Appellate Watch: Recent Michigan Opinions
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Court Interprets and Upholds Constitutionality of State Statute Exempting from FOIA the Records of a Catastrophic Claims Association
Title Conveyed to Third Party Following Foreclosure Sale of Mortgage on Condominium Property Does Not Restore Association Assessments Eliminated by Foreclosure
Liquidation Proceeding in Reciprocal State Against Insurer Domiciled in Michigan Requires that Pending Michigan Case Be Dismissed
Acceptance of Case Evaluation Award Resolves All Claims, Including Claims Subject to a Pending Motion to Amend
1) A Party May Not Partially Accept or Reject a Single Case Evaluation Award, and 2) On a Judgment of Foreclosure, Debtors Are Entitled to Credits for Partial Debt Payments
Mortgage And Fee Are Merged in Spite of Nonmerger Clause When Third Parties Are Affected on or after the Time of the Conveyance
Under Equitable Purchase-Money-Mortgage Doctrine, Mortgage Is Validated Despite Missing Signature from Spouse
By Failing to Redeem Property within the Applicable Time Following a Sheriff’s Sale, Plaintiff Loses Standing to Bring a Claim to Challenge the Foreclosure by Advertisement
Foreclosing Bank’s Obligation for Unpaid Condo Association Fees Begins on Date of Foreclosure Sale
Mortgagee is Afforded Coverage Under Standard Mortgage Clause of a Homeowners Insurance Policy
Deficiency Judgment Entered in Michigan Following a Foreclosure Sale in Nevada is Affirmed
On May 20, 2014, the Michigan Supreme Court issued its Opinion in the case of Acorn Investment Co v Michigan Basic Property Insurance Association, No. 146452. The Opinion primarily addresses the definition of the term “verdict” under MCR 2.403(O)(2)(c) for purposes of determining whether a party who rejected a case evaluation award is liable for actual costs if the verdict is not more favorable to the rejecting party. The Michigan Supreme Court clarified that a “verdict” reached on a ruling on a motion is not limited to a motion for summary disposition. It also includes a motion for entry of judgment which, in this case, was entered to approve an appraisal panel’s award.
The lawsuit involved a dispute over a fire insurance policy. Plaintiff sought to recover losses under the policy, but the defendant-insurer denied coverage claiming that it cancelled the policy prior to the fire. At case evaluation the panel awarded $11,000 in favor of the plaintiff and against the insurer. Plaintiff accepted the award, but the insurer rejected it. Subsequently, the trial court granted summary disposition in favor of the plaintiff holding that the insurer did not provide sufficient notice that the policy was cancelled.
Following this ruling the matter was referred to an appraisal panel as provided under the policy and Michigan law. The panel found the claim to be worth $20,877. Plaintiff then filed a motion for entry of judgment for purposes of entering a judgment in this amount, plus interest, case evaluation sanctions, and debris removal expenses. The trial court granted the $20,877 judgment plus interest, but it denied case evaluation sanctions and debris removal expenses. Plaintiff appealed the denial of expenses and sanctions, and the Michigan Court of Appeals affirmed. The Michigan Supreme Court heard oral argument on plaintiff’s application for leave.
The Michigan Supreme Court reversed and remanded to the trial court for further proceedings. Under MCR 2.403(O)(2)(c), the term “verdict” includes “a judgment entered as a result of a ruling on a motion after rejection of the case evaluation.” The Court clarified decisions reached in previous cases that a ruling on a motion is not limited solely to motions for summary disposition. The motion for entry of judgment filed in this case met the definition of “verdict.” The Court explained that under MCR 2.403(O)(2)(c), the rejecting party is liable for actual costs “if: (1) the action proceeded to a judgment, (2) the judgment entered as a result of a ruling on a motion, and (3) the judgment occurred after [defendant-insurer] rejected the case evaluation.” In analyzing these factors, the Court found:
All the elements of the three-part test have been satisfied. First, the action “proceeded to a judgment” when the circuit court granted [Plaintiff’s] motion for entry of judgment and interest. Second, the judgment “entered as a result” of the court’s ruling on a motion—here, the motion for entry of judgment and interest. Third, the court entered the judgment after [the defendant-insurer] rejected the case evaluation.
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