Litigation

This summary also appears under Insurance

 

Issues: Garnishment; Discovery rules; MCR 3.101; Statutory construction/court rule interpretation; Henry v. Dow Chem. Co.; Jenson v. Puste; Costa v. Community Emergency Med. Servs., Inc.; Effect of a failure to serve written interrogatories or notice of depositions within the time permitted by MCR 3.101(L)(1); MCR 3.101(M)(2); Judicial discretion to extend discovery; MCR 3.101(T); Principle that where a conflict exists between a general provision in a statute and a specific provision, the latter controls; Duffy v. Michigan Dep't of Natural Res.; Gebhardt v. O'Rourke

Court: Michigan Court of Appeals (Published)

Case Name: Decker v. Trux R Us Inc.

e-Journal Number: 58460

Judge(s): Riordan and Talbot; Dissent - Cavanagh

 

The court held that the trial court did not err in granting summary disposition for the defendant-insurer (Auto Owners) in the plaintiffs' garnishment action. They sued defendant-Trux R Us for injuries one of the plaintiffs sustained when he was run over by a bulldozer at a construction site. Auto Owners, the insurer for Trux R Us, then brought a declaratory action seeking a judgment that it had no duty to defend or indemnify Trux R Us on plaintiffs' claims. A default judgment was entered against Trux R Us after it failed to respond to the lawsuit, and its subsequent motion to set aside the default was denied. Plaintiffs and Trux R Us eventually entered into a consent agreement under which plaintiffs agreed to seek insurance proceeds from the Auto Owners policy. Plaintiffs then filed a request and writ for non-periodic garnishment in the amount of the consent judgment, naming Auto Owners as the garnishee of Trux R Us. Auto Owners claimed it was not indebted to Trux R Us, and the trial court granted its motion for summary disposition, finding that plaintiffs failed to initiate discovery within 14 days after service of the garnishee disclosure as required by MCR 3.101(L)(1), and thus the facts set forth in Auto Owners' disclosure were accepted as true. On appeal, the court found that because plaintiffs failed to serve Auto Owners with written interrogatories or notice of depositions within 14 days, as required, the facts stated in the disclosure (that Auto Owners was not indebted to Trux R Us) had to be accepted. "The plain language of MCR 3.101(L) and (M) commands that when a plaintiff fails to request discovery, the statements in the garnishee disclosure 'must be' accepted as true." It also found that "any conflict between MCR 3.101(L) and (T) is not irreconcilable. While subsections (L) and (M) provide a deadline for when a plaintiff must 'serve' the interrogatories or notice a deposition, subsection (T) deals with extending the time for the actual 'filing' of written interrogatories and demand for oral examination of the garnishee." It interpreted subsection (T) as permitting a trial court to exercise its discretion to extend discovery "as long as plaintiff has complied with MCR 3.101(M)(2)," noting that, with this interpretation, "both statutory provisions are left with independent operations and neither is rendered nugatory." Further, "the trial court did exercise its discretion in this case, and declined to extend discovery under MCR 3.101(T)." Finally, the court rejected plaintiffs' argument that the garnishee disclosure provided only erroneous legal conclusions, rather than factual statements, finding that Auto Owners offered "factual allegations, namely, that under the facts of this case, the insurance policy excluded coverage and that the prior litigation foreclosed garnishment." Affirmed.

 

Full Text Opinion

This summary also appears under Business Law

 

Issues: The Michigan Uniform Partnership Act (MCL 449.1 et seq.); Order and judgment compelling defendant-Steven Jacob to return certain monies to the defendant-partnership (Bald Mountain West - BMW); Award of monetary relief; An accounting; Nogueras v. Maisel & Assocs. of MI; Winding-up of partnership affairs; Urbain v. Beierling; The court's finding in a prior appeal that defendant violated the partnership agreement and MCL 449.18(e) & (f); The "law of the case" doctrine; Augustine v. Allstate Ins. Co.; Grievance Adm'r v. Lopatin; MCL 449.21; Bondy v. Davis; Remedy for a partner's breach of fiduciary duties; Gilroy v. Conway; Jury demand; Const. 1963, art. 1, § 14; In re Forfeiture of $1,159,420; Distribution of assets upon dissolution of a partnership; MCL 449.40; MCL 449.38; Kranz v. Kranz; Purpose of appointing a receiver; Reed v. Reed; Distinguishing Dobson v. Whitker, Marshall Lasser, PC v. George, and Davis v. Chatman; Alleged evidentiary errors; Order to repay attorney fees to the partnership; Claim that actual damages were less than what defendant was ordered to repay; Motion in limine to preclude the introduction of evidence; MRE 401 & 402; Department of Transp. v. Haggerty Corridor Partners Ltd. P'ship; Morales v. State Farm Mut. Auto. Ins. Co.; People v. Mills; Whether the trial court properly allowed the Liquid Asset Marital Trust to prosecute the evidentiary hearing as the receiver's proxy; Band v. Livonia Assocs.; Westgate v. Westgate; Motion to amend the judgment or for relief from judgment

Court: Michigan Court of Appeals (Unpublished)

Case Name: Jacob v. Bald Mountain W.

e-Journal Number: 58216

Judge(s): Per Curiam – Boonstra, Meter, and Servitto

 

In these consolidated cases arising from a partnership dispute, the court held that the law of the case precluded defendant-Steven Jacob from arguing that the trial court could not order him to return the management fees to the defendant-partnership (BMW). The trial court did not err in disregarding his jury demand because there were no jury triable matters at issue and no damages were collected. However, the court determined that the judgment must be amended to reflect that Jacob be ordered to repay only $150,000 to BMW for management fees. It also concluded that the trial court erred in its description of the consulting fee as an attorney fee and in finding that plaintiffs abandoned pursuit of recoupment of the consulting fee. Thus, in Docket No. 312390, the court remanded to the trial court for amendment of the judgment to reflect that Jacob be ordered to repay only $150,000 to the partnership for management fees, and affirmed in all other respects. In Docket No. 312469, it remanded to the trial court to determine whether the $141,325.75 paid as a consulting fee should be repaid to BMW. In a prior appeal, the court affirmed the trial court's bench trial rulings that an accounting, dissolution of the partnership, and the appointment of a receiver were appropriate. It found that "the trial court correctly ruled that Jacob's taking a $50,000 per year management fee modified the partnership agreement without the approval of all of the partners, violated the partnership agreement and violated MCL 449.18(e), and (f)." Since the court already affirmed the trial court's finding that Jacob was not entitled to the management fees and implicitly found that the fees belonged to the partnership, the law of the case precluded him from arguing that the trial court could not order him to return the fees to the partnership. "Jacob took the fees to which he was not entitled out of the partnership funds and the partnership could be made whole by Jacob returning the funds to the partnership. They were an asset of the partnership and could be gathered by the receiver as part of the winding up of the partnership." As to his jury demand, an action for an accounting is an equitable matter not entitled to a jury trial. Further, the "receiver in this case was not awarded damages from Jacob and neither were plaintiffs. Instead, the receiver was collecting property that the trial court determined Jacob had wrongfully taken from the partnership." However, the trial court clearly erred in directing Jacob to repay $300,000 in management fees. There was no testimony or documentary evidence suggesting that he actually took more than $200,000 in fees, and the testimony indicated he returned $50,000 of that $200,000.

 

Full Text Opinion
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