Court Opinion

ID: 2794493
Source: CourtListenerOpinion
Date Created: 2015-04-17 12:04:13.738514+00
Date Added: 2024-06-11T11:16:37.069605
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

RONALD W. LECH II,                                                   FOR PUBLICATION
                                                                     April 16, 2015
               Plaintiff/Counter-Defendant-                          9:00 a.m.
               Appellee/Cross-Appellant,

v                                                                    No. 320028
                                                                     Livingston Circuit Court
HUNTMORE ESTATES CONDOMINIUM                                         LC No. 08-024045-CH
ASSOCIATION,

               Defendant/Counter-Plaintiff,

and

JACOBSON ORE CREEK LAND
DEVELOPMENT, L.L.C., and SCOTT R.
JACOBSON, d/b/a S.R. JACOBSON LAND
DEVELOPMENT, L.L.C.,

               Defendants-Appellants/Cross-
               Appellees.

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

O’CONNELL, P.J.

        Defendants, Jacobson Ore Creek Land Development, L.L.C. and Scott R. Jacobson
(collectively “the developers”), appeal as of right the trial court’s order granting the developers’
costs and attorney fees. Plaintiff, Ronald W. Lech II, cross-appeals as of right the same order.
We affirm the trial court’s decision to exclude appellate attorney fees and costs from its offer of
judgment sanctions under MCR 2.405 because such costs are not incurred as a result of a party’s
decision to reject an offer of judgment, but we reverse the trial court’s decision to award the
developers judgment interest under MCL 600.6013.

                  I. BACKGROUND FACTS AND PROCEDURAL HISTORY

      In December 2008, Lech filed a complaint against the developers and Huntmore Estates
Condominium Association in which he alleged claims of slander of title, violation of the
Michigan condominium act, and tortious interference with a business relationship. On June 10,

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2009, the developers filed an offer of judgment for $5000. Lech effectively rejected the offer by
failing to respond to it within 21 days.

        The trial court later granted summary disposition to the developers and awarded them
attorney fees under MCR 2.405 because of Lech’s refusal of the offer of judgment. After Lech
appealed, a panel of this Court reversed the trial court’s grant of summary disposition on some of
Lech’s claims. Lech v Huntmore Estates Condo Ass’n, unpublished opinion per curiam of the
Court of Appeals, issued October 6, 2011 (Docket Nos. 296489 and 297196). The developers
appealed to the Michigan Supreme Court, which reversed this Court’s decision, reinstated the
trial court’s grant of summary disposition, and remanded for this Court to consider Lech’s
sanctions issue. Lech v Huntmore Estates Condo Ass’n, 491 Mich 937; 815 NW2d 127,
modified on reconsideration by 493 Mich 921 (2012). On remand, this Court determined that the
trial court calculated the offer of judgment sanctions from an incorrect date and remanded to the
trial court for a new calculation. Lech v Huntmore Estates Condo Ass’n (On Remand),
unpublished opinion per curiam of the Court of Appeals, issued August 6, 2013 (Docket No.
297196).

        On remand, the parties stipulated to reduce the trial court’s sanctions award to
$36,337.90, but disputed whether the developers were entitled to judgment interest or attorney
fees that the developers incurred as a result of the appeals. The trial court relied on Haliw v
Sterling Hts, 471 Mich 700; 691 NW2d 753 (2005), in which the Michigan Supreme Court held
that actual costs for case evaluation sanctions under MCR 2.403 do not include appellate
attorney fees, and determined that the developers were not entitled to appellate attorney fees
under MCR 2.405. But the trial court determined that the developers were entitled to statutory
judgment interest under MCL 600.6013, and it awarded the developers $5,230.16 in interest.

                                II. STANDARDS OF REVIEW

         This Court reviews de novo the interpretation and application of statutes. McCormick v
Carrier, 487 Mich 180, 188; 795 NW2d 517 (2010). We also review de novo the interpretation
and application of our court rules. In re McCarrick/Lamoreaux Minors, ___ Mich App ___, ___;
___ NW2d ___ (2014) (slip op at 5). We use the same rules of interpretation to interpret statutes
and court rules. Id. We give the words of rules and statutes their plain and ordinary meanings.
Id. (slip op at 6); McCormick, 487 Mich at 191. We construe legal terms according to their legal
meanings. Feyz v Mercy Mem Hosp, 475 Mich 663, 673; 719 NW2d 1 (2006). We determine
the intent of the court rule “from an examination of the court rule itself and its place within the
structure of the Michigan Court Rules as a whole.” Haliw, 471 Mich at 706.

                                   III. APPELLATE COSTS

        The developers contend that the trial court erred when it determined that MCR 2.405
sanctions do not include appellate costs and fees because the opposing party makes such costs
and fees necessary when the party rejects an offer of judgment. Lech contends that actual costs
for the purposes of MCR 2.405 do not include appellate attorney fees. We agree with Lech.

        When a party rejects an offer of judgment, “[i]f the adjusted verdict is more favorable to
the offeror than the average offer, the offeree must pay to the offeror the offeror’s actual costs

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incurred in the prosecution or defense of the action.” MCR 2.405(D)(1). Verdicts include
judgments following jury trials, nonjury trials, or resulting from a motion after rejection of the
offer of judgment. MCR 2.405(A)(4). “Actual costs” are “the costs and fees taxable in a civil
action and a reasonable attorney fee for services necessitated by the failure to stipulate to the
entry of judgment.” MCR 2.405(A)(6).

        In Haliw, the Michigan Supreme Court considered whether appellate costs were “actual
costs” for the purposes of MCR 2.403. Haliw, 471 Mich at 704. The court rule provides that
actual costs included “ ‘a reasonable attorney fee . . . for services necessitated by the rejection of
the mediation evaluation.’ ” Id. at 705, quoting MCR 2.403(O)(6). The Michigan Supreme
Court concluded that a party could not recover appellate fees and costs as case evaluation
sanctions. Id. at 706.

        The Michigan Supreme Court gave several reasons for its decision. First, the second
chapter of the Michigan Court Rule addresses trial court procedure, while the seventh chapter
addresses appellate procedure, including appellate fees and costs. Id. at 706. Second, MCR
2.403(O) is “trial-oriented” because its definition of verdict did not refer to the appellate process.
Id. at 708. Third, the Michigan Supreme Court noted that a party must request sanctions within
28 days of the verdict, well before a party has incurred the majority of its appellate fees and
costs. Id. at 711 n 8. Finally, the Michigan Supreme Court also noted that the phrase
“necessitated by” requires “a casual nexus between rejection and incurred expenses,” and a
decision to bring an appeal does not have the necessary causal nexus. Id.

        We discern no basis to differ from the Michigan Supreme Court’s analysis of “actual
costs” under MCR 2.403 when interpreting actual costs under MCR 2.405. As a rule, in the
second chapter of the Michigan Court Rules, MCR 2.405 also concerns trial court procedure.
Like MCR 2.403, nothing in MCR 2.405’s definition of verdict mentions the appellate process.
Also like MCR 2.403, under MCR 2.405, a party must request fees and costs within 28 days of
entry of the judgment. MCR 2.405(D)(6). And a party’s decision to bring an appeal after
rejecting an offer of judgment has a similar causal nexus to a party’s decision to bring an appeal
after rejecting case evaluation sanctions.

        Any minor differences between the definitions of “actual costs” in MCR 2.403 and MCR
2.405 do not warrant engaging in a different analysis and certainly do not compel a different
result. The difference between the definitions in these two court rules are solely differences of
formatting. We conclude that the trial court did not err when it determined that a party may not
recover appellate fees and costs as “actual costs” under MCR 2.405.

                                          IV. INTEREST

       Lech contends that the trial court erred by applying the judgment-interest statute to the
sanctions award in this case because a sanction award is not a money judgment in a civil case.
We agree.

         The developers requested judgment interest under MCL 600.6013. MCL 600.6013(1)
provides that “[i]nterest is allowed on a money judgment recovered in a civil action, as provided
in this section.” A money judgment in a civil action is a judgment “that orders the payment of a

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sum of money, as distinguished from an order directing an act to be done or property to be
restored or transferred.” In re Forfeiture of $176,598, 465 Mich 382, 386; 633 NW2d 367
(2001). There are several types of civil awards that are not a “money judgment in a civil action,”
including money awards in drug forfeiture, divorce judgments, awards of back pay for wrongful
discharge, and awards reflecting payment of a forced share in an estate. Id. at 388.

        We conclude that a sanctions award is properly characterized as an order directing that an
act be done instead of a money judgment in a civil action. Sanctions awards to collect attorney
fees and costs are post-judgment proceedings. See Fraser Trebilcock Davis & Dunlap PC v
Boyce Trust 2350, 304 Mich App 174, 219; 850 NW2d 537 (2014). A party files and serves its
request for costs after entry of the judgment. MCR 2.405(D)(6). Such proceedings, by their
very nature, come after any money judgment that might be entered. Accordingly, a sanctions
award is not a money judgment in a civil action. Rather, it is an order of the court directing a
party to do an act—specifically, to pay the other party’s attorney fees and costs.1

        In this case, the trial court applied MCL 600.6013 to award the developers $5,230.16 in
interest. Because this case concerned a post-judgment proceeding to collect sanctions, we
conclude that its decision was improper. We therefore reverse the trial court’s interest award.

     We affirm in part and reverse in part. No costs, neither party having prevailed in full.
MCR 7.219.

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

1
  This Court has also concluded in unpublished opinions that MCL 600.6013 does not apply in
cases of motions for sanctions. See Nartron Corp v Gen Motors Corp, unpublished opinion per
curiam of the Court of Appeals, issued January 6, 2005 (Docket No. 245942) (discovery
sanctions); Juarez v Holbrook, unpublished opinion per curiam of the Court of Appeals, issued
July 1, 2008 (Docket Nos. 275040 & 276312) (case evaluation sanctions); Wrobbel v Hydaker-
Wheatlake Co, unpublished opinion per curiam of the Court of Appeals, issued January 28, 2014
(Docket Nos. 30553 & 3127665) (case-evaluation sanctions). While unpublished opinions are
not binding on this Court, we may consider them for their persuasive value. Paris Meadows LLC
v Kentwood, 287 Mich App 136, 145 n 3; 783 NW2d 133 (2010). We find it persuasive that this
Court has repeatedly reached the same conclusion regarding other types of sanctions in
unpublished opinions.

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