Background
Angstrom Tubular Solutions LLC, an automotive parts supplier based in Ortonville, Michigan, hired John Lindeman in 2021 as plant manager. His employment agreement included a base salary plus an annual bonus tied to the company’s EBITDA—Earnings Before Interest, Tax, Depreciation, and Amortization. A dispute arose over whether Lindeman was entitled to a 2021 bonus at all and whether the 2022 bonus was properly calculated, with Lindeman contending Angstrom manipulated its EBITDA figures downward to reduce his payout. After Lindeman resigned in early 2023 and brought a breach-of-contract action seeking $38,000, Angstrom counterclaimed for unjust enrichment, arguing it had overpaid Lindeman salary and an 2022 bonus and that Lindeman owed back approximately $5,000 in unaccrued vacation pay.
After a three-day jury trial, the jury found Angstrom had breached the employment agreement and awarded Lindeman $38,000. The jury rejected Angstrom’s counterclaim entirely. Lindeman then moved for frivolous-litigation sanctions under MCR 1.109(E) and MCL 600.2591, arguing Angstrom’s unjust enrichment counterclaim was brought for an improper purpose. The trial court granted the sanctions motion for the reasons stated in Lindeman’s brief and calculated attorney fees at $48,940. Angstrom appealed on two grounds: (1) that the trial court’s questioning of Angstrom’s sole witness amounted to reversible judicial misconduct (Docket 371072); and (2) that the sanctions order was improper (Docket 374240).
The Court’s Holding
The court affirmed in Docket 371072 and reversed and remanded in Docket 374240. On the judicial misconduct issue, the court held the argument was unpreserved: MRE 614(c) required Angstrom to object at the time or at the next opportunity outside the jury’s presence, and Angstrom did neither. Under the heavy presumption of judicial impartiality and in light of the trial court’s curative instruction that its questions did not reflect its view of the facts, the questioning did not rise to the level of manifest injustice necessary to excuse the waiver.
On the sanctions, the court vacated the award and remanded. Michigan law requires that a trial court articulate a sufficiently clear basis for a frivolous-litigation finding under MCL 600.2591, sufficient to allow appellate review. Tolas Oil & Gas Exploration Co v Bach Servs & Mfg, 347 Mich App 280 (2023); Home-Owners Ins Co v Andriacchi, 320 Mich App 52 (2017). The trial court’s order granted sanctions “for the reasons stated in the plaintiff’s motion and brief,” but that brief offered several independent alternative grounds—improper purpose, factual invalidity, and a discovery-violation theory—leaving the appellate court unable to determine which theory the trial court adopted, whether the court applied the objective standard required at the time the counterclaim was filed, or whether the discovery violation factor supported an independent basis for sanctions.
Key Takeaways
- A trial court’s order granting frivolous-litigation sanctions must articulate a specific basis for the frivolity finding—not merely incorporate the moving party’s brief by reference. Where the moving brief offers multiple alternative grounds, the blanket adoption of that brief leaves the order unreviewable and requires vacatur and remand for proper findings.
- Under MRE 614(c), a party that fails to object to a trial court’s questioning of a witness at the time (or at the next opportunity outside the jury’s presence) forfeits appellate review. The heavy presumption of judicial impartiality, combined with a curative instruction, can prevent a finding of manifest injustice even when the questions were probing.
- EBITDA-based bonus provisions in employment agreements are enforceable in Michigan. A jury is entitled to find that an employer manipulated preliminary versus final EBITDA figures to understate bonus eligibility, and that finding supports a breach-of-contract verdict.
- For the Michigan commercial bar, this case also illustrates the heightened scrutiny of frivolous counterclaims in employer-employee disputes: a well-documented record of the employer’s conduct during litigation may supply grounds for sanctions, but the trial court must articulate precisely which conduct and which statutory standard it is applying.
Why It Matters
Lindeman v. Angstrom Tubular Solutions is a useful decision for Michigan employment and commercial litigators in several respects. The EBITDA-bonus holding confirms that Michigan juries can resolve disputes about whether a company manipulated its own financial metrics to reduce an agreed-upon bonus—a fact pattern increasingly common in Michigan’s automotive supply chain, where plant managers and other employees negotiate performance-based compensation. The sanctions holding is a procedural reminder: trial courts that want sanctions to stick must write detailed, standalone orders that identify the specific conduct, the specific statutory or rule provision, and the specific reason the court found that provision satisfied.
For automotive-industry employment counsel on both sides of the docket, the decision is also a reminder that employer counterclaims for unjust enrichment—overpaid salary, unearned bonuses, unaccrued vacation—carry litigation risk if they are brought primarily as leverage. A no-cause jury verdict on such a counterclaim is a predicate for sanctions, and the threshold for sanctions is met if the court can find an improper purpose even if the counterclaim had some factual or legal support.