Endoscopy Corp. of Am. v. Kenaan
| Decision Date | 09 March 2023 |
| Docket Number | 359398 |
| Parties | ENDOSCOPY CORPORATION OF AMERICA, Plaintiff-Appellant, v. HASSAN KENAAN, Defendant-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
UNPUBLISHED
Oakland Circuit Court LC No. 2020-182878-CB
Before: CAVANAGH, P.J., and SERVITTO and GARRETT, JJ.
In this action arising from an employment contract dispute, plaintiff appeals by right the trial court's order granting summary disposition in favor of defendant. On appeal, plaintiff argues that the trial court applied the wrong standard of review for deciding defendant's summary disposition motion pursuant to MCR 2.116(C)(8) (), plaintiff's original complaint stated claims upon which relief could be granted, plaintiff's first amended complaint stated claims upon which relief could be granted and the trial court erred when it granted summary disposition in favor of defendant when there was no pending motion for summary disposition and no hearing was held. We affirm in part, reverse in part, and remand for further proceedings.
This case arises out of plaintiff's allegations that defendant breached an employment contract between the parties by improperly retaining and using a trade secret after leaving his employment with plaintiff. As alleged in plaintiff's first amended complaint, plaintiff is in the business of repairing endoscopes, with a specific focus on repairing or replacing damaged circuit boards, known as "c-boards."[1] Defendant began working as a contractor for plaintiff in 2012, performing general information technology services. In March 2018, defendant became an employee of plaintiff and began focusing on repairing c-boards. At plaintiff's direction, defendant developed processes to transfer data from damaged c-boards to new ones. Plaintiff directed defendant to document the processes he developed and to convey the information to plaintiff, but defendant never documented or conveyed to plaintiff how the processes worked. On July 21, 2020, the parties entered into a new employment contract, which included a noncompetition agreement and provisions regarding the ownership and handling of proprietary information, trade secrets, and intellectual property. On July 28, 2020, defendant resigned from his position with plaintiff. Thereafter, defendant refused to tell plaintiff how the processes worked or to turn over to plaintiff materials regarding the processes he had developed regarding data transfer between c-boards. On July 30, 2020, plaintiff, through counsel, sent a letter to defendant advising defendant that he still had to fulfill his obligations under the employment contract to turn over to plaintiff information and materials regarding the data transfer processes. Defendant did not comply with plaintiff's requests.
On August 12, 2020, plaintiff filed a four-count complaint against defendant, alleging breach of contract, tortious interference with a business expectancy, misappropriation of trade secrets, and unjust enrichment.[2] In lieu of filing an answer to plaintiff's complaint, defendant moved for summary disposition pursuant to MCR 2.116(C)(8) and (10). Defendant argued that the employment contract between the parties was not enforceable after the employment ended, defendant had not interfered with a business expectancy of plaintiff, the processes he developed were not a trade secret and did not amount to intellectual property that could be owned, and plaintiff could not state a claim for unjust enrichment because the conduct at issue was covered by a valid contract. The trial court granted summary disposition in favor of defendant on all claims under MCR 2.116(C)(8), reasoning that plaintiff had not adequately pleaded any of its claims. However, the trial court's order allowed plaintiff to file a first amended complaint to cure the deficient pleadings of its breach of contract, tortious interference with a business expectancy, and misappropriation of a trade secret claims. The trial court dismissed plaintiff's unjust-enrichment claim with prejudice, finding that amendment would be futile in light of the valid contract between the parties governing the subject matter at issue.
Plaintiff filed a first amended complaint that also added defendant's company, Blue Leader, LLC, as a defendant. Defendant and Blue Leader, LLC, filed separate motions for summary disposition in lieu of filing answers. The trial court struck plaintiff's original first amended complaint because the addition of the new party violated the trial court's order allowing the amended complaint. Plaintiff filed a revised first amended complaint that complied with the order, and defendant again moved for summary disposition pursuant to MCR 2.116(C)(8) and (10). The trial court entered an order scheduling a hearing on defendant's second motion for summary disposition for June 16, 2021, and ordering defendant to file a praecipe and notice of hearing. Instead of doing so, defendant re-noticed hearing on his motion for summary disposition for a date and time to be determined by the court, adding additional arguments. The case thereafter proceeded to case evaluation. On October 12, 2021, the trial court, without providing advance notice to the parties, entered an order granting defendant's motion for summary disposition pursuant to MCR 2.116(C)(8) on the basis of plaintiff's failure to cure the deficiencies in its original complaint. This appeal followed.
Plaintiff argues that the trial court applied the wrong standard of review when it decided defendant's summary disposition motion brought pursuant to MCR 2.116(C)(8). We disagree.
This Court reviews de novo a trial court's decision on a motion for summary disposition. El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 159; 934 N.W.2d 665 (2019). In El-Khalil, 504 Mich. at 159-163, the Supreme Court explained the appropriate process for deciding a motion brought under MCR 2.116(C)(8). A defendant is entitled to summary disposition pursuant to MCR 2.116(C)(8) when the plaintiff fails to state a claim upon 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, 504 Mich. at 160 (emphasis omitted). When considering a motion brought pursuant to MCR 2.116(C)(8), a trial court must decide the motion on the basis of the pleadings alone. Id. at 163. "All well-pleaded factual allegations are accepted as true and construed in a light most favorable to the plaintiff." Wilson v King, 298 Mich.App. 378, 381; 827 N.W.2d 203 (2012). A motion brought under MCR 2.116(C)(8) is properly granted when a plaintiff's claims are "so clearly unenforceable as a matter of law that no factual development could possibly justify recovery." Maple Manor Rehab Ctr, LLC v Dep't of Treasury, 333 Mich.App. 154, 162-163; 958 N.W.2d 894 (2020).
Under MCR 2.116(C)(8), it is outside the appropriate scope of review to consider whether a plaintiff has brought forth evidence to establish a claim, and the court cannot consider or weigh any evidence before it. El-Khalil, 504 Mich. at 162. When a court is evaluating a motion brought pursuant to MCR 2.116(C)(8), it improperly considers the motion as one brought pursuant to MCR 2.116(C)(10) if it considers evidence when deciding the motion. Id. at 163-164. However, "[i]f a claim or defense is based on a written instrument, a copy of the instrument or its pertinent parts must be attached to the pleading ...." MCR 2.113(C). Thus, "when an action is premised on a written contract, the contract generally must be attached to the complaint and thus becomes part of the pleadings." Bodnar v St John Providence, Inc, 327 Mich.App. 203, 212; 933 N.W.2d 363 (2019).
From the trial court's orders, it does not appear that the court made or relied on findings of fact when it decided defendant's motions for summary disposition. Both orders acknowledged that defendant filed his summary disposition motions pursuant to both MCR 2.116(C)(8) and (10), and stated specifically that the court was granting the motions under MCR 2.116(C)(8) and not under MCR 2.116(C)(10). In the trial court's order deciding defendant's first motion for summary disposition regarding plaintiff's claims of breach of contract, tortious interference with a business expectancy, and misappropriation of a trade secret, the trial court only identified the absence of specific allegations relating to elements of each claim. Regarding the trial court's granting of summary disposition in favor of defendant on plaintiff's unjust-enrichment claim, the trial court's decision was based on its conclusion that a valid contract existed between the parties on the subject matter of the dispute in this case. The interpretation of a contract is a question of law. Klapp v United Ins Group Agency, Inc, 468 Mich. 459, 463; 663 N.W.2d 447 (2003). The trial court did not err in its application of the standards set forth for deciding defendant's first motion brought pursuant to MCR 2.116(C)(8) and did not rely on facts outside the pleadings.
The trial court, likewise, did not rely on facts outside the pleadings when deciding defendant's second motion for summary disposition. In granting defendant's motion, the trial court's reasoning was that plaintiff had not cured the deficiencies in its complaint identified by the trial court in its order regarding defendant's first summary disposition motion, and the trial court did not identify any facts it may have relied upon. Without any indication of facts or factual findings relied upon by the trial court, it cannot be said that the trial court decided defendant's second summary disposition motion under...
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