VALERIA HALIW V CITY OF STERLING HEIGHTS
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
VALERIA HALIW and ILKO HALIW,
FOR PUBLICATION
May 19, 2005
9:05 a.m.
Plaintiffs-Appellees/CrossAppellants,
v
No. 237269
Macomb Circuit Court
LC No. 97-000036-NO
CITY OF STERLING HEIGHTS,
Defendant-Appellant/CrossAppellee.
ON REMAND
Official Reported Version
Before: Markey, P.J., and White and Zahra, JJ.
PER CURIAM.
This case is before this Court again on remand by our Supreme Court to consider
plaintiffs' cross-appeal on an issue not reached in our prior opinion, and to determine whether the
trial court abused its discretion by failing to invoke the "interest of justice" exception under
MCR 2.403(O)(11). Haliw v Sterling Hts, 471 Mich 700, 702, 711; 691 NW2d 753 (2005). We
are unable to find that the trial court abused its discretion, and, therefore, we affirm.
In Haliw v Sterling Hts, 257 Mich App 689; 669 NW2d 563 (2003), this Court concluded
that MCR 2.403(O) permits an award of reasonable appellate attorney fees as "actual costs"
necessary to obtain a favorable verdict after rejection of a case evaluation. In reversing, our
Supreme Court found that appellate attorney fees are not within the ambit of MCR 2.403(O)
because Michigan follows the "American rule" under which "attorney fees generally are not
recoverable from the losing party as costs in the absence of an exception set forth in a statute or
court rule expressly authorizing such an award" and "MCR 2.403(O) is trial-oriented." 471
Mich at 706-707.
This case has a lengthy history that we do not repeat here. See id. at 702-704. The
present issue arises out of the trial court granting defendant summary disposition and its ruling
on defendant's motions for case evaluation sanctions. In our prior opinion we summarized the
MCR 2.403(O) proceedings in the trial court:
Defendant requested $31,618 in case evaluation sanctions which included
its appellate attorney fees. The trial court entered an order granting defendant
summary disposition but agreed with plaintiffs that MCR 2.403(O) did not
-1-
provide for payment of defendant's appellate attorney fees. Because the trial
court could not segregate defendant's trial court costs and attorney fees from its
appellate costs and attorney fees, the trial court requested that defendant do so and
resubmit a bill of costs. Thereafter, defendant presented a supplemental motion
for [case evaluation] sanctions in the amount of $5,335 for its trial court expenses.
At the hearing on defendant's supplemental motion, the trial court recognized it
had the discretion to not award costs or attorney fees, but noted that there were
two sides to the case and that defendant had incurred expenses. The trial court
further reasoned that because plaintiffs' claim was not frivolous and because the
appellate ruling established legal precedent benefiting defendant, it would award
defendant only $1,500 in case evaluation sanctions. [257 Mich App at 693.]
Plaintiffs argue that under the facts and circumstances of this case, the trial court erred by
not invoking the "interests of justice" exception under MCR 2.403(O)(11) to decline to award
any case evaluation sanctions. We disagree.
Subsection 11 is an exception to the mandatory rule set forth in MCR 2.403(O)(1) that a
party who rejects a case evaluation "must pay the opposing party's actual costs unless the verdict
is more favorable to the rejecting party than the case evaluation." Subsection 11 provides: "If
the 'verdict' is the result of a motion as provided by subrule (O)(2)(c), the court may, in the
interest of justice, refuse to award actual costs." In this case, subsection 11 confers discretion on
the trial court to "refuse to award actual costs" because the "verdict" was entered "as a result of a
ruling on a motion after rejection of the case evaluation." MCR 2.403(O)(2)(c). But to invoke
the exception the trial court must find it is "in the interest of justice" to do so. Because the court
rules do not define the term "interest of justice," we "look to the language and purpose of the
rule" for assistance in determining its meaning. Luidens v 63rd Dist Court, 219 Mich App 24,
31; 555 NW2d 709 (1996). We repeat our prior analysis:
The Luidens panel addressed the meaning of the term "interest of justice"
found in MCR 2.405(D)(3), which creates an exception to the imposition of
sanctions for rejecting an offer of judgment. Id. We find Luidens instructive
because both MCR 2.403(O), imposing costs for rejecting a case evaluation, and
MCR 2.405(D), imposing costs for rejecting an offer of judgment, serve identical
purposes of deterring protracted litigation and encouraging settlement. Dessart [v
Burak, 252 Mich App 490, 498; 652 NW2d 669 (2002)]; Luidens, supra at 31.
The two rules are not identical, however. MCR 2.405(D)(3) gives trial courts the
discretion, in all cases where an offer of judgment has been rejected, to decline to
impose attorney fees in the "interest of justice." On the other hand, MCR
2.403(O)(11) applies only to verdicts rendered as a result of a motion but grants
the trial court discretion to refuse to award "actual costs," which include both
court costs and reasonable attorney fees. The term "interest of justice" in MCR
2.403(O)(11) must not be too broadly applied so as to swallow the general rule of
subsection 1 and must not be too narrowly construed so as to abrogate the
exception. Luidens, supra at 33. This Court further held that factors normally
present in litigation, such as a refusal to settle being viewed as "reasonable," or
that the rejecting party's claims are "not frivolous," or that disparity of economic
-2-
status exists between the parties, are insufficient "without more" to justify not
imposing sanctions in the "interest of justice." Id. at 33-34, 37. Rather, the
unusual circumstances necessary to invoke the "interest of justice" exception may
occur where a legal issue of first impression is presented, id at 35, or
"where the law is unsettled and substantial damages are at issue, where a party is
indigent and an issue merits decision by a trier of fact, or where the effect on third
persons may be significant . . . ." [Id. at 36, quoting Judge Harrison in Nostrant v
Chez Ami, Inc, 207 Mich App 334, (343); 525 NW2d 470 (1994).]
The Luidens panel further opined:
"The common thread in these examples is that there is a public interest in
having an issue judicially decided rather than merely settled by the parties. In
such cases, this public interest may override MCR 2.405's purpose of encouraging
settlement. These examples involve unusual circumstances under which the
'interest of justice' might justify an exception to the general rule that attorney fees
are to be awarded. We recognize, of course, that the factors suggested here as
relevant to the 'interest of justice' exception are not exclusive. We offer them
only as examples. Other circumstances, including misconduct on the part of the
prevailing party, may also trigger this exception." [Luidens, supra at 36.]
In Stitt v Holland Abundant Life Fellowship (On Remand), 243 Mich App
461; 624 NW2d 427 (2000), this Court followed the "unusual circumstance"
interpretation of the phrase "interest of justice," as found in MCR 2.405(D)(3).
Indeed, the Stitt panel determined that the trial court had abused its discretion by
not invoking the exception. Specifically, this Court concluded that the
combination of two "unusual circumstances," the unsettled nature of the law and
the "gamesmanship" evidenced by the large disparity between the rejected
mediation evaluation and the defendant's offer of judgment, compelled invocation
of the 'interest of justice' exception to awarding attorney fees. Id. at 471-476.
* * *
In sum, we conclude that if the trial court finds on the basis of all the facts
and circumstances of a particular case and viewed in light of the purposes of
MCR 2.403(O) that unusual circumstances exist, it may invoke the "interest of
justice" exception found in MCR 2.403(O)(11). It follows that if the exception
applies, the trial court may, in the exercise of its discretion, refuse to award any
costs or attorney fees, or may award something less than "actual costs," i.e.,
something less than taxable costs and reasonable attorney fees. The trial court
must, however, articulate the bases for its decision. Luidens, supra at 32, citing
Hamilton v Becker Orthopedic Appliance Co, 214 Mich App 593, 596-597; 543
NW2d 60 (1995). [Haliw, supra, 257 Mich App at 706-709.]
In reviewing the trial court's decision regarding case evaluation sanctions for an abuse of
discretion under the standard discussed here, we do not find the circumstances of this case to be
-3-
so unusual as to compel our concluding that the trial court abused its discretion by failing to
invoke the "interest of justice" exception to deny defendant's request for "actual costs" in its
entirety.
We observe that no excessive financial hardship was imposed on plaintiffs. Defendant
was awarded only $1,500 of its trial costs and fees. This is a small sanction in light of the
$5,335 in trial costs and fees recognized by the trial court. Plaintiffs argue that their rejection of
the case evaluation award was reasonable under the circumstances, but this Court has rejected a
contention of "reasonable under the circumstances" as an argument sufficiently compelling to
invoke the "interest of justice" exception. Gudewicz v Matt's Catering Inc, 188 Mich App 639,
644-646; 470 NW2d 654 (1991). Further, this Court has rejected plaintiffs' additional argument
that sanctions are improper because defendant also rejected the case evaluation. "Actual costs,
including attorney fees, are awardable when both parties reject the award as well as when only
one does." Zalut v Andersen & Associates, Inc, 186 Mich App 229, 232-234; 463 NW2d 236
(1990). Given the development of the law in the area of premises liability, plaintiffs should have
been aware that any ruling in their favor had the potential to be reversed on appeal. They were
required to make their litigation decisions with that knowledge. The fact that sanctions may
have a chilling effect on future litigation is not an unusual circumstance. Indeed, an award of
costs is intended to have some chilling effect in order to encourage settlement and to deter
protracted litigation. Luidens, supra at 31. Accordingly, we find no abuse by the trial court of
its discretion.
We affirm.
/s/ Jane E. Markey
/s/ Helene N. White
/s/ Brian K. Zahra
-4-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
