Circuit Court LC No. 2016-151468-AV
Before: Cameron, P.J., and Servitto and Gleicher, JJ.
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.
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."
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. 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.
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,  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Ins Co, unpublished opinion per curiam of the Court of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
STANDARD OF REVIEW
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).
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.
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).
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