MICHAEL ROBERT POLLOCK V MICHELIN NORTH AMERICA INC
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STATE OF MICHIGAN
COURT OF APPEALS
MICHAEL ROBERT POLLOCK and SHANNON
MARIE POLLOCK,
UNPUBLISHED
April 4, 2000
Plaintiffs-Appellees,
v
No. 207969
Wayne Circuit Court
LC No. 94-434049 NP
MICHELIN NORTH AMERICA, INC.,
Defendant-Appellant,
and
MICHELIN CLERMONT-FERRAND
Defendant.
Before: Gage, P.J., and Fitzgerald and Markey, JJ.
PER CURIAM.
Defendant Michelin North America, Incorporated appeals as of right from a judgment for
plaintiffs in the amount of $236,400 in this products liability action. We reverse and remand.
I
Plaintiff sustained injuries in 1993 while attempting to inflate or check the air pressure within a
sixteen inch Michelin tire. Before inflating the tire, plaintiff had placed the sixteen inch tire on a 16.5 by
6.75 inch Budd Company wheel rim. Plaintiff alleged that the “tire and wheel/rim combination created
what is known in the tire and wheel/rim industry as a ‘mismatch’ condition.” The tire exploded,
allegedly breaking plaintiff’s nose, both his wrists, his right arm, hand and fingers, fracturing his ribs,
damaging an eye and causing many other abrasions and lacerations.
Plaintiffs filed a complaint alleging negligence and breach of express and implied warranty counts
against Michelin North America, Michelin Clermont-Ferrand, the Budd Company, Budd Acquisition
Corporation, and Thyssen Steel Detroit Company d/b/a Thyssen Steel Group.1 Over one year prior to
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trial, Budd Acquisition Company and Thyssen Steel Detroit Co. d/b/a Thyssen Steel Group were
dismissed pursuant to a stipulated order. On June 3, 1997, plaintiffs and the Budd company agreed to
settle, with the Budd Company agreeing to pay plaintiffs $40,000. While the status of named defendant
Michelin Clermont-Ferrand is unclear from the lower court record provided this Court, Michelin
Clermont-Ferrand is not a party to the instant appeal. 2
The trial began on June 3, 1997. The lower court docket sheets reveal that prior to trial
settlement conferences had occurred on September 26, 1996 and April 11, 1997. On June 2, 1997,
the day before trial, the parties spent approximately one hour and forty minutes in chambers discussing
settlement. On returning to the courtroom, the trial court remarked, “We’ve had some negotiations
about settlement and we’re going to adjourn the case until tomorrow morning. I have told and ordered
the attorneys from Michelin to have somebody from Michelin Tire here with the authority to settle the
case.”
The next morning, in response to the court’s inquiry whether someone with authority to settle
was now present, defense counsel presented Michelin North America (hereinafter “Michelin”) senior
technical advisor Robert Robinson. After Robinson was sworn, the court inquired of him as follows:
The Court:
All right. I understand that you don’t want to pay any money
on this case. Do you have the authority to settle the case?
Mr. Robinson: I have complete authority in this case, your Honor.
The Court:
To settle the case also?
Mr. Robinson: To settle the case or to try the case. Yes, your Honor.
The Court:
You do. All right. Okay . . . . Let me ask you this. Have you
ever settled any cases before?
Mr. Robinson: Yes, I have, your Honor.
The court, parties and representatives then again retired to chambers where for approximately forty
minutes they discussed settlement. The discussions were unsuccessful, and trial was commenced.
On June 10, 1997, plaintiffs’ counsel requested that the court permit him to cross examine
Robinson regarding his authority to settle the case, explaining that he did not believe Robinson’s earlier
representations concerning his settlement authority. The trial court permitted plaintiffs’ counsel to ask a
few questions outside the jury’s presence, leading to the following discussion:
Q:
Mr. Robinson, you have never settled a 16 inch tire 16.5 rim mismatch
case, have you?
A:
No, I haven’t.
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* * *
Q:
And you have to get authority from someone at the corporate offices to
give you authority to settle most cases, don’t you?
A:
That is not correct.
Q:
Your supervisor Mr. [Ourada] has testified, has he not, that he has the
only authority in your Products Liability Department to settle cases?
A:
To settle in terms of value, an amount.
***
Not in terms of determining whether to settle or whether not to settle.
Q:
He has to make the final say on the amount and approve it?
A:
That is correct.
Q:
And you don’t have any—
A:
But as to whether to settle or not—if you’d let me finish my—finish my
response. On whether to settle or not, it is my sole responsibility.
Q:
And you don’t have the authority to authorize money without Mr.
[Ourada]’s permission—consent?
A:
Since there is no intent on my—in my mind to settle, then there is no
question of whether there is an amount to authorize.
***
Mr. [Ourada] is my boss, your Honor. I have already said that the decision on
whether to settle or not settle the case is mine and mine alone. If I make a decision to
settle, then the figure amount for settlement has to be agreed between a committee of
my boss and myself.
Q:
Which means he hasn’t got the authority to authorize a dollar.
The Court:
A:
I have the authority not to authorize a dollar.
The Court:
A:
Is that correct?
But do you have the authority to authorize a dollar?
Not one dollar.
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Plaintiffs’ counsel moved for a contempt citation, then subsequently requested a default, which the court
took under advisement.
On June 11, 1997, after plaintiffs had presented several witnesses over four days of trial, the
parties presented the court with their arguments regarding the propriety of a default. The trial court
granted one pursuant to the following reasoning:
The Court is going to grant the motion. It is going to default the defendants.
It’s my view that in order to have a meaningful settlement conference, you have to have
somebody with the authority to pay money if you’re a defendant, and to accept money
if you’re a plaintiff. You cannot have a meaningful settlement conference if the posture
is the person who is here does not have one dollar to settle a case, and that’s what we
were told under oath. I don’t think—I think—there’s no question in my mind a
defendant does not have to settle a case, but there’s also no question in my mind that in
order for a meaningful settlement conference, a defendant does have to have somebody
with money at the settlement conference. The Court ordered that. I don’t think there’s
any question about that. And everybody knew what I had ordered. So, therefore, the
Court is going to grant the motion.
Later during the day’s proceedings, the court further discussed the basis for its ruling, quoting Kiefer v
Great Atlantic & Pacific Tea Co, Inc, 80 Mich App 590, 594, n 3; 264 NW2d 71 (1978), which the
court also quoted in its July 23, 1997 opinion:
[A] special problem is presented when the defendant is a corporation.
However, the party must be represented at these [settlement] conferences by someone
with authority to settle the suit in the same manner as an individual party. In most
instances, this will mean someone with discretion to make and accept offers not limited
by predetermined amounts.
Because the court did not believe that Robinson possessed this authority, the court concluded that
Michelin had failed to comply with MCR 2.401(F)(1) and defaulted Michelin with respect to the issue
of its liability.
After a subsequent bench trial concerning plaintiffs’ damages, the court awarded $276,000,
then subtracted the Budd Company’s $40,000 settlement, entering judgment against Michelin in the
amount of $234,000. Michelin subsequently moved to set aside the default judgment and for a new
trial, which the trial court denied.
II
Michelin contends that the trial court erred in entering the default judgment against it when it had
complied with the court’s directive to produce a representative possessing authority to settle the case.
The trial court found that defendant violated MCR 2.401(F), which provides in relevant part as follows:
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Presence of Parties at Conference. In the case of a conference at which
meaningful discussion of settlement is anticipated, the court may direct that persons with
authority to settle the case, including the parties to the action, agents of parties,
representatives of lienholders, or representatives of insurance carriers:
(1)
be present at the conference; or
(2)
be immediately available at the time of the conference. The court’s
order may specify whether the availability is to be in person or by telephone.
In the event that a party or a party’s attorney disobeys a court order to attend a settlement conference,
MCR 2.401(G) provides for a default or dismissal of that party’s case:
(1)
Failure of a party or the party’s attorney to attend a scheduled
conference, as directed by the court, constitutes a default to which MCR 2.603 is
applicable or grounds for dismissal under MCR 2.504(B).
(2)
The court shall excuse the failure of a party or the party’s attorney to
attend a conference, and enter an order other than one of default or dismissal, if the
court finds that
(a)
entry of an order of default or dismissal would cause manifest
injustice; or
(b)
the failure to attend was not due to the culpable negligence of
the party or the attorney.
Because MCR 2.401(F) and (G) give the court discretion to default a defendant for failure to
participate in pretrial proceedings, we review for an abuse of that discretion. Schell v Baker Furniture
Co, 232 Mich App 470, 474; 591 NW2d 349 (1998).
Michelin argues that it complied with MCR 2.401(F) when it produced Robinson, who had
complete and exclusive authority to determine whether to settle or try the case. Plaintiff counters that
MCR 2.401(F) demands the appearance of a representative with meaningful, unlimited settlement
authority, and characterizes Robinson’s authority as limited to only authority not to settle the case.
The trial court abused its discretion in entering a default against Michelin on the basis that
Robinson lacked authority to offer specific amounts of money in settlement because the plain language
of MCR 2.401(F) and (G) contemplates entry of a default only when a party or its attorney fails to
attend a scheduled conference, and makes no provision for a default based on the party’s or party’s
attorney’s failure to make a settlement offer. Henry v Prusak, 229 Mich App 162, 170; 582 NW2d
193 (1998). No indication exists that Michelin or Robinson attempted to avoid attending any settlement
conference. To the contrary, defense counsel and Robinson engaged in at least two separate attempts
to settle the case before trial, and the record does not reveal that defense counsel or Robinson in bad
faith simply refused to entertain any settlement of the case. Although the entry of default prevented
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Michelin from presenting its case in chief, defense counsel filed with Michelin’s motion to set aside the
default his sixteen page affidavit of meritorious defense.
We find that defendant’s production of Robinson satisfied MCR 2.401(F) and the trial court’s
order. The court rule’s plain language contemplates only the facilitation of “meaningful” settlement
discussions among “persons with authority to settle the case.”3 We note that the trial court did not
explicitly require the presence of someone who could authorize the payment of a specific monetary
amount. In response to the court’s order, Michelin produced Robinson, who testified repeatedly and
undisputedly that he alone could decide whether or not to entertain settlement of this particular case for
any monetary sum. He explained that he spent seventy to eighty percent of his time working for
Michelin defending its products in litigation, and explained that “this particular file is mine within the
corporation,” that it had always been his responsibility, and that he was fully familiar with it. Thus,
Michelin’s production of Robinson, who possessed complete authority to determine whether to settle or
try the case, and who meaningfully participated in the settlement negotiations, properly responded to
MCR 2.401(F) and the court’s order.
To the extent that the trial court relied on Kiefer, supra, in ordering the default, its reliance was
misplaced. Unlike Kiefer, this case did not involve a representative that made a deliberate effort to
avoid settlement negotiations altogether. Additionally, while Kiefer involved a disagreement concerning
an appropriate settlement amount, this case involved Michelin’s determination, at Robinson’s
recommendation, that it did not wish to settle at all. With respect to the Kiefer Court’s statement in
footnote three, supra, this case is not one in which Michelin produced a representative who could not
effectively negotiate because he lacked authority to act on Michelin’s behalf and was simply instructed
by another individual with authority to offer only a certain, specific sum. The fact that someone besides
Robinson must concur in a specific settlement dollar amount is irrelevant in this case when Robinson, the
individual possessing the sole authority to determine whether the instant case represents a candidate for
settlement at any dollar amount, has apparently in good faith concluded that this is not such a case.4
We note briefly that under the circumstances of this case the trial court’s entry of a default
sanctioned Michelin for its failure to make a settlement offer.
A court cannot “force” settlements upon parties. The practical effect of [the
trial court]’s sanction of default against a party whose insurance carrier’s representative
refuses to make an offer to pay money is to force settlement. While we certainly
encourage settlement negotiations as an essential and necessary tool for the resolution of
disputes and docket control in congested courts, we cannot tolerate the routine practice
of entering a default against a party for failure of the party’s insurance carrier to make an
offer of settlement. Such a practice deprives a party of due process, the right to assert
a defense, and the right to have a jury determine any disputed issues of fact. [Henry,
supra at 170-171.]
Although Henry involved a defendant defaulted for its nonparty insurance carrier’s refusal to offer a
settlement, we find that its reasoning applies to this case involving the party’s own representative.5
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Plaintiffs offer the dire prediction that a reversal of the trial court “will toll the death knoll for
settlement cases in Michigan courts.” Plaintiffs’ rhetoric ignores the facts of this case, however, which
show that pursuant to MCR 2.401(F) the trial court demanded the presence of a representative with
authority, that Robinson had authority to determine whether to settle or try the case, and that Michelin
and Robinson attended apparently meaningful settlement negotiations. These facts reflect that the court
rules achieved their intended purpose to achieve meaningful settlement discussions.6
In light of our conclusion that the trial court abused its discretion in defaulting Michelin pursuant
to MCR 2.401, we need not address Michelin’s further constitutional arguments.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ Hilda R. Gage
/s/ E. Thomas Fitzgerald
/s/ Jane E. Markey
1
Shannon Pollock also alleged loss of consortium.
2
After reviewing the record, we are unable to ascertain exactly what happened to Michelin ClermontFerrand. The record contains a translated affidavit of service indicating that the French corporation was
served on April 12, 1995. While Michelin Clermont-Ferrand generally appeared on the parties’ filings
throughout the case, we did not locate the entry of an appearance by the corporation. At trial, the
parties’ attorneys disagreed whether Michelin Clermont-Ferrand was ever properly served.
3
The trial court equated a “person[] with authority to settle” as someone with authority to pay specific
amounts of money. The language of MCR 2.401(F) is devoid of any such specific requirements. While
plaintiffs cite this Court’s statement that “[t]he purpose behind MCR 2.401 is satisfied when the
insurance company sends a representative who has unlimited authority and unfettered discretion to settle
the case and who is able to participate in meaningful settlement negotiations,” Kornak v Auto Club Ins
Ass’n, 211 Mich App 416, 422; 536 NW2d 553 (1995), we note that the Kornak Court did not hold
that meaningful settlement negotiations under MCR 2.401 can only occur in the presence of someone
with totally unfettered settlement discretion.
4
While plaintiffs contend that Robinson had no authority to settle as contemplated by the court rule
because “[h]e was a courier of Defendant’s fixed, predetermined prohibition against settlement of this
case,” plaintiffs’ argument ignores Robinson’s testimony regarding the scope of his authority.
Furthermore, plaintiffs do not support their assertion that Robinson was programmed to adhere to a
predetermined position of settlement rejection.
5
Although court rule commentary does not represent authority binding on this Court, we note the
following persuasive and relevant discussion of MCR 2.401(G):
It has been reported that some Michigan trial courts have adopted a practice of
entering defaults against defendants who appear at a settlement conference but offer
little or nothing in settlement. The apparent theory is that offering nothing in settlement is
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not meaningful participation, and is therefore tantamount to refusing to attend the
settlement conference. We believe that such a practice is not authorized by MCR
2.401(G), which permits entry of a default only for “[f]ailure of a party or the party’s
attorney to attend a scheduled conference.” To add the additional requirement that the
party make what the trial court considers a “meaningful” settlement offer, on pain of
default or dismissal, would require an amendment to the rule, and would seriously
intrude upon the parties’ right to a “day in court.” Once a party is in attendance, it is up
to the opposing party, with or without the court’s assistance, to persuade that party to
change its settlement position based on the likely outcome of the trial. The same
principle applies to all parties to the case. If either the plaintiff or the defendant elects
not to settle, or holds out for what the court may deem an “unreasonable” settlement, it
has every right to proceed to trial, weighing the risk of an unfavorable outcome against
the possibility of complete vindication. [2 Dean & Longhofer, Michigan Court Rules
Practice, p 478 (emphasis in original).]
6
Plaintiffs also argue that a default was proper pursuant to MCR 2.506(A)(2) and (F). We will not
address these provisions, however, because neither the parties nor the trial court previously addressed
these provisions. Fast Air, Inc v Knight, 235 Mich App 541, 549; 599 NW2d 489 (1999).
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