Tolas Oil & Gas Exploration Co v. Bach Services & Manufacturing ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
TOLAS OIL & GAS EXPLORATION CO., UNPUBLISHED
PETRO J. TOLAS, GEORGE J. TOLAS, August 22, 2017
TOLAS BROTHERS, INC., DOUGLAS
DARNELL, WILLIAM WERNER,
ROBERT WERNER, JOHN A. ERITANO,
PETER S. WILES, SANDY T. WILES, and
PAUL F. PATRICK,
Plaintiffs-Appellants,
v Nos. 333075, 333942
Montcalm Circuit Court
BACH SERVICES & MANUFACTURING LLC, LC No. 2015-020942-CZ
BACH ENERGY SYSTEMS LLC, BACH
OILFIELD SERVICES LLC, D&J
EXPLORATION LLC, R CUBED LLC,
ROBIN BACH, RICK BACH, DAVID VERWEY,
DAN VERWEY, ANDY VERWEY, KENNETH
RUSSELL, and DAVID BIEGANOWSKI,
Defendants-Appellees.
Before: BOONSTRA, P.J., and RONAYNE KRAUSE and SWARTZLE, JJ.
PER CURIAM.
In this consolidated appeal, plaintiffs appeal by leave granted in both docket numbers the
trial court’s order granting defendants’ motion to change venue and subsequent order granting
attorney fees and costs to defendants. This matter arises out of an oil and gas well physically
located in Eaton County. Plaintiffs and at least some defendants hold ownership interests in the
well, and many of them have a variety of shared interests in other wells in other counties. The
general allegations are that defendants fraudulently deceived investors into approving a
procedure intended to increase the well’s oil production but that actually resulted in diminished
production and eventual closure of the well. Defendants profited from performing the procedure.
Relevant to the instant appeal, defendants contended that venue was improper in Montcalm
County and was instead proper in Eaton County, and plaintiffs were obligated to pay costs and
fees associated with transferring the matter. The trial court agreed. We reverse and remand for
further proceedings in Montcalm County.
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As an initial matter, the trial court determined that all of plaintiffs’ allegations sounded in
tort. Because plaintiffs do not dispute this finding on appeal, we will neither consider nor revisit
that determination; rather, we will simply accept it without making our own determination. We
review for clear error a trial court’s ruling on a motion to change improper venue. Massey v
Mandell, 462 Mich. 375, 379; 614 NW2d 70 (2000). Venue is governed by statute. Dimmitt &
Owens Fin, Inc v Deloitte & Touche (ISC), LLC, 481 Mich. 618, 624; 752 NW2d 37 (2008). The
trial court’s interpretation of underlying statutes is reviewed de novo. Shiroka v Farm Bureau
Gen Ins Co of Mich, 276 Mich. App. 98, 102; 740 NW2d 316 (2007). Plaintiffs must establish the
propriety of their chosen venue, but “[b]attles over venue that endure for years and are a great
expense should be discouraged and avoided when there are convenient and fair locations for trial
that fulfill the venue requirements of Michigan statutes and court rules.” Gross v Gen Motors
Corp, 448 Mich. 147, 155-156; 528 NW2d 707 (1995).
Because this is presumed to be a tort action, venue analysis begins with MCL 600.1629,
which addresses “an action based on tort or another legal theory seeking damages for personal
injury, property damage, or wrongful death.” Under MCL 600.1629(2), a party may seek a
change of venue “based on hardship or inconvenience,” which is inapplicable because
defendants did not do so. The parties agree that none of the enumerated conditions under MCL
600.1629(1)(a) through (c) are satisfied because those three subsections explicitly depend on a
single county in which a single injury occurred, or a single plaintiff or defendant. We agree. See
Massey, 462 Mich. at 382 n 5. Therefore, venue must be determined pursuant to MCL
600.1629(1)(d), which provides that venue is therefore proper in “a county that satisfies the
criteria under [MCL 600.1621] or [MCL 600.1627].”
MCL 600.1621 provides:
Except for actions provided for in sections 1605, 1611, 1615, and 1629,
venue is determined as follows:
(a) The county in which a defendant resides, has a place of business, or
conducts business, or in which the registered office of a defendant corporation is
located, is a proper county in which to commence and try an action.
(b) If none of the defendants meet 1 or more of the criteria in subdivision
(a), the county in which a plaintiff resides or has a place of business, or in which
the registered office of a plaintiff corporation is located, is a proper county in
which to commence and try an action.
(c) An action against a fiduciary appointed by court order shall be
commenced in the county in which the fiduciary was appointed.
MCL 600.1627 provides:
Except for actions founded on contract and actions provided for in
sections 1605, 1611, 1615, and 1629, the county in which all or a part of the cause
of action arose is a proper county in which to commence and try the action. Suits
against the surety of a public officer or his or her appointees are not excepted
from the application of this section.
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This Court has referred to both MCL 600.1621 and MCL 600.1627 as “general venue statutes.”
Colucci v McMillin, 256 Mich. App. 88, 97, 100; 662 NW2d 87 (2003). Both statutes provide
exceptions for “actions provided for in sections 1605, 1611, 1615, and 1629,” the first three of
which are inapplicable and the last of which, as discussed, simply points back to §§ 1621 or
1627. Although MCL 600.1621 is applicable to actions sounding in contract, nothing in the
plain language thereof restricts it to such actions, and indeed, our Supreme Court has clearly
applied it in other circumstances. See Massey, 462 Mich. at 377, 384-385.
Notably, other than MCL 600.1621(c), both statutes use “a” instead of “the,” with the
obvious implication that venue might be proper in more than one county. Furthermore, the plain
language of MCL 600.1629(1)(d) uses “or,” equally clearly establishing that venue might be
proper in any county proper under either §§ 1621 or 1627. In a forum non conveniens context, a
plaintiff’s selection of a particular venue is given deference. Anderson v Great Lakes Dredge &
Dock Co, 411 Mich. 619, 628-629; 309 NW2d 539 (1981); Duyck v Intl Playtex, Inc, 144 Mich
App 595, 599; 375 NW2d 769 (1985), overruled on other grounds by Russell v Chrysler Corp,
443 Mich. 617; 505 NW2d 263 (1993). Although not directly applicable, the principle that a
plaintiff is entitled to choose among any of several available proper venues is applicable, and
moreover there is no statutory priority between MCL 600.1627 and MCL 600.1621. Dawley v
Hall, ___ Mich App ___, ___; ___ NW2d ___ (Docket No. 331800, issued May 9, 2017) (slip op
at p 5). Consequently, plaintiffs are entitled to commence suit in any county that would be
deemed proper under either MCL 600.1621 or MCL 600.1627.
Here, venue is proper under MCL 600.1621(a) in a county “in which a defendant resides,
has a place of business, or conducts business, or in which the registered office of a defendant
corporation is located.” No party disputed plaintiffs’ allegations in the complaint that some of
the defendants conducted business in Montcalm County. The arguments in the trial court
centered primarily on legal questions involving the application of the various venue statutes.
Plaintiffs therefore carried their burden of proving a proper venue under MCL 600.1629(1)(d).
MCL 600.1621(a); Gross, 448 Mich. at 155-156. The trial court unambiguously erred in
concluding that venue had been improper in Montcalm County.
Although strictly speaking it is therefore irrelevant whether venue might have also been
proper in Eaton County, some of the defendants make that argument. We disagree. As noted, “a
defendant” has a different meaning from “the defendant.” Massey, 462 Mich. at 382-383, 382 n 5
and n 7. Use of “the” is proper where there is a single defendant. Shiroka, 276 Mich. App. at
106. Obviously, both MCL 600.1629(1)(a)(i) and (b)(i) are inapplicable in the instant case
involving multiple plaintiffs and defendants. Although MCL 600.1629(1)(a)(ii) and (b)(ii) are
satisfied if, respectively, “a defendant” or “a plaintiff” has its corporate registered office in that
county, there are no claims by any party in the instant case that any plaintiff or defendant has a
corporate registered office in Eaton County. Consequently, venue cannot be established under
Subdivisions 1629(1)(a) or 1629(1)(b). Therefore, the trial court’s venue ruling cannot be
supported on this alternative ground where there are multiple plaintiffs and defendants. Massey,
462 Mich. at 382 n 5; Shiroka, 276 Mich. App. at 106.
Additionally, MCL 600.1629(1)(a) or MCL 600.1629(1)(b) both provide that venue is
proper in “[t]he county in which the original injury occurred,” which “clearly and
unambiguously limits venue to the situs of the original injury when either the defendant or the
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plaintiff resides, does business, or has a corporate office there.” Dimmitt, 481 Mich. at 628.
Significantly, the “original injury” is not the original breach of the standard of care, and the two
might be located in different counties. Id. at 630. In that case, the Court determined that the
injury was where the plaintiffs felt the effects of the defendants’ breach, and because the injury
was the plaintiffs’ parent company’s inability to satisfy its financial obligations and subsequent
forced liquidation, it occurred in the county of the plaintiffs’ principal places of business. Id. at
632.
The first injury suffered here was diminished financial returns from the diminished
productivity of the well, which therefore was felt at their principal places of business (for
plaintiffs that are companies) and at their places of residence (for the individual plaintiffs). None
of the principal places of business or residences were argued to be in Eaton County, so the
original injury did not occur there; furthermore, because plaintiffs are located in various different
counties, the requirement of “the county” in which the original injury occurred cannot be
satisfied in any event. Defendant Russell’s reliance on Schroeder v Terra Energy, Ltd, 223 Mich
App 176, 179, 180, 181, 188-189; 565 NW2d 887 (1997), for the proposition that plaintiffs
suffered their economic damage at the wellhead is misplaced because Schroeder was a breach of
contract action where the issue on appeal involved the interpretation of language in a lease
agreement; venue and the location of the original injury for purposes of MCL 600.1629 were not
at issue in that case. Defendants do not argue that MCL 600.1692(1)(c) applies, and neither §
1629(1)(a) nor § 1629(1)(b) apply. Although MCR 8.111(D) discusses when a case should be
assigned to a particular judge based on a prior connection to an action arising out of the same
transaction or occurrence, MCR 8.111 is only directed at case assignment to judges within a
particular court; it is not a venue rule. MCR 8.111(A); MCR 8.110(A).
The trial court clearly erred in ruling that venue was improper in Montcalm County. The
trial court’s order so holding is reversed. Because the trial court’s order granting costs, fees, and
expenses was based on MCR 2.223(B)(1) and MCL 600.1653, which are predicated on a motion
to change venue being properly granted, that order must likewise be reversed. See Smith v
Khouri, 481 Mich. 519, 526, 526; 751 NW2d 472 (2008). Accordingly, the trial court’s orders
under appeal are reversed, and this matter is remanded to the Montcalm Circuit Court for further
proceedings. We do not retain jurisdiction.
/s/ Mark T. Boonstra
/s/ Amy Ronayne Krause
/s/ Brock A. Swartzle
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