As part of its statutory charge to examine current judicial decisions for the purpose of discovering defects in the law and to recommend needed reform, the Michigan Law Revision Commission undertook a review of seven 1996 Michigan Court of Appeals opinions that identify statutes as potential candidates for legislative reform. Those cases and the statutes they dealt with are Miller v. Riverwood Recreation Center, Inc., 215 Mich. App. 561, 546 N.W.2d 684 (1996)(dealing with the application of M.C.L. § 600.2925d; M.S.A. § 27A.2925(4), contribution among joint tortfeasors); People v. Switras, 217 Mich. App. 142, 550 N.W.2d 842 (1996)(dealing with the application of M.C.L. § 750.239; M.S.A. § 28.436, firearms forfeiture); Ladd v. Ford Consumer Finance Co., 217 Mich. App. 119, 550 N.W.2d 826 (1996)(dealing with M.C.L. § 125.2301; M.S.A. § 19.855(101), transfer of title to mobile homes); Cooper v. Wade, 218 Mich. App. 649 (1996), and In the Matter of the Estate of Henderson, 1996 WL 158017 (1996), rehearing granted and overruled, 1996 WL 682922 (1996)(both dealing with the issue of liability to passengers in a vehicle fleeing police pursuit); People v. Poole, 218 Mich. App. 702 (1996)(involving the construction of the repeat drug offender statute, M.C.L. § 333.7413, M.S.A. § 14.15(7413)); and Platte Lake Improvement Ass'n v. Dep't of Natural Resources, 218 Mich. App. 424, 554 N.W.2d 342 (1996)(concluding that costs recoverable in lawsuits brought under the Michigan Environmental Protection Act do not include an award of attorneys fees).(2)
At common law there was no right to contribution among two or more joint tortfeasors. Consequently, in Michigan, as in other states, the right to contribution is controlled by statute. The contribution provisions of the Revised Judicature Act authorize a joint tortfeasor "who has paid more than his pro rata share of the common liability" to seek contribution from other tortfeasors, except as otherwise provided in the Act.(3) The Act further provides that "[e]xcept as otherwise provided by law . . . in determining the pro rata shares of tortfeasors in the entire liability as between themselves[,] . . . [t]heir relative degrees of fault shall be considered . . . [and] principles of equity applicable to contribution generally shall apply."(4)
In Miller v. Riverwood Recreation Center, Riverwood and Otto-Dufty were sued by the Millers for a slip and fall accident that occurred on a golf course owned by Riverwood that had been renovated by Otto-Dufty. The jury returned a $328,500 verdict in favor of the Millers and against Riverwood and Otto-Dufty, jointly and severally. The jury determined that Riverwood was 70 percent liable for plaintiffs' injuries and found Otto-Dufty 30 percent responsible. After the verdict was returned but before entry of judgment, Riverwood suggested to Otto-Dufty that they attempt to settle the case with plaintiffs. Riverwood stated that it was prepared to pay $25,000 in settlement. Otto-Dufty rejected that offer. Riverwood nevertheless went ahead and settled with plaintiffs for $25,000, with an order of judgment being entered against Otto-Dufty for the entire jury verdict, reduced by the $25,000 paid in settlement by Riverwood. Otto-Dufty made a post-trial motion for contribution that was denied.
On appeal, the Court of Appeals affirmed. As framed by the Court of Appeals, the issue was the application of M.C.L. § 600.2925d; M.S.A. § 27A.2925(4), which provides:
When a release or a covenant not to sue or not to enforce judgment is given in good faith [emphasis added] to 1 or 2 or more persons liable in tort for the same injury or the same wrongful death:
(a) It does not discharge any of the other tort-feasors from liability for the injury or wrongful death unless its terms so provide.
(b) It reduces the claim against the other tort-feasors to the extent of any amount stipulated by the release or the covenant or to the extent of the amount of the consideration paid for it, whichever amount is the greater.
(c) It discharges the tort-feasor to whom it is given from all liability for contribution to any other tort-feasor.
Otto-Dufty's argument that the settlement between the Millers and Riverwood was not "in good faith" because it would result in Otto-Dufty paying an amount grossly disproportionate to its pro rata share of plaintiffs' damages rested heavily on the California Supreme Court's decision in Tech-Bilt, Inc. V. Woodward-Clyde & Associates, 38 Cal.3d 488, 213 Cal. Rptr. 256, 698 P.2d 159 (1985). In Tech-Bilt, the California Supreme Court observed that the California contribution statute has twin goals, the encouragement of settlements and the equitable sharing of damage awards by joint tortfeasors. In order that neither of these goals be subordinated to the other, the good faith requirement was included in the contribution statute so that courts could inquire, among other things, whether the amount of the settlement is within the reasonable range of the settling tortfeasor's proportional share of comparative liability for the plaintiff's injuries.(5)
The Court of Appeals rejected the reasoning in Tech-Bilt regarding the meaning of "good faith" as unpersuasive with regard to Michigan's contribution statute. The Court believed that Tech-Bilt's treatment of "good faith" would have the unsalutary effect of undermining the Michigan statute's goal of reaching settlements in tort cases. The Court made the following important observations concerning the Legislature's intent in enacting the Michigan contribution statute:
Otto-Dufty can point to no Michigan legislative history suggesting any intent to adopt a judicial interpretation of "good faith" that would require a settlement agreement must reflect proportional liability. . . . We note that, at one point, this Act [the Uniform Contribution Among Tortfeasors Act] included a section providing that a settling tortfeasor was not released from liability unless the release provided that the plaintiff's ultimate recovery would be reduced to the extent of the released tortfeasor's pro rata share of the damages, not just the settlement amount. . . . However, this protection was removed in later versions of the Uniform Act, and it is not included in the Michigan statute at issue here. To the contrary, the Michigan statute specifically provides that a plaintiff's recovery against non-settling defendants is reduced only by the settlement amount.
Beyond that, as in California, the Michigan contribution statute seeks to advance two goals, the equitable sharing of liability and the settlement of lawsuits. However, it appears that the Legislature intended that the first goal should be subservient to the second in situations where they conflict. As previously noted, sections 2925a and 2925b, which provide the right to contribution and advance the equitable sharing goal, are both limited by an "except as otherwise provided" clause. The act otherwise provides, in § 2925d, a strong incentive to settle: a settling tortfeasor is protected from contribution claims made by other tortfeasors.
* * * *
We fully understand Otto-Dufty's basic complaint, that it is unfair to require it to pay most of plaintiff's damages when the jury found it minimally liable. That result is, however, required by the statute, and Otto-Dufty's arguments should be addressed to the Legislature.(6)
The Court concluded that "good faith" should be analyzed with respect to the settling parties' negotiations and intent, not on whether the settlement amount is reasonably related to the settling defendant's proportional liability as compared to other tortfeasors.
In its 1991 Annual Report, the Law Revision Commission visited the issue of settlements and releases from vicarious liability under the Michigan Contribution Among Joint Tortfeasors Act.(7) The Commission did not take up the issue presented in the Miller case.
In 1995, the Legislature enacted 1995 P.A. 249 (cited in footnote 5 of the Miller decision, but not applicable because the case was filed before the effective date of the Act) that radically changes principles of joint and several liability in personal injury actions generally. M.C.L. § 600.6304(1) directs a jury to return a special verdict in personal injury actions that contains the following finding:
(b) The percentage of the total fault of all persons that contributed to the death or injury, including . . . each person released from liability under section 2925d [M.C.L. § 600.2925d] . . . .
That section then provides as follows:
(4) Liability in an action to which this section applies is several only and not joint. Except as otherwise provided in subsection (6) [dealing with medical malpractice actions], a person shall not be required to pay damages in an amount greater than his or her percentage of fault as found under subsection (1). This subsection and section 2956 do not apply to a defendant that is jointly and severally liable under section 6312.(8)
If M.C.L. § 600.6304(4) (and with it the abolition of joint and several liability generally in tort actions) had been in effect at the time the Miller case was filed, Otto-Dufty's exposure would have been limited to its 30-percent share of liability.
For tort actions in which principles of joint and several liability still apply, the Commission should consider recommending an amendment to section 2925d to include a definition of "good faith" that compares the amount of the settlement with the percentage of the settling tortfeasor's liability.
The relevant portion of the Michigan firearms forfeiture statute, M.C.L. § 750.239; M.S.A. § 28.436, provides:
All pistols, weapons or devices carried, possessed or used contrary to this chapter are hereby declared forfeited to the state, and shall be turned over to the commissioner of the Michigan state police or his designated representative, for such disposition as the commissioner may prescribe (emphasis added).
The firearms forfeiture statute, M.C.L. § 750.239; M.S.A. § 28.436, originated as § 239 of 1931 PA 328, the act that created the modern Penal Code. Chapter 37 of Act 328, as designated in the original legislation, was entitled "Firearms," and included §§ 222 through 239. Through the course of various reenactments and amendments to the Penal Code, M.C.L. § 752.862; M.S.A. § 28.436(22), careless discharge of a firearm resulting in property damage, was not included in Chapter 37.
Following a district court jury trial, Switras was convicted of careless discharge of a firearm resulting in property damage, M.C.L. § 752.862; M.S.A. § 28.436(22). This section was originally enacted as section 2 of 1952 PA 45. Switras was ordered to pay a fine and to forfeit the firearm, pursuant to the forfeiture statute, M.C.L. § 750.239; M.S.A. § 28.436. Switras argued on appeal that forfeiture was not authorized because the forfeiture statute only applied to offenses under "this chapter," i.e., Chapter 37, and the statute under which he was convicted was not part of Chapter 37.
The Court of Appeals agreed. Noting that in their respective compilations of Michigan statutes West Publishing (which publishes Michigan Compiled Laws) had not included 1952 PA 45 in Chapter 37, but that Callaghan & Company (which publishes Michigan Statutes Annotated) had, the Court concluded that this was irrelevant because the Legislature had not delegated to either publisher the power to affect the application of any statute. While agreeing that conceptually the two sections of 1952 PA 45 dealing with firearms use belonged in Chapter 37 (covering offenses related to firearms), the Court stated that "1952 PA 45 . . . does not purport to add any sections to the Penal Code. To add a section to the Penal Code, the Legislature must do so explicitly. Const. 1963, art. 4, § 24."(9) The Court was thus forced to the conclusion that the offense of which Switras was convicted was not within the ambit of Chapter 37 of the Penal Code.
It is possible, as the Switras court noted, that the scope of the forfeiture provision was inadvertently limited as a result of legislative oversight. As matters currently stand, a person convicted of a firearms violation under M.C.L. § 752.862; M.S.A. § 28.436(22), cannot have his or her firearm forfeited. The Commission should recommend that the Legislature amend M.C.L. § 752.862; M.S.A. § 28.436(22), to make firearms used in violation of that section is subject to forfeiture.
The provisions of the Mobile Home Commission Act (MHCA) and the Uniform Commercial Code (UCC) governing transfer of ownership differ radically. The MHCA makes all mobile home sales or transfers subject to the certificate of title provisions of the Act, except for any new mobile home owned by a manufacturer or by a licensed mobile-home dealer.(10) A manufacturer or dealer is not required to apply for a certificate of title while holding the home for sale. Upon sale, however, the purchaser must apply for a certificate of title with the assistance of the dealer. The effective date of the transfer of title is the date of execution of either the application for title or the certificate of title.(11)
M.C.L. § 125.2330(3); M.S.A. § 19.855(130)(3) expressly provides that "a mobile home shall not be sold or transferred except by transfer of the certificate of title for the mobile home pursuant to this act." Pursuant to regulations promulgated by the Mobile Home Commission under authority of the MHCA, a mobile-home dealer must prepare and file an application for a certificate of title with the Department of Commerce, with the manufacturer's certificate of origin attached to the application.(12)
The UCC provisions governing transfer of ownership are markedly different. Under the UCC, title to goods passes to the buyer at the time and place at which the seller completes performance with respect to delivery of the goods, without regard to a certificate of title.(13)
In Ladd v. Ford Consumer Finance Co., Ladd was the purchaser of a new mobile home, the purchase of which was financed by NBD Bank. Under the terms of an inventory financing agreement with the mobile home dealer, Colony Homes Center, Ford Consumer Finance advanced funds to the manufacturer of the mobile homes so that Colony could buy them. Ford in turn held a security interest in Colony's entire inventory and required the manufacturer to send to Ford the certificates of origin, without which an application for a certificate of title is not complete. Ladd, with the NBD financing, paid for a new mobile home, which Colony delivered, but without a certificate of title. In violation of its agreement with Ford, Colony had failed to turn the Ladd purchase money over to Ford as a condition of Ford's surrender of the certificate of origin. Colony shortly thereafter ceased doing business and had no assets. Without the certificate of origin, Ladd could not obtain a certificate of title for the mobile home and NBD could not perfect its security interest in the home.
The Court of Appeals was presented with a case of first impression: Do the general provisions of the UCC or the specific provisions of the MHCA control the transfer of legal ownership in a mobile home? The Court concluded that the MHCA governs. First, the Court noted that in analogous cases involving a conflict over whether the UCC or some other more specific statute governs, the courts have held that the more specific statute controls. The Court of Appeals has ruled in cases involving transfer of title to automobiles and watercraft that the Motor Vehicle Code (MVC) and the Watercraft Certificates of Title Act (WCTA) preempt the UCC.(14) Because the MHCA title transfer provisions are analogous to those of the MVC and the WCTA, the Court concluded, that the specific certificate of title provisions of the MHCA control over the general provisions of the UCC.(15)
A subsidiary issue addressed by the Court was whether Ladd, the buyer of the mobile home, was a buyer in the ordinary course of business who, therefore, acquired title to the mobile home under the UCC, M.C.L. § 440.9307; M.S.A. § 19.9307. The Court again concluded that Ladd did not acquire title to the mobile home as a buyer in the ordinary course of business. "Despite our sympathy for these innocent plaintiffs," the Court concluded, "this Court is bound to follow the clear and unambiguous language of the title transfer provisions of the MHCA. Judicial construction of the MHCA title provisions is neither required nor permitted. If the Legislature intends a buyer in the ordinary course of business to take title to a mobile home under the UCC, it should plainly state so in an amended statute."(16)
As between the innocent purchaser, who has not had a continuous course of dealing with the mobile-home dealer, and the mobile-home dealer's finance company, who is intimately involved in the dealer's financial affairs, there is a natural impulse to favor the innocent party. As between an innocent purchaser, such as Ladd, and a financial institution, such as Ford Consumer Finance, the latter is much better placed to protect its financial position vis-a-vis the dealer.
On the other hand, most purchases of new automobiles, boats, and mobile homes will involve purchase-money financing arranged by the buyer through a sophisticated lending institution. That lending institution will insist that its security interest is noted on the certificate of title. If such institutions insist that a duly executed application for a certificate of title be completed and submitted before releasing purchase money, innocent purchasers should be protected. Mobile-home dealers which have a floor-plan financing arrangement like the one Colony had with Ford will be required to keep relatively minimal cash reserves on hand that they can use to pay their financing institution in order to secure release of the certificate of origin.
On balance, because this is an area involving a delicate balance of consumer, lender, and dealer interests, the Legislature should hold hearings on this question before changing the status quo.
On September 10, 1996, separate panels of the Michigan Court of Appeals handed down two decisions involving the identical issue, but reached opposite conclusions on the question of whether police officers engaged in a high-speed pursuit owe a duty of care to passengers in a fleeing vehicle. In Cooper v. Wade,(17) the Court of Appeals concluded that a duty of care is owed wed to such passengers. The Court added that "a limitation of liability must come, if at all, from the Legislature or from the Supreme Court's narrowing of Fiser [v. Ann Arbor, 417 Mich. 461, 339 N.W.2d 413 (1983), holding the a government employer can be held liable for the negligent operation of a motor vehicle by one of its employees]."(18) In the other case, In the Matter of the Estate of Henderson,(19) the Court of Appeals concluded that police officers owe no no duty of care to a passenger who is voluntarily in a fleeing vehicle because that person is not an innocent bystander and, thus, does not fall under the rule in Fiser. However, given the conflict with the Cooper opinion, the court in Henderson granted rehearing and deferred to the Cooper decision pursuant to Supreme Court Administrative Order 1996-4. The court noted that but for Administrative Order 1996-4, it would have adhered to its earlier decision, describing the reasoning in Cooper as "flawed."
These two decisions are discussed in the Report entitled, POLICE OFFICER LIABILITY IN HIGH-SPEED PURSUITS: A STUDY REPORT TO THE MICHIGAN LAW REVISION COMMISSION, which is part of this Annual Report.
M.C.L. § 333.7413; M.S.A. § 14.15(7413) prescribes the penalties for repeat controlled substance offenders, and provides in pertinent part:
(1) An individual who was convicted previously for a violation of any of the following offenses and is thereafter convicted of a second or subsequent violation of any of the following offenses shall be imprisoned for life and shall not be eligible for probation, suspension of sentence, or parole during that mandatory term:
(a) A violation of section 7401(2)(a)(ii) or (iii).
(b) A violation of section 7403(2)(a)(ii) or (iii).
(c) Conspiracy to commit an offense proscribed by section 7401(2)(a)(ii) or (iii) or section 7403(2)(a)(ii) or (iii).
These sections prohibit the manufacture, creation, delivery, or possession with intent to manufacture, create, or deliver, at least 50 grams but less than 225 grams, or at least 225 grams but less than 650 grams of a Schedule 1 or 2 narcotic or cocaine; or possession of at least 50 grams but less than 225 grams, or at least 225 grams but less than 650 grams, of a Schedule 1 or 2 narcotic or cocaine, or conspiracy to commit one of the foregoing offenses.
In People v. Poole,(20) the Court of Appeals reviewed the conviction and sentence of the defendant under the the repeat drug offender statute, M.C.L. § 333.7413; M.S.A. § 14.15(7413). On September 9, 1992, defendant delivered cocaine to a police officer. On September 17, 1992, the police found cocaine in defendant's jacket while executing a search warrant. Poole was subsequently convicted of two drug offenses following separate jury trials for delivery of 50 grams or more, but less than 225 grams, of cocaine; and possession with intent to deliver 50 grams or more, but less than 225 grams, of cocaine. He was sentenced to serve consecutive prison terms of 13 to 20 years, and a life term without parole, respectively.
Poole argued that the trial court erred in sentencing him as a repeat drug offender for the possession conviction. In affirming the trial court, the Court of Appeals held that section 7413(1) is not ambiguous and clearly requires a nonparolable life sentence where a defendant was "convicted previously" of an enumerated offense and is thereafter "convicted" of an enumerated offense. Poole's conviction history fit within this sequence. The Court rejected his argument that section 7413(1) does not apply to him because he committed his second offense before he had been convicted of the first offense. "For defendant's argument to prevail," the Court wrote, "we would have to rewrite § 7413(1) . . . [by changing] 'is thereafter convicted' to read '[who] thereafter commits' an offense. This we cannot do."(21)
The Court of Appeals' construction of section 7413(1) is consistent with the plain language of that statute. If the Legislature intended the result advanced by the defendant in Poole, statutory redrafting would be necessary.
At common law, costs recoverable following successful litigation did not include attorneys fees.(22) "Costs" in the context of litigation is a term of art that has a s a meaning different from the common meaning. The Michigan Environmental Protection Act (MEPA) contains a section that provides for an award of costs in litigation brought under MEPA. M.C.L. § 691.1203(3), M.S.A. § 14.528(203)(3) provides that "[c]osts may be apportioned to the parties if the interests of justice require." M.C.L. § 600.2405, M.S.A. § 27A.2405 lists the items which may be taxed and awarded as "costs" in the context of litigation, providing specifically for "[a]ny attorney fees authorized by statute or by court rule."
Thus, unless MEPA specifically authorizes an award of attorney fees, they are not otherwise recoverable as "costs."
In Platte Lake Improvement Ass'n v. Dep't of Natural Resources, 218 Mich. App. 424, N.W.2d (1996), the plaintiff-property owners' association sought an award of attorney fees and costs after successfully suing the DNR for operating a salmon hatchery facility that polluted plaintiffs' property. The Court of Appeals concluded that costs recoverable in lawsuits brought under the Michigan Environmental Protection Act do not include an award of attorneys fees. The Court stated that its conclusion was consistent with legislative intent:
[I]t is apparent that the Legislature understands the significance of the word "costs" because in other environmental legislation the Legislature has specifically provided for the payment of attorney fees.(23)
Other panels of the Court of Appeals have reached the opposite conclusion. See, e.g., Superior Public Rights, Inc. v. Dep't of Natural Resources, 80 Mich. App. 72, 263 N.W.2d 290 (1977). Contra Oscoda Chapter of PBB Action Committee, Inc. v. Dep't of Natural Resources, 115 Mich. App. 356, 320 N.W.2d 376 (1982); Attorney General v. Piller, 204 Mich. App. 228, 514 N.W.2d 210 (1994).
There is little room for disagreement with the Court of Appeals in the Platte Lake Improvement Ass'n case regarding statutory construction. In litigation settings the word "costs" is a term of art that does not include an award of attorney fees unless specifically authorized. The only question is whether the Legislature intended this result, given that in other environmental laws it has provided for an award of attorney fees as an item of recoverable costs.
(1) This Report was prepared by Professor Kevin Kennedy, Detroit College of Law at Michigan State University.
(2) These opinions are attached to this Report as Appendices 1-6, respectively.
(3) M.C.L. § 600.2925a(2); M.S.A. § 27A.2925(1)(2).
(4) M.C.L. § 600.2925b; M.S.A. § 27A.2925(2).
(5) Tech-Bilt, 698 P.2d at 166.
(6) Riverwood, 215 Mich. App. at 568, 570, 572 (citations omitted, footnote omitted).
(7) MICHIGAN LAW REVISION COMMISSION, 1991 ANNUAL REPORT 19-30.
(8) Under section 6312, defendants are jointly and severally liable if their conduct was criminal, involved the use of a motor or recreational vehicle, and in other circumstances.
(9) Switras, 217 Mich. App. at 246.
(10) M.C.L. § 125.2330(1); M.S.A. § 19.855(130)(1).
(11) M.C.L. § 125.2330c(2); M.S.A. § 19.855(130c)(2).
(12) 1991 AACS, R. 125.1217(2); 1985 AACS, R. 125.1232(1).
(13) M.C.L. § 440.2401; M.S.A. § 19.2401.
(14) See Whitcraft v. Wolfe, 148 Mich. App. 40, 384 N.W.2d 400 (1985)(MVC preempts UCC); Jerry v. Second Nat'l Bank of Saginaw, 208 Mich. App. 87, 527 N.W.2d 788 (1994)(WCTA preempts UCC).
(15) Ladd, 217 Mich. App. at 128.
(16) Ladd, 217 Mich. App. at 132 (citations omitted).
(17) 218 Mich. App. 649 (1996).
(18) Id., 218 Mich. App. at 657.
(19) 1996 WL 158017, rehearing granted and overruled, 1996 WL 682922 (1996).
(20) 218 Mich. App. 702 (1996).
(21) Id., Mich. App. at 710.
(22) See, e.g., Matras v. Amoco Oil Co., 424 Mich. 675, 695, 385 N.W. 2d 586 (1986); Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240 (1975).
(23) Id., 218 Mich. App. at 428. The Court cited as examples the Water Resources Commission Act and the Hazardous Waste Management Act.
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