HAWRA ALGARAWI V AUTO CLUB INS ASS'NAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
In re Contempt of AUTO CLUB INSURANCE
ASSOCIATION and NORRIS GOUDY.
HAWRA ALGARAWI, a Minor, by her Next
Friend, ALI ABDUL-HUSSEIN ALGARAWI,
December 15, 2000
Wayne Circuit Court
LC No. 96-620265
AUTO CLUB INSURANCE ASSOCIATION,
February 2, 2001
Before: Hood, P.J., and Gage and Whitbeck, JJ.
Appellants Norris Goudy and Auto Club Insurance Association (ACIA) appeal as of right.
ACIA challenges the trial court's March 3, 1997, order holding it in contempt of court. Goudy,
in-house counsel for ACIA, challenges the trial court's March 5, 1997, order holding him in
contempt of court. We reverse.
As so often occurs in contentious litigation, this appeal arises largely because the lawyers'
zest for legal combat overwhelmed their common sense.
In the process, a relatively
uncomplicated settlement process became a battleground between a stubborn insurer, ACIA, and
the equally stubborn attorneys for the claimant, Hawra Algarawi. While the insurer's legal
position was legally correct, the bitter legal warfare between the parties ultimately strained the
trial court's patience to the breaking point, resulting in contempt orders against the insurer and its
attorneys. Ironically, after the trial court entered those contempt orders, the parties apparently
negotiated a truce, if not a peace agreement, under which the insurer paid the full amount of the
$16,500 settlement to Ali Abdul-Hussein Algarawi, Algarawi's father, as her next friend.
With the smoke clearing from this battlefield, we need not address any issues concerning
the underlying claim for insurance benefits in this case. Rather, we must confront a series of
issues relating to the trial court's contempt orders. In particular, we must determine whether the
trial court's contempt orders in this case were for criminal or civil contempt, whether the trial
court followed the appropriate procedures to hold ACIA and Goudy in contempt, and whether the
sanctions the trial court ordered were proper. Because we ultimately resolve this case on
procedural grounds, we need not address whether there was sufficient evidence to prove that
Goudy and ACIA committed contempt.
We make one other preliminary note to clarify what could be a confusing element in this
case. Although the trial court held Mary T. Nemeth, ACIA's retained attorney, in contempt of
court, she does not appeal. Thus, while we recount the circumstances concerning the contempt
order against her because those facts are closely connected to the facts that concern Goudy and
ACIA, we neither affirm nor reverse the trial court's contempt order against her.
II. Basic Facts And Procedural History
The parties placed a settlement agreement on the record in January 1997.
thereafter, in mid-February 1997, Algarawi filed an emergency motion to show cause. She
claimed that ACIA refused to issue a check to her father as her next friend. She also alleged that
ACIA was attempting to force her to open a probate estate before it would pay the settlement,
even though the payments would be used to pay her medical and legal expenses, leaving none left
over for her. Algarawi asked the trial court to issue an order directing ACIA to deliver a check in
compliance with the settlement agreement. In response to the motion, ACIA argued that it could
pay a sum of this magnitude only if Algarawi, because she was a minor, opened a probate estate.
At the hearing on the emergency motion that same day, the trial court asked Goudy to determine
whether ACIA would issue the check if Algarawi did not open a probate estate. The trial court
concluded the hearing, but did not issue a written order resolving the parties' dispute.
In late February 1997, Algarawi filed a second emergency motion to show cause arguing
that, at the earlier hearing, the trial court had ruled that ACIA must issue a check payable to her
father and to her attorneys and that ACIA must deliver the check within ten days. Algarawi
contended that ACIA refused to deliver the check as ordered and, therefore, requested an order
directing ACIA to deliver the check. ACIA countered that Goudy had told the trial court that he
would ask ACIA to approve issuing the check and—if it agreed to do so—he would have the
check within ten days. ACIA also continued to argue that Algarawi had to open a probate estate
to receive the settlement, which would ensure that she would not sue ACIA when she reached the
age of majority if her father mismanaged or misappropriated the funds.
On February 26, 1997, the trial court held a hearing on Algarawi's second emergency
motion to show cause, after which it concluded that Algarawi did not need to open a probate
estate in order to receive the settlement money.1 As a result, the trial court ruled that ACIA had
to give the settlement money to Algarawi by hand-delivering a check to her attorneys' offices by
noon on February 28, 1997. The trial court did not issue a written order to this effect.
According to ACIA, on February 28, 1997, Nemeth, ACIA's retained attorney, appeared
at Algarawi's attorneys' offices where she presented a $5,000 check. Nemeth attempted to
explain to Algarawi's attorneys that it would be illegal for ACIA to pay more than $5,000 directly
to Algarawi's father. When Algarawi's attorneys refused to accept the $5,000 check, instead
demanding a check in the full amount of $16,500, ACIA moved to compel Algarawi's attorneys
to accept $5,000 in partial satisfaction of the settlement.
Also on February 28, 1997, ACIA filed a motion to modify the trial court's oral ruling on
the second emergency motion, arguing that it had attempted to comply with the ruling to the
fullest extent possible without violating the law by offering the $5,000 check to Algarawi's
attorneys. ACIA argued that only a conservator appointed to administer a probate estate for
Algarawi could accept the remaining $11,500. ACIA asked the trial court to direct Algarawi's
attorneys to commence appropriate probate proceedings to open an estate so that a court could
appoint a conservator for her and so it could finally pay the remaining $11,500. ACIA also asked
the trial court to enter an order granting its motion because Algarawi's attorneys had refused to
approve a proposed order concerning this $5,000 partial payment.
On the same day, however, Algarawi moved to hold Goudy in contempt of court. She
argued that, at the hearing on the first emergency motion, the trial court had ordered Goudy to
deliver a check for $16,500, Goudy had violated this order, the trial court had granted Algarawi's
second emergency motion, and Nemeth had attempted to persuade Algarawi's attorneys to accept
a $5,000 check, violating the trial court's second ruling. Algarawi therefore contended that the
trial court should hold Goudy in contempt and sanction him until ACIA delivered a check for
On March 3, 1997, the trial court held a hearing on Algarawi's motion to hold Goudy in
contempt. Nemeth argued that the trial court should grant ACIA's motion to modify the trial
court's previous ruling that Algarawi did not need to open a probate estate and to allow ACIA to
pay only $5,000 to Algarawi's father as her next friend. Then, Nemeth argued, ACIA could
appeal the trial court's ruling. As the following transcript excerpts reveal, the trial court made it
well-known to everyone present at the hearing that it was not impressed with ACIA's argument.
The Court: . . . Okay. I've heard the law. I read the case law. I read it last
time. Now you're in contempt. Who wants to go to jail?
Ms. Nemeth [defense counsel]: Your Honor, I'm the one.
The Court: Okay. What's your name, ma'am?
Ms. Nemeth: My name is Mary Nemeth. I'm the appellate attorney. I was
retained last Wednesday after the show cause hearing to look at this case, to
review it for a possible appeal. I am convinced that because this is over $5,000.00
you have to have a conservator.
* * *
The Court: . . . The Court's going to grant your motion to hold them in
contempt. The Court's going to simply sanction my [sic] appellate lawyer
[Nemeth]. The Court's going to deny the motion to compel Plaintiff 's attorney to
accept five thousand. The Court's going to enter an order granting Plaintiff 's
motion to show cause . . . .
* * *
The Court: . . . What's the name of your client that wont [sic] write the
Ms. Nemeth: The name of my client?
The Court: That wont [sic] write the check. Who's your client? Who are
you dealing with at AAA?
Ms. Burbott [plaintiffs' counsel]: Mr. Goudy.
The Court: Mr. Goudy? You work for AAA, sir?
Mr. Goudy [defense counsel]: Yes, ma'am, I do.
The Court: Okay. You're in house?
Ms. Nemeth: He is not authorized to write those checks.
Ms. Burbott: He's authorized to order them.
Ms. Nemeth: That's true.
* * *
The Court: Sir, [to Goudy] I'm speaking. I've ruled twice. This is the
third time. My head hurts. Banging my head against the wall with you guys. The
Court reads the law. I make interpretations. You have the right to appeal. I'm
telling you, appeal it as a final judgment after you pay the money. You don't want
to listen to my rulings, you want to be held in contempt of court, counsel's going
to pay $500.00 to First Step, you're going to go up to lockup, sir, until we get
sixteen-five for this minor. I don't know how else to get it through your head.
This is my ruling. This is the third time I've ruled this way.
* * *
Ms. Nemeth: Is this going to be—if I get the check made out this way, is
Ms. Burbott: It should be exactly as the release. Hawra Algarawi, a
Minor, by her Next Friend Ali Abdul—
Ms. Nemeth: Okay. We just have to reverse that. Okay.
The Court: When are you going to do that, counsel?
Ms. Nemeth: By the end of the week.
The Court: How about by five o'clock?
Ms. Nemeth: Your Honor, I can't physically get a check, I believe.
The Court: I don't want to keep him overnight.
Ms. Nemeth: I don't want to see him overnight.
The Court: What do I want to put him overnight at the County Jail?
Ms. Nemeth: If it's five o'clock, I will try to do the absolutely best that I
can to try to get this issued.
The Court: Mr. Goudy, I'm sorry. You'll have to go up to lockup until she
Mr. Goudy: I'm sorry, too, Judge. Might I say one thing, Judge?
Ms. Nemeth: Your Honor, may I make a phone call and see how quickly I
can get this?
Mr. Goudy: Might I say one thing on this record?
The Court: Be my guest, sir. You seem to want to say a lot of things.
Mr. Goudy: . . . Now this Court is relating to me as though I have
somehow been in contempt of this Court or used some abusive language or failed
to comply with the Court's order.
The Court: Twice. Twice. Twice.
Ms. Nemeth: Your Honor—
Mr. Goudy: Judge, what I did was went back to my client—
The Court: Good bye.
The Bailiff: This way.
Ms. Nemeth: Your Honor, will you stay enforcement until I at least make
a phone call to see how quickly I can get this check?
The Court: Yeah. Why don't you.
Ms. Nemeth: Let me make a phone call, see what I can do.
The record does not make clear whether Goudy ever went to jail. In its appellate brief,
ACIA states that Goudy was "released from custody by the trial court" later in the day and,
during oral argument to this Court, ACIA's counsel stated that Goudy was "detained but then
released." It is, however, plain that on March 3, 1997, the trial court entered a written order
holding "counsel for ACIA" in contempt of court without specifying whether the contempt was
civil or criminal. This order required ACIA's counsel, presumably Nemeth,2 to pay $500 to First
Step, which is apparently a charitable organization. The trial court also entered a second written
order denying an oral motion by ACIA to stay execution of sentence in which the trial court
stated that it had "adjudicated ACIA to be in contempt of this Court." This second order did not
specify the nature of the contempt, i.e., civil or criminal, and it did not require ACIA to pay a fine
or impose any other sanction on ACIA.3
On March 5, 1997, the trial court entered a written order granting Algarawi's motion to
hold Goudy in contempt, again without specifying whether this contempt was civil or criminal.
The order explained that the trial court was holding Goudy in contempt because it had "directed
Defense counsel at a prior hearing on February 26, 1997, to deliver to Plaintiffs' counsel no later
than Friday, February 28, 1997, at 12:00 noon a settlement draft in the amount of $16,500.00
made payable" to Algarawi, her father as her next friend, and her attorneys. However, the order
proceeded to note, "Defendant, in concert with Defense counsel, willfully disregarded this
Court's order to so deliver the check . . . ." As a result, the trial court ordered "Defendant's
counsel," clearly Goudy given that his name appeared in the title of the motion, to "pay sanctions
in the amount of $500" to First Step.
According to ACIA's brief, on the same day Algarawi obtained letters of authority from
the Wayne County Probate Court appointing her father conservator of her estate, ACIA handdelivered a check in the amount of $16,500 to Algarawi's attorneys' offices. The check was
payable jointly to Algarawi's father, as conservator, and Algarawi's attorneys.
In sum, the trial court exercised its contempt powers three ways in this case. First, it held
Nemeth in contempt during the hearing on March 3, 1997, and ordered her to pay $500 to First
Step as a sanction. The trial court confirmed this order in writing that same day. Second, the
trial court held Goudy, as counsel for ACIA, in contempt during the hearing on March 3, 1997,
and detained him for some time. The trial court confirmed this contempt holding in a written
order dated March 5, 1997, which also compelled Goudy to pay $500 to First Step. Both of these
written orders included a typed reference to "criminal contempt" that has been crossed out by
hand. Third, in a March 3, 1997, order denying ACIA's motion to stay execution of the contempt
ruling against Goudy, the trial court, perhaps inadvertently, noted that it had held ACIA in
contempt, again without specifying whether the contempt was civil or criminal.
III. Contempt Power: The Queen Of Battle
If the artillery is the queen of battle, then the power to punish contempt is its functional
equivalent in the stylized combat of modern litigation. The power to hold a party, attorney, or
other person in contempt is the ultimate sanction the trial court has within its arsenal, allowing it
to punish past transgressions, compel future adherence to the rules of engagement, i.e., the court
rules and court orders, or compensate the complainant.4 In In re Contempt of Robertson,5 we
defined contempt of court as a "willful act, omission, or statement that tends to . . . impede the
functioning of a court." Indeed, the primary purpose of the contempt power is to preserve the
effectiveness and sustain the power of the courts.6 Because the power to hold a party in contempt
is so great, it "carries with it the equally great responsibility to apply it judiciously and only when
the contempt is clearly and unequivocally shown."7
Interestingly enough, a court's authority in this area does not originally come from an
external source, such as a statute. Rather, the power to hold a party in contempt is inherent in the
judiciary as generally established in Const 1963, art 6, § 1. As the Supreme Court commented in
In re Huff:8
There is inherent power in the courts, to the full extent that it existed in the
courts of England at the common law, independent of, as well as by reason of
statute, which is merely declaratory and in affirmation thereof, to adjudge and
punish for contempt . . . . Such inherent power extends not only to contempt
committed in the presence of the court, but also to constructive contempt arising
from refusal of defendant to comply with an order of the court. Such power,
being inherent and a part of the judicial power of constitutional courts, cannot be
limited or taken away by act of the legislature nor is it dependent on legislative
provision for its validity or procedures to effectuate it.
Still, the Legislature has reinforced this inherent power by enacting a number of statutes
that permit the courts to punish contempt.9
MCL 600.1701; MSA 27A.1701, the general
contempt statute, is particularly relevant in this case. It permits "[t]he supreme court, circuit
courts, and all other courts of record . . . to punish by fine or imprisonment, or both, persons
guilty of any neglect or violation of duty or misconduct" in enumerated circumstances.10 Those
persons and circumstances include:
(c) All attorneys . . . and all other persons in any manner duly elected or
appointed to perform any judicial or ministerial services, for any misbehavior in
their office or trust, or for any willful neglect or violation of duty, for
disobedience of any process of the court, or any lawful order of the court, or any
lawful order of a judge of the court or of any officer authorized to perform the
duties of the judge.
* * *
(g) Parties to actions, attorneys, counselors, and all other persons for
disobeying any lawful order, decree, or process of the court.
Thus, there is no question that the trial court in this case had the power to hold ACIA, Goudy,
and Nemeth in contempt if they committed a "willful act, omission, or statement" that tended to
interfere with the way the trial court was handling this case. However, the sanction the trial court
imposed to punish this contemptuous conduct was limited by MCL 600.1715; MSA 27A.1715,
(1) Except as otherwise provided by law, punishment for contempt may be
a fine of not more than $250.00, or imprisonment which, except in those cases
where the commitment is for the omission to perform an act or duty which is still
within the power of the person to perform shall not exceed 30 days, or both, in the
discretion of the court.
(2) If the contempt consists of the omission to perform some act or duty
which is still within the power of the person to perform, the imprisonment shall be
terminated when the person performs the act or duty or no longer has the power to
perform the act or duty which shall be specified in the order of commitment and
pays the fine, costs, and expenses of the proceedings which shall be specified in
the order of commitment.
Accordingly, we must examine whether the sanctions imposed in this case were legally correct
even if the decisions to hold ACIA and Goudy in contempt were proper.
IV. Civil And Criminal Contempt: Different Weapons
The power to punish contempt means little in the abstract. How a court uses this power is
much more important and depends largely on the nature of the problem the court is attempting to
cure or prevent. As in the real world, different problems in courts often call for different
weapons. Accordingly, courts have two different forms of the contempt power at their disposal.
The court's purpose in exercising its contempt powers, to coerce or to punish, not the nature of
the contemptuous conduct, defines which of the two contempt powers the court actually uses.13
Further, to draw once again on the warfare analogy, each of these weapons must be loaded or
armed in a certain manner before they can be discharged. In other words, the trial court must
carry out the proper procedures before it can issue the order holding an individual or party in
contempt of court in order to carry out its goal of coercing particular action or punishing a
B. Civil Contempt: Coercion
When a court seeks to compel a contemnor to comply with its order requiring or
forbidding some particular act, the court may use the coercive sanctions permitted by civil
contempt, including a fine of up to $250, a jail term of no more than thirty days that expires when
the contemnor purges the contempt, and compensation to others who sustain losses because of
the contemptuous conduct.14 Civil contempt ends when the contemnor complies with the court's
order or is no longer able to do so and pays any fines or costs for the contempt proceedings.15
This ability to cure contempt, essentially making other sanctions unnecessary, is why the
contemptuous behavior must persist at the time of the contempt hearing in order for the trial
court to impose a coercive sanction.16
This contempt hearing is, however, an interesting study in and of itself. When exercising
its civil contempt power, the court acts as the factfinder, determines whether there was contempt
under a preponderance of the evidence standard,17 and imposes sanctions if this standard is met.18
If the contemptuous behavior occurs in front of the court, i.e., it is "direct" contempt, there is no
need for a separate hearing before the court imposes any proper sanctions because "all facts
necessary to a finding of contempt are within the personal knowledge of the judge."19 If the
contemptuous conduct occurs outside the court's direct view, i.e., it is "indirect" contempt, the
court must hold a hearing to determine whether the alleged contemnor actually committed
contempt.20 This hearing must follow the procedures established in MCR 3.606 and afford some
measure of due process before the court can determine whether there is sufficient evidence of
contempt to warrant sanctions.21
C. Criminal Contempt: Punishment
Criminal contempt, which may also be classified as direct or indirect, serves a very
different purpose from civil contempt in that it punishes the contemnor for past conduct that
affronts the court's dignity.22 A court exercising its criminal contempt power is not attempting to
force the contemnor to comply with an order.23 Therefore, it is impossible to purge this sort of
contempt by acting in any particular manner.24
Although criminal contempt is really only a "quasi-crime,"25 criminal contempt
proceedings encompass many of the same due process safeguards available to defendants charged
with traditional crimes. For instance, an alleged criminal contemnor is presumed innocent and is
protected from compelled self-incrimination.26 The alleged contemnor must be allowed to offer
a defense to the contempt charge, as well as adequate time in which to prepare the defense.27
Further, an alleged contemnor's "willful disregard or disobedience" of a court order and a clearly
contemptuous act must be proved beyond a reasonable doubt.28 Like civil contempt, direct
criminal contempt may be tried summarily, but indirect criminal contempt is subject to the
specific procedures outlined in MCR 3.606.29 If a court finds that there was contempt, it may
impose a fine of up to $250, a jail term of up to thirty days, or both.30 The court may also require
a criminal contemnor to pay compensation for damages caused by the contemptuous conduct.31
V. The Contemptuous Conduct
A. Standard Of Review
We review for abuse of discretion a trial court's decision to hold a party or individual in
contempt.32 However, to the extent that our review in this case requires us to examine questions
of law, such as the nature of the contempt orders and whether the contempt statute permitted the
sanctions imposed in this case, review is de novo.33
B. The Form of the Contempt
With these distinctions between civil and criminal contempt in mind, it is clear that the
trial court intended to hold ACIA and Goudy in criminal, not civil contempt. The trial court's
contempt orders evinced an intent to punish ACIA and Goudy for their past misconduct in
violating the trial court's orders compelling them to tender the $16,500 check to Algarawi's father
and lawyers. The trial court's statements on the records similarly showed an intent to punish
ACIA and Goudy for actions and arguments that the trial court plainly found frustrating and
Algarawi's motion to show cause plainly asked the trial court to find that Goudy
committed civil contempt in that it asked the trial court to impose coercive sanctions until ACIA
tendered the check. Yet, the trial court's contempt orders did not condition payment to First Step
on any corrective action ACIA or Goudy might take in the future. The only minor evidence that
the trial court ever intended to coerce anyone into complying with its order to pay $16,500 to
Algarawi's father and attorneys was its decision to detain Goudy. However, we conclude that the
contempt orders against Goudy and ACIA at issue in this appeal lack even the minimal coercive
elements surrounding Goudy's brief detention, which was not included or described in either of
these orders.34 With no way to purge the contempt, the trial court's orders had to be noncoercive,
criminal contempt orders, designed to punish the contemnors. That the trial court crossed out the
word "criminal" on the March 3, 1997, order against Goudy is irrelevant to this true
C. The Procedure
At this point in the analysis, we are not terribly concerned that the trial court failed to
assign the appropriate description to its criminal contempt orders or whether ACIA and Goudy
actually committed contempt. Rather, our primary concern is the way the trial court followed, or
did not follow, the procedures necessary to hold ACIA and Goudy in criminal contempt for their
The contempt proceeding in this case was instituted by a show cause motion, which was
scheduled for hearing on the trial court's civil docket. Even though he had a right to know the
nature of the contempt charge against him,36 Goudy was not informed of whether he was being
accused of criminal or civil contempt either in the written motion or at the hearing. Moreover,
even though there are many procedures that exist to protect an alleged contemnor and to
guarantee that his contemptuous conduct is proved beyond a reasonable doubt, the hearing in this
case did not incorporate any of these safeguards. When presented with similar circumstances in
People v Nowicki,37 the Michigan Supreme Court reversed the contempt finding and vacated the
contemnor's sentence.38 We conclude that Goudy is entitled to just such a result in this case with
the exception that, at Goudy's request, we do not require First Step to return the $500 to him.39
The contempt order against ACIA is even more difficult to justify because of the
procedures the trial court used. Algarawi's motion to show cause instituting this contempt
proceeding pertained only to Goudy, not ACIA. Not only was ACIA denied its right to know the
substance of the charges against it, it was not informed that it was being charged with contempt
at all from this motion. The contempt hearing also failed to give ACIA notice that it was being
charged with contempt because the trial court's order appeared to concern ACIA's attorneys as
individuals.40 The first time it became clear that the trial court intended to hold ACIA in
contempt was in the March 3, 1997, order, after the trial court had already done so. This
completely denied ACIA an opportunity to prepare or present a defense.41
Further, this was the most summary of all summary procedures because the show cause
hearing on the contempt issue did not involve any contempt charges against ACIA and there was
no other hearing on the matter.
Yet, as we noted above, summary procedures are only
permissible in cases where there is direct contempt, i.e., contempt committed in front of the
court.42 In this case, however, the allegedly contemptuous conduct was ACIA's failure to issue
and deliver a check for $16,500 to opposing counsel's offices by a deadline. Because this failure
to act did not occur in the trial court's presence, the trial court could not use a summary
procedure.43 We therefore reverse the trial court's criminal contempt finding against ACIA not
only because it was denied the notice and other procedural safeguards to which it was entitled,
but also because the trial court improperly used a summary proceeding to hold it in contempt.44
D. The Amount Of The Sanctions
Even if we were not inclined to reverse the contempt orders against Goudy and ACIA on
procedural grounds in this case, the $500 sanctions the trial court ordered Goudy to pay to First
Step would require us to take corrective action. As ACIA and Goudy argue,45 $250 is the
maximum fine permitted under MCL 600.1715(1); MSA 27A.1715(1), which we set out in
section III, above. The statute is unambiguous. It does not grant a court the discretion to impose
a monetary fine that exceeds $250 for a single act of contempt.46 A court may order the
contemnor to pay compensation for actual loss or injury due to the contemptuous conduct even if
that amount exceeds the $250 threshold.47 Nevertheless, the $500 fine Goudy paid in this case
was not intended to be compensation. Had it been intended as compensation, then the trial court
would have likely ordered Goudy to pay the $500 to Algarawi, assuming that that amount
accurately reflected damages she sustained.48 Accordingly, the trial court could not order Goudy
to pay $500 to First Step, which was twice the amount allowed under the statute. This was,
without a doubt, a legally invalid amount to order as a fine. If Goudy had asked to be repaid this
amount, we would have granted him that relief.
E. The Payment To A Charity
ACIA and Goudy also argue that the trial court exceeded its authority by requiring Goudy
to pay this $500 fine to First Step, a charity. Const 1963, art 6, § 7 provides:
The supreme court may appoint, may remove, and shall have general
supervision of its staff. It shall have control of the preparation of its budget
recommendations and the expenditure of moneys appropriated for any purpose
pertaining to the operation of the court or the performance of activities of its staff
except that the salaries of the justices shall be established by law. All fees and
perquisites collected by the court staff shall be turned over to the state treasury
and credited to the general fund.
This constitutional provision requires the Michigan Supreme Court to remit all the money that it
collects to the state treasury. Because Michigan has only "one court of justice,"51 of which the
trial court in this case is a part, the trial court had an obligation to follow Const 1963, art 6, § 7.
Stated another way, like the Supreme Court, the trial court in this case was required to remit any
money it collected to the state treasury. The trial court lacked the discretion to designate a
beneficiary for the fine it imposed on Goudy, even if the beneficiary was particularly worthy.
Because there are circumstances in which a circuit court may spend public money to
support necessary services for the judiciary,53 we must consider whether the trial court in this
case had the authority to direct Goudy to pay the fine to First Step as if he was making the
payment to the charity on behalf of the Third Judicial Circuit Court. However, this case involves
a decision to direct private money to what appears to be a private recipient that is completely
distinct from the judiciary. In other words, because the money went directly from Goudy to First
Step, not from Goudy to the trial court, the money never became public, even if it was perhaps
owed to the public through the return process mentioned in Const 1963, art 6, § 7. Nor is it at all
clear whether First Step offered any services to the judiciary, much less necessary services.
Further, even if we could consider the $500 Goudy paid to First Step public money and could
conclude that First Step offered necessary services to the judiciary, the trial court in this case
lacked the Supreme Court's approval to take this action.54 Thus, there is no way to characterize
the trial court's decision to order Goudy to pay $500, or any other amount, to First Step as proper.
Like other courts that have grappled with difficult cases involving contempt, throughout
this opinion we have used the battlefield metaphor to illustrate our view of the facts.55 We
emphasize, however, that litigation is not warfare under another name. Rather it is, and must
remain, a civil—if not always amicable—alternative to outright combat.
This case speaks
volumes about the untoward consequences of senseless legal conflict and presents us with an
opportunity to make bad law, as bad facts are prone to encourage. By reversing the trial court's
contempt order concerning ACIA and Goudy, we believe we have avoided making a bad
situation worse. At a minimum—and in the most basic sense—this is our obligation as a
/s/ William C. Whitbeck
/s/ Harold Hood
/s/ Hilda R. Gage
On appeal, Goudy and ACIA insist that Algarawi had to open a probate estate to receive a
settlement of this size. If we were forced to decide this issue—and we are not—we would be
inclined to agree that the plain language of MCR 2.420(4)(a) required her to open a probate
estate. See, generally, Smith v YMCA of Benton Harbor/St Joseph, 216 Mich App 552, 556; 550
NW2d 262 (1996); see also MCL 700.403; MSA 27.5403.
The transcripts suggest that the trial court was referring to Nemeth when it mentioned "counsel
for ACIA" in its order. For instance, after referring to Nemeth as a "hoot" and observing it had
"never seen anyone take me up on appeal over such piddly baloney material when I know I'm
right," the trial court stated to Nemeth:
I'll tell you what, I'm not going to send you to jail. I'm going to sanction
you for five hundred bucks. You're going to write a check to First Step. Sorry.
I'm sure your client would like that money, counsel, but [F]irst [S]tep needs it
Nemeth confirmed that the trial court was speaking to her because she asked the court how to
draft a check for the contempt fine.
Both orders entered on March 3, 1997, originally referred to criminal contempt. However, the
word "criminal" was stricken from both orders, leaving no classification for the contempt.
In re Contempt of United Stationers Supply Co, 239 Mich App 496, 499; 608 NW2d 105
In re Contempt of Robertson, 209 Mich App 433, 436; 531 NW2d 763 (1995), citing Pontiac v
Grimaldi, 153 Mich App 212, 215; 395 NW2d 47 (1986).
People v Kurz, 35 Mich App 643, 656; 192 NW2d 594 (1971).
People v Matish, 384 Mich 568, 572; 184 NW2d 915 (1971).
In re Huff, 352 Mich 402, 415-416; 91 NW2d 613 (1958) (citations omitted); see also In re
Contempt of Dougherty, 429 Mich 81, 91, n 14; 413 NW2d 392 (1987) (Dougherty II).
See, e.g., MCL 600.1346; MSA 27A.1346 (jurors); MCL 600.2164; MSA 27A.2164 (excessive
expert witness fees); MCL 600.3820; MSA 27A.3820 (public nuisance); MCL 600.8713; MSA
27A.8713 (false statements by authorized local officials).
MCL 600.1701; MSA 27A.1701.
See State Bar v Cramer, 399 Mich 116, 127-128; 249 NW2d 1 (1976); see also Gompers v
Bucks Stove & Range Co, 221 US 418, 441; 31 S Ct 492; 55 L Ed 797 (1911).
MCL 600.1715; MSA 27A.1715, MCL 600.1721; MSA 27A.1721; see also Dougherty II,
supra at 98.
MCL 600.1715(2); MSA 27A.1715(2); see In re Contempt of Calcutt, 184 Mich App 749,
758; 458 NW2d 919 (1990).
Dougherty II, supra at 111.
Jaikins v Jaikins, 12 Mich App 115, 121; 162 NW2d 325 (1968).
Williams Int'l Corp v Smith, 144 Mich App 257, 262; 375 NW2d 408 (1985) (Dougherty I),
rev'd on other grounds by Dougherty II, supra; see also MCL 600.1711(1); MSA 27A.1711(1)
(permitting summary proceedings for direct contempt).
Dougherty I, supra at 262; see also MCL 600.1711(2); MSA 27A.1711(2) (permitting
punishment for indirect contempt after requiring "after proof of the facts charged and opportunity
has been given to defend," meaning that there has been some sort of hearing).
Dougherty I, supra at 262, citing Cross Co v UAW Local No 155, 377 Mich 202; 139 NW2d
Cramer, supra at 127, quoting Jaikins, supra at 120.
In re Contempt of Rochlin, 186 Mich App 639, 645; 465 NW2d 388 (1990).
Cramer, supra at 127.
Dougherty II, supra at 90-91.
Jaikins, supra at 121, quoting Gompers, supra at 444.
Robertson, supra at 438.
In re Contempt of O'Neil, 154 Mich App 245, 248; 397 NW2d 191 (1986) (citations omitted).
In re Contempt of Barnett, 233 Mich App 188, 192-193; 592 NW2d 431 (1998).
MCL 600.1715(1); MSA 27A.1715(1).
MCL 600.1721; MSA 27A.1721.
United Stationers, supra at 499.
See, generally, Oakland Co Bd of Co Rd Comm'rs v Michigan Property & Casualty Guaranty
Ass'n, 456 Mich 590, 610; 575 NW2d 751 (1998) (questions of statutory construction require
review de novo); Cramer, supra at 128 (because a trial court's characterization does not
determine the nature of a contempt order, review does not entail extending deference to the trial
court; this is essentially review de novo).
We note that even though the trial court held ACIA in contempt of court, it did not impose
sanctions of any kind directly on the insurer. This strongly supports the idea that there was no
coercive motivation behind that order.
Cramer, supra at 128.
Robertson, supra at 438.
People v Nowicki, 384 Mich 482, 485; 185 NW2d 390 (1971).
Id. at 485-486, quoting People v Johns, 384 Mich 325; 183 N2d 216 (1971).
See, generally, CBS, Inc v Pennsylvania Record Outlet, Inc, 598 F Supp 1549, 1559 (WD Pa,
There is one place in the transcript where the trial court asked who was representing ACIA at
the hearing. Nemeth replied that she was representing ACIA that day. Although the trial court
eventually held her in contempt, the transcript as a whole suggests that the trial court did so
because it was reacting to her continuing arguments against payment, not simply because she was
ACIA's representative. There was no explicit statement on the record that the trial court was
charging ACIA with contempt. Therefore, we have no reason to believe that any of the trial
court's comments at the hearing constituted notice to ACIA that it was charged with contempt.
Robertson, supra at 438.
Dougherty I, supra at 262.
See Barnett, supra at 192-193.
If Nemeth had appealed the contempt order entered against her, we would reach the same
result based on the same reasoning we applied to the circumstances surrounding ACIA's
None of the contempt orders required ACIA to pay money as a sanction and Nemeth does not
appeal. Therefore, our conclusion on this issue and the next one only affect the order against
In re Contempt of McRipley, 204 Mich App 298, 301-302; 514 NW2d 219 (1994); In re
Contempt of Johnson, 165 Mich App 422, 428-429; 419 NW2d 419 (1988).
MCL 600.1721; MSA 27A.1721.
See Consolidated Rail Corp v Yashinsky, 170 F3d 591, 596 (CA 6, 1999).
A "perquisite" is an incidental payment, benefit, or privilege over and above regular income or
salary" as well as "something demanded or due as a particular privilege." Random House
Webster's College Dictionary (2d ed). A "fine" as it is used in this contempt context fits within
the meaning of a perquisite because it is income to the trial court above and beyond the money
allocated in the annual budget.
Const 1963, art 6, § 1; Wayne Circuit Judges v Wayne Co, 383 Mich 10, 20; 172 NW2d 436
(1969), mod on reh on other grounds 386 Mich 1; 190 NW2d 228 (1971).
See also Town of Manchester v Dep't of Environmental Quality Engineering, 381 Mass 208,
210-211, 216-219; 409 NE2d 176 (1980) (trial court could not order the defendant to pay a
$30,000 contempt fine to community organization or political subdivision to improve the
environment because the state constitution provided that "[a]ll money received on account of the
commonwealth from any source whatsoever shall be paid into the treasury thereof").
Wayne Circuit Judges, supra at 22-23.
Wayne Circuit Judges (On Rehearing), supra at 9.
See Cross, supra.