STATE OF MICHIGAN
COURT OF APPEALS
ROUMEL SHEENA and MAJIDA SHEENA, UNPUBLISHED
April 14, 2016
Plaintiffs-Appellants,
and
MAJID SHEENA,
Plaintiff,
v No. 326400
Wayne Circuit Court
NADER ISSA and LIQUOR EXPRESS LC No. 13-013644-CB
LIVERNOIS, INC,
Defendants-Appellees.
ROUMEL SHEENA and MAJIDA SHEENA,
Plaintiffs-Appellants,
and
MAJID SHEENA,
Plaintiff,
v No. 326750
Wayne Circuit Court
NADER ISSA and LIQUOR EXPRESS LC No. 13-013644-CB
LIVERNOIS, INC,
Defendants-Appellees.
Before: GLEICHER, P.J., and CAVANAGH and FORT HOOD, JJ.
PER CURIAM.
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Plaintiffs, Roumel and Majida Sheena, appeal as of right a final judgment of the trial
court ordering that no damages would be awarded and dismissing plaintiffs’ action for payment
of a promissory note. The named defendants in this matter were Liquor Express Livernois, Inc.
(Liquor Express) and Nader Issa. On appeal, plaintiffs argue that the trial court clearly erred in
its finding that no damages were proven by plaintiffs, that the trial court committed several
evidentiary errors during the bench trial, and that the trial court erred in denying summary
disposition on the issue of damages. We reverse and remand for further proceedings consistent
with this opinion.
This case arises from a series of financial transactions between plaintiff, Roumel Sheena,1
and defendant Nader. Nader owned Jim-George, a liquor store, along with his brother Nasser
Issa. Sheena was Nader’s accountant for personal and business matters, and had been for many
years. In 2001, Sheena loaned Nader and Nasser $40,000. The loan was secured by real
property and collateral in Jim-George. In 2005, Nader sold Jim-George. At the same time as the
sale, Sheena released his loan and security interest in Jim-George and received a check for
$40,000, notated “payoff promissory note.” In addition, Sheena entered into a new promissory
note with Nader for $40,000, secured by Nader’s new business, defendant Liquor Express. The
parties disputed the circumstances surrounding the 2005 transaction, leading to this lawsuit. The
trial court granted plaintiffs’ summary disposition regarding liability, and held a bench trial on
the issue of damages. After trial, the court held that there were no damages, and dismissed the
case.
Plaintiffs first argue that the trial court clearly erred in finding that there was no damages.
We disagree. We review factual findings by the trial court for clear error. MCR 2.613(C). Clear
error occurs when “the reviewing court is left with a definite and firm conviction that a mistake
has been made.” Douglas v Allstate Ins Co, 492 Mich 241, 256-57; 821 NW2d 472 (2012)
(citation omitted). After the bench trial, the court held that the 2005 payment satisfied
defendants’ obligation on the 2005 note, holding that the 2005 transaction constituted a mere
collateral shift between the 2001 note and the 2005 note. Based on the evidence presented at
trial, we conclude that the trial court did not clearly err in finding that plaintiffs failed to prove
damages. However, our disposition of plaintiff’s remaining arguments on appeal will require the
trial court to render judgment in this case based on additional evidence. Thus, we decline to
address plaintiff’s specific assertions regarding this issue in detail at this time.
To assist the trial court on remand, however, we do address plaintiff’s assertion that in
the joint pretrial order, defendants stipulated to owing either $6,514.72 or $38,484.96. Indeed,
that admission is included in the joint pretrial order: “Depending on the Court’s findings on the
evidence, Defendants owe either $6,514.72 or $38,484.96 to Plaintiffs.” In the order, defendants
stated that, even assuming no cash payments were made on the 2001 loan, the most that would
be owed as of 2005 was $40,000, plus $26,000 in interest (fifteen percent annually). The 2005
payment satisfied $40,000 of that obligation, in addition to the $7,000 in cash payments made in
1
For the purposes of this opinion, Roumel Sheena will be referred to as “Sheena,” as Majida
Sheena was not actively involved in the case or the factual background.
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2011 and 2012. The obligation would be further reduced if the trial court believed Nader’s and
Nasser’s testimony regarding the cash payments made between 2001 and 2005. During closing
arguments, defense counsel explained that, in deducting 26 $700 cash payments made between
2001 and 2005, the most that could be owed by defendants would be $6,514.72. However,
defense counsel also asserted that the parties agreed the entire obligation would be satisfied by
the 2005 payment plus the $7,000 payments in 2011 and 2012, indicating that Sheena accepted a
lesser amount in interest. The court, in making its findings, stated that defendants’ position was
that “there [were] no damages in this and/or at worse case [sic] scenario $6,000[.]”
Unfortunately, defendants do not address this issue in their brief on appeal. It does
appear that the trial court’s holding, and defense counsel’s position at trial, was contrary to
defendant’s statement in the joint pretrial order. On appeal, plaintiffs refer to the statement as an
“admission,” but provide no legal argument for its effect. The appellant may not merely
announce his position and leave it to this Court to discover and rationalize the basis for his
claims, nor may he give issues cursory treatment with little or no citation of supporting authority.
Bronson Methodist Hosp v Mich Assigned Claims Facility, 298 Mich App 192, 199; 826 NW2d
197 (2012).
However, the statement in the joint pretrial order does appear to be a stipulation by
defendants. Parties to a civil action may stipulate to the facts of their case, see MCR 2.116(A),
and regarding trial proceedings, see MCR 2.507(G). This Court has suggested that a stipulation
may not be set aside unless there is evidence of mistake, fraud, or unconscionable advantage.
Limbach v Oakland Co Bd of Co Rd Com’rs, 226 Mich App 389, 394; 573 NW2d 336 (1997).
The trial court did not address whether defendants could argue a position that was inconsistent
with the joint pretrial order, even though it was raised by plaintiffs at trial. Given the trial court’s
and parties’ failure to adequately address this issue, we conclude the court must consider
defendants’ statement regarding damages on remand and determine its legal effect on
defendants’ position.
Plaintiffs next argue that the trial court erred in excluding attorney Peter Abbo as a
witness. Abbo represented defendants in the 2005 transaction, and later filed this action on
behalf of plaintiffs. Upon realizing the conflict, Abbo withdrew from representation, but was
subpoenaed as a fact witness regarding the 2005 transaction. The trial court determined that
attorney-client privilege existed, had not been waived by defendants, and released Abbo as a
witness. We conclude that defendants waived attorney-client privilege regarding defendants’
understanding of the 2005 loan documents. Further, attorney-client privilege does not attach to
interactions with third parties or to communications intended to be disclosed to a third party.
The trial court erred in determining that attorney-client privilege applied in these circumstances,
and abused its discretion in releasing Abbo from his subpoena to testify.
A trial court’s decision to admit evidence is reviewed for an abuse of discretion.
However, when the trial court’s decision to admit evidence involves a preliminary question of
law, the issue is reviewed de novo, and admitting evidence that is inadmissible as a matter of law
constitutes an abuse of discretion. Barnett v Hidalgo, 478 Mich 151, 158-59; 732 NW2d 472
(2007). “An abuse of discretion occurs when the decision results in an outcome falling outside
the range of principled outcomes.” Id. (citation omitted). The question whether the attorney-
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client privilege applies to a communication is a question of law that this Court reviews de novo.
Leibel v Gen Motors Corp, 250 Mich App 229, 236; 646 NW2d 179 (2002).
“The attorney-client privilege attaches to direct communication between a client and his
attorney as well as communications made through their respective agents. The scope of the
attorney-client privilege is narrow, attaching only to confidential communications by the client to
his advisor that are made for the purpose of obtaining legal advice.” Reed Dairy Farm v
Consumers Power Co, 227 Mich App 614, 618; 576 NW2d 709 (1998); see also Leibel, 250
Mich App at 236. In Co-Jo, Inc v Strand, 226 Mich App 108, 112; 572 NW2d 251 (1997),
superseded on other grounds by MCR 7.208(I), our Court further explained that “[t]he purpose of
the attorney-client privilege is to permit a client to confide in the client’s counselor, knowing that
the communications are safe from disclosure.”
In Howe v Detroit Free Press, Inc, 440 Mich 203, 223-226; 487 NW2d 374 (1992), the
Michigan Supreme Court set forth a balancing test for determining a waiver of privilege in the
context of discovery. There is a presumption in favor of preserving the privilege and the burden
of establishing a waiver rests on the party seeking discovery of the privileged material. Id. at
223. To show waiver, that party must demonstrate that the material to be discovered was
relevant to the case and that the party’s assertion of the privilege seriously undermined the ability
to defend against the case. Id. at 225-226. If the court permits discovery of the privileged
material, it “should be narrowly limited to those portions of the privileged material that bear
directly on the issues at hand.” Id. at 223.
Additionally, attorney-client privilege narrowly attaches to direct communication
between an attorney and a client. Reed Dairy Farm, 227 Mich App at 618. It has been held that
“[o]nce otherwise privileged information is disclosed to a third party by the person who holds the
privilege, or if an otherwise confidential communication is necessarily intended to be disclosed
to a third party, the privilege disappears.” Liebel, 250 Mich App at 242. Additionally, “[a]
communication is not confidential if it is made for the purpose of disclosure to third parties.”
Yates v Keane, 184 Mich App 80, 83; 457 NW2d 693 (1990).
Plaintiffs assert, first, that defendants waived the attorney-client privilege. Indeed, Nader
testified that he considered the $40,000 payment in 2005 a full satisfaction of the 2001 debt.
However, this explanation does leave a logical gap in the evidence: why would the parties enter
into the 2005 transaction if it was immediately being paid? Nader’s explanation at trial and
throughout the proceedings was that he believed the documents he signed in 2005 were to pay
off the loan, not to start another loan. Nader specifically attributed this to the advice of his
attorney, Abbo. Whether Nader knowingly signed the documents was relevant to the
proceedings, and defendants’ assertion of privilege effectively prevented plaintiffs from asserting
their claim. Nader’s claim that he did not understand the 2005 transaction was critical to his
explanation of the events. In order to find his version of the events “plausible,” it was necessary
to conclude, minimally, that Nader did not understand the documents he was signing. Without
Abbo’s testimony, plaintiffs could not rebut Nader’s claim regarding his understanding. Thus,
Nader waived his privilege as it related to his understanding and comprehension of the
documents. In addition, we agree with plaintiffs that Abbo could also have testified regarding
the interactions involving Sheena, as privilege would not attach in the presence of a third party or
to communications intended to be disclosed to a third party. Liebel, 250 Mich App at 242.
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Defendants assert that there was no waiver because the assertion of privilege did not
undermine plaintiffs’ ability to present their case. Defendants assert that Abbo could provide no
further documentary evidence, and that Abbo’s testimony would have further supported the
court’s holding that the transaction constituted a “collateral shift.” However, defendants cannot
provide a plausible explanation for why the parties would have entered into the 2005 transaction
if the loan were going to be immediately paid off unless Nader’s statement regarding Abbo’s
representation was true. This constitutes an important fact in the case, and failure to allow
Abbo’s testimony severely impaired plaintiffs’ defense on that issue.
Defendants also claim that plaintiffs failed to provide an offer of proof of what Abbo
would testify pursuant to MRE 103(a)(2). We disagree. The record showed the substance of
what Abbo’s testimony would be, especially considering the affidavit presented by plaintiffs. It
was clear that defendants and the trial court understood the substance of Abbo’s potential
testimony. Indeed, it appears defendants make this argument in an attempt to circumvent
plaintiffs’ assertion that Sheena’s presence destroyed attorney-client privilege during the
transaction as defendants provide no other argument in regard to plaintiffs’ argument on that
issue.
Accordingly, the trial court erred in holding that attorney-client privilege existed and was
not waived. While the trial court made its decision based on the lack of documentary evidence at
trial, and, as defendants point out, Abbo will not be able to provide further documentary
evidence, we believe Abbo’s testimony may still impact the trial court’s findings. Abbo’s
testimony would potentially discredit a significant portion of Nader’s testimony, and lend
credibility to Sheena. This shift could certainly convince the trial court that it was more likely
than not that the parties agreed to enter into a new note for $40,000 in 2005. See Hannay v Dept
of Transp, 497 Mich 45, 79; 860 NW2d 67 (2014). Thus, we conclude that the trial court should
consider Abbo’s testimony in making its determination.
Plaintiffs next argue that the trial court erred in relying on its beliefs as to the alleged
Chaldean community practice of “street financing” in making its decision. We disagree. Again,
findings of fact by the trial court are reviewed for clear error. MCR 2.613(C).
In George v Travelers Indem Co, 81 Mich App 106; 265 NW2d 59 (1978), this Court
discussed the seriousness of allowing prejudice against the ethnicity of a party to impact the
result of a case:
Even in the occasional case where racial, ethnic, or religious matters are
relevant to the issues, there is always the risk of incidentally arousing prejudice
and this Court abhors injecting the poison of prejudice into any legal proceeding.
The law is blind to differences in race, religion, and nationality. Appeals to
prejudice overt or covert have no place in the administration of justice. [Id. at
114.]
It is reversible error to deny the opposing party a fair trial by making irrelevant and inflammatory
ethnic allusions. Id. When ethnic allusions are made at trial, this Court must look at whether the
statements were relevant to the issues, and if not, whether they were calculated to arouse
prejudice. Id.
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After reviewing the record, we conclude that that trial court’s comments did not
constitute reversible error. Initially, we reject defendants’ assertion that there was evidence of
street financing in the record. While Nader did state, “[t]hat’s how you do interest on money in
the street,” there was no reference to the parties’ ethnicity in the record, except for during the
court’s holding after trial. After proofs and arguments, the court held that plaintiffs could not
prove damages, and particularly cited plaintiffs’ lack of documentary evidence as the basis for its
decision. The trial court did attribute the lack of documentary evidence to the practice of street
financing in Chaldean communities. However, the record shows that the basis for the trial
court’s holding was the lack of documentary evidence, not plaintiffs’ ethnicity. Regardless, as
the trial court’s opinions regarding the practices of a particular ethnicity were not necessary to its
holding, on remand, the trial court should refrain from making such statements.
Plaintiffs next argue that the trial court erred in denying their motion for summary
disposition on the issue of damages. We disagree. This Court reviews de novo a trial court’s
decision on a motion for summary disposition. Alcona Co v Wolverine Environmental Prod, Inc,
233 Mich App 238, 245; 590 NW2d 586 (1998). A motion for summary disposition under MCR
2.116(C)(10) “tests the factual sufficiency of the complaint.” Joseph v Auto Club Ins Ass’n, 491
Mich 200, 206; 815 NW2d 412 (2012). Summary disposition is proper where there is no
“genuine issue regarding any material fact.” Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d
817 (1999).
Prior to trial, defendants asserted that the 2005 payment satisfied the 2001 loan, and that
Nader did not understand the impact of the 2005 loan documents. Defendants relied on the
December 2005 check, which was notated “payoff promissory note.” Notably, the lack of a date
in the notation created ambiguity regarding the payment. Thus, we do not agree that there was
no question of fact regarding damages on the 2005 note. Addressing plaintiffs’ final argument
on appeal, should the trial court reach a different decision after remand, it should reevaluate its
award of case evaluation sanctions to ensure the appropriateness of the award.
Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ Elizabeth L. Gleicher
/s/ Mark J. Cavanagh
/s/ Karen M. Fort Hood
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