If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
RUTH CLARK and JAN CLARK, UNPUBLISHED
August 20, 2019
Plaintiffs-Appellees,
v No. 344676
Oakland Circuit Court
GARRATT & BACHAND, P.C., and C. LC No. 2017-161218-CZ
WILLIAM GARRAT,
Defendant-Appellants,
and
JOHN W. UNGER, P.L.L.C.,
Defendant.
Before: M. J. KELLY, P.J., and BOONSTRA and RIORDAN, JJ.
PER CURIAM.
Defendant, the law firm of Garratt & Bachand, P.C. (G&B), appeals by right the trial
court’s post-judgment order denying its motion for sanctions. We affirm.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
This case arises out of an attorney fee dispute that was ultimately resolved by arbitration.
The underlying litigation that resulted in the attorney fees claimed by G&B was complex, but for
the purposes of this appeal may be discussed in broad strokes. A member of plaintiffs’ family
was convicted of criminal sexual conduct related to his sexual assault of numerous foster and
adoptive children while they were in the care of plaintiffs and other relatives. One of the victims
subsequently filed a personal injury action against plaintiffs Ruth and Jan Clark and other
members of their family (together, the Clarks), under various theories of liability. G&B
represented at least one of the Clarks in the lawsuit, although the parties disputed whether G&B
had provided representation to plaintiffs themselves. Plaintiffs’ homeowners’ insurer filed a
separate declaratory judgment action against plaintiffs, arguing that the policy at issue did not
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provide coverage with respect to the personal injury action. G&B asserts that it was retained by
plaintiffs to defend them in the declaratory judgment action, while plaintiffs assert that Attorney
C. William Garratt, a member of G&B, represented them in that case in his individual capacity
rather than as an agent of G&B. In any event, the declaratory judgment action was unsuccessful
and the insurer was ordered to defend and indemnify plaintiffs in the personal injury case. The
personal injury case subsequently settled.
In 2017, G&B filed a demand for arbitration with the American Arbitration Association
(AAA), claiming that plaintiffs had not paid over $150,000 in attorney fees related to the two
lawsuits. This demand was based on a retainer agreement signed by plaintiffs in 2012 stating, in
relevant part, that “[a]ny dispute or disagreement arising between Client and Attorney . . . will be
determined and settled by arbitration in Oakland County, Michigan in accordance with the rules
of the American Arbitration Association . . . .” The agreement defined “Client” collectively as
“Ruth Clark and Jan Clark” (i.e., plaintiffs) and “Attorney” as including both G&B and another
law firm, John W. Unger, PLLC (Unger). Unger had also provided legal services to plaintiffs in
the personal injury case and had assigned to G&B its rights to collect fees for those services.
Plaintiffs answered G&B’s arbitration demand, but also filed a separate lawsuit against
G&B, alleging that the demand for arbitration was not valid for numerous reasons, including
fraud, malpractice, and the lack of an attorney-client relationship between plaintiffs and G&B.
The complaint also asserted that plaintiffs owed no unpaid legal fees. Plaintiffs’ complaint asked
the trial court to declare the arbitration demand invalid and to enjoin the arbitration from
proceeding; it also sought money damages, attorney fees, costs, and sanctions.
G&B moved the trial court to compel plaintiffs to arbitrate the issues raised in their
complaint in the context of the pending arbitration proceeding, and to stay the court proceeding
until an arbitration award had been rendered. The trial court granted the motion.
After an arbitration hearing, the arbitrator entered an award in favor of G&B and against
plaintiffs in the amount of $112,311.38. The trial court subsequently entered a judgment
confirming the award and dismissing plaintiffs’ complaint with prejudice.
Three weeks after the entry of the judgment, G&B filed a motion with the trial court
requesting that it sanction plaintiffs and their attorneys for filing a frivolous complaint. G&B
argued that plaintiff’s complaint made many false and groundless factual assertions, including
that G&B had never represented them in the personal injury case, that plaintiffs had never
received a bill for legal services, and that no agreement to arbitrate existed between the parties.
G&B further argued that plaintiffs had admitted the falseness of many of their allegations during
the arbitration. In response, plaintiffs argued that, although they had been ultimately
unsuccessful, their claims were not frivolous.
The trial court issued an opinion and order denying the motion, finding that (1) the
language of the arbitration award foreclosed G&B’s ability to request sanctions because the issue
of sanctions was either not raised during the arbitration or, having been raised, resulted in the
arbitrator declining to award sanctions; (2) the language of the judgment confirming the
arbitration award also foreclosed G&B’s ability to subsequently request sanctions; and (3) G&B
had failed to prove that plaintiff’s complaint was frivolous; specifically, the trial court found that
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“there are 83 allegations in the Complaint and maybe two of those allegations . . . may be
construed as being made without a reasonable basis.” The trial court accordingly denied G&B’s
motion for sanctions.
This appeal followed.
II. STANDARD OF REVIEW
We review for clear error a trial court’s decision whether to impose sanctions under
MCR 2.114. Guerrero v Smith, 280 Mich App 647, 677; 761 NW2d 723 (2008). “A decision is
clearly erroneous when, although there may be evidence to support it, we are left with a definite
and firm conviction that a mistake has been made.” We review de novo issues involving the
interpretation of statutes and court rules. Bullington v Corbell, 293 Mich App 549, 554; 809
NW2d 657 (2011). We review for an abuse of discretion a trial court’s determination that a
request for sanctions was untimely. Maryland Cas Co v Allen, 221 Mich App 26, 31; 561 NW2d
103 (1997).
III. ANALYSIS
G&B argues that the trial court erred by concluding that its request for sanctions was
precluded by the arbitration award and by the judgment, and by concluding that it had not shown
plaintiffs’ complaint to be frivolous. We disagree.
Sanctions may be awarded under MCR 2.114(D)1 for the filing of frivolous actions or
defenses. MCL 600.2591(3)(a) provides that a claim is frivolous if:
(i) The party's primary purpose in initiating the action or asserting the defense was
to harass, embarrass, or injure the prevailing party.
(ii) The party had no reasonable basis to believe that the facts underlying that
party's legal position were in fact true.
(iii) The party's legal position was devoid of arguable legal merit.
At the outset, we are not persuaded by G&B’s argument that the arbitrator lacked the
authority to award sanctions in this matter. If an arbitration clause “is written in broad and
comprehensive language, i.e., language including all claims and disputes,” the arbitrator
generally possesses the broad authority in fashioning an award. See Gordon Sel-Way, Inc v
Spence Bros, Inc, 438 Mich 488, 495; 475 NW2d 704 (1991). Further, an award is presumed to
be within the scope of the arbitrator’s authority “absent express language to the contrary” in the
arbitration agreement. Id.
1
MCR 2.114 was repealed on September 1, 2018, but was in effect at the times relevant to this
case. The language governing sanctions previously found in MCR 2.114(D) through (F) is now
found in MCR 1.109(E).
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Here, the arbitration clause at issue was broad, stating that “Any dispute or disagreement
arising between Client and Attorney . . . whether under, out of, in connection with, or in relation
to this Agreement, or otherwise, will be determined and settled by arbitration.” In fact, G&B
made repeated reference to the broad nature of this clause when moving the trial court to compel
plaintiffs to arbitrate the issues raised in their allegedly frivolous complaint. Moreover, the
arbitration clause incorporated the rules of the AAA. Those rules permit the arbitrator to “grant
any remedy or relief that the arbitrator deems just and equitable and within the scope of the
agreement of the parties” (Rule 47(a)), including attorney fees if “authorized by law” (Rule
47(d)(ii) and expenses (Rule 54).2 Nothing in the AAA rules or the arbitration agreement
explicitly limited the arbitrator from awarding costs and sanctions related to the frivolousness of
plaintiff’s claims. See Gordon Sel-Way Inc, 438 Mich at 495. MCL 600.2591 and our court
rules provide for an award of attorney fees for frivolous claims. And, as the trial court noted, the
award purported to have resolved all claims and counterclaims between the parties. We find it to
be far from certain that the arbitrator lacked the authority to award attorney fees as sanctions for
plaintiff’s allegedly frivolous pleading.3
In any event, the trial court also noted that defendant failed to make a claim for sanctions
before the trial court entered the judgment confirming the award. Maryland Cas Co, 221 Mich
App at 31. “[T]o be timely, a request for sanctions should be filed before the action’s dismissal.”
Id. In Maryland Cas Co, this Court noted that, although the defendant did not file a motion for
sanctions until five months after judgment was entered, the defendant had requested sanctions in
his motion for summary disposition. Id. at 29-30. This Court concluded that “[s]o long as a
request [for sanctions] is made before dismissal, the trial court can award attorney fees at a later
date.” Id. at 30.
Here, the judgment entered by the trial court stated that it resolved the last pending claim
and closed the case. And unlike the defendant in Maryland Cas Co, G&B did not request
sanctions in this case before the entry of the judgment. Although G&B asserts on appeal that it
“raised the issue of sanctions” in its motion to compel arbitration, our review of that motion
reveals that, while defendant did repeatedly refer to plaintiffs’ complaint as frivolous, the sole
mention of sanctions is found in the puzzling statement: “Query whether this Court will sua
sponte impose sanctions against Plaintiffs.” Rather than requesting that the trial court sanction
plaintiffs, defendant thus appears merely to have queried whether, on its own authority and
without the motion of a party (i.e., sua sponte), the trial court would impose sanctions on
2
See American Arbitration Association, Commercial Arbitration Rules, See
https://www.adr.org/sites/default/files/Commercial%20Rules.pdf (last accessed June 18, 2019).
3
We note that it is not dispositive that the award itself did not explicitly state whether or not
sanctions for a frivolous pleading formed a portion of the award. The scope of the arbitration
award is determined by the arbitration agreement despite a lack of specific language in the
award. See Dohanyos v Detrex Corp (After Remand), 217 Mich App 171, 178-180; 550 NW2d
608 (1996) (holding that because the arbitration agreement stated that the award would include
“all interest, costs, attorney fees and sanctions,” the court “must assume” that the arbitration
award included all taxable costs even without explicitly stating so).
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plaintiffs. The answer to G&B’s question was apparently “no.” G&B never actually requested
that the trial court impose sanctions until after the award was confirmed and the case was closed,
and while the trial court did not completely lack the authority to consider such an untimely
motion, see id at 31, citing Community Electric Serv, Inc v Nat’l Electrical Contractors Assoc,
869 F2d 1235, 1242 (CA 9, 1989), we do not find that it abused its discretion when it declined to
do so after it had entered a judgment confirming the arbitration award.
Finally, we do not find that the trial court clearly erred by declining to award sanctions
based upon its reading of plaintiffs’ complaint. A trial court’s award of sanctions under
MCR 2.114 must be reasonable. Vittiglio v Vittiglio, 297 Mich App 391, 408; 824 NW2d 591
(2012). In making a determination regarding frivolousness, a trial court must “evaluate the
claims or defense at issue at the time” the allegedly frivolous pleading was filed. In re Costs &
Attorney Fees, 250 Mich App 89, 94; 645 NW2d 697 (2002). This determination “depends on
the particular facts and circumstances of the claim involved.” Id. at 94-95.
Here, the trial court’s involvement with the case was limited. After plaintiffs filed their
complaint, G&B’s first response was to move to have the dispute resolved in the course of an
existing arbitration, not by the trial court. The trial court’s next substantive action was to
confirm the award and enter a judgment. G&B’s argument concerning the frivolous nature of
plaintiffs’ pleadings relies extensively on evidence introduced during the arbitration and the
findings of the arbitrator. Although G&B appears to argue that all of the findings of the
arbitrator may be imputed to the trial court by its confirmation of the award, a trial court’s review
of an arbitration award is “very limited” and is not based on a review of the merits of the
arbitrator’s award or the arbitrator’s reasoning. Gordon Sel-Way, Inc, 438 Mich at 497.
Considering the trial court’s relatively minimal involvement with the case (at G&B’s request via
its motion to compel arbitration) and the fact that the resolution of the claims in plaintiffs’
complaint occurred during arbitration rather than in a proceeding before the court, we conclude
that the trial court did not clearly err by declining to award sanctions. Guerrero, 280 Mich App
at 677. Although the trial court did find that “maybe two” of plaintiff’s factual allegations could
be construed as being made without a reasonable basis, it did not clearly err by determining,
under the particular facts and circumstances of this case, that the complaint did not rise to the
level of frivolousness as of the time it was filed.
Affirmed.
/s/ Michael J. Kelly
/s/ Mark T. Boonstra
/s/ Michael J. Riordan
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