Court Opinion

ID: 2798837
Source: CourtListenerOpinion
Date Created: 2015-05-06 12:13:23.392502+00
Date Added: 2024-06-11T12:12:24.247868
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

LEEBOLDT, INC., d/b/a CAPITAL CITY                                  UNPUBLISHED
WIRELESS AND MORE,                                                  May 5, 2015

               Plaintiff-Appellant,
V                                                                   No. 319933
                                                                    Ingham Circuit Court
STATE FARM FIRE AND CASUALTY                                        LC No. 11-000526-CK
COMPANY,

               Defendant-Appellee.

Before: O’CONNELL, P.J., and FORT HOOD and GADOLA, JJ.

PER CURIAM.

        Plaintiff, Leeboldt, Inc., appeals as of right the trial court’s order dismissing its case
against defendant, State Farm Fire and Casualty Company, for failing to post an additional
security bond of $22,500. The trial court’s decision to increase plaintiff’s bond from $2,500 to
$25,000 was an abuse of discretion because it rested on a misinterpretation of MCR 2.109(A).
We reverse and remand for further proceedings.

                                            I. FACTS

        Plaintiff is the holder of a business insurance policy issued by defendant. Plaintiff
submitted an insurance claim alleging a theft loss. Following an investigation, defendant denied
plaintiff’s insurance claim, contending that no theft occurred and that plaintiff submitted
fraudulent documents to substantiate its claim. Plaintiff commenced this lawsuit in response.
On June 13, 2012, the parties engaged in court-ordered case evaluation. Plaintiff claimed
$58,125 in lost inventory, damages for interruption of its business operations, and penalty
interest. A case evaluation panel recommended an award of $1,000 to plaintiff. Defendant
accepted the award, but plaintiff rejected it.

        Following plaintiff’s rejection, defendant requested that the court order plaintiff to post
$25,000 in security for costs under MCR 2.109(A). The trial court granted defendant’s motion
and initially ordered plaintiff to post $2,500. Plaintiff obtained a security bond and placed the
deposit with the court. Defendant then moved for reconsideration, asking the court to increase
the security to $25,000. On October 24, 2013, the court granted defendant’s request.

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        Plaintiff filed a motion for reconsideration, which the trial court denied. Defendant then
filed a motion to enforce the security order. The trial court granted defendant’s motion and
ordered plaintiff to post the additional security by December 27, 2013. When plaintiff failed to
do so, the trial court dismissed the case without prejudice.

                                          II. ANALYSIS

       Plaintiff contends that the trial court abused its discretion when it increased the bond
from $2,500 to $25,000 on reconsideration. We agree.

        We review a trial court’s decision to require a security bond for costs for an abuse of
discretion. In re Surety Bond for Costs, 226 Mich. App. 321, 331; 573 NW2d 300 (1997).
Likewise, this Court reviews for an abuse of discretion a trial court’s decision on a motion for
reconsideration. Churchman v Rickerson, 240 Mich. App. 223, 233; 611 NW2d 333 (2000). The
trial court abuses its discretion when its outcome falls outside the range of principled outcomes.
Maldonado v Ford Motor Co, 476 Mich. 372, 388; 719 NW2d 809 (2006). When moving the
trial court for reconsideration, “[t]he moving party must demonstrate a palpable error by which
the court and the parties have been misled and show that a different disposition of the motion
must result from correction of the error.” MCR 2.119(F)(3).

        MCR 2.109(A) provides that “the court may order the opposing party to file with the
court clerk a bond with surety as required by the court in an amount sufficient to cover all costs
and other recoverable expenses . . . . The court shall determine the amount in its discretion.”
(Emphasis added.) In this case, the trial court ordered a $2,500 bond in its discretion on August
21, 2013. The trial court subsequently increased this amount to $25,000 on November 26, 2013.
The trial court indicated that its reason for doing so was that it “erred by granting a security bond
which does not comport with the court rule by issuing a security bond less than ‘an amount
sufficient to cover all costs and other recoverable expenses . . . .’ ” However, MCR 2.109(A) is
permissive and did not require the trial court to order a bond in any specific amount.

        The trial court gave no other reason for the increase but that its initial bond did not
comply with the court rule. Its decision on reconsideration rested on a misreading of the court
rule. The trial court’s $2,500 bond did, in fact, comply with the court rule, and a different
disposition was not required on reconsideration. Because the trial court’s order rested on an
erroneous interpretation of the law, we conclude that it abused its discretion. See In re Waters
Drain Drainage Dist, 296 Mich. App. 214, 220; 818 NW2d 478 (2012). The trial court must be
aware of its discretion in order to properly exercise it. Boyd v Wyandotte, 402 Mich. 98, 102-103;
260 NW2d 439 (1977). The trial court’s error was particularly harsh in this case because
plaintiff was able to obtain a bond in the first amount, but not in the second, which resulted in
dismissal of its potentially meritorious case.1 Given our conclusion, we need not consider the
remainder of plaintiff’s claims on appeal.

1
 In civil actions, generally, each party is responsible for their own costs. In re Temple Marital
Trust, 278 Mich. App. 122, 139; 748 NW2d 265 (2008). Our court rules shift this responsibility

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       We reverse and remand for further proceedings. We do not retain jurisdiction.

                                                           /s/ Peter D. O’Connell
                                                           /s/ Karen M. Fort Hood

under some very limited circumstances. But for the trial court to increase the amount of the bond
after plaintiff successfully posted the first bond has the appearance of a sanction rather than
security for costs. We note that discovery had closed, and the only remaining proceeding
appears to have been a short trial. Under these facts, the security bond appears to be excessive.

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