Court Opinion

ID: 9712850
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:01:36.745509+00
Date Added: 2024-06-11T18:23:14.861663
License: Public Domain

Bronson, P.J.
Plaintiff brought this action against defendant, its architect, alleging professional malpractice. Defendant filed a counterclaim against plaintiff, alleging that he had not been paid in full for services rendered. The matter was submitted to mediation pursuant to GCR 1963, 316. The mediation panel was not asked to evaluate separately the worth of the complaint and counterclaim, and it did not render separate assessments. Instead, it returned a single evaluation in favor of plaintiffs in the amount of $25,000. Defendant accepted this evaluation, but plaintiff rejected it.
After trial, the jury returned a verdict of only $4,700 in favor of plaintiff. The verdict was ”no *375cause of action” on the counterclaim. Because plaintiff failed to obtain judgment in an amount exceeding $27,500, the trial court ruled that, pursuant to GCR 1963, 316.7(b)(1), defendant was entitled to "actual costs”. The term "actual costs” is defined in GCR 1963, 316.8 to include "a reasonable attorney fee as determined by the trial judge for services necessitated by the rejection of the panel’s evaluation”. Applying this rule, the court ordered plaintiff to pay Dennis Cotter, the attorney defending against the complaint, $10,108.11 in attorney fees and costs. This amount included $1,250 for "expert witness fees” to be paid to defendant himself for testifying on his own behalf. The trial court went on to order plaintiff to pay the attorney prosecuting the counterclaim, Samual Gun, $4,218.75 in attorney fees and costs. Plaintiff now appeals as of right from the court’s order imposing these costs. We reverse and remand.
We acknowledge the Supreme Court’s authority to promulgate rules regulating practice and procedure (as opposed to substantive rules) in the courts, Const 1963, art 6, § 5; Perin v Peuler (On Rehearing), 373 Mich 531, 541-542; 130 NW2d 4 (1964). We also agree with defendant that the provision for the award of costs, GCR 1963, 316.8, supra, may reasonably be classified as "procedural” in nature, despite this Court’s observation that the line demarcating substantive and procedural rules is not susceptible of easy resolution, Cleveland-Cliffs Iron Co v First State Ins Co, 105 Mich App 487, 492; 307 NW2d 78 (1981). Accordingly, we decline to hold that the rule is unenforceable as an invalid promulgation of substantive law.
Nonetheless, we believe that the trial court erred in the way in which it applied the rule in *376this case. The court found that the entire amount awarded as fees and costs had been "necessitated by [plaintiffs] rejection of the [mediation] panel’s evaluation”, GCR 1963, 316.8. The assumption underlying this finding is that all of the time spent by each of the attorneys in trying the case (in addition to time spent preparing for trial) must be treated as having been "necessitated” by plaintiffs decision as to the mediation. In this way, the trial court has used the term "necessitated” as if it meant "caused”. Under the trial court’s reasoning, since plaintiffs refusal to accept the mediation award was the "but-for” cause of the need for trial, plaintiffs action thereby "necessitated” all costs incurred by defendant’s attorneys in trying the case. Given the language and purpose of GCR 1963, 316.7, we would interpret the term "necessitated” differently.
Neither case law nor the Committee Notes to GCR 1963, 316.7 and 316.8 provide this Court with any guidance in interpreting the meaning of terms contained in those rules. Still, the policy underlying the rule can guide this Court in its construction. That policy is apparent: to place the burden of litigation costs upon the party who insists upon a trial by rejecting a proposed mediation award.
We agree with any policy which effectively encourages the settlement of pending litigation. However, any such policy must be circumscribed by equitable considerations. A party should not be responsible for costs which accrue through no fault of his own. For example, if a party rejects a proposed mediation award and his opponent goes on to try the case in a manner which is grossly inefficient, or otherwise unduly wasteful of legal resources, it would not be fair to hold the party rejecting the mediation award responsible to the *377extent that the expenses in question exceed an amount which is reasonable. GCR 1963, 316.8 recognizes this equitable consideration by authorizing only an award of “a reasonable attorney fee”.
We believe that the term "reasonable” as used in this subrule should be construed to exclude certain costs which are incurred by the opposing side’s attorney through no fault of the party rejecting the proposed mediation award. Plaintiff aptly points out that the mediation award and procedure tends to chill access to the courts by imposing the burden of uncertainty upon a party who is dissatisfied with a proposed award and who chooses to exercise his constitutional right to a trial. To some extent, this chilling effect is a necessary by-product of any policy which encourages settlement of pending litigation. However, the adverse effect of this policy upon a party’s right to trial becomes oppressive when that party is faced with the potential of unlimited liability for any costs which are "but-for” caused by the decision to proceed to trial.
Taken to its logical extreme, defendant’s argument would hold plaintiff liable for all costs incurred in the trial of a case, even if those costs were the direct result of thousands of hours of unjustifiable delays ordered by a trial judge over both parties’ objections. A trial which could foreseeably have been completed in several days, for example, could run several months through no fault of either party. Applying defendant’s reasoning to this hypothetical, plaintiff could be liable for many times the reasonably foreseeable cost of trial. We believe that any construction of the court rule which could lead to such absurd hypothetical results must be rejected.
In order to avoid the potential for imposing such *378liability upon litigants, we construe the term "reasonable” to mean "reasonably foreseeable”. In other words, a party who rejects a proposed mediation award should be responsible only for trial costs which a person would find reasonably foreseeable under the circumstances facing him at the time he decides to reject the award. This construction preserves the mediation procedure’s effect of encouraging settlement, without adding the chilling element of uncertainty to a potential litigant’s decision to exercise his right to trial.
In the present case, the trial court simply imposed the full amount claimed by defendant’s attorneys as costs incurred in the trial of the case. The court did not distinguish between amounts of time spent in preparing for trial and time spent at the courthouse during the actual trial. All of the former is reasonably foreseeable; any litigant can expect that his opponent will need a certain amount of time to prepare for trial. However, plaintiff alleges that in the present case the parties were forced to spend an unusually large amount of time enduring delays in trial including numerous delays at the courthouse which neither party could reasonably have anticipated. We do not believe that the burden of these alleged delays should fall solely upon plaintiff.
Under the circumstances of this case, the trial court should have determined the amount of time which the trial of this matter would normally take, and should have computed attorney fees accordingly. If, as defendant asserts, the number of delays in the trial of this case was relatively normal, then the court’s award of costs could be upheld, subject to the additional adjustments ordered infra. If, on the other hand, plaintiff is correct in alleging that this trial involved an *379unforeseeable amount of delay, the court would be required to reduce its award of costs accordingly.
The matter is remanded for a factual determination of whether the trial of this cause involved more time than the parties could reasonably have anticipated when plaintiff decided to reject the mediation settlement. The court must then adjust its award of costs to the extent that there was any unforeseeable delay during trial. The court shall issue a written statement of its findings as to this issue.
There are additional adjustments which the trial court must make upon remand. First, the court must rescind its order requiring plaintiff to pay attorney Samuel Gun $4,218.75 in costs in connection with the pursuit of the counterclaim. We note that defendant did not prevail on the counterclaim —the verdict was "no cause of action”. Prevailing on the claim in question is an absolute prerequisite to any award of costs under GCR 1963, 316.7(b)(1).
Defendant makes much of the fact that the proposed mediation settlement did not separately evaluate the merits of the counterclaim. According to defendant, since plaintiff rejected the settlement "in gross”, it necessarily rejected the evaluation as to the counterclaim as well as the evaluation with respect to the original complaint. We disagree. There can be no question that any rational plaintiff would have accepted an evaluation indicating "no cause of action” on the counterclaim. The mere fact that plaintiff did not take the precaution of asking for separate evaluations does not require us to asume (1) that the evaluation was in fact the result of a setoff, or (2) that plaintiff intended to reject that aspect of the evaluation which related to the counterclaim. Certainly nothing in the rec*380ord supports either assumption. Under the circumstances, equity requires us to presume that plaintiff would have accepted any "no cause of action” on the counterclaim. Given this, we conclude that GCR 1963, 316.7(b)(1) applies, and that defendant’s failure to prevail on the counterclaim bars its recovery of costs.
Finally, plaintiff notes that the court awarded $1,250 as an "expert witness fee” for defendant’s own testimony. Nothing in the record indicates that defendant had to prepare himself as an "expert” or that his testimony appreciably lengthened his in-court testimony. Defendant acknowledges that the bulk of his trial testimony involved merely setting forth the factual background of the case. Defendant would have been called upon at trial to give this factual testimony regardless of whether he also gave testimony as an "expert”. Absent some showing that defendant underwent special preparation to testify as an expert, we believe that the trial court erred by including any amount as an "expert witness” fee for defendant.
Reversed and remanded for proceedings consistent with this opinion.
T. M. Burns, J., concurred.