Five Stories That Matter in Michigan This Week – October 6, 2023

  1. House Bills Would Allow Students Access to Medical Marijuana on School Grounds

“Jayden’s Law,” Michigan House Bills 5063 and 5064, would apply only to non-smokable medical marijuana. It would allow both public and private schools to administer medical cannabis on school grounds, subject to certain requirements, including a written treatment plan provided by the child’s caregiver, supervised administration by a designated staff member, and annual proof of the students’ medical marijuana cards.

Why it Matters: Michigan has allowed minors to access medical marijuana as registered patients for more than a decade. Such use, however, is prohibited while at school or school events. Backers of the legislation argue that students who use medical marijuana but must check out and back into school to do so, miss classroom instructions or extracurricular activities.

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  1. U.S. Supreme Court Clarifies Legal Standard for Threatening Speech in Counterman V. Colorado

The U.S. Supreme Court’s recent ruling in Counterman v. Colorado addressed the longstanding ambiguity surrounding the standards for criminal prosecution based on perceived threats of violence.

Why it Matters: The Court held that such a prosecution requires proof that the defendant subjectively understood the threatening nature of the statement such that making the statement was at least reckless. This case not only delves deep into First Amendment protections but also has broad implications for online communications and interactions. Read more from your Fraser Trebilcock attorney.

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  1. Fraser Trebilcock Attorney Thaddeus Morgan Selected to Serve on State Bar of Michigan’s U.S. Courts Committee

Fraser Trebilcock attorney Thaddues Morgan was selected to serve on the State Bar of Michigan’s U.S. Courts Committee for the 2023-24 Bar Year. Attorney volunteers are vital for the State Bar to continue providing exceptional service to the legal profession, the public, and the state.

Why it Matters: The State Bar of Michigan’s U.S. Courts Committee provides advice and recommendations concerning the State Bar’s interaction with federal courts in Michigan and on practice of law in those courts. Learn more.

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  1. Employee Benefits Attorney

Fraser Trebilcock is seeking applications for a position in our Firm from well-qualified attorneys with strong experience in employee benefits, including employer sponsored retirement plans, employee health plans and general ERISA compliance.

Why it Matters: The successful candidate should have a solid and portable client base. Fraser will consider candidates who may lack a portable client base provided they have a solid background in these practice areas and demonstrate an aptitude for client service and growth. Learn more and to apply.

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  1. Business Education Series – Maximizing Productivity: Strategies for More Effective Workdays

Productivity is a habit and it’s something you can become better at every day by choosing the methods and tricks that work for you.

Why it Matters: In the October Business Education Series program, Emmie Musser, Future of Work Strategist with TechSmith, is going to discuss some tried-and-true strategies for more productive and effective workdays. Learn more.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Criminal Law | Paula Spicer
Litigation | Thaddeus Morgan

Michigan Supreme Court Modifies Open and Obvious Legal Doctrine

Recently, the Michigan Supreme Court significantly modified a decades old legal doctrine that will have wide reaching impacts on property owners and lessees. In its decision in a pair of consolidated cases (Kandil-Elsayed v F & E Oil, Inc and Pinsky v Kroger Co of Mich), the state’s high court effectively abrogated a legal doctrine known as “open and obvious.” Generally speaking, under this doctrine as it had previously been applied in Michigan, a premises possessor (whether that is the landowner, land contract vendee, lessee, or other party with the right to possess the property) did not have a duty to warn invitees of potentially dangerous conditions on the premises if the condition was “open and obvious.”

In practice, the open and obvious doctrine made it a question of law (that is a determination to be made by the judge, rather than the jury) as to whether the condition that caused an injury was discoverable by a person of average intelligence upon casual inspection. The doctrine was often applied in slip-and-fall and other personal injury cases and acted as an initial barrier for plaintiff’s claims. Defendant premises possessors would bring a motion (typically for summary disposition) and ask the judge to rule on whether the condition was open and obvious. If it were, the case would end there, and the plaintiff’s recovery would be barred. In fact, many premises liability claims likely never made it to the court to begin with, because plaintiff’s attorneys recognized the difficulty in getting past the open and obvious doctrine.

Now, in light of the Kandil-Elsayed and Pinsky decisions, the nature of an open and obvious condition is evaluated as an element of comparative fault that may reduce a plaintiff’s recovery but will not act as complete bar to recover. Moreover, the issue of comparative fault is a question of fact (that is a determination to be made by the jury). In other words, juries can consider the premises possessor’s failure to warn in their comparative fault determinations and still award a plaintiff a portion of their damages even when the condition on the premises that caused the injury was open and obvious. Now, when some is injured as the result of a fall, the claim is much more likely to go to the jury.

What happens next is anybody’s guess, but likely effects of this decision include an increase in the number of personal injury lawsuits filed, an increase in the number of personal injury cases going to trial, and across the board increases in property insurance rates for commercial and residential property owners. If you have questions, or require assistance, please contact your Fraser Trebilcock attorney.

This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.


Ryan K. Kauffman is a Shareholder at Fraser Trebilcock with more than a decade of experience handling complex litigation matters. You can contact him at rkauffman@fraserlawfirm.com or 517.377.0881.

Five Stories That Matter in Michigan This Week – August 18, 2023

  1. Hosting an Event that Involves Cannabis in Michigan Requires Proper Licensing

As the legal cannabis industry continues to grow in Michigan, more events involving the consumption of cannabis are being hosted across the state. As the Cannabis Regulatory Agency (CRA) discussed in a recent information release, such events require proper licensing. Specifically, according to the CRA, “CRA rules require a person who allows consumption of marijuana products on the premises of a non-residential location – and charges a fee for entry, sells goods or services while individuals are consuming on the premises, or requires membership for entry – must acquire either a designated consumption establishment license or a temporary marijuana event license. An application for a temporary marijuana event license must be submitted 90 days prior to the date of the event.”

Why it Matters: Violations of requirements may result in disciplinary action. If you have any questions, please contact your cannabis law attorneys at Fraser Trebilcock.

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  1. Fraser Trebilcock Attorney Thaddeus Morgan Obtains Summary Judgment for Firm Client; Sixth Circuit Affirms Dismissal

The U.S. Court of Appeals for the Sixth Circuit affirmed a decision by the U.S. District Court for the Western District of Michigan, which granted summary judgment for the firm’s client, who was represented by Fraser Trebilcock attorney Thaddeus Morgan.

Why it Matters: The U.S. Court of Appeals for the Sixth Circuit did not find either of the district court’s decisions erroneous, affirming the denial of the Plaintiff’s motion to amend and granting summary judgment to the defendants. Read more on the case.

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  1. Michigan Cannabis Sales Exceed $276 Million in July

Cannabis sales surpassed $276 million in July, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $270,603,217.84, while medical sales came in at $6,143,046.23, totaling $276,746,264.07.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market oversaturation that the industry is contending with.

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  1. Business Education Series – Setting Meaningful Goals and Time Blocking for Success

On August 22, 2023, gain valuable knowledge and skills to set meaningful goals, establish priorities, and effectively manage their time through the practice of time blocking.

Why it Matters: Participants will learn practical strategies and techniques to enhance their goal-setting abilities, develop a clear sense of direction, and optimize their productivity. Learn more.

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  1. Michigan Supreme Court Clarifies the Difference Between “Requirements” and “Release-by-Release” Contracts Under the Uniform Commercial Code

In an important decision that impacts customers and suppliers in the manufacturing industry, the Michigan Supreme Court, in MSSC, Inc. v. AirBoss Flexible Prods. Co., clarified the contractual circumstances under which a supplier can become bound to a long-term “requirements contract” under the Uniform Commercial Code.

Why it Matters: In light of the Supreme Court’s decision, buyers and sellers of goods should review their contracts with legal counsel to evaluate whether they meet the standards for a requirements contract.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Litigation | Thaddeus Morgan
Business & Tax | Ed Castellani

Five Stories That Matter in Michigan This Week – August 11, 2023

  1. CRA Issues Bulletin, Recalling Vape Cartridges Due to Possible Presence of Banned Chemical

On July 21, 2023, the Cannabis Regulatory Agency (“CRA”), issued a public health safety bulletin, recalling more than 13,000 vape cartridges “due to the possible presence of banned chemical residue exceeding the established action limits.”

Why it Matters: Sky Labs, LLC, is the licensed marijuana processor who manufactured the three batches of vape cartridges that were recalled. Businesses operating in the cannabis market are required to adhere to strict rules and regulations laid out by the CRA. Failure to do so can result in steep fines, recalled product, and potential loss of license(s).

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  1. Business Education Series – Setting Meaningful Goals and Time Blocking for Success

On August 22, 2023, gain valuable knowledge and skills to set meaningful goals, establish priorities, and effectively manage their time through the practice of time blocking.

Why it Matters: Participants will learn practical strategies and techniques to enhance their goal-setting abilities, develop a clear sense of direction, and optimize their productivity. Learn more.

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  1. Michigan Supreme Court Alters Premises Liability Framework

Michigan courts have long held that premises owners generally have no duty to protect invitees from “open and obvious” hazards. In a recent decision (Kandil-Elsayed v F&E Oil, Inc and Pinsky v Kroger Co of Michigan), the Michigan Supreme Court held that whether a hazard is open and obvious is not an integral part of duty but is instead “relevant to breach and the parties’ comparative fault.” The Court overruled the special-aspects exception, holding that “when a land possessor should anticipate the harm that results from an open and obvious condition, despite its obviousness, the possessor is not relieved of the duty of reasonable care.”

Why it Matters: This decision significantly changes the legal standards in premises liability cases, particularly slip-and-fall cases.

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  1. Fraser Trebilcock Attorney Thaddeus Morgan Obtains Summary Judgment for Firm Client; Sixth Circuit Affirms Dismissal

The U.S. Court of Appeals for the Sixth Circuit affirmed a decision by the U.S. District Court for the Western District of Michigan, which granted summary judgment for the firm’s client, who was represented by Fraser Trebilcock attorney Thaddeus Morgan.

Why it Matters: The U.S. Court of Appeals for the Sixth Circuit did not find either of the district court’s decisions erroneous, affirming the denial of the Plaintiff’s motion to amend and granting summary judgment to the defendants.

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  1. Michigan Supreme Court Rules that New No-Fault Law Does Not Apply Retroactively

On July 31, 2023, the Michigan Supreme Court affirmed, in part, a court of appeals decision ruling that medical cost controls in Michigan’s new no-fault auto insurance law do not apply retroactively to car crash victims whose accidents occurred prior to the change in the law.

Why it Matters: As a result of the ruling, drivers who were catastrophically injured in accidents prior to the no-fault must be paid at full rates and not be subject to new cost controls for medical services.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Business & Tax | Ed Castellani
Insurance Law | Gary Rogers
Litigation | Thaddeus Morgan

Five Stories That Matter in Michigan This Week – April 28, 2023

  1. Effort to Mandate Hands-Free Phone Use While Driving in Michigan Stalls

Michigan House Bill 4250, the first bill of a three-bill package, failed to gain majority support in the House this week. The proposed legislation would ban the use of hand-held electronic device for drivers.

Why it Matters: 57 House members voted against the bill. One of the major concerns cited is that the penalties proposed to be imposed under the bill would be punitive, including the possibility of a license suspension of up to 90 days for a habitual offender.

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  1. Michigan Cannabis Sales Near $250 Million in March

Cannabis sales nearly hit $250 million in March, via the monthly report from the Michigan Cannabis Regulatory Agency. Michigan adult-use sales came in at $239,857,322.13, while medical sales came in at $9,816,894.70, altogether totaling $249,674,216.70.

Why it Matters: Marijuana sales remain strong in Michigan, particularly for recreational use. However, there still are significant concerns about profitability and market over-saturation that the industry is contending with.

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  1. May 2023 Business Education Series Program

During the May Business Education Series, Emmie Musser will discuss the challenges faced by businesses in building trust and transparency in a hybrid world, and explore strategies to overcome them including the importance of clear communication and regular updates, as well as the need to establish and maintain strong relationships.

Why it Matters: We will share practical, evidenced based tips on policies, workplace communication norms, and technology that can be used to help mitigate some of the biggest pain points of a hybrid work environment. Learn more.

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  1. Coverage Spoken Here

Commercial litigator and Chair of Fraser Trebilcock’s Real Estate Department, Jared Roberts, along with Shareholder and litigator Ryan Kauffman, successfully defended a mechanical contracting firm in an insurance coverage dispute initiated by its insurer.

Why it Matters: In this instance, in summary, the insurer argued that policy language excluded coverage for events of pollution or efforts by the insured at responding to it. Attorneys Roberts and Kauffman argued that, while some pollution-related events were clearly excluded under the policy here, the exact conduct of the insured in this case was covered, despite the exclusion. The Circuit Court agreed with the insured mechanical contractor and summary disposition was awarded in the contractor’s favor. Learn more.

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  1. CRA Publishes March 2023 Data, Average Price Hovers

Per data released by the Cannabis Regulatory Agency, the average retail price for adult-use sales of an ounce of cannabis is $86.87, a tiny increase from $86.00 in February. This is still a large decrease from March 2022, where the average price was $190.65.

Why it Matters: While the prices of cannabis and cannabis-related products continue to decrease and make consumers happy, growers on the other hand are seeing profits decrease resulting in them seeking ways to halt new licenses to be granted in an effort to steady prices. Contact our cannabis law attorneys if you have any questions.

Related Practice Groups and Professionals

Cannabis Law | Sean Gallagher
Litigation | Jared Roberts
Litigation | Ryan Kauffman

Five Stories that Matter in Michigan This Week – July 22, 2022

  1. COVID, Force Majeure, and Frustration of Purpose

Courts have rejected COVID-related force majeure and frustration of purpose arguments on the reasoning that the pandemic and its effects were foreseeable. Now in its third year, disruptions related to the pandemic are no longer unforeseeable and businesses should take note.

Why it Matters: COVID-related frustration of purpose and force majeure are not cure-alls, and courts will not take these arguments at face value. However, with the right facts, frustration of purpose or force majeure arguments can be successful. Businesses should take positive steps to ensure that their interests are protected if/when COVID comes knocking again.

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  1. Proposed Short-Term Rental Legislation Remains Stuck in Michigan House

Local communities will be limited in their ability to regulate short-term housing rentals if a bill passed by the Michigan House of Representatives, House Bill 4722 (“HB 4722”), becomes law. However, the bill remains on hold in the Michigan House, as powerful interest groups—local governments and Michigan realtors, in particular—remain at odds over the bill.

Why it Matters: The bill restricts local communities from adopting or enforcing zoning ordinance provisions that have the effect of prohibiting short-term rentals. On the one hand, local governments argue that the bill would undermine local control over zoning. On the other hand, realtors argue that the bill would dampen the real estate market. A lot is at stake, as Michigan homeownersreportedly made more than $250 million from Airbnb rentals alone in 2021.

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  1. Decreased Costs Trending for Medical Marijuana Licenses

Last month the Cannabis Regulatory Agency (CRA) announced that medical marijuana facilities that need to renew their license or obtain a new license will pay less in fees for the upcoming fiscal year. Fees for each class and type of business have been reduced, a trend that started last year when the CRA reduced fees for this current fiscal year.

Why it Matters: As the number of medical licensees in the state continue to grow, associated costs of getting a new license or renewing are decreasing. If you have any questions or seeking to acquire a medical marijuana license, contact our cannabis attorneys.

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  1. New Law Allows Non-Profit Corporation to be a Member of Limited Liability Company

Senate Bill 926 was recently signed into law by Governor Whitmer, which changes the definition of a person in the limited liability company act, allowing nonprofit corporations to be members of limited liability companies (“LLC”).

Why it Matters:  Michigan now joins other states that allow nonprofits to create LLCs that do not involve any financial gain or profit to perform certain functions while still maintaining their nonprofit status.

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  1. Paid Sick Leave and Minimum Wage Laws Up in Air

Following the ruling by the Michigan Court of Claims recently, the “adopt and amend” strategy taken on by Michigan’s legislature in 2018 to find a compromise for two ballot initiatives which would have increased the minimum wage and enacted a paid sick leave law, was deemed unconstitutional.

Why it Matters: It is anticipated that the Michigan legislature will appeal the decision and request a stay. If the decision is not reversed, then changes will go into effect immediately. The state’s minimum wage will increase to $12 an hour, tipped employees will receive an increase, and nearly every size and type of business will receive 72 hours per year of paid sick time leave.


Related Practice Groups and Professionals

Litigation | Matthew Meyerhuber

Real Estate | Jared Roberts

Cannabis | Klint Kesto

Business & Tax | Ed Castellani

Labor, Employment & Civil Rights | Aaron Davis

Default: The Risk of Failing to Respond to a Lawsuit Brought Against You

The risk of failing to respond to a lawsuit against you is severe. Understanding what a default is, and the implications associated with a default judgment is important when having a lawsuit brought against you.

What is a default?

A default can occur when a party that has been sued fails to respond to the complaint or otherwise defend against the lawsuit in a timely manner. If you are found to be in default, the other side can then request a default judgment from the court. If the court enters this default judgment, you are automatically liable for the full amount requested in the suit, plus fees and costs.

What are the ramifications of a default judgment being entered?

The opposing party can begin collecting the judgment by garnishing your wages, bank accounts, and state tax returns. The opposing party can even seize your property to fulfill the judgment amount. Additional costs/fees/interest may also begin to accrue.

What can I do if a default judgment has been entered against me? 

When a default judgment is entered, the case is technically closed, so it is important to act quickly. A Motion to Set Aside the Judgment should be filed immediately, explaining why you failed to respond or defend against the suit.

The attorneys at Fraser Trebilcock have the experience and knowledge to help you set aside a default judgment that has been entered against you. Contact Amy, Emily, or your Fraser Trebilcock attorney.


Emily M. Vanderlaan is a litigation attorney at Fraser Trebilcock handling all aspects of personal injury and property litigation. Emily has had great success in Michigan and Colorado trial courts and in the Michigan Court of Appeals. You can reach her at (517) 377.0882 or at evanderlaan@fraserlawfirm.com.


Fraser Trebilcock attorney Amanda S. Wolanin specializes her practice in business and tax law, bankruptcy, family law, estate planning, litigation, and real estate law. You can reach her at (517) 377-0897, or at awolanin@fraserlawfirm.com.

Covid, Force Majeure, and Frustration of Purpose – Some Words of Caution

Courts generally show a pattern of skepticism toward force majeure and frustration of purpose arguments stemming from the Covid-19 pandemic. Here’s what businesses need to know to protect themselves.


Definitions

First, we need to get our terminology straight. Frustration of purpose and force majeure, while related concepts, are distinct in some important ways. Force Majeure is an event mentioned explicitly in a contract that discharges the parties of at least some of their responsibilities. Frustration of purpose, on the other hand, is a contract defense alleging that the basic purpose of the contract being litigated has been frustrated by an event not reasonably foreseeable to the parties. Michigan Courts use a three-part test to assess frustration of purpose: 1) the contract must be at least partially executory; (2) the frustrated party’s purpose in making the contract must have been known to both parties when the contract was made; (3) this purpose must have been basically frustrated by an event not reasonably foreseeable at the time the contract was made, the occurrence of which has not been due to the fault of the frustrated party and the risk of which was not assumed by him. Molnar v. Molnar, 110 Mich. App. 622, 313 N.W.2d 171 (1981).

Primary issues: Causation and Foreseeability.

It’s hard to deny that the COVID-19 pandemic involved possibly the most significant disruption of global commerce since World War II. As of this writing, the WHO reports over six million lives have been lost to COVID-19. Sweeping restrictions on travel and trade across the globe have also come at an enormous and self-evident economic cost. So—why isn’t COVID persuasive as a force majeure or frustration of purpose event?

One issue is causation. It can be challenging to prove that the pandemic caused a disruption when intervening factors like government action come into play.

For example, Michigan saw strict government shutdown mandates related to COVID. Though these shutdowns may have saved numerous lives, they inarguably caused some markets to collapse overnight. Suddenly, college towns were empty; theaters, bowling alleys, and dine-in restaurants were shuttered. Did the pandemic cause this? Or did government action cause it? Alternatively, did a business decline for an entirely different reason? Was it already doomed, with a shutdown being only the final nail in the coffin? The same issue comes up with Covid-related supply chain disruptions. Did the pandemic cause it? Labor shortages and strikes? Both?

In a contract case where the defendant suffered a loss of business amid the COVID pandemic, causation issues might render their force majeure or frustration of purpose defenses ineffective. Whether initiating or defending a lawsuit, a party making a frustration of purpose or force majeure argument has a burden of proof to meet.

Another problem is that COVID-19 and its effects have arguably been foreseeable, negating frustration of purpose and force majeure arguments.

Erin Webb, a legal analyst writing for Bloomberg, noted in a November 2021 article titled ANALYSIS: No Longer Unforeseeable? Force Majeure and Covid-19 that courts have rejected Covid-related force majeure and frustration of purpose arguments on the reasoning that the pandemic and its effects were foreseeable.

“Since early 2021, with Covid-19 the new normal and the coronavirus feeling a lot less’ novel,’ courts have increasingly expected parties to have adjusted to pandemic-related issues—from supply chain disruptions to the challenges of remote work. So, for those still wishing to explore such defenses, careful factual research and analysis early in a case will be more important than ever,” writes Webb.

In short, with the pandemic being in its third year, disruptions related to the pandemic are no longer unforeseeable.

Another older version of this reasoning is that a decline in business, even if resulting from conditions such as a pandemic and stay-at-home order, is an inherent risk of doing business that the parties assume. “The tenant is not relieved from the obligation to pay rent if there is a serviceable use still available consistent with the use provision in the lease. The fact that the use is less valuable or less profitable or even unprofitable does not mean the tenant’s use has been substantially frustrated.” Mel Frank Tool & Supply, Inc. v. Di-Chem Co., 580 N.W.2d 802, 808 (Iowa 1998)

For a frustration of purpose argument to succeed, the entire basic purpose of the contract must be frustrated. This has happened in some cases. See, for example, Bay City Realty, LLC v. Mattress Firm, Inc., No. 20-CV-11498, 2021 WL 1295261 (E.D. Mich. Apr. 7, 2021). The case involved a frustration of purpose defense to the landlord’s breach of contract claim. The court found in favor of the tenant/defendant on the frustration of purpose issue, holding that the Governor’s order shuttering non-essential businesses frustrated the primary purpose of the Lease (retail sales of mattresses).

Force majeure clauses—should we use them for pandemics?

Paula M. Bagger, writing for the American Bar Association, covers this topic in greater detail in a March 2021 article titled The Importance of Force Majeure Clauses in the COVID-19 Era. Bagger warns that “we must not ignore the potential applicability of force majeure to our commercial agreements.”

Possible solutions are not as simple as slapping the word “pandemics” into a force majeure clause. For one, some courts may reason that the parties actually foresaw listed events, even though such reasoning goes somewhat against the logic of a force majeure clause, which lists potential unforeseen events.

Writes Erin Webb: “Some courts have found that the parties’ ability to name a risk—like a pandemic or a government shutdown risk—in a force majeure clause means that the risk was not only foreseeable at the time of contracting, but actually foreseen, defeating other defenses to nonperformance, such as impossibility of performance or frustration of purpose.”

This reasoning may be particularly applicable to Covid-19, given evidence that Covid-19 will be endemic to the human population in the future. If we expect Covid, we can no longer expect to use it as an excuse.

Furthermore, going back to causation, a force majeure clause mentioning a pandemic may not adequately address the issues accompanying the COVID-19 pandemic. More open-ended catch-all-type statements may be better.

However, it is essential to consider one’s own goals when drafting a force majeure clause. For example, if you’re a commercial landlord, you may not want a force majeure clause to encompass pandemics like COVID-19 – it could give a delinquent tenant ammunition in its efforts not to pay you. Conversely, if you’re a commercial tenant, you might want an out if business dries up.

Conclusion

COVID-related frustration of purpose and force majeure are not cure-alls, and courts will not take these arguments at face value. However, with the right facts, frustration of purpose or force majeure arguments can be successful. Businesses should take positive steps to ensure that their interests are protected if/when COVID comes knocking again. For all your business needs regarding frustration of purpose and force majeure clauses, the attorneys at Fraser Trebilcock can help.


Matthew J. Meyerhuber is an attorney at Fraser Trebilcock focusing on general litigation, cannabis law, environmental law, and real estate. Matthew can be reached at mmeyerhuber@fraserlawfirm.com or 517.377.0885. 

Five Stories that Matter in Michigan This Week – June 3, 2022

Five Stories that Matter in Michigan This Week – June 3, 2022; Legal, Legislative, and Regulatory Insights


Michigan Senate Votes to Suspend Gas Taxes this Summer

  1. The Michigan Senate, in a bipartisan vote, passed a series of new bills that would temporarily pause gas taxes from June 15 to September 15. The bills pause collections on the 6% sales and use taxes on gas purchases and the 27 cent per gallon excise gas tax. According to AAA, the average price for a gallon of gas in Michigan as of June 1 was over $4.70.

Why it Matters: These bills reflect the sense of urgency—within both parties in Michigan and across the country—to address surging gas prices, as well as inflationary pressures more broadly, before the upcoming elections. According to reporting by Crain’s Detroit, Governor Whitmer, at the Mackinac Policy Conference, indicated her general support for the legislation, although she raised concerns about the impact of suspending tax collections that would otherwise be allocated for road repair.

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Court of Appeals Rejects Michigan Public Body FOIA Exemption

  1. The Michigan Court of Appeals recently held that a public body in Michigan that is a plaintiff or defendant in litigation cannot deny a Freedom of Information Act request by the legal counsel to another party to the litigation based on a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties.” Learn more about this case here.

Why it Matters: MCL 15.243(1)(v) allows a public party to assert a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties.” However, as this case makes clear, the exemption will be strictly construed. If the FOIA requester does not meet the precise legal definition of a “party” in litigation, and instead is merely a friend, agent or legal counsel to a party, then the exemption will likely be denied. Accordingly, before asserting this or any other exemption, a public body should consult with legal counsel. Learn more about this case here.

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Michigan Legislature Passes Bill to Fund Security Enhancements at Schools

  1. The Michigan House and Senate passed legislation that would provide $27 million in funding for safety and security assessments at public and private schools around the state. The legislation was passed in the wake of a mass shooting at an elementary school in Uvalde, Texas. The bill would also set aside nearly $10 million for additional support to the Oxford Community School District following the November mass shooting at the district’s high school.

Why it Matters: Expect an increase in legislation, from security enhancements at schools to “red flag” laws meant to identify potential threats, being debated in Michigan and across the country.

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Full Principal Residence Tax Exemption Available Even if Portion of Home is Rented

  1. The Michigan Court of Appeals, in the case of Keith W. DeForge v. Township of Allouez, recently ruled that homeowners in Michigan can still claim 100% principal residence tax exemption even if the homeowner rents out a portion of their home.

Why it Matters: This ruling clarifies a tax question that impacts the rapidly increasing number of homeowners in Michigan who generate rental income from their homes using services such as Airbnb.

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Michigan’s Movers and Shakers Meet on Mackinac Island

  1. Michigan’s Mackinac Policy Conference wrapped up this week, and from this year’s election for governor to healthcare to housing in Michigan, a wide range of important issues were discussed and debated.

Why it Matters: The Mackinac Policy Conference has always been the place to take the pulse of politics and business in Michigan. A group of Fraser Trebilcock professionals were in attendance this year, and next week we’ll be sharing some of the key takeaways from the conference.


Related Practice Groups and Professionals

Election Law | Klint Kesto
Litigation | Thad Morgan
Administrative & Regulatory | Michael Ashton
Taxation | Paul McCord

FOIA Exemption Denied When Requesting Party is not Party to Civil Litigation

If a public body in Michigan is a plaintiff or defendant in litigation, can the public body deny a Freedom of Information Act request by the legal counsel to another party to the litigation based on a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties”? According to the Michigan Court of Appeals in an unpublished opinion in the case of Jones Day v Dep’t of Environment, Great Lakes, and Energy, and at least as it relates to the facts of this case, the answer is no.

Background of the Case

The underlying litigation involves a lawsuit brought by the State of Michigan in state court against chemical companies alleging that the companies improperly released toxic synthetic chemicals called polyfluoroalkyl substances (“PFAS”), which found their way into Michigan’s water supplies.

The state lawsuit was transferred to federal court and combined with similar cases from other jurisdictions, and a case management order was entered that precluded participation in discovery.

Jones Day, a law firm representing a defendant company, proceeded to file a state FOIA request with the Department of Environment, Great Lakes, and Energy (“EGLE”) seeking documentation related to the Michigan PFAS Action Response Team.

EGLE denied the request, citing MCL 15.243(1)(v), the exemption cited above pertaining to parties to a civil litigation. Jones Day then filed a FOIA complaint in the Court of Claims, and the Court of Claims granted summary disposition in favor of EGLE. Jones Day appealed.

The Court of Appeals Decision

The Court of Appeals reversed the lower court decision. The Court of Appeals relied upon precedent from a previous case, Taylor v Lansing Bd of Water & Light, in which a friend of the plaintiff to a lawsuit against a public body made a FOIA request after the plaintiff’s own FOIA request was denied by the public body defendant on the basis of MCL 15.243(1)(v). In the Taylor case, the Court of Appeals ruled that the exemption could not be used where, as in the Jones Day case, the party making the FOIA request was not a “party.”

In the Jones Day case, the Court of Appeals, in reaching a similar result, explained that “the Legislature did not act to obviate the Taylor decision and prevent FOIA actions from being filed by best friends, counsels of record, or associates despite this Court’s recognition that a ‘distasteful’ result occurs without such a restriction of the term ‘party.’”

Accordingly, in light of this case, and the Michigan case law it relies upon, public bodies should be aware that the MCL 15.243(1)(v) exemption will likely be strictly construed. If the FOIA requester does not meet the precise legal definition of a “party” in litigation, and instead is merely a friend, agent or legal counsel to a party, then the exemption will likely be denied.


Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at tmorgan@fraserlawfirm.com or (517) 377-0877.