Michigan Bell Telephone Co. v. Sfat

• Decision Date: 27 July 1989
• Docket Number: Docket No. 101077
• Citation: 442 N.W.2d 720,177 Mich.App. 506
• Parties: , 4 IER Cases 1104 MICHIGAN BELL TELEPHONE COMPANY, Plaintiff-Appellee, v. Tiberiu F. SFAT, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 720

442 N.W.2d 720

177 Mich.App. 506, 4 IER Cases 1104

MICHIGAN BELL TELEPHONE COMPANY, Plaintiff-Appellee, v. Tiberiu F. SFAT, Defendant-Appellant.

Docket No. 101077.

Court of Appeals of Michigan.

Submitted Jan. 10, 1989.

Decided June 7, 1989.

Released for Publication July 27, 1989.

Craig A. Anderson, Detroit, for plaintiff-appellee.

Roberta Kyselka Sarkis, Mt. Clemens, for defendant-appellant.

Before MAHER, P.J., and CYNAR and GRIFFIN, JJ.

PER CURIAM.

Defendant appeals as of right from the May 15, 1987, order of the Wayne Circuit Court entering judgment in accordance with an earlier consent agreement of the parties and imposing sanctions against both defendant and his attorney. We affirm.

Plaintiff Michigan Bell Telephone Company commenced this action in March of 1984 to recover sales commissions and cash advances which were allegedly fraudulently obtained by defendant, a former employee of Michigan Bell. On two occasions before commencing this suit, Michigan Bell had discharged defendant because of "unauthorized advertising" activity. Each time defendant filed for unemployment benefits. Although Michigan Bell protested his entitlement to benefits, the issue was ultimately decided against the employer by the Michigan Employment Security Commission. Defendant never sought judicial review of the agency decisions.

On March 17, 1987, Michigan Bell filed a motion to exclude certain evidence and a motion for summary disposition on the breach of contract claim for the cash advances paid to defendant. On the same date, defendant moved to strike the fraud claim, asserting that the MESC proceedings operated to bar the claim under the doctrines of res judicata or collateral estoppel. The trial court granted Michigan Bell's motion for partial summary disposition and granted its motion to exclude evidence in part. The court initially took defendant's motion under advisement and, on a later date, denied the same, holding that the MESC decisions do not have "the same quality or standard as many judgments."

Trial in the matter was scheduled to commence on March 19, 1987. Prior to the start of the proceedings, defense counsel informed the court that defendant had been in the courtroom that morning but had left because he was ill and "did not feel that he could appear at the trial today." Apparently, defendant was suffering a series of intestinal problems around this time. Defense counsel requested that the court adjourn the trial to an unspecified date. The court responded that it was without authority to adjourn the matter outright but would grant a continuance until the following Monday, i.e., March 23, 1987. Before concluding the day's proceeding, defense counsel was allowed to place on the record his belief that there was a breakdown in the attorney-client relationship due to defendant's refusal to pay attorney fees and to accept counsel's recommendations regarding settlement.

Immediately thereafter, the attorneys for both parties appeared before Chief Judge Richard C. Kaufman of the Wayne Circuit Court to voice their respective positions on defendant's request for adjournment. Defense counsel also requested that he be allowed to withdraw from the case. The chief judge denied the adjournment and withdrawal requests, and ordered the matter to continue on March 23. It was also ordered that defendant appear on that date with documentation from a physician indicating the nature and extent of his purported illness.

Defendant did not appear as ordered on March 23. However, because the trial judge was ill, the case was postponed until the next day. On March 24, defendant did not appear himself but his wife did. She brought a letter from a physician, dated March 23, 1987, stating that defendant had an ileostomy which was creating problems and that, while it could be controlled with medication over a period of time, defendant's activity in the interim had to be restricted. The case was postponed until April 6, 1987. Defense counsel renewed, but the court denied, his request to withdraw.

On April 6, defendant's wife again appeared in his stead. She asserted that he was still ill. Counsel for Michigan Bell challenged that assertion. He stated he had reason to believe that defendant's condition was not as his wife claimed but that defendant was, in fact, at his place of business on March 23, 1987. Defendant's wife acknowledged that he had been going to work. After the trial judge stated that "as far as I'm concerned the trial should go or you [Michigan Bell] should get a judgment today," defense counsel stated that he was prepared for trial. The case was recessed at 10:30 a.m. to allow the parties to take the adjournment matter up with the chief judge.

The chief judge again denied defendant's request for adjournment and, faced with an immediate trial, the parties negotiated a settlement of the case. Court reconvened later that afternoon and the terms of the settlement were placed on the open record. Defendant was in attendance at this time. As part of the settlement, the proceeds of a redemption order, which were owed to defendant and which arose from an unrelated workers' disability compensation claim, were to be deducted from the agreed upon settlement amount. The trial court approved the terms of the settlement and directed preparation of an order outlining those terms.

On April 7, 1987, Michigan Bell's attorney forwarded to defense counsel a proposed settlement agreement and stipulation for entry of judgment. Also forwarded was a workers' compensation check drawn by Michigan Bell payable to defendant which was to be endorsed over to Michigan Bell by defendant. Subsequently, defense counsel notified Michigan Bell that defendant had changed his mind and had refused to sign both the settlement agreement and the check.

On May 1, 1987, Michigan Bell filed a motion for entry of judgment. Sometime thereafter, defendant retained new counsel to represent him. On May 14, 1987, that counsel filed objections to Michigan Bell's motion, one of which was that the fraud and breach of contract issues had been raised and adjudicated before the MESC on two prior occasions and, therefore, Michigan Bell should be barred from bringing the instant action under the doctrine of collateral estoppel.

At a hearing on May 15, 1987, the trial court ordered entry of judgment and, pursuant to Michigan Bell's request, imposed sanctions on both defendant and his attorney in the amount of $1,500 each.

Defendant then filed motions for a stay of execution and an appeal bond. The trial court denied those motions at a hearing held on July 17, 1987. This appeal as of right followed.

As his first issue on appeal, defendant claims the trial court erred in holding that an MESC decision does not have the same quality or standing as many judgments and, therefore, cannot be used as collateral estoppel in the circuit court. Since the time defendant filed this claim of appeal, that issue, in a different context, was decided adversely to his position in Storey v. Meijer, Inc., 431 Mich. 368, 429 N.W.2d 169 (1988). The trial court did not err in its holding.

Defendant next raises several arguments concerning the imposition of sanctions against him by the trial court. We find that none of the arguments warrant reversal.

The court rule authorizing the imposition of sanctions, MCR 2.114, provides in pertinent part:

(D) Effect of Signature. The signature of an attorney or party, whether or not the party is represented by an attorney, constitutes a certification by the signer that

(1) he or she has read the pleading;

(2) to the best of his or her knowledge, information, and belief formed after reasonable inquiry, the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and

(3) the pleading is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

(E) Sanctions for Violation. If a pleading 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 pleading, including reasonable attorney fees.

In the instant case, the trial court properly assessed costs against both defendant and his newly retained counsel because, had the attorney made reasonable inquiry, he would have learned that the collateral estoppel defense was previously raised and rejected. See Lloyd v. Avadenka, 158 Mich.App. 623, 630-631, 405 N.W.2d 141 (1987), lv. den. 428 Mich. 905 (1987). Although defense counsel allegedly made investigative efforts to determine whether the issue had already been adjudicated, we do not believe this excuses his conduct. Assuming the defense had not been raised previously, counsel should have been aware that it was waived because defendant failed to assert it in his first responsive pleading. MCR 2.116(D)(1). Counsel offered no explanation for the untimeliness of the defense.

Moreover, because defendant was present when the terms of the settlement agreement were read in open court and he voiced no objections thereto, we must conclude that it met his approval. He did not provide the trial court below, or this Court on appeal, with an adequate explanation for his subsequent refusal to sign the consent decree. Defendant's objections to entry of judgment all involved matters which were, or should have been, within his knowledge or contemplation at the time he agreed to the settlement. Further, it does not matter that defendant's objections were not filed for an improper purpose. Lloyd, supra, 158 Mich.App. at p. 629, 405 N.W.2d 141.

Contrary to what defendant asserts, we do not believe MCR...