Personal injury: Availability of mediation sanctions

Dispute Resolution Journal, Feb-Apr 2003

The Michigan Court of Appeals held that for the purpose of determining whether, under court rules, mediation sanctions are available after a party rejects a mediation evaluation and then loses at trial, the term "assessable costs" does not include mediation costs or attorney's fees incurred after the date of the evaluation. They include only the costs incurred in a civil action from the filing of the complaint to the date of the mediation.

This was a third-party automobile negligence action arising from a collision that left the plaintiff William Dessart with injuries. In 1999, a mediation panel evaluated the case at $120,000. The plaintiff and his wife accepted the evaluation, but the defendants rejected it. The case proceeded to trial, and the jury awarded the plaintiff past non-economic damages totaling $100,000. The plaintiff moved for mediation sanctions under Michigan Court Rule 2.403(0)(1). Under this rule, if a party rejected an evaluation and the action was tried to a verdict, the rejecting party must pay the opponent's "actual costs" unless the verdict was "more favorable to the rejecting party than the case evaluation." For purposes of this rule, Subsection 3 provides, "a verdict must be adjusted by adding to it assessable costs and interest on the amount of the verdict from the filing of the complaint to the date of the case evaluation." The term "actual costs" is defined to mean "costs taxable in any civil action" and "a reasonable attorney fee" determined by the court "for services necessitated by the rejection of the case evaluation."

The trial court denied the motion for mediation sanctions. On appeal, the plaintiff argued that "assessable costs" should include statutory taxable costs from the date the complaint was filed through verdict and reasonable attorney's fees from the date of mediation through verdict. That argument essentially equated "assessable costs" with "actual costs." The court rejected the argument that actual costs should be used to adjust the verdict. Affirming the denial of mediation sanctions, it held that "in adjusting a verdict for purposes of MCR 2.403(0)(3), the term `assessable costs' includes only those costs taxable in a civil action incurred from the filing of the complaint to the date of mediation; `assessable costs' do not encompass post-- mediation costs or attorney fees." Only after this calculation is made can it be determined whether sanctions are appropriate, and if they are, then payment of "actual costs" can be taken into account. In the present case, the court found no error because in adjusting verdict, "assessable costs" and interest from the filing of the action to the date of the mediation evaluation, the threshold level of an adjusted verdict of $108,000 had not been reached.

Dessart v. Burak, No. 233844 (Mich. Ct. App. Aug. 13, 2002).