Hanton v. Hantz Fin. Servs., Inc.

• Citation: 306 Mich.App. 654,858 N.W.2d 481
• Decision Date: 23 September 2014
• Docket Number: Docket No. 314889.
• Parties: HANTON v. HANTZ FINANCIAL SERVICES, INC.
• Court: Court of Appeal of Michigan (US)

306 Mich.App. 654

858 N.W.2d 481

HANTON

v.HANTZ FINANCIAL SERVICES, INC.

Docket No. 314889.

Court of Appeals of Michigan.

Submitted Sept. 4, 2014, at Detroit.

Decided Sept. 23, 2014, at 9:00 a.m.

McGraw Morris PC (by Thomas J. McGraw, Troy and Christopher J. Raiti, Southfield) and Scarlett, Gucciardo & Hirsch, PA (by Scott D. Hirsch, Bradford M. Gucciardo, and Charles E. Scarlett), and Giarmarco Mullins & Horton PC, Troy, (by Larry W. Bennett ) for plaintiff.

Jaffe Raitt Heuer & Weiss PC, Southfield, (by Peter M. Alter, Brian G. Shannon, and James W. Rose ) for defendants Allen J. Klein, Edward E. Vettel, Jr., and Stephen R. Zurawski.

The Miller Law Firm, PC, Rochester, (by E. Powell Miller and Brian E. Etzel ), for defendants Hantz Financial Services, Inc., Hantz Group, Inc., John F. Beebe, John F. MacIntosh, Lisa C. McClain, Duane A. McCollum, Jamie M. Racine, Michael O. Reid, Jeffrey H. Soper, Charles F. Tourangeau, Renee A. Yaroch, and John R. Hantz.

Before: HOEKSTRA, P.J., and WILDER and FORT HOOD, JJ.

Opinion

FORT HOOD, J.

Plaintiff appeals by leave granted from the trial court's order denying her motion for class certification, striking class allegations from plaintiff's amended complaint, and allowing plaintiff's action to proceed only as an individual action. We reverse and remand for further proceedings.

This class action involves various claims brought by plaintiff, Anne M. Hanton, as trustee of the Anne M. Hanton Trust dated May 18, 2006, against defendant Hantz Financial Services, Inc. (HFS), and various other defendants who allegedly controlled HFS, to recover investment losses arising from HFS's sale of promissory notes issued by Medical Capital Holdings, Inc. (Med Cap), and its subsidiary Medical Provider Funding Corporation V (Med Cap V). Plaintiff alleged that Med Cap and Med Cap V were engaged in a Ponzi scheme and that defendants failed to exercise due diligence regarding the matter.

Plaintiff initially filed this action in the Montmorency Circuit Court in October 2011. In an amended complaint filed on October 19, 2011, plaintiff alleged that another civil action arising out of the same occurrence, Bergin v. Hantz Fin. Servs., Inc. (Oakland Circuit Court Docket No. 10–114541–NZ) (the “Bergin case”), was previously filed in the Oakland Circuit Court, where it was still pending. Plaintiff alleged that she was filing the class action individually and on behalf of all persons and entities to whom HFS publically offered, distributed, and sold promissory notes issued by Med Cap and Med Cap V, except for defendants, various individuals related to defendants, and Raymond Bergin.

Raymond Bergin was the plaintiff in the Bergin case. Similar to this case, Bergin filed a complaint against the defendants and sought class certification to represent the interests of various individuals who allegedly suffered investment losses involving HFS's sale of promissory notes issued by Med Cap. Bergin's complaint was filed in the Oakland Circuit Court in October 2010, and was amended in November 2010. The defendants filed a notice under MCR 3.501(B)(2), seeking to strike the class action allegations on the basis of Bergin's failure to timely move for class certification. At a hearing on February 9, 2011, the trial court agreed that Bergin had failed to timely move for class certification and denied Bergin's motion for an extension of time. On March 10, 2011, the court entered an order granting Bergin's motion to dismiss, without prejudice, subject to the following two conditions:

(1) Any rulings and/or orders made by this Court in the case of Raymond L. Bergin, on his own behalf and on behalf of those similarly situated v. Hantz Financial Inc., et al 2010–114541–NZ, shall be deemed final and binding in any refiled case where Plaintiff Bergin is a named Plaintiff individually and/or is a class member and the same or substantially similar claims are made against the named Defendants herein; (2) Costs and reasonable attorney fees shall be paid and are awarded to Defendants for defense of the herein claims Plaintiff now seeks to dismiss.

The Bergin case was ultimately dismissed in November 2011 pursuant to a stipulated order that was expressly made subject to the terms of a settlement agreement entered into by Bergin and the defendants and “for the reasons set forth on the record and stated set [sic] in the Opinion and Order dated March 10, 2011[.]” The settlement agreement further provided:

5. Refiled Class Action .... [N]otwithstanding Defendants' position that any future attempt to pursue class claims similar to Bergin's putative class claims (that were stricken) is improper, Bergin hereby agrees not to opt out of, or consent to be excluded from, any refiled case, whether currently pending or not, where Bergin would qualify as a class member and where the same or substantially similar claims are made against the named Defendants herein. In such an event, Bergin will not participate as, or apply for the status of, lead plaintiff, and shall be entitled to his pro rata portion of any benefits or award he would otherwise be entitled to as a class participant.

6. Bergin acknowledges that, consistent with the March 10, 2011 Opinion and Order, “Any rulings and/or orders made by this Court in the case of Raymond L. Bergin, on his own behalf and on behalf of those similarly situated v. Hantz Financial Inc., ... shall be deemed final and binding in any refiled case.”

Shortly before the Bergin case was dismissed, defendants in this case moved for a change of venue to Oakland County. In December 2011, the Montmorency Circuit Court held that venue was proper in Montmorency County if plaintiff pursued this action as an individual. If plaintiff wanted to proceed with a class action, venue would be transferred to Oakland County. In January 2012, plaintiff filed a motion for class certification in the Montmorency Circuit Court, and on February 13, 2012, the Montmorency Circuit Court entered a stipulated order transferring venue to the Oakland Circuit Court, where the case was assigned to the same judge who dismissed the Bergin case.

In September 2012, defendants filed a joint response to plaintiff's motion for class certification in which they argued, in part, that a class action was barred by the trial court's March 10, 2011 order in the Bergin case. Following a hearing, the trial court denied plaintiff's motion for class certification and struck the class action allegations. The court determined that the March 10, 2011 order in the Bergin case, which denied the request to extend the time for filing a motion for class certification because Bergin did not meet the time requirements of MCR 3.501(B), was binding on plaintiff in this case. The court further held:

Having reviewed Confidential Settlement Agreement and Mutual Release, this Court finds that the unambiguous language states that Bergin (1) agreed not to opt out of, or consent to be excluded from any refiled cases where he would qualify as a class member and where the same or substantially similar claims are made against defendants and (2) acknowledged that any rulings in the Bergin case are deemed final and binding in any refiled case. When this Court considers plaintiff's decision to expressly exclude Plaintiff Bergin in the class allegations, it is left with the distinct impression that plaintiff was attempting to avoid the ramifications of the rulings in the Bergin case and specifically the ruling that plaintiff's retained counsel failed to file a timely motion to certify the class action pursuantto MCR 3.501(B)(1). In the Bergin case, defendants filed a notice pursuant to MCR 3.501(B)(2) to strike class action allegations and to allow the lawsuit to continue against the named parties alone. Additionally, this Court denied plaintiff's motion to allow filing of class certification motion beyond ninety-one days pursuant to MCR 3.501(B)(1) based on excusable negligence. Plaintiff failed to direct this Court's attention to any statute, court rule, or case law to support that it could merely file a subsequent class action with a new named plaintiff when the prior attempt to certify the class contains both a failure to certify within 91 days and an order that all rulings are binding on future cases based on substantially similar claims made against named defendants. As such, this Court finds that it is appropriate to strike the class allegations from plaintiff's amended complaint and to allow this matter may [sic] proceed as an individual action only based on the ruling in the Bergin case.

Plaintiff thereafter sought leave to appeal, which was granted by this Court.¹ On appeal, plaintiff argues that the trial court erred by denying plaintiff's motion for class certification and striking the class allegations in plaintiff's complaint. Plaintiff asserts that the trial court erroneously determined that her class action was barred because Bergin failed to comply with MCR 3.501(B)(1)(a), or because of any order entered in the Bergin case. We agree.

“Interpreting the meaning of a court order involves questions of law that we review de novo on appeal.”

Silberstein v. Pro–Golf of America, Inc., 278 Mich.App. 446, 460, 750 N.W.2d 615 (2008). We review the proper interpretation and application of a court rule, including MCR 3.501, de novo. Henry v. Dow Chem. Co., 484 Mich. 483, 495, 772 N.W.2d 301 (2009). “The analysis a court must undertake regarding class certification may involve making both factual findings and discretionary decisions.” Mich. Ass'n of Chiropractors v. Blue Cross Blue Shield of Mich., 300 Mich.App. 551, 559, 834 N.W.2d 148 (2013). “We review the trial court's factual findings for clear error and the decisions that are within the trial court's discretion for an abuse of discretion.” Id. The burden of establishing that the requirements for a certifiable class are satisfied is on the party seeking to maintain the certification. Tinman v. Blue Cross & Blue Shield of Mich., 264 Mich.App....