Haliw v. City of Sterling Heights

• Decision Date: 18 September 2003
• Docket Number: Docket No. 237269.
• Citation: 257 Mich. App. 689,669 N.W.2d 563
• Parties: Valeria HALIW and Ilko Haliw, Plaintiffs-Appellees/Cross-Appellants, v. CITY OF STERLING HEIGHTS, Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

669 N.W.2d 563

257 Mich. App. 689

Valeria HALIW and Ilko Haliw, Plaintiffs-Appellees/Cross-Appellants, v. CITY OF STERLING HEIGHTS, Defendant-Appellant/Cross-Appellee.

Docket No. 237269.

Court of Appeals of Michigan.

Submitted March 12, 2003, at Detroit.

Decided August 5, 2003, at 9:10 a.m.

Released for Publication September 18, 2003.

Haliw, Siciliano and Mychalowych (by Andrew J. Haliw and Raymond L. Feul), Farmington Hills, for the plaintiffs.

O'Reilly, Rancilio, Nitz, Andrews & Turnbull, P.C. (by Bert T. Ross), Sterling Heights, for the defendant.

Before: MARKEY, P.J., and WHITE and ZAHRA, JJ.

MARKEY, P.J.

This case presents the question whether "actual costs," as provided in MCR 2.403(O), include reasonable appellate attorney fees necessary to obtain a favorable verdict after rejection of a case evaluation.¹ We hold that they do, and accordingly, reverse and remand for further proceedings in the trial court.

I. Overview of Facts and Proceedings

Mrs. Valeria Haliw was walking on a snow-covered sidewalk when she slipped and fell on a patch of ice that had formed where two sections of the sidewalk met to create a depression. Mrs. Haliw and her husband, Ilko Haliw, filed their complaint on January 6, 1997, alleging that defendant city of Sterling Heights breached its duty under M.C.L. § 691.1402 to maintain the sidewalk in a condition reasonably safe and convenient for public travel. After discovery, defendant moved for summary disposition, arguing that it was immune from liability because plaintiffs' claim was barred by the natural accumulation doctrine. See e.g., Stord v. Dep't of Transportation, 186 Mich.App. 693, 694, 465 N.W.2d 54 (1991). On September 8, 1997, the trial court denied defendant's motion from the bench. Before the order granting summary disposition was entered, plaintiffs' claim was submitted to mediation. On October 13, 1997, both parties rejected the unanimous mediation award of $55,000 in plaintiffs' favor. On April 28, 1998, this Court granted defendant leave to appeal the trial court's denial of its motion for summary disposition. We affirmed the trial court, Haliw v. Sterling Hts, unpublished opinion per curiam of the Court of Appeals, issued October 5, 1999 (Docket No. 206886), but our Supreme Court granted defendant leave to appeal and reversed, Haliw v. Sterling Hts., 464 Mich. 297, 627 N.W.2d 581 (2001). Our Supreme Court held that the natural accumulation doctrine precluded plaintiffs from recovering against defendant. Id. at 310-312, 627 N.W.2d 581. Accordingly, the Supreme Court reversed this Court and remanded the case to the trial court to grant defendant's motion for summary disposition. Id. at 312, 627 N.W.2d 581.

On remand, defendant moved for the entry of an order granting it summary disposition and for its costs and attorney fees pursuant to MCR 2.403(O). Defendant requested $31,618 in case evaluation sanctions which included its appellate attorney fees. The trial court entered an order granting defendant summary disposition but agreed with plaintiffs that MCR 2.403(O) did not provide for payment of defendant's appellate attorney fees. Because the trial court could not segregate defendant's trial court costs and attorney fees from its appellate costs and attorney fees, the trial court requested that defendant do so and resubmit a bill of costs. Thereafter, defendant presented a supplemental motion for mediation sanctions in the amount of $5,335 for its trial court expenses. At the hearing on defendant's supplemental motion, the trial court recognized it had the discretion to not award costs or attorney fees, but noted that there were two sides to the case and that defendant had incurred expenses. The trial court further reasoned that because plaintiffs' claim was not frivolous and because the appellate ruling established legal precedent benefiting defendant, it would award defendant only $1,500 in case evaluation sanctions.

Defendant appeals by right the trial court's order granting case evaluation sanctions, arguing that although the trial court granted its motion, the trial court improperly excluded its appellate attorney fees. Defendant asserts that the plain language of MCR 2.403(O) permits awarding a litigant that ultimately obtains a verdict more favorable than a rejected mediation award its reasonable attorney fees without drawing any distinction between fees incurred in the trial court and those incurred on appeal. Plaintiffs cross-appeal, arguing that the trial court abused its discretion by failing to invoke the interest of justice exception of MCR 2.403(O)(11) and refusing to award defendant any of its attorney fees under their exception.

II. Standard of Review

We review de novo the interpretation and application of a court rule. Marketos v. American Employers Ins. Co., 465 Mich. 407, 412, 633 N.W.2d 371 (2001). Thus, whether MCR 2.403(O)(1) applies and mandates the imposition of sanctions presents a question of law that we review de novo. Campbell v. Sullins, 257 Mich.App. 179, 667 N.W.2d 887 (2003)Great Lakes Gas Transmission Ltd. Partnership v. Markel, 226 Mich.App. 127, 129-130, 573 N.W.2d 61 (1997). There are three exceptions to the general rule requiring the imposition of sanctions, one being MCR 2.403(O)(11), which allows trial courts to refuse to award actual costs to a prevailing party "in the interests of justice" when the verdict was entered as a result of a motion. Great Lakes Gas, supra at 130, 573 N.W.2d 61. We review for an abuse of discretion a trial court's refusal to award actual costs pursuant to MCR 2.403(O)(11). Campbell, supra at 205 n. 9, 667 N.W.2d 887. A trial court's determination of the amount of "a reasonable attorney fee" under MCR 2.403(O)(6)(b) is also reviewed for an abuse of discretion. Zdrojewski v. Murphy, 254 Mich.App. 50, 73, 657 N.W.2d 721 (2002); Maryland Cas. Co. v. Allen, 221 Mich.App. 26, 32, 561 N.W.2d 103 (1997). A trial court abuses its discretion only if its decision is grossly contrary to fact and logic, Michigan Basic Prop Ins. Ass'n v. Hackert Furniture Distributing Co., Inc., 194 Mich.App. 230, 234, 486 N.W.2d 68 (1992), or evidences a perversity of will, a defiance of judgment, or the exercise of passion or bias, Elia v. Hazen, 242 Mich.App. 374, 377, 619 N.W.2d 1 (2000).

III. Appellate Attorney Fees Under MCR 2.403(O)

We are required to apply general principles of statutory construction when interpreting the meaning of a court rule. Hinkle v. Wayne Co. Clerk, 467 Mich. 337, 340, 654 N.W.2d 315 (2002); Marketos, supra at 413, 633 N.W.2d 371. When the language of the rule is clear and unambiguous, we must enforce the meaning plainly expressed. Hinkle, supra at 340, 654 N.W.2d 315, citing Grievance Administrator v. Underwood, 462 Mich. 188, 193-194, 612 N.W.2d 116 (2000). If construction is necessary, the first principle guiding our review is to apply the plain language of the rule, giving effect to the ordinary meaning of the words used in light of the purpose to be accomplished. Dessart v. Burak, 252 Mich.App. 490, 497, 652 N.W.2d 669 (2002); Dykes v. William Beaumont Hosp., 246 Mich.App. 471, 484, 633 N.W.2d 440 (2001). The overall purpose of MCR 2.403(O) "is to encourage settlement, deter protracted litigation, and expedite and simplify the final settlement of cases." Id. at 498, 633 N.W.2d 440. Although the rule is not punitive, it places the burden of court costs and reasonable attorney fees incurred by the prevailing party on the party that forces the litigation to continue by rejecting case evaluation. Id.; Jerico Constr., Inc. v. Quadrants, Inc., 257 Mich.App. 22, 666 N.W.2d 310 (2003)

As a preliminary matter, we note that MCR 2.403 has been frequently amended. In general, this Court applies the version of the rule existing at the time mediation, now case evaluation, was rejected. Dessart, supra at 497, 652 N.W.2d 669. See also Dresselhouse v. Chrysler Corp., 177 Mich.App. 470, 481-482, 442 N.W.2d 705 (1989) (requiring application of the mediation rule in effect at the time of rejection to avoid injustice), and Herrera v. Levine, 176 Mich.App. 350, 359-360, 439 N.W.2d 378 (1989) (applying the version of the rule existing at the time of mediation).

On March 5 and 14, 1997, the Michigan Supreme Court adopted several amendments of MCR 2.403 that initially were ordered to take effect on July 1, 1997, but were postponed until October 1, 1997. 454 Mich, cxxii. In addition to other changes, the language in MCR 2.403(O)(1) was amended from "and the action proceeds to trial" to "and the action proceeds to verdict." 454 Mich, cxxvii (emphasis added); 429 Mich. cxvi. Consequently, at the time mediation was rejected in this case, MCR 2.403(O)(1) provided, in pertinent part:

(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.

Further, MCR 2.403(O)(2), which defined "verdict," was amended in subsection c from "a judgment entered as a result of a ruling on a motion filed after mediation" to "a judgment entered as a result of a ruling on a motion after rejection of the mediation evaluation." 454 Mich. cxxviii. The 1997 amendments did not change MCR 2.403(O)(6), which provided:

For the purpose of this rule, actual costs are

(a) those costs taxable in any civil action, and

(b) a reasonable attorney fee based on a reasonable hourly or daily rate as determined by the trial judge for services necessitated by the rejection of the mediation evaluation. [434 Mich. cxlvi; 454 Mich. cxxviii.]

Here, the parties rejected the mediation award on October 13, 1997, twelve days after the 1997 amendments became effective MCR 2.403(O) essentially contained the same language at the time the trial court granted defendant's motion for case evaluation sanctions.² Therefore, we analyze whether "actual costs" include appellate attorney fees pursuant...