Badiee v. Brighton Area Schools

• Decision Date: 29 April 2005
• Docket Number: Docket No. 248270,Docket No. 247437,Docket No. 249881.
• Citation: 265 Mich. App. 343,695 N.W.2d 521
• Parties: Hebat BADIEE, Plaintiff, and Spartan Technical Services, Inc, d/b/a Laser Electric, Plaintiff-Counter-Defendant-Appellee, v. BRIGHTON AREA SCHOOLS, Defendant, and George W. Auch Company, Defendant-Counter-Plaintiff-Appellant. Hebat Badiee, Plaintiff-Appellant, and Spartan Technical Services, Inc, d/b/a Laser Electric, Plaintiff-Counter-Defendant-Appellant, v. Brighton Area Schools, Defendant-Appellee, and George W. Auch Company, Defendant-Counter-Plaintiff-Appellee. Hebat Badiee, Plaintiff-Appellant, and Spartan Technical Services, Inc, d/b/a Laser Electric, Plaintiff-Counter-Defendant-Appellant, v. Brighton Area Schools, Defendant-Appellee, and George W. Auch Company, Defendant-Counter-Plaintiff-Appellee.
• Court: Court of Appeal of Michigan — District of US

695 N.W.2d 521

265 Mich. App. 343

Hebat BADIEE, Plaintiff, and Spartan Technical Services, Inc, d/b/a Laser Electric, Plaintiff-Counter-Defendant-Appellee, v. BRIGHTON AREA SCHOOLS, Defendant, and George W. Auch Company, Defendant-Counter-Plaintiff-Appellant.

Hebat Badiee, Plaintiff-Appellant, and Spartan Technical Services, Inc, d/b/a Laser Electric, Plaintiff-Counter-Defendant-Appellant, v. Brighton Area Schools, Defendant-Appellee, and George W. Auch Company, Defendant-Counter-Plaintiff-Appellee.

Hebat Badiee, Plaintiff-Appellant, and Spartan Technical Services, Inc, d/b/a Laser Electric, Plaintiff-Counter-Defendant-Appellant, v. Brighton Area Schools, Defendant-Appellee, and George W. Auch Company, Defendant-Counter-Plaintiff-Appellee.

Docket Nos. 247437, 248270, 249881.

Court of Appeals of Michigan.

Submitted November 17, 2004, at Lansing.

Decided March 1, 2005, at 9:00 a.m.

Released for Publication April 29, 2005.

Loomis, Ewert, Parsley, Davis & Gotting, P.C. (by Jeffrey S. Theuer and Lisa A. Hanson), Lansing, for Hebat Badiee and Spartan Technical Services, Inc.

Foster, Swift, Collins & Smith, P.C. (by William R. Schulz and John P. Nicolucci), Lansing, for the Brighton Area Schools.

Plunkett & Cooney, P.C. (by Ernest R. Bazzana), Detroit, for the George W. Auch Company.

Before: GRIFFIN, P.J., and SAAD and O'CONNELL, JJ.

SAAD, J.

In Docket No. 247437, defendant George W. Auch Company (Auch) appeals from an order that granted summary disposition in favor of plaintiff Spartan Technical Services, Inc., doing business as Laser Electric (Laser), with respect to Auch's counterclaim for contractual indemnity. In Docket No. 248270, Laser and plaintiff Hebat Badiee appeal from the trial court's judgment in favor of Auch and defendant Brighton Area Schools (BAS) on all of plaintiffs' claims in the instant action. In Docket No. 249881, plaintiffs appeal from the trial court's order that awarded defendants costs and case-evaluation sanctions. These three cases were consolidated on appeal,¹ and we affirm the trial court's orders.

I. FACTS AND PROCEDURAL HISTORY

BAS entered into a contract with Auch on November 20, 1998, under which Auch would act as construction manager for the renovation or new construction of seven schools in the Brighton area. In the fall of 1999, Laser, of which Badiee is executive vice president,² bid for and was awarded seven separate contracts to do the electrical work at the seven schools. The total combined contract price was approximately $1.1 million.

To accommodate the academic calendar, the project was set to begin on November 29, 1999, and was to be completed no later than August 26, 2000. In January of 2000, Auch personnel expressed concerns about the quality of Laser's work, its available staffing, and its ability to complete work on schedule. Accordingly, a meeting was held on February 1, 2000, at one of the job sites. Badiee claims that at this meeting, Auch vice president Thomas Hickey directed an ethnic slur at Badiee, who is of Iranian descent.³ Hickey denied making ethnocentric slurs, and testified that when he arrived at the job site on February 1, 2000, for the meeting, he found Badiee in Auch's trailer, speaking at length to the Auch project manager and construction superintendents. Hickey testified that, in response to Auch's concerns that Badiee did not have enough people on the job and that those present were not adequately supervised, Badiee proceeded "in a very dismissive and very demeaning manner" to tell the Auch personnel "that they didn't know really what they were doing...." As a result of the meeting, plaintiffs and Auch reached an agreement to alleviate several of the concerns Auch raised.⁴ Auch sent plaintiffs a letter on February 4, 2000, memorializing these agreements. In particular, Auch required Laser to (1) provide copies of state electrician licenses for Laser personnel responsible for the projects,⁵ (2) correct defective work, (3) update its schedule to accurately reflect progress at each school, (4) provide consent of surety letters for payment applications, and (5) provide state electrical permits for each project. Auch's letter concluded by stating that payments would not be released until these requirements were met. A second meeting took place on February 10, 2000, with representatives from BAS, Auch, and Laser, to further clarify the requirements spelled out in the February 4, 2000, letter, and Auch sent a second letter to memorialize that meeting.

On February 14, 2000, Laser sent what proved to be the first of several letters in which it threatened to walk off the job. The February 14 letter cited Auch's alleged failure to pay Laser on its first payment application. Laser sent Auch a second letter on February 16, 2000, threatening to walk off the job. However, the delay in payment appeared to result from a combination of Laser not fulfilling the conditions agreed to at the February 1, 2000, meeting⁶ and the fact that Laser overstated its "general conditions" expenses by nearly $41,000.⁷ Ultimately, the payment application was approved for one hundred percent of the costs related to labor and materials and for that portion of the "general conditions" amount requested that reflected expenses Laser had actually incurred.

As a result of Laser's poor performance, apparent labor difficulties, and threats to stop work, Auch felt the need to scrutinize Laser's work more closely. And, because of these concerns, Auch required Laser to submit consent of surety letters with each of its future payment applications, which it did for the second through sixth applications.⁸ In addition to the BAS projects, Laser was under contract to perform electrical work for the Michigan Department of Transportation (MDOT) and Michigan State University (MSU).⁹ Laser employee Mike Beach, one of the two licensed electricians employed by Laser, split his time between the BAS projects and the MDOT project. Laser began to fall behind schedule, and there were workmanship concerns at several of the project sites.¹⁰ Unsupervised, unlicensed apprentice electricians were performing much of the electrical work.

On July 6, 2000, Laser sent another letter threatening to stop work apparently as a result of the nonpayment of its seventh payment application dated June 30, 2000. In addition to not being able to submit a consent of surety as required, Laser apparently represented that it made payments to suppliers in excess of amounts those suppliers actually received. After Auch's accounting department spent several hours working with Laser's bookkeeper to reconcile this discrepancy, Auch eventually released payment in the form of a check payable jointly to Laser and its vendors. Significantly, by mid-July 2000, it became apparent to Auch that Laser was behind schedule and would not complete its work before August 26, 2000, the date that school was set to begin. An emergency meeting of representatives from Auch, Laser, and BAS resulted in a promise from Badiee that Laser would submit a plan for finishing the project by July 24, 2000. Laser never submitted this plan. Instead, it sent yet another letter threatening to stop work, dated July 28, 2000, and on August 4, 2000, Laser walked off the job.

After Laser left the job, Auch and BAS filed a claim with Merchant's Bonding, Laser's surety. Rather than bid the contracts out again with only three weeks left before the beginning of the school year, Auch "left the contracts" in place, and relied on Ted Krawzynski Electric, Laser's electrical subcontractor,¹¹ as well as two other subcontractors, to finish the job using the amount of money remaining under the contracts.

Auch paid the Laser employees, subcontractors, and vendors a total of approximately $717,000 for work performed after Laser stopped work. Laser was paid approximately $493,000, representing the amount of work it had performed. Auch repaid approximately $128,000 to Merchant's Bonding.¹²

Plaintiffs filed the instant action on July 16, 2001, and alleged several counts related to what Laser characterized as defendants' breach of contract, one count that alleged both ethnic intimidation, MCL 750.147b, and ethnic discrimination in violation of the Civil Rights Act (CRA), MCL 37.2101 et seq., counts of intentional interference with a business relationship and intentional interference with a contractual relationship, and a third-party beneficiary claim.

Auch filed a counterclaim against Laser with respect to the discrimination claim, and alleged that Laser's contracts with BAS required Laser to indemnify Auch against Badiee's ethnic-discrimination claim. Plaintiffs moved for summary disposition on the counterclaim, and Auch argued in response that, in fact, it was entitled to summary disposition on its counterclaim. The trial court ruled that Auch could not be indemnified by Laser for Auch's alleged ethnic discrimination against Badiee because Michigan's public policy prohibits indemnification of such civil rights violations.

At trial, all of plaintiffs' claims were resolved in defendants' favor by way of summary disposition, directed verdict, and jury verdict. Plaintiffs filed a postjudgment motion for judgment notwithstanding the verdict (JNOV), which the trial court rejected.

Auch appeals from the trial court's order that rejected its indemnity claim. Plaintiffs appeal from several orders that grant defendants' motions for summary disposition and directed verdict, and from an order that denied their motion for JNOV. Plaintiffs further appeal from orders granting case-evaluation sanctions granted to BAS and costs to defendants.

II. CONTRACTUAL INDEMNITY

A

After plaintiffs filed the complaint, Auch filed a counterclaim and sought an order to compel Laser to indemnify Auch against Badiee's civil rights claim. Laser filed a motion for summary disposition under MCR 2.116(C)(8) (failure to state a claim for which relief may be granted). The trial court granted summary...