Court of Appeals Spoils Plaintiff’s Cause of Action-Davis Dissents

In Teel v Allstate Insurance, __Mich App__; __NW2d___ (2009), the Court of Appeals held that Michigan does not recognize a cause of action for spoliation of evidence. In Teel, Plaintiff lost his wife in an apartment fire. While he was in the hospital recovering, Plaintiff’s landlord permitted an Allstate Insurance Co. representative into the apartment. Contrary to statute, Plaintiff did not receive notice that the inspector would be allowed into the apartment. During the inspection, the investigator removed items from the apartment and altered the scene. Plaintiff alleged that these actions resulted in spoliation of evidence of the fire’s origin and resulted in hindering Plaintiff’s ability to succeed in litigation against the landlord relating to the fire. The trial court granted summary disposition in favor of Defendant, holding that plaintiff failed to state a claim under which relief could be granted because Michigan did not permit a cause of action for spoliation of evidence.

The Court of Appeals agreed. The court reasoned that such a cause of action has not been recognized in Michigan. Additionally, that the courts have no business developing such a cause of action because doing so would require defining the scope of the duty to preserve evidence. Noting that the Legislature has comprehensive Legislation addressing the insurance industry, including more than 1,000 sections in the insurance code evidences the Legislature’s intent to provide for and regulate the rights and remedies available to the public concerning business in the insurance arena. Alternatively, the court reasoned that even if there were such a cause of action in this state, it would be inapplicable in Teel because the Plaintiff failed to show that there were no other remedies available (citing criminal contempt as an example).

Judge Davis disagreed. In his dissent, Judge Davis framed the case as one calling for the court to fashion a remedy–not create an entirely new cause of action. Davis stated, “Although the cases in Michigan have, thus far, only addressed spoliation of evidence by litigants, spoliation of evidence is nevertheless recognized as a legally wrongful act. In other words, there is already a well-established right in Michigan of a litigant to the integrity of evidence in a lawsuit. It follows that the courts are not only empowered, but obligated to provide a remedy for violations of that right.” It is too soon to tell whether the Supreme Court will weigh-in on the battle of rights versus remedies.

US Supreme Court holds that justice should have recused himself

In the much-anticipated decision regarding judicial recusal, the United States Supreme Court ruled in Caperton v Massey Coal Co. that the West Virginia Supreme Court justice who received $3,000,000 in campaign contributions from a person who had a case pending before the Court should have recused himself because there was a "serious, objective risk of actual bias." The Court held that the petitioner's due process rights were violated when the W.Va. high court reversed the $50,000,000 trial court ruling in its favor, and instead, ruled in favor of the party who had contributed significant sums to one of the justice's recent campaign for election.

The majority opinion was particularly concerned by the "extreme" nature of this case, and considered the amount of campaign contributions in comparison to the total amount contributed and to the total amount spent in the election, along with the temporal relationship bewteen the campign contributions, the justice's election, and the pendency of this case. The Court noted that the "extraordinary contributions were made at a time when he [the donor] had a vested stake in the outcome" of the election due to his case that was being appealed to the West Virginia Supreme Court.

The dissenting opinion by Justice Roberts raises concerns about how to implement the standard of what gives rise to the "probability" or "appearance" of bias. The dissent lists 40 questions that courts will have to answer in order to decide a recusal issue, such as (#1) how much money is too much money, (#7) how long does the probability of bias last, and (#13) must the judge's vote be outcome determinative in order for his non-recusal to constitute a due process violation?

Michigan COA rejects foreign divorce entered without due process

The Court of Appeals reversed a Michigan trial court's decision to recognize a foreign divorce in Tarikonda v Pinjari (unpublished decision). In that case, the parties are Muslim citizens of India who married in India, then moved to Michigan. The parties had one child, and when they separated, the wife stayed in Michigan with their son while the husband moved to New Jersey. At some point, the husband went to India and obtained a divorce under the Muslim personal law through the procedure known as the "triple talaq." Under Muslim law, a husband may summarily divorce his wife by pronouncing language such as, "I divorce thee," three times.

The month following the triple talaq divorce, the wife filed for divorce in Michigan. The husband moved to dismiss the complaint based on the existing divorce judgment from India. He presented a divorce certificate from India. The trial court dismissed the wife's divorce complaint, and instructed her to register the Indian divorce in Michigan and file a separate complaint for custody and child support.

The Court of Appeals held that the triple talaq violated the wife's constitutional rights and refused to affirm the trial court's recognition of the foreign divorce judgment because the wife did not have prior notice of the husband's pronouncement of the triple talaq, she was not represented by an attorney and had no right to be present at the pronouncement, and there was no opportunity to be heard on the merits.

Why aren't there more conflicts panels?

Over the years, I have observed that there are many times when the Court of Appeals in a published decision does not acknowledge a prior published opinion that is on point, or disagrees with a prior published opinion. In those instances, the later panel is supposed to call a conflicts panel under MCR 7.215(J), but that does not always happen. It seems that the later court's failure to convene a conflicts panel does a disservice to the parties, and all the litigants whose cases might be affected by the conflict.

For instance, in Froling Revocable Living Trust v Bloomfield Hills Country Club, a published opinion from April 9, 2009, the Court of Appeals recognized a previous conflict in Court of Appeals' published decisions on the issue of whether the Supreme Court's decision in Garg v Macomb County Community Mental Health Services regarding the continuing violations doctrine applied to all cases (including the nuisance and trespass case at issue in Froling) or only to civil rights cases (the issue presented by Garg). The published Court of Appeals' decisions after Garg disagreed on whether Garg abrogated the doctrine for all cases or just for civil rights employment discrimination cases. Because the later panels of published decisions failed to convene a conflicts panel, the Court of Appeals in Froling decided that it was bound by the earlier published decisions, and thus, the continuing violations doctrine has been abrogated for all cases in Michigan. Based on the reasoning of Froling, any time the Court of Appeals fails to convene a conflicts panel when a later published opinion does not follow a prior published opinion, other panels must follow the earlier decision and disregard the latter decision.

Attorney faces criminal contempt

In the recent case of In re Contempt of Henry, a published opinion of the Court of Appeals, the Court addressed a criminal contempt matter arising from appellant, attorney Kathy Henry’s, involvement with her brother, defendant Charles Henry’s, post-divorce judgment child support enforcement case. The trial court held that the attorney committed criminal contempt based on a series of violations, including: “violations of the Michigan Rules of Professional Conduct, committing perjury, affirmatively lying to the court and lying to the court by omission, violating court orders, and failing to deliver and fully account for the funds at issue.” The trial court sentenced the attorney to two days in jail, a fine in the amount of $7,500, and attorney fees.

Among the many issues included in the attorney's appeal, the attorney challenged the $7,500 fine on the ground that the penalty violated the ex post facto clauses of the United States and Michigan Constitutions. The amount of fine available under the criminal contempt statute changed while the attorney's contempt case was pending. The new legislation changed the maximum contempt fee from $250 to $7,500. MCL 600.1715(1). The attorney argued that her contemptuous acts occurred before March 30, 2007, so it violated her rights to fine her $7,500 for her conduct.

The Court of Appeals held that the “retroactive application of the amended version of MCL 600.1715 enhancing the fine recoverable from appellant violates constitutional ex post facto prohibitions by increasing the level of punishment applicable when appellant committed her criminal contempt before the amendment.” The Court vacated the $7,500 fine and remanded the case for compliance with the prior version of MCL 600.1715. The Court affirmed on all other grounds.

Attorney judgment rule going to trial

In Shannon v Foster Swift Collins & Smith, P.C., former clients brought a legal malpractice suit against the law firm and attorney who represented them in a real estate matter. The circuit court granted the law firm's motion for summary disposition on the ground that the attorney-judgment rule should shield the attorney from malpractice because he gave legal advice in good faith, even though the advice may not have been correct.


The Court of Appeals disagreed with the circuit court and reversed its grant of summary disposition. The Court stated that regardless of whether the attorney based his advice on well-recognized Michigan law, the standard of care still required him to function as an advocate for his clients. In this case, the attorney’s firm represented every bank involved in the real estate transaction, and failed to disclose one of the potential conflicts of interest to his clients. The attorney then convinced his clients to go through with the deal by stating that they would be held to the rent payments under the unsigned contract regardless of their actions. The Court of Appeals held that whether the attorney was acting in a manner consistent with the fiduciary standard of care depending on what a reasonable attorney would have done under the circumstances – a determination that must be made by the jury. Based on the circumstances of this case, the Court reversed and remanded the matter to the circuit court to be tried before a jury. [Judge Fitzgerald would have affirmed the circuit's decision].

Non-refundable Retainers Do Not Violate the Ethics Rules

The Supreme Court issued an order on the long-awaited non-refundable retainer case pending before it in Cooper v Attorney Grievance Commission. In that case, the client hired an attorney to represent her in a divorce action. The attorney charged a $4,000 nonrefundable retainer and her fee agreement with the client stated that the $4,000 was a “minimum fee.” In exchange for the minimum fee, the attorney would work on the client’s case according to her standard hourly rates without any additional fee. Once the attorney’s work exceeded the minimum fee, then the client would be obligated to pay for those additional hours. The fee agreement also stated that “Client understands that NO portion of the MINIMUM FEE referred to above is REFUNDABLE to the client, under any circumstances.”

When the client decided against going through with her divorce before her attorney had worked $4,000 worth of hours, the client demanded a refund. Although the attorney gave her a partial refund (contrary to the terms of the fee agreement), the client filed a grievance against the attorney. The hearing panel of the attorney discipline board dismissed the grievance complaint, but the Attorney Grievance Commission pursued the case and issued an order sanctioning the attorney for charging a nonrefundable retainer. The Grievance Commission ruled that the nonrefundable retainer agreement violated MRPC 1.5 (reasonable fees) and MRPC 1.16 (safekeeping of client property).

The Supreme Court’s order stated that the attorney’s fee agreement “unambiguously provided that the [attorney] was retained to represent the client and that the minimum fee was incurred upon execution of the agreement, regardless of whether the representation was terminated by the client before billings at the stated hourly rate exceeded the minimum.” Accordingly, the Supreme Court held that the non-refundable retainer in this case did not violate the ethics rules. Justice Kelly concurred with the Court’s decision but wrote separately to note that fewer grievances might be filed if an attorney’s nonrefundable fee agreement “designate[s] the number of hours the attorney will work without additional charge, and specify an hourly rate to be charged thereafter.”