NEDERLANDER v. NEDERLANDER

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Docket Number

Docket No. 145048.

Attorney(S)

Carson, Fischer Potts (by Robert M. Carson), for the plaintiff. Hill Lewis (by Robert B. Webster and Margaret C. Alli), for the defendant.

Judges

PER CURIAM.

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Smart Summary

Factual and Procedural Background

The case arises from a divorce judgment entered on May 24, 1988, which ended a marriage that began in June 1975. More than one year after the divorce judgment, the plaintiff sought to reopen discovery to set aside the judgment under MCR 2.612(C)(1)(c). The trial court found this motion untimely under MCR 2.612(C)(2) but allowed the plaintiff to file an amended complaint. On February 14, 1990, the plaintiff filed a first amended complaint alleging fraud on the court, fraudulent misrepresentations and omissions, breach of fiduciary duty, intentional infliction of emotional distress, conspiracy to defraud, and abuse of process. The complaint was an independent action for monetary damages and did not seek to set aside the divorce judgment. The plaintiff alleged the defendant misrepresented the value of his interests in Ticketmaster, Inc., and Nederlander Realty of Illinois, specifically that the defendant knew of a forthcoming redemption of Ticketmaster stock and the sale of valuable real estate known as Poplar Creek during the divorce proceedings.

The trial court limited discovery to the defendant's redemption of Ticketmaster stock and the sale of Poplar Creek. The plaintiff's motion to expand discovery was denied, the court reasoning that the plaintiff was attempting to discover in the present suit what should have been discovered in the divorce proceeding.

Regarding the defendant's motion for summary disposition, the trial court denied summary disposition under MCR 2.116(C)(8) for the fraud claim but granted it under MCR 2.116(C)(10), finding no genuine issue of material fact that the defendant or his witnesses had falsely testified or concealed evidence.

Legal Issues Presented

Whether the trial court erred in granting summary disposition of the plaintiff's claims of fraud.
Whether the trial court erred in granting summary disposition of the plaintiff's claim of breach of fiduciary duty.
Whether the trial court abused its discretion in denying the plaintiff's motion to expand the scope of discovery.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Courtney v Feldstein, 147 Mich. App. 70, 382 N.W.2d 734 (1985)	Recognition that an independent claim for damages based on fraud during divorce proceedings can be maintained because res judicata does not bar fraud claims.	The court acknowledged this precedent but found the present case controlled by later Supreme Court precedent.
Triplett v St Amour, 444 Mich. 170, 507 N.W.2d 194 (1993)	No independent cause of action exists for damages from a fraudulently induced settlement; court rules provide adequate remedies and protect finality of judgments.	The court applied this precedent to bar the plaintiff’s independent fraud claim filed more than one year after the divorce judgment, emphasizing finality and public policy.
Columbia Casualty Co v Klettke, 259 Mich. 564, 244 N.W. 164 (1932)	Policy considerations regarding fraud claims and finality of judgments.	Used to support the court’s view that fraud claims must be timely and that finality should not be disturbed by late claims.
Fawcett v Atherton, 298 Mich. 362, 299 N.W. 108 (1941)	Policy considerations on fraud and finality of judgments.	Supported the court’s conclusion limiting late fraud claims after divorce judgments.
Duran v Detroit News, Inc, 200 Mich. App. 622, 504 N.W.2d 715 (1993)	Standard that summary disposition is proper where claims are unenforceable as a matter of law and no factual development could justify recovery.	The court found the fraud claim unenforceable as a matter of law and affirmed summary disposition accordingly.
Kar v Hogan, 399 Mich. 529, 251 N.W.2d 77 (1976)	Recognition that a fiduciary relationship may exist between husband and wife.	The court acknowledged this but held no fiduciary relationship existed under the facts at the time of the divorce proceedings.
In re Jennings' Estate, 335 Mich. 241, 55 N.W.2d 812 (1952)	Elements required for fiduciary relationship: reposing faith, confidence, and trust, and reliance on judgment and advice.	Applied to conclude no fiduciary relationship existed between the parties during the divorce.
Mannausa v Mannausa, 370 Mich. 180, 121 N.W.2d 423 (1963)	Criteria for fiduciary relationships in domestic relations.	Supported the finding that no fiduciary relationship existed in this case.
Adkins v Thomas Solvent Co, 440 Mich. 293, 487 N.W.2d 715 (1992)	Standards for fiduciary duty claims.	Supported the court's ruling that the defendant was entitled to judgment on the breach of fiduciary duty claim.
Borman v State Farm Fire Casualty Co, 198 Mich. App. 675, 499 N.W.2d 419 (1993)	Legal standards for fiduciary duty and summary disposition.	Applied to affirm summary disposition on fiduciary duty claim.
Williams v Logan, 184 Mich. App. 472, 459 N.W.2d 62 (1990)	Trial court’s discretion in discovery matters.	Used to uphold denial of plaintiff’s motion to expand discovery.
Rapaport v Rapaport, 185 Mich. App. 12, 460 N.W.2d 588 (1990)	Pleading requirements for fraud and discovery scope.	The court noted the plaintiff was not required to meet strict pleading standards for the motion to expand discovery but found further discovery irrelevant.
Williams v City of Cadillac, 148 Mich. App. 786, 384 N.W.2d 792 (1985)	Requirement to adequately present issues in appellate briefs.	The court declined to consider issues inadequately presented by the plaintiff.
Community Nat'l Bank of Pontiac v Michigan Basic Property Ins Ass'n, 159 Mich. App. 510, 407 N.W.2d 31 (1987)	Standards for appellate review of issues not properly presented.	Supported refusal to consider cursory arguments on appeal.

Court's Reasoning and Analysis

The court analyzed the plaintiff’s fraud claim in light of procedural rules and public policy favoring finality of judgments. Although the plaintiff cited Courtney v Feldstein to support an independent fraud claim post-divorce, the court found the controlling precedent to be the Supreme Court’s decision in Triplett v St Amour, which bars independent fraud claims arising from settlement agreements due to effective remedies under court rules and the need to preserve finality. The plaintiff’s claim was filed more than one year after the divorce judgment, exceeding the time limit for reopening under MCR 2.612(C). The court emphasized that allowing late fraud claims based on post-judgment transactions would undermine finality and public policy. Due diligence and liberal discovery during the divorce should expose any intrinsic fraud.

Regarding the breach of fiduciary duty claim, the court found no fiduciary relationship existed at the time of the divorce proceedings because there was no reposing of trust or reliance between the parties. Established legal standards require such elements, which were absent here.

The court also declined to consider other claims inadequately briefed by the plaintiff. Finally, the court found no abuse of discretion in denying the plaintiff's motion to expand discovery because the claims relevant to that motion failed as a matter of law and further discovery was not relevant to the pleaded claims.

Holding and Implications

The court affirmed the trial court’s summary disposition orders. Specifically:

The plaintiff’s independent fraud claim was barred as untimely and contrary to the public policy favoring finality of divorce judgments.
The breach of fiduciary duty claim failed as a matter of law due to absence of a fiduciary relationship.
The trial court did not abuse its discretion in denying expanded discovery.

The direct effect is the dismissal of the plaintiff’s amended complaint claims against the defendant. The decision does not establish new legal precedent but applies existing principles to uphold the finality of divorce judgments and limit late fraud claims.

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NEDERLANDER v NEDERLANDER

PER CURIAM.

Plaintiff appeals as of right six orders entered by the Oakland Circuit Court, the cumulative effect of which granted the defendant summary disposition of each count of the plaintiff's first amended complaint. We affirm.

Following a trial, the entry of a divorce judgment on May 24, 1988, ended a marriage that began in June 1975. More than one year after entry of the judgment, the plaintiff sought to reopen discovery in an attempt to set aside the judgment under MCR 2.612(C)(1)(c). The trial court determined that the plaintiff's motion was untimely under MCR 2.612(C)(2), but allowed the plaintiff to file an amended complaint. On February 14, 1990, the plaintiff filed her first amended complaint in this proceeding, alleging fraud on the court, fraudulent misrepresentations and omissions, breach of fiduciary duty, intentional infliction of emotional distress, conspiracy to defraud, and abuse of process. The amended complaint does not seek to set aside the divorce judgment. Instead, the plaintiff's complaint is an independent action for monetary damages. Plaintiff claimed that the defendant misrepresented the value of his interest in Ticketmaster, Inc., and Nederlander Realty of Illinois. Specifically, the plaintiff alleged that the defendant knew during the divorce proceedings that Ticketmaster would be merged into a new entity, with the defendant redeeming his stock, and that the realty company was in the process of selling valuable real estate known as Poplar Creek.

On January 22, 1990, the trial court entered an order limiting discovery to matters concerning the defendant's redemption of his stock in Ticketmaster and to the realty company's sale of Poplar Creek. On July 16, 1991, the trial court denied the plaintiff's motion to expand the scope of discovery, deciding that the plaintiff was attempting to discover in the present suit what she should have attempted to discover in the first suit.

In deciding the defendant's motion for summary disposition with respect to the plaintiff's claim of fraud, the trial court determined that the plaintiff had stated a claim upon which relief could be granted and therefore denied the defendant's motion for summary disposition under MCR 2.116(C) (8). However, the trial court granted the defendant's motion under MCR 2.116(C)(10), ruling that the evidence did not create a genuine issue of material fact regarding whether the defendant or his witnesses falsely testified at trial or concealed material evidence from the court.

As her first issue on appeal, the plaintiff argues that the trial court erred in granting summary disposition of her claims of fraud. We find that the summary disposition was proper under MCR 2.116(C)(8).

In Courtney v Feldstein, 147 Mich. App. 70, 74; 382 N.W.2d 734 (1985), this Court held that the plaintiff could maintain an independent claim for damages resulting from the defendant's alleged fraudulent conduct during a divorce proceeding because principles of res judicata cannot be invoked to sustain fraud. The plaintiff in Courtney learned, approximately one year after the divorce judgment was entered, that the defendant had sold his interest in two corporations at a price substantially larger than the value placed on them in the property settlement.

We believe, however, that the issue in the present case is controlled by the Supreme Court's decision in Triplett v St Amour, 444 Mich. 170; 507 N.W.2d 194 (1993). In Triplett, the parties entered into a settlement agreement in an underlying personal injury action. The defendants in the underlying action then learned that the plaintiff failed to disclose that she had previously undergone treatment for her shoulder condition. The defendants in the underlying action filed a claim against the plaintiff less than one year after the settlement agreement was filed, alleging that St. Amour had fraudulently concealed her preaccident physical condition. In its opinion, the Supreme Court held that there is no independent cause of action to recover damages for a fraudulently induced settlement because the court rules provide effective remedies and deterrents. Id., p 176. The Court decided that the balanced approach given in MCR 2.612(C) to competing public policy considerations concerning the recognition of fraud suits and the finality of judgments would be upset if the plaintiff was allowed to file a claim of fraud. Id., p 178.

Unlike Triplett, the plaintiff in the present case filed her claim of fraud more than one year after the divorce judgment was entered. In addition, Justice LEVIN in a separate opinion in Triplett, supra p 186, stated that different policy considerations in a divorce action might justify a different rule depending on the circumstances. However, we believe that the policy concerns expressed in Columbia Casualty Co v Klettke, 259 Mich. 564; 244 N.W. 164 (1932), and Fawcett v Atherton, 298 Mich. 362; 299 N.W. 108 (1941), are controlling. If a party suspects that the other party has committed fraud during a divorce proceeding, then MCR 2.612(C)(1) (c) and (2) allows the party to seek redress within one year after the judgment is entered. On the other hand, we believe that allowing a party to file an independent action for fraud whenever the other party, more than one year after the divorce judgment is entered, liquidates assets or consummates a business transaction is contrary to the public policy behind the finality of judgments. The exercise of due diligence during the course of liberal discovery should expose any intrinsic fraud that may be present in the divorce proceeding. Accordingly, we find that the trial court did not err in granting the defendant summary disposition because the claim was so clearly unenforceable as a matter of law that no factual development could establish the claim and justify recovery. Duran v Detroit News, Inc, 200 Mich. App. 622, 628; 504 N.W.2d 715 (1993).

Next, the plaintiff argues that the trial court erred in granting summary disposition of her claim of breach of fiduciary duty. We disagree. Although a fiduciary relationship may exist between husband and wife, see, e.g., Kar v Hogan, 399 Mich. 529; 251 N.W.2d 77 (1976), a fiduciary relationship does not necessarily exist whenever the parties are related. At the time of the divorce proceedings, there certainly was no reposing of faith, confidence, and trust and the placing of reliance by one party upon the judgment and advice of the other party. See In re Jennings' Estate, 335 Mich. 241, 244; 55 N.W.2d 812 (1952); Mannausa v Mannausa, 370 Mich. 180, 184; 121 N.W.2d 423 (1963). We conclude, as a matter of law, that the defendant was entitled to judgment against the plaintiff's claim of breach of fiduciary duty. Adkins v Thomas Solvent Co, 440 Mich. 293, 302; 487 N.W.2d 715 (1992); Borman v State Farm Fire Casualty Co, 198 Mich. App. 675, 678; 499 N.W.2d 419 (1993).

We also decline to consider the plaintiff's argument concerning whether the trial court erred in granting summary disposition of the other counts of her amended complaint because the plaintiff has failed to adequately include those issues in the statement of questions presented in her brief and has given them only cursory treatment. Williams v City of Cadillac, 148 Mich. App. 786, 790; 384 N.W.2d 792 (1985); see also Community Nat'l Bank of Pontiac v Michigan Basic Property Ins Ass'n, 159 Mich. App. 510, 520-521; 407 N.W.2d 31 (1987); MCR 2.116(C)(8).

Finally, we determine that the trial court did not abuse its discretion in denying the plaintiff's motion to expand the scope of discovery. See Williams v Logan, 184 Mich. App. 472, 476; 459 N.W.2d 62 (1990). The issue is moot because the counts of the plaintiff's amended complaint that were pertinent to her motion to expand discovery failed to state a claim upon which relief could be granted. In any event, we note that fraud must be pleaded with particular facts. MCR 2.112(B)(1). In her amended complaint, the plaintiff alleges with specificity that the defendant misrepresented the value of his interest in Ticketmaster, Inc., and the value of Poplar Creek. Defendant supplied, and the plaintiff received, numerous documents regarding these entities. We do not hold that the plaintiff was required to comply with the strict pleading requirements of MCR 2.112(B)(1) in filing her motion to expand discovery. Compare Rapaport v Rapaport, 185 Mich. App. 12, 16; 460 N.W.2d 588 (1990). Instead, we find only that further discovery was not relevant to the subject matter specifically pleaded in the plaintiff's amended complaint. MCR 2.302(B)(1); Williams, supra.

Affirmed.