In Bailey, a man was brandishing a firearm and threatening to shoot people. A witness informed two security guards working for a company hired by the landlord of the dangerous situation. The witness pointed in the direction of the trouble, which was visible to the guards. Instead of calling the police or attempting to defuse the situation, the security guards dropped off an intoxicated person at another apartment. While security guards took the intoxicated person to the apartment, shots were fired and Bailey struck by two bullets. As a result of his injuries, Bailey sued the apartment complex and the security company. Bailey argued that the landlord and security company had a duty to call the police once they were apprised of the dangerous situation.

Because of the novel issue presented, the court discussed the evolution of premises liability with respect to merchants. The court then concluded that the same rules that apply to merchants also apply in a landlord-tenant relationship. The specific duty at issue in Bailey was the duty owed to persons on the premises when a situation poses a risk of imminent and foreseeable harm to those present.  The court ruled that the landlords owe their tenants and any invitees to the property a duty “to respond reasonably to situations occurring on the premises.” This includes the duty to call “the police when the criminal acts of a third party endanger a readily identifiable invitee.”

Although landlords have a duty to contact the police, it should be remembered that there is no duty to take further action. The landlord is under no obligation to personally break up any altercation. In order for landlords to protect themselves, they should put policies in place and train employees on how to handle dangerous situations as they arise. When landlords contract with private security firms, landlords should be diligent in confirming that the security guards are aware and trained in these situations.

In Champion, the Michigan Supreme Court ruled that under the MCRA an employer could be held liable for the intentional torts of its supervisor for instances of sexual harassment. The Champion Court held that employers were liable “where the supervisor accomplishes [a] rape through the exercise of his supervisory power over the victim.” In the Champion case, a supervisor used his influence and authority over a lower employee to rape her. The Champion court ruled that the forseeability of the action was not relevant to the employer’s liability.

The Hamed Court overruled the Champion decision, which arose under similar circumstances. The Court’s ruling focused on the fact that employers could not be held liable for the intentional torts of its employees (including supervisors) that were not foreseeable to the employer.

The Michigan Supreme Court stated:

The general rule that an employer is not liable for acts of its employee outside the scope of its business, however, does not preclude vicarious liability in every instance.  This Court has consistently recognized that an employer can be held liable for its employee’s conduct if “the employer ‘knew or should have known of [the] employee’s propensities and criminal record’” before that employee committed an intentional tort.  This inquiry involves an analysis of whether an employer had (1) actual or constructive knowledge of prior similar conduct and (2) actual or constructive knowledge of the employee’s propensity to act in accordance with that conduct.

Although, employers are no longer liable for the unforeseeable torts of their employees under the MCRA, employers must still exercise care in hiring employees. The Court noted that employers might still be liable for the intentional torts of its employees (as well as for negligent hiring or negligent supervision) if the torts were foreseeable.

The court’s ruling turned on the fact that the woman’s employer had warned her that emails sent via her work email account were not confidential. In other words, the employer had the right to look at all email traffic. Under the evidence rules in most jurisdictions, the presence of a third party during attorney client communications will destroy privilege. The court treated the fact that any email might be viewed by the employer as analogous to a third party being present.

In order to ensure that attorney client privilege is maintained, clients need to be careful as to how they transmit information. If clients communicate privileged information via email, make sure that the client is the only one with access to the email account. Even the ability for a spouse or child to use the account may destroy the privilege.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

During the discovery phase, Plaintiff gave notice to take the depositions of two high-ranking executives at Toyota.  Plaintiff alleged that the testimony was necessary because one executive had given testimony to Congress regarding the defective acceleration models while the other executive was involved in quality control.

Defendant moved to prevent the depositions arguing that the Toyota executives had not “engaged in or participated in the design, testing, manufacture, warnings, sale or distribution” of the automobile at issue.  Defendant sought a protective order to prevent the depositions.

Prior to the decision in this case, Michigan applied the “apex deposition” rule solely to high-ranking government officials.  The apex rule provides that before a party may take the deposition of a high-ranking government official, the party must show that the government official had superior or unique knowledge and information relevant to the issues being litigated.  The rule also requires that the information sought cannot be obtained by a less intrusive method, such as by deposing lower ranking employees.

The Court of Appeals decision extends the apex deposition rule to high-ranking corporate officials.  Citing public policy, the Michigan Court of Appeals determined that the rule will promote efficiency because frequent appearances in depositions will limit the ability of high-ranking officers to perform their job duties.  Further, the Court of Appeals found that applying the apex rule to corporate officials would “prevent the use of depositions to annoy, harass, or unduly burden the parties.”

The Court of Appeals explained that this rule would not shift the burden for litigants seeking to depose a high-ranking corporate officer.  The burden only shifts to the proponent of the deposition only “after the party opposing discovery has moved for a protective order and has made a showing regarding the lack of the proposed deponent’s personal knowledge and that other discovery methods could produce the required information.”

This article was written by Matthew Ehrlich, Legal Clerk at Demorest Law Firm.

The Anti-Lockout Statute specifically states that “any tenant in possession of premises whose possessory interest has been unlawfully interfered with by the owner, lessor, licensor, or their agents shall be entitled to recover the amount of his actual damages or $200.00, whichever is greater, for each occurrence and, where possession has been lost, to recover possession.” (emphasis added).  This statute prohibits a landlord from attempting self-help eviction of a tenant, or eviction without legal process.

In Christie, plaintiff tenant filed a complaint alleging that defendant landlord unlawfully locked them out of the rental premises and also moved a large quantity of valuable equipment from the rental premises to storage, where it was subsequently damaged.  Defendants argued that the plaintiffs were behind in rent, the plaintiffs had abandoned the premises, and that plaintiffs had numerous opportunities to retrieve their personal property after it was moved.

At trial, the court gave the jury an instruction regarding the award of exemplary damages.  Specifically, the jury was instructed that “an award of exemplary damages is proper if it compensates a plaintiff for humiliation, sense of outrage, and indignity resulting from injustices maliciously, willfully, and wantonly inflicted by the defendant.”  After a jury found for plaintiffs and against defendants on plaintiffs’ claim for violation of the anti-lockout statute, MCL 600.2918, they awarded plaintiffs treble damages for the anti-lockout claim, or three times the actual damages amount.

Defendants appealed on this issue, arguing that a statutorily based cause of action will not allow for damages other than those specified in the statute.  Exemplary damages are not specifically provided for in the Anti-Lockout Statute.

Although Michigan Court of Appeals in Christie agreed with Defendants argument, it did not reverse the ruling.  The Court reasoned that, under Michigan law, recovery under the Anti-Lockout Statute may include damages for emotional distress, embarrassment, and humiliation, as part of actual damages.  Therefore, although a separate award for exemplary damages is not appropriate in a statutorily based action unless the statute in question specifically provides for such damage, damages for mental distress are allowable as part of a plaintiff’s actual damages. As a result, the Court allowed plaintiffs to recover the damages awarded as emotional distress damages under the Anti-Lockout Statute.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

]]> http://www.detroitbusinesslaw.com/2010/03/10/damages-under-the-anti-lockout-statute/feed/ 0 http://www.detroitbusinesslaw.com/2010/02/01/when-is-a-license-fee-really-an-illegal-tax/ http://www.detroitbusinesslaw.com/2010/02/01/when-is-a-license-fee-really-an-illegal-tax/#comments Mon, 01 Feb 2010 13:30:11 +0000 Mark Demorest http://www.detroitbusinesslaw.com/?p=791 Faced with tighter budgets, Michigan cities and townships are looking for additional ways to raise revenue.  Due to the Headlee Amendment, property tax increases are severely restricted.   However, a municipality may establish or increase a fee without violating the Headlee Amendment.  The question is:  Where is the dividing line between a permissible fee and an illegal tax increase?

A tax is solely to raise revenue.   A permissible fee (typically a permit or license fee) has three characteristics: (a) the fee serves a regulatory purpose; (b) the amount of the fee is proportionate to the necessary costs for the municipality to provide that service, and (c) payment of the fee is voluntary.

Several years ago, we were involved in litigation that resulted in the Wayne County Circuit Court declaring a license fee imposed by Sumpter Township illegal.  The Court decided that the fee for a sand excavation license was really being used by the Township to discourage additional landfills from being located in the Township, and that the amount of the fee was excessive in relationship to the Township’s costs to regulate and inspect sand excavation sites.  The Ordinance was set aside.

On January 21, 2010, the Michigan Court of Appeals issued its decision in Wolf v City of Detroit.    The plaintiff claimed that a new Solid Waste Inspection Fee adopted by the City of Detroit was really just a disguised tax.  The inspection fee was imposed on properties that did not use the City’s Department of Public Works for solid waste pick-up.  The Court of Appeals analyzed the three criteria for a fee and decided that the fee was permissible.   A copy of the Court of Appeals’ decision is attached.

Whenever a municipality imposes a new fee, or dramatically increases the amount of a fee, then one should analyze whether the three criteria for a fee are met.  If not, the fee may be challenged as a hidden tax.

Click here to download a PDF copy of the Court of Appeals Decision.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

Recently, our firm won two separate awards of attorney’s fees for two companies in lawsuits they were forced to file or defend.    In the first case, the statute allowed for attorney’s fees and costs to our client when the opposing bank refused to honor an irrevocable letter of credit.    Our second case involved the judge ruling that based on the statute and the Michigan Court Rules the other party’s complaint was so frivolous that sanctions, including attorney’s fees and costs were warranted.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

In the Michigan Court of Appeals case Bronco Oil v Citizens Bank (click here to download), the contract language, in essence, immunized the breaching party from having to pay the damages it allegedly caused because they occurred outside of a 12-month period before the lawsuit was filed. Even though the lawsuit was timely, the potential damages were lost because of when the lawsuit was filed.

This article was written by Michael R. Dorfman, Senior Associate at Demorest Law Firm.

Under the Michigan Court Rules, there are only four grounds to vacate an arbitration award.  These focus on the fairness of the proceeding, rather than whether the arbitrator’s decision was correct or incorrect.  The arbitrator can be set aide only if:

(1)  The award was procured by corruption, fraud or other undue means;

(2)  There was evident partiality by an arbitrator appointed as a neutral, corruption of an arbitrator, or misconduct prejudicing a party’s rights;

(3)  The arbitrator exceed his or her powers; or

(4)  The arbitrator refused to postpone the hearing on a showing of sufficient cause, refused to hear evidence material to the controversy, or otherwise conduct the hearing to prejudice substantially a party’s rights.

If you are dissatisfied with the outcome of an arbitration, it is also very important to act promptly.  There is a very short time period to file a complaint in court to vacate an arbitration award.  Depending on the grounds for challenging the arbitration award, the complaint must be filed within 21 days or 91 days after the date of the arbitration award.  If the complaint is not timely filed, it is too late to challenge the arbitration award later.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm

The Michigan Court of Appeals continued this trend on September 29, 2009, when it issued its decision in Siuda v Tobin. The contract for purchase of a modular home stated that any claim had to be filed no more than one year from the date of sale of the home, rather than the normal six years.  The purchasers claimed that the home was damaged during construction, but failed to bring suit until three years after construction began.  The Court of Appeals rejected all of the purchasers’ arguments against the enforcement of the shortened Statute of Limitations.

You should review the forms and contracts that your company uses, and decide whether to shorten the time period that your customers or suppliers have to bring a lawsuit.  On the flip side, if you have a potential lawsuit, you need to review the contracts to make sure how long you have to bring a claim.   Don’t simply assume that the Statute of Limitations has not been modified.

Click to Download Case from Michigan Court of Appeals in PDF Format

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm