POWELL PRODUCTION INC V DONALD BUTCHER
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STATE OF MICHIGAN
COURT OF APPEALS
POWELL PRODUCTION, INC., and POWELL
LEASING COMPANY,
UNPUBLISHED
March 13, 2003
Plaintiffs-Appellants,
v
DONALD BUTCHER, DONALD CHISHOLM
and LARRY FRENCH,
No. 231626
Hillsdale Circuit Court
LC No. 00-000654-CZ
Defendants-Appellees.
Before: Sawyer, P.J., and Gage and Talbot, JJ.
PER CURIAM.
Plaintiffs appeal from an order of the circuit court granting summary disposition on
plaintiffs’ complaint for fraud. We affirm.
This action has its roots in a claim filed by plaintiffs against Jackhill Oil Company and
six of its directors, officers and employees, including the three defendants in the case at bar.
That suit stemmed from an agreement between the parties regarding the development of certain
oil wells and a determination when payout was to occur. In that litigation, plaintiffs maintained
that a letter of intent dated June 2, 1983, existed that set forth the terms of the payout agreement.
The defendants in Powell v Jackhill maintained that the letter of intent was unsigned and,
therefore, was legally ineffective. Discovery did not yield any indication that defendants had
acted wrongfully in their individual capacities and, as a result, they were ultimately dismissed
from the original litigation after mediation resulted in a no-cause evaluation in favor of the
individual defendants named in the present suit.
Plaintiffs were ultimately successful in their suit against Jackhill and obtained a judgment
for $1.8 million. Several years later, Jackhill sued its attorneys for legal malpractice. During the
course of that case, a fully executed letter of intent surfaced, which plaintiffs discovered in the
summer of 1998. Plaintiffs then moved for discovery sanctions in the original litigation against
both Jackhill and its attorneys. The circuit court awarded $48,177. That award was affirmed by
this Court in In re Costs & Attorney Fees, 250 Mich App 89; 645 NW2d 697 (2002).
In June 2000, plaintiffs commenced the instant lawsuit, alleging that the individual
defendants committed fraud on the court by authorizing or allowing the withholding of the letter
of intent by Jackhill’s attorneys. Defendants denied that they individually committed fraud on
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the court and moved to dismiss the claims pursuant to MCR 2.116(C)(7) (barred by prior
judgment) and MCR 2.116(C)(8) (failure to state a claim). The trial court granted summary
disposition under (C)(7), stating that a new cause of action could not be maintained between
plaintiffs and the individual defendants. The trial court stated that the proper remedy for
plaintiffs would have been to file a motion for relief from judgment under MCR 2.612(C)(1)(c)
as the case allegedly involved intrinsic fraud.
Whether an independent action for fraud exists arising out of the conduct of a party to a
lawsuit was addressed by the Supreme Court in Daoud v De Leau, 455 Mich 181, 200; 565
NW2d 639 (1997):
The principal teaching of Triplett [v St Amour, 444 Mich 170; 507 NW2d
194 (1993)] is that the court rules are a primary source for determining the means
by which a person aggrieved by a judgment may seek to remedy the situation.
The opinions of Justices Boyle and Riley are closely tied to the availability of
relief under MCR 2.612(C). Justice Levin emphasizes another aspect of this
point—the reluctance to fashion a new cause of action where the court rules
already provide a framework for relief.
Indeed, one can paraphrase the last sentences of the opinions of Justice
Boyle, 444 Mich 179, and of Justice Riley, 444 Mich 183, in this manner: Where
statutes and court rules provide effective means for dealing with a judgment
fraudulently obtained through perjury, it is neither sound law nor sound policy to
permit a separate cause of action for fraud.
In the case at bar, plaintiffs did, in fact, seek and receive a remedy to the discovery fraud.
The trial court awarded discovery sanctions of nearly $50,000, an award that this Court upheld
on appeal. In re Costs & Attorney Fees, supra. Furthermore, plaintiffs do not argue that the trial
court did not or could not have fashioned an adequate remedy through the use of discovery
sanctions. Accordingly, we conclude that there existed an adequate remedy under the court rules
and, consistent with the Supreme Court holdings in Daoud and Triplett, plaintiffs are precluded
from bringing a separate action for fraud.
In light of this holding, we need not address the question whether the trial court’s analysis
of MCR 2.612(C) was correct.
Affirmed. Defendants may tax costs.
/s/ David H. Sawyer
/s/ Hilda R. Gage
/s/ Michael J. Talbot
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