Miller v. Riverwood Recreation Center, Inc.

• Decision Date: 27 February 1996
• Docket Number: Docket No. 176335
• Citation: 546 N.W.2d 684,215 Mich.App. 561
• Parties: Mary MILLER and Kenneth Miller, wife and husband, Plaintiffs, v. RIVERWOOD RECREATION CENTER, INC., Defendant-Appellee, and Otto-Dufty Architects, P.C., Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 684

546 N.W.2d 684

215 Mich.App. 561

Mary MILLER and Kenneth Miller, wife and husband, Plaintiffs, v. RIVERWOOD RECREATION CENTER, INC., Defendant-Appellee and Otto-Dufty Architects, P.C., Defendant-Appellant.

Docket No. 176335.

Court of Appeals of Michigan.

Submitted Nov. 9, 1995, at Grand Rapids.

Decided Feb. 27, 1996, at 9:00 a.m.

Released for Publication April 29, 1996.

Sullivan, Ward, Bone, Tyler & Asher, P.C. by Thomas M. Slavin, Southfield, for Otto-Dufty Architects, P.C.

Kallas & Henk, P.C. by Constantine N. Kallas, Bloomfield Hills, for Riverwood Recreation Center, Inc.

Before MARKEY, P.J., and BANDSTRA and BATZER, ^* JJ.

BANDSTRA, Judge.

As often happens, we are asked in this case to creatively interpret the clear language of a statute to avoid an obvious, but arguably unfair, result. We cannot do this. Under the Michigan Constitution and its division of power between the Legislature and the judiciary, we are only authorized to implement statutes, not change them in response to policy arguments, regardless of how persuasive.

Defendant-appellant Otto-Dufty Architects, P.C., brought a cross-complaint against defendant-appellee Riverwood Recreation Center, Inc., seeking contribution. Both Otto-Dufty and Riverwood had been sued in the underlying lawsuit by plaintiffs Mary and Kenneth Miller, not parties to this appeal, who alleged defendants were responsible for Mary Miller's slip and fall accident. The accident occurred at a golf course owned and operated by Riverwood that had been renovated in a project in which Otto-Dufty was architecturally involved. The jury awarded plaintiffs a $328,500 verdict against Riverwood and Otto-Dufty, jointly and severally. The jury also determined that Riverwood was seventy percent at fault for Mary Miller's injuries and Otto-Dufty thirty percent liable.

Following the verdict, but before an order of judgment was entered, Riverwood suggested that Otto-Dufty and Riverwood should jointly try to settle the case with plaintiffs and that Riverwood would be willing to pay $25,000 in settlement. Otto-Dufty declined that offer and Riverwood went forward with settlement, agreeing with plaintiffs to pay $25,000. As a result, an order of judgment was entered making Otto-Dufty liable for the entire jury verdict reduced only by the $25,000 amount paid in settlement by Riverwood, pursuant to Michigan's contribution statute, M.C.L. § 600.2925d(b); M.S.A. § 27A.2925(4)(b). Otto-Dufty contested that result in a motion for contribution that was denied pursuant to the statute.

This appeal centers mainly on the judgment order entered and the related denial of Otto-Dufty's motion for contribution. In addition, Otto-Dufty argues that sanctions should not have been imposed against it for attempting to mislead the court regarding the proper procedure to be used in attempting to enforce its alleged contribution right against Riverwood. We affirm.

The right to contribution in Michigan is controlled entirely by statute because there was no right to contribution at common law. Reurink Bros. Star Silo, Inc. v. Clinton Co. Road Comm'rs, 161 Mich.App. 67, 70, 409 N.W.2d 725 (1987). The contribution provisions of the Revised Judicature Act allow a joint tortfeasor "who has paid more than his pro rata share of the common liability" to seek contribution from other tortfeasors. M.C.L. § 600.2925a(2); M.S.A. § 27A.2925(1)(2). However, this right is limited "as otherwise provided in this act." M.C.L. § 600.2925a(1); M.S.A. § 27A.2925(1)(1). In another section, the statute specifies that "in determining the pro rata shares of tortfeasors in the entire liability as between themselves[,] ... [t]heir relative degrees of fault shall be considered ... [and] [p]rinciples of equity applicable to contribution generally shall apply." M.C.L. § 600.2925b; M.S.A. § 27A.2925(2). Again, this section contains a caveat that it is to be applied "[e]xcept as otherwise provided by law." Id.

At issue here is the application of M.C.L. § 600.2925d; M.S.A. § 27A.2925(4):

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 tortfeasors from liability for the injury or wrongful death unless its terms so provide.

(b) It reduces the claim against the other tortfeasors 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.

Otto-Dufty contends that the settlement entered into between Riverwood and plaintiffs was not "in good faith" and, thus, this statute does not discharge Riverwood from its liability for contribution to Otto-Dufty.

Otto-Dufty argues that we should consider the settlement not in good faith because of its result, i.e., because Otto-Dufty must pay far more than its pro-rata share of plaintiffs' damages. Hypothetically, under the jury finding that Riverwood was seventy percent at fault for plaintiffs' damages, Riverwood would have paid more than $200,000 to plaintiffs. Otto-Dufty would have paid less than $100,000 as a result of its being thirty percent at fault for plaintiffs' damages. However, as a result of the settlement and the trial court's application of the statute, the judgment against Otto-Dufty was nearly a quarter of a million dollars, ¹ Riverwood must pay plaintiffs only $25,000, and Otto-Dufty has no right against Riverwood for contribution. Because this result is so disproportionate in light of the jury's finding of fact regarding Otto-Dufty's relatively limited fault for Mary Miller's injuries, Otto-Dufty argues that the settlement agreement should not be considered to be "in good faith" under the statute.

In the absence of any compelling Michigan authority regarding the statutory meaning of good faith, ² Otto-Dufty relies heavily on the majority opinion in Tech-Bilt, Inc. v. Woodward-Clyde & Associates, 38 Cal.3d 488, 213 Cal.Rptr. 256, 698 P.2d 159 (1985), and cases following it. ³ The Tech-Bilt majority reasoned that the California contribution statute has two goals, the equitable sharing of costs among parties at fault and the encouragement of settlements. Id. at 494, 213 Cal.Rptr. 256, 698 P.2d 159. The majority reasoned that neither of these goals should be applied to defeat the other, but, instead, that they should be accommodated even though they are not necessarily always harmonious. Id. The majority decided that, by including a requirement that settlement agreements be entered into in good faith, the Legislature intended that courts should "inquire, among other things, whether the amount of the settlement is within the reasonable range of the settling tortfeasor's proportional share of comparative liability for the plaintiff's injuries." Id. at 499, 213 Cal.Rptr.

The Tech-Bilt majority came to its conclusion because of legislative action that occurred after judicial decisions adopting a proportionate-liability test of good faith. For the majority, this constituted legislative affirmation of that interpretation. Id. at 495-497, 498-499, 213 Cal.Rptr. 256, 698 P.2d 159. The court also noted that its understanding of good faith was consistent with comments to the Uniform Contribution Among Tortfeasors Act, 12 U.L.A. 63 (1955 rev), upon which California statute was modeled. Id. at 494, n. 4, 213 Cal.Rptr. 256, 698 P.2d 159.

In dissent, Chief Justice Rose E. Bird persuasively reasoned that the 1955 revisions of the Uniform Contribution Among Tortfeasors Act "represented a policy decision to encourage settlement [which] ... abandoned as unworkable [the] earlier attempt to protect nonsettling parties from inequity other than that caused by collusive conduct." Id. at 504, 213 Cal.Rptr. 256, 698 P.2d 159. Chief Justice Bird criticized the majority's conclusion that the legislature had adopted a judicial interpretation of good faith requiring proportionality because the judicial interpretation purportedly relied upon was "mere dictum." Id. at 503, 213 Cal.Rptr. 256, 698 P.2d 159. Chief Justice Bird adopted a much more limited view of good faith: "[A] settlement satisfies the good faith requirement if it is free of corrupt intent, i.e., free of intent to injure the interests of the nonsettling tortfeasors. A settlement is made in bad faith only if it is collusive, fraudulent, dishonest, or involves tortious conduct." Id. at 502, 213 Cal.Rptr. 256, 698 P.2d 159.

While the Tech-Bilt majority's reasoning regarding the meaning of "good faith" in the California statute may or may not be correct, it is not persuasive with regard to the Michigan statute. Otto-Dufty can point to no Michigan legislative history suggesting any intent to adopt a judicial interpretation of "good faith" that would require that a settlement agreement must reflect proportional liability. As in California, the Uniform Contribution Among Tortfeasors Act was the basis of the Michigan contribution statute. Theophelis v. Lansing General Hosp., 430 Mich. 473, 481, 424 N.W.2d 478 (1988). We note that, at one point, this uniform Act included a section providing that a settling tortfeasor was not released from liability unless the release provided that the plaintiff's ultimate recovery would be reduced to the extent of the released tortfeasor's pro-rata share of the damages, not just the settlement amount. Tech-Bilt, supra at 504, 213 Cal.Rptr. 256, 698 P.2d 159. That section provided protection for other tortfeasors, similar to the protection Otto-Dufty seeks here. However, this protection was removed in later versions of the uniform act, id., and it is not included in the Michigan statute at issue here. To the contrary, the Michigan statute specifically provides that a plaintiff's recovery against nonsettling defen...