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Cone v. Tessler

United States District Court, E.D. Michigan, Southern Division

April 8, 2019

Margaret Cone, Plaintiff,
v.
Mark Tessler, et al., Defendants.

          OPINION & ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

          Sean F. Cox United States District Court Judge

         Plaintiff Margaret Cone filed suit against three Defendants (Mark Tessler, Sherman Jackson, and David Howell) in this action, based upon diversity jurisdiction. Cone asserts breach of contract, unjust enrichment, and fraudulent misrepresentation claims. Those claims stem from an alleged agreement with Defendants to host an educational program at the University of Michigan. This is now the third lawsuit that has been filed against these three Defendants stemming from that alleged agreement.

         The matter is currently before the Court on Defendants' Renewed Motion for Summary Judgment. The motion has been fully briefed by the parties and the Court concludes that oral argument would not aid the decisional process. The Court therefore orders that the motion shall be decided without oral argument. For the reasons set forth below, the Court shall GRANT the motion because all of Cone's claims are barred by the applicable statutes of limitation. In addition, while the Court need not reach any other challenges, the Court also concludes that other challenges to Plaintiff's claims have merit.

         BACKGROUND

         The named Plaintiff in this action is Margaret Cone (“Cone”), a licensed attorney in Michigan. After terminating her counsel, since June of 2018, Cone has been proceeding in this case pro se.

         The World Leadership Program Institute (“the Institute”) is a District of Columbia corporation that was formed by Cone on October 10, 2010. (ECF No. 130 at PageID.4541).

         This is now the third civil action that has been filed against Defendants Mark Tessler (“Tessler”), Sherman Jackson (“Jackson”), and David Howell (“Howell”) that relates to an alleged agreement with Defendants to host an educational program at the University of Michigan.

         Federal Case Number 14-13852, Filed By The Institute Alone

         On October 6, 2014, the Institute alone filed suit in the United States District Court for the Eastern District of Michigan, based on federal-question jurisdiction. That suit was filed against the three Defendants in this case (Tessler, Jackson, and Howell), along with the Board of Regents of the University of Michigan, and the Center for Political Studies, Institute of Social Research. That case, Case Number 14-13852, was assigned to the Honorable Stephen J. Murphy.

         The complaint included the following counts: 1) Breach of Contract, asserted against the University of Michigan, Tessler, and Jackson (but not Howell); 2) Fraud and Misrepresentation asserted against all Defendants; 3) Unjust Enrichment and Promissory Estoppel, asserted against the University of Michigan, Tessler, and Jackson (but not Howell); and 4) a § 1983 claim for unlawful deprivation of property.

         In an Opinion & Order issued on April 28, 2015, Judge Murphy dismissed the § 1983 claim as barred by the applicable statute of limitations. Having dismissed the only federal claim in the action, Judge Murphy declined to exercise supplemental jurisdiction over the remaining state-law claims and dismissed those claims without prejudice.

         The 2015 State-Court Case Filed By The Institute Alone

         On June 30, 2015, acting through counsel, the Institute alone filed a lawsuit in state court against Defendants Mark Tessler, Sherman Jackson, Nancy Burns, and David Howell. Cone was not named as a plaintiff in the action.

         In its complaint, the Institute asserted four counts against Defendants: 1) breach of contract; 2) Fraud and Misrepresentation; 3) unjust enrichment; and 4) promissory estoppel. (See state-court complaint, ECF No. 54-3). All of those claims centered on an alleged agreement Defendants had with the Institute to host an educational program at the University of Michigan.

         All of the Defendants in that action filed motions for summary disposition. In those motions, the parties asserted that the claims against them should be dismissed for several reasons, including that the sole named plaintiff in the action (the Institute) had no standing to bring the claims in the complaint because it did not even exist at the time of the alleged events that form the basis of the claims. The trial court ultimately agreed with Defendants on the standing issue and declined to consider any of the Defendants' other arguments in their motions.

         In response to the motion, the Institute did not seek leave to file an amended complaint. Rather, the Institute filed responses opposing those motions, affirmatively asserting that it is the proper party to the suit. (ECF No. 60-3).

         The trial court heard oral argument on the motions. (ECF No. 60-4). During oral argument, the Institute's Counsel acknowledged on the record that Margaret Cone is a licensed Michigan attorney and that she set up and managed both the Institute and another entity called East West Learning Initiative, Inc. (Id. at Pg ID 1644-45).

         At the hearing, Defense Counsel argued that the Institute “doesn't have standing to bring this case because the [named] plaintiff did not exist at the time of any of the alleged actions.” (Id. at Pg ID 1641). The trial court ultimately agreed with Defendants on the standing issue and declined to consider any of the Defendants' other arguments in their motions. (ECF No. 60-4 at Pg ID 1648-49).

         In an Order issued on November 4, 2015, the trial court granted Defendants' motions for summary disposition, “for the reasons stated on the record, ” and dismissed the claims against Defendants with prejudice. In addition, the trial court ordered the Institute to pay Defendants $5, 000.00 “in sanctions for filing a frivolous case.” (ECF No. 54-4).

         Thereafter, the Institute filed a Motion for Reconsideration. (ECF No. 54-5). That motion asked the Court to reverse the sanction award and allow Plaintiff to file an amended complaint in order to name a different plaintiff. The trial court denied that motion and the Institute appealed.

         Margaret Cone Files This Third Case On April 8, 2016.

         On April 8, 2016, acting through counsel, Cone filed this action against Tessler, Jackson, and Howell, based on diversity jurisdiction. No. other Defendants, such as the University of Michigan, are named as Defendants in this action.

         Cone's First Amended Complaint is the operative complaint in this action. It asserts claims against three Defendants: 1) Tessler; 2) Jackson; and 3) Howell.

         It asserted the following three claims against Defendants: 1) Breach of Contract (Count I); 2) Fraudulent Misrepresentation (Count II); and 3) Promissory Estoppel and Unjust Enrichment (Count III).

         The Court's September 21, 2016 Rulings On Defendants' Motions to Dismiss

          In May of 2016, each of the three Defendants filed their own separate Motion to Dismiss, brought under Fed.R.Civ.P. 12(b)(6). (ECF Nos. 6/7, [1] 8, and 9).

         In an Opinion & Order issued on September 21, 2016, this Court ruled on the motions to dismiss. In it, this Court noted that the motions were “complicated by the fact that: 1) the three defendants each filed a separate motion, even though they were raising the same or very similar challenges; 2) Cone filed a First Amended Complaint, including additional allegations, after Defendants had filed their motions; and 3) both sides ma[d]e references to Cone's original complaint rather than the First Amended Complaint.” (ECF No. 25 at Pg ID 671). Based upon what was presented, the Court granted the motion to the extent that it dismissed the breach of contract and promissory estoppel/unjust enrichment claims against Defendant Howell as untimely. It denied the motion in all other respects, concluding that Defendants other statute of limitations challenges appeared to lack merit. The Court also declined to consider some arguments made for the first time in Defendants' reply briefs - such as whether Cone's claims are barred by res judicata.

         On February 9, 2017, The Michigan Court Of Appeals Affirmed The State-Court's Rulings

         On February 9, 2017, the Michigan Court of Appeals affirmed the trial court's rulings in the State-Court Case, including the sanction award, in an unpublished opinion. (ECF No. 54-6). In doing so, the appellate court found that “the Institute had no reasonable basis to believe that it was the aggrieved party in this lawsuit. It did not exist until after the actions leading to the suit occurred. Nevertheless, the Institute both asserted that it was the proper party and that it was a successor entity without any evidence to support its positions. Because Cone founded and represented both entities, the Institute knew or should have known which entities existed at which times during this dispute.” (Id.) (emphasis added).

         This Court Denied Defendants' Motion For Judgment On The Pleadings, Ruling That Cone's Claims In This Action Are Not Barred By Res Judicata.

         Defendants filed a Motion for Judgment on the Pleadings in this case, asking this Court to rule that Cone's claims in this action are barred by res judicata, based on the dismissal with prejudice in the State-Court Case. In opposing that motion, Cone argued that Defendants could not establish res judicata because: 1) a dismissal for lack of standing is not a determination on the merits for purposes of res judicata; and 2) Defendants cannot establish that the Institute was in privity with Plaintiff for purposes of res judicata. (ECF No. 60 at PageID.1540) (“Even if Defendants could show a determination on the merits, they could not properly demonstrate that the [Institute] was in privity for purposes of res judicata with Margaret Cone. They privity test fails because the [Institute] did not exist and did not have standing to assert the claims. As a result, Margaret Cone's claims and interests were not and could not be represented by the [Institute].”); (see also ECF No. 60 at PageID.1547) (“The [Institute] cannot, and does not, contend that it represented the same legal right - in fact the opposite is true. Margaret Cone's role with the [Institute] does not render her, and all her claims including those that predated the [Institute]'s existence, in privity with the [Institute] and its claims.”).

         In an Opinion & Order issued on August 28, 2018, this Court denied Defendants' motion, ruling that the claims in this action are not barred by res judicata by virtue of rulings in the State-Court Case.

         Defendants' Renewed Motion For Summary Judgment Is Now Before The Court

         Now, following the close of discovery, the matter is before the Court on Defendants' Renewed Motion for Summary Judgment. This motion seeks summary judgment as to all remaining claims.

         STANDARD OF DECISION

         Summary judgment will be granted where there exists no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). No. genuine issue of material fact exists where “the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.” Matsushita Elect. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “The mere existence of a scintilla of evidence in support of the [non-moving party]'s position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. The Court “must view the evidence, all facts, and any inferences that may be drawn from the facts in the light most favorable to the non-moving party.” Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002).

         ANALYSIS

         This action is in federal court based upon diversity jurisdiction and the parties agree that Michigan law applies to Cone's claims in this action.

         I. All Of Cone's Claims In This Action Are Barred The Applicable Statutes of Limitation.

         Because this Court's jurisdiction is based on diversity of citizenship, Michigan's statutes of limitations apply to Cone's claims in this action. Blaha v. A.H. Robins & Co., 708 F.2d 238, 239 (6th Cir. 1983); Martello v. Santana, 713 F.3d 309, 314 (6th Cir. 2013).

         Defendants correctly note that a six-year statute of limitations applies to each of Cone's claims in this action.

         Mich. Comp. Laws § 600.5807(8) “provides for a six-year limitations period for breach of contract” claims, starting from the date the claim “accrued.” “Breach of contract claims accrue ‘at the time of the asserted breach of contract.'” Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1133 (6th Cir. 1995) (citations omitted).

         A six-year statute of limitations also applies to Cone's promissory estoppel / unjust enrichment count. Id.; Huhtala v. Travelers Ins. Co., 401 Mich. 118 (1977); Mich. Comp. Laws § 600.5815.

         The limitations period for fraudulent misrepresentation claims is also six years. Mich. Comp. Laws § 600.5813; Boyle v. General Motors Corp., 468 Mich. 226, 230 (2003); Shaya v. Countrywide Home Loans, Inc., 489 Fed.Appx. 815, 818 (6th Cir. 2012). A fraud claim accrues “at the time the wrong upon which the claim is based was done regardless of the time when damage results.” Mich. Comp. Laws § 600.5827. Thus, Michigan has rejected a discovery rule for fraud claims. Boyle, 468 Mich. at 231.

         Notably, in response to Defendants' motion, Cone does not dispute that a six-year statute of limitations applies to each of the claims she asserts in this action. Cone also does not dispute that each of her claims accrued more than six years before she filed this case on April 8, 2016.[2]

         Rather, Cone asserts that her claims are not barred by the applicable statutes of limitation because the limitations periods were tolled by virtue of the Institute's prior federal action. Cone further asserts that the law-of-case doctrine precludes this Court from reconsidering its prior rulings on the statute of limitations issues.

         A. The Law-Of-The-Case Doctrine Does Not Preclude This Court From Reconsidering The Statute-Of-Limitations Issues.

         “A district court's application of the law of the case doctrine to that court's own rulings is reviewed for abuse of discretion because it is a ‘discretionary tool' meant to promote judicial efficiency and not a limit on the court's power.” Ominex Energy, Inc. v. Blohm, 374 Fed.Appx. 643, 651 (6th Cir. 2010) (citing United States v. Todd, 920 F.2d 399, 403 (6th Cir. 1990)). That is, the law-of-the-case doctrine “as applied to the effect of previous orders on the later action of the court rendering them in the same case, merely expresse[s] the practice of courts generally to refuse to reopen what has been decided, not a limit to their power” to do so. In re Kenneth Allen Knight Trust, 303 F.3d 671, 677 (6th Cir. 2002). A district court can reconsider its own prior ruling when there is a “cogent reason” to do so, such as the presentation of new evidence or if the court concludes the prior decision was in error based upon its understanding of the issues as the case develops. Ominex Energy, Inc., supra.

         Here, the Court previously rejected some of Defendants' statute of limitations arguments at the motion-to-dismiss phase, concluding that “the statute of limitations challenges appear to lack merit.” (ECF No. 25 at PageID.672) (emphasis added). The Court concluded that the prior federal action appeared to toll the statutes ...


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