Cindy Whitney v. Courtney Schultz ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
CINDY WHITNEY, UNPUBLISHED
December 6, 2018
Plaintiff,
and
AMERICAN SURGICAL CENTERS I, INC., and
AMERICAN SURGICAL CENTERS II, INC.,
Intervening-Plaintiffs,
v No. 338094
Wayne Circuit Court
COURTNEY SCHULTZ, JOHN DOE, and LC No. 12-009385-NI
AMERICAN COUNTRY INSURANCE
COMPANY,
Defendants,
and
ALLSTATE PROPERTY AND CASUALTY
INSURANCE COMPANY,
Defendant/Third-Party Plaintiff-
Appellee,
and
DENNIS KAWECKI and TIMELY
TRANSPORTATION LLC,
Third-Party Defendants,
and
CARLA AIKENS,
Third-Party Defendant-Appellant.
Before: M.J. KELLY, P.J., and MARKEY and FORT HOOD, JJ.
FORT HOOD, J. (concurring in part and dissenting in part).
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I agree with the majority that the trial court’s December 12, 2016 order should be
affirmed to the extent that it determines that Carla Aikens should be sanctioned. However, I
would vacate the portion of the trial court’s order requiring Aikens to pay $23,897.78 in
Allstate’s attorney fees as a sanction and remand to allow the trial court the opportunity to
reconsider the reasonableness of the amount of the attorney fees imposed as a sanction against
Aikens. I therefore dissent on that basis.
Under the circumstances of this case, I agree with the majority that the trial court
correctly utilized its inherent authority to sanction Aikens, an officer of the Court, for her
misconduct and wrongdoing in this case. However, Aikens also challenges on appeal the amount
of the sanctions imposed against her, the $23,897.78 in attorney fees that Allstate alleges it
incurred as a result of her misconduct. This amount is nothing short of outrageous. My review
of the record evidence demonstrates that the sanctions that the trial court ordered are not just, fair
or proportionate, particularly under the circumstances of this case, where the record reflects that
Aikens was not solely responsible for (1) the dismissal of plaintiff’s claim against American
Country Insurance Company (American County) and (2) Allstate having to defend this litigation
against plaintiff. Instead, the record confirms that the actions and inactions of others involved in
the lower court proceedings contributed to and resulted in these outcomes. Therefore, on the
basis of the analysis set forth below, I would remand to allow the trial court the opportunity to
fashion a more proportionate and just award of sanctions against Aikens.
In the context of the award of discovery sanctions, this Court has cautioned that an award
of sanctions must be “proportionate and just[.]” Hardrick v Auto Club Ins Ass’n, 294 Mich. App.
651, 662; 819 NW2d 28 (2011). Moreover, the Chambers Court recognized that “[b]ecause of
their very potency, inherent powers must be exercised with restrain and discretion.” Chambers v
NASCO, Inc, 501 U.S. 32, 44; 111 S. Ct. 2123; 115 L. Ed. 2d 27 (1991). Similarly, in the context of
MCR 2.114(E),1 this Court has observed that the plain language of the court rule does not allow
for “punitive damages.” Kaeb v Kaeb, 309 Mich. App. 556, 565; 873 NW2d 319 (2015); see also
Vittiglio v Vittiglio, 297 Mich. App. 391, 408; 824 NW2d 591 (2012) (recognizing that attorney
fees awarded as a sanction pursuant to MCR 2.114(E) must be “reasonable.”)
During the December 10, 2015 evidentiary hearing, Allstate provided the trial court with
its invoices for services rendered from November 19, 2012 until March 6, 2014, asserting that all
such fees were attributable to Aikens’s actions in not tendering Timely Transportation’s proof of
insurance coverage. Notably, the record reflects that Aikens tendered the correct requested
certificate of insurance to Allstate’s counsel on May 20, 2013. This followed Aikens providing a
certificate of insurance to Allstate’s counsel on February 20, 2013, which was for the wrong
year, with the policy period ending in 2012, as opposed to 2011.
For reasons unclear from the record, counsel for Allstate did not contact Aikens regarding
obtaining the correct certificate of insurance coverage, but on April 19, 2013, Allstate filed a
motion seeking leave to file its third-party claim against Aikens, Dennis Kawecki and Timely
1
MCR 2.114 was repealed effective September 1, 2018. Michigan Supreme Court Order, Adm
File No. 2002-37 (May 30, 2018), 501 Mich. cxx, cxxxvii
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Transportation. Third-party defendants subsequently filed a motion for summary disposition of
Allstate’s third-party claim against them, asserting that plaintiff’s claim for no-fault benefits was
appropriately directed against American Country. For reasons unclear from the record, plaintiff
did not take action to amend her complaint to add American Country to the litigation and allege
claims against it until December 20, 2013. As a consequence, American Country successfully
moved for summary disposition of plaintiff’s claims against it pursuant to MCR 2.116(C)(7) on
the basis that the statute of limitations had expired.2 Aside from plaintiff’s statements in her
deposition and during the evidentiary hearing that she had a conversation with Aikens shortly
after the November 29, 2011 motor vehicle accident, the record is also relatively unclear with
respect to what actions plaintiff and her counsel, during the time period of November 29, 2011
until November 29, 2012, undertook to ascertain whether Timely Transportation was in fact
insured.3 It is also not clear from the record why counsel for Allstate did not contact Aikens
regarding its inquiries with respect to the insurance coverage for Timely Transportation before
November 19, 2012. This is particularly so where counsel for Allstate, Karen Magdich,
acknowledged at the evidentiary hearing that her firm was aware of plaintiff’s claim against
Allstate with respect to the November 29, 2011 accident when plaintiff’s complaint was filed on
July 16, 2012. Magdich went on to testify that her firm did not undertake efforts before
November 19, 2012 to ascertain the insurance coverage for Timely Transportation because she
was “trusting [the law firm representing plaintiff] to deal with it.” Aikens testified during the
evidentiary hearing that aside from a telephone call with predecessor counsel for plaintiff in the
spring of 2012, she did not receive any telephone or written communication from plaintiff’s
counsel requesting confirmation of Timely Transportation’s insurance coverage. While the trial
court stated on the record while rendering its factual findings during the December 10, 2015
evidentiary hearing that the “expenditures in the bill” submitted by Allstate for its attorney fees
were not challenged, this is not entirely accurate. My review of the evidentiary hearing
transcript confirms that counsel for Aikens strenuously challenged whether Aikens should be
held responsible for the actions or inactions of counsel for Allstate and plaintiff.
Moreover, to the extent that Allstate asserts that the attorney fees it incurred from
November 2012 until March 2014 arose solely by reason of Aiken’s misconduct, this assertion is
perplexing where it is uncontroverted that Aikens provided the requested insurance information
by May 20, 2013. Therefore, as of that date, Allstate was certainly in a position to inform
plaintiff of her correct recourse against American Country as the insurer in priority to provide
her no-fault benefits, and it is unclear from the record why plaintiff did not pursue that recourse.
It is also not clear why it took six months for Allstate, after receiving a copy of the requisite
insurance policy from Aikens in February 2013, although for an incorrect policy period, to file a
motion for summary disposition seeking to be removed from the litigation in the trial court.4 In
2
The trial court’s order granting the summary disposition motion of American Country was
entered March 31, 2014.
3
The trial court observed on the record during the December 10, 2015 evidentiary hearing that
predecessor counsel for plaintiff certainly “could have taken further efforts” to ascertain the
requisite insurance coverage but apparently did not do so because Allstate insured plaintiff.
4
Allstate filed its partial motion for summary disposition on August 15, 2013.
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any event, where the trial court’s stated reasoning for imposing such significant attorney fees
against Aikens was based on its conclusion that Aikens alone bore responsibility for (1) the
dismissal of plaintiff’s claims against American Country and (2) Allstate’s attorney fees in
litigating this cause of action, this reasoning is not supported by the record. Accordingly,
whether Allstate’s claimed attorney fees are in fact reasonable hinges on whether they are
properly attributed to dilatory tactics on the part of Aikens. In its December 12, 2016 order
requiring Aikens to pay $23,897.78 in attorney fees, the trial court observed, in pertinent part, as
follows:
Aikens failure to produce the [insurance policy for Timely Transportation]
forced Allstate to perform further needless investigation, incur costs, expense,
time and efforts to determine the priority of coverage for the accident.
* * *
As a direct result of this action [plaintiff] lost her potential lawsuit and
Allstate was compelled to expend unnecessary time, effort, energy and money
defending a motor vehicle accident it was not legally obligated to defend.
I would remand to the trial court with directions that it reconsider its award of sanctions
against Aikens and in doing so, that it specifically determine whether the attorney fees that
Allstate claims that it is entitled to as sanctions were in fact caused by (1) Aikens’s failure to
produce the insurance information for Timely Transportation, or (2) actions or inaction that can
be attributed to other parties or counsel in the case.
/s/ Karen M. Fort Hood
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