One Court of Justice

In Fisher Sand and Gravel Co v Neal A Sweebe, Inc, No. 297156, Judge Owens authored the majority opinion in this case of first impression, holding that the plaintiff’s claim for payment on an open account relating to the sale of goods was barred by the four year limitations period in the Uniform Commercial Code (UCC).  Judge O’Connell dissented, and would apply the general 6 year limitations period that applies to actions for breach of contract. Read more »

In Attorney General v Merck Sharp & Dohme Corp, the Court of Appeals panel majority held that “plaintiffs’ allegations fall within the statutory definition of “product liability  action,”  because  plaintiffs  have  asserted  legal  and  equitable  theories  of  liability  for damage to property resulting from the production of a product.  MCL 600.2945(h).”  The Court determined that “plaintiffs’ claim of monetary  loss  based  on  alleged  misrepresentations  regarding  the  safety  and  efficacy  of  Vioxx constitutes ‘damage to property.’”  Judge Fitzgerald dissented stating that the trial court properly determined that plaintiffs’ claim under the MCFA is not a product liability action subject to the absolute defense established by the product liability statute MCL 600.2946(5).

Merck  is  the  manufacturer  of  the  prescription  pain  reliever  Vioxx, which  the Food  and  Drug  Administration  (FDA)  approved  in May 1999.  After approval, clinical trials and independent studies showed an increased risk of heart attack in persons who used Vioxx.  Merck voluntarily removed Vioxx from the market in 2004.

Michigan’s attorney general and Carbology Inc filed this action under the Medicaid False Claims Act (MFCA) against Merck for the expenses Michigan incurred through Medicaid payments for the drug Vioxx.  The complaint alleged that as early as 2000, Merck knew that Vioxx was associated with an increased risk of heart attack, and Merck concealed or misrepresented the scientific data.   Plaintiffs asserted that if Merck had been truthful about the  safety  and  efficacy  of  Vioxx,  they  would  not  have  paid  all  or  part  of  the  cost  of  Vioxx prescribed  to  Michigan  Medicaid  beneficiaries,  which  cost  them  more  than  $20  million.  Plaintiffs also sought recovery under a theory of unjust enrichment.  Merck moved for summary disposition pursuant to MCR 2.116(C)(8) claiming that plaintiffs’ claims were a “product liability action” pursuant to MCL 600.2945(h) and therefore barred by MCL 600.2946(5).  The trial court denied summary disposition stating that Plaintiffs claims did not constitute a products liability action because they did not require proof of a defective or unsafe product.  In a split decision the Court of Appeals reversed, concluding that Plaintiffs claims were indeed a products liability action because the monetary loss alleged constitutes “damage to property.” Read more »

In the case of In re Estate of David Gary Lundy, the Court of Appeals held that a security interest perfected under Article 9 of the Uniform Commercial Code, MCL 440.9101 et seq., has priority over all other estate claims made under the Estate and Protected Individuals Code (EPIC). Read more »

On November 6, the Michigan Supreme Court denied one motion to waive fees, denied two applications for leave, and took substantive action in three matters, which are discussed in detail after the jump.

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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 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 1, 2009, the Michigan Supreme Court:

• denied seven applications for leave to appeal;
• denied a prisoner’s motion to waive filing fees;
• ordered supplemental briefing and a mini-oral argument (MOA) on the application for leave filed in Loos v. J.B. Installed Sales, INc., Case No. 137987, a case involving application of the statutory factors enumerated in MCL 418.161(1)(n) for determining when a person is an “employee” for purposes of the Worker’s Disability Compensation Act (the Court of Appeals opinion can be found here);
• ordered supplemental briefing and an MOA on the application for leave filed in People v. Hoch, Case No. 137908, a case involving a trial court’s decision to respond to a note from the jury, off the record and in the absence of defendant or his counsel (the Court of Appeals opinion can be found here);
• reversed the Court of Appeals’ decision in Consumers Energy Co. v. Acey, Case No. 137425, holding the plaintiff bound to its stipulation in the trial court regarding the width of an easement;
• issued a summary decision in Attorney General v. Michigan Public Service Commission, Case Nos. 136431 and 134676, holding that (1)  ”transmission costs” may be recovered through a power supply cost recovery clause, and (2) Detroit Edison Company could not recover a portion of the control premium that DTE Energy paid to acquire MCN Energy  (our previous post on these cases can be found here); and
• on reconsideration, vacated its previous summary order and granted the application for leave to appeal in Davis v. Forest River, Inc., Case No. 136114, a case involving a party’s ability to assert the remedy of rescission in an implied warranty action under the UCC against an out-of-privity seller (the Court’s previous order can be found here).

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On December 19, 2008, the Michigan Supreme Court denied applications or vacated previous orders granting applications in five cases.  The Court also remanded two cases for re-sentencing, People v. Poole and People v. Kurtz; held that the remedy of rescission is not available in an implied warranty action under the UCC against an out-of-privity seller, David v. Forest River, Inc.; and reversed a Court of Appeals opinion and remanded for entry of an order granting summary disposition in a premises liability action where the plaintiff failed to give the defendant (a government entity) notice within 120 days of the incident, as MCL 691.1406 requires, Chambers v. Wayne County Airport Authority (the Court peremtorily adopted the opinion of the dissenting Court of Appeals judge, which can be found here).