Court Opinion

ID: 6317860
Source: CourtListenerOpinion
Date Created: 2022-02-26 05:05:52.455612+00
Date Added: 2024-06-11T09:01:33.349047
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

HOOPER HATHAWAY, PC,                                                UNPUBLISHED
                                                                    February 24, 2022
               Plaintiff/Counterdefendant,

and

KOHN FINANCIAL CONSULTING, LLC,

               Intervening
               Plaintiff/Counterdefendant-Appellee,

v                                                                   No. 354976
                                                                    Washtenaw Circuit Court
ATLAS TECHNOLOGIES, LLC, and                                        LC No. 18-001131-CB
PRODUCTIVITY TECHNOLOGIES
CORPORATION,

               Defendants/Counterplaintiffs-
               Appellants,

and

RICHARD J. LANDAU,

               Appellant.

Before: GLEICHER, C.J., and SERVITTO and LETICA, JJ.

PER CURIAM.

       In this action arising from unpaid fees for professional services,
defendants/counterplaintiffs (defendants) Atlas Technologies, LLC (Atlas), and Productivity
Technologies, Corporation (PTC), appeal as of right the order granting summary disposition under
MCR 2.116(C)(9) (failure to state a valid defense) and MCR 2.116(C)(10) (no genuine issue of
material fact) in favor of intervening plaintiff/counterdefendant Kohn Financial Consulting, LLC
(KFC), on KFC’s claims for breach of contract and account stated, as well as its alternative claims

                                               -1-
for promissory estoppel and unjust enrichment. The trial court’s order also dismissed defendants’
counterclaim against KFC for accounting malpractice and found the counterclaim frivolous.
Finding no error requiring reversal, we affirm.

                      I. BASIC FACTS AND PROCEDURAL HISTORY

        This case arises from defendants’ alleged failure to pay KFC for professional services
rendered in relation to federal lawsuits filed by defendants against their former manager and
director. PTC is a holding company whose sole asset is Atlas, a manufacturing company created
by PTC in 2011. From the time of Atlas’s creation until March 2016, Atlas’s board of managers
consisted of Jesse Levine, Samuel Seidman, and Arthur Stupay, who also served as PTC’s
directors.

        In March 2016, Jesse Levine was fired from Atlas, and in August 2016, defendants filed
two lawsuits against Jesse and his father, Julius Levine, in federal court. The lawsuits alleged
“fraud, breach of fiduciary duty, conversion, and tortious interference.” The Levines responded
with multiple counterclaims against defendants and derivative claims against Seidman and Stupay.

        Defendants were represented in the federal lawsuits by Hooper Hathaway attorneys Angela
Jackson and Adam Linkner. In November 2017, Jackson contacted KFC for an independent
financial expert to provide services for the federal cases. Jackson discussed KFC’s retention with
Seidman, Stupay, and Atlas’s Vice President of Finance, Kimberly Nation, and e-mailed them
KFC’s “Engagement Letter, Engagement Terms and Conditions and a Retainer Invoice for a
retainer of $5,000.” Seidman and Stupay authorized Nation to pay the retainer and, on
November 17, 2017, Nation wired the $5,000 retainer fee to KFC on defendants’ behalf. KFC’s
principal, Mauricio Kohn (Kohn), asked for an interim payment of $10,000 “given the volume of
work being done.” Three days later, KFC issued to defendants its “Preliminary Independent
Expert Report.” On December 1, 2017, after receiving authorization from Seidman and Stupay,
Nation wired KFC $10,000. She also e-mailed Kohn that the KFC team “did an amazing job” on
the report. On December 30, 2017, KFC invoiced defendants for a balanced owed of $19,784.75
for services rendered through November 30, 2017.

        KFC was also asked to review a report prepared by Charles Hoebeke, the Levines’ expert
for the federal lawsuits. KFC issued its preliminary rebuttal report of Hoebeke’s opinion on
January 2, 2018. In February 2018, KFC invoiced defendants for a balance owed of $44,331.25.
On March 22, Nation e-mailed Kohn to explain that defendants were cash-strapped at the moment,
but that they intended to pay KFC’s invoices and would pay $4,000 a week until their indebtedness
was cleared. The next day, defendants made their first and only $4,000 payment.

         By June 2018, defendants agreed to a settlement with the Levines. The Levines outspent
defendants on attorney fees nearly two to one. They pushed defendants nearly to bankruptcy by
filing numerous UCC liens and destroying the companies’ credit. Seidman and Stupay, who were
in their 80s, no longer wished to pursue the lawsuit and against their attorneys’ advice, accepted
an unfavorable settlement agreement that ceded control of their businesses. Defendants’ claims
were dismissed, defendants granted a $750,000 note to Julius Levine as indemnification for
litigation costs, and Seidman and Stupay resigned from PTC’s board, relinquishing their stock to
Jesse and the Levine family. In response to Hooper Hathaway’s requests for payment, defendants’

                                               -2-
present attorney (who had represented the Levines in the federal suit) sent a settlement demand to
Hooper Hathaway detailing the law firm’s alleged professional malpractice relative to the federal
litigation and requesting a response by the end of the month. Hooper Hathaway responded by
filing this action against defendants to recover unpaid legal fees, asserting claims for breach of
contract, account stated, promissory estoppel, and unjust enrichment. Defendants raised a
counterclaim against Hooper Hathaway for professional malpractice and sought nearly
$2.8 million in damages. By stipulation of the parties, KFC intervened in the action to recover
from defendants $42,812.44 in unpaid fees. Defendants responded by asserting a counterclaim
against KFC for accounting malpractice, seeking $2.7 million in damages.

        KFC moved to compel arbitration, arguing that its engagement terms and conditions
contained an enforceable provision requiring the parties to arbitrate their disputes. Defendants
opposed the motion, alleging that an express agreement to arbitrate did not exist because the
engagement letter was not signed by an authorized representative. Defendants further argued that,
even if they had agreed to arbitrate, KFC waived that right when it submitted the parties’ dispute
to the trial court by moving to intervene in the litigation, filing a complaint, and a first amended
complaint, all without mentioning the arbitration agreement. The trial court adopted defendants’
argument and denied KFC’s motion without hearing oral argument. KFC moved for
reconsideration, submitting that a signature was not required because the engagement terms and
conditions expressly stated that payment of KFC’s retainer constituted assent to the agreement,
and defendants indisputably paid KFC’s retainer.1 The trial court denied KFC’s motion for
reconsideration.

        In May 2019, Hooper Hathaway moved for summary disposition of the claims in its
complaint, and in October 2019, the trial court granted this motion and dismissed defendants’
professional-malpractice claim against the law firm. Two months later, KFC moved for summary
disposition of its claims and of defendants’ counterclaim. KFC argued that it was entitled to
summary disposition of its account-stated claim because it presented prima facie evidence of the
amount that defendants owed, defendants expressly accepted KFC’s invoices and promised to pay
them, and they failed to object to any of the invoices within a reasonable time. KFC asserted that
it was entitled to summary disposition of its breach-of-contract claim because extensive evidence
established that Nation had actual authority, or at least apparent authority, to bind defendants to
KFC’s engagement letter. Further, the engagement letter was enforceable despite the absence of
a signature because defendants manifested their acceptance of the engagement terms and
conditions by paying KFC’s retainer fee. KFC alleged in the alternative that all the elements of
promissory estoppel and unjust enrichment had been met. Lastly, KFC contended that summary
disposition of defendants’ counterclaim was appropriate, primarily because KFC was entitled to
witness immunity. Both Hooper Hathaway and KFC presented affidavits from Seidman, Stupay,
and Nation with their motions, as well as invoices and e-mails tracing the parties’ interactions.

1
 The relevant provision states: “In lieu of signing the Engagement Letter, you agree that payment
of the Retainer Fee indicates your acceptance to these Terms and Condition and shall be construed
as if the Engagement Letter had been signed.”

                                                -3-
        In opposition, defendants contended that summary disposition was premature because
there had been no document discovery or depositions taken in their case with KFC. Defendants
also submitted that KFC’s claim for breach of contract failed because the trial court had rejected
the argument that the engagement letter was an enforceable contract when ruling on KFC’s motion
for arbitration. Addressing its counterclaim for accounting malpractice, defendants asserted that
it was not barred by witness immunity in light of recent caselaw and that Hoebeke’s affidavit
supported each element of the counterclaim. It was further alleged that summary disposition of
KFC’s account-stated claim was inappropriate because there remained disputed fact questions
about how much defendants owed as of May 2018, and whether they received KFC’s second
invoice before the change in management, after which Nation would not have been authorized to
accept or to pay the invoice. Defendants did not include affidavits outlining the Levines’ version
of events. They also failed to present depositions from the federal lawsuits that their counsel
asserted would contradict the affidavits of Seidman, Stupay, and Nation.

        In a written opinion and order, the trial court granted KFC’s motion for summary
disposition and dismissed defendants’ counterclaim for professional malpractice. The court
granted summary disposition in favor of KFC on its account-stated claim on the basis that KFC
established prima facie evidence of the amount defendants owed. Additionally, undisputed
affidavits from the representatives to the agreement, i.e., Seidman, Stupay, and Nation, supported
the premise that KFC should be paid for the work it performed. There being no genuine issue of
material fact that defendants owed KFC the amount claimed, the trial court granted summary
disposition under MCR 2.116(C)(10). The trial court also granted summary disposition to KFC
under MCR 2.116(C)(9) on the basis that defendants’ answer failed to deny the allegations. The
trial court granted summary disposition in favor of KFC on its breach-of-contract claim after
finding that extensive evidence established that Nation was an authorized agent for defendants, or
at least an apparent agent, and that parties’ conduct had given rise to an implied contract that
defendants would pay KFC for accounting services rendered. 2 Lastly, the trial court dismissed
defendants’ counterclaim against KFC, finding that it was frivolous because it was “not grounded
in law as it relates to the facts of this case.” Defendants moved unsuccessfully for reconsideration.
This appeal followed.

                                          II. ANALYSIS

                                 A. STANDARDS OF REVIEW

        This Court reviews de novo a circuit court’s decision on a motion for summary disposition,
as well as the existence and interpretation of a contract. See Dunn v Bennett, 303 Mich App 767,
774; 846 NW2d 75 (2013); Dextrom v Wexford Co, 287 Mich App 406, 416; 789 NW2d 211
(2010). The trial court granted summary disposition of all KFC’s claims under MCR 2.116(C)(10).
A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint and is properly
granted when there are no genuine issues of material fact and the movant is entitled to summary

2
  The trial court also granted KFC summary disposition on its alternative claims of promissory
estoppel and unjust enrichment, finding that evidence established the elements of these two claims.

                                                -4-
disposition as a matter of law. Joseph v Auto Club Ins Ass’n, 491 Mich 200, 206; 815 NW2d 412
(2012); Michalski v Bar-Levav, 463 Mich 723, 730; 625 NW2d 754 (2001).

                                       B. ACCOUNT STATED

       Defendants contend that the trial court erred by granting summary disposition in favor of
KFC on its claim for account stated when there remained disputed questions of fact regarding
which invoices defendants received before settlement of the federal cases required Seidman and
Stupay to resign from PTC’s board, thereby clearly depriving Nation of any authority to accept
and approve invoices. We disagree.

         In Dunn, 303 Mich App at 770-771, this Court explained account stated as follows:

         An “account stated” refers to a “contract based on assent to an agreed balance,”
         which, like all contracts, must be created through mutual assent. Fisher Sand &
         Gravel Co v Neal A Sweebe, Inc, 494 Mich 543, 557, 561-562; 837 NW2d 244
         (2013) (citation and quotation marks omitted). “[P]arties assent to a sum as the
         correct balance due from one to the other; and whether this operation has been
         performed or not, in any instance, must depend upon the facts.” White v Campbell,
         25 Mich 463, 468 (1872). An express contract arises when the parties expressly
         agree to the sum due. Fisher Sand & Gravel Co, 494 Mich at 558. A party’s
         acceptance may also be inferred when the party makes payments on the amount due
         or receives an accounting and fails to object within a reasonable time. [Emphasis
         in original.]

An account-stated claim can be proven “by evidence of an express understanding, or of words and
acts, and the necessary and proper inferences from them.” Keywell & Rosenfeld v Bithell, 254
Mich App 300, 331; 657 NW2d 759 (2002) (citation omitted). “When an account is stated in
writing by the creditor and accepted as correct by the debtor, either by payments thereon without
demur or by failure within a reasonable time to question the state of the account as presented, it
becomes an account stated.” Corey v Jaroch, 229 Mich 313, 315; 200 NW 957 (1924).

        An account-stated claim may also be established in accordance with MCL 600.2145.3 If a
plaintiff files an account-stated claim with “an affidavit of the amount due,” submits a copy of the

3
    MCL 600.2145 states in relevant part:
                 In all actions brought in any of the courts of this state, to recover the amount
         due on an open account or upon an account stated, if the plaintiff or someone in his
         behalf makes an affidavit of the amount due, as near as he can estimate the same,
         over and above all legal counterclaims and annexes thereto a copy of said account,
         and cause a copy of said affidavit and account to be served upon the defendant,
         with a copy of the complaint filed in the cause or with the process by which such
         action is commenced, such affidavit shall be deemed prima facie evidence of such

                                                   -5-
account, and serves the defendant with these materials, “such affidavit shall be deemed prima facie
evidence of such indebtedness, unless the defendant with his answer, by himself or agent, makes
an affidavit and serves a copy thereof on the plaintiff or his attorney denying the [indebtedness].”
MCL 600.2145.

        Nevertheless, defendants allege that summary disposition was precluded because there
remains a fact question regarding whether defendants received invoices totaling $42,812.44 before
the June 2018 change in management. Defendants attached to their motion for summary
disposition an Atlas invoice dated May 10, 2018, and showing that defendants owed KFC only
$15,748.75.4 On June 12, 2018, KFC e-mailed Hooper Hathaway attorney Jackson and Nation an
invoice showing the total owed by defendants. In a June 13, 2018 e-mail, Nation told Kohn that
her records did not accord with his and asked him to send her defendants’ account history so that
she could reconcile her records. Defendants rely on this e-mail exchange to: (1) contest KFC’s
statement that defendants “received and accepted” the invoices for which KFC seeks payment;
(2) suggest that no one at the defendant companies knew that there was an additional invoice to
which to object until after the June 2018 change in management, and (3) argue that summary
disposition was precluded by the existence of a “question of material fact as to what invoices
properly form the basis of KFC’s account-stated claim.” None of these arguments are convincing.

        Although an express contract arises when parties agree to a sum due, a party’s acceptance
of the sum due may also be inferred when the party “receives an accounting and fails to object
within a reasonable time.” Dunn, 303 Mich App at 771; see also Fischer Sand & Gravel, 494
Mich at 558 (indicating that a party’s failure to object to an account within a reasonable time may
be deemed as an admission that the amount stated is correct). Assuming for the sake of argument
that KFC did not send, or Nation did not record, KFC’s February 2018 invoice, it is undisputed
that KFC sent defendants their entire billing history by June 13, 2018. The record shows that
defendants received monthly invoices in July, August, September, October, and December 2018,
that the September and October invoices were copied to Jesse Levine, and that the December
invoice was copied to defendants’ current attorney. Defendants fail to dispute these facts.
Addressing whether an objection was raised within a reasonable time, defendants argue that no
one at the defendant companies knew that there was an additional invoice to which to object until
after the June 2018 change in management. Assuming this to be true, it still does not explain why,
after defendants received several invoices for unpaid balances after June 2018, at least two of
which were copied to Jesse Levine and one to defendants’ current attorney, defendants still failed
to object to any of the invoices. Because defendants received multiple invoices from KFC showing
a balance owing, yet failed to object to any of them, defendants may be considered to have admitted
the correctness of the amount owed, and KFC was justified in treating the balance owing as an

       indebtedness, unless the defendant with his answer, by himself or agent, makes an
       affidavit and serves a copy thereof on the plaintiff or his attorney, denying the same.
4
  Defendants owed $19,748.75 at the end of December 2017 and made a $4,000 payment in March,
leaving Nation’s balance of $15,748.75. This balance does not reflect KFC’s February 2018
invoice, which added $29,582.50 to an outstanding balance of $19,748.75, and credited the $5,000
retainer fee, for a balance of $44,331.25. Therefore, it appears that Nation either failed to receive,
or failed to record, KFC’s February 2018 invoice.

                                                 -6-
account stated. See Fisher Sand & Gravel, 494 Mich at 558 (“[A]s against a party receiving an
account, and not objecting to it within a reasonable time, its correctness may be considered
admitted by him, and the balance as the debt; or, in other words, that the party rendering the
account may, under such circumstances, treat it as an account stated . . . .”) (quotation marks and
citation omitted).

        Next, defendants assert that the trial court ignored the fact that neither Seidman nor Stupay
mentioned in their affidavits the KFC engagement letter or acknowledged retaining KFC.
Furthermore, Stupay’s uncontested testimony was that he and Seidman decided to rely on Nation’s
testimony alone to support the litigation in federal court and thus never retained an expert because
of the “costs associated with retaining a forensic accountant.” Defendants misrepresent Stupay’s
affidavit testimony, which was filed to rebut defendants’ counterclaim against Hooper Hathaway
for legal malpractice. Stupay stated in his affidavit:

               Hooper Hathaway advised me that [defendants] should obtain the services
       of a forensic accountant to analyze the evidence supporting the claims against the
       Levines prior to filing the Litigations. But Seidman and I decided to rely upon
       Nation’s investigation in lieu of retaining a forensic accountant because of the costs
       associated with retaining a forensic accountant.

This statement was intended to rebut defendants’ allegation that, among their many acts of
malpractice, Hooper Hathaway “did not seek to obtain in advance the independent opinion of a
forensic accountant or other qualified person regarding the claims being considered by
[defendants].” Stupay’s statement addresses hiring a forensic account before defendants filed their
complaints in federal court in August 2016, to analyze “the evidence supporting the [federal]
claims.” This pre-litigation decision has no bearing on defendants’ decision to hire KFC well after
federal litigation had begun.

       We conclude that defendants have failed to present evidence raising a genuine issue of
material fact regarding the amount owed KFC or whether defendants, through Seidman and
Stupay, agreed to retain KFC. Therefore, the trial court did not err by granting KFC’s motion for
summary disposition of its account-stated claim.

                                  C. BREACH OF CONTRACT

        Defendants also contend that the trial court erred by granting summary disposition in favor
of KFC on its breach-of-contract claim because there remained significant factual questions
regarding the “existence and terms of the alleged written contract,” as well as Nation’s authority
to bind defendants to a contract. Again, we disagree.

        Turning first to Nation’s authority, under Michigan law, an agent’s authority to bind the
principal may be actual or apparent. Meretta v Peach, 195 Mich App 695, 698; 491 NW2d 278
(1992). An agent’s actual authority “may be implied from the circumstances surrounding the
transaction at issue.” Chiamp v Hertz Corp, 210 Mich App 243, 246; 533 NW2d 15 (1995).
“These circumstances must show that the principal actually intended the agent to possess the
authority to enter into the transaction on behalf of the principal.” Id. “Apparent authority arises
where the acts and appearances lead a third person reasonably to believe that an agency

                                                -7-
relationship exists. However, apparent authority must be traceable to the principal and cannot be
established only by the acts and conduct of the agent.” Alar v Mercy Mem Hosp, 208 Mich App
518, 528; 529 NW2d 318 (1995).

        Evidence supports the trial court’s conclusion that Nation had actual authority, or apparent
authority at a minimum, to engage KFC on defendants’ behalf. Jackson attested that she discussed
hiring KFC with Seidman, Stupay, and Nation, and that she e-mailed the three of them KFC’s
engagement letter on November 13, 2017. Jackson further attested that after talking with Seidman,
Stupay, and Nation, she understood Nation to be defendants’ representative with authority to hire
KFC and to pay its retainer fee. Consequently, she e-mailed Nation another copy of KFC’s
engagement letter and terms and conditions on November 15, 2017. Nation attested that she,
Seidman, and Stupay discussed retaining KFC, and that Seidman and Stupay authorized her to
inform Hooper Hathaway of their decision to proceed with the engagement and to pay KFC’s
$5,000 retainer fee and to actually pay the fee, which she did on November 17, 2017. Nation
averred that defendants, through Seidman and Stupay, authorized her to pay KFC’s $5,000 retainer
fee, which she paid on November 17, 2017. She also attested that defendants, through Seidman
and Stupay, authorized her to make an interim payment of $10,000 to KFC, which she made on
November 30, 2017.

        Defendants contend that evidence exists that raises a question of fact regarding whether
Nation had the authority to retain KFC. Yet defendants failed to attach even affidavits to their
pleadings. First, defendants argue that whether Nation was validly appointed secretary of PTC is
a disputed question of fact. Assuming this to be true, whether Nation was validly appointed
secretary of PTC is irrelevant to the matters before this Court. According to the affidavits of
Nation and Jackson, Nation did not act under her own authority, but was authorized by defendants,
through Seidman and Stupay, to retain and pay KFC.

        Second, defendants assert that there is substantial evidence that Nation did not have
Seidman and Stupay’s authorization to enter into an agreement with KFC on behalf of defendants.
Defendants argue that Nation’s authority is belied by the fact that Seidman’s and Stupay’s
affidavits are silent regarding any authorization to enter into an agreement with KFC. Defendants
repeatedly refer to the “ruinously inconvenient fact” that Stupay unequivocally testified that he
decided against hiring a forensic account because of the costs of doing so. As we have already
indicated, Stupay’s affidavit, as well as Seidman’s was crafted to rebut defendants’ counterclaim
against Hooper Hathaway for legal malpractice; therefore, the fact that they do not mention KFC
is not sufficient to raise a genuine issue of fact about Nation’s authority. The testimonies of
Jackson and Nation indicating that, through Seidman and Stupay, defendants discussed hiring KFC
in November 2017, decided to retain the accounting firm, and authorized Nation to pay KFC’s
retainer, in addition to an extra $10,000, is unrefuted. Accordingly, the trial court did not err by
concluding that Nation had actual authority to bind defendants.

        The trial court also did not err by concluding that the parties’ conduct created an implied-
in-fact contract.

       A contract implied in fact arises under circumstances which, according to the
       ordinary course of dealing and common understanding, of men, show a mutual
       intention to contract. A contract is implied in fact where the intention as to it is not

                                                 -8-
       manifested by direct or explicit words between the parties, but is to be gathered by
       implication or proper deduction from the conduct of the parties, language used or
       things done by them, or other pertinent circumstances attending the transaction.
       The existence of an implied contract, of necessity turning on inferences drawn from
       given circumstances, usually involves a question of fact, unless no essential facts
       are in dispute. [Erickson v Goodell Oil Co, 384 Mich 207, 211-212; 180 NW2d
       798 (1970).]

“Courts recognize implied contracts where parties assume obligations by their conduct.” Williams
v Litton Sys, Inc, 433 Mich 755, 758; 449 NW2d 669 (1989).

       The essential elements of a contract are parties competent to contract, a proper
       subject matter, legal consideration, mutuality of agreement and mutuality of
       obligation. The elements requisite for the establishment of an implied contract are
       identical. The only difference is the character of the evidence necessary to establish
       the contract. [Borg-Warner Acceptance Corp v Dep’t of State, 169 Mich App 587,
       590; 426 NW2d 717 (1988), rev’d on other grounds 433 Mich 16 (1989) (citations
       omitted).]

        By contrast, a contract implied in law, or a quasi- or constructive contract, does not require
a meeting of the minds, but is imposed by a fiction of law to allow justice to be accomplished. See
Cascaden v Magryta, 247 Mich 267, 270; 225 NW 511 (1929). Courts “employ the fiction with
caution, and will never permit it in cases where contracts, implied in fact, must be established, or
substitute one promisor or debtor for another.” Id.

        There can be no serious dispute that defendants and KFC are parties competent to contract,
that professional accounting services are a proper contractual subject matter, and that the promise
to supply accounting services in exchange for compensation constituted legal consideration. See
Dep’t of Natural Resources v Bd of Trustees of Westminster Church of Detroit, 114 Mich App 99,
104; 318 NW2d 830 (1982) (“Consideration for an agreement exists where there is a benefit on
one side or a detriment suffered, or services done, on the other.”). It is undisputed that defendants
paid a $5,000 retainer fee and a $10,000 interim payment, and that KFC delivered a Preliminary
Independent Expert Report. This exchange is an objective manifestation of the parties’ mutual
assent to exchange accounting services for payment, as well as evidence of the parties’ mutuality
of obligation. See Reed v Citizens Ins Co of America, 198 Mich App 443, 449; 499 NW2d 22
(1993), overruled on other grounds Griffith v State Farm Mut Auto Ins Co, 472 Mich 521; 697
NW2d 895 (2005). The conduct of the parties in the present case demonstrated that defendants
understood that they were obligated to pay KFC for services rendered, and that KFC understood
that, by accepting defendants’ retainer fee, it was obligated to perform the requested accounting
services. KFC’s request for a $10,000 interim payment further demonstrates KFC’s understanding
that it was obligated to provide certain services and entitled to payment for those services, and
defendants’ recognition that they were obliged to pay for KFC’s services. Likewise, Nation’s
promise in March 2018 that defendants would make weekly payments against their indebtedness

                                                 -9-
to KFC, and her payment of $4,000 as partial fulfillment of that promise, is additional evidence of
the parties’ understanding of the deal they had struck.5

        Although the existence of an implied-in-fact contract is usually a question of fact, it can be
a question of law when no essential facts are in dispute. Erickson, 384 Mich at 212. There is no
dispute that defendants tendered KFC’s retaining fee, that KFC provided accounting services, and
that defendants made partial payment for those services. Defendants present neither evidence nor
argument that would raise a genuine issue of material fact regarding Nation’s authority to bind
defendants or that the parties’ conduct gave rise to an implied-in-fact contract under which KFC
would provide certain accounting services and defendants would pay for the services rendered.
Accordingly, the trial court did not err by concluding there was an implied-in-fact contract between
defendants and KFC.

       The evidence also supports the trial court’s conclusion that defendants breached the
implied contract with KFC. “A party claiming a breach of contract must establish (1) that there
was a contract, (2) that the other party breached the contract and, (3) that the party asserting breach
of contract suffered damages as a result of the breach.” Dunn, 303 Mich App at 774. (quotation
marks and citation omitted). In the present case, an implied-in-fact contract arose between
defendants and KFC that obligated KFC to provide accounting services to defendants and
defendants to pay for the services provided. KFC provided those services, as is evinced by its
invoices, detailed time logs, and work product, and defendants paid for only part of the services
received, causing KFC to suffer damages in the amount of the unpaid balance.

        In light of the foregoing, we conclude that the trial court did not err by grant of summary
disposition in favor of KFC’s of its claim for breach of contract.6

                               D. ACCOUNTING MALPRACTICE

        Defendants further contend that the trial court erred by dismissing its counterclaim against
KFC for accounting malpractice. Specifically, defendants submit that the trial court erred by
concluding that a claim for professional malpractice belonged to defendants before June 2018, but
not afterward, and that KFC was protected by the doctrine of witness immunity. We conclude that

5
  Defendants’ argument that the trial court’s grant of summary disposition on KFC’s breach-of-
contract claim reversed its prior denial of KFC’s motion to compel arbitration on the basis that
defendants had not signed the engagement letter and, therefore, had not agreed to arbitrate their
dispute is without merit. The trial court’s ultimate finding of an implied contract is not inconsistent
with its adoption of defendants’ argument that there existed no express contract and, therefore, no
obligation to arbitrate. The trial court did not conclude that defendants’ remission of KFC’s
retaining fee constituted acceptance of the engagement terms and conditions, thus creating a
binding contract that included an agreement to arbitrate. Accordingly, the trial court did not err
by failing to dismiss the case and, in turn, ordering the matter to arbitration.
6
  In light of our disposition of this issue, we need not consider the trial court’s ruling on KFC’s
alternative theories of promissory estoppel and unjust enrichment.

                                                 -10-
the trial court did not err by dismissing defendants’ counterclaim on the ground that Kohn and his
work product were subject to the protection of witness immunity.

       “Generally, to state a claim for malpractice, a plaintiff must allege (1) the existence of a
professional relationship, (2) negligence in the performance of the duties within that relationship,
(3) proximate cause, and (4) the fact and extent of the client’s injury.” Broz v Plante & Moran,
PLLC, 326 Mich App 528, 537; 928 NW2d 292 (2018), vacated in part on other grounds 504 Mich
892 (2019). In some instances, however, the testimony of expert witnesses, as well as their related
evaluations, are shielded by the doctrine of witness immunity.

       In Maiden v Rozwood, 461 Mich 109, 134; 597 NW2d 817 (1999), our Michigan Supreme
Court explained the doctrine of witness immunity as follows:

       [W]itnesses who testify during the course of judicial proceedings enjoy quasi-
       judicial immunity. This immunity is available to those serving in a quasi-judicial
       adjudicative capacity as well as “those persons other than judges without whom the
       judicial process could not function.” 14 West Group’s Michigan Practice, Torts,
       § 9:393, p 9-131. Witnesses who are an integral part of the judicial process “are
       wholly immune from liability for the consequences of their testimony or related
       evaluations.” Id., § 9:394, pp 9-131 to 9-132, citing Martin v Children’s Aid
       Society, 215 Mich App 88, 96, 544 NW2d 651 (1996).

        Defendants rely on Estate of Voutsaras by Gaydos v Bender, 326 Mich App 667; 929
NW2d 809 (2019), to argue that witness immunity does not bar their counterclaim against KFC.
This Court held in Voutsaras that “licensed professionals owe the same duty to the party for whom
they testify as they would to any client and that witness immunity is not a defense against
professional malpractice.” Id. at 670. At issue was whether the plaintiff could sue certain
attorneys retained to provide expert testimony. Because the plaintiff’s complaint “appear[ed] to
allege that the [] defendants provided expert opinions for the benefit of Diana Voutsaras or her
attorneys in addition to intended expert testimony for the court,” id. at 675, this Court held that the
doctrine of witness immunity did not shield the defendant attorneys from any duty they had to
ensure that the additional opinions were professionally competent. See id. at 682 (concluding that
“[a] professional’s client is not precluded from maintaining a professional-malpractice action by
witness immunity except to the extent the action is premised on the substance of evidence or
testimony prepared for the benefit of the court”).

        Defendants allege in their brief to this Court that Voutsaras stands for the proposition that
“a claim may be based on a malpractice theory even if it is ‘expected’ that the witness will provide
expert testimony.” Although largely true, defendants’ propositional statement lacks sufficient
nuance. This Court made clear in Voutsaras, 326 Mich App at 682, that a professional-malpractice
claim must arise from professional services or opinions other than those intended for the court.
Defendants have identified no such additional services or opinions in the present case. Rather,
alleged deficiencies in KFC’s work product, which defendants acknowledged was intended for the
federal court, form the basis for their counterclaim for accounting malpractice.

       Defendants asserted that KFC’s “Preliminary Independent Expert Report” was flawed
because KFC did not conduct “a forensic review or any independent analysis of the reasonableness

                                                 -11-
of the allegations in the [federal] Litigations,” but “relied blindly on the allegations of Hooper
Hathaway.” Defendants faulted the report’s list of 40 items as consisting solely of “Kohn’s opinion
as to whether a stated amount does or does not represent ‘conversion’ under MCL 600.2919a(1).”
Defendants declared that Kohn’s “opinions [were] nothing more than deeply flawed and
unprofessional guesses that a jury would blindly accept the allegations lodged against the
Defendants in the Litigations . . . in order to seek treble damages of approximately $2.7 million,”
and that the report “was not based on reasonable assumptions and was in violation of the standard
of care for a C[ertified] P[ublic] A[ccountant].” As the foregoing quotations from defendants’
counterclaim illustrate, defendants’ counterclaim rests entirely on deficiencies in the expert report
KFC created to prepare for its own expert testimony in the federal court. Witness immunity
includes not just witness testimony, but “necessarily extends to any other materials or evidence
prepared by the witness for the intended benefit of the court.” Id. at 675.

        In light of the foregoing, we conclude that defendants have failed to show that the trial
court erred by granting KFC’s motion for summary disposition of defendants’ counterclaim on the
basis that KFC was entitled to witness immunity.

                                         E. DISCOVERY

       Defendants submit that the trial court erred by granting summary disposition in favor of
KFC without allowing additional discovery on disputed issues of fact and without properly
considering the affidavit defendants’ attorney submitted under MCR 2.116(H)(1). Once again, we
disagree.

        “In general, summary disposition is premature if discovery on a disputed issue has not been
completed.” Walrath v Witzenmann USA LLC, 320 Mich App 125, 144; 904 NW2d 875 (2017).
However, the mere fact that discovery is incomplete “does not automatically mean that the trial
court’s decision to grant summary disposition was untimely or otherwise inappropriate.” Marilyn
Froling Revocable Living Trust v Bloomfield Hills Country Club, 283 Mich App 264, 292; 769
NW2d 234 (2009).

       The question is whether further discovery stands a fair chance of uncovering factual
       support for the opposing party’s position. In addition, a party opposing summary
       disposition cannot simply state that summary disposition is premature without
       identifying a disputed issue and supporting that issue with independent evidence.
       The party opposing summary disposition must offer the required MCR 2.116(H)
       affidavits, with the probable testimony to support is contentions. [Id. at 292-293.]

        Defendants’ present attorney submitted an affidavit under MCR 2.116(H)(1) in which he
identified three areas requiring additional discovery: (1) Nation’s authority to agree to retain KFC;
(2) whether Kohn violated the standard of care of a licensed accountant, and (3) whether
defendants agreed to pay the sum that KFC is seeking.

        Relevant to Nation’s authority, defendants’ attorney attested that Nation’s credibility was
at issue and could only be meaningfully probed at a deposition during which she could be
challenged with prior statements “as recorded in [defendants’] records,” and that if deposed,
Seidman and Stupay would testify that they never authorized Nation to agree to KFC’s engagement

                                                -12-
letter. The affiant did not identify what prior statements from defendants’ records he would use to
challenge Nation, leaving open the question whether the statements would be relevant to the instant
litigation with KFC or would seek to rehash Nation’s role in the federal lawsuits. Further,
considering Nation’s and Jackson’s averments that they discussed hiring KFC with Seidman and
Stupay, and Nation’s statement that Seidman and Stupay authorized her to retain KFC, to pay its
retainer, and to make a $10,000 interim payment, the affiant’s expectation that Seidman and Stupay
would testify contrarily appears to have no basis in fact. See Estate of Trueblood v P&G
Apartments, LLC, 327 Mich App 275, 289; 933 NW2d 732 (2019) (“Speculation cannot create a
question of fact.”).

        As to KFC’s claim of account stated, the affiant stated that if deposed, Nation would testify
that she did not receive invoices from KFC “during the time that she was employed by Atlas, and
that she was only aware of a total account receivable to KFC of $15,748.75,” Seidman and Stupay
would testify that they did not authorize Nation to pay KFC more than $15,748.75, and Kohn
would testify that he did not provide defendants with at least one invoice until June 13, 2018.
Lastly, the affiant stated that if Jackson and Linkner were deposed, they would testify that they
never signed KFC’s engagement letter, and that they lacked the qualifications to determine
whether Kohn violated the relevant standard of care.

         There is no dispute that no one from Hooper Hathaway signed KFC’s engagement letter,
which is why the trial court found an implied-in-fact contract on the basis of the parties’ conduct,
not an express contract. That Jackson and Linkner may lack qualifications to determine whether
Kohn operated in accord with the relevant standard of care does not detract from Jackson’s
attestation that Hooper Hathaway was satisfied with Kohn’s work. As to KFC’s account-stated
claim, it is difficult to discern that Kohn would testify contrary to what KFC’s records show, which
is that KFC sent defendants an invoice dated February 23, 2018, and reflect a balance due of over
$40,000. But even if Kohn did so testify, it would have no effect on KFC’s claim for account
stated. As we have already discussed, it is undisputed that defendants received multiple invoices
after June 2018 and objected to none of them. Therefore, defendants are considered to have
admitted the correctness of the sum due. See Fisher Sand & Gravel, 494 Mich at 558.

         Regarding defendants’ counterclaim of accounting malpractice, their attorney surmised
that, if deposed, Kohn would testify that he did not undertake an “independent, objective analysis
of the facts and circumstances underlying [defendants’] claims” against the Levines in the federal
court litigations, and that he “had an unsatisfactory business relationship with Jesse Levine.” He
further surmised that, if deposed, Dennis Travis, one of the KFC employees who did work for
defendants’ federal cases, would testify about his qualifications. The affiant asserted that the
testimony of Kohn and Travis pertained to whether Kohn’s conduct fell below the relevant
standard of care. But even if Kohn and Travis so testified, their testimonies would not support
defendants’ position that KFC committed accounting malpractice because, as already explained,
KFC was entitled to witness immunity for his planned testimony and related evaluations. See
Maiden, 461 Mich at 134.

        Defendants have failed to show that additional discovery would have a fair chance of
revealing facts that support their positions that Nation lacked authority to retain KFC on
defendants’ behalf, that Kohn committed accounting malpractice, or that defendants did not owe

                                                -13-
the amount sought by KFC. Accordingly, defendants have not shown that summary disposition
was premature. See Marilyn Froling, 283 Mich App at 292.

                                          F. FRIVOLOUS

        Lastly, defendants argue that the trial court clearly erred by ruling that their counterclaim
against KFC was frivolous. We disagree.

        This Court reviews for clear error a trial court’s finding that an action is frivolous. Kitchen
v Kitchen, 465 Mich 654, 661; 641 NW2d 245 (2002). “A decision is clearly erroneous where,
although there is evidence to support it, the reviewing court is left with a definite and firm
conviction that a mistake has been made.” Id. at 661-662. This Court reviews for an abuse of
discretion a trial court’s decision to dismiss a case. Maldonado v Ford Motor Co, 476 Mich 372,
388; 719 NW2d 809 (2006). An abuse of discretion occurs when a trial court’s decision falls
outside the range of principled outcomes. See id.

       MCL 600.2591 provides in relevant part:

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

                                               * * *

               (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.

       “A court must determine whether a claim or defense is frivolous on the basis of the
circumstances at the time it was asserted.” Meisner Law Group PC v Weston Downs Condo Ass’n,
321 Mich App 702, 732; 909 NW2d 890 (2017). A party’s position, though erroneous, is not
devoid of legal merit when the law at issue is unsettled or concerns a matter of first impression.
See Evans & Luptak, PLC v Lizza, 251 Mich App 187, 203-204; 650 NW2d (2002); Travelers Ins
v U-Haul, Inc, 235 Mich App 273, 290; 597 NW2d 235 (1999).

       The legal underpinning for defendants’ counterclaim was this Court’s holding in
Voutsaras, 326 Mich App at 670, that “licensed professionals owe the same duty to the party for
whom they testify as they would to any client and that witness immunity is not a defense against

                                                 -14-
professional malpractice.” Read in isolation, this holding could be interpreted as an attack on the
common-law doctrine of witness immunity, which the Michigan Supreme Court explained in
Maiden, 461 Mich at 134-135. However, as already discussed, this Court clearly indicated that at
issue in Voutsaras were expert opinions intended for the estate’s decedent or her attorneys “in
addition to intended expert testimony for the court.” Id. at 675. This Court acknowledged the
applicability of the settled common-law doctrine of witness immunity by stating that, to the extent
that the plaintiff’s malpractice claim arose from the defendants’ “having provided damaging
testimony or evidence intended for consideration by the trial court, [the defendants were] clearly
protected by the doctrine of witness immunity.”7 Id. The present defendants’ argument from
Voutsaras appears to be less an attempt to argue for “the extension, modification, or reversal of
existing law,” MCR 1.109(E)(b), than an exercise in the selective citation and artful interpretation
of this Court’s opinion to support a position contrary to that taken by this Court. See id.

        In addition, it is not entirely clear that, at the time defendants asserted their counterclaim
against KFC, they had conducted a “reasonable inquiry” into whether KFC had, in fact, committed
malpractice. MCR 1.109(E)(b). Defendants derived the factual allegations relevant to their
counterclaim from Hoebeke’s rebuttal of KFC’s Preliminary Independent Rebuttal Expert Report.
Hoebeke wrote his rebuttal to affirm that nothing in KFC’s report changed or altered the opinions
that he had expressed in his expert report. Although he faults Kohn for failing to conduct an
independent analysis of the federal lawsuits’ claims against the Levines, and repeatedly opines that
there is no basis for Kohn’s various opinions, nowhere does Hoebeke allege that Kohn was
professionally negligent. The overwhelming majority of Hoebeke’s criticisms of Kohn’s report
arise from differences between his and KFC’s scopes of engagement. Kohn was tasked with
determining damages arising from the claims alleged against the Levines in the federal lawsuits,
whereas Hoebeke was tasked with justifying the financial transactions that were the basis for the
claims. Nowhere in Hoebeke’s report does he suggest that Kohn negligently performed the task
that he was actually given. Although attestations by Nation and Jackson that they were satisfied
with KFC’s work do not establish that KFC performed in accordance with any relevant standard
of care, they arguably express defendants’ and Hooper Hathaway’s recognition that KFC did what
it was asked to do. If KFC did what defendants asked it to do in 2017, there seems no factual basis
to claim in 2019 that KFC committed malpractice for not doing more than it was asked to do.

        Lastly, there is no basis in fact for defendants’ assertion in the countercomplaint that KFC
was the direct and proximate cause for $2.7 million in damages. Michigan abolished joint and
several liability and replaced it with “fair share liability where each tortfeasor only pays the portion
of the total damages award that reflects that tortfeasor’s percentage of fault.” Estate of Goodwin
v Northwest Mich Fair Ass’n, 325 Mich App 129, 138; 923 NW2d 894 (2018) (quotation marks
and citation omitted). Thus, the liability for damages is several only, not joint. Id. at 139 (citation
omitted).

7
 As in the present case, the Voutsaras defendants did not actually testify, since the cause of action
underlying Voutsaras was dismissed against Voutsaras at the summary disposition stage.
Voutsaras, 326 Mich App at 670.

                                                 -15-
        In the present case, defendants essentially requested that same amount of damages from
KFC as it did from Hooper Hathaway in the claim alleging legal malpractice. However, defendants
failed to identify the portion of the $2.7 million attributed to KFC’s percentage of fault, as opposed
to the acts of other tortfeasors, i.e., Hooper Hathaway. There was simply no basis stated in fact or
law for defendants to seek $2.7 million in damages from KFC.

         We agree with the trial court that defendants’ counterclaim was not sufficiently grounded
in law. It relied on a contrived reading of Voutsaras, the relevant facts of which were different
from those presented here and which merely restated settled law governing witness immunity. In
addition, defendants’ counterclaim arguably was not grounded in fact or the product of a
reasonable inquiry, as it arose from allegations derived from a rebuttal report that did not address
accounting malpractice and did not assess the actual work that KFC had been asked to do. Further,
given defendants’ limitations on KFC’s scope of engagement in 2017, and the evidence that KFC
did what Hooper Hathaway and defendants asked it to do, defendants’ insinuation that KFC
committed malpractice by not doing more or something different has no basis in fact. For these
reasons, defendants’ counterclaim was devoid of legal merit, MCL 600.2591(3)(iii). In addition,
the absence of any factual or legal basis to seek $2.7 million in damages from KFC gives rise to a
reasonable inference that defendants’ primary purpose in bringing the counterclaim was to “harass,
embarrass, or injury” KFC and Kohn. MCL 600.2591(3)(i). Because the evidence establishes that
at least one of the conditions identified in MCL 600.2519(3) existed at the time defendants filed
their counterclaim, the trial court did not clearly err by concluding that defendants’ counterclaim
against KFC was frivolous.

       Affirmed. KFC, as the prevailing party, may tax costs.

                                                              /s/ Elizabeth L. Gleicher
                                                              /s/ Deborah A. Servitto
                                                              /s/ Anica Letica

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