SHAWN SPEARS V ROBERT CERIOTTI
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STATE OF MICHIGAN
COURT OF APPEALS
SHAWN SPEARS and ELIZABETH SPEARS,
UNPUBLISHED
November 17, 2005
Plaintiffs-Appellants,
v
No. 256267
Wayne Circuit Court
LC No. 02-206485-CH
ROBERT CERIOTTI, KIMBERLY ANN
CERIOTTI and ROBERT WATSON,
Defendants-Appellees,
and
HOME TECH SERVICES and BILL
GREENHALGH,
Defendants.
Before: Davis, P.J., and Fitzgerald and Cooper, JJ.
PER CURIAM.
Plaintiffs appeal as of right the order denying their motion for case evaluation sanctions
against defendants, Robert Ceriotti, Kimberly Ceriotti and Robert Watson, in this action for
breach of a residential real estate contract.1 We reverse.
A trial court’s decision to grant or deny case evaluation sanctions is subject to de novo
review on appeal. Harbour v Correctional Medical Services, Inc, 266 Mich App 452, 465; 702
NW2d 671 (2005). However, because a trial court’s decision whether to award costs pursuant to
the “interest of justice” provision set forth in MCR 2.403(O)(11) is discretionary, this Court
reviews that decision for an abuse of discretion. Id.
MCR 2.403(O) provides in pertinent part:
1
Home Tech Services and Bill Greenhalgh were dismissed from this case by stipulation and are
not parties to this appeal.
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(1) If a party has rejected an evaluation and the action proceeds to verdict,
that party must pay the opposing party’s actual costs unless the verdict is more
favorable to the rejecting party than the case evaluation. However, if the
opposing party has also rejected the evaluation, a party is entitled to costs only if
the verdict is more favorable to that party than the case evaluation.
(2) For the purpose of this rule “verdict” includes,
(a) a jury verdict
(b) a judgment by the court after a nonjury trial,
(c) a judgment entered as a result of a ruling on a motion after rejection of
the case evaluation.
***
(11) 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.
MCR 2.403(O)(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.”
Here, the parties do not dispute that both parties rejected the case evaluation and that the
verdict was more favorable to plaintiffs than the rejected case evaluation. The case evaluation
was $20,000, and the trial court awarded plaintiffs $163,000. Plaintiffs requested case
evaluation sanctions within twenty-eight days of the judgment as required by MCR 2.403(O)(8).
The threshold question is whether the verdict in this case was “a judgment entered as a result of a
ruling on a motion after rejection of the case evaluation.” MCR 2.403(O)(2)(c). If so, the court
may refuse to award actual costs in the “interest of justice.” MCR 2.403(O)(11). If the judgment
was entered as a result of a jury or non-jury trial, the court rule requires the trial court order that
defendants pay plaintiffs’ actual costs, including reasonable attorney fees, necessary to obtain a
favorable verdict after rejection of a case evaluation. MCR 2.403(O)(2); Haliw v City of Sterling
Heights (On Remand), 266 Mich App 444, 447-450; 702 NW2d 637 (2005).
Here, the trial court granted plaintiffs’ motion for summary disposition with respect to
liability and then held a three-day trial on the damages. Thus, while the decision that defendants
were liable for damages was the result of a motion, the damage verdict was the result of a non
jury trial. MCR 2.403(O)(2)(b). Under MCR 2.403(O)(1), plaintiffs are entitled to recover their
actual costs, and the court erred when it denied plaintiffs’ motion for costs and attorney fees.
The court determined that the requested fees were reasonable, and defendants do not challenge
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the reasonableness of the fees. Therefore, we remand this case for the trial court to award
$29,488.91 in costs and attorney fees to plaintiffs.2
Additionally, although defendants did not argue on appeal that Robert Watson should not
be assessed attorney fees, he should not be held liable because he had no contractual obligations
vis-à-vis plaintiffs. A court may go beyond the issues raised on appeal to address issues which
justice requires be considered and resolved. LME v ARS, 261 Mich App 273, 287; 680 NW2d
902 (2004). It undisputed that Watson had no ownership interest in the property and did not
2
Even if we assumed that this case involved MCR 2.403(O)(2)(c) and that the court had
discretion under MCR 2.403(O)(11) to deny plaintiffs’ motion for costs and attorney fees, the
court abused that discretion when it denied plaintiffs’ motion “in the interests of justice.” In
Haliw (On Remand), supra at 447-450, citing Luidens v 63rd Dist Court, 219 Mich App 24, 31;
555 NW2d 709 (1996), this Court interpreted MCR 2.403(O)(11) by analogy to the “interest of
justice” exception found in the offer of judgment rule, MCR 2.405(D)(3), because both court
rules “serve identical purposes of deterring protracted litigation and encouraging settlement.” Id.
at 448. The “interest of justice” exception should be invoked only in “unusual circumstances,”
such as where a legal issue of first impression or public interest is present, the law is unsettled
and substantial damages are at issue, there is a significant financial disparity between the parties,
or where the effect on third persons may be significant. Id. at 448-449, quoting Luidens, supra at
36. These factors are not exclusive. Id. “‘Other circumstances, including misconduct on the
part of the prevailing party, may also trigger this exception.’” Id., quoting Luidens, supra. This
Court concluded 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). Haliw, supra at 449, quoting Luidens, supra at 31.
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. [Haliw,
supra at 449-450, quoting Luidens, supra at 32.]
Here, the trial court denied plaintiffs’ motion for case evaluation sanctions in the interest of
justice, stating that plaintiffs had won a “substantial verdict.” The court did not specifically
articulate the interests of justice it relied upon when it denied plaintiffs’ motion for case
evaluation sanctions. It stated that it was exercising discretion to deny plaintiffs’ motion “in
equity and fairness.” The court cited no unusual circumstances that would justify invoking the
interests of justice exception to MCR 2.403(O). Defendants rejected the $20,000 award to
plaintiffs even though the admissions conclusively established that defendants were liable for
damages because of their misconduct. Defendants chose to pursue litigation rather than accept
the case evaluation, and plaintiffs accrued significant attorney fees as a result. Viewed in light of
the purposes of MCR 2.403(O), the trial court abused its discretion when it denied plaintiffs’
motion for costs and attorney fees.
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contract to sell it. Plaintiffs argue that they thought that Watson was Kimberly’s agent and that
neither Kimberly Ceriotti nor Robert Ceriotti ever indicated that Watson lacked authority to
make representations about the conditions of the house. While the actions of an agent bind a
principal when the agent acts with either actual or apparent authority, apparent authority must be
traceable to the principal and cannot be established only by the acts and conduct of the agent.
Alar v Mercy Memorial Hosp, 208 Mich App 518, 528; 529 NW2d 318 (1995). Here, nothing in
the record indicates that any of Kimberly’s actions reasonably lead plaintiffs to believe that an
agency relationship existed. Plaintiffs’ assumptions are not sufficient to create an agency
relationship between Kimberly and Watson. Thus, because Watson is not liable for the breach of
contract judgment, Watson is not liable for the costs and attorney fees.
Plaintiffs also argue that they should be awarded costs for appellate fees. But appellate
attorney fees and costs are not recoverable as case evaluation sanctions under MCR 2.403(O).
Haliw v Sterling Heights, 471 Mich 700, 711; 691 NW2d 753 (2005). Thus, plaintiffs are not
entitled to recover fees incurred on appeal.
Reversed and remanded for entry of a judgment consistent with this opinion. We do not
retain jurisdiction.
/s/ Alton T. Davis
/s/ E. Thomas Fitzgerald
/s/ Jessica R. Cooper
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