No good deed goes unpunished

Earlier this week, a Court of Appeals panel handed back a multi-million dollar headache to Judge Timothy Connors of the Washtenaw Circuit Court and politely told him we’re sorry, pal, but you did this to yourself.

At issue is a settlement the Michigan Department of Corrections made with a class of female inmates who claimed prison personnel sexually abused them for years.

MDOC agreed to pay $100 million dollars in installments over a six-year period paid into an escrow account and then distributed to the attorneys and class members according to an allocation plan. MDOC also agreed to waive the prohibition on prisoners maintaining accounts at financial institutions outside their MDOC institutional account.

For the record, MDOC has already paid some of those installments.

Here’s where the headache began.

The trial court … entered a protective order which prohibited the disclosure of the names of class members other than to necessary MDOC and Attorney General employees. The purpose of the protective order was to prevent retaliation against the class members.

The retaliation issue is important. Many of the class members are still behind bars. Paybacks can be rough, doubly so when made prison-style. Connors’ protective order rightfully addressed that concern.

But whenever big money is involved, there are always folks looking for a piece of the action – and, in this case, rightly so.

Some class members may owe child support, said the Department of Human Services. What about unpaid victim restitution, court costs, fines and fees, asked prosecutors and court administrators.

The government officials intervened. They collectively argued that any such obligations owed by individual class members have first priority in any settlement distribution.

So, said the intervenors, give us the names.

Judge Connors took a stab at it.

The trial court attempted to resolve the matter by having Intervenors submit a list of names of any female prisoner with an outstanding obligation who might have been a member of the class. Plaintiffs’ counsel was then to compare those lists against the names of class members and determine if any class member had an outstanding obligation.

This failed to resolve the dispute, however, because Intervenors determined that it was logistically impossible for them to generate a comprehensive list of all potential claimants. They continued to maintain that they needed the list of names of the class members to check that list against their own records. Ultimately, the trial court declined to order the parties to disclose to Intervenors the identities of the class members and this appeal followed.

Having plaintiffs’ counsel determine which class members owe an obligation and giving the intervenors those names is a bad idea, said COA Judge David Sawyer. There’s a big conflict of interest between protecting clients’ rights and the intervenors’ collection efforts.

The applicable statutes provide that MDOC can’t disburse settlement funds to class members until they have satisfied the obligations at issue in this case, Sawyer ruled. But there’s nothing in the statutes that give the intervenors a particular right to know the class members’ identities.

The intervenors’ interest in statutory compliance “does not equate with the right to receive the names of the class members,” Sawyer said.

So, Judge Connors, here comes your headache.

If the trial court is able to fashion a method to ensure that the MDOC is meeting its statutory obligations with respect to the proper disbursement of the proceeds of the settlement without the necessity of disclosing the names of the class members, it is certainly free do so. …

Our only directions are these: (1) the MDOC must comply with the statutory provisions to ensure that the restitution, fees and costs required to be paid by a class member are, in fact, paid before any disbursement to that class member, (2) plaintiffs’ counsel is not to be the gatekeeper to determine compliance or otherwise to identify which class members have such an obligation, and (3) there must be some oversight mechanism to confirm that the MDOC does, in fact, discharge its obligations. We also direct that any future disbursement of funds is to be suspended until a satisfactory method is in place to ensure compliance with the statute.

Sawyer offered some suggestions on how to accomplish all of this and acknowledged that Connors was being saddled with a difficult task.

But the trial court in essence took this burden upon itself when it entered the protective order. We do not disparage the actions of the trial court in doing so as we recognize the reasons for the protective order. But just as the unique circumstances of this case necessitated the protective order, it also necessitates greater involvement by the trial court in ensuring that the order does not impede the MDOC and DHS from meeting their statutory duties nor does it shield plaintiffs from meeting their financial obligations.

The case is Neal, et al. v. Dep’t of Corrections, et al.

Latest court rule orders from the MSC

Late last month, the Michigan Supreme Court unanimously ruled in People v. Cole, that a defendant who pleaded guilty to sex crimes could withdraw his plea because the trial court neglected to tell him that along with a 5- to 15-year prison sentence would come a lifetime of electronic monitoring.

Justice Michael Cavanagh’s opinion stated::

MCR 6.302 and constitutional due process require a trial court to inform a defendant pleading guilty or no contest to first-degree criminal sexual conduct (CSC-I) or second-degree criminal sexual conduct (CSCII) that he or she will be sentenced to mandatory lifetime electronic monitoring, if required by MCL 750.520b(2)(d) or MCL 750.520c(2)(b).

Yesterday, the Court amended MCR 6.302 to explicitly reflect the holding in Cole. The added language is underscored in the block quote below.

MCR 6.302(B)(1) now provides:

(B) An Understanding Plea. Speaking directly to the defendant or defendants, the court must advise the defendant or defendants of the following and determine that each defendant understands:

(1) the name of the offense to which the defendant is pleading; the court is not obliged to explain the elements of the offense, or possible defenses;

(2) the maximum possible prison sentence for the offense and any mandatory minimum sentence required by law, including a requirement for mandatory lifetime electronic monitoring under MCL 750.520b or 750.520c[.]

The amendment is effective immediately, although the Court will take comments until Oct. 1, and will consider the matter at a later public hearing.

In a proposed amendment of MCR 2.105,  plaintiffs seeking a court order for substituted service of process would be required, as part of the “diligent inquiry” to locate the defendant, to use the Internet.

The proposed amendment is underscored in the block quote below.

MCR 2.105(I)(2) would provide:

A request for an order under the rule must be made in a verified motion dated not more than 14 days before it is filed. The motion must set forth sufficient facts to show that process cannot be served under this rule and must state the defendant’s address or last known address, or that no address of the defendant is known. If the name or present address of the defendant is unknown, the moving party must set forth facts showing diligent inquiry to ascertain it. For purposes of this rule, “diligent inquiry” shall include an online search if the moving party has reasonable access to the Internet. A hearing on the motion is not required unless the court so directs.

To submit comments concerning the changes to either rule, follow the appropriate link for information.

No-fault one-year-back rule unaffected by tolling provision

A no-fault plaintiff who invoked the statutory minority/insanity tolling provision to seek additional benefits many years after her accident is subject to the no-fault act’s one-year-back rule, a divided Michigan Supreme Court has ruled.

The Court overruled University of Michigan Regents v. Titan Ins. Co., 487 Mich. 289 (2010), which held that the minority/insanity tolling provision, MCL 600.5851(1), also tolled the one-year-back rule, MCL 500.3145(1).

The rule limits recovery of no-fault benefits to those losses occurring no more than one year before suit is filed.

The Court’s latest pronouncement on the issue, the third in six years, came in Joseph v. Auto Club Ins. Ass’n (Lawyers Weekly No. 06-78514, 26 pages).

The Joseph decision reinstated Cameron v. Auto Club Ins. Ass’n, 476 Mich. 55 (2006).

“We once again hold that the minority/insanity tolling provision, which addresses only when an action may be brought, does not preclude the application of the one-year-back rule, which separately limits the amount of benefits that can be recovered, ” said Justice Mary Beth Kelly, writing for the Joseph majority.

“These distinctions were recognized in Michigan law both in Cameron as well as several decisions of this Court that predate Cameron.

“Yet this Court’s decision in Regents conflated these distinct concepts in order to effectuate what the Regents majority believed was a broader social good served by expanding the right to recover benefits beyond those allowed by law,” Kelly continued.

Mary Beth Kelly was joined by Chief Justice Robert Young Jr. and Justices Stephen Markman and Brian Zahra.

Justice Marilyn Kelly, joined by Justices Michael Cavanagh and Diane Hathaway, dissented.

Marilyn Kelly, who authored the majority opinion in Regents, noted, “That the Legislature wanted to grant a minor or insane person the right to prove his or her damages in a court of law while lacking any opportunity to be awarded them defies common sense.”

Marilyn Kelly continued, “Yet under the Cameron regime restored today, many claims supposedly ‘saved’ by MCL 600.5851(1) will be disposed of in precisely that fashion.”

Sidewalks and SOL on judiciary committee’s agenda

The House Judiciary Committee is considering HB 4589, which would give municipalities the benefit of the “two-inch rule” for any sidewalk they maintain.

The “two-inch” rule creates a rebuttable inference that a sidewalk is properly maintained if the height difference between two slabs is less than two inches.

The legislation would apply the two-inch rule to sidewalks adjacent to municipal and state highways, in addition to sidewalks adjacent to county highways.

The bill also revises how the term “highway” is defined. Currently, the term means a public highway, road, or street that is open for public travel and includes bridges, sidewalks, crosswalks, trailways, and culverts on the highway and does not include an alley, tree, or utility pole.

The bill would delete the reference to “trailways” and “culverts” and add “an appurtenance” to the list of things that “highway” does not include.

The bill affects MCL 691.1401, MCL 691.1402 and MCL 691.1402a.

The committee will also consider SB 77, which would amend MCL 600.5805 and MCL 600.5839 to make actions against architects, professional engineers, and professional surveyors subject to the two-year statute of limitations on malpractice actions.

The legislation would remove language under which the period of limitations on actions against those professionals and contractors is governed by MCL 600.5839.

SB 77 would legislatively overrule the Michigan Supreme Court’s decision in Ostroth v. Warren Regency, 474 Mich. 36 (2006). In Ostroth, the MSC ruled that MCL 600.5805(14) unambiguously directs that the period of limitations for actions against architects is provided by MCL 600.5839(1). Moreover, the six-year period of MCL 600.5839(1) operates as both a statute of limitations and a statute of repose.”

Critics of Ostroth say the decision allows too much time in which to sue architects, professional engineers and contractors.

The committee’s hearing on the legislation is scheduled for June 16, 2011, 521 House Office Building, Lansing, at 10:30 a.m.

MSC orders amendments to MCRs

In orders released late yesterday, the Michigan Supreme Court took the following action on amendments to the Michigan Court Rules, the Rules Concerning the State Bar of Michigan and the Rules for the Board of Law Examiners:

Amendment of MCR 5.208
Notice to Creditors, Presentment of Claims

Issued: 5/17/11
Effective: 9/01/11

Staff Comment: The amendment of MCR 5.208 removes the requirement to list a decedent’s last known address on the Notice to Creditors form.

The staff comment is not an authoritative construction by the Court.
ADM File No. 2009-29

Amendment of MCR 6.005
Right to Assistance of Lawyer; Advice; Appointment for Indigents; Waiver; Joint Representation; Grand Jury Proceedings

Issued: 5/17/11
Effective: 9/01/11

Staff Comment: The amendment of MCR 6.005(H) revises the rule to clarify that appointed and retained defense counsel in a criminal proceeding either must file a substantive response to a prosecutor’s application for interlocutory appeal or notify the Court of Appeals that the lawyer intends not to submit a pleading.

The staff comment is not an authoritative construction by the Court.
ADM File No. 2008-28

Amendment of Rule 3 of the Rules Concerning the State Bar of Michigan and Rule 8 of the Rules for the Board of Law Examiners
Rule 3 Membership Classes; Rule 8 Recertification

Issued: 5/17/11
Effective: 9/01/11

Staff Comment: The amendment of SBR 3(E), submitted by the State Bar of Michigan, would clarify that an out-of-state attorney who voluntarily resigned from the Michigan bar would not be required to retake the Michigan Bar Examination if the person meets the criteria for admission without examination under Rule 5 of the Rules for the Board of Law Examiners. A similar change also is made in SBR 3(F) regarding emeritus members.

Finally, Rule 8 of the Rules for the Board of Law Examiners is amended to reflect that resigned or emeritus members who seek readmission are covered under Rule 8, which allows for recertification.

The staff comment is not an authoritative construction by the Court.
ADM File No. 2009-20

Proposed Amendment of MCR 3.501
Class Actions

Issued: 5/17/11
Action: Court declined to adopt either proposal; file closed.

The proposed amendment of MCR 3.501(B) in Alternative A would have required a change in circumstances to have occurred that would allow a party to file a supplemental motion for certification of a class within 21 days of the party’s knowledge of the changed circumstances. The proposed amendment also would have allowed a party to file a motion for revocation or amendment of the certification. The court as well would have been allowed to consider supplemental motions to recertify and revoke or amend the certification. The proposed amendment of MCR 3.501(B) in Alternative B would have clarified that only one motion for certification may be brought, and that once granted, the certification may be amended or revoked.
ADM File No. 2008-18.

In their opinions

“[A]lthough the constitutional privilege against self-incrimination must be protected, the constitutional right of a plaintiff in a civil case to have his day in court must also be protected.”

– from the per curiam opinion of the Michigan Court of Appeals in The Huntington Nat’l Bank v. Ristich.

Jovica Ristich borrowed $55,000 from The Huntington National Bank to buy a used BMW and took out a $25,000 line of credit. The problem, as the bank later claimed, was that Ristich didn’t provide a security interest in the Beemer and misrepresented his income on the loan and credit applications.

That’s what the bank alleged in its suit. Funny thing, said Ristich, I think the feds are investigating me for the same thing. So instead of answering the suit, he asserted his Fifth Amendment privilege, moved for an evidentiary hearing and asked for a stay of proceedings.

At the bank’s request, the county clerk entered a default. The bank argued that Ristich couldn’t dodge answering the complaint with a blanket assertion of the Fifth Amendment.

That’s right, said Macomb County Circuit Court Judge David Viviano. Ristich couldn’t “just wave a magic wand because he’s been indicted and say I’m immune from civil process.”

Viviano ordered Ristich to answer the complaint and to plead the Fifth paragraph-by-paragraph where Ristich believed it was appropriate.

The bank moved for a default judgment. Ristich argued the default should be set aside, claiming in an affidavit that he had a good defense and that he didn’t owe as much as the bank said he did.

Viviano noted the conspicuous absence of supporting material to find good cause to set aside the default. And, he ruled, Ristich had to do more than just generally deny how much was owed to avoid a default judgment. Viviano entered an $86,000 default judgment, plus interest, against Ristich.

In the Court of Appeals, Judge Jane M. Beckering, William C. Whitbeck and Michael J. Kelly, made short work of Ristich’s argument that his motion to stay proceedings was the functional equivalent of a motion to extend time under MCR 208(E).

[D]efendant has not pointed to any legal rule supporting the assertion that the two motions are equivalent.

Moreover, defendant’s argument, which focuses on the factual circumstances of his case, ignores a significant distinction between motions for a stay of the proceedings and for an extension of time to file an answer.

While a defendant might assume that a motion to stay the proceedings extends the time for filing an answer, nothing in the motion notifies the trial court of the defendant’s desire to extend the time as does a motion under MCR 2.108(E).

The trial court could assume that the defendant fully intends to answer within 21 days of service. For this reason, motions to stay the proceedings and to extend the time for filing an answer should not be treated synonymously.

In order to request an extension of time for filing an answer, a defendant must file a motion pursuant to MCR 2.108(E), particularly requesting the extension.

But wait, Ristich argued, my motion for a stay and an evidentiary hearing was “other action permitted by law” under MCR 2.108(A)(1) and I’ve otherwise defend[ed]” myself under MCR 2.603(A)(1). Not so, said the COA panel:

Although a defendant in a civil action may raise the privilege against self-incrimination in his answer to the complaint, we have not discovered any Michigan law excusing a defendant who invokes the privilege from filing an answer.

To the contrary, our Supreme Court’s opinion in People ex rel Moll v Danziger, 238 Mich 39, 44; 213 NW 448 (1927), suggests that the invocation of the privilege does not excuse the obligation to file an answer. …

[T]he essence of defendant’s motion was not defensive; rather, the essence of the motion was to postpone the proceedings indefinitely, i.e., for as long as the chance that he could be criminally indicted existed. Nothing in defendant’s motion demonstrated that he was intending to defend or was defending the action.

Finally, defendant’s suggestion that he defended himself by raising self-incrimination concerns in his motion fails because … the proper method for invoking the privilege against self-incrimination is through a responsive pleading.

Bottom line: there’s nothing wrong with taking the Fifth in a civil suit, it’s just how you take it that matters.

Case evaluation sanctions: More breathing room to file motion

You’ve prevailed on a motion for summary disposition and your opponent’s case is dismissed in its entirety.

Your opponent moves for reconsideration and the court denies the motion.

Pop quiz: Under MCR 2.403(O)(8), when does the 28-day period in which to seek case evaluation sanctions begin to run?

MCR 2.403(O)(8) provides:

A request for costs under this subrule must be filed and served within 28 days after the entry of the judgment or entry of an order denying a timely motion for a new trial or to set aside the judgment.

Well, now. The rule mentions motions for new trials and setting aside judgments. A motion for reconsideration isn’t either of those, so the 28-day period must begin to run when judgment on the summary disposition motion is entered.

A reasonable but wrong conclusion, according to the Michigan Court of Appeals.

The 28-day period begins to run when the motion for reconsideration is denied.

As the court in Peterson v Fertel, 283 Mich App 232, 235; 770 NW2d 47 (2009), indicated “a motion for reconsideration corresponds to a motion for a new trial or to set aside a judgment.

Although the three motions have different labels and are used at different procedural points in litigation, all three have the same purpose: to rescind a dispositive ruling or judgment issued by the trial court. See MCR 2.119(F) (motion for reconsideration); MCR 2.610(A) (motion to set aside); MCR 2.611 (motion for new trial).

All three motions must be filed within 21 days of the issuance of the ruling or judgment. MCR 2.119(F)(1); MCR 2.610(A)(1); MCR 2.611(B).

The 21-day limit on these motions will expire before the 28-day limit on motions for case evaluation sanctions, so a party seeking case evaluation sanctions may elect to hold the motion for sanctions until learning whether the opposing party has filed any dispositive motions. See Brown v Gainey Transp Servs, Inc, 256 Mich App 380, 384; 663 NW2d 519 (2003) (the logic of MCR 2.403(O)(8) is to enable a party to await pending dispositive motions after trial).

We hold that when a trial court has entered a summary disposition order that fully adjudicates the entire action, MCR 2.403(O)(8) requires a party to file and serve a motion for case evaluation sanctions within 28 days after entry of a ruling on a motion for reconsideration of the order.

The case is Meemic Ins. Co. v. DTE Energy Co., et al.

File this one under: Good Things to Know.

A cautionary tale about courts and the mail

The deadline to respond to a defense motion for summary disposition was coming up fast. So was the hearing on the motion.

Under MCR 2.116(G)(1)(a)(ii), responses, including briefs and affidavits, to a summary disposition motion must be filed and served seven days before the hearing.

Plaintiff’s counsel prepared the response and sent it to defense counsel and the court via United States Postal Service Express mail on a Thursday, the day before the deadline.

The court’s copy was addressed:

Washentaw County Circuit Court
101 E. Huron Street
PO Box 8645
Ann Arbor, MI 48107-8645

This is not idle information. As you will see, the order of things in the address matters. A lot.

Defense counsel got it on Friday. The court got it on Monday. Lacking any timely submitted, substantively admissible evidence from plaintiff, the court granted defendant’s motion and dismissed the case.

Why the discrepancy between when defense counsel and the court got plaintiff’s response?

The USPS delivered plaintiff’s response to both defense counsel and the court on Friday. The problem was the court’s copy was delivered to its post office box at 9:31 a.m. But court personnel had already picked up the box mail for the day. So the response sat over the weekend until Monday, when it was picked up and later stamped “filed” at the court.

In affirming the trial court’s dismissal of the case, the Michigan Court of Appeals, in Luke v. Valley Ranch Apartments, said this:

Plaintiff’s argument that the court should have considered her late filing is not based on the language of the court rule. The response was not filed on time and we decline to hold that “received at the post office box” is equivalent to “filed.”

Nor is there an express exception in the court rule for a good-faith effort. Counsel should have realized that the response was mailed to the post office, and not to the court itself. Counsel could have called the court to discover when it would pick up the mail, or called at some point Friday afternoon to see if it had been received, but failed to do so.

But wait. How was counsel to know the response went to the post office box instead of the street address?

The court didn’t provide an explanation.

I called my local friendly postmaster and learned this: If everything works as it should, the USPS automatic sorting equipment scans the city, state zip code line, and then scans one line above that information for the precise delivery location. So, if the line above is a street address, the mail goes there. If it’s a post office box, the mail goes there.

You learn something new everyday.

All in favor of state-wide court e-filing, raise your hands.

6th Circuit: No jury trials in WARN Act cases

Laid-off workers suing their employers under the federal Worker Adjustment and Retraining Notification Act of 1988 (WARN Act), 29 U.S.C. §§ 2101-2109, can’t try their claims to a jury.

The Sixth Circuit is the first federal appellate court to rule on the issue. Several district courts had addressed the issue with mixed results.

The WARN Act opens an employer to damages in the form of back pay and benefits if the employer doesn’t give enough advance warning of large-scale layoffs or plant closing.

At first blush, this sounds like Seventh Amendment stuff — money damages in an action at law — for which there is an undeniable right to a jury trial.

But is it? One test to determine whether a remedy is legal (say hello to the jury) or equitable (say hello to the judge) is to compare the statute to 18th-century actions brought in English courts before the merger of law and equity.

Judge Ralph B. Guy analyzed it this way:

It is undisputed that no action for failing to give advance notice of an employment loss was known to 18th-century England. …

[W]e do not see an analogy between the issue to be tried in an employee’s WARN Act claim and an action
for breach of contract — a recognized pre-merger action at law … .

Nor are the WARN Act claims analogous to a personal injury or tort action, which would be “a prototypical example of an action at law.” …

[A] better comparison might be to a breach of an employer’s fiduciary duty, which is an action recognized as equitable in nature. …

[The WARN Act] places the entire damage award — the liability for back pay and benefits — within the district court’s discretion.

It’s true that money is the usual remedy for a suit at law but money can also change hands as a form of equitable relief, such as restitution. The bottom line from the Sixth Circuit:

We are persuaded that the statutory remedies available to aggrieved employees provide equitable restitutionary relief for which there is no constitutional right to a jury trial.

The case is Bledsoe, et al. v. Emery Worldwide Airlines, et al.

It’s all about the deadlines

If you do a lot of procedural fencing in court, particularly removal motions to federal court or getting a case remanded to state court, you’ll want to take a look at the latest case from the 6th U.S. Circuit Court of Appeals on the topic.

The upshot is that an untimely petition to remove a diversity case from state court to federal court can’t be challenged with an untimely motion to remand, unless, of course, diversity jurisdiction itself is being called into question.

In Music v. Arrowood Indemnity, Carpenter sued Music for auto negligence. Arrowood, Music’s insurer, wouldn’t defend the case and Carpenter got a default judgment against Music.

Music wasn’t collectable, so Carpenter sued his own insurer for unisured motorist benefits. He filed in state court. There wasn’t enough at stake to go to federal court.

Globe, in turn, sued Music for indemnity. Music declared bankruptcy, identified Carpenter’s uninsured motorist claim as a liability, but didn’t list Arrowood as an estate asset.

After Music got a complete discharge, he sued Arrowood in a Kentucky state court for not defending him against Carpenter’s auto negligence suit.

Arrowood removed the case to federal district court under 28 U.S.C. § 1446(b). Nobody claimed there was a problem with diversity or the amount in controversy.

But Music claimed that Arrowood waited too long to remove the case. 28 U.S.C. § 1446(b) requires removal within one year of “commencement” of the state court action.

The federal district court said Music waited too long to challenge the removal and dismissed Music’s motion to remand. 28 U.S.C. § 1447(c) provides 30 days to file a remand motion after a case has been removed from state court.

Here’s how the Sixth Circuit sorted it all out.

There’s a first-party, third-party and fourth-party claim, so it’s not exactly clear whether Arrowood’s removal motion was filed within a year after the state-court action commenced. For analytical purposes, the Sixth Circuit assumed the removal motion was late.

But Music’s motion to remand was late as well.

So the issue is whether the one-year removal limit is jurisdictional, in which case, it can be challenged at any time. If it’s procedural, then it is waived if not timely challenged.

There is no published precedent in the Sixth Circuit on the issue but every circuit considering the matter has concluded that the one-year limit is procedural. And, the U.S. Supreme Court, in Caterpillar Inc. v. Lewis, 519 U.S. 61, 75 n.13 (1996), has hinted as much.

The Sixth Circuit’s bottom line:

Upon review, we hold that the one-year time limitation rule for removal, 28 U.S.C. § 1446(b), is procedural, not jurisdictional, and therefore subject to forfeiture.