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Michigan Supreme Court 

Lansing, Michigan 48909 

C hief Justice Justices 

Maura D. Corrigan	 Michael F. Cavanagh 

Elizabeth A. Weaver 

Marilyn Kelly 

Clifford W. Taylor Opinion Robert P. Young, Jr. 

Stephen J. Markman 

FILED SEPTEMBER 12, 2001
 

EDWARD BAUROTH and BARBARA
 

BAUROTH,
 

Plaintiffs-Appellees,
 

v	 No. 119370
 

JAMAL HAMMOUD and ENDOCRINE 


CONSULTANTS OF MID-MICHIGAN,


P.C., a Michigan Professional


Corporation, Individually


and Jointly and Severally,
 

Defendants-Appellants.
 

PER CURIAM
 

The circuit court ordered that the plaintiffs could
 

discover the defendants’ financial assets in the course of
 

this civil action. We reverse because such discovery is
 

outside the scope allowed by MCR 2.302.
 

I
 

Plaintiff Barbara Bauroth was being treated by defendant
 

Jamal Hammoud, M.D., for hyperthyroidism. He prescribed the
 
drug Tapazole, which, she alleges, caused her harm. She sued,
 

claiming that his actions and inactions constituted
 

professional malpractice.1
 

The case-evaluation process described in MCR 2.403
 

produced an evaluation of $250,000.2 This amount exceeded the
 

defendant's insurance coverage, which was $200,000/$600,000.3
 

The plaintiffs filed in circuit court a motion asking for
 

an order requiring the defendants to disclose their assets.4
 

They explained:
 

That before Plaintiffs can make a valid and
 

knowing acceptance or rejection of Mediation,[5]
 

which might result in the settlement of this
 

litigation, they must have the opportunity to


review the net worth and/or assets and liabilities


of Defendants in order to make a business judgment


as to what monies may be available over and above


any insurance coverage.
 

1 Ms. Bauroth's husband, Edward Bauroth, is also a


plaintiff; he presents derivative claims. A second defendant
 

is Endocrine Consultants of Mid-Michigan, P.C., in which Dr.


Hammoud practiced medicine.
 

2 The facts pertaining to the case evaluation and to the


defendants' insurance coverage are taken from the apparently


undisputed statements of counsel in the circuit court and in


this Court.
 

3 The defendants explained in circuit court that their


"insurance policy limits are $200,000 per incident/$600,000


aggregate."
 

4 At the hearing on the motion, the plaintiffs also asked


for an extension of the time limit, MCR 2.403(L)(1), for


deciding whether to accept or reject the evaluation.
 

5 In 2000, the name of the process described in MCR 2.403


was changed from "mediation" to "case evaluation." The term
 

"mediation" now applies to the process described in MCR 2.411.
 

2
 
In support of their motion, the plaintiffs relied upon McLaren
 

v Zeilinger, 103 Mich App 22; 302 NW2d 583 (1981).
 

Responding to the motion, the defendants stated that they
 

would neither accept the case evaluation, nor agree to pay any
 

money toward a settlement. "Unless plaintiffs agree to
 

dismiss this action without the payment of money, this matter
 

will proceed to trial." The defendants asserted that their
 

financial status was therefore irrelevant.
 

The circuit court granted the motion to compel
 

disclosure.6 On the representation by plaintiffs' counsel
 

6 The circuit court's order provided that the defendants


to disclose the following "forthwith”:
 

1. A detailed, sworn, net-worth statement


setting forth all of the assets and liabilities of


both Defendants. And
 

2. The last five (5) years, Federal, State


and Local Income Tax returns for both of the
 

Defendants. And
 

3. Any and all financial statements prepared


prior to the date hereof during the last two (2)


years for any reason whatsoever of both Defendants.


And
 

4. Such other and further information as will
 

assist Plaintiffs in determining the true net worth


and/or collect-ability of both of the Defendants.


And
 

5. Both Defendants shall submit to a
 

creditor's exam regarding the disclosure of the


assets herein mentioned.
 

The order provided that the plaintiffs were to hold these


materials in confidence, and use them for no purpose other


than determining whether to accept the evaluation. The order
 

further provided that the time for accepting or rejecting the
 

3
 
that he would delay the creditors' examination for thirty
 

days, the circuit court denied the defendants' request for a
 

stay.
 

The defendants applied to the Court of Appeals, which
 

denied leave to appeal.7 The Court also denied a stay.
 

When the defendants applied to this Court for leave to
 

appeal, we issued a stay of the circuit court's order.8 Today
 

we reverse that order.
 

II
 

The interpretation and application of a court rule
 

presents a question of law that is reviewed de novo. McAuley
 

v General Motors Corp, 457 Mich 513, 518; 578 NW2d 282 (1998).
 

III
 

The general scope of permissible discovery is stated in
 

MCR 2.302(B)(1):
 

Parties may obtain discovery regarding any


matter, not privileged, which is relevant to the


subject matter involved in the pending action,


whether it relates to the claim or defense of the
 

party seeking discovery or to the claim or defense


of another party, including the existence,


description, nature, custody, condition, and
 

location of books, documents, or other tangible


things and the identity and location of persons


having knowledge of a discoverable matter. It is
 

evaluation was extended sixty days after the date of the
 

order.
 

7
 Unpublished order entered May 30, 2001 (Docket No.


233885).
 

8
 Unpublished order entered June 7, 2001 (Docket No.


119370).
 

4
 
not ground for objection that the information


sought will be inadmissible at trial if the
 

information sought appears reasonably calculated to


lead to the discovery of admissible evidence.
 

As indicated, the motion granted by the circuit court was
 

premised on McLaren. In that case, which arose from a motor
 

vehicle accident, the plaintiff sought to discover financial
 

information about the defendant. The circuit court denied the
 

defendant’s objections to interrogatories, and the Court of
 

Appeals affirmed. In the concluding paragraphs of its
 

opinion, the Court explained that it was applying a “good
 

cause” test:
 

We believe that the test now utilized by the


Supreme Court is whether plaintiff has "good cause"


to have discovery of the extent and value of


defendant's assets, and that the trial judge is


vested with discretion to make that determination
 

on a case by case basis. To hold otherwise would
 

lead to incongruous results that we do not believe


the Supreme Court intended.
 

E.g., in this case, if, rather than submitting


interrogatories to defendant, plaintiff had chosen


to proceed under GCR 1963, 310, to require


defendant to produce copies of his income tax
 

returns, it would appear that if plaintiff


satisfied the trial court there was good cause,


defendant could have been required to produce such


income tax returns, even though they were not


admissible in evidence at trial nor relevant to the
 

subject matter at trial.
 

We believe the Supreme Court intended the same


test, namely, "good cause" to apply to the scope of


interrogatories as to the scope of production of


documents.
 

The question then is whether there is good


cause to require defendant to answer these
 

interrogatories. As indicated, we hold this
 

decision was for the discretion of the trial judge,
 

5
 
 

and we find that, under the circumstances of this


case, "good cause" encompasses the interrogatories


regarding defendant's assets that are in dispute.
 

The circumstances to which we refer are that
 

the recommendation of a mediation panel has placed


a substantial value on plaintiff's damages, that


there is a real possibility of a jury award


exceeding the policy limits, and that discovery of


defendant’s assets could be a factor inducing


settlement. We do not hold that, as a general
 

rule, a plaintiff in an automobile accident case
 

will be entitled to discovery of defendant's
 

assets.
 

On the contrary, we would expect that it will
 

only be in the exceptional case that a plaintiff
 

may have sufficient "good cause" to permit such
 

discovery.
 

Where sufficient good cause is present, a


defendant's alleged right of privacy must give way.


Consequently, we hold that the trial court's denial


of defendant's motion was not clearly erroneous.


[103 Mich App 31-32.]
 

As the Court of Appeals made clear in McLaren, that
 

decision is based on the General Court Rules of 1963. The
 

change effected by the Michigan Court Rules of 1985 is well
 

explained in Dean & Longhofer, Michigan Court Rules Practice,
 

§ 2302.2, p 198:
 

With the adoption of MCR 2.302, which contains


general provisions governing discovery as a whole,


subtle changes were made in discovery practice that


are not readily apparent from a reading of the


individual rules. GCR 1963, 310 previously


governed the production and discovery of documents


and things. As the rule permitted such discovery
 

only on motion and order of the court, and
 

additionally adopted the restrictions of GCR 1963,


306.2, several Michigan cases concluded that a


party must show “good cause” to obtain such
 

discovery.
 

6
 
One of the principal reasons that the Michigan


courts reached the conclusion that good cause must
 

be shown to conduct discovery was that the Michigan
 

rules did not contain a comprehensive rule, similar
 

to Federal Rule of Civil Procedure 26, setting
 

forth standards and exceptions for the scope of
 

discovery. Rather, the Michigan scope of discovery


provisions were contained in GCR 1963, 302.2, and


several restrictions thereto were contained in
 

GCR 1963, 306.2. This was true despite the fact
 

that GCR 1963, 306.2 purported to govern only


protective orders associated with the taking of


depositions on oral examination. It is not hard to
 

understand how the courts, considering standards


for issuance of protective orders, could reach the


conclusion that a party had to show good cause to


acquire the discovery requested.
 

The adoption of MCR 2.302, and the elimination


of the requirement for a motion and order prior to


conducting discovery proceedings under MCR 2.310,


have eliminated any requirement that a party show


good cause for the discovery of particular


information, documents, and the like. MCR 2.302(B)
 

now compiles all the Michigan rules restricting the
 

scope of discovery into one rule. [Emphasis


supplied.]
 

As this treatise well states, the clarified text of the
 

1985 rules rendered obsolete the “good cause” approach that
 

had been employed under the 1963 rules. With it, the
 

rationale of McLaren likewise became obsolete.
 

Again, MCR 2.302(B)(1) sets the bounds of discovery in
 

most civil actions. The rule allows discovery of matter that
 

is “relevant to the subject matter involved in the pending
 

action” or that “appears reasonably calculated to lead to the
 

discovery of admissible evidence.” Under the circumstances of
 

this case, the financial information sought by the plaintiffs
 

satisfies neither branch of MCR 2.302(B)(1).
 

7
 
For these reasons, we reverse the order of the circuit
 

court requiring disclosure. We remand this case to the
 

circuit court for further proceedings. MCR 7.302(F)(1).
 

CORRIGAN, C.J., and CAVANAGH, WEAVER, KELLY, TAYLOR, YOUNG, and
 

MARKMAN, JJ., concurred.
 

8