COA 373820 PRECISION STANDARD INC V ADP TAX SERVICES INC Opinion - Per Curiam - Unpublished 12/9/2025

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
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S T A T E O F M I C H I G A N
C O U R T O F A P P E A L S
PRECISION STANDARD, INC.,
Plaintiff-Appellant,
UNPUBLISHED
December 09, 2025
1:10 PM
v No. 373820
Oakland Circuit Court
ADP TAX SERVICES, INC., LC No. 2024-205934-CB
Defendant-Appellee.
Before: RIORDAN, P.J., and GARRETT and MARIANI, JJ.
PER CURIAM.
Plaintiff, Precision Standard, Inc. (Precision), and defendant, ADP Tax Services, Inc.
(ADP), entered into a payroll agreement that required ADP to pay Precision’s payroll taxes with
funds that Precision provided. Precision filed this action alleging breach of fiduciary duty and
conversion after ADP delayed paying the taxes despite being in possession of the funds. ADP
moved for summary disposition under MCR 2.116(C)(8) and (10), which the trial court granted,
but the court allowed Precision to file an amended complaint alleging breach of contract. Instead
of filing an amended complaint, Precision sought reconsideration, which the trial court denied.
Precision appeals by right the trial court’s order denying reconsideration. Because the trial court
properly determined that the separate-and-distinct-duty test precluded Precision’s claims, we
affirm.
I. FACTS AND PROCEEDINGS
On June 18, 2020, the parties entered into a payroll agreement that required ADP to
perform payroll and tax services for Precision. According to the agreement, Precision forwarded
funds to ADP to be used for the payment of Precision’s tax obligations, and ADP billed Precision
for its services. In August 2021, Precision began receiving checks from ADP, but it was unclear
what the checks were for. When Precision’s employees contacted ADP to inquire about the
checks, they were told to just deposit them. Precision retained Sabina Bravo Persons, a certified
public accountant, to look into the matter. According to Persons, ADP advised that the checks
were overpayments of Precision’s payroll-tax liabilities that Precision remitted to ADP, but which
ADP did not pay to the taxing agencies. ADP further advised that it did not pay any of Precision’s

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payroll taxes or file any of Precision’s tax returns because, “according to their system,” ADP was
not handling Precision’s tax filings. ADP indicated that it would correct the error and pay the
taxes, but it would take a few months to do so.
Persons continued to reach out to ADP to ensure that Precision’s outstanding taxes had
been paid. Ultimately, Precision retained an attorney, Neal Nusholtz, to contact ADP. After he
did so, ADP paid the taxes. Precision filed this action against ADP, alleging breach of fiduciary
duty and conversion. It alleged that it paid ADP a total of $250,419.91 after it received ADP’s
invoices from 2020 through 2022. It maintained that the funds were intended to be used to prepay
its payroll taxes, but ADP failed to do so. It also alleged that ADP had a duty to promptly inform
Precision if ADP failed to use the funds that Precision provided to pay the taxes, but ADP
concealed its nonpayment from Precision, which resulted in Precision spending $10,776.08 to
retain Persons and Nusholtz to ensure that the taxes were paid. Precision asserted that ADP’s use
of Precision’s $250,419.91 for ADP’s own purposes constituted conversion. It maintained that it
suffered $10,776.08 in damages and sought treble damages under MCL 600.2919a.1
ADP moved for summary disposition under MCR 2.116(C)(8) and (10). Relevant to this
appeal, ADP argued that the matter at issue in the complaint was resolved before Precision filed
the complaint, which Precision acknowledged by alleging that ADP had paid the taxes. ADP
denied converting Precision’s funds, but also argued that Precision’s purported damages of
$10,776.08 did not represent the amount allegedly converted. Rather, Precision expended that
amount to retain an accountant and an attorney. ADP noted that Precision failed to allege a breach-
of-contract claim and instead relied on tort theories to “get around” the contractual language and
collect treble damages. The contract provided, in relevant part:
11. Limitation of Liability
This Section 11 sets forth the full extent or ADP’s liability for damages resulting
from this Agreement or the Services rendered or to be rendered hereunder,
regardless of the form in which such liability or claim for damages may be asserted,
and sets forth the full extent of Your remedies. . . .
* * *
A. ADP Responsibility ADP will correct any of Your reports, data or tax agency
filings, as the case may be, produced incorrectly as a result of an ADP error, at no
charge to You. Additionally, ADP will reimburse You for (i) actual damages You
incur as a direct result of the criminal or fraudulent acts or willful misconduct of
ADP or any of its employees, or the loss or misdirection of Your funds in
possession or control of ADP due to ADP’s error or omission (ii) any penalty
imposed against You as a result of an error or omission made by ADP in performing
the Tax Filing Services or (iii) any interest assessed against You as a result of ADP
1 MCL 600.2919a(1)(a) allows for “3 times the amount of actual damages” plus costs and
attorney’s fees because of “[a]nother person’s stealing or embezzling property or converting
property to the other person’s own use.”

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holding Your tax funds past the applicable due date as a result of an error or
omission made by ADP in performing the Tax Filing Services.
In addition, the contract disclaimed consequential damages:
D. No Consequential Damages NEITHER ADP, NOR YOU WILL BE
RESPONSIBLE FOR SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR OTHER SIMILAR DAMAGES . . . THAT THE OTHER
PARTY MAY INCUR OR EXPERIENCE IN CONNECTION WITH THIS
AGREEMENT OR THE SERVICES, HOWEVER CAUSED AND UNDER
WHATEVER THEORY OF LIABILITY, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ADP also argued that because its duty to Precision arose out of the contract, Precision could
not maintain an action in tort. ADP asserted that, in order for a valid tort claim to exist, there must
be a duty separate and distinct from its contractual obligation. It maintained that Precision’s claims
fell squarely within the duties that ADP owed under the contract and that, but for the contract, it
would not have been required to provide payroll and tax services to Precision. Alternatively, ADP
argued that Precision’s conversion claim should be dismissed because Precision’s alleged damages
consisted of professional fees rather than the funds purportedly converted.
Precision opposed ADP’s motion, arguing, in relevant part, that a conversion of funds, even
if temporary, still constitutes conversion, and Michigan law allows damages for a temporary
conversion. Precision also asserted that that there existed a fiduciary relationship between the
parties, and ADP’s silent fraud forced it to retain tax professionals to protect itself from ADP’s
misfeasance. It claimed that it was required to pay the tax professionals approximately $10,776
because of ADP’s conversion and silent fraud. Precision did not respond to ADP’s separate-and-
distinct-duty argument.
The trial court granted ADP’s motion, but allowed Precision to file an amended complaint
alleging breach of contract. The court determined that ADP did not owe Precision a duty separate
and distinct from the duty ADP owed under the parties’ contract. The court stated:
[N]o relationship between Precision and ADP existed giving rise to a legal
duty separate from the parties’ Agreement. Precision’s claims that ADP failed to
timely file Precision’s payroll tax returns; failed to timely pay Precision’s payroll
taxes to the government; and failed to disclose that it had not filed or paid the
payroll taxes and returns, relate to ADP’s failure to abide by the terms of that
Agreement. Because there is no separate duty distinct from that existing under the
Agreement’s obligations and because breach of the duty would not have been
possible but for the contractual relationship, ADP’s motion is GRANTED.
Because ADP acknowledged that Precision’s complaint related to a contractual relationship, the
court permitted Precision to file an amended complaint alleging a breach-of-contract claim within
14 days from the date of the court’s opinion and order.
Rather than filing an amended complaint, Precision moved for reconsideration. It argued
that the trial court’s separate-and-distinct-duty analysis erroneously applied a “but for” standard

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to that facts of this case. Precision maintained that instead of addressing whether a breach of duty
would have occurred “but for” the contract, the proper inquiry was whether a duty existed
independent of the contract. The trial court permitted ADP to respond to the motion. ADP filed
a response, arguing that all of its obligations arose under the contract, which contained explicit
provisions regarding ADP’s liability. It maintained that it owed no duty to Precision unrelated to
the contract. The trial court denied reconsideration on the basis that Precision failed to allege a
duty that ADP owed separate and distinct from the contract. This appeal followed.
II. STANDARD OF REVIEW
We review de novo a trial court’s ruling on a motion for summary disposition. Kilian v
TCF Nat’l Bank, 343 Mich App 621, 630; 997 NW2d 745 (2022). ADP moved for summary
disposition under MCR 2.116(C)(8) and (10). “When an action is based on a written contract, it
is generally necessary to attach a copy of the contract to the complaint.” Laurel Woods Apartments
v Roumayah, 274 Mich App 631, 635; 734 NW2d 217 (2007). The contract then “becomes part
of the pleadings themselves, even for purposes of review under MCR 2.116(C)(8).” Id. Because
Precision did not attach a copy of the contract to its complaint, it appears that the trial court granted
ADP’s motion under MCR 2.116(C)(10). A motion under MCR 2.116(C)(10) challenges the
factual sufficiency of the plaintiff’s complaint. LaFontaine Saline, Inc v Chrysler Group, LLC,
496 Mich 26, 34; 852 NW2d 78 (2014). Summary disposition under subrule (C)(10) is properly
granted “when the affidavits or other documentary evidence, viewed in the light most favorable to
the nonmoving party, show that there is no genuine issue as to any material fact and the moving
party is therefore entitled to judgment as a matter of law.” Lowrey v LMPS & LMPJ, Inc, 500
Mich 1, 5; 890 NW2d 344 (2016).
We also review de novo the interpretation of a contract. Zwiker v Lake Superior State
Univ, 340 Mich App 448, 474; 986 NW2d 427 (2022). “The cardinal rule in the interpretation of
contracts is to ascertain the intention of the parties.” Shay v Aldrich, 487 Mich 648, 660; 790
NW2d 629 (2010) (quotation marks and citation omitted). “[T]he language of the parties’ contract
is the best way to determine what the parties intended.” Klapp v United Ins Group Agency, Inc,
468 Mich 459, 476; 663 NW2d 447 (2003). If contractual language is unambiguous, it must be
interpreted in accordance with its plain meaning. Shay, 487 Mich at 660. “[C]ourts must also give
effect to every word, phrase, and clause in a contract and avoid an interpretation that would render
any part of the contract surplusage or nugatory.” Klapp, 468 Mich at 468.
III. ANALYSIS
Generally, when a cause of action arises from the breach of a promise, the plaintiff’s action
lies in contract. Hart v Ludwig, 347 Mich 559, 563; 79 NW2d 895 (1956). If a claim is based on
negligence, in other words “more than a mere breach of a promise,” the action lies in tort. Id.
(quotation marks and citation omitted). Thus, “[a]s a general rule, there must be some active
negligence or misfeasance to support [a] tort.” Id. (quotation marks and citation omitted). “There
must be some breach of duty distinct from breach of contract.” Id. (quotation marks and citation
omitted). “[T]he threshold inquiry is whether the plaintiff alleges violation of a legal duty separate
and distinct from the contractual obligation.” Rinaldo’s Constr Corp v Mich Bell Telephone Co,
454 Mich 65, 84; 559 NW2d 647 (1997).

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In Rinaldo’s, the plaintiff moved its place of business to a new location and requested the
defendant telephone company to transfer its phone service to the new location. Id. at 67. The
plaintiff began to experience difficulties with its phone service, which it alleged caused phone calls
from customers not to be connected, resulting in a loss of business revenue. Id. at 68. The plaintiff
filed suit against the defendant, alleging negligence, res ipsa loquitur, and willful
misrepresentation. Id. at 78. The specific duties that the plaintiff alleged the defendant violated
included the “duty to conduct its business in a reasonable manner” and “to be honest and forthright
in its dealings” with the plaintiff. Id. Our Supreme Court determined as follows:
We agree with the plaintiff that the defendant owed these duties; however,
we conclude that they arose solely out of the contractual relationship between the
parties and not from any independent legal obligations supporting a cause of action
in tort. [Id. at 78-79.]
* * *
In this case, as in Hart, the defendant agreed to provide the plaintiff with
services under a contract. Like the defendant in Hart, Michigan Bell allegedly
failed to fully perform according to the terms of its promise. While plaintiff’s
allegations arguably make out a claim for “negligent performance” of the contract,
there is no allegation that this conduct by the defendant constitutes tortious activity
in that it caused physical harm to persons or tangible property; and plaintiff does
not allege violation of an independent legal duty distinct from the duties arising out
of the contractual relationship. [Id. at 85.]
In the instant case, Precision alleged that ADP had a duty to promptly inform Precision that
it did not file Precision’s payroll tax returns and did not use Precision’s funds to pay Precision’s
payroll taxes. Precision also alleged that ADP concealed its failures from Precision. As in
Rinaldo’s, Precision’s allegations amount to a claim that ADP negligently performed its
obligations under the parties’ contract. Precision failed to allege that ADP violated a duty that it
owed Precision separate and distinct from those owed under the contract. Precision’s reliance on
Dep’t of Agriculture v Appletree Mktg, LLC, 485 Mich 1; 779 NW2d 237 (2010), is misplaced.
Unlike the instant case, Appletree Mktg did not involve a contract between the parties that gave
rise to the duty alleged to have been breached. Rather, that case involved the Agricultural
Commodities Marketing Act (ACMA), MCL 290.651 et seq., which the Court determined “did
not abrogate common law claims for conversion.” Id. at 16-17. The Court further stated, “unlike
an ACMA claim, a conversion claim does not arise from a distributor’s mere failure to deduct or
remit any assessment due” under the act. Id. at 15 (quotation marks, brackets, and citation
omitted).
Notably, ADP ultimately performed under the contract and paid Precision’s tax obligations,
albeit it did so late. Paragraph 11(A) of the contract contemplated ADP’s liability in this regard
and required ADP to reimburse Precision for any penalties and interest assessed “as a result of
ADP holding Your tax funds past the applicable due date as a result of an error or omission made
by ADP in performing the Tax Filing Services.” Accordingly, the contract specifically provided
a remedy for the exact scenario that occurred. In addition, ¶ 11(D) of the contract disclaimed
consequential damages that the other party “may incur or experience in connection with” the

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contract. (All caps omitted.) Precision alleged that it incurred fees because it hired an accountant
and an attorney to ensure that its tax obligations had been paid. It claimed as damages the amount
that it paid the accountant and attorney, and asserted that the amount should be tripled under MCL
600.2919a. Because Precision incurred its alleged damages in connection with the contract,
however, they were specifically excluded under the contractual language.
Affirmed. ADP, being the prevailing party, may tax costs. MCR 7.219.
/s/ Michael J. Riordan
/s/ Kristina Robinson Garrett
/s/ Philip P. Mariani

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