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Docket Number

Docket Nos. 87865, 87866.

Attorney(S)

Dean, Dean, Segar, Hart Shulman, P.C. (by Leonard B. Shulman), for plaintiffs. Conlin, Conlin, McKenney Philbrick (by Allen J. Philbrick), for Debra Ann Kranick. Frank J. Kelley, Attorney General, Louis J. Caruso, Solicitor General, and Elizabeth L. Valentine, Assistant Attorney General, for the State of Michigan.

Judges

PER CURIAM.

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Smart Summary

BUSCH v HOFFMEYER; BUSCH v STATE OF MICHIGAN — Michigan Court of Appeals, Dec. 6, 1987 (Per Curiam)

Factual and Procedural Background

This matter arose from the February 6, 1983 drowning of 17-year-old Robert Murphy, Jr., after a car in which he was a passenger broke through the ice at Mill Lake in the Waterloo Recreation Area. The driver, Paul Hoffmeyer, and other passengers reached solid ice; Murphy did not and drowned. All four occupants had consumed at least one beer and were underage. Plaintiffs sued Hoffmeyer, Debra Ann Kranick (the passenger who purchased the beer), and the Inverness Inn (which sold the beer). The Inn obtained summary judgment. A separate suit against the State (operator of the recreation area) was filed in the Court of Claims and later consolidated with the other suit.

Mediation was held June 6, 1985. The panel awarded plaintiffs $20,000 against Hoffmeyer and $7,500 against Kranick, and found no cause of action against the State. Under MCR 2.403(L)(1) each party had 28 days from June 6 to file a written acceptance or rejection; the 28th day fell on July 4, 1985 (a holiday), so the deadline was July 5, 1985. Defendants filed letters of acceptance. Plaintiffs did not file a timely response; a letter of rejection prepared and signed by plaintiffs' counsel on July 1, 1985, was not mailed until July 5 and was received by the mediation clerk on July 9, 1985. The mediation clerk notified counsel on July 11 that the award had been accepted by all defendants and, by plaintiffs' failure to timely respond, by plaintiffs as well. Plaintiffs moved on July 26, 1985 for relief from the mediation order under MCR 2.612(C)(1)(a) (mistake, inadvertence, surprise, or excusable neglect); defendants moved for entry of judgment under MCR 2.403(M). The trial court denied plaintiffs' motion and entered judgment in the amount of $27,500.

Legal Issues Presented

Whether the trial court abused its discretion in denying plaintiffs' request for relief from a mediation award deemed accepted because plaintiffs failed to file a timely rejection under MCR 2.403(L)(1).

Arguments of the Parties

Plaintiffs' Arguments

Plaintiffs' counsel asserted that plaintiffs decided to reject the mediation award on the morning of July 1, 1985, and informed counsel of that decision.
A rejection letter was dictated, typed by counsel's secretary, and signed by counsel on July 1, 1985.
Counsel left for California on July 3 and did not return until July 9; for unknown reasons the letter was not mailed until July 5 and thus was received by the clerk four days late (July 9).
Plaintiffs sought relief under MCR 2.612(C)(1)(a) for mistake, inadvertence, surprise, or excusable neglect.

Defendants' Arguments

Defendants moved in opposition to plaintiffs' motion and requested that judgment be entered under MCR 2.403(M) because the mediation rule deems failure to file a response within 28 days to constitute acceptance.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
MGM Brakes Division of Indian Head, Inc v Uni-Bond, Inc, 417 Mich. 905; 330 N.W.2d 853 (1983)	Establishes that a trial court has discretion to set aside a party's acceptance of a mediation evaluation prior to entry of judgment.	The court relied on this authority to recognize the trial court's discretionary power to set aside an acceptance, framing the standard of review as abuse of discretion.
Hauser v Roma's of Michigan, 156 Mich. App. 102; 401 N.W.2d 630 (1986)	Used for the proposition that judgment on acceptance should be set aside only if failure to do so would result in substantial injustice.	The court contrasted the present facts with Hauser, noting that here plaintiffs' counsel was aware of the deadline and attempted compliance, distinguishing Hauser's facts.
Muntean v Detroit, 143 Mich. App. 500, 511; 372 N.W.2d 348 (1985)	Provides the balancing principle: strike a balance between remedying injustice and achieving finality; recognizes that some neglect may be "excusable."	The court cited Muntean to support that excusable neglect may exist and that the trial court should weigh finality against remedying injustice; the court invoked Muntean to conclude relief was appropriate here.

Court's Reasoning and Analysis

The court identified the sole issue as whether the trial court abused its discretion in denying relief under MCR 2.612(C)(1) from a deemed acceptance under MCR 2.403(L)(1). It began by stating the well-settled principle (citing MGM Brakes) that trial courts possess discretion to set aside an acceptance prior to judgment, but that such relief should be granted only when failure to do so would result in substantial injustice (citing Hauser and Muntean).

The trial court denied relief emphasizing the need for finality under MCR 2.403(L)(1) and MCR 2.403(M)(1), and expressing concern that granting relief would "open the door" to numerous excuses and undermine the court rule's purpose. The trial court stated that it would exercise its discretion in favor of finality and declined to set aside the acceptance.

The Court of Appeals concluded the trial court abused its discretion. It relied on plaintiffs' counsel's staff affidavits showing: plaintiffs timely decided to reject the award; they informed counsel; a rejection letter was typed and signed; and the failure was one of mailing (unknown reasons) which resulted in the clerk receiving the letter four days late. The appellate court found these facts distinguishable from Hauser because plaintiffs' counsel here was fully aware of the rule's deadline and worked to comply. The court acknowledged the tension between the mediation rules' definite language and MCR 2.612(C)(1)(a)'s allowance for excusable neglect, and invoked Muntean's observation that some acts of neglect can be excusable. Based on that record, the court concluded the trial court should have granted plaintiffs' motion to set aside the acceptance.

Holding and Implications

REVERSED AND REMANDED.

The Court of Appeals held that the trial court abused its discretion in denying plaintiffs' motion to set aside the mediation award deemed accepted due to plaintiffs' untimely mailing of a rejection letter. The direct effect is reversal of the trial court's denial and remand for further proceedings consistent with this opinion. The opinion does not announce a broader new rule beyond applying established precedent (MGM Brakes, Hauser, Muntean) and thus does not purport to set novel precedent; it applies existing standards to the facts and finds relief warranted under MCR 2.612.

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BUSCH v HOFFMEYER BUSCH v STATE OF MICHIGAN

PER CURIAM.

Plaintiffs appeal as of right from a decision of the Washtenaw Circuit Court denying plaintiffs' motion to set aside the acceptance of a mediation award and the subsequent judgment.

This case arose out of the February 6, 1983, drowning of Robert Murphy, Jr., then seventeen years old, when a car in which he was a passenger broke through the ice on Mill Lake in the Waterloo Recreation Area. The driver of the car, Paul Hoffmeyer, had been "doing doughnuts" on the ice when the car began to break through the ice. Hoffmeyer and two other passengers were able to reach solid ice; the decedent Murphy did not and drowned. It was determined that all four had drunk at least one beer on that date and that all were under the legal drinking age.

Suit was filed against Hoffmeyer, Debra Ann Kranick, the passenger who had purchased the beer, and the Inverness Inn, the store that had sold Kranick the beer. The Inn was granted summary judgment. A separate suit was filed in the Court of Claims against the State of Michigan, which operates the Waterloo Recreation Area. The Court of Claims action was later consolidated for hearing with the other suit.

Mediation of all claims was held on June 6, 1985. The mediation panel awarded recovery for damages to plaintiffs in the amount of $20,000 against defendant Hoffmeyer and $7,500 against defendant Kranick. The panel determined that there was no cause of action against defendant State of Michigan. The mediation panel's findings were delivered to each attorney following the hearing.

Each party then had twenty-eight days from June 6, 1985, within which to file an acceptance or rejection of the mediation award under MCR 2.403(L)(1). The twenty-eighth day following mediation was July 4, 1985, a holiday. Under MCR 1.108, the last day for filing an acceptance or rejection of the mediation award became July 5, 1985. The defendants all filed letters of acceptance. Plaintiffs did not file a timely acceptance or rejection, but on July 9, 1985, plaintiffs' letter of rejection was received by the mediation clerk. The clerk notified counsel for all parties on July 11, 1985, that the mediation award had been accepted by all the defendants and was accepted by plaintiffs because of their failure to respond by July 5, 1985.

On July 26, 1985, plaintiffs filed a motion for relief from the mediation order. Defendants filed motions in opposition, requesting entry of a judgment under MCR 2.403(M). At the hearing on the motion, plaintiffs' counsel contended that he had had a conversation with plaintiffs the morning of July 1 and that the plaintiffs had decided to reject the mediation award. Following his conversation with plaintiffs, he dictated a letter of rejection. Plaintiffs' counsel's secretary typed the letter and it was signed by counsel on July 1, 1985. Plaintiffs' counsel then left for California on July 3 and did not return until July 9. In the interim, for reasons unknown to counsel, the letter of rejection was not mailed until July 5, 1985, the day the letters were due at the clerk's office. The letter was received by the mediation clerk on July 9, 1985, four days late.

On July 16, 1985, plaintiffs received a letter from the mediation clerk stating that the award had been accepted due to the failure to file a letter of rejection. Plaintiffs then asked to set aside the acceptance of the mediation award under MCR 2.612(C)(1)(a), which allows relief for mistake, inadvertence, surprise, or excusable neglect. The trial court denied plaintiffs' motion to set aside the acceptance of the mediation award and entered judgment for plaintiffs in the amount of $27,500.

The sole question before this Court is whether the trial court abused its discretion in denying plaintiffs' request for relief from a mediation award deemed accepted through plaintiffs' failure to file a timely rejection. MCR 2.403(L)(1) provides as follows:

Each party must file a written acceptance or rejection of the panel's evaluation with the mediation clerk within 28 days after service of the panel's evaluation. The failure to file a written acceptance or rejection within 28 days constitutes acceptance. [Emphasis supplied.]

MCR 2.403(M)(1) states:

If all the parties accept a panel's evaluation, judgment will be entered in that amount, which includes all fees, costs, and interest to the date of judgment. [Emphasis supplied.]

Plaintiffs filed a motion to set aside the award under MCR 2.612(C)(1) which provides:

On motion and on just terms, the court may relieve a party or the legal representative of a party from a final judgment, order, or proceeding on the following grounds:

(a) mistake, inadvertence, surprise, or excusable neglect.

* * *

(f) any other reason justifying relief from the operation of the judgment.

It is well settled that a trial court has the discretion to set aside a party's acceptance of a mediation evaluation prior to the entry of judgment upon the award. MGM Brakes Division of Indian Head, Inc v Uni-Bond, Inc, 417 Mich. 905; 330 N.W.2d 853 (1983). Although the determination is discretionary, the judgment on the acceptance should be set aside only if failure to do so would result in substantial injustice. Hauser v Roma's of Michigan, 156 Mich. App. 102; 401 N.W.2d 630 (1986); Muntean v Detroit, 143 Mich. App. 500, 511; 372 N.W.2d 348 (1985). It is the trial court's responsibility to "`strike a balance between the goal of remedying injustice, on the one hand, and the desire to achieve finality in litigation, on the other hand'." Id., 511, citing 3 Honigman Hawkins, Michigan Court Rules Annotated (2d ed), p 181.

In the instant case, the trial court denied plaintiffs' motion to set aside the judgment on the grounds that MCR 2.403(L)(1) and 2.403(M)(1) call for finality in judgments:

This Court has been very concerned in this area and I feel that the new Court Rule and the Court Rule which speaks in a definite manner to bring these matters to a close. If I were to grant the relief requested here, it would open the door in every case to a situation where somebody says they acted in good faith, and today it's five days and the next time it will be forty days as in the Muntean case, and we are right back where we started before we put the rule into effect and we haven't accomplished a darn thing.

I am going to deny your motion. I am going to exercise my discretion. I believe that it is a situation in which it becomes the responsibility of each and every attorney who is seated in my courtroom here today to make sure that that does reach the clerk on time, and if it doesn't, then it is your responsibility and I am sorry to have to do it, but I am going to deny your motion. I think that the exercise of my discretion should be in the way of finality and therefore, I am going to refuse to set aside the acceptance.

Although this is a close question, we find that the court abused its discretion in not granting plaintiffs' motion to set aside the judgment. Plaintiffs' counsel's staff filed affidavits that clearly show that plaintiffs themselves timely chose to reject the mediation award, that they informed their counsel of this, that a rejection letter was typed and prepared for mailing, but that for unknown reasons it was not timely mailed. Unlike the facts in Hauser, supra, plaintiffs' counsel here was fully aware of the ramifications of the new court rule deadline and worked to comply with it.

The trial judge's statement, quoted above, appears to imply that no motion to set aside a judgment entered under the new mediation court rule could be granted because of the need not to "open the door" to all manner of excuses. This Court is sympathetic to the tension between the language found in MCR 2.403(L)(1) and MCR 2.403(M)(1), which speak in definite terms, and the language of MCR 2.612(C)(1)(a), which includes relief for "excusable neglect." However, as stated in Muntean, supra, p 510, "[w]hile many acts of neglect are not `excusable', some are, else that word would not appear in the rule." We believe that the trial court should have granted plaintiffs' motion to set aside the judgment here.

Reversed and remanded.

BUSCH v. HOFFMEYER