Nation v. W.D.E. Elec. Co.

• Decision Date: 03 June 1997
• Docket Number: Docket No. 104659,No. 14,14
• Citation: 563 N.W.2d 233,454 Mich. 489
• Parties: Michael NATION, Plaintiff-Appellant, v. W.D.E. ELECTRIC COMPANY, a foreign corporation; C.J. Link Lumber Company, a Michigan corporation; and Ecolo-Tech, Inc., a Michigan corporation, Jointly and Severally, Defendants- Appellees. Calendar
• Court: Michigan Supreme Court

Page 233

563 N.W.2d 233

454 Mich. 489

Michael NATION, Plaintiff-Appellant, v. W.D.E. ELECTRIC COMPANY, a foreign corporation; C.J. Link Lumber Company, a Michigan corporation; and Ecolo-Tech, Inc., a Michigan corporation, Jointly and Severally Defendants- Appellees.

Docket No. 104659.

Calendar No. 14.

Supreme Court of Michigan.

Argued March 5, 1997.

Decided June 3, 1997.

Sommers, Schwartz, Silver & Schwartz, P.C. by Robert H. Darling and Richard D. Toth, Southfield, for Plaintiff-Appellant.

Gault Davison, P.C. by Edward B. Davison, Flint, for Defendants-Appellees.

Mark Granzotto, Detroit, for Michigan Trial Lawyers Association.

Plunkett & Cooney, P.C. by Robert G. Kamenec, Detroit, for Michigan Defense Trial Counsel, Inc.

Siemion, Huckabay, Bodary, Padilla, Morganti & Bowerman, P.C. by Raymond W. Morganti, Southfield, for PICOM Insurance Company and Michigan Physicians Mutual Liability Company.

Opinion

BOYLE, Justice.

We granted leave in this case to decide whether reduction of future damages to present cash value under M.C.L. § 600.6306; M.S.A. § 27A.6306 is to be calculated using compound or simple interest. We reverse the decision of the Court of Appeals and hold that simple interest is appropriate under the statute.

Facts and Procedural History

Plaintiff Michael Nation, an independent contractor employed by the W.D.E. Electric Company, was engaged in electrical work at the C.J. Link Lumber Company on June 24, 1992, when he fell from a ladder. ¹ He sued defendants C.J. Link, Ecolo-Tech, Inc., and W.D.E. Electric Company in the Genesee Circuit Court on various tort theories for the injuries he sustained in the fall. The jury found plaintiff sixty-five percent at fault, but awarded damages against one defendant, W.D.E. Electric, for its comparative negligence as follows: $15,000 for past lost earning capacity and medical expenses, $2,700 for past pain and suffering, $6,372 for future medical expenses, and $1,000 a year for future pain and suffering until the year 2034. The jury applied annual compound interest of five percent to the $1,000 award. It did not award damages for future lost earning capacity.

The trial court, at defendant's request, reduced plaintiff's future damages to a present cash value of $42,000, using compound interest. The court rejected plaintiff's request that simple interest be employed to arrive at a present cash value of $60,611.31. ² The plaintiff appealed on various grounds, including whether the court used the proper method to reduce the award of future damages. The Court of Appeals affirmed, 213 Mich.App. 694, 540 N.W.2d 788 (1995), and we granted leave "limited to whether M.C.L. § 600.6306; M.S.A. § 27A.6306 requires interest compounding to reduce a jury award to present cash value." 453 Mich. 912, 554 N.W.2d 906 (1996).

I

Section 6306 provides in relevant part:

(1) After a verdict rendered by a trier of fact in favor of a plaintiff, an order of judgment shall be entered by the court ... against each defendant ... in the following order and in the following judgment amounts:

* * * * * *

(c) All future economic damages, less medical and other health care costs, and less collateral source payments ... reduced to gross present cash value.

(d) All future medical and other health care costs reduced to gross present cash value.

* * * * * *

(2) As used in this section, "gross present cash value" means the total amount of future damages reduced to present value at a rate of 5% per year for each year in which those damages accrue....

Before 1986, under the common law, the obligation to perform the reduction of future damages to present cash value in personal injury actions was the obligation of the jury. SJI2d 53.03 instructed the jury to perform the calculation using simple interest. Under the tort reform legislation passed in 1986, § 6306 transferred the obligation to perform the calculation to the trial judge. We decline the invitation to hold that this transfer abrogated the method in place under the common-law scheme. The Legislature did not explicitly require the use of compound interest as it did in the context of judgment interest. ³ Moreover, the Legislature contemporaneously rejected a bill seeking to require just that. ⁴

The common law has long favored simple interest and disfavored compound interest, which it has characterized as "interest on accrued interest." See, e.g., Schwartz v. Piper Aircraft Corp., 90 Mich.App. 324, 327, 282 N.W.2d 306 (1979). The Court of Appeals aptly there observed:

[T]hose courts which have dealt with similar problems have uniformly rejected compound interest except where specifically authorized by statute or in cases where compounding of interest was granted as a penalty for some misconduct on the part of a defendant. [Id. at 326, 282 N.W.2d 306.] [ ⁵

For nearly eighty years before the enactment of § 6306, Michigan approved the use of simple interest to reduce damages to present value. Rivers v. Bay City Traction &amp Electric Co., 164 Mich. 696, 128 N.W. 254 (1910). SJI2d 53.03, still applicable to damage awards in cases not covered by § 6306, ⁶ reflects the state of the common law under Rivers before the enactment of § 6306. A dispute arises now, however, with regard to the meaning of § 6306 because the Legislature did not explicitly specify which method should be employed by the court in reducing future damage awards to present value.

II

In resolving disputed interpretations of statutory language, it is the function of a reviewing court to effectuate the legislative intent. Hiltz v. Phil's Quality Market, 417 Mich. 335, 343, 337 N.W.2d 237 (1983). ⁷ If the language used is clear, then the Legislature must have intended the meaning it has plainly expressed, and the statute must be enforced as written. Id. Section 6306 is silent with regard to the kind of interest rate to be employed. However, the Legislature is deemed to act with an understanding of common law in existence before the legislation was enacted. Nummer v. Treasury Dep't, 448 Mich. 534, 544, 533 N.W.2d 250 (1995); Garwols v. Bankers Trust Co., 251 Mich. 420, 424-425, 232 N.W. 239 (1930). ⁸ Moreover, "statutes in derogation of the common law must be strictly construed, and will not be extended by implication to abrogate established rules of common law." Rusinek v. Schultz, Snyder & Steele Lumber Co., 411 Mich. 502, 508, 309 N.W.2d 163 (1981). In other words, "[w]here there is doubt regarding the meaning of such a statute, it is to be 'given the effect which makes the least rather than the most change in the common law.' " Energetics, Ltd. v. Whitmill, 442 Mich. 38, 51, 497 N.W.2d 497 (1993). "This Court will presume that the Legislature of this state is familiar with the principles of statutory construction." People v. Hall, 391 Mich. 175, 190, 215 N.W.2d 166 (1974).

These principles of statutory construction alone are ample authority for the conclusion that simple interest was intended by the Legislature when reenacting § 6306 in 1986. The Legislature did not expressly provide for compound interest, instead making it clear only that the responsibility for making the calculation was being transferred from the jury to the trial judge. The tort reform legislation of 1986 was a comprehensive effort involving numerous compromises. It strains common sense to surmise that the Legislature was unaware of the interest-calculation question and simply overlooked the common-law scheme for reducing judgments to present cash value using simple interest. We therefore presume the Legislature intended to maintain the status quo when it changed the statute without expressly providing that compound interest would be required. To conclude otherwise would violate the clear dictates of well-established rules of statutory interpretation.

III

Extrinsic evidence in the form of legislative history supports our conclusion. First, the Legislature enacted § 6306 as part of 1986 P.A. 178. That same act also amended parts of M.C.L. § 600.6013(5); M.S.A. § 27A.6013(5) and M.C.L. § 600.6455; M.S.A. § 27A.6455, both of which provide for calculation of the interest on judgments using compound interest. Section 6013(6) ⁹ provides in pertinent part:

[F]or complaints filed on or after January 1, 1987, interest on a money judgment recovered in a civil action shall be calculated at 6-month intervals from the date of filing the complaint at a rate of interest that is equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually, pursuant to this section. [Emphasis added.]

Before being "extensively revised" in 1980, Gage v. Ford Motor Co., 423 Mich. 250, 253, 377 N.W.2d 709 (1985), § 6013 was silent regarding whether simple or compound interest applied. Acknowledging the common-law preference for simple interest that was dispositive in Schwartz, ¹⁰ Gage, supra at 259, 377 N.W.2d 709, this Court held that the Legislature's silence in this regard demonstrated "that the Legislature did not intend to provide for compounding of [judgment] interest before June 1, 1980," the effective date of the statute. id.at 258, 377 N.W.2d 709. Rather, Justice Brickley, speaking for a unanimous Court, concluded that "[t]he analyses of the bill, as well as the wording of the amended statute, clearly indicate[d] the intent that before June 1, 1980, interest was to continue to be computed in the former manner--six percent interest without compounding." Id. at 258, 377 N.W.2d 709. In reaching this conclusion, we reasoned, "It was clear to the Legislature when it embarked on this amendment that the six percent interest had been construed to be simple interest, Schwartz, supra, and it made no attempt to change it retroactively." Gage, supra at 259, 377 N.W.2d 709. We find this reasoning to be compelling here.

Assuming the Legislature was aware of the...