ROY PETERSON V BOAT SALES INC
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STATE OF MICHIGAN
COURT OF APPEALS
ROY PETERSON,
UNPUBLISHED
December 21, 2004
Plaintiff-Appellant/Cross-Appellee,
v
BOAT SALES, INC. d/b/a ANDERSON BOAT
SALES, a Michigan Corporation, BAY
FINANCIAL L.L.C., a Michigan Limited Liability
Company, REGINA ANDERSON, and JUDY
ANDERSON, Jointly and Severally,
No. 248733
Oakland Circuit Court
LC No. 1999-013960-CK
Defendants-Appellees/CrossAppellants.
Before: Whitbeck, C.J., and Saad, and Talbot, JJ.
PER CURIAM.
This case arose from plaintiff’s 1998 purchase of a boat from defendant Anderson Boat
Sales at a cost of $27,150.00. In 1999, plaintiff filed an action alleging breach of contract, fraud,
innocent misrepresentation, breach of warranties, and violation of the Michigan Consumer
Protection Act, MCL 445.901 et seq. Two jury trials were held in this matter, the second action
was filed after plaintiff was unable to collect on the judgment he received in the first trial. In
both trials, the juries found that defendants were in violation of the consumer protection act.
Plaintiff appeals as of right on issues involving attorney fees and costs; defendants have filed a
cross-appeal. We affirm in part, reverse in part, and remand for further proceedings.
Plaintiff argues on appeal that the trial court erred in awarding him only $5,000 in
attorney fees following the first trial because, the court said, the matter, involving a “used boat,”
“could have been handled by negotiation in the first place, rather than protracted litigation.” In
plaintiff’s original action, the jury found breach of contract, breach of warranties, and violation
of the Michigan Consumer Protection Act, MCL 445.901 et seq. The Michigan Consumer
Protection Act, MCL 445.901 et seq., is a remedial statute designed to “protect consumers in the
purchase of goods and services” and must be “liberally construed to achieve its intended goals.”
Forton v Laszar, 239 Mich App 711, 715; 609 NW2d 850 (2000). One of the purposes of the act
is “to provide, via an award of attorney fees, a means for consumers to protect their rights and
obtain judgments where otherwise prohibited by monetary constraints.” Jordan v Transnat’l
Motors, 212 Mich App 94, 97-98; 537 NW2d 471 (1995). Under the act, a consumer may bring
a civil action to “recover actual damages or $250.00, whichever is greater, together with
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reasonable attorney fees.” MCL 445.911(2). In consumer protection cases, “the monetary value
of the case is typically low.” Id. Without the award of attorney fees, it will often be
“economically impossible for attorneys to represent their clients.” Id.
Here, plaintiff claimed actual costs of $1,242.83, and attorney fees for the first trial in the
amount of $51,964.50. Although the trial court listed the factors found in Crawley v Schick, 48
Mich App 728, 737; 211 NW2d 217 (1973), it gave no indication whether it took into
consideration the remedial nature of the consumer protection act, the success of plaintiff’s action,
or even whether it considered the attorney’s standing, the result of the case, or the nature of the
relationship with the client at all. There was no apparent recognition of the negotiations between
the parties or of the reasons that negotiations were not successful. In light of the jury verdict that
defendants were in violation of the consumer protection act, it was insufficient for the trial judge
to summarily conclude that the case should have been resolved through negotiations.
Accordingly, we reverse the $5,000 award and remand for a hearing and evaluation of a
reasonable attorney fee. Jordan, supra.
Following the second trial, plaintiff petitioned the court for $3,044.64 in costs, and
$57,640.00 in attorney fees pursuant, to the Michigan Consumer Protection Act; at the same
time, defendants moved for mediation sanctions under MCR 2.403, because the jury verdict of
$1000 in statutory damages was “considerably less than the case evaluation award of
$17,500.00.” Plaintiff also argues that the trial court erred in finding, after the second trial, that
“plaintiff’s request for attorney fees under the Michigan Consumer Protection Act and
defendants’ request for case evaluation sanctions under MCR 2.403 are of equal merit and offset
each other.” Again, the court did not analyze the appropriate factors or circumstances of the
case, nor did it give any recognition of the remedial nature of the consumer protection act or the
equitable nature of the remedy.
In O’Neill v Home IV Care, Inc., 249 Mich App 606, 612-615; 643 NW2d 600 (2002), a
panel of this Court considered the question of appropriate attorney fees and mediation sanctions
under the Whistleblowers’ Protection Act (WPA), MCL 15.361 et seq., another remedial statute.
In O’Neill, this Court found that the trial court’s “focus on mediation in determining attorney
fees and costs” under the WPA was “contrary to the purpose” of the statute. Id. “We are of the
opinion that judicial impartiality dictates that a judge not consider a mediation evaluation, and
the potential sanctions, when determining an award of attorney fees and costs, as was done in the
present case.” Id. As is true of the WPA, the consumer protection act is also a remedial statute,
Forton, supra, and it was improper for the trial court to consider defendants’ claim for mediation
sanctions when determining plaintiff’s reasonable attorney fees under the consumer protection
act. Accordingly, we reverse the zero-award and remand for a hearing and evaluation of a
reasonable attorney fee. Jordan, supra. Only after that has been determined, should the trial
court turn to the question of discretionary mediation sanctions, with consideration given to
plaintiff’s successful action and the equitable nature of the plaintiff’s relief. MCR 2.403(O)(5);
O’Neill, supra.
Next, plaintiff contends that the trial court erred in granting defendants a set off following
the jury’s verdict in the first trial. We agree. During the first trial, the jurors were aware that
plaintiff had not returned the boat to defendants, and that it was in storage with plaintiff’s
mechanic. During deliberations, the jury submitted the question, “can we agree to a lower
damage award without itemizing and include the return of the boat to the dealership?” The
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parties stipulated to send the following answer into the jury room: “If you find there has been a
revocation of the contract the boat will be returned to the dealership, you need not itemize
damages.” Following the jury verdict in the first trial of $29,018.00, plaintiff submitted a
proposed order of judgment of $29, 018.00, and defendants responded with the complaint that
the judgment should be “reduced by the amount of the boat because the Jury found that plaintiff
was entitled to revocation.” The trial court entered an order to the effect that it had “reviewed
Plaintiff’s proposed judgment and Defendant’s objections to same,” and that plaintiff’s proposed
judgment comported with the jury verdict with the addition that “defendant is entitled to a set-off
in the amount of $27,150 based upon the revocation of acceptance.”
A trial court’s grant of remittitur is reviewed for an abuse of discretion. Palenkas v
Beaumont Hospital, 432 Mich 527, 533; 443 NW2d 354 (1989). Although a jury verdict may be
amended to conform with the intention of the jury, Johnson v Auto-Owners, 202 Mich App 525,
528; 509 NW2d 538 ( 1993), it appears from the record that the jury intended to award plaintiff
$29,018.00 and have the boat returned to the dealership. The trial court made no finding that the
jury verdict was excessive, MCR 2.611(E), and, at best, it appears that both the trial court and
defendants’ counsel simply forgot that they had advised the jury that it could limit damages with
the knowledge that the boat would be returned to defendants. It also appears from the record that
defendants did, in fact, get the boat back. We therefore modify the first verdict to reflect the
actual jury award to plaintiff of $29,018.00, a net award that already took into consideration the
return of the boat.
Plaintiff also argues that the second jury verdict should be amended to $1,300,000, the
amount of the letter of credit. There is no merit to this issue. The jury in the second trial found
that there was a fraudulent conveyance between defendant Bay Financial and defendant Boat
Sales, that plaintiff could pierce the corporate veil and that each of the defendants violated the
consumer protection act. The jury found that the amount of plaintiff’s exemplary damages was
“zero,” and awarded the statutory amount of $250 for each of defendants’ violations of the
consumer protection act. Plaintiff is not entitled to the amount of the $1,300,000 letter of credit
that was the subject of the fraudulent conveyance.
Defendants argue on cross appeal that there was insufficient evidence to support the jury
verdict in the second trial and that the trial court improperly denied defendants’ motions for jnov
and directed verdict. This Court reviews de novo a trial court’s grant or denial of a motion for
directed verdict or jnov. Wiley v Henry Ford Cottage Hospital, 257 Mich App 488, 491; 668
NW2d 402 (2003). The evidence and legitimate inferences are reviewed in the light most
favorable to the nonmoving party; the motion should be granted only if the evidence fails to
establish a claim as a matter of law. Id. “If reasonable jurors could honestly have reached
different conclusions, this Court may not substitute its judgment for that of the jury.” Id.
Here, defendants agreed to the jury instruction on this issue, which essentially instructed
that a conveyance is fraudulent if it is made without fair consideration, and the person making it
intends or believes it will leave inadequate property to pay present and future creditors. The jury
was also instructed that plaintiff had the burden of proof, and that “often recognized badges of
fraud include: lack of consideration for the conveyance, a close relationship between the
transferor and the transferee, pending threat of litigation, financial difficulties of the transferor,
and retention of the possession, control or benefit of the property by the transferor.” Both
counsel indicated satisfaction with the instructions.
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On appeal, defendants argue that plaintiff did not meet his burden. However, the
undisputed evidence showed that both defendant Boat Sales and defendant Bay Financial were
owned by defendants Regina and Judy Anderson, and that defendant Boat Sales was managed by
defendants’ husbands, David and Dale Anderson. Defendant Bay Financial gave defendant Boat
Sales a $1,300,000 letter of credit, an amount representing the Anderson family’s “life savings”
but no documentation was presented to show that any money was transferred from one
corporation to the other. Defendant Bay Financial obtained a consent judgment for the same
amount, but did not act to execute the judgment until more than two years later, during which
time defendant Boat Sales was losing money. Accountants for both parties testified that it was
not to defendant Bay Financial’s advantage to put off collecting on the debt, but that collection
would have had tax implications for defendant Boat Sales and, therefore, for defendants Regina
and Judy Anderson. On this evidence, a jury could have reasonably inferred that the conveyance
was made without fair consideration, with the belief or intent that it would not leave enough
property to pay present and future creditors. Wiley, supra.
Defendants also allege on cross appeal that the trial court improperly admitted, over
objection, information about a prior lawsuit, testimony by plaintiff’s expert suggesting that
defendant Bay Financial may not have made a loan to defendant Boat Sales, testimony regarding
settlement negotiations, and testimony about the jury verdict in the first trial. Defendants do not
provide any citations to the transcript of specific instances of error, and have waived this issue by
not citing to the record or making specific arguments to support their broad allegation that the
trial court erred in admitting prejudicial information. MCL 7.212(C)(7); Great Lakes v Ecorse,
227 Mich App 379, 422; 576 NW2d 667 (1998).
Finally, defendants argue that all of plaintiff’s claims were asserted in the first case, that
no additional damages were shown at the second trial, and that, under the tort reform statute, the
trial court should have granted defendants remittitur. A trial court’s grant of remittitur is
reviewed for an abuse of discretion. Palenkas, supra. Again, defendants offer no citations to the
record, and little analysis. However, the tort reform act applies to actions “based on tort or
another legal theory seeking damages for personal injury, property damage, or wrongful death.”
MCL 600.6304. The second trial in this case involved defendants’ fraudulent scheme to avoid
paying the judgment on their previous breach of contract. Defendants reliance on Holton v A+
Insurance, 255 Mich App 318, 323-324; 661 NW2d 248 (2003), that damages in a “tort based
action” must be allocated among those at fault, is misplaced. Id., emphasis in original.
Affirmed in part, reversed in part, and remanded for determination of plaintiff’s costs and
reasonable attorney fees for both trials and for this appeal. We do not retain jurisdiction.
/s/ William C. Whitbeck
/s/ Henry William Saad
/s/ Michael J. Talbot
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