Michigan Appeals Court Reverses $48,940 Sanctions Order, Citing Trial Court’s One-Line Ruling

LANSING (LN) — The Michigan Court of Appeals reversed and remanded a $48,940 attorneys’ fees sanction against Angstrom Tubular Solutions LLC on Monday, faulting the trial court for adopting a plaintiff’s motion without explaining its own reasoning for finding the company’s counterclaim frivolous.

John Lindeman sued his former employer in Oakland County Circuit Court in early 2023, claiming the automotive parts supplier wrongfully withheld and shorted his 2021 and 2022 bonuses. A three-day jury trial resulted in a $38,000 award for Lindeman on his breach-of-contract claim, and the jury also found Angstrom’s counterclaim for unjust enrichment without merit.

Lindeman then moved for sanctions under MCL 600.2591, arguing the counterclaim was frivolous and filed for an improper purpose. The trial court initially denied the motion without prejudice, but after Lindeman renewed it following completion of trial transcripts, the court issued a one-line order: “For the reasons stated in the plaintiff’s motion and brief, plaintiff’s renewed motion for sanctions against defendant for filing and pursuing a frivolous counterclaim is granted.”

The Court of Appeals found that order insufficient. Citing its prior decision in Tolas Oil & Gas Exploration Co v Bach Services & Manufacturing, LLC, the panel held that MCL 600.2591 requires a trial court to “articulate a sufficiently clear basis” for a frivolousness finding to allow appellate review. By simply adopting Lindeman’s motion wholesale, the trial court left the appellate panel unable to determine what aspect of the counterclaim supported an improper-purpose finding, how the court applied the objective standard the claim was asserted, or what role, if any, discovery failures played.

“We cannot discern what aspect of the counterclaim the trial court determined supported an improper-purpose finding,” the panel wrote. “Nor can we tell how—if at all—the trial court applied ‘the objective standard considering the circumstances concerning the claim it was asserted.'”

The panel reversed and remanded for the trial court to articulate its reasoning on the record or in a written opinion. The Court of Appeals affirmed in a consolidated docket, Docket No. 371072, rejecting Angstrom’s separate challenge to the trial court’s questioning of a witness, finding the company waived the issue by failing to object at trial.