Before: Cavanagh, P.j., and Marilyn Kelly and M.d. Schwartz,* JJ.
The opinion of the court was delivered by: Kelly
Spirex Structures, Inc. appeals as of right from an order which denied any party to the suit mediation sanctions. We affirm.
In 1981, Saint George Greek Orthodox Church of Southgate contracted for design and construction of its church. Laupmanis Associates, P.C. was the architect, J.S. Vig Construction Company the general contractor, Insurance Company of North America the surety on the bond, and Steyer Roofing Company the roofer. The building developed substantial water leaks during construction. Despite efforts to correct the problem, it continued after the project had been completed.
In 1986, Saint George filed suit against Laupmanis, Vig, INA and Steyer. In 1987, Vig filed third-party complaints against five subcontractors, including Spirex Structures, Inc. Vig's contract with Spirex required that all disputes between Vig and Spirex be resolved through arbitration according to the Construction Industry Arbitration Rules of the American Arbitration Association.
In 1988, the entire case was heard before a mediation panel. On Vig's third party claim against Spirex, the mediators found for Vig in the amount of $15,000. Both Vig and Spirex rejected the mediation evaluation. In 1989, after what appears to have been considerable maneuvering by the parties, the court ordered all the parties to arbitrate. The arbitration panel concluded that Vig was liable to Saint George for $300,000 and apportioned the costs among the parties. It also concluded that Spirex was not liable to Vig.
In 1991, Vig moved to vacate, modify or correct the arbitration award pursuant to MCR 3.602(J)(1) and (K)(1). Saint George filed a motion to confirm the award and enter it as a judgment. The proposed order contained a clause stating that the order would not prejudice the rights of any party to file for mediation sanctions. The court confirmed the arbitration award but ordered that no mediation sanctions were allowed.
On appeal, Spirex contends that it is entitled to seek mediation sanctions pursuant to MCR 2.403(O)(1) and (2)(c). Spirex argues that a party is not prohibited from seeking sanctions, regardless of whether the case is proceeding to trial, if both parties have rejected the mediation award. Spirex also argues that an arbitration award which is confirmed and entered as a judgment by the trial court is a "verdict" within the meaning of MCR 2.403(O)(2)(c).
(1) If a party has rejected an evaluation and the action proceeds to trial, that party must pay the opposing party's actual costs unless the verdict is more favorable to the rejecting party than the mediation evaluation. However, if the opposing party has also rejected the evaluation, a party is entitled to costs only if the verdict is more favorable to that party than the mediation evaluation.
(2) For the purpose of this rule "verdict" includes,
(b) a judgment by the court after a ...