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### STATE OF MICHIGAN

COURT OF APPEALS

MICHIGAN COMMERCE BANK, f/k/a PORTAGE COMMERCE BANK,

Plaintiff/Counter DefendantAppellee, UNPUBLISHED May 3, 2016

v No. 325299 Kalamazoo Circuit Court T. A. SCOTT CONSTRUCTION, INC., THOMAS SCOTT, DEANNE SCOTT, and PARKWEST DEVELOPMENT OF SCHOOLCRAFT, L.L.C., LC No. 2013-000266-CK

Defendants/Counter PlaintiffsAppellants.

Before: S AAD , P.J., and B ORRELLO and G ADOLA , JJ.

P ER C URIAM

. Defendants/counter-plaintiffs ( defendants) appeal by leave gra nted a December 8, 2014, trial court order denying defendants’ motion for release of dee ds, entry of judgment, and dismissal with prejudice. For t he reasons set forth in this op inion, we affirm.

I. BACKGROUND

Plaintiff filed a complaint against defendants in June 2013, w hich it later amended in January 2014, alleging nine counts related to defendants’ breac h of contract for failing to pay promissory notes owed to the bank and failure to pay commercial guarantees for those notes. Plaintiff’s counts included equita ble claims to foreclose on va rious mortgages to satisfy the debts, a claim to foreclose on a security interest in the perso nal assets of defendant TA Scott, and a claim regarding an equitable mo rtgage plaintiff alleged it he ld by virtue of po ssessing the deeds to 43 properties owned by defendants.

Defendants filed a counterclaim alleging various counts based on an underlying claim that plaintiff promised to keep a line of credit open for defen dants after receiving additional guarantees and collateral, but then closed that line of credit after acquiring the additional security. Defendants also alleged that plaintiff possessed no interest in the property for which it held deeds and demanded return of those deeds.-2- On June 13, 2014, the parties participated in case evaluation. In a split decision, the case evaluation panel awarded plaintiff $1 million on its legal clai ms and awarded defendant zero on its counterclaims. On July 14, 2014, the parties accepted the case evaluation award.

Although defendants had not yet satisfied the $1 million award , on October 23, 2014, defendants moved for release of deeds, entry of judgment, and d ismissal with prejudice. Defendants argued the case was submitted to case evaluation, no party objected to case evaluation or moved to exclude a ny issue from case evaluation, and all parties accepted the case evaluation award of $1 million for plaintiff. Hence, plaintiff was entitled to nothing more than a judgment of $1 million against def endants and were required to return the cont ested deeds.

In their supporting brief, however, defendants acknowledged th at the case evaluators represented that they could only make a ruling as to monetary a mounts and could not address the claims of foreclosure, claim and delivery, appoin tment of recei ver, or determination of plaintiff’s interest in the contested deed s. Defendants’ admission mirrore d plaintiff’s assertion that the panel indicated at the outset that it would not address or reso lve plaintiff’s equitable claims. Nevertheless, defendants argued t hat, because the parties accep ted the case evaluation award, the trial court was required to enter judgment against defendants f or $1 million, dismiss all of plaintiff’s claims, and order plai ntiff to retur n the contested deeds.

On November 12, 2014, plainti ff responded, arguing that “the c ase evaluators clearly stated at the outset of the eva luation that they could not and were not deciding on anything beyond the monetary counts” and “the case evaluators focused so lely on the claims of monetary damages, that being Counts I, II, and IV of the Plaintiff’s com plaint and the Defendants’ counterclaim.” Plaintiff furthe r noted that the counts related to foreclosure and possession of the contested deeds were not discu ssed during the case evaluation, and that counsel for plaintiff understood the case evaluators to have removed the issues from the evaluation. Plaintiff agreed that if defendants paid the case evaluation award it would have no right to retain any of the collateral on the outstanding debt. According to plaintiff, de fendants’ maintained that even an unsatisfied case evaluation award would require plaintiff to re lease its collateral, which was not suggested by the case evaluators.

On November 17, 2014, the trial cour t denied defendants’ motio n, stating

I think everyone agrees that the case evaluators made it clear that they were not addressing the equitable clai ms. Both of you referenced that i n your briefs.

It’s a tricky situation and a tricky fact pattern. I understan d that. But—And I— Well, so, I’m going to deny the request for the judgment dis—di smissing all of their claims in their entirety. To the Court it seems clear th at the equitable claims would still proceed.

I understand there’s an issue now , because the judgment hasn’t been paid, but the motion for release of the deeds and entry of the judgment dismi ssing everything with prejudice is denied.-3- On December 8, 2014, the trial court entered a written order d enying defendants’ motion and requiring defendants to satis fy the case evaluation award b y paying plaintiff $1 million within 14 days. The order provided that if defendants failed t o timely pay the case evaluation, judgment would enter against them for $1 million on Counts I, I I, and IV of plaintiff’s amended complaint, Counts I and II of the counterclaim would be dismiss ed, and the remaining equitable counts of the complaint and counterclaim would proceed to trial . Thereafter, this Court granted defendants’ application for leave to appeal the trial court ord er. 1

II. ANALYSIS

On appeal, defendants argue that the trial court erred in deny ing their motion, arguing that because plaintiff failed to formally reserve their equitab le claims from case evaluation, the trial court was required to enter judgment for plaintiff, dismi ss all plaintiff’s claims, and order plaintiff to return the cont ested deeds pursuant to MCR 2.403(M )(1).

Resolution of this appeal requires that we interpret and apply MCR 2.403. The “interpretation of a court rule, like a matter of statutory int erpretation, is a question of law that this Court reviews de novo.” CAM Constr v Lake Edgewood Condo Ass’n , 465 Mich 549, 553; 640 NW2d 256 (2002). We also revie w de novo a grant or denial of a motion to dismiss. Cork v Applebee's of Michigan, Inc , 239 Mich App 311, 315; 608 NW2d 62 (2000).

Under MCR 2.403(A)(1), “A court may submit to case evaluation any civil action in which the relief sought is primarily money damages or division of property.” The following three subsections of the court ru le are relevant to this appeal :
[A] (3) A court may exempt claims seeking equitable relief fro m case evaluation for good cause shown on m otion or by stipulation of the parties if the court finds that case evaluati on of such claims would be inappr opriate.

* * *

(K) Decision.

(1) Within 14 days after the hearing, the panel will make an e valuation and notify the attorney for each party of its evaluation in writing . If an award is not unanimous, the evaluation must so indicate.

(2) Except as provided in subrule (H)(3), the evaluation must include a separate award as to each plaint iff's claim against each defend ant and as to each cross-claim, counterclaim, or third-party claim that has been f iled in the action. For the purpose of this subrule, all such claims filed by any o ne party against any other party shall be treat ed as a single claim.

1 Mich Comm Bank v T A Scott Constr, Inc , unpublished order of the Court of Appeals, entered May 5, 2015 (Docket No. 325299).-4- (3) The evaluation may not include a separate award on any claim for equitable relief, but the panel may consid er such claims in determining the amount of an award.

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(M) Effect of Acceptance of Evaluation.

(1) 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 s hall be deemed to dispose of all claims in the action and includes all fees, cost s, and interest to the date it is entered[.]

(2) If only a part of an action has been submitted to case evaluation pursuant to subrule (A)(3) and al l of the parties accept the pa nel’s evaluation, the court shall enter an order di sposing of only those claims . [MCR 2.403 (emphasis added.]

In this case, it is undisputed that plaintiff did not formally move to exempt their equitable claims from case evaluation pursuant to MCR 2.403(A)(3). Howev er, defendants acknowledged in their lower court pleading that the case evaluators stated t hat they would not address or decide plaintiff’s equitable claims. It appears that the evaluators w ere aware that under MCR 2.403(K)(3) a case evaluation award “ may not include a separate award on any claim for equitable relief . . . .” (Emphasis added). Accordingly, once the case evaluat ors indicated that they did not intend to address and resolve plaintiff’s equitabl e claims, it was no longer necessary for plaintiff to move to exclude those claims from case evaluat ion under MCR 2.403(A)(3). Moreover, defendants did not raise any objection when the evalu ators indicated that they did not intend to address the equitabl e claims. It is disingenuous for defendants to now claim that the equitable claims were part of the case evaluation award when th e evaluators clearly informed defendants that those claims were not subject to the case evalu ation because to do so would allow defendants to harbor err or as an appellate parachute. Se e e.g. Dresselhouse v Chrysler Corp , 177 Mich App 470, 477; 442 NW2d 705 (1989) (“[a] party is not allowed to assign as error on appeal something which his or her own counsel deemed p roper at trial since to do so would permit the party to harbor error as an appellate parachut e.”)

Defendants argue that CAM Constr
, 465 Mich at 553-555 and Magdich & Assocs, PC
, v Novi Dev Assocs LLC , 305 Mich App 272; 851 NW2d 585 (2014) compel a different outc ome. However, neither CAM Constr nor Magdich are controlling in this case.

In CAM Constr , the plaintiff, a construction company, filed a four-count com plaint against a condominium association, with counts I, II, and III s temming from one contract between the parties, and count IV stemming from a different con tract between the parties. CAM Constr , 465 Mich at 550-551. The trial court granted summary disposi tion as to Count IV, and the case was then submitted to case evaluation, which resulted in an award recommending the defendant pay the plaintiff $5,400. Both parties accepted the award. Id . at 551-552. The-5- defendant sent the plaintiff the required check within 28 days and then moved the court to dismiss the entire case with prejudice under MCR 2.403(M)(1). Id . at 552, 557. The trial court dismissed counts I-III as havin g been resolved through case eva luation, but entered a judgment preserving the earlier dismi ssal of count IV for appeal. Id . at 553. The plaintiff appealed, and this Court dismissed the appeal, holding that “a party cannot a ppeal an earlier order entered after a subsequent acceptance of the [case evaluation] award.” Id

. Our Supreme Court affirmed the outcome, holding that the “lang uage of MCR 2.403(M)(1) could not be more clear that accepting a case evalu ation means that all claims in the action, even those summarily disposed, are dismissed.” Id . at 555. The Court noted that previous decisions by the Court of Appeals had construed MCR 2. 403(M)(1) to allow parties to make a showing that less than all issues were submitted to case evaluation, and expressly overruled those cases to the extent that they “ha[d] been read to suggest that parties may except claims from case evaluation under the current rule.” Id . at 557. The Court stated that “[a]llowing the parties involved in the case evaluation process to make such a showing has no basis in the court rule.” Id . at 556. The Court concluded th at “[i]f all parties accept th e panel’s evaluation, the case is over.” Id . at 557. The Court noted that the “unambiguous language” of MCR 2.403(M)(1) “evidences our des ire to avoid bifurcation of c ivil actions submitted to case evaluation.” Id

. Unlike in this case, CAM Constr did not involve equitable claims and thus MCR 2.403(K)(3) was not at issue in that case. Furthermore, the ca se evaluation panel in CAM Constr did not expressly exempt any claim from the evaluation. Here, when the panel stated at the outset that it would not address and resolve plaintiff’s equita ble claims, it was no longer necessary for plaintiff to move to exclude those claims from ca se evaluation under MCR 2.403(A)(3). Moreover, unlike in CAM Constr , here, the case evaluation award has not been satisfied; defendant has not paid the $1 million award, thus di smissal with prejudice was not proper under MCR 2.4036(M)(1).

Similarly, Magdich , 305 Mich App at 272, is not controlling in this case. In Magdich , the plaintiff, a tenant, sued the defendant, a landlord, concerning a lease agreement and right of first refusal. Id . at 274. The defendant filed a counterclaim, and later moved to amend its counterclaim to add claims that a llegedly did not exist at the time of the original complaint. Id

. Before the trial court ruled on the defendant’s counterclaim, h owever, the partie s participated in case evaluation, both parties accepted the case evaluation awar d, and the plaintiff paid the award to the defendant. Id . at 274-275. The plaintiff then m oved the trial court to dism iss the case with prejudice, but the trial court denied the motion, holding that the subject of the amendment to the counterclaim had not been incl uded in the case evaluation. Id . at 275.

On appeal, this Court held that under MCR 2.403(M) and in ligh t of CAM Constr , the trial court should have granted the motion to dismiss, because “both parties accepted the case evaluation award without qualifi cation, and therefore, the case is over.” Id . at 281. This Court noted that it is impermissible for a party to show that less th an all issues were submitted to case evaluation, that such a showi ng has no basis under MCR 2.403, a nd that under MCR 2.403(C)(1) the defendant could have filed a motion to remove the matter fr om case evaluation, but failed to do so. Id . at 280.-6- Unlike in Magdich , in this case, plaintiff’s equitable claims were included in t he original complaint and were expressly exempted from the case evaluation process. Essentially, Magdich involved claims that the defendant sought to bring into the lit igation after the evaluation process was complete. In contrast, in this case the case evaluation pa nel was aware of plaintiff’s equitable claims and clearly indicated that it would not addres s and resolve those claims. Thus, unlike in Magdich where this Court held that the defendant could have moved to r emove the issue from case evaluation, here, it was not necessary for plai ntiff to file such a motion because the panel indicated at the outset that it would not address the equitable claims. Finally, unlike in Magdich , here, defendants have not pai d the case evaluation award.

In short, because the equitable claims were clearly excluded f rom case evaluation at the outset, acceptance of the case evaluation award only resolved t he parties’ legal claims and the trial court was required to enter an order disposing only of th ose claims pursuant to MCR 2.403(M)(2). Accordingly, the tria l court did not err in denyi ng defendants’ motion for release of deeds, entry of judgment, a nd dismissal with prejudice. Cork , 239 Mich App at 315.

Affirmed. Plaintiff having prevai led in full, may tax costs. MCR 7.219(A).

/s/ Henry William Saad /s/ Stephen L. Borrello