Nejla Israel v. Ramiz Putrus ( 2014 )

STATE OF MICHIGAN
COURT OF APPEALS
NEJLA ISRAEL, UNPUBLISHED
November 4, 2014
Plaintiff/Counterdefendant/
Intervening Defendant-Appellant,
v No. 316249
Macomb Circuit Court
RAMIZ PUTRUS and NAJAH PUTRUS, LC No. 2011-002782-CB
Defendants/Counterplaintiffs/
Third-Party Plaintiffs-Appellees,
and
FOUAD ZORA,
Third-Party Defendant,
and
BI-COUNTY MEDICAL CENTER, P.C., and
UNIVERSAL URGENT CARE, P.C.,
Intervening Plaintiffs.
Before: CAVANAGH, P.J., and JANSEN and RONAYNE KRAUSE, JJ.
PER CURIAM.
Plaintiff appeals by right the circuit court’s order of April 29, 2013, confirming the
arbitration award and denying plaintiff’s motion to vacate the arbitration award. We affirm but
remand for a determination of the actual damages arising from this vexatious appeal pursuant to
MCR 7.216(C).
I
Dr. Nejla Israel (“plaintiff”) practiced medicine and was in business with Dr. Ramiz
Putrus (“Ramiz”) and his wife Dr. Najah Putrus (“Najah”) (collectively “defendants”). Plaintiff
and Ramiz were the co-owners of two medical clinics: Universal Urgent Care, P.C., and Bi-
County Medical Center, P.C. Plaintiff and Ramiz each owned 50 percent of the outstanding
common stock of each professional corporation. However, pursuant to a written agreement
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between plaintiff and Ramiz dated August 1, 2008, Ramiz possessed 51 percent of the voting
power of the two entities.
Plaintiff alleged that, beginning in late 2008 and continuing into 2009, defendants
embezzled more than $300,000 from the professional corporations and converted these funds to
their own personal use. On July 12, 2011, plaintiff sued defendants for conversion in the
Macomb Circuit Court. Plaintiff asserted that defendants had engaged in either embezzlement or
statutory conversion, and that she was therefore entitled to treble damages pursuant to MCL
600.2919a(1). Plaintiff also set forth a shareholder-oppression claim under MCL 450.1489,
asserting that defendants had engaged in illegal, fraudulent, or willfully unfair and oppressive
conduct. Among other things, plaintiff sought dissolution and liquidation of the assets of the two
professional corporations.
On August 23, 2011, defendants answered the complaint and set forth counterclaims of
breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, common-
law conversion, statutory conversion, unjust enrichment, and tortious interference with a
business relationship or expectancy. Defendants also sought an accounting and set forth a
shareholder-oppression claim under MCL 450.1489. In addition, defendants filed a third-party
complaint, setting forth similar third-party claims against plaintiff’s husband, Fouad Zora
(“Zora”).
On August 24, 2011, Universal Urgent Care, P.C., and Bi-County Medical Center, P.C.,
sought leave to intervene as plaintiffs. Their motion to intervene was ultimately granted. The
professional corporations set forth claims against plaintiff and Zora that were largely identical in
substance to defendants’ counterclaims and third-party claims.
On September 16, 2011, defendants and intervening plaintiffs moved for partial summary
disposition, arguing that all parties had sought dissolution of the two professional corporations
and requesting that the circuit court immediately dissolve the entities. The circuit court granted
the motion and entered an order dissolving the two professional corporations. The matter then
proceeded with respect to the parties’ remaining claims.
After several adjournments, the entry of protective orders, the filing of certain motions to
compel discovery, and the entry of several other pretrial orders, the parties entered into an
agreement to submit their claims to binding arbitration on May 10, 2012. On June 8, 2012, the
circuit court entered an order staying all further proceedings pending the completion of binding
arbitration proceedings and the issuance of the arbitrators’ final award. On November 2, 2012,
pursuant to a stipulated order, the parties agreed to dismiss Najah and Zora from the action and
also dismissed certain claims and counterclaims in advance of the commencement of arbitration
proceedings.
Under the arbitration agreement, dated May 10, 2012, the parties agreed to submit their
dispute to a panel of three arbitrators. By their agreement, the parties stipulated that the
arbitration panel would determine the amount of money in dispute and all other questions of fact.
The parties further agreed that the arbitrators’ award would be final and binding.
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The arbitration panel held hearings in November and December 2012. The panel issued
its unanimous, final award on December 20, 2012. The arbitrators determined that plaintiff was
entitled to an award of $284,900, and that Ramiz was entitled to an award of $14,300. The
$284,900 awarded to plaintiff consisted of (1) funds due to plaintiff that had been deposited into
the wrong account, (2) overpayments by plaintiff for rent, property taxes, and other operating
expenses, (3) improper salary payments to third parties made without plaintiff’s knowledge, and
(4) legal fees paid to Ramiz in connection with this matter. The arbitrators specifically
determined that there was no evidence of embezzlement or shareholder oppression by Ramiz,
and therefore awarded plaintiff “Zero Dollars” on her corresponding embezzlement and
shareholder-oppression claims.
The arbitration panel issued a unanimous “Clarification of Final Award of Arbitrators” on
February 7, 2013. In response to a request for clarification submitted by plaintiff, the arbitrators
explained that plaintiff was not entitled to treble damages or attorney fees under MCL 600.2919a
because there had been “insufficient evidence to sustain a claim of [statutory] conversion.” In
response to a subsequent request for clarification submitted by plaintiff, the arbitrators
unanimously clarified, among other things, the manner in which funds were to be distributed
from certain existing reserve accounts to satisfy the award.
On April 5, 2013, plaintiff filed a motion in the Macomb Circuit Court seeking to vacate
or modify the arbitration award under MCR 3.602(J) and (K). Plaintiff argued that the
arbitrators exceeded their powers or, alternatively, miscalculated the figures in determining their
final award. Plaintiff claimed that Ramiz had engaged in embezzlement or statutory conversion
and that she was therefore entitled to treble damages under MCL 600.2919a. Plaintiff also
argued that the arbitrators had erred by finding no evidence of shareholder oppression and by
failing to award her costs and reasonable attorney fees.
Ramiz responded by arguing, among other things, that plaintiff’s motion to vacate the
arbitration award was untimely because it had been submitted more than 91 days after issuance
of the final award. See MCR 3.602(J)(3). Ramiz also argued that plaintiff was impermissibly
seeking to revisit the factual determinations of the arbitrators. Ramiz requested that the circuit
court confirm the arbitration award pursuant to MCR 3.602(I).
On April 29, 2013, the circuit court held oral argument. Plaintiff’s attorney argued that
the arbitrators exceeded their authority and made an error of law by failing to award plaintiff
treble damages under MCL 600.2919a. The circuit court pointed out that the arbitrators had
specifically found that there was no embezzlement or statutory conversion within the meaning of
MCL 600.2919a, and observed that it was within the arbitrators’ purview to make such factual
determinations. Plaintiff’s counsel disagreed, insisting that “these people didn’t have carte
blanche to just throw numbers around.” Counsel insisted that because plaintiff’s claim had been
pleaded under MCL 600.2919a, the arbitrators were required to award treble damages, costs, and
attorney fees.
Counsel for Ramiz responded by pointing out that the arbitrators had concluded that there
was no embezzlement, statutory conversion, or shareholder oppression. Counsel further argued
that even if his client had committed statutory conversion or embezzlement, the award of treble
damages, costs, and attorney fees under MCL 600.2919a was discretionary with the arbitrators.
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The circuit judge noted that he “was satisfied that [the arbitrators] acted within their
authority.” The court also observed that plaintiff’s motion to vacate the arbitration award had
been filed more than 91 days after the issuance of the final award. The court then stated that
“even if [plaintiff was] not late in filing, the Court is satisfied that [the arbitrators] acted
appropriately and the decision did not exceed their authority.” The circuit court remarked that it
would confirm the award.
Following the hearing of April 29, 2013, the circuit court entered an order (1) denying
plaintiff’s motion to vacate the award as untimely, and (2) ruling that the arbitrators had not
made an error of law. In that same order, the circuit court confirmed the final arbitration award,
as clarified by the arbitration panel. On June 3, 2013, the circuit court entered an order staying
all distributions under the arbitration award pending the outcome of this appeal.
II
Judicial review of an arbitration award is very limited. Washington v Washington, 283
Mich. App. 667, 671; 770 NW2d 908 (2009). We review de novo the circuit court’s decision to
confirm, modify, or vacate an arbitration award. Nordlund & Assoc, Inc v Hesperia, 288 Mich
App 222, 226; 792 NW2d 59 (2010); Tokar v Albery, 258 Mich. App. 350, 352; 671 NW2d 139
(2003). We also review de novo whether the arbitrators exceeded their authority. Washington,
283 Mich. App. at 672.
Factual findings by the arbitrators are not subject to judicial review. Krist v Krist, 246
Mich. App. 59, 67; 631 NW2d 53 (2001); Konal v Forlini, 235 Mich. App. 69, 75; 596 NW2d 630
(1999). Decisions within the arbitrators’ discretion are similarly beyond the scope of judicial
review. Iron Co v Sundberg, Carlson & Associates, Inc, 222 Mich. App. 120, 126; 564 NW2d 78
(1997). We review de novo the proper interpretation and application of the court rules. In re
Mason, 486 Mich. 142, 152; 782 NW2d 747 (2010).
III
As a preliminary matter, we conclude that plaintiff’s motion to vacate the arbitration
award was properly denied as untimely. The arbitrators’ final award was originally issued on
December 20, 2012. Plaintiff submitted requests for clarification on January 9, 2013, and
January 11, 2013. Neither request for clarification was submitted within 14 days of the original
final award. Accordingly, neither request for clarification constituted a proper “motion to correct
errors or omissions” under MCL 600.5078(3). Vyletel-Rivard v Rivard, 286 Mich. App. 13, 24;
777 NW2d 722 (2009). Because neither request for clarification constituted a proper “motion to
correct errors or omissions” under MCL 600.5078(3), plaintiff had no legal authority to file these
requests for clarification. Vyletel-Rivard, 286 Mich. App. at 24. Therefore, neither request
extended the running of the 91-day period prescribed by MCR 3.602(J)(3). See Vyletel-Rivard,
286 Mich. App. at 24-25. The circuit court properly denied plaintiff’s motion to vacate the
arbitration award as untimely. MCR 3.602(J)(3); see also Vyletel-Rivard, 286 Mich. App. at 24-
25.
Plaintiff argues that the arbitrators exceeded their authority and committed errors of law
by (1) refusing to treble plaintiff’s damages, (2) failing to award plaintiff her costs and
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reasonable attorney fees, (3) failing to find that plaintiff was oppressed as a shareholder, and (4)
evidently miscalculating the figures in determining their final award. As already explained, the
circuit court was required to deny plaintiff’s motion to vacate the arbitration award because it
was untimely filed. See MCR 3.602(J)(3); Vyletel-Rivard, 286 Mich. App. at 24-25. However,
even if plaintiff’s motion had been timely, plaintiff’s arguments are entirely meritless.
As this Court has previously held, the decision to award treble damages, costs, and
attorney fees for statutory conversion or embezzlement under MCL 600.2919a is entirely
discretionary. Aroma Wines & Equipment, Inc v Columbia Distribution Services, Inc, 303 Mich
App 441, 449; 844 NW2d 727 (2013). Discretionary decisions by the arbitrators are beyond the
scope of judicial review. Iron Co, 222 Mich. App. at 126. In addition, this Court lacks the
authority to review the arbitrators’ factual finding that no embezzlement, statutory conversion, or
shareholder oppression was committed in this case. Krist, 246 Mich. App. at 67; Konal, 235 Mich
App at 75.
Plaintiff’s claim that the arbitrators evidently miscalculated the figures in determining
their final award is merely a restatement of her earlier argument that the arbitrators should have
trebled her damages. Indeed, plaintiff makes very little effort to conceal the true substance of
this argument, stating in her brief on appeal that “[t]he award contains an evident miscalculation
of figures which can be corrected by simply multiplying the sum [awarded] by the statutorily
mandated triple.” As already explained, the award of treble damages under MCL 600.2919a is
not “statutorily mandated” as plaintiff argues, but is purely discretionary. Aroma Wines, 303
Mich. App. at 449. We perceive no error in the circuit court’s denial of plaintiff’s motion to
vacate or modify the arbitration award; the court properly confirmed the award.
IV
The instant appeal is wholly devoid of legal merit. Plaintiff has done nothing but
challenge the arbitrators’ discretionary decisions and factual determinations. Such decisions and
determinations are unreviewable by this Court, as plaintiff’s appellate attorneys certainly knew at
the time they filed this appeal on plaintiff’s behalf. Plaintiff and her attorneys had no reasonable
basis to believe that there were any meritorious issues to be determined on appeal. See MCR
7.216(C)(1)(a). Therefore, on our own initiative, we award defendants their actual damages
incurred as a result of this vexatious appeal. MCR 7.216(C)(1). This includes the actual costs
and expenses incurred by defendants as a result of this appeal, including their reasonable
appellate attorney fees. MCR 7.216(C)(2). We remand to the circuit court for a determination of
the actual damages attributable to the conduct of plaintiff and her attorneys. MCR 7.216(C)(2).
These actual damages are awarded against plaintiff and her appellate attorneys. Cvengros v
Farm Bureau Ins, 216 Mich. App. 261, 269; 548 NW2d 698 (1996).
V
Plaintiff’s motion to vacate the arbitration award was properly denied as untimely. Even
if her motion had been timely filed, plaintiff may not attack the arbitrators’ discretionary
decisions and factual findings on appeal. We affirm the circuit court’s order confirming the
arbitration award and denying plaintiff’s motion to vacate. We remand to the circuit court for a
determination of the actual damages payable to defendants as a result of this vexatious appeal.
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Affirmed but remanded for a determination of the actual damages arising from this
vexatious appeal pursuant to MCR 7.216(C). We do not retain jurisdiction. Defendants, having
prevailed on appeal, may tax their costs pursuant to MCR 7.219.
/s/ Mark J. Cavanagh
/s/ Kathleen Jansen
/s/ Amy Ronayne Krause
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