Decker v. Trux R US, Inc.
| Decision Date | 28 October 2014 |
| Docket Number | Docket No. 316479. |
| Citation | 307 Mich.App. 472,861 N.W.2d 59 |
| Parties | DECKER v. TRUX R US, INC. |
| Court | Court of Appeal of Michigan — District of US |
Sachs Waldman, PC, Detroit (by George T. Fishback ), for James and Kay Decker.
Kallas & Henk PC, Bloomfield Hills, (by Constantine N. Kallas and Courtney A. Jones ) for Auto Owners Insurance Company.
Before: RIORDAN, P.J., and CAVANAGH and TALBOT, JJ.
In this garnishment action, plaintiffs, James and Kay Decker, appeal as of right orders denying their motion to extend discovery and granting summary disposition in favor of garnishee defendant, Auto Owners Insurance Company. We affirm.
In October 2007, plaintiffs filed a lawsuit against defendant, Trux R Us, Inc., arising out of injuries plaintiff James Decker sustained at a construction site when he was run over by a bulldozer.
In May 2008, Auto Owners, the insurer for Trux R Us, brought a declaratory judgment action seeking a judgment that it had no duty to defend or indemnify Trux R Us with regard to the Deckers' claims. The Deckers were not named as parties in the declaratory judgment action. On August 27, 2008, a default judgment was entered in favor of Auto Owners after Trux R Us failed to respond to the lawsuit. On September 18, 2008, plaintiffs' counsel was advised about this declaratory judgment action and was provided a copy of the default judgment. In December 2008, a motion by Trux R Us to set aside the default judgment was denied and, because the claim of appeal was untimely, on April 8, 2009, this Court granted Auto Owners' motion to dismiss the claim of appeal filed by Trux R Us. Auto Owners Ins. Co. v. Trux R Us Inc., unpublished order of the Court of Appeals, entered April 8, 2009 (Docket No. 290421).
In September 2009, plaintiffs and Trux R Us entered into a consent judgment in the amount of $2,250,000. At the June 2009 hearing in that regard, plaintiffs' counsel advised the trial court that the consent judgment was subject to an agreement that provided that plaintiffs would not execute on the judgment against assets of Trux R Us, but would seek insurance proceeds from a policy issued by Auto Owners to Trux R Us.
On February 13, 2013, plaintiffs filed a request and writ for nonperiodic garnishment in the amount of the consent judgment, naming Auto Owners as the garnishee of Trux R Us.
On February 21, 2013, Auto Owners filed its garnishee disclosure that indicated that it was not indebted to Trux R Us for any amount and did not possess or control any of its property. The reasons provided by Auto Owners in support of its denial included that: (1) the insurance policy excluded coverage because James Decker was an employee of Trux R Us and was injured in the course of his employment, (2) Trux R Us violated a condition of the policy by entering into a consent judgment with plaintiffs, (3) the question of insurance coverage had been previously litigated and resulted in a judgment in favor of Auto Owners, and (4) the doctrine of laches prevented plaintiffs from proceeding.
On April 4, 2013, Auto Owners filed a motion for summary disposition of the garnishment proceeding. Auto Owners argued that plaintiffs' failure to contest its garnishee disclosure by filing discovery requests under MCR 3.101(L)(1) caused the facts stated in the disclosure to be accepted as true, as provided by MCR 3.101(M)(2) ; therefore, Auto Owners argued that the motion for summary disposition should be granted and the writ of garnishment dismissed with prejudice.
Plaintiffs responded to Auto Owners' motion, arguing that the motion for summary disposition should be denied because the garnishee disclosure provided only erroneous legal conclusions and not factual statements in support of its denial of liability to Trux R Us. In particular, plaintiffs argued that whether res judicata applied presented a legal issue and, in this case, it did not apply. Further, they contended, interpretation of an insurance policy is a legal issue and, under the policy terms, James Decker was an employee of Bell Site Services, not Trux R Us. Moreover, because Auto Owners obtained a default judgment against Trux R Us before the consent judgment was entered, any “consent” condition in Auto Owners' policy was not operative at the time the consent judgment was entered. Accordingly, plaintiffs argued, Auto Owners was not entitled to summary disposition of this garnishment proceeding.
Auto Owners filed a reply to plaintiffs' response, arguing that plaintiffs' failure to initiate discovery within 14 days after receiving the garnishment disclosure resulted in Auto Owners' statement of nonliability being deemed admitted; thus, “everything else is irrelevant.” But, in any case Auto Owners argued, plaintiffs' challenges to the reasons set forth in the disclosure are without merit.
On April 10, 2013, plaintiffs filed a motion under MCR 3.101(T) to extend the time to serve written interrogatories on Auto Owners. Plaintiffs argued that the trial court had discretion to allow the requested extension of the discovery deadline set forth in MCR 3.101(L)(1). Plaintiffs explained that discovery was not sought in this matter because they viewed Auto Owners' disclosures as legal conclusions and were preparing a motion for summary disposition in this matter. Plaintiffs noted that, in cases involving discovery admissions under MCR 2.312, parties may be allowed to amend or withdraw an admission when the severity of the sanction outweighs the equities involved in the matter. Further, MCR 1.105 provides that the Michigan Court Rules should be construed “to avoid the consequences of error that does not affect the substantial rights of the parties.” Plaintiffs attached a set of proposed interrogatories that they would serve on Auto Owners if the court granted their motion.
Auto Owners responded to plaintiffs' motion, arguing that the trial court did not have discretion to extend the time in which discovery could be initiated after the 14 days provided in MCR 3.101(L)(1) expired. That is, MCR 3.101(M)(2) provides: “The facts stated in the disclosure must be accepted as true unless the plaintiff has served interrogatories or noticed a deposition within the time allowed by subrule (L)(1)....” Accordingly, plaintiffs were impermissibly requesting the court to set aside the admissions made by plaintiffs as a consequence of their failure to request discovery.
The trial court first issued a decision on plaintiffs' motion to extend discovery and agreed with Auto Owners, holding that because plaintiffs failed to initiate discovery within 14 days after service of the garnishee disclosure as required by MCR 3.101(L)(1), the facts set forth in the disclosure were accepted as true. The court noted that plaintiffs waited over three years to attempt to collect the debt and, to the extent plaintiffs were attempting to set aside the garnishee disclosure, no good cause was shown. Accordingly, the trial court entered an order denying plaintiffs' motion to extend the time to serve interrogatories on Auto Owners.
Subsequently, the court issued its decision on Auto Owners' motion for summary disposition, holding that, because the facts stated by Auto Owners in its disclosure must be accepted as true and Auto Owners stated that it was not indebted to Trux R Us for any amount, summary disposition was appropriate under MCR 2.116(C)(6), (7), (8), and (10). Plaintiffs now appeal.
We review de novo a trial court's decision granting a motion for summary disposition. Coblentz v. City of Novi, 475 Mich. 558, 567, 719 N.W.2d 73 (2006). We review for an abuse of discretion a trial court's decision regarding a motion to extend discovery. Shinkle v. Shinkle (On Rehearing), 255 Mich.App. 221, 224, 663 N.W.2d 481 (2003). “An abuse of discretion occurs when the decision results in an outcome falling outside the principled range of outcomes.” Woodard v. Custer, 476 Mich. 545, 557, 719 N.W.2d 842 (2006).
At issue in this case is the interplay between the different subrules of MCR 3.101, which provide:
The principles of statutory construction apply to the interpretation of the Michigan Court Rules. Henry v. Dow Chem. Co., 484 Mich. 483, 495, 772 N.W.2d 301 (2009). Thus, we look to “the plain language of the court rule in order to ascertain its meaning” and the “intent of the rule must be determined from an examination of the court rule itself and its place within the structure of the Michigan Court Rules as a whole.” Id. (quotation marks and citation omitted). “If the rule's language is plain and unambiguous, then judicial construction is not permitted and the rule must be applied as written.” Jenson v. Puste, 290 Mich.App. 338,...
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