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Simcor Construction, Inc. v. Trupp

Court of Appeals of Michigan

January 9, 2018

SIMCOR CONSTRUCTION, INC., Plaintiff-Appellee,
v.
CARL J TRUPP III and JENNIFER M. TRUPP, Defendants-Appellants.

         Oakland Circuit Court LC No. 2016-151468-AV

          Before: Cameron, P.J., and Servitto and Gleicher, JJ.

          Cameron, P.J.

         Defendants, Carl J. Trupp III and Jennifer M. Trupp, appeal by leave granted the circuit court's May 26, 2016 order affirming the district court's January 22, 2016 order denying their motion for offer of judgment sanctions against plaintiff, Simcor Construction, Inc. We reverse and remand.

         I. BACKGROUND

         This case arises out of plaintiff's breach of contract claim against defendants, which originated in district court. Pursuant to a contractual provision, the district court ordered the parties to arbitration on September 18, 2014. Defendant made an offer of judgment in favor of plaintiff for $2, 200 on November 6, 2014. Plaintiff rejected the offer and made a counteroffer of judgment for $9, 383.39. The parties did not reach a settlement, the case went to arbitration, and the arbitrator dismissed plaintiff's claim "with prejudice and without costs."

         On February 17, 2015, the district court denied plaintiff's motion to vacate the arbitration award, confirmed the arbitration award in favor of defendants, and entered "a Judgment of No Cause of Action" that was "in favor of Defendants and against Plaintiff." On March 9, 2015, the district court denied defendants' motion for offer of judgment costs and attorney fees under MCR 2.405. On June 8, 2015, the circuit court affirmed the district court's denial of plaintiff's motion to vacate the arbitration award.[1] On October 7, 2015, the circuit court held a hearing on defendants' appeal of the district court's denial of their motion for offer of judgment costs. The circuit court remanded the case to the district court to allow it the opportunity to more thoroughly explain its reasoning under MCR 2.405(D) regarding the "interest of justice" exception.

         On remand, the district court granted costs to defendants under MCR 2.405(D). On January 22, 2016, the district court held a hearing on plaintiff's motion for reconsideration. After some confusion as to the scope of the remand from the circuit court, [2] the district court changed course and entered an order concluding that MCR 2.405(D) did not apply, relying heavily on Kequam ex rel Macklam v Lakes States Ins Co, unpublished opinion per curiam of the Court of Appeals, issued April 11, 1997 (Docket No. 189433), p 1, and held that the confirmation of the arbitration award did not constitute a "verdict" under MCR 2.405(A)(4). The circuit court affirmed the district court's order, concluding that the confirmation of an arbitration award does not constitute a "verdict" within the meaning of MCR 2.405(A)(4) because a court that confirms the arbitration award is essentially acting in an appellate capacity and not rendering a "verdict." Defendants filed leave to appeal the circuit court's order affirming the district court's order. On appeal, defendants argue that the circuit court erred when it affirmed the district court's order denying defendants' motion for offer of judgment sanctions. First, defendants claim that they are entitled to offer of judgment costs because the district court's judgment confirming the arbitration award constitutes a "verdict" under MCR 2.405(A)(4)(c). Second, defendants claim that if offer of judgment costs apply, plaintiff cannot prove an "interest of justice" exception that would nonetheless prevent the imposition of costs.

         II. STANDARD OF REVIEW

         Generally, this Court reviews de novo "[t]he interpretation of statutes and court rules." Estes v Titus, 481 Mich. 573, 578-579; 751 N.W.2d 493 (2008), citing Cardinal Mooney High Sch v Michigan High Sch Athletic Ass'n, 437 Mich. 75, 80; 467 N.W.2d 21 (1991). Additionally, this Court reviews "de novo the interpretation and application of the offer of judgment rule." Marilyn Froling Revocable Living Trust v Bloomfield Hills Country Club, 283 Mich.App. 264, 297; 769 N.W.2d 234 (2009), citing Castillo v Exclusive Builders, Inc, 273 Mich.App. 489, 492; 733 N.W.2d 62 (2007). We review "for an abuse of discretion the trial court's decision regarding whether to refuse to award attorney fees under the interest-of-justice exception." AFP Specialties, Inc v Vereyken, 303 Mich.App. 497, 516; 844 N.W.2d 470 (2014) (citations omitted). "An abuse of discretion occurs 'when the trial court's decision is outside the range of reasonable and principled outcomes.' " Id. at 517, quoting Smith v Khouri, 481 Mich. 519, 526; 751 N.W.2d 472 (2008).

         III. ANALYSIS

         Defendants first claim that MCR 2.405 applies to the district court's confirmation of the arbitration award, and therefore, offer of judgment costs are merited. We agree.

         "Generally, the rules governing statutory interpretation apply equally to the interpretation of court rules. If the plain meaning of the language of the court rule is clear, then judicial construction is neither necessary nor permitted, and unless explicitly defined, every word or phrase should be accorded its plain and ordinary meaning, considering the context in which the words are used." Castillo, 273 Mich.App. at 492 (citations and quotation marks omitted).

         "MCR 2.405(D) provides for the imposition of costs following the rejection of an offer to stipulate the entry of a judgment[.]" Castillo, 273 Mich.App. at 491, citing MCR 2.405(D). This is known as "the offer of judgment rule." Froling Trust, 283 Mich.App. at 297. "The purpose of MCR 2.405 is 'to encourage settlement and to deter protracted litigation.' " Luidens v 63rd Dist Court, 219 Mich.App. 24, 31; 555 N.W.2d 709 (1996), citing Hamilton v Becker Orthopedic ...


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