One Court of Justice

On September 7, 2010, the Court of Appeals approved its May 27, 2010 opinion in Butler v. Wayne County, No. 290361, for publication.  Here, Wayne County retirees asserted a class action based on the fact that their supplemental life insurance program through the County changed from its historical flat-rate structure, to an age-based based premium where older individuals paid more than younger people.  The Court of Appeals reversed the lower court, and remanded the matter for entry of an order permitting the change in the rate structure.  The Court of Appeals found the the collective bargaining agreement between the County and its employees incorporated the County’s benefit plan which unambiguously provided for an age-based premium structure.  Thus, the Court of Appeals concluded that the historical practice could only trump that language if plaintiffs showed a meeting of the minds on the flat-rate structure.  Reviewing the evidence, the Court of Appeals found that while the plaintiffs might have believed there was an agreement for a flat-fee premium, there was no evidence that the defendants held that belief.  Indeed, the Court concluded that the evidence established that the agreement was that the County’s insurer set the premiums and determined how they would be calculated, and that the retirees would pay those rates as accepted by the County; so when the insurer determined that the flat-rate structure was inadequate, the change to the age-based premium was permissible.

On August 31, 2010, the Court of Appeals published its earlier, July 1, 2010,  opinion in Ajax Paving Industries, LLC v. VanOpdenbosch Construction Co., No. 288452.  The primary issue in this case concerned the fees and costs incurred by a contractor in defending a tort action, arguably covered under an indemnity clause in a contract between the contractor and its subcontractor.  After finding that the indemnity clause was sufficiently broad to cover the underlying action, the Court of Appeals turned to the question of liability under that clause for the fees and costs incurred by the contractor during the 18 months it defended that case without notifying the subcontractor.  The Court of Appeals found that, because the indemnity clause did not require the contractor to notify the subcontractor of the underlying action or tender the defense of that action to the subcontractor, the contractor is entitled to complete indemnification of all of its fees and costs incurred in defending the underlying case, without limitation.

In an opinion released after the Michigan Supreme Court’s July 31 end of term, the Court reinvigorated the latent-ambiguity doctrine by holding that the word “all” in a liability release did not actually mean “all” where extrinsic evidence demonstrated that the parties to the release meant less than “all.”

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On Tuesday, March 23, 2010, the Michigan Court of Appeals issued its opinion in Old Republic National Title Co. v. First Metropolitan Title Co., No. 284767, reversing a trial court’s grant of summary disposition regarding contract interpretation.  The contract at issue involved a referral clause that the Court concluded was inherently ambiguous, subject to two conflicting interpretations.  The appellee argued that any ambiguity in the clause should be construed against the drafter, the appellant.  But the Court rejected that approach, holding that such a canon of construction can be applied only after all conventional means of contract interpretation—including consideration of relevant extrinsic evidence—have left the jury unable to discern the parties’ intent.

Disclaimer:  WNJ represented the prevailing plaintiff in this case.

The debate over strict statutory language interpretation took a somewhat unusual, but very polite and respectful, turn in the Court of Appeals’ published opinion on March 16, 2010 in Progressive Michigan Ins. Co. v. William Smith, et al., No. 287505.  Judge Bandstra authored the opinion of the divided panel, which held that the warning notice requirement of MCL § 500.3009(2) for auto insurance policies must be strictly enforced as written, and thus the named driver exclusion here was unenforceable.  Judge Murray concurred, and Judge Markey dissented.  Judge Bandstra’s opinion of the panel can be found here.  Judge Murray’s concurrence can be found here, and Judge Markey’s dissent can be found here. Read more »

On March 16, 2010, the Michigan Court of Appeals published its opinion in Holland v. Trinity Health Care Corp., No. 280657.  The uninsured plaintiff signed a contract to pay the defendant-hospital the “usual and customary charges” for the treatment she received.  The court held that this phrase unambiguously referred to the defendant’s “Charge Master,” rather than the discounted payments the defendant accepts from insurers or the government.  Read more »

On Friday, January 22, 2010, the Michigan Supreme Court granted leave to appeal in Beach v. Township of Lima to address whether a plaintiff who seeks to establish an adverse possession claim that affects property in a recorded plat must bring a claim under the Land Division Act if the plaintiff is not expressly requesting that the plat be vacated, corrected or revised.  The Court of Appeals held that a plaintiff need not bring a claim under the Land Division Act when he or she brings a quiet title action to establish adverse possession because a Land Division Act claim only alters the plat consistent with already existing property interests.  In other words, under the approach adopted by the Court of Appeals, a plaintiff may prevail in a quiet title action and later bring a claim under the Land Division Act to alter the plat–the two claims do not need to be brought simultaneously.  Such an approach has the effect of permitting inaccurate recorded plats.  The Michigan Supreme Court invited the Michigan Municipal League and the Real Property Section of the State Bar of Michigan to submit amicus briefs.  Our earlier post on the Court of Appeals’ decision is here.

Appellate criminal defense practitioners should note Justice Corrigan’s concurrence in People v. Henderson, No. 139375.  In Henderson, the Court of Appeals dismissed the defendant’s appeal because he did not timely file his appeal brief.  The Michigan Supreme Court remanded the case  to the Court of Appeals for consideration as though the defendant’s brief had been timely filed because the delay was solely attributable to the neglect of appellate counsel.  The Court concluded that defendant was deprived of effective assistance of counsel and ordered appellate counsel to pay costs to the Court.  Justice Corrigan concurred recommending that in cases where an attorney fails to timely prosecute a criminal appeal and thereby deprives the defendant of effective assistance of counsel, the Court should refer the negligent counsel to the Attorney Grievance Commission. Read more »

Recognizing that the trial court likely erred when it refused to grant attorney fees to defendant, the Court of Appeals nonetheless affirmed the trial court’s denial of fees because the defendant failed to separately appeal the post-judgment order.  In Mossing v. Demlow Products, Inc., No. 287643, a published opinion issued on January 7, 2010, the Court held that it lacked jurisdiction to consider the merits of the trial court’s post-judgment order, because the claim of cross appeal was filed before the post-judgment order was issued.  The Court stated that it was not deciding whether a post-judgment order issued before the claim of appeal or cross appeal is filed must be separately appealed.  The Court also concluded that a plaintiff who cashes a check stating it was a final payment, accompanied by a letter containing the defendant’s intention to terminate the contract, constituted accord and satisfaction under MCL § 440.3311(4).

On December 8, 2009, the Court of Appeals published its opinion in Helms v. Lemieux, No. 286397.  In this case, the Court of Appeals examined the distribution of assets from an annuity.  The annuity, purchased by an elderly couple, provided that the proceeds would be paid to the annuitant, except that after the annuitant’s death the proceeds would be paid to the designated beneficiary.  Apparently, there were handwritten additions in the application for the annuity where the wife was described as the annuitant, and the husband as the joint owner.  In contrast, the annuity policy issued later describes the wife as the annuitant, and the husband as a joint annuitant.  The Court concluded that, accordingly to contract interpretation principles, the description of the husband and wife’s roles in the application (that was signed by both) controls.  Thus, when the wife died, the beneficiary’s interest in the annuity vested, and that beneficiary was entitled to the benefits of the annuity.

On Wednesday, October 28, 2009, the Michigan Supreme Court denied 17 applications for leave to appeal and ordered the Saginaw County Prosecuting Attorney to respond to the application for leave to appeal in People v. Mushatt, Case No. 137846.  Mushatt had been held in abeyance pending the Court’s decision in People v. Idziak.  Our post on Idziak is here.  The Court directed the prosecutor to respond to the application for leave to appeal within 28 days.  The prosecutor was asked to address: 1) whether, in light of the Court’s holding in Idziak, the defendant is entitled to jail credit under MCL §769.11b, and 2) whether because he is being held subject to an Alabama detainer, the defendant has received or will receive credit on his Alabama sentences for the time he spent in jail awaiting the disposition of this case.  The Court also remanded one criminal case for resentencing and peremptorily reversed and remanded three cases, which are discussed after the jump. Read more »

The Michigan Supreme Court will hear oral argument this afternoon in Davis v. Forest River, Inc., No. 136114.  In Davis, defendant Forest River, Inc. appeals the Court of Appeals decision allowing the Plaintiffs to revoke their purchase of a recreational vehicle (“RV”) manufactured by Forest River.  Under Chief Justice Taylor, the Michigan Supreme Court reversed the judgment of the Court of Appeals in an unsigned December order, holding that rescission was unavailable as a remedy in this case.  Five months later, after the composition of the Court changed, the Court granted the Plaintiffs’ motion for reconsideration, vacated the December order, and granted leave to appeal.  The Court agreed to hear arguments on six issues: (1) whether the UCC applies to the purchase contract between plaintiff and the RV dealer, Kitsmiller; (2) if the UCC applies, whether the UCC provides the plaintiff’s exclusive remedy for revocation; (3) whether the UCC requires privity of contract to reverse acceptance of the purchase agreement; (4) whether third-party-beneficiary status under the warranty confers any rights independent of the warranty onto the plaintiff; (5) whether the economic-loss doctrine and the UCC apply to the plaintiff’s claims for breach of warranty; and (6) if the UCC does not apply, what is the nature and source of any non-UCC remedy.  The Court’s order granting leave may be found here.  The Michigan Court of Appeals’ opinion may be found here and the dissent here.  The briefs of the parties and amici curiae on the application for leave to appeal may be found here.

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On August 4, 2009 the Court of Appeals published its decision in Miller-Davis Co. v. Aherns Construction, Inc., No. 284037.  The Court of Appeals found that the relevant statute of repose barred a general contractor’s claim for damages arising out of allegedly defective workmanship by a subcontractor.  Thus, the Court of Appeals reversed the trial court’s bench trial verdict in favor of the general contractor and remanded the case for entry of judgment for the subcontractor.  The Court of Appeals found that the subcontractor, which installed a roofing system, had made a improvement to real property, and thus applied the six-year statute of repose in MCL 600.5839(1) which addresses claims for injury to property arising out of defective or unsafe conditions of improvements to real property.  Under that statute, the limitations period begins to run after “use or acceptance” of the improvement.  In this case, the suit was commenced more than six years after the general contractor paid the subcontractor for the work, and thus the Court concluded it was untimely filed more than six years after “use or acceptance” of the subcontractor’s roofing system.  Additionally, the Court of Appeals held that even though the general contractor’s complaint claimed breach of contract, it still sought recovery for a injury to property and the statute of repose still applied.

On July 30, 2009, the Michigan Supreme Court issued its opinion in Jackson v. Estate of Green, No. 136423.  The Court considered two issues:  whether an action to partition jointly owned real estate survives the death of the person who filed the action, and the point in time at which a cause of action accrues for a breach of verbal loan that did not include explicit terms for repayment.  The background and the Court of Appeals’ holdings are discussed here.  In plurality opinions, the Court affirmed the results reached by the Court of Appeals. Read more »

On July 17, 2009, the Michigan Supreme Court issued its decision in Seyburn, Kahn, Ginn, Bess, Deitch & Serlin, P.C. v. Bakshi, No. 136436.  The Court explained that an attorney’s claim for unpaid legal fees under a formal contract for legal services accrues at the time that the attorney-client relationship ends.  Because the plaintiff sued to recover its fees more than 6 years after Plaintiff Seyburn Kahn’s attorney-client relationship with Defendant Bakshi ended, the Court unanimously held that Seyburn Kahn’s claim for unpaid attorney fees was barred by the statute of limitations.  The Court affirmed in part, and reversed in part, the decision of the Court of Appeals and remanded the case to the trial court. Read more »

On June 30, 2009, the Court of Appeals published its opinion in Heritage Resources, Inc. v. Caterpillar Financial Services Corp. et. al., No. 284036.  This case arises from the purchase of a rock classification machine.  The machine was purchased by plaintiff from a dealer, and manufactured by defendant.  Plaintiff claimed that the machine did not conform to certain specifications, and that there were other quality and performance issues that resulted in damages.  Plaintiff sued the dealer and defendant.  Plaintiff settled with the dealer prior to trial.  After a bench trial between the plaintiff and defendant, the trial court found that defendant had breached express warranties and awarded damages to plaintiff.  The Court of Appeals reversed and ordered judgment to be entered in favor of defendant.  It is undisputed that there was no contract between plaintiff and defendant.  Instead, there were contracts between plaintiff and the dealer, and the defendant and the dealer.  Thus, the Court of Appeals concluded, as a matter of law, because there was no contract between plaintiff and defendant, defendant could not have made any express warranties to plaintiff.  The Court of Appeals did note that plaintiff could have enforced express warranties in the contract between defendant and the dealer.  Plaintiff, however, did not produce a copy of the contract between defendant and the dealer, or pursue this liability theory at trial.   Additionally, although the trial court did not address plaintiff’s implied warranty claims, the Court of Appeals concluded that even if plaintiff could assert such claims against defendant, those claims were barred by the broad language of plaintiff’s settlement with the dealer releasing all claims against anyone “charged or chargeable with responsibility which is or may be derivative from [the dealer].”  Justice Hoekstra issued a short concurring opinion regarding the intent rule as related to this settlement agreement.

On May 28, 2009, the Michigan Court of Appeals, in a published per curiam opinion, decided that parties seeking to vacate an arbitration award involving a municipality and one of its unions have six years to do so before the statute of limitations extinguishes the claim.  The case, City of Ann Arbor v. AFSCME Local 369 (Case No. 283814), arose out of labor negotiations between the City and the Union.  The existing contract, which expired on June 30, 2001, contained a “me too” provision that required the City to provide the Union wage increases identical to any wage increases the City agreed to provide to other unions, such as police and firefighters.  The City/Union negotiations were not completed prior to the June 30, 2001, contract end so both parties agreed to “ground rules” that, in part, kept the existing contract in effect until the parties agreed to a new one.  Ultimately, the parties agreed to a new contract, which was ratified by the Union in October 2002. 

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The Court of Appeals, in Liparoto Construction, Inc. v. General Shale Brick, Inc., No. 282920, a published opinion, affirmed the grant of summary judgment in favor of a brick supplier (Lincoln Brick), a brick manufacturer (General Shale), and an insurer (State Auto).  The claims of the plaintiff, a general contractor, arose after homeowners discovered acid stains on the brick exterior of the house the plaintiff built. 

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On May 12, 2009, the Michigan Court of Appeals released its published opinion in Reicher v. S.E.T. Enterprises, Inc., Case No. 278907, clarifying the impact a settlement agreement has on the Michigan sales representative commission act (SRCA), MCL § 600.2961.  The court held that a settlement agreement between a sales representative and its principal releasing all SRCA claims the sales representative has against its principal is valid despite the SRCA provision that voids provisions in sales representative contracts waiving rights arising under SRCA.

MCL § 600.2961(8) states that “[a] provision in a contract between a principal and a sales representative purporting to waive any right under this section is void.”  Here, the plaintiff sales representative brought suit against its principal’s successor for unpaid commissions.  Plaintiff and the successor entered into a settlement agreement under which the successor agreed to pay commissions and plaintiff agreed to release its SRCA claims against the successor.  When the successor company regularly made commission payments to plaintiff that were over 45 days late, plaintiff commenced a new action asserting that it was entitled to penalty damages because the successor violated SRCA by making payments that were more than 45 days late.  The circuit court granted the successor’s motion for summary disposition.

The Michigan Court of Appeals affirmed.  On appeal, the Plaintiff articulated two key arguments: (1) the release of claims in the settlement agreement applied only to claims arising before the execution of the settlement agreement; and (2) any attempts to waive the provisions of SRCA are void.  The court rejected both arguments.  According to the Michigan Court of Appeals, MCL § 600.2961(8) only prohibits the waiver of SRCA rights when the waiver is included in the sales representation agreement.  When the waiver is in a settlement agreement, the waiver falls outside the scope of SRCA and can be valid.  Additionally, the court held that the plain language of the settlement agreement demonstrated that the release included in the settlement agreement applied to plaintiff’s SRCA claims arising after the settlement agreement was signed.

On May 5, 2009, the Supreme Court heard oral argument in Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, P.C. v. Kirit Bakshi, No. 136436.  The Supreme Court granted leave to consider when a statute of limitations accrues in an attorney’s lawsuit to recover unpaid fees from a client.  The Court’s order granting leave can be found here.  The parties’ briefs are available here and here.

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Today, the Michigan Supreme Court will hear oral argument in two cases:  Seyburn, Kahn v. Bakshi, No. 136436 at 9:00, and People v. McGraw, No. 132876 at 10:00.  The Court granted leave to appeal in Seyburn, Kahn to determine when the statute of limitations accrues for a claim by an attorney against a client for unpaid legal fees (an issue of importance to many of the readers of this blog).  The Court granted leave in McGraw to determine whether the offense variables of the sentencing guidelines are scored based on the defendant’s conduct in committing the specific offense or more broadly based on the defendant’s conduct during the entire criminal transaction.  Our summary of People v. McGraw is here.