Imad Yatooma v. Safa Dabish
340110
| Mich. Ct. App. | Mar 21, 2019Background
- Yatooma and Dabish co-owned Angel Cakes and IAS; Wasim Hanna agreed to buy interests and executed promissory notes and mortgages, some payable to the companies and later one payable to Yatooma and Dabish personally. Hanna paid via checks directed to Angel Cakes.
- The partners split Hanna’s payments while they remained partners; after Dabish bought out Yatooma and after a 2012 settlement in which Yatooma released claims (including in respect to Angel Cakes/IAS), Dabish stopped splitting payments.
- Yatooma sued Dabish (Hanna and the companies were not parties), alleging fraud and conversion because he received no post-buyout share of Hanna’s payments.
- The trial court granted MCR 2.116(C)(8) dismissal of the fraud claim for failure to plead misrepresentation and granted MCR 2.116(C)(10) summary disposition on conversion, finding payments were made to Angel Cakes and not to Dabish personally.
- After judgment, the court awarded defendant case-evaluation sanctions, costs, and attorney fees; the Court of Appeals affirmed dismissal(s) but vacated the sanctions award and remanded for proper findings on reasonableness and temporal scope.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of fraud pleading | Yatooma: complaint adequately alleges Dabish kept payments and lied about them, supporting fraud | Dabish: complaint lacks allegations of a material misrepresentation, knowledge, intent, or reliance | Court: Affirmed dismissal under MCR 2.116(C)(8); complaint fails to plead actionable misrepresentation with particularity |
| Leave to amend fraud claim | Yatooma: should have been allowed to amend after C(8) dismissal | Dabish: Plaintiffs did not move to amend; no basis shown | Court: No abuse — plaintiff never requested leave to amend in record; issue not preserved |
| Conversion claim | Yatooma: Dabish received Hanna’s checks personally after buyout and converted Yatooma’s share; corporate form should not shield wrongful acts | Dabish: All payments were made to Angel Cakes; Yatooma directed payments there and released interests in settlement; Dabish never received checks personally | Court: Affirmed summary disposition under MCR 2.116(C)(10); no specific wrongful dominion shown and payments deposited to Angel Cakes with Yatooma’s consent and after release |
| Case-evaluation & other sanctions | Yatooma: award improper—court made no finding of frivolousness, gave no reasoned analysis, and included fees/costs outside the permissible post-rejection period | Dabish: entitled to fees and sanctions because outcome was more favorable than case evaluation and prior frivolousness concerns | Held: Vacated sanctions award and remanded—trial court failed to make required reasonableness findings and improperly based sanctions on prior informal statements and on costs outside permitted period |
Key Cases Cited
- Maiden v. Rozwood, 461 Mich 109 (court outlines summary-disposition standards) (discusses C(8) and C(10) review)
- Titan Ins. Co. v. Hyten, 491 Mich 547 (Michigan Supreme Court 2012) (elements of actionable fraud)
- Foremost Ins. Co. v. Allstate Ins. Co., 439 Mich 378 (Michigan Supreme Court 1992) (definition of conversion)
- Trail Clinic, PC v. Bloch, 114 Mich App 700 (1982) (checks as property of payee and aiding/abetting conversion)
- Citizens Ins. Co. of America v. Delcamp Truck Ctr., Inc., 178 Mich App 570 (1989) (conversion of money requires an obligation to return specific funds)
- Smith v. Khouri, 481 Mich 519 (2008) (trial-court obligation to make reasonableness findings for fee awards)