JOHN WAGNER V RITA MARROGHI-JABRO
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STATE OF MICHIGAN
COURT OF APPEALS
JOHN WAGNER,
UNPUBLISHED
April 23, 2009
Plaintiff-Appellee/Cross-Appellant,
v
No. 280632
Oakland Circuit Court
LC No. 2006-071961-CZ
RITA MARROGHI-JABRO,
Defendant-Appellant/CrossAppellee.
Before: Beckering, P.J., and Talbot and Donofrio, JJ.
PER CURIAM.
Defendant Rita Marroghi-Jabro appeals as of right from a judgment, following a jury
trial, awarding her damages of $3,000 on her claim for tortious interference with a business
relationship. Plaintiff John Wagner cross appeals, challenging the trial court’s denial of his
motion for case evaluation sanctions and the court’s award of taxable costs to Marroghi-Jabro.
Because the trial court did not abuse its discretion when it did not allow Marroghi-Jabro to
amend her complaint, limited the evidence Marroghi-Jabro could present regarding damages, and
denied Wagner’s request for case evaluation sanctions, we affirm and remand for further
proceedings consistent with this opinion.
This case arises out of Wagner’s sale of his dental practice to Marroghi-Jabro in 2004.
Marroghi-Jabro purchased the practice as a going concern for $575,000. As part of the
agreement, Wagner agreed not to engage in any similar business within a 25-mile radius of the
practice for seven years. In January 2006, Wagner filed a complaint for breach of contract,
alleging that Marroghi-Jabro failed to pay account receivables that were due under the
agreement, and improperly prevented him from practicing on certain patients in the office as
permitted by the agreement. Marroghi-Jabro filed a counter-complaint that included two claims
for breach of contract and a claim for tortious interference with a business relationship.
Marroghi-Jabro alleged that Wagner breached the agreement’s non-compete clause by soliciting
patients of his former practice and conducting business in direct competition with MarroghiJabro’s practice. Marroghi-Jabro also alleged that Wagner acted in bad faith and willfully
breached the agreement by soliciting his former patients, thereby undermining the purpose of the
agreement. Marroghi-Jabro requested reasonably foreseeable damages, including, but not
limited to, lost profits. She also requested “[q]uasi-[p]ermanent injunctive relief” and specific
performance to require Wagner to comply with the terms of the restrictive covenant that
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prevented him from competing with Marroghi-Jabro. Marroghi-Jabro’s tortious interference
claim was based on the same facts.
Before trial, Wagner moved to limit the theories of liability that Marroghi-Jabro could
pursue at trial. Wagner sought to prevent Marroghi-Jabro from presenting any evidence related
to his alleged failure to help with the transition of the practice.1 The trial court ruled that
Marroghi-Jabro would not be permitted to pursue any claim related to Wagner’s alleged failure
to assist with the transition of the practice because it was a new theory that Marroghi-Jabro had
not pleaded in her counter-complaint, discovery was closed, and the matter scheduled for trial.
The trial court acknowledged that Marroghi-Jabro was well aware of the claim long before her
attempt to amend and that she had no excuse, reasonable or otherwise, for failing to earlier plead
her claim. The trial court subsequently denied Marroghi-Jabro’s motion to amend her countercomplaint to cure the perceived pleading deficiencies.
Wagner also filed a motion to limit the evidence that Marroghi-Jabro could present with
respect to her claim for lost profits arising from Wagner’s alleged breaches of the parties’
agreement and interference with Marroghi-Jabro’s business relationship with the practice’s
patients. The trial court ruled that Marroghi-Jabro would be limited to presenting evidence of
lost profits related to 20 identifiable patients whom Wagner allegedly treated in violation of the
agreement.
At trial, the jury found that both parties breached the purchase agreement, but declined to
award either party damages for the respective breaches. The jury also found that Wagner
intentionally interfered with Marroghi-Jabro’s business relationship or expectancy and awarded
Marroghi-Jabro damages of $3,000 on that claim only. Both parties appeal.
I. Marroghi-Jabro’s Appeal
Marroghi-Jabro first argues that she was improperly precluded from pursuing a claim
related to the transitioning of the business. This Court reviews a trial court’s decision to deny a
motion to amend a complaint for an abuse of discretion. “An abuse of discretion occurs when a
trial court’s decision falls outside the range of principled outcomes.” Shember v Univ of
Michigan Medical Ctr, 280 Mich App 309, 314; 760 NW2d 699 (2008).
MCR 2.118(A)(2) provides that a court should freely grant leave to amend “when justice
so requires.” In PT Today, Inc v Comm’r of the Office of Financial and Ins Services, 270 Mich
App 110, 143; 715 NW2d 398 (2006), this Court explained:
The rules pertaining to the amendment of pleadings are designed to
facilitate amendment except when prejudice to the opposing party would result;
1
Marroghi-Jabro argues in her brief on appeal that Wagner sought to preclude evidence related
to transitioning the practice and loss of goodwill. The trial court’s order of February 7, 2007
only denied Marroghi-Jabro’s transitioning the practice claim as not having been properly
pleaded.
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amendment is generally a matter of right rather than grace. Thus, a motion to
amend should ordinarily be denied only for particularized reasons, including
undue delay, bad faith or a dilatory motive, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing party, or
futility. The trial court must specify its reasons for denying leave to amend, and
the failure to do so requires reversal unless the amendment would be futile.
[Internal citations and footnote omitted.]
Here, the trial court stated that it was denying Marroghi-Jabro’s motion to amend in part
because no proposed amended counter-complaint was provided. MCR 2.118(A)(4) does require
that amendments be in writing. The record here discloses that, indeed, a copy of MarroghiJabro’s proposed amended counter-complaint was attached to her motion to amend. Thus, the
trial court erroneously believed that a written copy had not been provided. Nonetheless, the trial
court also stated that it was denying the motion to amend because discovery had closed, the
matter was set for trial, and the trial court accepted Wagner’s argument that because of the
circumstances he would be prejudiced by the late-filed proposed amendment. Wagner buttressed
his argument on the fact that without prior knowledge of the claim, he had conducted no
discovery on the issue of transitioning the practice and the trial date was set and was fastapproaching. Indeed, the proposed amendment regarding the claim of Wagner’s alleged failure
to assist with the transition of the practice was a new claim raised post-discovery by MarroghiJabro essentially on the eve of trial. Under the circumstances, the trial court’s decision that
Marroghi-Jabro’s proposed amendment would have caused unfair surprise and prejudiced
Wagner, was within the range of principled outcomes and was not an abuse of discretion.
Shember, supra at 315.
Marroghi-Jabro also argues that the trial court erred when it granted Wagner’s pretrial
“motion in limine,” thereby precluding her from presenting evidence of lost profits beyond that
related to 20 identifiable patients whom Wagner allegedly treated in violation of the parties’
agreement. Although Wagner’s motion was labeled a “motion in limine to strike,” the trial court
appropriately observed on reconsideration that it was substantively a motion for partial summary
disposition. Marroghi-Jabro claimed that after she purchased the practice in May 2004, revenues
declined by approximately $200,000 in 2005. Patient records indicated that at least 441 of
approximately 1,200 patients did not return after the sale. Marroghi-Jabro estimated that the
practice lost approximately $550 for each patient who did not return based on the purchase price
of the practice divided by the number of existing patients. We do note, however, that MarroghiJabro also received as part of the purchase price, the building, land, fixtures, and equipment.
Marroghi-Jabro calculated that she lost in excess of $200,000 in 2005 due to patients who did not
return after the sale of the practice. The trial court permitted Marroghi-Jabro to present evidence
related to lost revenues associated with Wagner’s alleged treatment of 20 identifiable patients,2
2
Wagner admitted treating three patients in violation of the agreement, but the trial court
allowed evidence regarding other identifiable patients. Wagner was allowed, pursuant to the
sales agreement, to treat his orthodontic patients and ten other identified patients who were in the
midst of treatment.
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but precluded her from presenting additional evidence of lost profits on the basis that it was too
speculative to establish a causal link between Wagner’s alleged breach of the parties’ agreement
and the claimed damages.
The appropriate measure of damages for breach of a contract is that which would place
the injured party in as good a position as she would have been in had the promised performance
been rendered. Jim-Bob, Inc v Mehling, 178 Mich App 71, 98; 443 NW2d 451 (1989). Lost
profits arising from a breach, if properly proved, are an appropriate element of damages. Id.
The party asserting a claim has the burden of establishing lost profits, but the jury should not be
permitted to speculate or guess on the amount. Joerger v Gordon Food Service, Inc, 224 Mich
App 167, 175-176; 568 NW2d 365 (1997). Lost profits must be proven with a reasonable degree
of certainty, considering the nature of the case, but mathematical precision is not required. JimBob, supra, at 98-99; Body Rustproofing, Inc v Michigan Bell Tel Co, 149 Mich App 385, 390391; 385 NW2d 797 (1986). It is appropriate to place before the jury all the facts and
circumstances that tend to show a probable amount of damages if the nature of the case only
permits an estimation. Body Rustproofing, Inc, supra at 391; see also Bonelli v Volkswagen of
America, Inc, 166 Mich App 483, 511-513; 421 NW2d 213 (1988).
In this case, evidence was presented that Marroghi-Jabro paid a higher amount to acquire
the dental practice as a going concern with an established patient base. Thus, lost profits were
foreseeable as damages if Wagner breached the agreement by improperly soliciting patients from
the practice, thereby leading to the loss of an excessive number of patients. See Lawrence v Will
Darrah & Assoc, Inc, 445 Mich 1, 13-15; 516 NW2d 43 (1994). Marroghi-Jabro presented
evidence that Wagner improperly solicited patients after the sale in contravention of their
agreement. Marroghi-Jabro also indicated that she could offer testimony that the standard in the
industry was a 10 to 15 percent patient loss after the sale of a dental practice but that her practice
lost more than 30 percent of its patients in the year following the sale.
Damages are not speculative merely because they cannot be ascertained with
mathematical precision, particularly where the opposing party’s own actions caused the
imprecision. Godwin v Ace Iron & Metal Co, 376 Mich 360, 368; 137 NW2d 151 (1965).
Evidence is sufficient to prove damages if there is a reasonable basis for computing them, even if
the amount is only approximate. McCullagh v Goodyear Tire & Rubber Co, 342 Mich 244, 254255; 69 NW2d 731 (1955). Here, Marroghi-Jabro failed to offer a reasonable basis for proving
lost profits based on actual, objective data related to the number of patients lost. MarroghiJabro’s evidence essentially was only that Wagner wrongfully competed with her practice during
2005. And, without establishing any connection or correlation, that her dental practice lost more
than the standard in the industry of 10 to 15 percent patient loss in 2005.
The record contains evidence of a loss of patients to other dentists in the area. The record
further shows that Marroghi-Jabro possessed the patient lists of Wagner’s former patients
including those that did not return. In fact, Marroghi-Jabro not only had the names of the 441
non-returning patients, but also their contact information including address and phone number, as
well as their dental records. Inexplicably, Marroghi-Jabro offered not one of the patients lost as
a witness at trial to provide direct evidence concerning the loss. Because lost profits must be
proven with a reasonable degree of certainty, considering the nature of the claims, MarroghiJabro had the means and ability to prove the basis of her loss, and if, to any extent, it was the
result of the alleged nefarious activity of Wagner. Marroghi-Jabro’s bald assertion that Wagner
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competed with her practice in violation of the contract and she suffered a loss of patients greater
than expected is wholly unsupported by the record evidence. In other words, Marroghi-Jabro
offered no evidence whatsoever that the loss of patients she suffered numbering 441, was
somehow related to Wagner’s competition wherein he treated 20 patients. The lack of evidence
of correlation, without more, requires the trier of fact to engage in impermissible conjecture and
speculation. The trial court allowed, even after ruling that evidence of damages would be limited
to the 20 identified patients, that further direct evidence of damages, if collected, would be
admitted. In any event, the trial court allowed Marroghi-Jabro an additional 21 days to
document her loss. Marroghi-Jabro provided no other documentation. Because the trial court’s
determination that Marroghi-Jabro’s evidence of lost profits was merely speculative is supported
by record evidence, the trial court’s decision to limit the damages evidence was within the range
of principled outcomes and was not an abuse of discretion. Shember, supra at 315.
II. Wagner’s Cross Appeal
Wagner’s cross appeal challenged the trial court’s denial of his request for case
evaluation sanctions and its award of taxable costs to Marroghi-Jabro. Wagner claims
entitlement to case evaluation sanctions because he accepted case evaluation and Marroghi-Jabro
did not. The case evaluation was $16,000 and the jury verdict was $3,000. It was, however,
appropriate for the trial court to consider the equitable relief received from the court by
Marroghi-Jabro to deny Wagner’s request for case evaluation sanctions.
MCR 2.403(O)(5) provides:
If the verdict awards equitable relief, costs may be awarded if the court
determines that
(a) taking into account both monetary relief (adjusted as provided in
subrule [O][3]) and equitable relief, the verdict is not more favorable to the
rejecting party than the evaluation, and
(b) it is fair to award costs under all of the circumstances.
MCR 2.403(O)(5) requires that some form of “equitable relief” be granted. Equitable
relief consists of “[t]hat species of relief sought in a court with equity powers as, for example, in
the case of one seeking an injunction or specific performance instead of money damages.”
Forest City Enterprises, Inc v Leemon Oil Co, 228 Mich App 57, 79-80; 577 NW2d 150 (1998),
quoting Black’s Law Dictionary (5th ed), p 484. In this case, Wagner sought reformation of the
covenant not to compete and Marroghi-Jabro sought enforcement of that contract provision. The
trial court issued an order before the case evaluation was conducted that provided “that Case
Evaluation in this matter will not evaluate the equitable relief sought, but will only determine the
monetary amount of damages from violation of the contract in question.” Thus, the trial court
and the parties were aware before the case evaluation was held that the case evaluation would not
address equitable relief.
The trial court’s final judgment, in addition to awarding money damages to MarroghiJabro, dismissed Wagner’s claim for equitable relief, thereby continuing the non-compete clause
in force. However, the final judgment does not include an affirmative statement directly
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enforcing the non-complete clause, instead it is only inferred by the language of the judgment
and supported by the record. A rejecting party is subject to case evaluation sanctions dependent
upon the ultimate verdict. MCR 2.403(O)(1). Verdict is defined in MCR 2.403(O)(2) as:
(a) a jury verdict,
(b) a judgment by the court after a nonjury trial,
(c) a judgment entered as a result of a ruling on a motion after rejection of the
case evaluation.
The trial court in ruling on Wagner’s motion denying sanctions specifically agreed with
Marroghi-Jabro’s proposition that she received equitable relief in the form of specific
performance of the covenant not to compete as she requested in both her initial countercomplaint and amended counter-complaint. The trial court held in particular, “I think that
considering the equitable relief initially in comparison with what the jury did, I don’t think
sanctions are appropriate.” The order that was entered appears incomplete to this Court because
it does not reflect the entirety of the trial court’s holding. We therefore remand for the trial court
to either correct its final judgment to reflect its holding directly providing specific performance
of the non-compete clause3 or, in the alternative, assess mandatory case evaluation sanctions in
accordance with MCR 2.403(O)(5).
Affirmed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Jane M. Beckering
/s/ Michael J. Talbot
/s/ Pat M. Donofrio
3
At oral argument before this Court, all parties stipulated that the covenant not to compete is in
full force and effect.
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