STATE OF MICHIGAN COURT OF APPEALS

Transcription

1 STATE OF MICHIGAN COURT OF APPEALS LEEBOLDT, INC., d/b/a CAPITAL CITY WIRELESS AND MORE, UNPUBLISHED May 5, 2015 Plaintiff-Appellant, V No Ingham Circuit Court STATE FARM FIRE AND CASUALTY LC No CK COMPANY, Defendant-Appellee. Before: O CONNELL, P.J., and FORT HOOD and GADOLA, JJ. PER CURIAM. Plaintiff, Leeboldt, Inc., appeals as of right the trial court s order dismissing its case against defendant, State Farm Fire and Casualty Company, for failing to post an additional security bond of $22,500. The trial court s decision to increase plaintiff s bond from $2,500 to $25,000 was an abuse of discretion because it rested on a misinterpretation of MCR 2.109(A). We reverse and remand for further proceedings. I. FACTS Plaintiff is the holder of a business insurance policy issued by defendant. Plaintiff submitted an insurance claim alleging a theft loss. Following an investigation, defendant denied plaintiff s insurance claim, contending that no theft occurred and that plaintiff submitted fraudulent documents to substantiate its claim. Plaintiff commenced this lawsuit in response. On June 13, 2012, the parties engaged in court-ordered case evaluation. Plaintiff claimed $58,125 in lost inventory, damages for interruption of its business operations, and penalty interest. A case evaluation panel recommended an award of $1,000 to plaintiff. Defendant accepted the award, but plaintiff rejected it. Following plaintiff s rejection, defendant requested that the court order plaintiff to post $25,000 in security for costs under MCR 2.109(A). The trial court granted defendant s motion and initially ordered plaintiff to post $2,500. Plaintiff obtained a security bond and placed the deposit with the court. Defendant then moved for reconsideration, asking the court to increase the security to $25,000. On October 24, 2013, the court granted defendant s request. -1-

2 Plaintiff filed a motion for reconsideration, which the trial court denied. Defendant then filed a motion to enforce the security order. The trial court granted defendant s motion and ordered plaintiff to post the additional security by December 27, When plaintiff failed to do so, the trial court dismissed the case without prejudice. II. ANALYSIS Plaintiff contends that the trial court abused its discretion when it increased the bond from $2,500 to $25,000 on reconsideration. We agree. We review a trial court s decision to require a security bond for costs for an abuse of discretion. In re Surety Bond for Costs, 226 Mich App 321, 331; 573 NW2d 300 (1997). Likewise, this Court reviews for an abuse of discretion a trial court s decision on a motion for reconsideration. Churchman v Rickerson, 240 Mich App 223, 233; 611 NW2d 333 (2000). The trial court abuses its discretion when its outcome falls outside the range of principled outcomes. Maldonado v Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006). When moving the trial court for reconsideration, [t]he moving party must demonstrate a palpable error by which the court and the parties have been misled and show that a different disposition of the motion must result from correction of the error. MCR 2.119(F)(3). MCR 2.109(A) provides that the court may order the opposing party to file with the court clerk a bond with surety as required by the court in an amount sufficient to cover all costs and other recoverable expenses.... The court shall determine the amount in its discretion. (Emphasis added.) In this case, the trial court ordered a $2,500 bond in its discretion on August 21, The trial court subsequently increased this amount to $25,000 on November 26, The trial court indicated that its reason for doing so was that it erred by granting a security bond which does not comport with the court rule by issuing a security bond less than an amount sufficient to cover all costs and other recoverable expenses.... However, MCR 2.109(A) is permissive and did not require the trial court to order a bond in any specific amount. The trial court gave no other reason for the increase but that its initial bond did not comply with the court rule. Its decision on reconsideration rested on a misreading of the court rule. The trial court s $2,500 bond did, in fact, comply with the court rule, and a different disposition was not required on reconsideration. Because the trial court s order rested on an erroneous interpretation of the law, we conclude that it abused its discretion. See In re Waters Drain Drainage Dist, 296 Mich App 214, 220; 818 NW2d 478 (2012). The trial court must be aware of its discretion in order to properly exercise it. Boyd v Wyandotte, 402 Mich 98, ; 260 NW2d 439 (1977). The trial court s error was particularly harsh in this case because plaintiff was able to obtain a bond in the first amount, but not in the second, which resulted in dismissal of its potentially meritorious case. 1 Given our conclusion, we need not consider the remainder of plaintiff s claims on appeal. 1 In civil actions, generally, each party is responsible for their own costs. In re Temple Marital Trust, 278 Mich App 122, 139; 748 NW2d 265 (2008). Our court rules shift this responsibility -2-

3 We reverse and remand for further proceedings. We do not retain jurisdiction. /s/ Peter D. O Connell /s/ Karen M. Fort Hood under some very limited circumstances. But for the trial court to increase the amount of the bond after plaintiff successfully posted the first bond has the appearance of a sanction rather than security for costs. We note that discovery had closed, and the only remaining proceeding appears to have been a short trial. Under these facts, the security bond appears to be excessive. -3-

4 STATE OF MICHIGAN COURT OF APPEALS LEEBOLDT INC., d/b/a CAPITAL CITY WIRELESS AND MORE, UNPUBLISHED May 5, 2015 Plaintiff-Appellant, V No Ingham Circuit Court STATE FARM FIRE AND CASUALTY LC No CK COMPANY, Defendant-Appellee. Before: O CONNELL, P.J., and FORT HOOD and GADOLA, JJ. GADOLA, J. (dissenting). I respectfully dissent because I believe it was well within the trial court s discretion to increase plaintiff s required security bond from $2,500 to $25,000. MCR 2.109(A) provides that if it appears reasonable and proper, the court may order the opposing party to file with the court clerk a bond with surety as required by the court in an amount sufficient to cover all costs and other recoverable expenses.... The court shall determine the amount in its discretion. In this case, the court ordered plaintiff to post a $2,500 security, then increased the amount to $25,000 after defendant filed a motion for reconsideration. In its order, the trial court indicated that it was granting defendant s motion because the $2,500 security was insufficient to cover all of [the] expenses if Defendant succeeds at trial. The majority opinion concludes that the trial court abused its discretion in granting defendant s motion for reconsideration because the court erroneously interpreted MCR 2.109(A) as requiring it to order a security in an amount sufficient to cover all costs and expenses, when MCR 2.109(A) is permissive and does not require a bond in any specific amount. I disagree. I believe the trial court increased the security amount because it properly considered evidence of the case evaluation award and the circumstances surrounding the case to conclude that plaintiff had little chance of future success on its claims, and because it reasonably determined that defendant s litigation costs would exceed $25,000. In deciding a motion for reconsideration, MCR 2.119(F)(3) grants trial courts broad discretion to review all evidence and to reconsider previous rulings. Sutton v Oak Park, 251 Mich App 345, 349; 650 NW2d 404 (2002). Thus, [i]f a trial court wants to give a second chance to a motion it has previously denied, it has every right to do so, and [MCR 2.119(F)(3)] -1-

5 does nothing to prevent this exercise of discretion. Kokx v Bylenga, 241 Mich App 655, ; 617 NW2d 368 (2000), quoting Smith v Sinai Hosp of Detroit, 152 Mich App 716, 723; 394 NW2d 82 (1986) (first alteration in original). The majority contends that the trial court s only reason for increasing the security was a belief that its original order violated MCR 2.109(A). 1 In my reading of the trial court s order, the court does not insinuate that it relied solely on a belief that its initial security order violated MCR 2.109(A). Rather, the order shows that the court granted defendant s motion because Defendant [raised] a new issue regarding the amount of the security bond not covering all costs and other recoverable expenses. It was perfectly reasonable, and within the trial court s discretion, to conclude that plaintiff stood little chance of success on the merits of its claim, and that the costs and recoverable expenses in defending the action would meet or exceed $25,000. Based on the facts and circumstances of this case, I cannot say that the trial court abused its discretion in determining that an increased security amount was warranted under MCR 2.109(A). Regarding the remaining arguments on appeal, plaintiff claims that the $25,000 security was inappropriate because plaintiff was not financially able to furnish such a security. However, plaintiff did not file an affidavit asserting this fact, as required by MCR 2.109(B)(1), until after it filed its motion for reconsideration. Plaintiff forfeited review of this issue by failing to timely file an affidavit and invoke MCR 2.109(B)(1). See Vushaj v Farm Bureau Gen Ins Co, 284 Mich App 513, 519; 773 NW2d 758 (2009) ( Where an issue is first presented in a motion for reconsideration, it is not properly preserved. ). Alternatively, plaintiff argues that the trial court should have considered the issue of posting bond under MCR 2.403(N)(3) rather than MCR 2.109(A). MCR 2.403(N)(3) requires a party to post bond in the amount of $5,000 if a case evaluation panel determines that the party s claim or defense was frivolous. Here, the case evaluation panel never stated that plaintiff s claims were frivolous. Moreover, defendant moved the trial court to require a bond for costs under MCR 2.109(A), not MCR 2.403(N)(3). Plaintiff offers no explanation or authority to show that defendant was required to bring its motion under MCR 2.403(N)(3) rather than MCR 2.109(A). An appellant may not simply announce a position... and then leave it up to this Court to discover and rationalize the basis for his claims. Mitcham v Detroit, 355 Mich 182, 203; 94 NW2d 388 (1959). Plaintiff s arguments regarding MCR 2.403(N) lack merit. For these reasons, I would affirm the trial court. /s/ Michael F. Gadola 1 Quoting the trial court s order, the majority opinion states, The trial court indicated that its reason for [increasing the security] was that it erred by granting a security bond which does not comport with the court rule. However, the prefatory language to this quote from the trial court s order states, Defendant argues this Court erred by granting a security bond which does not comport with the court rule. -2-