988 N.W.2d 800
Mich. Ct. App.2022Background
- Vincent Johnson, a Black entrepreneur, owns Piston Group and its subsidiary Piston Automotive, Irvin Automotive, AIREA, and majority of Detroit Thermal; each subsidiary had long-held MBE certification through MMSDC.
- MMSDC (regional affiliate of NMSDC) audits MBE status requiring ≥51% minority ownership, control, and day-to-day management by minorities; Johnson signed affidavits containing a hold‑harmless/indemnity clause with each certification application.
- After organizational changes in 2020 (departure of an Asian-American CFO and appointment of a white COO/CFO), MMSDC reviewed the Piston entities and decertified some subsidiaries for not being managed day-to-day by minority members; an appeals committee upheld the decision.
- Plaintiffs sued for tortious interference, negligence, defamation, and declaratory relief and moved for a preliminary injunction to reinstate MBE certifications pending trial; the circuit court granted the injunction.
- On expedited appeal, the Court of Appeals affirmed the injunction, stressing appellate deference to equitable discretion despite concluding plaintiffs were unlikely to prevail on most merits issues and that the hold‑harmless clause could bar recovery.
- The court declined to address defendants’ First Amendment challenge because it was not preserved below.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of hold‑harmless/indemnity clause on plaintiffs’ claims | Clause is an indemnity only and does not bar plaintiffs’ claims | Clause releases and holds MMSDC free and harmless from "any and all claims," functioning as a release | Court: clause unambiguously includes a hold‑harmless release; it may substantially impair plaintiffs’ likelihood of success (court faulted lower court for reading it narrowly) |
| Tortious interference with business relationships | Decertification intentionally disrupted business expectancies (MBE status tied to contracts) | MMSDC acted in good faith applying MBE criteria; no intent to cause breach or improper conduct | Court: plaintiffs unlikely to succeed; record does not show MMSDC acted illegally, unethically, or with intent to induce breaches |
| Negligence and defamation | MMSDC breached its duty in certification process and defamed plaintiffs by publishing decertifications | MMSDC exercised due care in its review and acted in good faith; communications were privileged and accurate as of decision | Court: plaintiffs unlikely to succeed on negligence or defamation; MMSDC’s review record supports exercise of due care and qualified privilege applies absent actual malice |
| Preliminary injunction (irreparable harm, balance of harms, public interest) | Loss of contracts and goodwill from decertification is immediate and irreparable; balance favors plaintiffs | Certification supports MMSDC mission; injunction interferes with association/speech (First Amendment) | Court: affirmed injunction — plaintiffs showed irreparable risk to goodwill, balance of harms favors injunction, public interest not harmed; First Amendment claims not considered (unpreserved) |
Key Cases Cited
- Dep’t of Environmental Quality v. Gomez, 318 Mich. App. 1 (2016) (standard and abuse-of-discretion review for injunctions)
- Pontiac Fire Fighters Union Local 376 v. City of Pontiac, 482 Mich. 1 (2008) (irreparable harm requirement for preliminary injunctions)
- McPherson v. Michigan High Sch. Athletic Ass’n, Inc., 119 F.3d 453 (6th Cir. 1997) (injunction factors are guides, not rigid rules)
- Yoches v. Dearborn, 320 Mich. App. 461 (2017) (contract interpretation reviewed de novo)
- Xu v. Gay, 257 Mich. App. 263 (2003) (valid releases can bar claims under MCR 2.116(C)(7))
- Prysak v. R.L. Polk Co., 193 Mich. App. 1 (1992) (elements and overcoming qualified privilege in defamation)
- Puetz v. Spectrum Health Hosps., 324 Mich. App. 51 (2018) (tortious interference requires intentional and improper or unjustified conduct)