BJ'S & SONS CONST. CO., INC. v. Van Sickle
| Decision Date | 26 July 2005 |
| Docket Number | Docket No. 250815,Docket No. 250816. |
| Citation | 266 Mich. App. 400,700 N.W.2d 432 |
| Parties | BJ'S & SONS CONSTRUCTION COMPANY, INC., Plaintiff/Counter-Defendant-Appellant, v. George VAN SICKLE and Linda Van Sickle, Defendants/Counter-Plaintiffs/Cross-Defendants-Appellees, and Two Shoe Boxes, Inc., Defendant/Cross-Plaintiff-Appellee, and Robert J. Harvey and Stephen E. Shefman, Appellants. BJ'S & Sons Construction Company, Inc., Plaintiff-Appellant, v. Two Shoe Boxes, Inc., Defendant-Appellee, and Robert J. Harvey and Stephen E. Shefman, Appellants. |
| Court | Court of Appeal of Michigan — District of US |
Stephen E. Shefman, Southfield, for BJ's & Sons Construction Company, Inc. and Robert J. Harvey.
Stephen E. Shefman in propria persona.
John A. DeMarco, Lake Orion, for George and Linda Van Sickle.
William E. Hosler, Birmingham, for Two Shoe Boxes, Inc.
Before: KELLY, P.J., and SAAD and SMOLENSKI, JJ.
Plaintiff BJ's & Sons Construction Company, Inc.; Robert Harvey, the president and chief executive officer of BJ's & Sons Construction Company, Inc.; and Stephen Shefman, plaintiff's attorney (hereafter referred to jointly as plaintiffs), appeal the trial court's order that imposed sanctions because the court ruled that their claim was frivolous. The order imposed attorney fees and costs reduced by the reasonable amount it would have cost plaintiffs to resolve the issue appropriately.1 We affirm and award additional sanctions against plaintiffs for bringing a frivolous appeal.
This is one of those rare cases in which a trial court granted sanctions (attorney fees and costs) for frivolous litigation. The trial court granted sanctions against plaintiff corporation, the president of the corporation, and plaintiff's trial counsel. The trial court ordered sanctions because the evidence demonstrated that neither counsel nor his client had any reasonable basis to bring this suit. Indeed, the evidence showed that the client and its counsel pursued this litigation despite knowing that the underlying claim was completely without merit. Compounding this wrongful conduct, plaintiff and its trial counsel continued this litigation despite warnings from the experienced trial judge that the trial court would impose sanctions if, as the court correctly sensed, and as it turned out, the case had absolutely no merit. Here, plaintiff alleged an interest in property though its president and sole shareholder knew that plaintiff had no interest in this property. Plaintiff asserted an interest arising out of a 1994 real estate transaction in which plaintiff purchased property from defendants, but not the disputed property that plaintiff claims here. Indeed, before filing suit, plaintiff's counsel was told that, though a scrivener's error showed that the disputed property had been conveyed, neither party intended to make the disputed property part of the sale. The transaction involved the sale of a portion of a larger tract of land that defendants, the Van Sickles, were purchasing by land contract. The Van Sickles intended to sell (and plaintiff intended to purchase) a small portion of the land while the Van Sickles retained the remainder (the larger part) for themselves. The scrivener's error resulted in a deed that purported to convey the entire parcel of land, as opposed to the intended smaller portion. Moreover, plaintiff's president told plaintiff's counsel that he never believed that plaintiff had bought the property claimed here. Indeed, he admitted that, after the 1994 sale, he saw defendants build on and conduct business on this property, and he also sought to buy the very property at issue here. Overwhelming evidence showed that both plaintiff and its counsel brought this suit and continued to prosecute this suit knowing full well that it is completely frivolous. For this reason, the trial court warned that it would impose sanctions, and after a full hearing on the propriety and amount of sanctions, the trial court imposed sanctions against plaintiff, plaintiff's president, and plaintiff's counsel. We affirm and award sanctions for frivolous and vexatious appeal.
This case arises out of a 1994 sale of land. The deed contained a scrivener's error that ostensibly granted plaintiffs a parcel of property that the parties clearly did not intend to be part of the transaction.2 The trial court dismissed the land-title claim as frivolous and granted defendants an award of attorney fees and costs. The trial court computed the costs and fees from the time it became obvious to Harvey and plaintiff's counsel that there was a scrivener's error. After a three-day evidentiary hearing, the trial court concluded that the scrivener's error had been obvious before commencement of the suit and imposed sanctions accordingly.
Under Michigan law, a party that maintains a frivolous suit or asserts frivolous defenses is subject to sanctions under applicable statutes and court rules. Under MCL 600.2591(3).
MCR 2.625(A)(2) provides:
In an action filed on or after October 1, 1986, if the court finds on motion of a party that an action or defense was frivolous, costs shall be awarded as provided by MCL 600.2591.
MCR 2.114(F) provides in part:
In addition to sanctions under this rule, a party pleading a frivolous claim or defense is subject to costs as provided in MCR 2.625(A)(2).
MCR 2.114(E)3 provides:
If a document is signed in violation of this rule, the court, on the motion of a party or on its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the document, including reasonable attorney fees. The court may not assess punitive damages.
"A trial court's determination that an action is frivolous is reviewed for clear error." Kitchen, supra at 661, 641 N.W.2d 245.4
The purpose of imposing sanctions for asserting frivolous claims "is to deter parties and attorneys from filing documents or asserting claims and defenses that have not been sufficiently investigated and researched or that are intended to serve an improper purpose." FMB-First Michigan Bank v. Bailey, 232 Mich.App. 711, 723, 591 N.W.2d 676 (1998). In the context of Fed R Civ P 11 (Rule 11), which imposes similar requirements on attorneys and parties and imposes similar sanctions for violations as MCR 2.114 does, the United States Supreme Court noted that "[b]aseless filing puts the machinery of justice in motion, burdening courts and individuals alike with needless expense and delay." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 398, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). Similarly, a federal court observed that "sanctions awarded under Rule 11 ... are essentially deterrent in nature, imposed in an effort to discourage dilatory tactics and the maintenance of untenable positions." Prewitt v. Alexander, 173 F.R.D. 438, 441 (N.D.Miss., 1996).
Here, the trial court ruled that plaintiffs' claim was based on an obvious scrivener's error and granted summary disposition in favor of defendants.5 The trial court held an evidentiary hearing and determined that sanctions were warranted under MCL 600.2591, MCR 2.114(F), and MCR 2.625(A)(2). The attorney who drafted the deed testified that he made a mistake and that he advised plaintiff's counsel, Shefman, of his mistake before plaintiff filed suit. Harvey's former attorney testified that he also advised Shefman that Harvey had no ownership interest in the disputed property. Importantly, Harvey himself testified that he told Shefman, before commencement of this suit, that he was unaware of any ownership interest in the disputed property and that he had watched defendants construct buildings and operate a business on the property in issue.6
Our review of the record reveals that the trial court correctly and properly ruled that plaintiffs had no reasonable basis for asserting their claims and, indeed, that Harvey himself had testified that he commenced suit despite knowing that he had no valid claim to the disputed land. Plaintiffs' claim of title to the property was premised solely on the admittedly mistaken description in the deed, which plaintiffs knew to be the result of a scrivener's error. Indeed, discovery clearly revealed what plaintiffs and their attorney knew before filing this suit—plaintiffs had no legitimate claim to this property. Moreover, the trial court properly advised and warned plaintiffs and their counsel that they risked serious sanctions if, as it turned out, this claim had no merit whatsoever. Plaintiffs and their counsel failed to heed this warning and, instead, subjected defendants to years of litigation and caused them to incur substantial attorney fees despite knowing that plaintiffs had no interest in the property.
In Lloyd v. Avadenka, 158 Mich.App. 623, 631, 405 N.W.2d 141 (1987), this Court concluded that if the plaintiff's counsel had made "reasonable inquiry" as required by MCR 2.114(D),7 then the plaintiff's counsel would easily have known that the plaintiff's claim had no basis in law or fact. As a result, this Court upheld the trial court's imposition of sanctions under MCR 2.114(E). Lloyd, supra at 631-632, 405 N.W.2d 141....
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