Case evaluation sanctions are available when a non-dispositive motion leads to judgment


The Michigan Supreme Court has held that a party can be held liable for case evaluation sanctions when a court enters judgment based on a non-dispositive motion.

In Acorn Investment Co. v. Michigan Basic Property Insurance Assoc., Acorn accepted the case evaluation award and Michigan Basic rejected. The parties later agreed that the amount of the loss would be set by appraisal. The appraisal panel determined Acorn’s claim was worth nearly double what the case evaluation panel had awarded. Acorn then filed a motion for entry of a judgment based on the appraisal panel’s determination and sought actual costs based on Michigan Basic’s rejection of the case evaluation award.

The trial court granted the motion and awarded interest, but refused Acorn’s request for actual costs. The Court of Appeals affirmed, and Acorn appealed to Michigan’s Supreme Court. On May 20, 2014, the Court held that Acorn was entitled to actual costs, even though the motion that led to the judgment was non-dispositive.

Michigan Court Rule 2.403(O)(1) requires a court to award actual costs when an opposing party rejects a case evaluation award, the action proceeds to verdict, and the verdict is less favorable to the rejecting party than the case evaluation award. The only issue in Acorn Investment was whether the requirement that the action “proceed[] to verdict” had been met.

The Supreme Court noted that the definition of “verdict” included a judgment entered as a result of a ruling on a motion after rejection of the case evaluation. In this case, the trial court had ruled on Acorn’s motion for entry of a judgment and entered the judgment.

The Court rejected the argument that the decision to submit the case to an appraisal panel was a settlement, noting that the trial court retained the ability to overturn the panel’s award. Michigan Basic also argued, based on Haliw v. Sterlight Heights, that the rule contemplates resolution of the case by a dispositive motion in lieu of a trial. The Supreme Court disagreed. While Haliw involved an entry of judgment after a dispositive motion, and the Supreme Court used the term “dispositive motion” when resolving Haliw, it clarified that Haliw does not require a dispositive motion before case evaluation costs are awarded. Rather, Haliw indicated that dispositive motions were now covered by the modified case evaluation rule.

Thus, dispositive motions are not the only motions covered by Rule 2.403. As the Court held, that rule applies when judgment is entered because of a ruling on “a” motion, not only when ruling on a dispositive motion.

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