ROBERT BORDENER V JOHN P HERRINTON
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STATE OF MICHIGAN
COURT OF APPEALS
ROBERT BORDENER and SARA MICHELLE
BORDENER,
UNPUBLISHED
December 22, 2005
Plaintiffs/Counter-DefendantsAppellants,
v
No. 254877
Wayne Circuit Court
LC No. 01-121565-CK
JOHN P. HERRINTON and BERRY
MOORMAN, P.C.,
Defendants-Appellees,
and
MIDWEST LENDING CORPORATION,
Defendant/Counter-Plaintiff,
and
TALON GROUP, INC., KS LIQUIDATING,
L.L.C.,
KORSTONE,
f/k/a
KORSTONE
SURFACES, L.L.C., TALON SURFACES, L.L.C.,
f/k/a TALON BUILDING PRODUCTS, TALON
FINANCE COMPANY, L.L.C., TALON EQUITY
PARTNERS, L.L.C., ETURA CORPORATION,
EH CORPORATION and EH ENTERPRISES,
LTD.,
Defendants.
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ROBERT BORDENER and SARA MICHELLE
BORDENER,
Plaintiffs/Counter-DefendantsAppellees,
v
No. 256359
Wayne Circuit Court
LC No. 01-121565-CK
JOHN P. HERRINTON and BERRY
MOORMAN, P.C.,
Defendants-Appellants,
and
MIDWEST LENDING CORPORATION,
Defendant/Counter-Plaintiff,
and
TALON GROUP, INC., KS LIQUIDATING,
L.L.C.,
KORSTONE,
f/k/a
KORSTONE
SURFACES, L.L.C., TALON SURFACES, L.L.C.,
f/k/a TALON BUILDING PRODUCTS, TALON
FINANCE COMPANY, L.L.C., TALON EQUITY
PARTNERS, L.L.C., ETURA CORPORATION,
EH CORPORATION and EH ENTERPRISES,
LTD.,
Defendants.
Before: Murphy, P.J., and Sawyer and Meter, JJ.
PER CURIAM.
In Docket No. 254877, plaintiffs appeal from an order granting summary disposition to
defendants on plaintiffs’ legal malpractice claim. In Docket No. 256359, defendants challenge
the trial court’s partial denial of case evaluation sanctions. We affirm in part and remand in part.
Plaintiffs’ claims arise from the representation provided by attorney John Herrinton in
plaintiffs’ negotiations with defendant Talon Group concerning an agreement reached in 2000.
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That agreement was part of a renegotiation of earlier agreements regarding the acquiring of
patent rights to an invention by Robert Bordener by Talon. Specifically, Bordener held certain
patents relating to the manufacturing of a countertop material known as “Korstone.” The
original agreement was reached in 1996. A second agreement was reached in 1998. Attorney
Herrinton was not involved in these transactions. Rather, Bordener retained Herrinton to
represent him in the 2000 negotiations. The 2000 agreement was the result of Talon’s request in
1999 to renegotiate the 1998 agreement, citing a need to adjust the compensation schedule.
Herrinton also sought changes in the agreement, seeking to change from a commission structure
to a royalty structure, believing that that was to Bordener’s advantage. The negotiations took
fourteen months to complete.
The structure of the transactions was such that the rights to Korstone were owned by
defendant Talon Surfaces. Talon Surfaces in turn was financed by a loan from defendant Talon
Finance, which took a security interest in the intellectual property. According to defendants, by
late 2000 Talon Surfaces was losing large amounts of money and was no longer viable. Talon
was unable to find a purchaser for Talon Surfaces as a going concern. In 2001, approximately
six months after the 2000 agreement was signed, Talon Finance foreclosed on the intellectual
property held by Talon Surfaces, assigned those assets to another Talon subsidiary, Midwest
Finance, which in turned assigned the assets to defendant Etura Corporation. The instant
litigation commenced when Etura took the position that it was not obligated to honor the
compensation agreement between Bordener and Talon.
The trial court granted defendants’ motion for summary disposition, concluding that,
because she was not a party to the contract, plaintiff Sara Bordener had failed to state a claim
upon which relief could be granted, MCR 2.116(C)(8), and that there was no genuine issue of
material fact, MCR 2.116(C)(10), regarding Robert Bordener’s legal malpractice claims. On
appeal, plaintiffs only challenge the grant of summary disposition with respect to the legal
malpractice claims.
We review the grant of summary disposition de novo to determine if the moving party is
entitled to judgment as a matter of law. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817
(1999). In evaluating a motion under MCR 2.116(C)(10), the court must consider all the
evidence submitted by the parties, including affidavits, pleadings, depositions and admissions, in
the light most favorable to the nonmoving party and if that evidence fails to establish a genuine
issue of material fact, the moving party is entitled to judgment as a matter of law. Id. at 120.
In this case, plaintiffs primarily argue three grounds for finding malpractice. First, that
attorney Herrinton failed to properly draft the 2000 agreement to protect Bordener’s interest,
such as including a clause establishing a reversionary interest to Bordener in the intellectual
property in the event of a breach of contract. Second, that attorney Herrinton failed to file a
security interest or notice with the United States Patent Office or under the Uniform Commercial
Code. And, third, that attorney Herrinton abandoned his client.
With respect to the claim that attorney Herrinton was negligent in failing to adequately
protect Bordener’s interests in the 2000 agreement, the trial court concluded that there was no
genuine issue of material fact on the issue of causation. Specifically, the trial court concluded
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that it was speculative at best that plaintiffs could show that Talon would have signed an
agreement in 2000 that would include the terms plaintiffs assert should have been included:
In this case, based upon the documents that I have read and the different
depositions, there is no evidence presented that conclusively demonstrates that
had Mr. Herrington [sic] sought a reversion in the patents and intellectual
property to Bordener, that Talon would have agreed to that. Talon had purchased
the patents and property rights under the 1996 and 1998 agreements and there was
no such clause then.
There’s no reason, except through speculation or guess to expect that
Talon would have agreed to such a clause in 2000 had it been proposed. There’s
no evidence of a material fact that supports the Plaintiff’s malpractice claim in
this regard.
To establish legal malpractice, the plaintiff must show that the attorney’s negligence was
a proximate cause of the client’s injury. Simko v Blake, 448 Mich 648, 655; 532 NW2d 842
(1995). To prove proximate cause, a plaintiff must establish (1) cause in fact and (2) legal cause.
Skinner v Square D Co, 445 Mich 153, 162-163; 516 NW2d 475 (1994). As the Court explained
in Skinner, supra at 164-166, it is not sufficient to merely establish the speculative possibility
that the defendant’s conduct caused the plaintiff’s injury:
[A] causation theory must have some basis in established fact. However, a
basis in only slight evidence is not enough. Nor is it sufficient to submit a
causation theory that, while factually supported, is, at best, just as possible as
another theory. Rather, the plaintiff must present substantial evidence from which
a jury may conclude that more likely than not, but for the defendant’s conduct, the
plaintiff’s injuries would not have occurred.
We have consistently applied this threshold evidentiary standard to a
plaintiff’s proof of factual causation in negligence cases:
“ ‘The plaintiff must introduce evidence which affords a reasonable basis
for the conclusion that it is more likely than not that the conduct of the defendant
was a cause in fact of the result. A mere possibility of such causation is not
enough; and when the matter remains one of pure speculation or conjecture, or the
probabilities are at best evenly balanced, it becomes the duty of the court to direct
a verdict for the defendant.’ ” [Mullholland v DEC Int’l Corp, 32 Mich 395, 416
n 18; 443 NW2d 340 (1989), quoting Prosser & Keeton, Torts (5th ed), § 41, p
269.]
“The mere possibility that a defendant’s negligence may have been the
cause, either theoretical or conjectural, of an accident is not sufficient to establish
a causal link between the two.” [Jordan v Whiting Corp, 396 Mich 145, 151; 240
NW2d 468 (1976).]
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“There must be substantial evidence which forms a reasonable basis for
the inference of negligence. There must be more than a mere possibility that
unreasonable conduct of the defendant caused the injury. We cannot permit the
jury to guess . . . .” [Daigneau v Young, 349 Mich 632, 636; 85 NW2d 88 (1957).
Citations omitted.]
The Skinner Court, supra at 166-167, then goes on to quote the following passage from 57A Am
Jur 2d, Negligence, § 461, p 442:
All that is necessary is that the proof amount to a reasonable likelihood of
probability rather than a possibility. The evidence need not negate all other
possible causes, but such evidence must exclude other reasonable hypotheses with
a fair amount of certainty. Absolute certainty cannot be achieved in proving
negligence circumstantially; but such proof may satisfy where the chain of
circumstances leads to a conclusion which is more probable than any other
hypothesis reflected by the evidence. However, if such evidence lends equal
support to inconsistent conclusions or is equally consistent with contradictory
hypotheses, negligence is not established.
We agree with the trial court that it is speculative at best that plaintiffs’ attorney could
have negotiated an agreement which included the clauses plaintiffs now believe should have
been in that agreement. Plaintiffs point to no evidence to establish that Talon would have agreed
to such terms. Indeed, defendants point to evidence that Talon would have been reluctant at best
to agree to any terms that ceded any of their existing rights under previous agreements. That also
leads to a secondary problem for plaintiffs’ case, namely that they do not identify any evidence
that Bordener would have been better off walking away from the negotiations rather than signing
the 2000 agreement. That is, there is no showing here that attorney Herrinton gave away an
element of the existing agreement, thus putting Bordener in a worse position than existed under
the 1998 agreement. Simply put, the attorney was not in a position to dictate terms to Talon and
plaintiffs can make no showing that any such desired term would have been agreed to by Talon.
Accordingly, it is speculative at best that attorney Herrinton could have negotiated such terms
and, therefore, there is no genuine issue of material fact that plaintiffs will be unable to establish
causation on this claim.
Plaintiffs significantly rely on the trial court’s statement that there is no evidence that
“conclusively demonstrates” that attorney Herrinton could have obtained a reversionary interest
clause in the agreement. Plaintiffs argue that this demonstrates that the trial court applied an
erroneous burden of proof: that plaintiffs must “conclusively demonstrate” causation in order to
survive summary disposition. Therefore, plaintiffs argue, reversal is required. We disagree.
First, we believe that plaintiffs are reading the trial court’s comments out of context. We read
the trial court’s use of “conclusively” as meaning “non-speculatively.” In any event, on our de
novo review, we are satisfied that plaintiffs are unable to establish a genuine issue of material
fact. Even if the trial court held plaintiffs to the wrong burden, such error is harmless as
defendants were entitled to summary disposition on this aspect of the claim even under the
proper standard.
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This then leads us to the second aspect of plaintiffs’ claim, the failure to file a security
interest or notice to the United States Patent Office. The trial court concluded that causation
could not be established on this aspect of the claim either because plaintiffs would be unable to
show that such a filing would accomplish anything other than putting Etura on notice of
Bordener’s interest. But Etura already had actual knowledge and, therefore, a filing would make
no difference. We agree with the trial court that plaintiffs cannot show that such a filing would
have been of benefit, especially in light of Etura’s knowledge of the underlying transaction.
Indeed, during the oral argument on the summary disposition motion in the trial court, plaintiffs’
counsel stated that the expert would opine that a filing would have placed Bordener behind Talon
Financial in the order of priority. But once Talon Financial foreclosed on the intellectual
property and became owner, we fail to see how Bordener could then have greater priority than a
buyer to whom Talon Financial sold the property.
In short, the only potential malpractice on this issue would have been if a reversionary
interest or similar security had been included in the agreement, the attorney then failed to file
notice of such interest, and Etura would have purchased intellectual property without such notice
and, as a result, could have defeated Bordener’s interest because of a lack of notice. But that was
not the sequence of events. Summary disposition on this aspect of the claim was therefore
properly granted.
Next, plaintiffs argue that attorney Herrinton committed malpractice by abandoning them
as clients. We disagree. Plaintiffs claim that they were abandoned by attorney Herrinton by his
failure to pursue litigation against Talon once Talon breached the agreement. But plaintiffs point
to no evidence that Herrinton was retained to pursue such litigation. At most, plaintiffs make the
unsubstantiated claim in their brief that “Mr. Herrington [sic] promised action through
litigation.” Plaintiffs suggest that the failure to timely pursue such litigation allowed the sale to
be completed, at which point it became too late for Bordener to enforce his own contractual
rights. But plaintiffs direct us to no evidence that Herrinton actually agreed to pursue such
litigation, much less to any evidence to suggest that had such a strategy been pursued, Bordener
would have been able to adequately protect his interests. At most, Bordener testified in his
deposition that Herrinton promised to consult with the litigators in his firm to put together a
litigation strategy. But that does not constitute an agreement to be engaged to pursue litigation,
much less an abandonment of that pursuit. Moreover, if anything, Bordener’s own deposition
testimony suggests that any such litigation would be fruitless: the Talon Surfaces CEO had told
him (Bordener) that Talon Surfaces was insolvent and had no money to pay any more to
Bordener. If true, and plaintiffs point us to no evidence that it is not, then even a successful suit
against Talon would have been fruitless as it would only produce an uncollectable judgment.
Plaintiffs do suggest that a prompt suit could have prevented the sale to Etura. But plaintiffs do
not explain how such a maneuver could be accomplished. In short, plaintiffs do not make even a
minimal showing that defendants agreed to represent plaintiffs in such a suit or how such a suit
could conceivably have produced a better outcome for plaintiffs.
Finally, plaintiffs argue that the trial court overlooked other instances of malpractice
claimed by plaintiffs, including attorney Herrinton’s failure to advise Bordener to accept an offer
by Talon for a co-licensing arrangement which would have permitted Bordener to also
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independently manufacture products under the patents. Perhaps the trial court failed to consider
such claims because they were not clearly plead in the complaint nor argued as part of the
summary disposition motion. Plaintiffs did raise the issue in the motion for reconsideration,
pointing to sections of their complaint which can be read as raising this claim in only the most
general of terms, as well as a brief argument on appeal. In any event, we are at a loss to
understand how any such arrangement would have proven to be to plaintiffs’ advantage. Any
co-licensing arrangement with Talon would have come into existence after the signing of the
2000 agreement. But plaintiffs fail to show how any such arrangement would have survived the
foreclosure on the intellectual property by Talon Financial. Simply put, just as the 2000
agreement itself and the compensation arrangement did not survive the foreclosure, we fail to see
how a second agreement in 2000 to provide for co-licensing could have survived the foreclosure
as well. In other words, plaintiffs would be unable to establish proximate cause as to this claim
as well. Similarly, plaintiffs cannot demonstrate that any failure by Herrinton to explore Talon’s
financial condition would have produced a different outcome.
For the above reasons, we conclude that the trial court properly granted summary
disposition to defendants on plaintiffs’ legal malpractice claims.
Turning to defendants’ appeal, they argued that the trial court erred when it failed to
award defendants their expert witness fees as part of the case evaluation sanctions. After the trial
court granted summary disposition to defendants, defendants moved for case evaluation
sanctions. The trial court granted defendants their claim for attorney fees, but denied their claim
to recover their expert witness fees. Unfortunately, the trial court did not explain its ruling,
merely giving a terse “I’ll allow the attorney fees but not the expert witness fees.” Without
knowing the basis for the trial court’s ruling, we cannot say whether the trial court erred in
denying the expert witness fees.
Although plaintiffs did present arguments to support the denial of expert witness fees
entirely, their primary argument below seems to be not that the expert witness fees should not be
awarded at all, but that they should be granted an evidentiary hearing to explore whether the
amount of the fees were reasonable, especially the nearly $60,000 fee of the expert accountant.
The trial court, without explanation, merely denied any expert witness fees at all.
MCR 2.403(O)(1) provides that a party that rejects case evaluation must pay the actual
costs of the opposing party unless the verdict is more favorable to the rejecting party than was
the case evaluation. MCR 2.403(O)(6) defines “actual costs” as including any cost taxable in a
civil action plus a reasonable attorney fee. MCR 2.403(O)(11) provides that the trial court may
refuse to award actual costs in the interests of justice where the “verdict” is the result of a ruling
on a motion.
Plaintiffs in their brief below did raise the issue of denying actual costs in the interest of
justice, though that really was not the focus of their argument at the hearing nor did the trial
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court specify that as the basis for its ruling.1 On the other hand, if the trial court merely agreed
with the primary thrust of plaintiffs’ argument, that the amount billed by the experts was
unreasonable, that would seemingly not justify a complete denial of those fees. Presumably at
least some of the expert’s fees were reasonable, as plaintiffs do not argue that it was completely
unreasonable to employ the experts at all.
Also present in this case is the question whether the expert witness fees were assessable
at all. MCL 600.2164(1) provides that an expert may not be paid a fee in excess of the standard
witness fee unless the trial court awards a higher sum. Conceivably, the trial court may be ruling
that defendants may not pay the experts any expert witness fee, but if that is the basis of the trial
court’s ruling, it did not so state.
In sum, while there may well be a basis for the trial court to reduce or eliminate the
amount requested by defendants for case evaluation sanctions, the trial court has failed to
provide us with the rationale for its ruling and, therefore, the issue is unreviewable on the current
record. Accordingly, we remand the matter to the trial court. On remand, the trial court may
hold any hearing necessary to resolve this matter and may reiterate its original ruling on case
evaluation sanctions or modify it if the court comes to the conclusion that its original ruling was
in error. In any event, the trial court shall explain in detail on the record, or in a written opinion,
the basis for its ruling. The trial court shall file with this Court any opinion and the transcript of
any hearing held on remand within forty-two days of the matter being remanded to the trial
court.
Affirmed in part and remanded in part for further proceedings consistent with this
opinion. We retain jurisdiction. Defendants may tax costs in Docket No. 254877 only. No costs
in Docket No. 256359, no party having prevailed in full.
/s/ William B. Murphy
/s/ David H. Sawyer
/s/ Patrick M. Meter
1
We also note that MCR 2.403(O)(11) authorizes the court to “refuse to award actual costs.” It
is unclear to us whether the court can, as was done here, award partial actual costs. The
language of the court rule would suggest that it may have to be all or nothing, and thus the trial
court’s ruling could not be upheld on this basis.
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