Cheron, Inc. v. Don Jones, Inc.

• Decision Date: 08 March 2001
• Docket Number: Docket No. 216707.
• Citation: 625 N.W.2d 93,244 Mich. App. 212
• Parties: CHERON, INC., Plaintiff-Appellant, v. DON JONES, INC., d/b/a Harbour Real Estate, and Duane Jones, Defendants-Third-Party Plaintiffs/Counter-Defendants-Appellees, and Harry F. Mayerhofer, Noreen Mayerhofer, Martin H. Mayerhofer, and Midwest Innkeepers, Third-Party Defendants/Counter-Plaintiffs.
• Court: Court of Appeal of Michigan — District of US

625 N.W.2d 93

244 Mich. App. 212

CHERON, INC., Plaintiff-Appellant, v. DON JONES, INC., d/b/a Harbour Real Estate, and Duane Jones, Defendants-Third-Party Plaintiffs/Counter-Defendants-Appellees, and Harry F. Mayerhofer, Noreen Mayerhofer, Martin H. Mayerhofer, and Midwest Innkeepers, Third-Party Defendants/Counter-Plaintiffs.

Docket No. 216707.

Court of Appeals of Michigan.

Submitted June 7, 2000, at Lansing.

Decided December 26, 2000, at 10:05 a.m.

Released for publication March 8, 2001.

Mark A. Hullman, Traverse City, for the plaintiff.

Keleher & Brunner (by Thomas N. Brunner), Manistee, for the defendants.

Before METER, P.J., and RICHARD ALLEN GRIFFIN and TALBOT, JJ.

METER, P.J.

Plaintiff appeals as of right from an order reducing its damages award against defendants by an amount that plaintiff received pursuant to a settlement agreement in a prior action. Plaintiff also appeals an order granting mediation sanctions to defendants under MCR 2.403(O). We affirm in part and reverse in part.

This case arises out of plaintiff's purchase of a motel from Midwest Innkeepers (Midwest). Defendants facilitated plaintiff's purchase of the motel from Midwest. After the purchase, plaintiff discovered that the motel was unable to generate sufficient income and sued Midwest, alleging misrepresentation and fraud. Subsequently, plaintiff and Midwest settled the suit; Midwest agreed to pay plaintiff $175,000 and to rescind the contract to purchase the motel, and plaintiff signed a covenant not to sue.

Several months later, plaintiff sued defendants, alleging intentional misrepresentation, innocent misrepresentation, and fraud. Plaintiff claims on appeal that its total damages were $532,779 but that it only sought $357,779 in the suit against defendants because it subtracted the $175,000 received under the settlement agreement with Midwest.

Following a bench trial, the trial court found for plaintiff on its innocent misrepresentation claim against defendants and awarded $57,000 in damages. Subsequently, the trial court subtracted the $175,000 settlement amount from this damages award under M.C.L. § 600.2925d; MSA 27A.2925(4), thereby reducing the damages award to zero. It is from this action that plaintiff appeals.

Before March 28, 1996, M.C.L. § 600.2925d; MSA 27A.2925(4) stated as follows:

When a release or a covenant not to sue or not to enforce judgment is given in good faith to 1 of 2 or more persons liable in tort for the same injury or the same wrongful death:

(a) It does not discharge any of the other tort-feasors from liability for the injury or wrongful death unless its terms so provide.

(b) It reduces the claim against the other tort-feasors to the extent of any amount stipulated by the release or the covenant or to the extent of the amount of the consideration paid for it, whichever amount is the greater.

(c) It discharges the tort-feasor to whom it is given from all liability for contribution to any other tort-feasor.

On March 28, 1996, an amendment of the statute took effect; this amendment eliminated the language in subsection b.1995 PA 161, the act amending the statute, stated that the amendment of § 2925d applied "to cases filed on or after the effective date of this amendatory act." 1995 PA 161, § 3.1995 PA 161 further stated that "[t]his amendatory act shall take effect September 1, 1995." 1995 PA 161, § 4. However, 1995 PA 161 was not approved and filed until September 29, 1995, and was not ordered to take immediate effect. Accordingly, it took effect on the general effective date for 1995 legislation: March 28, 1996. See Const. 1963, art. 4, § 27.

Plaintiff contends that the September 1, 1995, effective date stated in 1995 PA 161 should govern the statutory amendment and that the amendment should therefore apply to the instant case because plaintiff filed suit against defendants on October 5, 1995. We disagree. This issue involves statutory interpretation, which is subject to review de novo. Shields v. Shell Oil Co., 237 Mich.App. 682, 688, 604 N.W.2d 719 (1999).

In Selk v. Detroit Plastic Products (On Resubmission), 419 Mich. 32, 35, n. 2, 348 N.W.2d 652 (1984), the Supreme Court indicated that when a public act states that the act shall apply to all actions pending or commenced on or after the effective date of the act and then provides a specific effective date for the act, the Legislature has evidenced an intent for the act to apply retroactively to the specified effective date, even if the actual approval and filing of the act occurs after the specified effective date. Selk, therefore, would seem to support plaintiff's position in the instant case. However, this language from a footnote in Selk was mere obiter dicta¹ and therefore does not constitute binding authority under the doctrine of stare decisis. See People v. Squires, 240 Mich.App. 454, 458, 613 N.W.2d 361 (2000). With this in mind, we cannot construe the Legislature's statement in 1995 PA 161, § 3 that the amendment applied "to cases filed on or after the effective date of this amendatory act" to allow for retroactivity to September 1, 1995, given that the amendment did not actually take effect until March 28, 1996. Indeed, statutes are to be applied prospectively² unless the Legislature's intent for retroactive application is clear. See People v. Nuss, 405 Mich. 437, 450, 276 N.W.2d 448 (1979), and International Business Machines Corp. v. Department of Treasury, 75 Mich.App. 604, 614, 255 N.W.2d 702 (1977). There simply existed no clear intent for a retroactive application in the instant case. If the Legislature had intended a retroactive application to September 1, 1995, it would have provided that the amendment applied "to cases filed on or after September 1, 1995," instead of stating that the amendment applied "to cases filed on or after the effective date of this amendatory act." While the Legislature did state in § 4 that "[t]his amendatory act shall take effect September 1, 1995," we conclude that this was merely an indication that if the act were approved and filed before that date, it would not become law until September 1, 1995. See Selk, supra at 35, n. 2, 345 N.W.2d 184 (indicating that "effective dates provide notice to those who must conform their conduct to the law as specified in the enactment"); see also Nuss, supra at 450, 276 N.W.2d 448, and Int'l Business Machines, supra at 614, 255 N.W.2d 702 (indicating that statutes are presumed to operate prospectively). Thus, the trial court did not err in applying the preamendment version of M.C.L. § 600.2925d; MSA 27A.2925(4) to this case.

Next, plaintiff argues that the preamendment version of § 2925d required only that the claim for damages, not the actual damages award, against a nonsettling tortfeasor be reduced by the settlement amount reached with a settling tortfeasor. Plaintiff argues that because it reduced its original $532,779 claim for damages against defendants to $357,779 by subtracting the $175,000 received from Midwest, it complied with the express requirements of § 2925d. This issue again involves statutory construction and is subject to review de novo. Shields, supra at 688, 604 N.W.2d 719. We conclude that the trial court correctly determined that under § 2925d, the $57,000 judgment against defendants had to be reduced by the $175,000 that plaintiff received from Midwest in the first action. Contrary to plaintiff's argument, § 2925d required that the actual damages award—not the amount of the claim as determined by plaintiff—be reduced by the settlement amount reached with the other tortfeasor. See, e.g., Department of Transportation v. Thrasher, 446 Mich. 61, 79, 521 N.W.2d 214 (1994),Rittenhouse v. Erhart, 424 Mich. 166, 185, 193, 380 N.W.2d 440 (1985), and Mayhew v. Berrien Co. Rd. Comm., 414 Mich. 399, 407, 326 N.W.2d 366 (1982). No error occurred.³

Finally, plaintiff argues that the trial court erred in granting defendants' motion for attorney fees and costs as mediation sanctions under MCR 2.403(O) because the original $57,000 damages award was more than the mediation evaluation of $20,000. We agree. We review de novo a trial court's decision to grant or deny a motion for mediation sanctions. Great Lakes Gas Transmission Ltd. Partnership v. Markel, 226 Mich.App. 127, 129, 573 N.W.2d 61 (1997).

MCR 2.403(O) states:

(1) If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party's actual costs unless the verdict is more favorable to the rejecting party than the mediation evaluation. However, if the opposing party has also rejected the evaluation, a party is entitled to costs only if the verdict is more favorable to that party than the mediation evaluation.

(2) For purposes of this rule "verdict" includes,

(a) a jury verdict,

(b) a judgment by the court after a nonjury trial,

(c) a judgment entered as a result of a ruling on a motion after rejection of the mediation evaluation.

(3) For the purpose of subrule (O)(1), a verdict must be adjusted by adding to it assessable costs and interest on the amount of the verdict from the filing of the complaint to the date of the mediation evaluation, and, if applicable, by making the adjustment of future damages as provided by M.C.L. § 600.6306; MSA 27A.6306. After this adjustment, the verdict is considered more favorable to a defendant if it is more than 10 percent below the evaluation, and is considered more favorable to the plaintiff if it is more than 10 percent above the evaluation. If the evaluation was zero, a verdict finding that a defendant is not liable to the plaintiff shall be deemed more favorable to the defendant. This Court recently held that "the plain language of MCR 2.403(O) requires the trial court to award mediation sanctions if the jury verdict itself, adjusted only as set forth in MCR 2.403(O)(3), is not more favorable to the rejecting party than the mediation evaluation." Marketos v. American Employers Ins. Co., 240

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