Lloyd Howard v. Erika Christensen ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
LLOYD HOWARD, UNPUBLISHED
July 31, 2018
Plaintiff/Counter Defendant-
Appellant,
v No. 337699
Macomb Circuit Court
ERIKA CHRISTENSEN, LC No. 2016-000312-CH
Defendant/Counter Plaintiff-
Appellee.
Before: O’BRIEN, P.J., and METER and RIORDAN, JJ.
PER CURIAM.
Plaintiff/Counter defendant (plaintiff) appeals as of right the trial court’s order denying
plaintiff’s motion to dismiss, as well as the trial court’s later order granting defendant/counter
plaintiff (defendant) sole title to 30013 Rosebriar, St. Clair Shores, Michigan (the property). We
vacate the order granting defendant sole title to the property, and reverse and remand for entry of
an order dismissing the entire case with prejudice.
Defendant purchased the property via land contract in 2008, and later quitclaimed the
property to herself and plaintiff jointly. At the time the property was quitclaimed, plaintiff and
defendant were in a dating relationship. According to plaintiff, on the same day that defendant
quitclaimed the property, he and defendant entered into a contract to sell the property and split
the proceeds. The parties never sold the property, and after their relationship ended, plaintiff
remained on the property’s deed. Plaintiff eventually filed a complaint against defendant
alleging partition of real estate and breach of contract. Defendant filed a counter-complaint
alleging undue influence related to her quitclaiming the property to herself and plaintiff jointly.
The trial court ordered case evaluation. The case evaluators awarded $0 to plaintiff
against defendant, but did not provide a separate award for defendant against plaintiff. Instead,
the panel wrote above their signatures, “Panel finds merit in Defendant’s/Counter-Plaintiff’s
claims [sic] of undue influence.” Both parties accepted the award. Based on the parties’
acceptance, plaintiff moved to dismiss the entire case with prejudice under MCR 2.403(M)(1).
The trial court denied plaintiff’s motion in part, finding that it was not required to dismiss
defendant’s counterclaim based on the case evaluation panel’s statement. But the trial court
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went on to hold that its decision did “not circumvent the previously accepted case evaluation”
with respect to plaintiff’s claims, and it dismissed those claims with prejudice.
After a trial on defendant’s counterclaim, the trial court issued a written opinion in which
it decided that plaintiff’s acceptance of the case evaluation award effectively decided that
plaintiff had no interest in the property. On this basis, the trial court ordered that plaintiff’s
“name [be] removed from the property,” and held that the merits of defendant’s counterclaim
“need not be addressed.” This appeal followed.
On appeal, plaintiff argues that the trial court erred by not granting its motion to dismiss
the entire case following the parties’ acceptance of the case evaluation award. We agree.
At issue is the interpretation and application of the court rule governing case evaluation,
MCR 2.403. The proper interpretation and application of a court rule is a question of law, which
this Court reviews de novo. Magdich & Assoc, PC v Novi Dev Assoc LLC, 305 Mich. App. 272,
275; 851 NW2d 585 (2014).
“In general, the purpose of MCR 2.403 is to expedite and simplify the final settlement of
cases to avoid a trial.” Larson v Auto-Owners Ins Co, 194 Mich. App. 329, 332; 486 NW2d 128
(1992). MCR 2.403(M)(1) provides as follows:
If all the parties accept the panel’s evaluation, judgment will be entered in
accordance with the evaluation, unless the amount of the award is paid within 28
days after notification of the acceptances, in which case the court shall dismiss the
action with prejudice. The judgment or dismissal shall be deemed to dispose of
all claims in the action and includes all fees, costs, and interest to the date it is
entered . . . .
In CAM Constr v Lake Edgewood Condo Ass’n, 465 Mich. 549; 640 NW2d 256 (2002),
our Supreme Court addressed MCR 2.403(M)(1)’s proper interpretation. The plaintiff in that
case alleged three counts against the defendant “for services rendered pursuant to an agreement
between the parties,” and, in a fourth count, alleged that the defendant “reneged on a separate
contract.” CAM Constr, 465 Mich. at 551. The fourth count was dismissed in summary
disposition, and the plaintiff did not appeal. Id. The case was then submitted to case evaluation,
and both parties accepted the case evaluation award. Id. 551-552. Based on the parties’
acceptance, the defendant moved for dismissal with prejudice of all claims under MCR
2.403(M)(1). Id. at 552. The plaintiff argued in response that it had reserved the right to appeal
the summary disposition on the fourth count, and the circuit court agreed. Id. The plaintiff then
appealed the earlier summary disposition. Id. at 553.
On appeal, our Supreme Court held that plaintiff’s claim should have been dismissed,
reasoning that “[t]he language of MCR 2.403(M)(1) could not be more clear that accepting a
case evaluation means that all claims in the action, even those summarily disposed, are
dismissed.” Id. at 555. The CAM Constr Court explained that “allowing bifurcation of the
claims within such actions . . . would be directly contrary to the language of the rule.” Id. Our
Supreme Court then overruled a line of cases that allowed a party to exempt claims from
dismissal under MCR 2.403(M)(1) if the party could “make a showing that ‘less than all issues
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were submitted’ to case evaluation.” Id. at 556. The Court reasoned that such an exception had
“no basis in the court rule.” Id. The CAM Constr Court concluded that, because both parties
accepted the case evaluation award, the plaintiff’s claim must be dismissed. Id. at 557.
Later, in Magdich, this Court interpreted MCR 2.403(M)(1) in light of CAM Constr. The
plaintiff in Magdich filed a claim for declaratory relief, disputing whether it exercised its right of
first refusal on a space adjacent to its lease space known as the “Crawford space.” Magdich, 305
Mich. App. at 274. The defendant filed an unrelated counterclaim, but the parties agreed to limit
the case to the issues regarding the “Crawford space.” Id. The defendant later filed a motion to
amend its counterclaim, requesting to include certain necessary claims that, it alleged, did not
exist when the complaint was filed. Id. The trial court took the matter under advisement, and
the case proceeded to case evaluation. Id. Both parties accepted the award without qualification,
and the trial court later granted the defendant’s motion to include additional claims. Id. at 274-
275. The plaintiff then filed a motion to dismiss all claims—including the newly added claims—
with prejudice under MCR 2.403(M)(1), which the trial court denied. Id. at 275. This Court,
relying on CAM Constr, held that “the trial court erred by denying [the] plaintiff’s motion to
dismiss with prejudice,” reasoning that nothing in the court rule permitted the trial court to
exempt the defendant’s claim from case evaluation even if the claim had yet to be added. Id. at
279. The Magdich Court explained,
The case evaluation is binding and is comparable to a consent judgment or
settlement agreement. The court rules governing case evaluation provide that
“claims seeking equitable relief” may be exempted from case evaluation upon
good cause shown or the stipulation of the parties if the court finds that the
evaluation of such claims would be inappropriate. MCR 2.403(A)(3). However,
the plain language of the court rule does not exempt any other type of claim from
case evaluation, and defendant does not allege that the claims raised fall within
the equitable-relief exception. [Id. (citations omitted).]
This Court in Magdich further pointed out that, under MCR 2.403(C)(1), the parties could have
moved to remove the matter from case evaluation but chose not to do so. Id. at 280. This Court
surmised, “In short, both parties accepted the case evaluation award without qualification, and
therefore, the case is over. The trial court erred by denying the motion to dismiss the case with
prejudice.” Id. at 281.
Here, the parties submitted their claims to case evaluation, and both parties accepted the
resulting evaluation. Neither party moved to exempt their equitable claims from the evaluation,
nor did the parties stipulate to exempt any of their equitable claims from case evaluation. See
MCR 2.403(A)(3).1 Indeed, neither party sought to exempt any of their claims from case
1
MCR 2.403(A)(3) provides,
A court may exempt claims seeking equitable relief from case evaluation for good
cause shown on motion or by stipulation of the parties if the court finds that case
evaluation of such claims would be inappropriate. [Emphasis added.]
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evaluation. See MCR 2.403(C)(1); Magdich, 305 Mich. App. at 280. Instead, the parties
submitted all of their claims to case evaluation. The parties accepted the $0 award, which was
necessarily paid within 28 days. See MCR 2.403(M)(1) (stating that all claims must be
dismissed with prejudice if the award is paid within 28 days). Because no claims were
exempted, the award constituted a “final adjudication” of all the parties’ claims, Magdich, 305
Mich. App. at 276, and, once the award was paid, the trial court was required to dismiss the
parties’ claims with prejudice under MCR 2.403(M)(1), CAM Constr, 465 Mich. at 555. The trial
court erred by holding otherwise.2
This result is not affected by the case evaluation panel’s apparent failure to state a
separate award amount for defendant’s claim against plaintiff or its note that defendant’s
counterclaim “has merit.” As for the lack of a separate award, the case evaluation panel was
precluded from listing a separate award for defendant’s equitable counterclaim. See MCR
2.403(K)(3) (stating that “[t]he evaluation may not include a separate award on any equitable
claim”); Walters v Nadell, 481 Mich. 377, 383; 751 NW2d 431 (2008) (interpreting “may not” as
“shall not”). The lack of award for defendant against plaintiff was nothing more than the case
evaluation panel’s faithful application of MCR 2.403(K)(3). As for the panel’s statement on the
merits of defendant’s counterclaim, it may have simply been to convey that the claim was not
frivolous. But even if the statement was a remark on the counterclaim’s likelihood of success at
trial, this does not mean that the $0 award did not reflect that consideration. See MCR
2.403(K)(3) (stating that “the panel may consider [equitable] claims in determining the amount
of an award”). The panel may have considered defendant’s counterclaim and nonetheless
awarded $0 because no amount of money could provide defendant with the relief she sought:
removal of plaintiff from the property’s title. 3 But it does not matter what the statement was
intended to convey; defendant mistakenly believed that, after submitting her claim to case
evaluation, she could accept the case evaluation award and then bifurcate the action, having
plaintiff’s claims dismissed while her claim proceeded. As held by our Supreme Court,
bifurcating claims in accepted case evaluation awards is “directly contrary to the language of”
MCR 2.403(M)(1), CAM Constr, 465 Mich. at 555, and the “unambiguous language” of that rule
reflects our Supreme Court’s “desire to avoid bifurcation of civil actions submitted to case
evaluation,” id. at 557. Regardless of the case evaluation panel’s note, the result of acceptance is
2
This conclusion is bolstered by the fact that MCR 2.403 expressly provides an exception to
dismissing equitable claims upon acceptance of a case evaluation award. MCR 2.403(M)(2)
states, “If only a part of an action has been submitted to case evaluation pursuant to subrule
(A)(3) and all of the parties accept the panel’s evaluation, the court shall enter an order disposing
of only those claims.” By its plain language, the exception in MCR 2.403(M)(2) only applies if
the parties proceeded under MCR 2.403(A)(3), which the parties in this case did not. Thus, the
parties’ acceptance was governed by MCR 2.403(M)(1), which requires dismissal of all claims in
this case with prejudice. CAM Constr, 465 Mich. at 555; Magdich, 305 Mich. App. at 281.
3
Defendant admitted at a hearing that the case evaluation panel “addressed” her claim.
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straightforward: once “both parties accepted the case evaluation award without
qualification . . . the case [was] over.” Magdich, 305 Mich. App. at 281.4
As for the trial court’s subsequent order removing plaintiff from the title to the property,
that order was improper. The trial court reasoned that it need not address the merits of
defendant’s counterclaim because the parties’ acceptance of the case evaluation award
determined that plaintiff did not have any interest in the property.
MCR 2.403(K)(3) states that “[t]he evaluation may not include a separate award on any
claim for equitable relief, but the panel may consider such claims in determining the amount of
an award.” Based on this language, this Court has held that a case evaluation award cannot
provide equitable relief. See Forest City Enterprises, Inc v Leemon Oil Co, 228 Mich. App. 57,
79; 577 NW2d 150 (1998). This Court has also held that providing equitable relief is beyond the
permissible scope of a case evaluation award pursuant to MCR 2.403(A)(1). See RN W Constr
Co v Barra Corp of Am, Inc, 148 Mich. App. 115, 118; 384 NW2d 96 (1986) (“The award tries to
grant equitable relief, which is beyond the scope of [MCR 2.403(A)(1)] and the subject-matter
jurisdiction of the [case evaluation] panel. A judgment cannot lawfully be based upon such an
extra-jurisdictional award.”).
Despite this case law, the trial court reasoned that “the case evaluation award determined
that [plaintiff] had no interest in the property whatsoever.” This was beyond the scope of
permissible relief; all that the case evaluation award decided—and all that it could decide—was
that plaintiff’s claims entitled him to $0. This is not equivalent to deciding that plaintiff had no
interest in the property.
This conclusion is mandated by MCR 2.403. That rule provides that acceptance of a case
evaluation award can only have one of two effects: either judgment is entered in accordance with
the award or, if the award is paid within 28 days, the claims are dismissed with prejudice. See
4
The Court recognizes that in Dane Const, Inc v Royal’s Wine & Deli, Inc, 192 Mich. App. 287,
292-294; 480 NW2d 343 (1991), this Court held that an equitable claim based on in rem
proceedings against property is necessarily not included in a case evaluation award because the
award cannot provide relief on that type of claim. Notably, neither party raised issues related to
Dane at trial or on appeal, and the trial court never addressed the case. Even so, since Dane,
MCR 2.403(A)(3) and MCR 2.403(M)(2) were amended to provide a means for exempting
equitable claims from case evaluation. See CAM Constr, 465 Mich. at 556 (describing the
previous version of MCR 2.403 as “less detailed”). In light of these changes, as well as the
unequivocal holdings in CAM Constr and Magdich that acceptance of a case evaluation award
cannot result in the bifurcation of actions, we conclude that Dane does not apply here, and all of
the parties’ claims should be dismissed with prejudice. See MCR 2.403(M)(1) (stating that if the
case evaluation award is paid within 28 days of the parties’ acceptance, then the entire action—
not certain claims in the action—shall be dismissed with prejudice); see also CAM Constr, 465
Mich. at 556-557 (overruling cases that “improperly allow a party” to exempt a claim from case
evaluation if the party can “make a showing that ‘less than all issues were submitted’ to case
evaluation”).
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MCR 2.403(M)(1). Although acceptance of a case evaluation award serves as a final
adjudication, Magdich, 305 Mich. App. at 276, nowhere in MCR 2.403 does it state that
acceptance is a decision on the merits. Because the award here was paid within 28 days, the only
permissible result was for the trial court to dismiss the claims with prejudice. The trial court’s
reasoning that acceptance of the case evaluation award mandated any conclusion other than this
was incorrect. See Schell v Baker Furniture Co, 232 Mich. App. 470, 479-480; 591 NW2d 349,
353 (1998), aff’d on other grounds 461 Mich. 502 (2000) (“[I]t is manifest that the contents of a
[case] evaluation should not have any effect on a trial court’s resolution of the merits of a
case.”). For these reasons, the trial court’s order removing plaintiff’s name from the title is
vacated.
The March 9, 2017 order granting defendant sole title to the property is vacated. The
December 2, 2016 order denying plaintiff’s motion to dismiss is reversed, and the case is
remanded to the trial court to enter an order dismissing all claims with prejudice. We do not
retain jurisdiction.
/s/ Colleen A. O'Brien
/s/ Patrick M. Meter
/s/ Michael J. Riordan
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