MEGA DYNAMICS INC V HANDLEMAN CO
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STATE OF MICHIGAN
COURT OF APPEALS
MEGA DYNAMICS, INC.,
UNPUBLISHED
December 6, 2002
Plaintiff-Appellant/Cross-Appellee,
v
No. 211967
Oakland Circuit Court
LC No. 91-414593-CZ
HANDLEMAN COMPANY,
Defendant-Appellee/CrossAppellant,
ON REMAND
and
TELXON CORPORATION,
Defendant-Appellee.
Before: Holbrook, Jr., P.J., and Meter and Owens, JJ.
PER CURIAM.
This case returns to us on remand from our Supreme Court. Cross-appellant Handleman
Company’s application for leave to appeal was held in abeyance by the Supreme Court pending
its decision in CAM Constr v Lake Edgewood Condominium Ass’n, 465 Mich 549; 640 NW2d
256 (2002). Following issuance of the CAM Constr decision, the Supreme Court remanded the
case to us “[f]or reconsideration in light of the fact that CAM Constr expressly overruled the
rationale of Reddam v Consumer Mortgage Corp, 182 Mich App 754[; 452 NW2d 908] (1990),
and its progeny that was relied on by the Court of Appeals in this case.” Mega Dynamics, Inc v
Handleman Co, ___ Mich ___; 645 NW2d 667 (2002). We affirm in part, reverse in part, and
remand for further proceedings.
The underlying facts of the case were set forth in our prior opinion:
Mega Dynamics, Inc. (Mega), filed this action against Handleman Company
(Handleman), for breach of an alleged contract to purchase hand-held,
computerized scanners. Mega also brought a claim against Telxon Corporation
(Telxon) for tortious interference with contract or business relationship. The
circuit court granted summary disposition to both defendants and Mega appealed.
This Court held that the circuit court erred in ruling that Handleman was not a
merchant for purposes of the Uniform Commercial Code (UCC) statute of frauds
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confirmatory memorandum provision and, therefore, dismissing Mega’s breach of
contract claim on the basis that it was barred by the UCC statute of frauds. This
Court also found that the circuit court erred in dismissing, pursuant to MCR
2.116(C)(8), Mega’s claim of tortious interference on the basis that it had
dismissed Mega’s breach of contract claim and that plaintiff failed to plead
improper conduct on the part of Telxon.
On remand, the circuit court granted summary disposition for both
defendants pursuant to MCR 2.116(C)(10). Mega appeals as of right. Handleman
appeals the trial court’s denial of mediation sanctions. [Mega Dynamics v
Handleman Co, unpublished opinion per curiam of the Court of Appeals, issued
July 21, 2000 (Docket No. 211967) [hereinafter Mega Dynamcis I.]
The Supreme Court’s remand order does not affect our prior resolution of the issues
raised on appeal to this Court by Mega Dynamics. We now reaffirm our earlier holding rejecting
Mega Dynamics’ claims that the trial court had erred in granting summary disposition to
Handleman and Telxon. Id. at slip op 2-4.
In our prior opinion we rejected Handleman’s claim that the trial court erred in denying
its motion for mediation sanctions pursuant to MCR 2.403. Mega Dynamics I, supra at slip op 45. In our analysis, we cited Reddam and Joan Automotive Industries, Inc v Check, 214 Mich
App 383; 543 NW2d 15 (1995). Subsequently, however, our Supreme Court held in CAM
Constr that “[t]o the extent that Reddam and its progeny[1] have been read to suggest that parties
may except claims from case evaluation under the current rule, these cases are overruled.” CAM
Constr, supra at 557.
The plaintiff in CAM Constr had filed a four-count complaint against the defendant “for
damages stemming from defendant’s failure to pay plaintiff for services rendered and breach of
contract.” Id. at 550-551. Prior to case evaluation, the defendant was granted summary
disposition on count IV of the complaint. Id. at 551. Subsequently, both parties accepted the
case evaluation. Id. at 552. The plaintiff objected to the defendant’s proposed order dismissing
the entire case, arguing “that it had reserved its right to appeal the summary disposition on count
IV.” Id. The circuit court agreed and ordered that a judgment be crafted that dismisses the case
except for count IV. Id. This Court then dismissed the plaintiff’s appeal of the summary
disposition on count IV because the plaintiff was not an aggrieved party. Id. at 553. Thereafter,
the plaintiff applied to the Supreme Court for leave to appeal.
At issue in CAM Constr was whether the plaintiff could “appeal an earlier partial
summary disposition ruling where the parties have subsequently accepted a case evaluation
award.” Id. CAM Constr rejected this argument “because it was contrary to the plain language
of MCR 2.403(M)(1).” CAM Constr, supra at 554. “The language of MCR 2.403(M)(1) could
not be more clear,” the Court observed, “that accepting a case evaluation means that all claims in
the action, even those summarily disposed, are dismissed. . . . [A]llowing bifurcation of the
1
Joan Automotive was identified as having followed the principles of law established in
Reddam. CAM Constr, supra at 556.
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claims within such actions . . . would be directly contrary to the language of the rule.” CAM
Constr, supra at 555 (footnote omitted; emphasis in original).
The case at bar, however, does not involve the acceptance of an evaluation.2 Rather, at
issue is plaintiff’s rejection of a 1992 evaluation award of $25,000.3 Rejection of an evaluation
is governed by MCR 2.403(N)(1), which reads: “If all or part of the evaluation of the case
evaluation panel is rejected, the action proceeds to trial in the normal fashion.” Unlike MCR
2.403(M)(1), MCR 2.403(N)(1) specifically recognizes in clear language that an evaluation is
bifurcated to the extent that individual separate awards within the evaluation may be rejected
while others are accepted. The question then becomes whether this recognition of a bifurcated
process means that when an evaluation is rejected, a party can successfully argue that a part of
his claim against a given defendant may be considered to have been excepted from case
evaluation because that part was previously dismissed by motion.
To understand MCR 2.403(N)(1), we look to MCR 2.403(K)(2) and (O)(4)(a). Subrule
(K)(2) reads as follows:
The evaluation must include a separate award as to the plaintiff’s claim
against each defendant and as to each cross-claim, counterclaim, or third-party
claim that has been filed in the action. For the purpose of this subrule, all such
claims filed by any one party against any other party shall be treated as a single
claim.
Subrule (O)(4)(a) reads as follows:
Except as provided in subrule (O)(4)(b), in determining whether the
verdict is more favorable to a party than the case evaluation, the court shall
consider only the amount of the evaluation and verdict as to the particular pair of
parties, rather than the aggregate evaluation or verdict as to all parties. However,
costs may not be imposed on a plaintiff who obtains an aggregate verdict more
favorable to the plaintiff than the aggregate evaluation.
Read together, these two subrules clearly indicate that when more than one defendant is
involved, the claims against each defendant are considered and dealt with separately within the
case evaluation process. See Wilcoxon v Wayne Co Neighborhood Legal Services, 252 Mich
App 549, 553; ___ NW2d ___ (2002). In other words, the partial rejection spoken of in subrule
(N)(1) is not a partial rejection of an amount awarded on a particular count within a claim against
a given defendant, but the rejection of an amount awarded on a claim against one defendant in a
multi-defendant action, or the amount awarded on “each cross-claim, counterclaim, or third-party
claim that has been filed in the action.” As subrule (K)(2) plainly states, because “all . . . claims
2
At all times relevant, the process involved in the case at bar was termed “mediation” by MCR
2.403. Effective August 1, 2000, MCR 2.403 was amended, and the term “mediation” was
replaced with “case evaluation.”
3
In February 1998, the action was reevaluated on order of the court. Because summary
disposition was granted to Handleman before the expiration of the parties’ time to accept or
reject the award, the 1998 evaluation cannot serve as a basis for sanctions. MCR 2.403(L).
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filed by any one party against any other party shall be treated as a single claim,” the amount
awarded separately “as to the plaintiff’s claim against each defendant,” addresses all claims
brought against the other party.
Therefore, the 1992 evaluation rejected by Mega Dynamics encompassed all of its claims
against Handleman, including the breach of contract claim that was summarily dismissed by the
court prior to the case evaluation. Following Mega Dynamics' rejection of the 1992 evaluation,
the action proceeded to verdict, i.e., judgment was entered on Handleman’s motion for summary
disposition of Mega Dynamics promissory estoppel claim. MCR 2.403(O)(1) & (O)(2).
Because the verdict was more favorable to Handleman than the evaluation, Handleman is due its
actual costs. MCR 2.403(O)(1).
On remand, the trial court shall determine Handleman’s actual costs. We remind the trial
court that while for purposes of MCR 2.403(N) all of Mega Dynamic’s claims against
Handleman were submitted for case evaluation, Handleman is only due a reasonable attorney fee
“necessitated by the rejection of the case evaluation.” MCR 2.403(O)(6)(b). Further, because
this case was decided on motion for summary disposition, the court retains all of its discretionary
authority under MCR 2.403(11).
Affirmed in part, reversed in part, and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.
/s/ Donald E. Holbrook, Jr.
/s/ Patrick M. Meter
/s/ Donald S. Owens
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