Trial Court Improperly Granted Summary Disposition
Opinion Published: January 11, 2024 (O’Brien, P.J., and K. F. Kelly and M. J. Kelly, JJ.)
Court of Appeals Docket No. 364375
Author: Judge K. F. Kelly
Holding: The trial court improperly granted summary disposition to Defendant Herman under MCR 2.116(C)(10) because discovery had not begun in earnest to allow plaintiff an opportunity to raise a genuine issue of material fact. The trial court also legally erred in finding that the objection to sharing of referral fees under MRPC 1.5(e) was timely.
Facts: Plaintiff Melvin Babi and Defendant Gregg Herman had a professional relationship where Babi would send Herman referrals in exchange for a referral fee. Pursuant to this agreement, Babi sent a referral client, Terri Poplichak, to Herman for a medical malpractice lawsuit. Poplichak later settled her suit with Herman as her attorney. However, at the settlement conference, Poplichak denied any knowledge of Babi, stated she was not referred to Herman by any attorney, and objected to any attorney fee being paid to Babi.
After Babi was denied his referral fee, he filed his own suit against Herman asserting a breach of their agreement. In lieu of answering, Herman filed a motion for summary disposition under MCR 2.116(C)(8), arguing that Poplichak’s testimony during the settlement conference rendered the referral fee agreement unenforceable under Michigan Rule of Professional Conduct 1.5(e). Babi responded that Herman improperly relied on evidence outside the pleadings and considering Herman’s motion under MCR 2.116(C)(10) would be premature as discovery had not begun in earnest. The trial court granted Herman’s motion, concluding that, without a written fee agreement, there was not a genuine issue of material fact that Poplichak objected to the fee and further discovery would not reveal a different result. Babi appealed.
Key Appellate Rulings:
The trial court prematurely granted summary disposition under MCR 2.116(C)(10) because discovery had not begun in earnest, Poplichik’s objection to the referral fee was untimely, and Babi raised a genuine issue of material fact precluding summary disposition.
The Court of Appeals first discussed the proper subrule for Herman’s motion for summary disposition. Although Herman purported to move under MCR 2.116(C)(8), he included evidence outside the pleadings, which effectively brought the motion under MCR 2.116(C)(10). Although Babi was not prejudiced by this, the Court of Appeals held that Babi was nonetheless entitled to relief because a motion under subrule (C)(10) was premature. The Court of Appeals acknowledged that the trial court’s reasoning was internally inconsistent. The trial court granted summary disposition because Babi did not raise a genuine issue of material fact but also prevented Babi from engaging in discovery to raise a genuine issue of material fact. Thus, summary disposition was improperly granted.
Moreover, summary disposition was improper because the trial court legally erred in finding Poplichik’s objection to the sharing of referral fees timely. The trial court implicitly rejected the Court of Appeals’ opinion in Law Offices of Jeffery Sherbow, PC v Fieger v Fieger, PC, 326 Mich App 684; 930 NW2d 416 (2019). Although Sherbow was partially reversed by the Supreme Court, the Supreme Court did not disturb the Court of Appeals’ holding that a client must object to a referral fee at the time the client is made aware of the referral fee agreement under MRPC 1.5(e). Because Poplochik did not object at the time she was made aware of the agreement, but instead waited to object until the time of the settlement conference, her objection was untimely and summary disposition should not have been granted.
Finally, Babi’s response to Herman’s motion included e-mails and text messages between Babi and Herman from the date of Babi’s referral to Herman. Those communication revealed that Herman did receive a referral from Babi and sufficiently undermined Poplichak’s settlement conference testimony. Thus, Babi created a genuine issue of material fact precluding summary disposition under MCR 2.116(C)(10).
