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Prince v. MacDonald8/13/1999
FOR PUBLICATION August 13, 1999 9:25 A.M.
Plaintiff alleged several theories of liability against defendants after the parties' employment relationship ended acrimoniously. Plaintiff prevailed on her breach of contract claim and her stock valuation claim. She did not, however, prevail on her religious discrimination claim and, she appeals as of right, raising evidentiary issues with regard to that claim. While defendant MacDonald & Goren, P.C. prevailed on its counterclaim against plaintiff for breach of fiduciary duty, it was sanctioned jointly and severally with defendant MacDonald for litigant misconduct. Defendant MacDonald appeals as of right from the order granting sanctions. We affirm.
On May 23, 1996, the day before the scheduled trial date, defendant MacDonald filed a bankruptcy petition on behalf of MacDonald & Goren, P.C. The next morning he informed the trial court about the filing of the petition. According to plaintiff, defendant MacDonald also represented to the court, and convinced the court, that the trial could not proceed against him personally because of the bankruptcy. He then offered a nominal amount in an attempt to settle the case, which amount plaintiff refused to accept. The trial was adjourned.
On May 31, 1996, MacDonald & Goren, P.C. filed a motion to dismiss its own bankruptcy petition, claiming that it unexpectedly received money and the bankruptcy filing was no longer necessary. The bankruptcy court did not grant the motion, but instead dismissed the case because of defects in the filing of the petition, including a failure to include the necessary matrix, schedules and statements. Plaintiff subsequently moved the bankruptcy court to reopen the case and make a determination as to whether the filing was in bad faith. The bankruptcy court denied plaintiff's motion . Plaintiff then moved for sanctions in the trial court. A hearing with regard to the sanction motion was held, and after trial in the underlying matter, the trial court issued its findings of fact and awarded sanctions to plaintiff in the amount of $43,203.
The trial court stated, in part:
"The Bankruptcy Petition was hastily put together by Defendants, the rules were not followed, a limited disclosure was attempted by listing only two of the firm's creditors, and the Defendants misrepresented the firm's assets in the Petition. The bankruptcy filing was in bad faith. The permissible and appropriate inferences are that (a) the bankruptcy proceeding was used in an attempt to reach a nominal settlement of this case through misrepresentation, or (b) the bankruptcy was filed to otherwise delay these proceedings, cause increased expense and hardship to the Plaintiff and causing unnecessary burden to this Court, under circumstances where the Defendants had no intention of following through with the bankruptcy.
"Further, Defendant Harold C. MacDonald suggested the filing was because of a cash flow problem and because of his firm's pending eviction. The facts do not support these claims. The Court finds that Defendant's testimony is not credible. Finally, the Court finds that Defendants deliberately and improperly delayed the trial.
"For its wrongful conduct, the Court finds the Defendants' action is sanctionable."
In sanctioning defendants, the trial court relied on its inherent authority to sanction litigant misconduct. Cummings v Wayne County, 210 Mich App 249, 262-253; 533 NW2d 13 (1995). It also noted that court's have inherent power to sanction the bad faith or vexatious use of collateral proceedings. See In re Powell Estate, 160 Mich App 704, 718 719; 408 NW2d 525 (1987).
Defendant recognizes
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