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Volume XXVI, No. 10, April 8, 2014
From the Law Offices of Garan Lucow Miller, P.C.
From the Editor: Sarah Nadeau
COURT OF APPEALS BARS DISTRICT COURT FORUM SHOPPING
CONTRIBUTOR – EDWARD FREELAND
Recently the Michigan Court of Appeals addressed two appeals from verdicts entered in the 36th District Court where plaintiff counsel, despite alleging in Plaintiff’s Complaint that damages do not exceed $25,000, introduced evidence at trial of damages of over $100,000, far in excess of the District Court’s jurisdictional limit. The first case, Charles Moody, Get Well Medical Treatment, Progressive Rehab Center and Carol Reints, Inc. v Home-Owners Insurance Company (______ Mich App ______ 2014) was consolidated with an appeal in the case of Linda Hodge v State Farm Mutual Automobile Insurance Company.
Charles Moody filed his Complaint for no-fault personal protection insurance benefits in the 36th District Court alleging that his claims did not exceed $25,000. In addition, the prayer for relief sought damages in whatever amount plaintiff was found to be entitled, not to exceed $25,000, plus interest, costs and attorney fees. Get Well Medical Transport, Progressive Rehab Center and Carol Reints, Inc. filed a separate Complaint in the 36th District Court seeking payment for “reasonably necessary products, services and accommodations” provided to Moody allegedly as a result of the motor vehicle accident. The combined total of these provider’s claims amounted to $21,982.14. Upon Home-Owners’ motion the providers’ lawsuit was consolidated with Moody’s lawsuit. During the course of discovery Moody served Answers to Interrogatories in which he identified claims for no-fault benefits in excess of $400,000.
At trial, Home-Owners raised the issue of the District Court’s subject matter jurisdiction as clearly, Moody intended to claim damages far exceeding the $25,000 jurisdictional limit of the District Court. In addressing Home-Owners’ motion, the District Court ruled that it would not restrict Moody’s counsel from introducing claims for no-fault benefits in excess of the Court’s jurisdictional limit however, should the jury return a verdict in excess of the Court’s jurisdictional limit, it would “cure” the jurisdictional problem by limiting the judgment to $25,000 exclusive of attorney fees, interest and costs. The District Court also ruled that it would not take judicial notice of the District Court’s jurisdictional limit and that defense counsel could not advise the jury of this limit.
At trial, counsel for Home-Owners renewed its Motion for Summary Disposition inasmuch as plaintiff’s claim for damages far exceeded the District Court’s jurisdictional limit. The Court again denied Home-Owner’s motion. Following the submission of proofs the jury returned a verdict in excess of the District Court’s jurisdictional limit which was then reduced to the District Court’s jurisdictional limit of $25,000. The jury also returned a verdict in favor of the medical providers however, in an amount less than the District Court’s jurisdictional limit. Home-Owners then filed an appeal with the Circuit Court which found that the District Court lacked subject matter jurisdiction, that it was inappropriate to allow plaintiff to present evidence of damages above the District Court’s jurisdictional limit and that the District Court should have either dismissed plaintiff’s lawsuit or transferred it to the Circuit Court. As such, Moody’s case was remanded to the District Court for either an entry of a dismissal or an order transferring it to the Circuit Court. The Circuit Court also reversed the verdict entered in favor of the providers as the providers’ claim was intertwined with Moody’s and as inadmissible evidence admitted in Moody’s case may have affected the outcome in the providers’ lawsuit.
Hodge v State Farm addressed a similar issue. As with Moody, Linda Hodge brought an action in the 36th District Court seeking no-fault personal protection insurance benefits well in excess of the District Court’s $25,000 subject matter jurisdictional limit. Following the submission of proofs, the jury returned a verdict of $85,957 which was then reduced to a Judgment of $25,000 plus interest. State Farm appealed to the Circuit Court which, similar to the Circuit Court’s ruling in Moody, found that the District Court lacked subject matter jurisdiction and therefore, the Circuit Court vacated the verdict entered against State Farm.
Plaintiffs appealed the Circuit Court decisions to the Michigan Court of Appeals which affirmed the Circuit Court’s rulings. In doing so, the Court of Appeals noted that the District Court was obligated to recognize the limits of its subject matter jurisdiction and either dismiss plaintiffs’ cases or transfer them to the Circuit Court. As the District Court failed to do so, the District Court Judgments were therefore void.
In addressing the District Court’s jurisdictional limit, the Court of Appeals noted that the Circuit Court is the primary Court having jurisdiction over civil cases. However, MCL 600.8301(1) provides an exception for bringing civil actions in a District Court “when the amount in controversy does not exceed $25,000.” In addressing the phrase “amount in controversy” the Court noted that it is the amount the parties to a lawsuit dispute, argue about, or debate during the litigation. While the “amount in controversy” will most often be determined by reviewing the amount of damages or injuries a party claims in his pleadings, the Statute does not explicitly make this limitation. In Moody and Hodge, pretrial discovery answers, the arguments of counsel before trial and the presentation of evidence at trial all show that the “amount in controversy” far exceeded the District Court’s subject matter jurisdictional limit. As such, without subject matter jurisdiction the only action the District Court could have properly taken would have been to dismiss the action or transfer it to the Circuit Court. The Court of Appeals also noted that simply reducing the verdicts to a Judgment of $25,000 would not confer subject matter jurisdiction with the District Court.
With respect to the providers’ argument that their claims may be saved by severing them from the extra jurisdictional claims of Moody, the Court of Appeals held that because the claims were consolidated for trial, they are considered merged with Moody’s claims for the purpose of determining the “amount in controversy”.
As a published decision, Moody has precedential effect and as such, its holding controlled the Court of Appeals decision in the matter of Madison v AAA (COA No. 312880, decided March 13, 2014). Similar to Moody and Hodge, Madison also filed suit in the 36th District Court alleging damages of $25,000 however after filing suit and at trial, plaintiff submitted proofs alleging damages well over $100,000. At trial the jury returned a verdict in excess of the District Court’s jurisdictional limit which was then reduced to a Judgment of $25,000. On appeal, the Court of Appeals vacated the $25,000 Judgment and remanded the case back to the District Court for either a dismissal or transfer of plaintiff’s case to the Circuit Court.
Although decided on the basis of subject matter jurisdiction, Moody also addresses the issue of forum shopping, a practice whereby a lawsuit is filed in the District Court premised upon the allegation, in the initial Complaint, that damages do not exceed the Court’s jurisdictional limit, however, during discovery and at trial, proofs are presented well in excess of the District Court’s jurisdictional limit. A favorable verdict in excess of the Court’s jurisdictional limit is then reduced to the District Court’s jurisdictional limit of $25,000 and used as a basis to request no-fault interest and attorney fees, sometimes in amounts of hundreds of thousands of dollars. The Court of Appeals’ decision in Moody makes clear that once “the amount in controversy” (i.e., the amount in dispute, argued about or debated during the litigation) exceeds $25,000, (including all combined provider claims), the District Court loses subject matter jurisdiction and therefore must either dismiss the lawsuit or transfer it to the Circuit Court. Moody makes certain that there can be no allegation, argument or presentation of a claim for damages exceeding $25,000 in any District Court no-fault matter.
If you would like a copy of the Moody v Home-Owners’ decision or wish to discuss the impact of this litigation on a pending claim or lawsuit, please contact Edward Freeland at Efreeland@garanlucow.com or (248) 641-7600, ext. 2253.
GARAN LUCOW MILLER
GRAND RAPIDS SPRING BREAKFAST SEMINAR
REGISTER NOW: firstname.lastname@example.org
April 23, 2014 at the Frederik Meijer Gardens and Sculpture Park
You and your co-workers are invited to attend our complimentary Annual Spring Breakfast Seminar at the Frederik Meijer Gardens and Sculpture Park on April 23, 2014. After the seminar, please enjoy all of the indoor and outdoor garden areas as our guests, including the always wonderful Butterflies Are Blooming exhibit.
If you are able to attend, please R.S.V.P., along with the full names and number of attendees, to Lynn Beatty at email@example.com or call our office at 616-742-5500. We look forward to seeing you at the gardens.
8:00 – 8:20 a.m. Registration and Continental Breakfast
8:20 – 8:25 a.m. Welcome and Introduction
David N. Campos, Moderator
8:25- 8:50 a.m. A View From the Bench
Special Guest Speaker: Hon. James R. Redford, Kent County Circuit Court
8:50 – 9:50 a.m. Michigan First Party No-Fault (PIP) Updates
A comprehensive review of significant court decisions over the past year.
Speaker: David N. Campos
9:50 – 10:15 a.m. Property Protection Insurance (PPI) Updates
A presentation specifically focused on Property Protection Insurance claims and strategies for successful handling.
Speaker: Tara L. Velting
10:15 – 10:30 a.m. Break
10:30 – 10:50 a.m. Michigan Third-Party (Automobile Negligence) Updates
How courts are applying McCormick v Carrier, and the continued importance of using a wide variety of social networking sites for impeachment.
Speaker: David A. Couch
10:50 – 11:10 a.m. Updated Strategies for Handling Vehicle and Home Modifications Cases
A presentation specifically focused on Admire v Auto Owners, 494 Mich. 10 (2013) and its effect on modifications claims.
Speaker: Emily L. Partridge
11:10 – 11:50 a.m. Using Biomechanical Engineering to Strengthen Your Case
Guest Speaker: Brian T. Weaver, P.E., Weaver Engineering Co.
11:50 – 12:20 p.m. Michigan Premises Liability Updates
Speaker: Nathan A. Dodson
12:20 – 12:30 p.m. Question and Answer Session With the Panel Speakers
INDY CITY SEMINAR
INDY CITY SEMINAR, Indianapolis, Indiana, Marriott Downtown.
May 21, 2014. To register please contact Eileen Carty at firstname.lastname@example.org