Wayne-Oakland Bank v. Brown Valley Farms, Inc.
| Decision Date | 29 August 1988 |
| Docket Number | WAYNE-OAKLAND,Docket No. 95357 |
| Citation | 428 N.W.2d 13,170 Mich.App. 16 |
| Parties | TheBANK, as Next Friend of David Kelman, a minor, and Alan P. Kelman, Plaintiffs, v. BROWN VALLEY FARMS, INC., a Michigan corporation, Bill Brown, Inc., a Michigan corporation, jointly and severally, Defendants, and BROWN VALLEY FARMS, INC., a Michigan corporation, and Bill Brown, Inc., a Michigan corporation, Defendants/Third-Party Plaintiffs-Appellants, v. FORD MOTOR COMPANY, a Delaware corporation, Third-Party Defendant-Appellee. 170 Mich.App. 16, 428 N.W.2d 13 |
| Court | Court of Appeal of Michigan — District of US |
[170 MICHAPP 17] Kohl, Secrest, Wardle, Lynch, Clark & Hampton by Michael L. Updike, Farmington Hills, for Brown Valley Farms, Inc., and Bill Brown, Inc.
Ogne, Jinks, Alberts & Stewart, P.C. by Wayne Ogne and Bryan Cermak, Troy for Ford Motor Co.
Before DANHOF, C.J., and DOCTOROFF and GREEN, * JJ.
In this case we consider the propriety of mediation sanctions awarded pursuant to former GCR 1963, 316.7(b)(1), now MCR 2.403(O)(1). Defendants and third-party plaintiffs Brown Valley Farms, Inc., and Bill Brown, Inc. (hereinafter appellants) appeal as of right from an award of mediation sanctions in favor of third-party defendant Ford Motor Company.
The incident giving rise to this appeal occurred on June 18, 1977, when seven-year-old David Kelman was injured by a lawn mower operated at Brown Valley Farms. On February 21, 1979, a negligence suit was filed on the boy's behalf in Oakland Circuit Court, naming appellants as defendants. On March 10, 1980, appellants filed suit as third-party plaintiffs against Ford Motor Company, [170 MICHAPP 18] the manufacturer of the lawn mower, seeking indemnification and contribution on the basis that the lawn mower was defectively designed.
The case proceeded to mediation under GCR 1963, 316 in October, 1980. The mediators recommended an award of $325,000 in favor of plaintiffs and against appellants, and an award of no cause of action on appellants' third-party complaint against Ford. Pursuant to an agreement of the parties, the mediation award was sealed so that settlement discussions could be undertaken. In January, 1981, the mediation award was unsealed after settlement negotiations broke down. Plaintiffs and Ford accepted the award; appellants rejected it.
The case went to trial in May, 1982. On the first day, plaintiffs called Mr. Brown as a witness. On cross-examination by counsel for Ford, Brown testified that, to his knowledge, nothing was wrong with the mower. Ford immediately moved for "dismissal or summary judgment or directed verdict" regarding the third-party complaint. Ford's motion was granted, and Ford was dismissed from the case by an order of June 25, 1982. The order stated that the matter of costs and attorney fees would be reserved for subsequent argument and proofs.
The jury returned a verdict of no cause of action against plaintiffs on their complaint. Plaintiffs then moved for a judgment notwithstanding the verdict and/or a new trial. This motion was denied by an order of September 8, 1982. Plaintiffs appealed from the order, and appellants cross-appealed challenging the order dismissing their third-party complaint against Ford. In an unpublished per curiam decision of March 23, 1984, this Court affirmed both orders of the circuit court, Docket No. 67057.
Plaintiffs and appellants next requested leave to [170 MICHAPP 19] appeal in the Michigan Supreme Court. On January 30, 1985, the Court issued an order holding such applications in abeyance pending release of decisions in two other cases. The two decisions were released on November 13, 1985; plaintiffs and appellants subsequently reached a settlement, and the applications were dismissed by stipulation pursuant to an order entered in the Supreme Court on March 6, 1986.
Following dismissal in the Supreme Court, Ford moved for costs, attorney fees and interest against appellants pursuant to GCR 1963, 316.7(b)(1), now MCR 2.403(O)(1). Ford requested an amount totaling $36,413.87, representing $24,414.31 in costs and attorney fees for trial and appellate work, plus twelve percent interest dating from the circuit court's June 25, 1982, order dismissing the third-party complaint. Appellants challenge here the circuit court's order of September 17, 1986, awarding Ford $36,787.90 in costs, attorney fees and interest.
Appellants argue that the circuit court could not award mediation sanctions in favor of Ford because there was no verdict entered at trial on the third-party complaint. However, in the event that we find mediation sanctions appropriate, appellants contend that the circuit court erroneously awarded attorney fees for appellate work, erroneously refused to find the requested attorney fees unreasonable, and erroneously awarded interest on the amount of costs and attorney fees.
Appellants' argument against the propriety of mediation sanctions in the instant case is based on the following provision of MCR 2.403(O) 1:
Under appellants' reading of the rule, a verdict is a prerequisite to an award of mediation sanctions and as there was no verdict reached on the third-party complaint in the instant case, the circuit court was not authorized to award mediation sanctions.
We disagree with appellants' interpretation of MCR 2.403(O)(1). The committee notes to the rule suggest that the provision was not intended to require a verdict as a prerequisite to the imposition of mediation sanctions, stating, "[t]he rejecting party is liable for costs unless that party improves its position by at least 10 percent...." (Emphasis added.) Once trial of a case has commenced, we hold that the rule authorizes mediation sanctions any time a party fails to improve his position by ten percent, regardless of whether the case reaches the finder of fact for a verdict.
[170 MICHAPP 21] Our interpretation of the rule is consistent with its purpose to place the burden of litigation costs upon the party who insists upon a trial by rejecting a proposed mediation award. Commercial Union Ins. Co. v. Liberty Mutual Ins. Co., 137 Mich.App. 381, 394, 357 N.W.2d 861 (1984), aff'd on other grounds 426 Mich. 127, 393 N.W.2d 161 (1986). The commencement of trial is the necessary prerequisite for mediation sanctions under MCR 2.403, not the rendering of a verdict. See O.D. Silverstein, M.D., P.C. v. Services, Inc., 165 Mich.App. 355, 360, 418 N.W.2d 461 (1987). 2 Under appellants' reading, a party with a case too weak to reach the jury would not be subject to mediation sanctions if it rejected a mediation award, even though such sanctions might be more appropriate to it than to a party with a case strong enough to proceed to a verdict. Accordingly, we uphold the circuit court's decision to award mediation sanctions against appellants.
Having determined that mediation sanctions were appropriate in the instant case, we will not disturb the circuit court's award absent an abuse of discretion. Bien v. Venticinque, 151 Mich.App. 229, 232, 390 N.W.2d 702 (1986). We find no abuse of discretion in the court's award of sanctions against appellants.
First, we note that appellants' counsel stipulated to the accuracy and reasonableness of Ford's requested attorney fees, including fees for appellate work:
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