LANSING, Mich. (Legal Newsline) -- The Michigan Court of Appeals ruled this week that a lower court did not err in awarding sanctions to a couple, whose home was overrun by bats, on the basis that a remediation company's civil action against them was frivolous.
A three-judge panel of the court released its per curiam opinion Tuesday.
In the case at issue, plaintiff Complete Animal Control Solutions LLC alleged breach of contract by defendants James and Alida Wolney for failure to pay the company for services it performed at the Wolneys' bat-infested home.
The company and its counsel, Parker & Parker, appealed to the state Court of Appeals from a Livingston Circuit Court order granting sanctions against it and the law firm.
In June 2011, the defendants' residence in Howell, Mich., was severely infested with bats, so they filed a claim with their insurer, State Farm.
State Farm recommended that the couple hire Complete Animal Control Solutions to provide bat remediation services.
After inspecting the residence, the company discovered the attic was filled with bats, bat feces and urine, and debris. Bat excrement also had destroyed the roof and siding.
Complete Animal Control Solutions and the Wolneys agreed that the company would provide labor and material for bat remediation and restoration of the residence.
The company initiated bat remediation services and work on the couple's roof, but bats were still entering the home.
In fact, the damage to the home from bat excrement and debris became so extensive that it was determined that the home had to be "gutted."
The defendants and company later agreed, in August 2011, to an initial contract price of $81,388.37 and a scope of work that was approved by State Farm.
Although the parties dispute the reason for Complete Animal Control Solutions doing so, the company stopped working on the home later that month.
In response, in September 2011, the Wolneys sent the company a letter notifying it that its services were terminated effective immediately.
Months later, in November 2011, Mission Carpentry LLC recorded a claim of lien regarding the Wolneys' property and Complete Animal Control Solutions recorded a construction lien on the property.
Complete Animal Control Solutions then sued the couple on Feb. 3, 2012, alleging claims for breach of contract, quantum meruit, open account and fraud.
In particular, the company alleged that the amount due to it under the contract the couple breached was $81,388.37. It requested a judgment against the defendants for $81,388.37 plus costs, interest and attorney fees.
The company also requested that the trial court appoint a receiver for insurance funds and order the defendants provide the receiver with any funds that they had already received from their insurance carrier for labor or materials provided to their home for their claim of loss.
On the same day, Complete Animal Control Solutions recorded a notice of lis pendens concerning the Wolneys' property.
The trial court appointed a receiver.
The defendants moved for summary disposition, arguing that the company's claims were barred because, as an unlicensed residential builder, it lacked the legal capacity to sue.
The couple also argued that the company's construction lien and notice of lis pendens were invalid and constituted slander of title, and that the receivership should be terminated.
The defendants also insisted they were entitled to sanctions because Complete Animal Control Solutions filed frivolous claims.
The company responded that it was licensed by the state of Michigan to engage in "damage control and nuisance caused by wild animals, and to use non-pesticide methods to control and remove wild animals."
It also countered that its work at the Wolneys' residence did not require a building permit, and that it was exempt from licensure requirements because "it was working under contract with a licensed residential builder," Mission Carpentry LLC.
On April 19, 2012, the lower court granted the defendants' motion for summary disposition and dismissed each count of plaintiff's complaint.
The court explained that the Residential Builders Act required the company to maintain a residential maintenance and alteration contractor's license to perform the contracted work and that its failure to do so precluded it from obtaining relief either in law or equity.
The court also dismissed the receivership, and ordered that both the claim of lien and the lis pendens be discharged within 14 days.
In addition, it ordered that the company would be responsible for the defendants' costs following their submission of a bill of particulars for Feb. 28 to April 19, 2012.
It noted there was no legal merit to the arguments that the company made in defending the motion for summary disposition.
Following the trial court's decision, the defendants, in May 2012, moved to award $8,688.50 in sanctions against Complete Animal Control Solutions and its counsel, jointly and severally.
The company moved the court for reconsideration and, in response to the defendants' motion for sanctions, objected to various fees and expenses requested.
Specifically, Parker & Parker argued that the couple was prohibited from obtaining fees from it under res judicata because the court had previously ruled that the company was responsible for the defendants' attorney fees.
The lower court granted the Wolneys' motion for sanctions, but struck several of the fees and costs from their bill of particulars, awarding $5,676 in sanctions against the company and its counsel, jointly and severally.
The court denied the company's motion for reconsideration.
"Although the trial court neither expressly stated that plaintiff's complaint was frivolous nor specifically cited one of the definitions of frivolous under MCL 600.2591(3)(a), it is evident from the record that the court determined that plaintiff's civil action was frivolous because plaintiff's legal position was devoid of arguable legal merit, MCL 600.2591(3)(a)(iii)," the appeals court wrote, affirming the lower court's ruling. "Plaintiff's legal position in the trial court was that it was entitled to compensation in the amount of $81,388.37 for materials and services that it provided defendants under the Aug. 13, 2011 contract.
"This position was devoid of arguable legal merit because MCL 339.2412(1) clearly prohibited plaintiff from maintaining its claims because it was not licensed."
The company's legal position that it was exempt for licensure also was devoid of arguable legal merit, the appeals court concluded.
"Given that plaintiff contracted with defendants -- who are neither residential builders nor residential maintenance and alteration contractors -- plaintiff clearly did not engage 'solely in the business of performing work and services under contract with a residential builder or a residential maintenance and alteration contractor.'"
As to the sanctions against Parker & Parker, the court said the law firm did not provide it with any legal authority to support its position that the trial court erred by amending its April 19 order to award sanctions against the firm.
"An appellant may not simply announce its position without providing citation to supporting authority and, thus, leave it to this Court to discover and rationalize the legal basis for its claims," the panel wrote in its nine-page ruling.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.