Friedman v. Freidberg Law Corp.

Decision Date09 April 1999
Docket NumberNo. Civ.A. 96-40053.,Civ.A. 96-40053.
Citation44 F.Supp.2d 902
PartiesLawrence FRIEDMAN; as receiver of the assets of John Z. DeLorean; C. William Garratt; C. William Garratt & Assocs., P.C.; and GA II, P.C., Plaintiffs, v. FREIDBERG LAW CORPORATION, Defendant.
CourtU.S. District Court — Eastern District of Michigan

C. William Garratt, Garratt Law Firm, Bloomfield Hills, MI, for plaintiffs.

Mark S. Koppelman, Michael K. Lee, Amberg, McNenly, Southfield, MI, for defendant.

ORDER DENYING DEFENDANT'S RENEWED MOTION FOR SUMMARY JUDGMENT

GADOLA, District Judge.

Presently before the Court is a renewed motion for summary judgment filed on September 11, 1998 by defendant Freidberg Law Corporation (hereinafter "FLC" or "Freidberg").1 Previously, on May 29, 1998, this Court issued a memorandum opinion and order denying without prejudice defendant's original motion for summary judgment and allowing defendant to renew its motion after the close of additional discovery. The May 29, 1998 opinion extended discovery on the following issue: whether defendant was bound by the injunction issued by the Honorable David F. Breck of Oakland County Circuit Court pursuant to Michigan Court Rule 3.310(C)(4). Plaintiffs responded to defendant's renewed motion for summary judgment on September 28, 1998. A final pre-trial conference is scheduled for May 24, 1999.2

For the reasons set forth below, the Court will deny defendant Freidberg Law Corporation's renewed motion for summary judgment.

I. Factual Background

The following factual background is taken from the recitation of facts set out in this Court's previous memorandum opinion and order issued May 29, 1998.

On June 30, 1993, the Honorable David F. Breck of Oakland County Circuit Court entered a $125,000 judgment, confirming a previous arbitration award in favor of C. William Garratt & Associates, P.C. and GA II, P.C., and against John Z. DeLorean (Civil Action No. 91-416860-CZ). Lawrence Friedman, plaintiff herein, was appointed receiver for DeLorean and his assets. On October 27, 1993, Judge Breck entered an order (hereinafter the "Breck Injunction") restraining DeLorean from making or suffering any transfer or other disposition of, or interference with, any property now held or hereafter acquired by him, or by others in trust or otherwise, or any debt due or to become due to him, not exempt by law from application of the satisfaction of that certain judgment entered by this Court on June 30, 1993....

Exh. A to defendant's brief in support of renewed motion for summary judgment, p. 2.

In another matter, wholly unrelated to the previously-described state court matter, DeLorean was sued by Attorney Mayer Morganroth in the United States District Court for the Eastern District of Michigan. Defendant FLC, a California corporation, was lead counsel for DeLorean in that lawsuit. In connection with that litigation, DeLorean transferred to FLC approximately $890,000 between October 1993 and May 1994. Plaintiffs in the instant suit allege that FLC, acting as an agent and attorney for DeLorean, and/or in active concert and participation with DeLorean, encouraged and permitted DeLorean to transfer such monies in violation of the Breck Injunction.3

II. Procedural History

In April 1995, plaintiffs filed a two-count complaint against defendant FLC. In Count One, plaintiffs allege conversion, and specifically that FLC encouraged DeLorean to transfer monies to FLC in violation of the Breck Injunction, thereby converting plaintiffs' right to be paid first from DeLorean's assets. In Count Two, plaintiffs allege tortious interference with economic expectancy. In particular, plaintiffs allege that FLC, when it received money from DeLorean, tortiously interfered with plaintiffs' expectancy to be paid first from DeLorean's assets. Both plaintiffs' claims are predicated upon an alleged violation of the Breck Injunction.

On May 29, 1998, this Court issued a memorandum opinion and order, denying without prejudice defendant's original motion for summary judgment, as well as denying plaintiffs' motion to bar defendant from asserting unpleaded avoidances or affirmative defenses at trial. With respect to defendant's original motion for summary judgment, this Court rejected the argument that because the transfers of money took place outside of the State of Michigan, they were thus outside the reach of the Breck Injunction. See May 29, 1998 Op. and Order, pp. 8-10. Specifically, the Court held that defendant's reliance on Emmons v. Emmons, 136 Mich.App. 157, 355 N.W.2d 898 (1984) was misplaced.

In Emmons, the Michigan Court of Appeals, while holding that a Michigan court does not have jurisdiction over property located in Florida, nonetheless affirmed that a Michigan court could compel a defendant over whom personal jurisdiction existed to transfer, sell or otherwise dispose of his Florida property. See id. at 166, 355 N.W.2d 898 (citing Niemetta v. Teakle, 210 Mich. 590, 178 N.W. 37 (1920)). As a consequence, this Court concluded that Judge Breck had the power to enjoin DeLorean, his agents, attorneys and/or those acting in active concert with them from making or suffering any transfer or other disposition of or interference with property located outside of Michigan. See May 29, 1998 Op. and Order, p. 10.

Defendant, however, asserted a second argument in support of its motion for summary judgment: that defendant FLC was not bound by the Breck Injunction. Consideration of this argument was postponed because plaintiffs insisted that they required more discovery on the factual issues relevant to this defense. Accordingly the Court allowed the parties additional time to conduct discovery on this issue. After the close of this additional discovery period, defendant submitted a "renewed" motion for summary judgment filed September 11, 1998. As mentioned above, on November 17, 1998, this Court granted plaintiffs' motion to adjourn the hearing on defendant's renewed motion pending Magistrate Judge Pepe's ruling on certain discovery issues. Following the magistrate judge's ruling, on March 4, 1999, plaintiffs submitted a supplemental brief in response to defendants' renewed motion for summary judgment. On March 12, 1998, defendant submitted its own supplemental brief.

III. Legal Standard

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." "A fact is `material' and precludes grant of summary judgment if proof of that fact would have [the] effect of establishing or refuting one of the essential elements of the cause of action or defense asserted by the parties, and would necessarily affect [the] application of appropriate principle[s] of law to the rights and obligations of the parties." Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984) (citation omitted). In evaluation a motion for summary judgment, the court must view the evidence in a light most favorable to the nonmovant, as well as draw all reasonable inferences in the nonmovant's favor. See U.S. v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir.1984).

The movant bears the burden of demonstrating the absence of all genuine issues of material fact. See Gregg v. Allen-Bradley Co., 801 F.2d 859, 861 (6th Cir.1986). This burden "may be discharged by showing ... that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party discharges that burden, the burden shifts to the nonmoving party to set forth specific facts showing a genuine triable issue. Fed. R.Civ.Proc. 56(e); Gregg, 801 F.2d at 861.

To create a genuine issue of material fact, however, the nonmovant must do more than present some evidence on a disputed issue. As the United States Supreme Court stated in Anderson v. Liberty Lobby, Inc.,

[t]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the [nonmovant's] evidence is merely colorable, or is not significantly probative, summary judgment may be granted.

477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). See Catrett, 477 U.S. at 322-23, 106 S.Ct. 2548; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The evidence itself need not be the sort admissible at trial. Ashbrook v. Block, 917 F.2d 918, 921 (6th Cir.1990). However, the evidence must be more than the nonmovant's own pleadings and affidavits. Id.

IV. Analysis

The crucial issue presented is whether defendant Freidberg Law Corporation was bound by the terms of the Breck Injunction. Defendant insists that injunctions only bind parties to the underlying law suit and further that it is uncontroverted that defendant was not a party to the previous state court litigation. Plaintiff, on the other hand, maintains that it is well-settled that injunctions bind not only parties to an action, but also their officers, agents, and attorneys, and those in active concert or participation with them who receive actual notice of the injunction. Plaintiff further asserts that there exist several genuine issues of material fact still outstanding which preclude summary judgment in the instant case.

Pursuant to Michigan Court Rule 3.310, concerning the form and scope of injunctions, "[a]n order granting an injunction or restraining order ... is binding only on the parties to the action, their officers, agents, servants, employees, and attorneys, and on those persons in active concert or participation with them who receive actual notice of the order by...

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