One Court of Justice

On August 31, 2010, the Court of Appeals published its per curiam decision in Barksdale v. Bert’s Martketplace, No. 290329, where plaintiff challenged the conduct of a sexual harassment trial where the the judge limited the testimony of the owner of the defendant business to a half-hour per side, and ended plaintiff counsel’s direct examination of that witness at the end of that time, not allowing re-direct or an offer of proof.  The Court of Appeals found the time limitation to be arbitrary under the circumstances of this case, as it was unrelated to the complexity of the case or the time taken for other witnesses.  Additionally, the Court of Appeals found that the trial court’s failure to take an offer of proof meant that there was no record that would permit a finding of harmless error, meaning the case would have to be reversed and remanded for a new trial as a result of the trial court’s abuse of discretion.

On August 10, 2010, the Court of Appeals published its per curiam opinion in River Investment Group, LLC v. Casab, No. 290645.  In this case, the Wayne County Treasurer foreclosed on plaintiff’s property and sold that property to defendant.  Plaintiff initiated an action in circuit court for damages against defendant based on alleged improvements plaintiff had made to the property after the foreclosure,where plaintiff alleged that it had not received notice of the foreclosure.  The circuit court dismissed that action for lack of jurisdiction, finding that the court of claims had exclusive jurisdiction over such an action.  The Court of Appeals affirmed this ruling.  The Court found that MCL 600.6519 and MCL 600.6437 confer jurisdiction to the court of claims to hear claims against the state, but they do not preclude the court from exercising any additional jurisdiction that my be provided elsewhere by the Legislature.  Specifically, the Court of Appeals found that MCL 211.78l(2), indicates that the court of claims will have exclusive jursidiction over any claims for monetary damages arising out of a failure to provide notice of a tax foreclosure, regardless of whether the defendant is a public or private entity.  Thus, summary disposition of plaintiff’s claims was appropriate in the circuit court.

In Alberto v. Toyota Motor Corp., No. 296824 (published Aug. 5, 2010), the Court of Appeals adopted, in a divided opinion, the apex-deposition rule.  The apex-deposition rule provides that before a plaintiff may take the deposition of a high-ranking or “apex” government official or corporate officer, the plaintiff must demonstrate (1) that the government official or corporate officer possesses superior or unique information relevant to the issues being litigated and (2) that the information cannot be obtained by a less intrusive method, such as by deposing lower-ranking employees.  Judge Saad wrote the majority opinion, which Judge Donofrio joined, while Judge Jansen dissented.

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The Court of Appeals published its per curiam opinion in Jaguar Trading Ltd Partnership v. Presler, Case No. 290972 on August 3, 2010.  Here, a plaintiff sought to confirm an arbitration award in circuit court by filing the arbitration award with the court.  The defendant sought summary judgment on the ground that a required complaint had not been filed.  Defendant further argued that because a complaint was not filed within the applicable one-year limitations period, confirmation of the award would be time-barred.  Based on its reading of MCR 3.602, the Court of Appeals concluded that this request for circuit court relief must occur within a civil action, and thus is subject to the requirements of a civil action, including the filing of a complaint.  The Court of Appeals, however, declined to find that any subsequent request for confirmation would be time-barred because the rule only required the filing of the award within one year (which plaintiff did).

On July 27, 2010, the Court of Appeals published its per curiam opinion in McManus v. Toler, No. 290249.  This is the second appeal arising from this case.  In the first, the Court of Appeals affirmed a verdict of no cause of action in a breach of contract claim where plaintiff alleged he had entered into a contract to sell an investment franchise to his daughter and the defendant if his daughter acquired her licenses in an agreed time-frame.  The trial court and Court of Appeals confirmed there was no breach of the contract where the daughter was not able to acquire the necessary licenses in the requisite time.

Now, the issue in the present appeal is the award of attorney fees pursuant to the offer of judgment rule found in MCR 2.405.  Prior to obtaining the liability verdict, defendant had offered to settle for $25,000, but that offer noted the $25,000 would be in addition to the purchase price for the business.  The Court of Appeals concluded that the statement regarding the purchase of the business did not turn the $25,000 sum certain offer of judgment into a conditional offer outside the scope of MCR 2.405.  Additionally, plaintiff had argued that the case was wholly in equity, and the offer of judgment rule did not apply.  The Court of Appeals found that the plaintiff had asked for damages, and thus the case was a mixed law and equity action.  The Court concluded that the offer of judgment rule applies to such mixed actions, but left open the question of whether it would apply to a purely equitable case.

The Court took substantive peremptory action in two cases, ordered oral argument on the application in two cases, and granted leave to appeal to address a criminal-sentencing issue.  All five cases are discussed below: 

Lawrence M. Clarke, Inc. v. Richco Construction, Inc.:  The Court ordered oral argument on the application.  The Court of Appeals affirmed the trial court’s refusal to set aside a default judgment where the plaintiff obtained leave from the court to effect service by alternate means and the defendants failed to present the necessary affidavits to show a meritorious defense.

In re W Minors:  The Court ordered oral argument on the application.  The Court of Appeals majority affirmed the decision of Michigan Children’s Institute’s superintendent denying consent to adopt and dismissing the adoption petitions filed by the Martins, the W minors’ former foster parents.  Judge Shapiro dissented, concluding that the Martins had been deprived of their ability to adopt the W minors because of an error by the Department of Human Services of Genesee County, and would have remanded the case to the trial court for rehearing. Read more »

On July 13, 2010, the Michigan Supreme Court published Justice Corrigan’s majority opinion in Holman v. Rasak, No. 137993.  In this case, the Court was presented with the question of whether the federal Health Insurance Portability and Accountability Act (“HIPAA”) prevented defense counsel from conducting an ex parte interview of a plaintiff’s treating physician.  Justice Corrigan, joined by Justices Cavanagh, Young, Markman and Kelly concluded that it did not.

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After garnishee defendants failed to respond to plaintiff’s wage garnishment petition, and failed to appear at the hearing on plaintiff’s motion to show cause, the district court granted judgment against garnishee defendants for the entire amount of defendant’s judgment debt.  However, the district court set aside the judgment because the defendant’s bankruptcy filing resulted in an automatic stay of all efforts to collect his debts.  The circuit court reversed and ordered reinstatement of the judgment against garnishee defendants.  On appeal by leave granted, in Vanderpool v. Pineview Estates, LLC, No. 289359, the Court of Appeals agreed with the district court and vacated the circuit court’s order reinstating the district court’s judgment.  Interpreting MCR 3.101(S)(2) and MCR 3.101(O)(7), the Court of Appeals determined that if garnishee defendants were to satisfy the contempt judgment, the same amount of defendants’ outstanding judgment debt would be satisfied, and therefore would violate the automatic stay under federal bankruptcy laws.  The Court of Appeals adopted the bankruptcy court’s analysis in an analogous situation.  The Court of Appeals rejected garnishee defendants’ other claim of error, that the district court should not have entered a default judgment against them due to plaintiff’s failure to comply with procedural requirements, because there was no entry of default or default judgment in this case and thus the notice of entry requirements simply did not apply.

On June 29, 2010, the Court of Appeals published Judge Shapiro’s majority opinion in McNeel v. Farm Bureau Insurance Company of Michigan, No. 285008.  This case arose out of a denial of insurance coverage for a house that was destroyed by fire on March 18, 2003.  On April 17, 2003, the insurer denied coverage on the grounds that the house was vacant and/or unoccupied.  The insurer contends that the trial court erred in denying its motion for summary disposition on the statute of limitations.  The relevant statute requires such an action “be commenced within 1 year after the loss . . .  The time for commencing an action is tolled from the time the insured notifies the insurer until the insurer formally denies liability.”  MCL § 500.2833(1)(q).  Here, the insurer argues that the claim filed in October 2004 was untimely, based on its formal denial of coverage via letter in June 2003.  The majority of the Court of Appeals disagreed, finding that there was a question of fact as to whether the June letter constituted a “formal denial” because, subsequent to the denial, the insured (through its independent claims adjuster) communicated with the insurer challenging the basis for the denial and the insurer considered the evidence and arguments, and then issued another denial letter in October 2003.  Specifically, the Court found that, under these circumstances, it was reasonable to infer that the insurer “withdrew its formal denial while it reinvestigated the claim.”  Thus, the Court upheld the denial of summary disposition to the insurer, and also made ancillary rulings about the jury instructions, interest, and costs.  Judge Kelly dissented from the majority’s opinion on the statute of limitations, arguing that it was undisputed that the insurer never withdrew its denial of coverage and, in fact, maintained that denial in writing several times.  Additionally, Judge Kelly argued that the affidavit from the independent adjuster that the carrier’s representative was reconsidering the claim in light of subsequent information was hearsay insufficient to create a question of fact.

On June 22, 2010, the Court of Appeals approved its per curiam opinion in TBCI, P.C. v. State Farm Mutual Automobile Insurance Co., No. 288853, for publication.  In this case a service provider was seeking to recover no-fault benefits to cover services provided to an insured.  In prior litigation between the insured and the no-fault insurer, a trial court had determined that the relevant claim was fraudulent and rejected the claim for benefits.  The Court of Appeals found that initial determination of fraud barred the service provider’s subsequent litigation by res judicata.  Specifically, it held that the insurer stood in the shoes of the insured in asserting the insurance claim, and thus was a privy of the insured and bound by the legal judgments that applied to the insured.  Therefore, the Court of Appeals affirmed the trial court’s award of summary disposition of the service provider’s claim against the no-fault insurer.

On May 13, 2010, the Court of Appeals published its opinion in Miller v. Citizens Insurance Company, No. 290522.  In this case, a medical center that had provided services to an injured plaintiff was challenging the trial court’s decision to award the plaintiff’s attorney one-third of the medical expenses that the no-fault insurer agreed to pay pursuant to a settlement with the plaintiff.  In an opinion authored by Judge Cavanagh, the Court of Appeals affirmed the award of fees to the plaintiff’s attorney.  The Court of Appeals focused on the fact that there was a contingent fee agreement between the plaintiff and his attorney that entitled the attorney to a one-third share of any recovery—which, in this case, included the medical expenses owed to the center.  The center argued that this had the effect of reducing recovery they were entitled to, and that they did not have any agreement with the attorney for such a reduction.  In response, the Court of Appeals noted that the center was aware that plaintiff’s attorney was pursuing the recovery of these expenses, but chose not to intervene in the litigation or otherwise assert its rights independently.  Additionally, the Court of Appeals noted that the center received the benefits of the plaintiff’s attorney’s efforts and the resulting settlement, without incurring any of the expenses associated with obtaining that result.  Thus, the Court of Appeals cited the “common fund” rule that allows such fee recovery where the prevailing party creates a fund that benefits himself and others.  Here, the settlement benefited both the plaintiff and the medical providers, including the center.

The Michigan Supreme Court released two orders yesterday, each denying a prisoner’s motion to waive fees relating to the civil action the prisoner was pursuing.  See MCL § 600.2963.

On April 27, 2009, the Court of Appeals published its opinion in King v. McPherson Hospital, No. 284436.  In this case, the Court was presented with a medical-malpractice action involving the application of the relevant statute of limitations.   Here, the trial court initially rejected defendant’s motion to dismiss, but the Court of Appeals reversed finding that the plaintiff’s complaint was untimely according to the then-existing precedent.  The case was ultimately remanded, and the trial court granted the defense motion for entry of an order of dismissal based on the Court of Appeals’ decision.  Later, the Michigan Supreme Court decided another case involving the application of similar statute-of-limitations issues.  The plaintiff filed a motion to set aside the dismissal order based on a change in the law.   The defense disagreed that the relevant legal precedent had been reversed, and also argued that the law-of-the-case doctrine required the Court to uphold the dismissal that had been ordered by the Court of Appeals.  The trial court agreed with the defendants and denied the motion pursuant to the law of the case.  Plaintiff filed an application for leave to appeal to the Court of Appeals, which was denied.  But the Supreme Court remanded the case to Court of Appeals for consideration as on leave granted.  Now, the Court of Appeals noted that the recent Court of Appeals opinion in Farley v. Carp was directly on point, and required this panel of the Court of Appeals to affirm the trial court’s decision to uphold the earlier directive from the Court of Appeals to dismiss the case.  Our prior post on the Farley decision can be found here.  This panel, however, disagreed with the result in Farley and called “for the convening of a special panel of this Court pursuant to MCR 7.215(J)(3).”

On April 27, 2010, the Court of Appeals published a per curiam opinion in Chelsea Investment Group LLC v. City of Chelsea, No. 288920.  In this contract action, the Court of Appeals affirmed the trial court’s order entering judgment in favor of defendants after a bench trial.  However, the Court of Appeals vacated the trial court’s order with respect to the trial court’s calculation of interest.

On this issue of first impression, the Court of Appeals considered whether MCL § 600.6013(8), which allows an award of interest on a money judgment, requires interest to be calculated at six-month intervals from the date of the complaint, or whether the statute requires interest to be calculated every six months on July 1 and January 1 from the date of the complaint.  The Court of Appeals viewed the language of this provision requiring that “interest on a money judgment [be] calculated at 6-month intervals from the date of the filing of the complaint at a rate of interest equal to . . . United States treasury notes during the 6 months immediately preceding July 1 and January 1 . . .” as plain and unambiguous.  MCL § 600.6013(8).  The Court of Appeals interpreted this provision to require that “interest on a judgment be re-calculated every six months from the date of the filing of the complaint using the interest rates announced on July 1 or January 1, whichever is ’immediately preceding’ the complaint’s six-month anniversary date.”  As an example, the Court of Appeals explained that for a complaint filed in August 2008, interest would be calculated in February 2009 using the January 1 interest rate, and calculated again in August 2009, using the July 1 rate. Read more »

On April 13, 2010, the Michigan Court of Appeals issued for publication a per curiam opinion in Duray Development, LLC v. Perrin, No. 287722, holding that, under the de facto corporation doctrine, Outlaw LLC, and not its owner Perrin, was bound by the contract with Duray.  It therefore reversed the trial court’s judgment against Perrin.  The Court also reviewed the trial court’s failure to sua sponte raise the issue of corporation by estoppel but found no plain error.  Finally, the Court reversed the trial court’s decision to sanction defendants for not timely filing a witness list by precluding them from offering Perrin as a witness at trial.  The trial court should have first considered all relevant factors and other sanction options before exercising its discretion to enter such a heavy sanction. Read more »

On Wednesday, April 7, 2010, the Michigan Supreme Court denied nine applications for leave to appeal, directed the Emmet County Prosecuting Attorney to answer the application for leave to appeal in the case of People v. Hoag, Case No. 141079, and ordered oral argument on the application for leave to appeal in Harvath v. Johnson, Case Nos. 139996 and 139997.  The Court also took substantive action in one criminal and three civil cases which are discussed after the jump. Read more »

On Wednesday, March 31, 2010, the Michigan Supreme Court denied nine applications for leave to appeal and denied two motions for reconsideration.  The Court also held the cases of People v. Gagnier, Case No. 139735, and People v. Laidlaw, Case No. 139751, in abeyance pending a decision in People v. Smith, Case No. 140371.  Our post on the issues presented in Smith can be found below.  The Court also took substantive action in six criminal cases and one civil matter which are discussed after the jump. Read more »

On Wednesday, March 24, 2010, the Michigan Supreme Court denied eight applications for leave to appeal, denied one motion for reconsideration, and ordered oral argument on the application for leave to appeal in Janson v. Sajewski Funeral Home, Inc., No. 140071.   The Court also took substantive action in two criminal and two civil cases which are discussed after the jump. Read more »

On March 9, 2010, the Court of Appeals published its opinion in Alpha Capital Management, Inc. v. Rentenbach, No. 287280.  In this case, the Court of Appeals affirmed a jury verdict that found that a lawyer and law firm were not liable to their former client, Alpha Capital Management (“ACM”), in connection with their representation of a former ACM shareholder in a dispute concerning that former shareholder’s buyout agreement.  The Court of Appeals addressed multiple issues related to the trial court’s denial of summary disposition to ACM, and the conduct of the trial.  Notably, the Court of Appeals affirmed the trial court’s decision that defendants did not, as a matter of law, breach their fiduciary duties to ACM.  The Court of Appeals identified a conflict in the expert testimony regarding whether the work defendants performed for ACM had a substantial relationship to the work performed for the former shareholder, and noted that there was no evidence that defendants had any confidential information that advantaged the former shareholder.  On another interesting issue related to the conduct of the trial, the Court of Appeals upheld the trial court’s time limitations on witness examinations.  In making this decision, the Court of Appeals relied heavily on the trial court’s decision to allow lengthy examination of ACM’s primary witness on the basis of ACM counsel’s representation that all the subsequent exams could be completed in a half hour each.  Thus, the Court of Appeals concluded that the trial court’s limitation of all subsequent exams to 45 minutes for each side was not improper, particularly where there was adequate time to develop the facts and issues involved in the case.

On February 23, 2010, the Court of Appeals issued its unpublished opinion in Webber v. Muy Grande Ranch, Inc., No. 289113, affirming the trial court’ s grant of summary disposition on multiple counts of fraud and breach of contract in connection with a real estate transaction.  Most relevant to practitioners, the Court’s opinion discusses a non-movant’s burden of proof when arguing that additional discovery is necessary before the trial court may make a summary disposition decision.

The Court began by emphasizing that a motion under MCR 2.116(C)(10) may be raised at any time.  MCR 2.116(D)(4).  If a party opposes the motion on the ground that discovery is incomplete, the party must assert that a factual dispute does indeed exist, and must support that allegation “by some independent evidence.”  Bellows v. Delaware McDonald’s Corp., 206 Mich. App. 555, 561; 522 N.W.2d 707 (1994).  Here, the plaintiffs, the non-moving parties, raised the issue of incomplete discovery but failed to support their claim with independent evidence.  Instead, the plaintiffs simply cited the defendants’ brief and attached their own attorney’s deposition and the real estate purchase agreement.  None of this evidence was sufficient to create a genuine issue of material fact, or to warrant the suspension of summary disposition proceedings until discovery was complete.

Disclaimer:  WNJ represented GreenStone Farm Credit Services, a prevailing defendant-appellee in this case.