Ferranti v. Elec. Res. Co.

330 Mich.App. 439

948 N.W.2d 596

Thomas A. FERRANTI, Plaintiff-Appellant,andFrancyne B. Stacey, Appellant,

v.ELECTRICAL RESOURCES COMPANY and Terry Grieve, Defendants-Appellees.

No. 342934

Court of Appeals of Michigan.

Submitted November 7, 2019, at Lansing.

Decided November 19, 2019, 9:05 a.m.

Carole M. Stanyar, Plymouth, for Thomas A. Ferranti.

Mogill, Posner & Cohen, Lake Orion (by Kenneth M. Mogill ) for Francyne B. Stacey.

Berry Moorman PC (by Randolph T. Barker and Andrea M. Pike, Detroit) for Electrical Resources Company and Terry Grieve.

Before: Borrello, P.J., and K. F. Kelly and Servitto, JJ.

Per Curiam.

Appellants, plaintiff Thomas A. Ferranti and his counsel, Francyne B. Stacey, appeal by leave granted the trial court order denying discovery following a show-cause notice of criminal contempt, arising from a purported violation of a discovery order.¹ We reverse.

I. BASIC FACTS

Ferranti was a sales representative for defendant Electrical Resources Company (the Company). He left the Company in 2015, and brought a lawsuit alleging age discrimination and failure to pay sales commissions against the Company and one of its employees, defendant Terry L. Grieve. During discovery, appellants sought to examine the Company's sales records. The parties stipulated to a discovery order that required the Company to provide Ferranti's expert with access to the sales records, which were stored in a cloud-based server called Epicor. The order provided, in relevant part, as follows:

Plaintiff's forensic expert, Fortz Legal, shall be provided access to and the opportunity to copy all sales information contained in Defendant Electric Resources Company's ("ERC") electronic sales records from October 2014 up to and including the present. Plaintiff's expert may specifically access any customer or sales tracking or cloud software or services utilized by ERC during the stated time period.

Ferranti's expert encountered problems accessing the electronic sales records. After an exchange of e-mails across numerous dates, Stacey, Ferranti's counsel, then requested that the Company's counsel send a username and password to access the records via the Internet. The Company's counsel sent the username and password to Stacey.²

Stacey gave the username and password to Ferranti, and he accessed the records, downloaded certain records, and sent the downloaded records to Stacey electronically. An Epicor specialist later determined that a user who logged in with the provided username and password during the same timeframe had modified or removed metadata from the electronic records. Ferranti acknowledged that he had accessed the records, but denied intentionally modifying or removing any data.

The Company filed a motion to dismiss the civil suit as a sanction for violation of the stipulated discovery order. In the same motion, the Company sought to hold appellants in criminal contempt for violation of the stipulated order. The trial court held a hearing on the contempt motion and, after confirming that the Company wished to proceed with criminal contempt, the court advised appellants of the contempt allegations. Appellants stood mute to the charges, and the court entered not guilty pleas on their behalf. The court appointed defense counsel to act as the prosecutor in the criminal-contempt proceeding. Appellants retained separate counsel, and a motion for discovery was filed on their behalf. The discovery motion included a request for documents in accordance with MCR 6.201(B)(1) as well as the opportunity for an independent forensic examination of relevant stored documents and files among other items. Defendants opposed the motion, asserting that appellants were seeking discovery and information pertinent to restitution that presented an inquiry separate and distinct from the criminal-contempt proceeding. The trial court denied the motion for discovery. We granted appellants' application for leave to appeal.

II. CRIMINAL-CONTEMPT SHOW-CAUSE AFFIDAVIT

Appellants initially contend that the information provided to the trial court was insufficient to warrant the issuance of an order to show cause for criminal contempt. We agree. A trial court's decision regarding a contempt motion is reviewed for an abuse of discretion, while its factual findings are reviewed for clear error. DeGeorge v. Warheit , 276 Mich. App. 587, 591, 741 N.W.2d 384 (2007). "If the trial court's decision results in an outcome within the range of principled outcomes, it has not abused its discretion." Taylor v. Currie , 277 Mich. App. 85, 99, 743 N.W.2d 571 (2007). Further, "[c]lear error exists when this Court is left with the definite and firm conviction that a mistake was made." In re Contempt of Henry , 282 Mich. App. 656, 669; 765 N.W.2d 44 (2009). Additionally, questions of law related to the trial court's decision are reviewed de novo. Id. at 668.

A trial court has inherent and statutory authority to enforce its orders. MCL 600.611 ; MCL 600.1711 ; MCL 600.1715. "Contempt of court is defined as a willful act, omission, or statement that tends to ... impede the functioning of a court." In re Contempt of Dudzinski , 257 Mich. App. 96, 108, 667 N.W.2d 68 (2003) (quotation marks and citation omitted). MCR 3.606(A), which specifically governs the initiation of contempt proceedings for conduct occurring outside the immediate presence of the court, states as follows:

Initiation of Proceeding. For a contempt committed outside the immediate view and presence of the court, on a proper showing on ex parte motion supported by affidavits, the court shall either

(1) order the accused person to show cause, at a reasonable time specified in the order, why that person should not be punished for the alleged misconduct; or

(2) issue a bench warrant for the arrest of the person.

Accordingly, a trial court's order to show cause why a party should not be held in contempt must be based on "a proper showing on ex parte motion supported by affidavits." MCR 3.606(A). "[T]here must be a sufficient foundation of competent evidence, and legitimate inferences therefrom," before a show-cause order may be issued. In re Contempt of Steingold , 244 Mich. App. 153, 158, 624 N.W.2d 504 (2000) (quotation marks and citation omitted). To be valid, an affidavit in a contempt proceeding must be made by someone who has personal knowledge of the facts stated in the affidavit. Id. The affidavit must sufficiently state facts that, along with legitimate inferences from the facts, constitute contempt as a matter of law. Id. To establish criminal contempt, the charged party must have willfully disregarded or willfully disobeyed a court order. People v. Mysliwiec , 315 Mich. App. 414, 416-417, 890 N.W.2d 691 (2016).

In this case, defendants sought dismissal of the civil case on the basis that appellants, or someone else who was provided the username and password, had "manipulated metadata," moved documents within the system, and attempted to modify the account password. Further, defendants sought to hold appellants in criminal contempt for violation of the stipulated order and suggested that they be required to pay any costs incurred in restoring their records to their original configuration. However, at the time of filing their motion, defendants attached an unexecuted affidavit stating that metadata was modified or deleted. The attached affidavit did not sufficiently state facts that, along with legitimate inferences from the facts, constitute contempt as a matter of law.

First, the affidavit did not identify any specific orders that were violated, identify any contemptuous actions, or even identify the individual or individuals responsible for the alleged conduct.³ Further, the affidavit did not meet the requirements of an affidavit under MCR 2.119(B)(1), which requires the affidavit to:

(a) be made on personal knowledge; (b) state with particularity facts admissible as evidence establishing or denying the grounds stated in the motion; and

(c) show affirmatively that the affiant, if sworn as a witness, can testify competently to the facts stated in the affidavit.

As noted above, at the time that defendants filed the motion, the affidavit submitted was unexecuted and unsworn. The affidavit was later executed by Mark Sanges, a technical support manager for DocStar. At Sanges's deposition, he indicated that he provided the content for his affidavit "after asking members of [his] support team and [the] operations team to pull the data that was being requested." Thus, the affidavit that he ultimately signed was not necessarily premised on personal knowledge. Further, Sanges was not aware whether the username associated with the audited activity was provided to Ferranti. Accordingly, it is clear that he could not establish that Ferranti was responsible for the changes made in DocStar or violated any order. Additionally, while Sanges acknowledged that the system could recognize that changes were made to certain documents, he could not detail what changes were made or whether the contents of the documents were modified. Accordingly, Sanges's affidavit, even when coupled with his testimony, remained insufficient to establish contemptuous acts. "If an inadequate affidavit is the predicate which underlies the contempt proceeding or if no affidavit at all accompanies the petition, the court lacks jurisdiction over the person of the alleged contemnor." In re Steingold , 244 Mich. App. at 159, 624 N.W.2d 504 (citation and quotation marks omitted). Accordingly, the trial court erred by ordering a show-cause hearing on the basis of the submitted affidavit.

III. DISCOVERY⁴

Appellants also contend that the trial court improperly denied their request for discovery in light of the deprivation of rights, including imprisonment, and consequences associated with criminal contempt.⁵ We agree.

"The power to hold a party, attorney, or other person in contempt is the ultimate sanction the trial court has within its arsenal, allowing it to punish...