Opinion ID: 458191
Heading Depth: 1
Heading Rank: 2

Heading: Algoma's Challenge to Court's Dismissal of Wire and Supply

Text: 20 Wire and Supply, never joined as a defendant party by Burpo, gave $5,000 for plaintiffs' release of possible claims against it. 5 It is undisputed that an effective release from tort liability by Burpo insulates Wire and Supply from a subsequent contribution claim by Algoma. See M.C.L. Sec. 600.2925(d); M.S.A. Sec. 27A.2925 ('good faith' release 'discharges the tort-feasor . . . for contribution to any other tort-feasor.') Algoma, however, argues that the release is ineffective because of a failure of consideration flowing from the Burpos. In this regard, Algoma relies upon a three-year Michigan statute of limitations, M. C. L. Mich. Sec. 600.5805(7); M.S.A. Sec. 27A 5805(7), covering tort actions. 21 Wire and Supply admits that the statutory period had expired at the time of its settlement and release. It asserts, nevertheless, that the agreement was based upon sufficient consideration flowing from plaintiffs. Wire and Supply acknowledges that the agreement was negotiated primarily to insulate it from a claim by Algoma of possible contribution liability. Algoma was free to pursue such a claim because a joint-tortfeasor contribution action represents a separate equitable action independent from the underlying tort suit. Sziber v. Stout, 419 Mich. 514, 358 N.W.2d 330, 335 (1984). Thus the statute of limitations on Algoma's contribution action did not expire until one year after an unfavorable final judgment against it had been rendered. Sziber, supra, 358 N.W.2d at 338; M.C.L. Sec. 600.2925(c)(3); M.S.A. Sec. 27A.2925(3)(3). 22 The trial court agreed with Wire and Supply that the Burpo release represented sufficient legal consideration. The court held that the statute of limitations did not operate in a per se fashion to prevent a suit by the Burpos against Wire and Supply. 6 The statute of limitations is instead an affirmative defense that must be specifically pled by a defendant and can be avoided by a plaintiff under certain circumstances. 7 23 Very little modern Michigan case law directly addresses the question whether the release of an apparently expired claim can represent sufficient consideration. In Taylor v. Weeks, 129 Mich. 233, 88 N.W. 466 (1901), however, the Michigan Supreme Court took a contrary view from the trial court here and held that a promise not to bring claim 'barred by the statute of limitations' represents a promise 'without sufficient consideration.' 129 Mich. at 233, 88 N.W. at 466 (citing from case headnote in both volumes). Weeks has apparently not been cited in Michigan case law for almost the lasthalf-century. 8 Yet it has also never been overruled by the Michigan Supreme Court. 24 Weeks could possibly be distinguished from the instant case, because of 'circumstances [showing] . . . prima facie that there was no valid claim in the first instance.' 88 N.W. at 467. 9 Weeks involved a suit against a deceased widow's estate by a former apprentice worker of her previously deceased husband. The worker had agreed not to press a supposed claim (for services performed) against the husband's estate in exchange for the wife's belatedly written promise to pay him out of her own estate. Thus Weeks presented a case of a party possessing only a false claim against an apparently unsophisticated and newly deceased widow. The trustee of the widow's estate acting as party to the alleged contract, moreover, moved to void the contract. In the instant case, Algoma, as a third party, attacks the sufficiency of consideration, particularly as it relates to its substantial claim for contribution. 25 We are nevertheless reluctant to ignore established Michigan case law precedent on this question. 10 More important, a rejection of the Weeks rationale would not result in an affirmance. Even if it were assumed that the agreement between the Burpos and Wire and Supply is legally sufficient to bar any subsequent action by the Burpos against Wire and Supply, it does not follow that this agreement between the plaintiffs and Wire and Supply bars Algoma as a thirdnon-contractual party from making an equitable claim of contribution against Wire and Supply. We conclude that it is unfair and unreasonable to hold that an agreement for such questionable consideration paid by Wire and Supply necessarily bars the claim of Algoma for equitable relief from another potential joint tortfeasor. 26 We recognize, on the other hand, that Wire and Supply should not be completely precluded from protecting a potentially exposed legal interest by negotiating a settlement. The Final Pretrial Order entered by the trial court noted that defendant Algoma 'has repeatedly stated that it will offer only a nuisance value in settlement of said claim, and such offer is totally unacceptable to Plaintiff.' Algoma's apparent reluctance to settle obviously kept Wire and Supply open to liability due to the potentiality of an equitable contribution action by Algoma in the event of its loss of trial (which, of course, did occur). If the trial court had relied on this evidence to rule that Algoma's anti-negotiation stance was unreasonable and constituted a waiver of any objections to Wire and Supply's settlement, we would be faced with a different question. We now REMAND for reconsideration to the district court the sufficiency of consideration of the purported release and its effect on Algoma in light of the equities found to be present at the time. 27