Motion to quash writs of garnishment; Whether a dispute over a bad-faith refusal to settle can be litigated in a writ of garnishment; Rutter v King; MCR 3.101(L), (M)(1), & (M)(3); Sanctions; Frivolous claim or filing; MCL 600.2591(3)(a)(ii) & (iii); MCR 1.109(E)(5)(b); Improper purpose; MCL 600.2591(3)(a)(i); MCR 1.109(E)(5)(c)

The court held that Rutter was controlling and that the trial court abused its discretion in granting garnishee defendants’ motions to quash the writs at issue on the basis “a dispute over a bad-faith refusal to settle could not be litigated in a writ of garnishment.” It also held that the trial court abused its discretion in imposing sanctions against plaintiff-Hairston to the extent it did so based on a finding his writ was frivolous, but “did not clearly err to the extent that it determined that Hairston interposed the writs for an improper purpose.” The appeal arose from his efforts to collect an approximately $13.5 million judgment he obtained against defendant-Specialty Industries after he was seriously injured in a work accident. Specialty was insured by the garnishee defendants, who paid approximately $9.7 million of the judgment. Hairston sought to collect the remaining balance from them after Specialty assigned him its right to pursue legal action against them. The trial court found Rutter did not control because it was decided before the current court rules were promulgated. “It reasoned that Michigan’s courts had not relied on Rutter since the enactment of MCR 3.101.” But the court noted that its published opinions, even those decided before 11/1/90, bind “lower courts and tribunals under the rule of stare decisis.” Thus, its decision in Rutter should not have been disregarded. “Rutter decided as a point of law that a garnishee plaintiff who had been assigned a claim of bad-faith refusal to settle could litigate whether an insurer was liable for an excess judgment in a garnishment proceeding.” As a result, this “point of law was a matter of stare decisis.” The court also disagreed with the trial court’s conclusion that its more recent decisions undermined Rutter’s holding. And it was “unavailing to distinguish the facts in Rutter from the facts” here. The court found Rutter “established a workable format that provided parties with flexibility and afforded them adequate and efficient processes for resolving” a dispute involving claims of bad-faith refusal to settle. The garnishee defendants did not convince the court it “should discard this long-settled precedent beyond a preference for compelling an assignee to litigate the claim in a separate and drawn-out proceeding.” Thus, it reversed the order granting the motions to quash and dismissing the writs. But it affirmed the order awarding sanctions. On remand, the trial court is to address possible dismissal under MCR 2.116(C)(6).