Court Opinion

ID: 9908200
Source: CourtListenerOpinion
Date Created: 2023-12-08 05:05:39.186303+00
Date Added: 2024-06-11T12:48:59.362787
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                  revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

KIM T. CAPELLO and JODI A. CAPELLO,                                   UNPUBLISHED
                                                                      December 7, 2023
               Plaintiffs-Appellants,

v                                                                     No. 364006
                                                                      Oakland Circuit Court
KEVIN WALTON and MELISSA WALTON,                                      LC No. 2021-190542-CH

               Defendants-Appellees.

Before: BOONSTRA, P.J., and GADOLA and MALDONADO, JJ.

PER CURIAM.

        In this breach of contract action arising from the failed sale of plaintiffs’ house, the trial
court granted summary disposition in favor of defendants pursuant to MCR 2.116(C)(7) (release),
(8) (failure to state a claim), and (10) (no genuine issue of material fact). 1 Plaintiffs appeal by
right the trial court’s order granting sanctions pursuant to MCR 2.405(D), also known as the offer
of judgment rule. Because the trial court failed to address plaintiffs’ argument that the interest-of-
justice exception to the offer of judgment rule should bar recovery of attorney fees, we must vacate
the court’s order and remand for additional proceedings.

                                        I. BACKGROUND

        Kevin Walton, with his wife Melissa Walton acting as his agent, entered into a contract to
purchase plaintiffs’ house for $680,000. However, after the purchase agreement was executed but
before the sale closed, Kevin Walton’s brother was struck by a drunk driver and killed. Because
Kevin Walton’s brother was predeceased by his wife, defendants were suddenly entrusted with the
care of their two minor nieces, one of whom had serious medical problems and also passed away
during the pendency of this litigation. As a result of this sudden upheaval, defendants decided that

1
 In a separate appeal, plaintiffs’ delayed application for leave to appeal the order granting
summary disposition was denied. Capello v Walton, unpublished order or the Court of Appeals,
entered June 28, 2023 (Docket No. 364509).

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it was not the right time in their lives to purchase this house. Two days after Kevin Walton
announced his intent to breach and prior to relisting the house for sale, plaintiffs sued for breach
of contract and fraud. The house subsequently sold for $703,000, and Kevin and Melissa Walton
tendered separate offers of judgment for $821.71 and $1, respectively. This offer was declined,
and the court ultimately granted summary disposition in favor of defendants. With respect to
Melissa, the court concluded that the purchase agreement released her, as the buyer’s agent, from
any liability arising from failure to close the sale. With respect to both defendants, the court
concluded the plaintiffs failed to establish damages. Defendants moved for offer-of-judgment
sanctions, and the court ordered defendants to pay $28,281.25 in attorney fees as well as $61.80
in costs.

                                         II. DISCUSSION

                                  A. STANDARDS OF REVIEW

        “In general, the interpretation and application of the offer-of-judgment rule is reviewed de
novo.” AFP Specialties, Inc v Vereyken, 303 Mich App 497, 516; 844 NW2d 470 (2014).
However, the trial court’s decision regarding whether to apply the interest-of-justice exception as
a basis for refusing an award of attorney fees is reviewed for abuse of discretion. Id. “An abuse
of discretion occurs when the trial court’s decision is outside the range of reasonable and principled
outcomes.” Id. at 517 (quotation marks and citation omitted). Any factual findings “underlying
an award of attorney fees are reviewed for clear error. A finding of the trial court is clearly
erroneous when, although there is evidence to support it, this Court is left with a definite and firm
conviction that a mistake was made.” Id. at 516.

                            B. INTEREST-OF-JUSTICE EXCEPTION

        Plaintiffs argue that the trial court erred by failing to address their argument that the
interest-of-justice exception barred recovery of attorney fees. We agree.

        Pursuant to MCR 2.405(B), a party may “offer to stipulate to the entry of a judgment for
the whole or part of the claim, including interest and costs then accrued.” The offering party may
recover “actual costs incurred in the prosecution or defense of the action” if the offer is rejected
and the offering party obtains a verdict more favorable than the offer. MCR 2.405(D)(1). MCR
2.405(D)(3)(i) confers limited discretion upon the court to deny attorney fees “in the interest of
justice” in “cases involving offers that are token or de minimis in the context of the case . . . .” In
its order granting offer-of-judgment sanctions, the trial court failed to acknowledge the existence
of this exception despite it having been raised by plaintiffs.

        In Simcor Constr, Inc v Trupp, 322 Mich App 508, 512; 912 NW2d 216 (2018), the plaintiff
rejected an offer of judgment then saw their case wholly dismissed by an arbitrator. The
defendant’s motion for offer-of-judgment sanctions was denied, however, because the district
court mistakenly believed that an arbitrator’s decision is not a “verdict” for the purposes of MCR
2.405. Id. at 513-514. This Court concluded that, despite the district court’s error, it could not
impose offer-of-judgment sanctions because the district court never addressed that issue:

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               The district court’s order does not address this exception. A court speaks
       through its written orders and judgments, not through its oral pronouncements.
       Because the district court did not reach the issue of whether the ‘interest of justice’
       exception applies in its order, we cannot determine whether the exception in MCR
       2.405(D)(3) applies to the facts of this case. For that reason, we must remand the
       case to the district court for a determination of the applicability of the exception
       and to articulate the basis for its decision. [Id. at 522 (quotation marks, citations,
       and alterations omitted).]

The application of Simcor to this case is straightforward. The trial “court’s order does not address
this exception,” so this Court “must remand the case to the [circuit] court for a determination of
the applicability of the exception and to articulate the basis for its decision.” Id.

         Moreover, the court’s order in no way acknowledged the existence of this exception, and
the trial court made comments at the two hearings suggesting that it lacked awareness of the fact
that an award was in any way discretionary. For example, at the motion hearing, the court asked
plaintiffs if they had “any basis upon which I would even be allowed to disregard the offer of
judgment.” This comment was made after defendants’ attorney said, “There is no discretion that’s
offered with that when an offer is submitted to the other side and rejected and the offeree is more
successful, our case having been dismissed in its entirety. The rule requires that the other side
must pay.” These comments, combined with the absence of any mention of the court’s discretion,
suggest that the court may not have been aware that it had any discretion to exercise. “It is by now
well-settled that a trial judge commits reversible error if he or she does not recognize that he or
she has discretion and therefore fails or refuses to exercise it.” People v Merritt, 396 Mich 67, 80;
238 NW2d 31 (1976).

                                   C. OTHER ARGUMENTS

       The other arguments plaintiffs raised on appeal are either without merit or not ripe for
appellate review.

       Plaintiffs argue that Kevin and Melissa Walton’s respective offers of judgment should have
been analyzed separately when the court determined if they were de minimis offers and not genuine
attempts to settle. However, as discussed above, the trial court has yet to actually address this
argument. Therefore, the issue is not ripe for appellate review. It is well settled that this Court
will not consider hypothetical issues on appeal, reach the merits of issues that are not ripe for
review, or issue advisory opinions. See People v Hart, 129 Mich App 669, 674; 341 NW2d 864
(1983); Rozankovich v Kalamazoo Spring Corp (On Rehearing), 44 Mich App 426, 428; 205
NW2d 311 (1973).

         Finally, plaintiffs make a cursory and underdeveloped argument that “[t]he Court should
have made a separate finding as to costs and attorney fees incurred by each Defendant.” Plaintiffs
fail to cite any authority in support of this argument and fail to offer any explanation for how this
alleged error harmed them. “An appellant may not merely announce his position and leave it to
this Court to discover and rationalize the basis for his claims, nor may he give issues cursory
treatment with little or no citation of supporting authority.” In re Warshefski, 331 Mich App 83,
87; 951 NW2d 90 (2020) (quotation marks and citation omitted). Therefore, review of this issue

                                                -3-
is waived. Regardless, Kevin and Melissa Walton were codefendants whose potential liability
stemmed from the same transaction and the same facts. Aside from Melissa Walton’s simple
release argument, they both raised the same defense: lack of damages. Presumably, most—if not
all—of the work performed by the attorneys in this matter was performed on behalf of both
defendants.
                                      III. CONCLUSION

         We vacate the trial court’s order granting attorney fees. This case is remanded for the
limited purpose of considering plaintiffs’ argument that defendants did not make a genuine effort
to settle the case. The reasonableness and amount of fees were not among the issues raised on
appeal; therefore, with the exception of any additional attorney fees incurred during this appeal,
the issue shall not be revisited on remand. To facilitate expeditious review of the proceedings on
remand, we retain jurisdiction.

                                                            /s/ Michael F. Gadola
                                                            /s/ Allie Greenleaf Maldonado

                                               -4-
                              Court of Appeals, State of Michigan

                                                ORDER
                                                                               Mark T. Boonstra
 KIM T CAPELLO v KEVIN WALTON                                                    Presiding Judge

 Docket No.     364006                                                         Michael F. Gadola

 LC No.         2021-190542-CH                                                 Allie Greenleaf Maldonado
                                                                                 Judges

               Pursuant to the opinion issued concurrently with this order, this case is REMANDED for
further proceedings consistent with the opinion of this Court. We retain jurisdiction.

                Proceedings on remand in this matter shall commence within 28 days of the Clerk’s
certification of this order, and they shall be given priority on remand until they are concluded. The
proceedings on remand are limited to the issues specifically addressed in the opinion issued concurrently
with this order.

               The parties shall promptly file with this Court a copy of all papers filed on remand. Within
seven days after entry, appellant shall file with this Court copies of all orders entered on remand.

               The transcript of all proceedings on remand shall be prepared and filed within 21 days after
completion of the proceedings.

                                                           _______________________________
                                                            Presiding Judge

                                 December 7, 2023