Ayar v. Foodland Distributors

• Decision Date: 29 September 2004
• Docket Number: Docket No. 246349.
• Citation: Ayar v. Foodland Distributors, 263 Mich.App. 105, 687 N.W.2d 365 (Mich. App. 2004)
• Parties: Raad AYAR, Vincent, Inc., Joliet, Inc., and R & D Wholesale, Inc., Plaintiffs-Appellees, v. FOODLAND DISTRIBUTORS and Livonia Holding Company, Inc., Defendants, and Kroger Company, Defendant-Appellant.
• Court: Court of Appeal of Michigan

687 N.W.2d 365

263 Mich. App. 105

Raad AYAR, Vincent, Inc., Joliet, Inc., and R & D Wholesale, Inc., Plaintiffs-Appellees, v.FOODLAND DISTRIBUTORS and Livonia Holding Company, Inc., Defendants, andKroger Company, Defendant-Appellant.

Docket No. 246349.

Court of Appeals of Michigan.

Submitted April 13, 2004, at Detroit.

Decided July 20, 2004, at 9:00 a.m.

Released for Publication September 29, 2004.

Morganroth & Morganroth, PLLC(by Mayer Morganroth and Jeffrey B. Morganroth), Southfield, for the plaintiffs.Miller, Canfield, Paddock and Stone, P.L.C.(by Carl H. von Ende, Larry J. Saylor, and Todd A. Holleman), Detroit, for Kroger Company.

Before: GAGE, P.J., and METER and FORT HOOD, JJ.

PER CURIAM.

DefendantKroger Company(Kroger) appeals by delayed leave granted the trial court's November 14, 2002, postjudgment order awarding plaintiffs, Raad Ayar(Ayar) and Vincent, Inc.(Vincent), statutory interest pursuant to MCL 600.6013 on an earlier June 24, 2002, order awarding costs and mediation sanctions.¹We reverse.

I.Facts and Proceedings

Plaintiffs, Ayar, Vincent, Joliet, Inc., and R & D Wholesale, Inc., filed a complaint alleging various contract and tort claims against Kroger and Foodland Distributors (Foodland) on October 7, 1993.Livonia Holding Company, Inc.(Livonia), was later added as a defendant by stipulation.The trial court's April 27, 1998, judgment followed a jury trial and found Kroger individually liable in the amount of $20,481,434 with regard to Ayar's contract (right-of-first-refusal) claim and Kroger and Foodland jointly and severally liable in the amount of $9,441,801 on Ayar and Vincent's intentional (silent) fraud claims.On August 20, 1998, the trial court entered a second judgment, which found Livonia jointly and severally liable on the intentional fraud claim in its capacity as a partner of Foodland.

Kroger, Foodland, and Livonia appealed the judgment, and this Court reversed and remanded for a bench trial with regard to Foodland's liability to Vincent on the intentional fraud claim only.See Ayar v. Foodland Distributors, unpublished opinion per curiam of the Court of Appeals, issued November 21, 2000, 2000 WL 33400197(Docket No. 214293).Following a bench trial, the trial court entered a judgment on June 21, 2002, that reduced the joint and several liability of Kroger, Foodland, and Livonia to $674,680.26 with respect to the fraud claim.Without explanation, the trial court also held Kroger individually liable to Vincent (as well as Ayar) for an additional $6,200,149.74 on the same fraud claim.

On June 24, 2002, the trial court entered an order awarding costs and mediation sanctions to Ayar and Vincent in the "total amount of $555,275.00 plus statutory interest, if any, to be assessed," of which $381,752 was allocated to Kroger and $173,523 was allocated to Foodland and Livonia.On November 14, 2002, the trial court entered an order stating that prejudgment interest on costs and mediation sanctions pursuant to MCL 600.6013 would accrue from the date the complaint was filed (October 7, 1993).

II.Standard of Review

Statutory interpretation presents a question of law that an appellate court reviews de novo.Morales v. Auto-Owners Ins. Co.,469 Mich. 487, 490, 672 N.W.2d 849(2003).The cardinal rule of statutory construction is to give effect to legislative intent.Id."If the Legislature's intent is clearly expressed, no further construction is permitted."Id.If the statutory language is clear and unambiguous, we assume that the Legislature intended its plain meaning, and we enforce the statute as written.Roberts v. Mecosta Co. Gen. Hosp.,466 Mich. 57, 63, 642 N.W.2d 663(2002).

III.Analysis

Kroger argues that statutory interest pursuant to MCL 600.6013 should accrue from the date the trial court awards costs and mediation sanctions, not the date the original complaint was filed.MCL 600.6013 was amended in both 2001 and 2002, and these amendments were effective in March 2002.The most recent amendment enacted, as part of 2002 PA 77, effective March 21, 2002, applies to this case.MCL 600.6013 provides, in pertinent part:

(1) Interest is allowed on a money judgment recovered in a civil action, as provided in this section.However, for complaints filed on or after October 1, 1986, interest is not allowed on future damages from the date of filing the complaint to the date of entry of the judgment.As used in this subsection, "future damages" means that term as defined in section 6301.

* * *

(8) Except as otherwise provided in subsections (5) and (7) and subject to subsection (13), for complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action is calculated at 6-month intervals from the date of filing the complaint at a rate of interest equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually, according to this section.Interest under this subsection is calculated on the entire amount of the money judgment, including attorney fees and other costs.The amount of interest attributable to that part of the money judgment from which attorney fees are paid is retained by the plaintiff, and not paid to the plaintiff's attorney.[Emphasis added.]

The purpose of prejudgment interest is "to compensate the prevailing party for expenses incurred in bringing actions for money damages and for any delay in receiving such damages."Phinney v. Perlmutter,222 Mich.App. 513, 540-541, 564 N.W.2d 532(1997).As used in the statute, the term "complaint" refers to the formal complaint against the defendant on whom statutory interest is being taxed.Rittenhouse v. Erhart,424 Mich. 166, 217, 380 N.W.2d 440(1985)(Riley, J.),²Phinney, supra,222 Mich.App at 541-542, 564 N.W.2d 532.The statute's inclusion of "attorney fees and other costs" forms the basis for the parties' dispute on appeal.Plaintiffs were not awarded attorney fees and costs as an element of the damages claimed by plaintiffs for the contract and tort claims.Rather, the attorney fees and costs awarded in the instant case arose from the mediation proceedings that occurred after the complaint was filed.

The provision for attorney fees and costs was added to MCL 600.6013 by 1993 PA 78.Before the 1993amendment, there was no specific provision indicating that interest could be calculated on an award of attorney fees and costs.Schellenberg v. Rochester, Michigan, LodgeNo. 2225 of theBenevolent & Protective Order of Elks,228 Mich.App. 20, 50, 577 N.W.2d 163(1998).But there was authority for the proposition that interest could be imposed under MCL 600.6013 on attorney fees and costs awarded as part of mediation sanctions.Wayne-Oakland Bank v. Brown Valley Farms, Inc.,170 Mich.App. 16, 22, 428 N.W.2d 13(1988);andPinto v. Buckeye Union Ins. Co.,193 Mich.App. 304, 312, 484 N.W.2d 9(1992), in which the Court agreed with the decision in Wayne-Oakland Bank that interest may be awarded on mediation sanctions.

The 1993amendment of MCL 600.6013 confirms that interest may be imposed on attorney fees and costs.The pertinent language in the 1993amendment has been carried forward into the most recent amendment, and it evidences an intent to impose interest on attorney fees and costs.It confirms that interest accrues from the date of the complaint and is to be calculated on the entire amount of the money judgment, including attorney fees and other costs.Morales, supra at 491-492, 672 N.W.2d 849;2002 PA 77, 1993 PA 78.Kroger does not argue otherwise on appeal, but challenges the use of the date the complaint was filed as the starting date for interest accrual because there is no basis for an award of mediation sanctions on the date a complaint is filed.

In Morales, supra at 489, 672 N.W.2d 849, the Supreme Court considered the defendant's argument that prejudgment interest should not accrue during a four-year period while the case was on appeal because the delay was not the defendant's fault.The Court stated that MCL 600.6013(8)"confirms that interest accrues `from the date of filing the complaint' and that it `is calculated on the entire amount of the money judgment, including attorney fees and other costs.'"Morales, supra at 491, 672 N.W.2d 849.The language of MCL 600.6013(8) clearly and "unambiguously states that prejudgment interest is to be calculated from the date the complaint is filed" and "makes no exceptions for periods of prejudgment appellate delay."Morales, supra at 489, 492, 672 N.W.2d 849."In the face of the Legislature's clearly expressed intent, this Court will not read such an exception into the statute."Id. at 492, 672 N.W.2d 849.Because the issue in Morales concerned interest accrued during appellate delay, and the instant case involves interest calculated before mediation sanctions were awarded, Morales is distinguishable.

This Court has recognized several exceptions to awarding interest from the date of filing the complaint under MCL 600.6013.See generallyPhinney, supra at 541, 564 N.W.2d 532.A majority of the Michigan Supreme Court concurred with Justice Riley's opinion in Rittenhouse, supra at 218, 380 N.W.2d 440, that the purposes of MCL 600.6013 are not furthered by allowing interest for periods during which "no claim existed against the defendant."Phinney, supra at 541, 564 N.W.2d 532.In Wayne-Oakland Bank, supra at 22-23, 428 N.W.2d 13, this Court upheld the trial court's award of interest on costs and attorney fees from the date of entry of the order that dismissed the complaint, instead of the date of filing the complaint.

In Pinto, supra at 312, 484 N.W.2d 9, this Court relied on Wayne-Oakland Bank, supra at 22-23, 428 N.W.2d 13, and held that prejudgment interest may be awarded on fees assessed pursuant to mediation sanctions.The Court held that "the trial...