Where a defendant asserted a counterclaim for unjust enrichment, the counterclaim was not well grounded in fact after reasonable inquiry and was interposed for an improper purpose, so a sanction of $48,940 should be imposed on the defendant.
“Defendant’s March 8, 2023 counterclaim pleaded three counts: Count I, breach of contract; Count II, breach of fiduciary duty; and Count III, unjust enrichment. Count I alleged that a valid employment contract specifically governed Plaintiff’s compensation and that Plaintiff breached it by accepting and retaining compensation allegedly not authorized by the agreement. … Count II alleged that Plaintiff breached fiduciary duties by retaining the same alleged salary, bonus, and vacation overpayments. … Count III incorporated the preceding allegations and alleged that Plaintiff was unjustly enriched by more than $25,000 in salary, an $18,000 bonus, and more than $5,000 in vacation pay. …
“… The sanctions determination on remand rests on Count III, the unjust-enrichment counterclaim that was pursued to verdict, and on the factual allegations incorporated into it. …
“Considering the objective circumstances existing when the counterclaim was filed and pursued, the Court finds that the primary purpose of the unjust-enrichment claim was to impose a financial consequence on Plaintiff after his departure, rather than simply to correct an objectively identified accounting error. The salary had been deliberately agreed to and knowingly continued, yet Defendant sought to recoup it only after resignation. Management knew the facts surrounding the approved vacation and remote-work week. The bonus had been intentionally paid before the criterion later used to demand a full clawback had even been checked. Defendant’s own decisionmaker admitted that Plaintiff could have kept the same allegedly unearned bonus if he remained employed. …
“If equity truly required repayment of an improperly retained benefit, continued employment would not erase the asserted overpayment. Defendant’s admitted position was effectively: stay and keep the money; leave and repay it. In context with Banga’s statement that Plaintiff had ‘done so wrong to us,’ the Court finds that the primary purpose of the unjust-enrichment counterclaim was to injure Plaintiff financially because he left. That satisfies MCL 600.2591(3)(a)(i) and MCR 1.109(E)(5)(c). …
“The Court independently finds frivolousness under subsection (ii). The relevant facts were not hidden by Plaintiff or dependent on uncertain third-party information. They concerned Defendant’s own payroll decisions, management communications, compensation practices, and bonus calculations. A reasonable prefiling inquiry would have revealed that the salary was knowingly agreed to and continued; one week of vacation had been approved and management knew of the intended remote-work week; and the $18,000 bonus was intentionally paid before Defendant had checked the scorecard criterion. The demand letter attached to the pleading itself further showed that the final financial component supported a $12,000 bonus and that the full clawback depended on the separate scorecard theory.
“… Defendant’s own records and its own corporate decisionmaker undercut material factual premises incorporated into Count III before it was filed. The Court therefore finds that Defendant had no reasonable basis to believe material facts underlying its unjust-enrichment position were true as pleaded. MCL 600.2591(3)(a)(ii). The same record establishes the absence of the reasonable factual inquiry required by MCR 1.109(E)(5)(b).”