CHRISTINA MARTINELLI V OAKWOOD HOSP & MED CENTER
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STATE OF MICHIGAN
COURT OF APPEALS
CHRISTINA MARTINELLI and JOHN
SANDLIN III, Individually and as Co-Personal
Representatives of the Estate of ELIZABETH
KITCHEN,
UNPUBLISHED
October 15, 2009
Plaintiffs-Appellees,
v
OAKWOOD HOSPITAL & MEDICAL CENTER,
No. 283923
Wayne Circuit Court
LC No. 05-524387-NH
Defendant,
and
MICHAEL DARGAY, D.O.,
Defendant-Appellant.
Before: Saad, C.J., and O’Connell and Zahra, JJ.
PER CURIAM.
In this wrongful death action, defendant Michael Dargay, D.O. (Dargay), appeals as of
right from the trial court’s order granting his motion for $42,048.50 in case evaluation sanctions
against plaintiffs, but denying his request to have the sanctions paid from the proceeds of a
$17,500 settlement between plaintiffs, as co-personal representatives of the estate of Elizabeth
Kitchen, and codefendant Oakwood Hospital and Medical Center (Oakwood Hospital). We
affirm.
Plaintiffs filed a wrongful death action against defendants on August 18, 2005, in both an
individual and representative capacity, alleging medical malpractice against Dargay and
vicarious liability on the part of Oakwood Hospital.1
1
The issue on appeal only concerns plaintiffs’ actions in a representative capacity as co-personal
representatives of Kitchen’s estate.
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In October 2007, plaintiffs settled the estate’s claims against Oakwood Hospital for
$17,500. Plaintiffs’ claims against Dargay went to trial, where a jury found in favor of Dargay.
On November 26, 2007, the trial court entered a judgment of no negligence in favor of Dargay,
in accordance with the jury’s verdict. The settlement proceeds were to be paid directly to
plaintiffs’ attorney because the retainer agreement required that costs be paid first from any
settlement. Because costs exceeded the settlement amount, the entire amount was to be paid to
plaintiffs’ attorney.
The next day, Dargay moved for case evaluation sanctions under MCR 2.403 because the
jury verdict was more favorable than a $125,000 case evaluation award that both plaintiffs and
Dargay had rejected. The trial court awarded $42,048.50 in case evaluation sanctions to Dargay.
Dargay also claimed a priority right to the settlement proceeds under the wrongful death
act. However, the retainer agreement between plaintiffs and their attorney required that costs be
paid first from any settlement. Because costs exceeded the $17,500 settlement amount, plaintiffs
claimed that no money from the settlement would be available to pay the sanctions. The trial
court determined that the $17,500 settlement not be considered part of the judgment against
Dargay and ordered that plaintiffs’ attorney’s law firm receive the $17,500 settlement to cover
costs of litigation.
On appeal, Dargay argues that case evaluation sanctions have priority under the wrongful
death act, MCL 600.2922, and that the trial court should not have denied his request for payment
of the case evaluation sanctions from the proceeds of plaintiffs’ settlement with Oakwood
Hospital. We disagree.
The interpretation and application of a statute presents a question of law that we review
de novo. Associated Builders & Contractors v Dep’t of Consumer & Industry Services Director,
472 Mich 117, 123-124; 693 NW2d 374 (2005). The same legal principles that govern the
construction and application of a statute also apply to the construction of a court rule. Marketos
v American Employers Ins Co, 465 Mich 407, 413; 633 NW2d 371 (2001). When construing a
statute, “we give effect to the Legislature’s purpose and intent according to the common and
ordinary meaning of the language used.” Bailey v Oakwood Hosp & Medical Ctr, 472 Mich 685,
693; 698 NW2d 374 (2005). “Statutes that relate to the same subject or that share a common
purpose are in pari materia and must be read together as one law, even if they contain no
reference to one another and were enacted on different dates.” Walters v Leech, 279 Mich App
707, 709-710; 761 NW2d 143 (2008). “The object of the in pari materia rule is to effectuate the
legislative purpose as found in harmonious statutes.” In re Project Cost & Special Assessment
Roll for Chappel Dam, 282 Mich App 142, 148; 762 NW2d 192 (2009).
In this case, the only source that Dargay is looking for to pay the case evaluation
sanctions is the $17,500 settlement between Oakwood Hospital and plaintiffs. A settlement
between parties is not the result of a ruling on a motion and, therefore, is not a “verdict” subject
to costs under MCR 2.403. Webb v Holzheuer, 259 Mich App 389, 392; 674 NW2d 395 (2003).
The material question in this case is whether Dargay, a non-party to the $17,500 settlement, may
nonetheless look to that settlement to recover case evaluation sanctions that decedent’s estate
owed him as a result of a separate verdict of no negligence in his favor.
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In general, the probate court has jurisdiction over matters relating to the settlement of a
decedent’s estate under the Estates and Protected Individuals Code (EPIC), MCL 700.1101 et
seq. See MCL 700.1103(j) (defining “court” as “the probate court or, when applicable, the
family division of circuit court”) and MCL 700.1302(a) (a “court” has exclusive jurisdiction over
“[a] matter that relates to the settlement of a deceased individual’s estate”). The matters coming
within the probate court’s exclusive jurisdiction include, but are not limited to, estate
administration, settlement and distribution, and a declaration of rights involving an estate,
devisee, heir, or fiduciary. MCL 700.1302(a)(ii) and (iii).
EPIC contains a number of specific provisions governing the administration of an estate.
Specifically, MCL 700.3805(a) establishes the priority of claims in the event that “the applicable
estate property is insufficient to pay all claims and allowances in full.” The first priority is given
to “[c]osts and expenses of administration.” MCL 700.3805(a). Further, MCL 700.3715(w)
authorizes a personal representative, acting reasonably and for the benefit of reasonable persons,
to “[e]mploy an attorney to perform necessary legal services or to advise or assist the personal
representative in the performance of the personal representative’s administrative duties.”
MCL 700.3924 addresses the distribution of proceeds where a wrongful death claim is
not pending in another court. The statute authorizes the probate court to approve a settlement,
MCL 700.3924(1), and to authorize distribution of the proceeds of a court settlement as follows:
After a hearing on the personal representative’s petition, the court shall
order payment from the proceeds of the decedent’s reasonable medical, hospital,
funeral, and burial expenses for which the estate is liable. The proceeds shall not
be applied to the payment of any other charges against the decedent’s estate. The
court shall then enter an order distributing the proceeds to those persons
designated in section 2922 of the revised judicature act of 1961 who suffered
damages and to the decedent’s estate for compensation for conscious pain and
suffering, if any, in the amount the court considers fair and equitable considering
the relative damages sustained by each of the persons and the decedent’s estate.
[MCL 700.3924(2)(d) (emphasis added).]
Where a wrongful death action is pending in a different court, MCL 700.3924(2)(g)
provides that procedures prescribed in MCL 600.2922 apply to “the distribution of proceeds of a
settlement or judgment.” MCL 600.2922, commonly referred to as the wrongful death act,
concerns actions brought by the personal representative of a decedent’s estate where the death
was caused by the wrongful act, negligence, or fault of another. MCL 600.2922(1) and (2). As
amended in 2000 and 2005, MCL 600.2922 identifies persons who might be entitled to damages,
subject to MCL 700.2802 to MCL 700.2805 in EPIC. MCL 600.2922(3). The statute also
provides, in pertinent part:2
2
The pre-EPIC version of the statute, as amended by 1985 PA 93, contains the same distribution
provision as the current subsection (6)(d). The 2000 amendment primarily changed references in
the statute from the Revised Probate Code to the EPIC. The 2005 amendment does not contain
(continued…)
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(5) If, for the purpose of settling a claim for damages for wrongful death where
an action for those damages is pending, a motion is filed in the court where the
action is pending by the personal representative asking leave of the court to settle
the claim, the court shall, with or without notice, conduct a hearing and approve
or reject the proposed settlement.
(6) In every action under this section, the court or jury may award damages as the
court or jury shall consider fair and equitable, under all the circumstances
including reasonable medical, hospital, funeral, and burial expenses for which the
estate is liable; reasonable compensation for the pain and suffering, while
conscious, undergone by the deceased during the period intervening between the
time of the injury and death; and damages for the loss of financial support and the
loss of the society and companionship of the deceased. The proceeds of a
settlement or judgment in an action for damages for wrongful death shall be
distributed as follows:
(a) The personal representative shall file with the court a motion for
authority to distribute the proceeds. Upon the filing of the motion, the
court shall order a hearing.
***
(d) After a hearing by the court, the court shall order payment from the
proceeds of the reasonable medical, hospital, funeral, and burial expenses
of the decedent for which the estate is liable. The proceeds shall not be
applied to the payment of any other charges against the estate of the
decedent. The court shall then enter an order distributing the proceeds to
those persons designated in subsection (3) who suffered damages and to
the estate of the deceased for compensation for conscious pain and
suffering, if any, in the amount as the court or jury considers fair and
equitable considering the relative damages sustained by each of the
persons and the estate of the deceased. If there is a special verdict by a
jury in the wrongful death action, damages shall be distributed as provided
in the special verdict.
(e) If none of the persons entitled to the proceeds is a minor, a
disappeared person, or a legally incapacitated individual and all of the
persons entitled to the proceeds execute a verified stipulation or agreement
in writing in which the portion of the proceeds to be distributed to each of
the persons is specified, the order of the court shall be entered in
accordance with the stipulation or agreement. [MCL 600.2922(5), (6).]
Based on this statutory scheme, although a circuit court plainly has authority in a
wrongful death action to distribute funds received pursuant to a settlement or judgment, it does
(…continued)
any substantive changes to subsection (6).
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not have authority to go beyond MCL 600.2922 and determine how a personal representative
should pay expenses under EPIC. The trial court in this case unduly confused the issue by
attempting to ascertain how expenses would be paid under EPIC.
Further, the trial court incorrectly cited In re McDivitt Estate, 169 Mich App 435; 425
NW2d 575 (1988), for the proposition that case evaluation sanctions are administrative expenses
under the wrongful death act. The matter before the McDivitt Court was a probate court petition
to recoup a prior distribution in order to pay mediation (now case evaluation) sanctions awarded
to a defendant in a separate circuit court action. Id. at 437-438. The McDivitt Court held that
mediation sanctions were administrative expenses of the estate under the priority provision in the
Revised Probate Code, MCL 700.192 (repealed by 1998 PA 386, effective April 1, 2000),
because a contrary holding would frustrate the intent in MCR 2.403(O) “by giving estates
immunity from the consequences of prosecuting meritless claims.” Id. at 440. But recoupment
of amounts already distributed was denied based on a determination that “the partial distribution
was made in good faith, with full disclosure and pursuant to a court order which was not set
aside and from which no appeal was taken.” Id. at 443. Because the instant action is a wrongful
death action in circuit court, the material issue is whether MCL 600.2922(6) allows Dargay to
recover case evaluation sanctions against a $17,500 settlement to which he is not a party. This is
not solely a question of priority, but rather whether there exists any right in the first instance to
reach the settlement proceeds.
The trial court also considered Bennett v Weitz, 220 Mich App 295, 298; 559 NW2d 354
(1996), but that case does not involve a wrongful death action. In Bennett, the plaintiffs filed a
medical malpractice action in district court. Id. at 296. The defendants were awarded mediation
sanctions because a jury returned a verdict that was more than ten percent below the mediation
evaluation. Id. at 296-297. The plaintiffs claimed that they were entitled to pay the contingent
attorney fees and costs owed to their attorney before offsetting the mediation sanctions against
the judgment. Id. at 297. The Bennett Court found merit to the plaintiffs’ argument that their
attorney could collect attorney fees and costs from the judgment on the ground that “Michigan
recognizes a common-law attorney’s lien on a judgment or fund resulting from the attorney’s
services.” Id. But looking to MCR 2.403 and its purpose to place the burden of litigation costs
on the party who demands a trial by rejecting a proposed mediation award, the Bennett Court
held that the mediation sanctions must be deducted from the judgment before the plaintiffs paid
the attorney fees and costs owed to their attorney. Id. at 301. In dicta, the Bennett Court
observed:
[T]he action at bar is unlike cases with multiple defendants where one
defendant has settled with the plaintiff, and then the verdict at trial is more
favorable to another defendant, to whom the court later awards mediation
sanctions. Under that circumstance, the plaintiff’s counsel is entitled to collect his
contingency fee from the settlement, which was separate and apart from the
verdict. Moreover, in that instance another defendant had paid the settlement,
which is not the situation here. [Bennett, supra at 298.]
In this case, the trial court found this dictum persuasive in concluding that the separate
settlement should not be considered part of the judgment. Although the trial court did not
indicate that it applied MCL 600.2922 and the analysis in Bennett did not involve the wrongful
death act, the trial court considered Dargay’s argument based on another case, Colbert v Primary
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Care Medical, PC, 226 Mich App 99; 574 NW2d 36 (1997), which involves MCL 600.2922 and
provided the framework for the trial court’s decision.
The decision in Colbert was preceded by and, in part, predicated on an earlier decision in
Mason v Cass Co Bd of Co Rd Comm’rs, 221 Mich App 1; 561 NW2d 402 (1997). The Mason
Court construed the “proceeds” subject to distribution in the wrongful death act, MCL 600.2922,
as permitting a deduction for case evaluation sanctions in an appropriate case. Id. at 5. The
Mason Court declined to preclude a defendant from filing a claim against a decedent’s estate for
administrative expenses, stating in part:
We do not conclude that the wrongful death act requires this result. In its
first sentence, § 6 provides: “In every action under this section the court or jury
may award damages as the court or jury shall consider fair and equitable, under
all the circumstances . . . .” In its next sentence, § 6 provides for the distribution
of “[t]he proceeds of a settlement or judgment.” We conclude from the language
and structure of this subsection that “[t]he proceeds” means an “award [of]
damages as the court or jury shall consider fair and equitable, under all the
circumstances.” Further, “all the circumstances” surrounding an award of
damages certainly includes the court rules and their provision for mediation as an
important tool to promote settlements, using mediation sanctions to promote that
end. Thus, when § 6(d) limits the purposes for which “the proceeds” are to be
used, that limitation applies to the “award [of] damages” which, in an appropriate
case, has already been reduced as a sanction for rejecting a mediation evaluation.
Moreover, we conclude that this is the most “fair and equitable” approach,
as contemplated by the statute. If defendants are required to seek the recovery of
mediation sanctions from decedent’s estate, they may well be able to make only
partial, if any, recovery. Under § 6(d), most of the judgment amount will likely
be used to pay medical, hospital, funeral, and burial expenses, along with
payments to decedent’s survivors for their pain and suffering, loss of
companionship and support, or other damages they may have suffered. The estate
will receive payment only to the extent that damages were awarded because of
decedent’s “conscious pain and suffering” before death. To the extent that
defendants are unable to obtain full recovery of mediation sanctions from the
estate, the penalty for rejecting the mediation evaluations is avoided. We will not
“frustrate the intent behind the mediation sanctions rule . . . by giving estates
immunity from the consequences of prosecuting meritless claims.” In re McDivitt
Estate, 169 Mich App 435, 440; 425 NW2d 575 (1988). [Mason, supra at 5-6.]
Although Mason supports Dargay’s argument that case evaluation sanctions are
deductible before a distribution under the wrongful death act in an appropriate case, Mason is
distinguishable because it does not involve a settling defendant. A jury trial was held with
respect to claims against an individual and the Cass County Board of Road Commissioners
arising from the plaintiff’s decedent’s death in a traffic accident. Id. at 3. Apparently, the jury
found only the board negligent. Id. Each defendant was awarded mediation sanctions because
the plaintiff had previously rejected mediation awards that were higher than the jury award. Id.
The Mason Court upheld the trial court’s determination that each defendant’s award of sanctions
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was payable from the judgment owed by the board before the distribution of “proceeds” under
the wrongful death act. Id. at 5-6.
In Colbert, supra at 104, this Court relied on Mason to determine that case evaluation
sanctions may be imposed against a wrongful death judgment. As in this case, the circumstances
in Colbert involved multiple defendants in a wrongful death action filed in circuit court. Id. at
101-102. The plaintiff settled with the hospital. Id. at 102. A jury trial against a doctor and
Primary Care Medical, P.C., resulted in a no-cause verdict. Id. The Colbert Court found the
record and the parties’ briefs insufficient to resolve whether the settlement proceeds should be
applied to a codefendant’s case evaluation sanctions. Id. at 104. Rather, the case was remanded
to the trial court for additional briefing and argument with respect to this issue. Id. at 105. On
remand, the trial court was instructed to determine “whether the award against the codefendant
should be treated as a judgment against defendants or if defendants should be treated as just other
creditors (and, if so, at what level of priority) with respect to the award against the codefendant.”
Id.
Because Colbert did not decide the material question in this case concerning the
application of settlement proceeds, it is of limited relevance in deciding whether Dargay should
be allowed to collect his case evaluation sanctions from a codefendant’s settlement. Colbert
seems to assume that the circuit court would have jurisdiction to decide priority issues in the
administration of a decedent’s estate if the wrongful death act does not apply, inasmuch as the
trial court was instructed to consider this priority issue in the event that it decided not to treat the
award against the codefendant as a judgment against “defendants.” Id. For the reasons
discussed earlier, the probate court has exclusive jurisdiction to decide priority issues under
EPIC. Nonetheless, it appears from the trial court’s decision that it attempted to follow the
approach in Colbert. Aside from its consideration of EPIC provisions to reach a conclusion
regarding how administrative expenses would be paid, it specifically framed the issue as being
whether the award against a codefendant should be treated at a judgment against “defendants.”
The trial court did not consider another case, Hill v L F Transportation, Inc, 277 Mich
App 500; 746 NW2d 118 (2008), on which Dargay relies on appeal to support his claim that he
should be permitted to receive case evaluation sanctions from the $17,500 settlement before any
distribution.3
In Hill, the decedent died when his vehicle was struck by a tractor-trailer driven by an
individual hauling materials for L.F. Transportation, Inc. (LFT). Id. at 502. The decedent’s
vehicle was insured by Auto-Owners Insurance Company (Auto-Owners). Id. The personal
representative of the decedent’s estate filed a wrongful death action against the driver of the
tractor-trailer, LFT, LFT’s insurance carrier, and Auto-Owners, among others. Id. at 503. The
personal representative also sought arbitration of an uninsured motorist claim under AutoOwner’s insurance policy. Id. The wrongful death allegations were later dismissed, but the
personal representative obtained an arbitration award against Auto-Owners. Id. at 504. On
3
Hill was decided on January 15, 2008, shortly before the trial court heard oral arguments on
January 18, 2008.
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appeal, this Court reversed the arbitration award on the ground that LFT’s insurer was previously
found obligated to provide liability coverage. Id. at 504-505. After the Hill Court granted
taxable costs to Auto-Owners, the Eaton County Probate Court entered a judgment in favor of
Auto-Owners, which was payable from any estate property that became available. Id. at 505.
The personal representative thereafter filed a wrongful death action against the driver of
the tractor-trailer and LFT. Id. The claim against the driver was resolved pursuant to a case
evaluation award of $465,000. Hill, supra at 506. The circuit court denied Auto-Owners’s
motion to intervene for the purpose of recovering its prior judgment of costs from the proceeds
of the case evaluation award. Id. The Hill Court reversed, finding a right to intervene. Id. at
507. Applying the rationale in Mason for deducting mediation sanctions from proceeds before
making a distribution in a wrongful death action, the Hill Court held that litigation costs arising
from the wrongful death should also be deducted because “there is no valid purpose to allowing
estates the ability to escape an award of costs to the prevailing party.” Id. at 510. The Hill Court
did not address any concerns arising from the fact that the proceeds that Auto-Owners was
attempting to reach were part of a case evaluation award for which it was not a party. Rather, the
concern expressed by the Hill Court was that the action was technically separate from the one in
which Auto-Owners prevailed and was awarded costs. Id. Relying on MCR 2.504(D), it
concluded that the costs could not be avoided by the filing of a new action. Id. The Hill Court
explained:
[T]he court rules recognize that a plaintiff may not avoid the payment of costs
merely by dismissing an action and commencing a new action. The basis for any
claim against Auto-Owners in the prior action is the same for the claim against the
tortfeasor in the instant action. That is, any liability by Auto-Owners in the prior
action was based not just on whether the defendants were insured, but also on
whether the defendants were found liable for the wrongful death. In other words,
if plaintiff were unable to prevail on the merits in the instant action, then she
would have been unable to prevail against Auto-Owners in the prior action even if
the defendants were uninsured. The distinction between the two actions is not
whether plaintiff had a meritorious wrongful death claim or whether defendants
are liable for that wrongful death, but which insurer was obligated to pay the
claim.
In short, because the instant action involves the same essential claim as the
prior action, we do not believe that plaintiff may escape responsibility for paying
costs in the prior action merely by choosing to commence a new action instead of
continuing the old action. The costs awarded to Auto-Owners represent the cost
of litigation of the wrongful death action that, under Mason, should have been
deducted from the jury award before determining the amount of the net proceeds
to be distributed to the beneficiaries. The trial court erred in failing to allow
Auto-Owners to intervene and recover its award of costs from the wrongful death
award before the proceeds of that award were distributed to the beneficiaries.
[Hill, supra at 510-511.]
If one follows the logical implication in Hill, it appears immaterial whether the party
seeking payment of case evaluation sanctions or taxable costs against a decedent’s estate in a
wrongful death action was a party to a judgment or settlement because the objective of allowing
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a deduction before a distribution under MCL 600.2922 is to preclude the decedent’s estate from
escaping liability for litigation costs. If one applies the reasoning in Mason, on which the Hill
Court relied, then the particular circumstances of the case should be considered to determine
what is fair and equitable. If one applies the reasoning in Colbert, the appropriate focus is on
whether a settlement by one codefendant should be treated as a judgment against “defendants,”
as was done by the trial court in this case.
A rule of law established by a prior published decision issued on or after November 1,
1990, is binding pursuant to MCR 7.215(J)(1). But “[s]tatements regarding a rule of law that are
not essential to the outcome of the case do not create a binding rule of law.” Meyer v Mitnik, 244
Mich App 697, 701; 625 NW2d 136 (2001). Further, a decision is not generally precedent with
regard to a matter that was insufficiently argued and presented on appeal, Foreman v Foreman,
266 Mich App 132, 139; 701 NW2d 167 (2005), although if the point was essential, the fact that
it was duly presented and considered may be assumed, McNally v Bd of Canvassers of Wayne
Co, 316 Mich 551, 558; 25 NW2d 613 (1947).
We conclude that the essential rule of law that we are bound to follow is the fair and
equitable approach in Mason, supra. Further, the trial court reached the right result in holding
that the case evaluation sanctions were not deductible from the $17,500 settlement under the
circumstances of this case. There is never any guarantee that sanctions will be collectible against
a party. Colbert, supra at 106. And while there is obviously a relationship between plaintiffs’
claim against Dargay and the vicarious liability claim that they pursued against Oakwood
Hospital, the effect that Oakwood Hospital’s participation in the trial would have had on the
outcome is unknown. This is not a case where the record on appeal reflects no triable issue. To
the contrary, based on the verdict form, Dargay’s negligence was submitted to the jury.
The settlement reached by plaintiffs and Oakwood Hospital is consistent with the intent
of the case evaluation rule, which is to promote settlements. Mason, supra at 5. Because a
settlement is not a “verdict” subject to sanctions under MCR 2.403, Webb, supra at 392, it would
not frustrate the intent of MCR 2.403 to disallow a deduction against the settlement for sanctions
owed to a party who did not participate in the settlement. To hold otherwise and require the
deduction might prove counterproductive by discouraging settlements between the time of the
case evaluation and the trial when there is more than one defendant.
Therefore, although it was unnecessary for the trial court to evaluate the priority of
claims under EPIC, MCL 700.3805, the trial court correctly determined that the case evaluation
sanctions should not be paid from the $17,500 settlement. Although the trial court did not
specifically discuss the fair and reasonable test in Mason, supra, we will not reverse a trial
court’s decision when the right result is reached. Coates v Bastian Bros, Inc, 276 Mich App 498,
508-509; 741 NW2d 539 (2007). For this reason, and considering that Dargay has not shown
any basis for not allowing plaintiffs’ attorney to be reimbursed for costs and attorney fees in an
amount equal to the full amount of the settlement before any distribution of proceeds, we affirm
the trial court’s decision.
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Affirmed.
/s/ Henry William Saad
/s/ Peter D. O’Connell
/s/ Brian K. Zahra
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