.
Such facts could also establish a claim for fraud in the inducement, given that the elements are the
same and fraud in the inducement pertains to a misrepresentation of future conduct. Innocent
misrepresentation does not require a showing of intent to mislead by the defendant, and, therefore,
such alleged facts could also support a claim of innocent misrepresentation. Thus, amendment is
permissible because there is no indication that amendment would be futile. Plaintiff may factually
expand the allegations in his first amended complaint to allege, with specificity, that defendant’s
sales scheme constituted fraud.

        Plaintiff next submits that defendant’s alleged sales scheme violates several provisions of
the MCPA. Contrary to defendant’s contention claiming waiver of the MCPA claim, plaintiff’s
allegations delineating defendant’s new sales scheme could be deemed to violate the MCPA. “[I]t
is well settled that the gravamen of an action is determined by reading the complaint as a whole,
and by looking beyond mere procedural labels to determine the exact nature of the claim.” Buhalis
v Trinity Continuing Care Servs, 296 Mich App 685, 691-692; 822 NW2d 254 (2012). Thus, the
fact that plaintiff does not cite the MCPA is not fatal because his complaint sufficiently puts
defendant on notice that it will have to defend a claim of discharge in violation of public policy
premised on the alleged scheme. Plaintiff has not waived his claim arising from alleged MCPA
violations. Moreover, plaintiff may amend his complaint to clarify the specific violations of the
MCPA at issue. See Jawad A Shah, MD, PC, 324 Mich App at 209.2

2
  While the MCPA’s provisions share some of the language of fraud claims, the act is remedial in
nature and most of its provisions do not require proof of intent to defraud a customer. Brownlow
v McCall Enterprises, Inc, 315 Mich App 103, 125-126; 888 NW2d 295 (2016). Accordingly, a
plaintiff does not need to plead every element of a claim under the MCPA. Id. at 125. Although

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         The trial court erred when it granted summary disposition in favor of defendant on
plaintiff’s claim of discharge in violation of public policy premised on his alleged refusal to engage
in illegal fraud and violations of the MCPA. Because an amendment to plaintiff’s complaint was
not futile, the trial court should have allowed plaintiff an opportunity to plead his claim with the
required particularity. Jawad A Shah, MD, PC, 324 Mich App at 209. In light of our resolution
of this issue, we need not address the contention that the trial court improperly applied the standard
governing MCR 2.116(C)(10) when it granted summary disposition in favor of defendant.

        Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.

                                                              /s/ Stephen L. Borrello
                                                              /s/ Anica Letica

plaintiff raised allegations that could be construed as falling within the parameters of
MCL 445.903(1)(g), (1)(s), and (1)(y), he may wish to clarify his claims when amending his
complaint.

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