Myers v. Jarnac

• Decision Date: 20 May 1991
• Docket Number: Docket Nos. 117770,118160
• Citation: Myers v. Jarnac, 474 N.W.2d 302, 189 Mich.App. 436 (Mich. App. 1991)
• Parties: Dennis J. MYERS, Plaintiff-Appellant, v. Robert H. JARNAC and Sandee Louise Jarnac, father and daughter, Defendants-Appellees. 189 Mich.App. 436, 474 N.W.2d 302
• Court: Court of Appeal of Michigan

Page 302

474 N.W.2d 302

Dennis J. MYERS, Plaintiff-Appellant, v.Robert H. JARNAC and Sandee Louise Jarnac, father and daughter, Defendants-Appellees.

Docket Nos. 117770, 118160.

189 Mich.App. 436, 474 N.W.2d 302

Court of Appeals of Michigan.

Submitted March 12, 1991, at Grand Rapids.

Decided May 20, 1991, at 10:25 a.m.

Released for Publication Sept. 19, 1991.

[189 MICHAPP 437]Sumpter & Perry, P.C. by Thomas E. McDonald, Cheboygan, for plaintiff-appellant.

Bensinger & Cotant, P.C. by James F. Pagels, Gaylord, for defendants-appellees.

Before SHEPHERD, P.J., and SAWYER and REILLY, JJ.

SAWYER, Judge.

A judgment was entered in favor of plaintiff in the amount of $6,115.10 plus statutory interest after a jury verdict in favor of plaintiff in the amount of $15,287.75 was reduced because of plaintiff's sixty percent comparative negligence.The trial court thereafter denied plaintiff's requests for the award of costs and attorney fees under MCR 2.405 and for sanctions for the defendants' alleged frivolous defenses and refusal to stipulate to facts.Plaintiff's appeals from those orders were consolidated by the Court of Appeals.We reverse in part.

DefendantSandee Jarnac was operating a motor vehicle in plaintiff's driveway when she hit the gas pedal, causing the vehicle to lunge backwards, which in turn caused plaintiff to fall from where he was sitting on the running board and to be run over by the vehicle.Plaintiff suffered an injury as a result of the accident, and the instant litigation ensued.

During the course of litigation, the parties made four offers of judgment.On June 20, 1988, plaintiff filed his first offer of judgment in the amount of $22,500.Defendants apparently did not respond to [189 MICHAPP 438] this offer, but on October 24, 1988, filed their own offer to settle the dispute for $1,500.These offers are not relevant to this appeal.Two subsequent offers, however, are relevant.Namely, on January 6, 1989, plaintiff filed another offer of judgment, dated January 5, 1989, offering to settle the matter for $10,000.Within twenty-one days, on January 18, 1989, defendants filed a document dated January 16, 1989, and entitled "offer of judgment" which offered to settle the matter for $3,000.Plaintiff shortly thereafter rejected this offer, which plaintiff's written rejection referred to as a "counteroffer."The matter then proceeded to trial, resulting in the jury verdict in favor of plaintiff.

Following trial, plaintiff moved for an award of fees and costs pursuant to MCR 2.405(D) on the basis that the adjusted verdict was more favorable to plaintiff than the average offer.SeeMCR 2.405(D)(1).The trial court denied the motion, ruling that plaintiff had failed to make a counteroffer to defendants' last offer and, therefore, was not entitled to an award of fees and costs under the court rule.SeeMCR 2.405(D)(2).Thus, the question to be answered on appeal is whether plaintiff was obligated to file a counteroffer to defendants' January 18 offer of $3,000.For the reasons to be discussed below, we conclude that plaintiff was not so obligated.

MCR 2.405 provided, at the time relevant to this case, ¹ in pertinent part as follows:

(A) Definitions.As used in this rule:

(1)"Offer" means a written notification to an adverse party of the offeror's willingness to stipulate to the entry of a judgment in a sum certain, which is deemed to include all costs and interest [189 MICHAPP 439] then accrued.If a party has made more than one offer, the most recent offer controls for the purposes of this rule.

(2)"Counteroffer" means a written reply to an offer in which a party rejects an offer of the adverse party and makes his or her own offer.

(3)"Average offer" means the sum of an offer and a counteroffer, divided by two.If no counteroffer is made, the offer shall be used as the average offer.

* * * * * *

(5)"Adjusted verdict" means the verdict plus interest and costs from the filing of the complaint through the date of the offer.

* * * * * *

(B) Offer.Until 28 days before trial, a party may serve on the adverse party a written offer to stipulate to the entry of a judgment for the whole or part of the claim, including interest and costs then accrued.

(C) Acceptance or Rejection of Offer.

(1) To accept, the adverse party, within 21 days after service of the offer, must serve on the other parties a written notice of agreement to stipulate to the entry of the judgment offered, and file the offer, the notice of acceptance, and proof of service of the notice with the court.The court shall enter a judgment according to the terms of the stipulation.

(2) An offer is rejected if the offeree

(a) expressly rejects it in writing, or

(b) does not accept it as provided by subrule (C)(1).

A rejection does not preclude a later offer by either party.

(3) A counteroffer may be accepted or rejected in the same manner as an offer.

Plaintiff takes the position that defendants' $3,000 offer on January 18 constituted a counteroffer under the rule and, because the adjusted verdict [189 MICHAPP 440] was more than the average offer, plaintiff is entitled to an award of costs and fees under the court rule.Defendants take the position, however, that their $3,000 offer on January 18 was not a counteroffer, because it was labeled an "offer" and not a "counteroffer" and because it did not explicitly reject plaintiff's offer of January 6, and, therefore, that plaintiff is not entitled to an award of costs and fees because plaintiff failed to make a counteroffer as required under MCR 2.405(D)(2).We agree with plaintiff that the $3,000 "offer" made by defendants on January 18 constitutes a counteroffer within the meaning of the court rule and, therefore, plaintiff is entitled to an award of costs and fees if the adjusted verdict was more than the average offer.

While the issue presented in this case appears to be one of first impression, this issue was discussed in 2 Martin, Dean & Webster, Michigan Court Rules Practice, pp. 451-452:

A "counteroffer" is a written reply to an offer in which the party rejects the offer of the other party and makes his or her own offer of settlement.Though the rule is not explicit on point, a written reply to an offer which fails to accept the offer made, and proposes settlement in a different amount, would satisfy the definition of a "counteroffer" even though the written reply does not expressly reject the offer made.

Martin, Dean & Webster reiterates this observation later in the commentary:

An offer or counteroffer may be rejected by; (1) expressly rejecting it in writing; (2) not accepting it as provided in rule 2.405(C)(1); and (3) by replying to the offer or counteroffer with a different offer or counteroffer.The last means of rejecting an offer or counteroffer is not stated in the rule.[189 MICHAPP 441] As discussed in point la, supra, this is the intent of the rule, and the rule does operate in accordance with basic contract principles.In addition, the rule specifically provides that failure to accept an offer constitutes rejection of it, but that this rejection does not preclude a later offer by either party.[Id. at 454-455.]

We agree that the interpretation of the term "counteroffer" as proposed by plaintiff and discussed in Martin, Dean & Webster presents the most rational view of this issue.First, this interpretation is consistent with the basic principle of contract law that a response to an offer which contains terms different than that proposed in the offer constitutes a rejection of the offer and the creation of a counteroffer.SeeHarper Building Co. v. Kaplan, 332 Mich. 651, 655-656, 52 N.W.2d 536(1952).

Second, this interpretation is consistent with the rational view of what occurred.That is, defendants, by offering to settle for $3,000, clearly, if not explicitly, rejected plaintiff's offer to settle for $10,000.Thus, from a practical view, defendants' January 18 offer to settle for $3,000 constitutes a counteroffer as defined in MCR 2.405(A)(2), because it is a written reply, it implicitly rejects an offer of the adverse party(plaintiff), and makes defendants' own offer.

Third, there is no rational reason to accept defendants' interpretation of the court rules.Court rules are to be interpreted to secure the just, speedy, and economical determination of every action.MCR 1.105.Defendants seek to prevail solely because of the fact that defendants' January 18"offer" failed to make explicit that which was implicit in the document:...