SHERROD PIGEE V TONY DIPONIO
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STATE OF MICHIGAN
COURT OF APPEALS
SHERROD PIGEE and FIRST MORTGAGE
FUND, INC.,
UNPUBLISHED
September 21, 2004
Plaintiffs-Appellants,
v
No. 249235
Genesee Circuit Court
LC No. 01-071910-CZ
TONY DiPONIO,
Defendant-Third-Party-Appellee,
and
PETER DOERR,
Defendant.
Before: Whitbeck, C.J., and Sawyer and Saad, JJ.
PER CURIAM.
Plaintiffs appeal as of right from the trial court order granting summary disposition to
defendant Tony DiPonio on their claims for abuse of process and constructive fraud. We affirm
in part and reverse and remand in part.
This lawsuit stems from receivership proceedings in which defendant acted as attorney
for the receiver, and also for a judgment creditor. Plaintiffs allege that as a result of defendant’s
intentional wrongful actions, they suffered financial damage to property they owned and which
defendant prevented from being sold in a timely fashion. Specifically, they allege that defendant
misrepresented to the receiver the need to obtain court approval for certain transactions, that he
delayed the wind-up of a receivership involving a debt of only about $11,000 by putting forward
a spurious claim for $95,000, and that he failed to properly file a substitution of counsel when he
withdrew as attorney for the receiver, thus leaving the receiver technically unrepresented and
placing the receivership in limbo. They also allege, as a special master appointed in the
receivership found, that all this was done improperly to gain leverage for defendant’s creditor
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client in other litigation the creditor had with plaintiff Sherrod Pigee.1 They allege as well that it
was defendant who largely instigated these actions by the creditor client. The special master said
nothing on this point.
The trial court found that defendant’s conduct as an attorney was “inappropriate,” but that
he owed no duty to plaintiffs as non-clients, and that he could not be sued for abuse of process
because there was no showing that he acted for his personal benefit in committing the alleged
abuse. The court therefore granted summary disposition to defendant.
Plaintiffs first argue that the trial court erred in finding that suit could not be brought
because defendant owed them no duty. We agree. It is true that a lawyer ordinarily has no duty
for professional negligence injuring a non-client. Mieras v DeBona, 452 Mich 278, 297; 550
NW2d 202 (1996). However, plaintiffs are not suing defendant for negligence or professional
malpractice. They are suing him for deliberately wrongful conduct constituting an intentional
tort. The fact that a lawyer owes no duty to avoid malpractice with respect to non-clients does
not mean that the lawyer can commit intentional torts harming persons who are not his clients
with impunity. In Trepel v Pontiac Osteopathic Hosp, 135 Mich App 361; 354 NW2d 341
(1984), this Court ruled that an attorney who assisted a doctor in blocking a hospital from
obtaining financing for an expansion by knowingly filing spurious statements casting doubt on
the need for the facility could be sued by the hospital for the damage it suffered from this
intentional misconduct. The facts alleged by plaintiffs in this case, if credited by the trier of fact,
are remarkably similar to those in Trepel, and we see no reason the same rule should not apply.
Plaintiffs next argue that the trial court erred in ruling that they could not state a cause of
action for constructive fraud or abuse of process. We agree with plaintiffs as to the abuse of
process claim. There are two elements of a claim for abuse of process: (1) an ulterior purpose,
and (2) “an act in the use of process which is improper in the regular prosecution of the
proceeding.” Friedman v Dozorc, 412 Mich 1, 30; 312 NW2d 585 (1981).
Both elements are met by the facts alleged by plaintiffs. As explained by the Friedman
Court, “abuse of process” does not mean abuse of “process” in the sense of abuse of the
summons used to begin the case, but rather the subsequent misuse of the proceedings “ ‘for any
purpose other than that which it was designed to accomplish.’ ” Id. at 30 n 18, quoting 3
Restatement Torts, 2d, comment a, p 474. Plaintiffs have clearly alleged that defendant used the
receivership proceedings, not for purposes for which such proceedings are designed, but to
obtain a tactical advantage for Midwest in other litigation, when there was no need for the
proceedings. Plaintiffs have support for this position in both the special master’s decision and
the trial court’s statements on the record regarding defendant’s bad conduct. Moreover,
defendant’s position that any abuse was by Midwest, not by him, does not comport with the law.
Friedman clearly recognizes that the attorney acting in the legal proceedings is an appropriate
defendant in an abuse of process action. Id. at 30-31.
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Pigee is the person whose property was in receivership, and plaintiff First Mortgage Fund, Inc.,
held mortgages on ten of his properties in receivership.
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The other element of abuse of process is action for an ulterior motive. This appears to be
the ground on which the trial court relied in ruling that the case could not go forward against
defendant because there was no evidence “for his own benefit or detriment.” In Young v Motor
City Apts Ltd Dividend Housing Ass’n No 1 & No 2, 133 Mich App 671, 681; 350 NW2d 790
(1984), it was noted that one who has “attempted to obtain a collateral advantage outside of the
use of the process” has satisfied this requirement. This is exactly what plaintiffs have alleged—
and the special master found to have taken place—in the present case. Plaintiffs alleged that
defendant used the receivership to try to gain advantage in a situation external to that particular
legal proceeding. See Three Lakes Ass’n v Whiting, 75 Mich App 564, 574; 255 NW2d 686
(1977) (the ulterior purpose was an attempt to “coerc[e] plaintiff to end all opposition to
defendants’ condominium project”).
Neither Young nor Three Lakes Ass’n suggests, as the trial court apparently thought, that
the “ulterior purpose” must be pecuniary advantage for the attorney himself. It is clear from
Friedman, supra, that an attorney may be sued for abuse of process when the elements are met.
There is no suggestion, in this or any other case cited to us, that the ulterior purpose cannot be
one the attorney is pursuing on behalf of the client.
The elements of constructive fraud are set forth in General Electric Credit Corp v
Wolverine Ins Co, 420 Mich 176; 362 NW2d 595 (1984). That decision explains that the
distinction between “actual fraud” and “constructive fraud” is that actual fraud is an intentional
misrepresentation which a party makes to induce detrimental reliance, while “constructive fraud”
is a misrepresentation which causes the same effect, but without “a purposeful design to
defraud.” Id. at 188-190. In either case, there has to be a misrepresentation. This is the missing
element in plaintiffs’ claim. There is no allegation that defendant made any representation of
any kind, false or otherwise, to plaintiffs. Thus we hold that defendant cannot be liable to
plaintiffs for constructive fraud. The trial court did not err in granting summary disposition to
defendant on plaintiffs’ claim for constructive fraud.
Finally, plaintiffs argue that they presented sufficient admissible evidence to withstand a
motion for summary disposition.
This Court reviews orders granting summary disposition pursuant to MCR 2.116(C)(10)
to determine whether, when the evidence is considered in the light most favorable to the nonmoving party, there is a genuine issue of material fact. Ritchie-Gamester v City of Berkley, 461
Mich 73, 76; 597 NW2d 517 (1999); Spiek v Dep’t of Transportation, 456 Mich 331, 337; 572
NW2d 201 (1998). The nonmovant receives the benefit of all reasonable inferences. Hall v
McRea Corp, 238 Mich App 361, 369-370; 605 NW2d 354 (1999). The benefit of the doubt is
given to the existence of a genuine issue of material fact. Marlo Beauty Supply, Inc v Farmers
Ins Group, 227 Mich App 309, 320; 575 NW2d 324 (1998). If the record, when viewed in this
way, leaves open an issue on which reasonable minds could differ, summary disposition is
inappropriate. Allstate Ins Co v Dep’t of Mgt & Budget, 259 Mich App 705, 709; 675 NW2d
857 (2003).
Plaintiffs presented evidence which, if believed, would establish that defendant
misrepresented the procedural requirements in the receivership proceedings to the receiver, filed
a false claim of almost nine times the amount of the actual debt plaintiff Pigee owed to keep the
receivership going, and that he hamstrung the receivership by withdrawing as receiver without
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properly allowing the substitution of replacement counsel in a timely fashion. Any one of these
sets of facts, if credited, would be sufficient to support plaintiffs’ claim for abuse of process.
There is, therefore, a genuine issue as to questions of material fact, and so summary disposition
was inappropriate on that claim. As previously noted, however, because there was no allegation
that defendant made any false representations to plaintiffs, summary disposition was appropriate
as to plaintiffs’ claim for constructive fraud.
Affirmed in part and reversed and remanded in part. We do not retain jurisdiction.
/s/ William C. Whitbeck
/s/ David H. Sawyer
/s/ Henry William Saad
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