No Need to Reply to Affirmative Defenses

One of my pet peeves relate to demands for a reply to affirmative defenses. I've always considered this to be a  pointless and wasteful exercise. I'm annoyed when opposing counsel makes such a demand and causes my client to needlessly incur fees to do the obvious.

By a published opinion issued this week, the Michigan Court of Appeals has ruled that there is no need to file any reply to such a demand.  In McCracken v City of Detroit, #294218,  the Court definitively held "that affirmative defenses are not pleadings requiring a response" and that they "are to be taken as denied even if a demand for a response has been made."

Thank you Court of Appeals for the small gesture to simplify litigation.

Mid-Michigan Litigation Update is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be specific legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

Limitations to the “Written Instrument” judgment interest rate in Michigan

The statutory money judgment interest rate in Michigan is at a new low - - 2.553% as of January 1, 2011. With this paltry statutory rate, the inquiry of the applicable judgment interest rate takes on added importance. If you are defending a judgment debtor, don’t assume that the higher written instrument interest rate applies just because there was a written contract.

The higher rate only applies if the written instrument evidences "indebtedness with a specified interest rate." MCLA 600.6013.  This qualifying language was specifically added the last time the statute was amended in 2001. Therefore, I believe the statute requires both a stated interest rate along with a specified amount. The typical open account statement with a monthly finance charge doesn't meet the definition and is not entitled to post-judgment enforcement.

This analysis is supported by the only case I've read that addresses the issue - Novi Promenade Associates v Target, 2006 WL 847118 (ED MI 2006). The court in that case found that the statute contemplated such things as land contracts or promissory notes.  The analysis has also been accepted by Judge Lauderbach of the 42nd circuit court.

Mid-Michigan Litigation Update is authored by W. Jay Brown, a Midland Michigan based civil litigation attorney. The foregoing is intended to be for general information purposes only and is not intended to be specific legal advice and does not create an attorney-client relationship between W. Jay Brown PLC and you. Individuals with legal issues are advised to consult an attorney of your own choosing for advice specific to your situation.

Duty of Reasonable Inquiry does not include Bankruptcy Search

Like many attorneys, I’ve experienced the uncomfortable feeling of being blindsided by a previously unknown fact that a client should have told me being raised in litigation. The recent opinion issued by the Michigan Court of Appeals in Food Solutions Inc v Haggard (docket # 294206 released 11/09/10) demonstrates how unknown facts can also be dangerous to an attorney’s bank account. In that case, the Defendant filed bankruptcy four days prior to his attorney filing an answer to a creditor’s complaint. After the bankruptcy filing was discovered, the defense attorney was sanctioned almost $2,500 pursuant to MCR 2.114(E) for not knowing about the bankruptcy.

Thankfully, the Court of Appeals reversed the sanction by holding that the duty of reasonable inquiry does not extend to a determination of a bankruptcy filing. However, it brings up a good point and one can be addressed in a “client obligations” paragraph within the retainer agreement. Clients need to be advised of their obligation to not hide unfavorable facts from their lawyer. I believe the retainer agreement provides the perfect opportunity to make sure this point is covered and documented.

Malpractice Alert – Pay close attention to expert interrogatories

In a case that is sure to trap the unwary, the Michigan Court of Appeals has upheld a trial court’s bar of expert witness testimony as a discovery sanction for failing to supplement answers to interrogatories. In the case of Lawton & Cates S.C. v International Brotherhood of Teamsters, (dckt. # 290479 rel. 9/21/10) the Plaintiff served expert interrogatories on the Defendant making the inquires authorized by MCR 2.302(B)(4). The Defendant answered very generally by naming an expert, listing a very broad area of testimony and indicating that the expert had not finished his review.

The case progressed and the Plaintiff never requested a deposition of the expert or otherwise addressed the previous interrogatory answers until trial was pending at which time a motion in limine was filed to bar the expert’s testimony. The trial court found that the Defendant’s failure to supplement meant that the Plaintiff was never provided with the expected expert testimony and was unable to prepare to address the evidence. Even if the Defendant did not ever receive an official written opinion, they were still obligated to provide the evidence that they expected would come from the expert witness. It was no excuse that the Plaintiff could have found out the opinions by taking the deposition of the witness.

The holding in this case brings Michigan more in line with the mandatory expert disclosures required in federal court. The lesson for practitioners is (1) always send out the expert interrogatories parroting the court rule when experts are involved in a case and (2) supplement, supplement, supplement.

Michigan Contract Disputes – Rebirth of the Latent Ambiguity Doctrine

This week, the Michigan Supreme Court released its opinion in Shay v Aldrich, (# 138908 released August 23, 2010) and held that sometimes, “all” does not mean “all.” The facts in Shay were straight-forward – a plaintiff settled with two parties in a litigation and entered into a release that released “all other persons.” Despite this language, there was highly persuasive and unequivocal evidence that the parties did not intend to release the other defendants. These other defendants then sought to use the release language as an amended affirmative defense but were denied by the trial court. Upon appeal, the Court of Appeals turned a deaf ear to the facts and held firm that the contractual language must be enforced and that “all” means “all” no matter what the intentions of the parties may be. The court of appeals holding was based on the 1999 Court of Appeals opinion by Justice Markman in Romska v Opper, 234 Mich App 512; 594 NW2d 853 (1999).


The Supreme Court reversed. After first finding that the other defendants could be third-party beneficiaries of the release, it held that normal rules of contract interpretation must be applied to the attempt to obtain the benefit from the release. Citing back to cases from as early as 1849, the Court found:

A latent ambiguity exists when the language in a contract appears to be clear and intelligible and suggests a single meaning, but other facts create the “‘necessity for interpretation or a choice among two or more possible meanings.’” To verify the existence of a latent ambiguity, a court must examine the extrinsic evidence presented and determine if in fact that evidence supports an argument that the contract language at issue, under the circumstances of its formation, is susceptible to more than one interpretation. Then, if a latent ambiguity is found to exist, a court must examine the extrinsic evidence again to ascertain the meaning of the contract language at issue.

Thus, when allowed to consider the clear and overwhelming evidence of intent, Supreme Court found that the trial court properly denied the other Defendants’ attempt to use the release for their benefit.

While not addressed, this case also raises interesting questions about the application of a merger clause. While the case appears not to change the rule from UAW-GM Human Resource Center v. KSL Recreation Corp., 228 Mich.App. 486, 579 N.W.2d 411 (1998) (ie- that a merger clause prevents consideration of evidence outside of a contract to establish a latent ambiguity), I think it does establish that a stranger to the contract is not barred from presenting extrinsic evidence to show ambiguity even if there is a merger clause.

Summary Disposition Practice

In the recently released published opinion of Barnard Manufacturing v Gates Performance Engineering, (docket 286003 released August 18th), the Michigan Court of Appeals emphasized and clarified the non-moving party’s burden when responding to such motions.
In that case, the plaintiff sought summary disposition on the defendant’s counterclaims and, in what appears to be an afterthought, included a single paragraph without its own heading requesting summary disposition on its primary claim. The trial court granted the entire motion.

The Court of appeals held:

· While the trial court may only consider admissible evidence, the submission in connection with the motion does not have to be in admissible form - - ie, the court could consider evidence as long as there is a “plausible basis” for its admission.

· A trial court has no obligation to conduct an independent review of the record to determine whether there are genuine issues of fact. Facts must be identified in brief or oral argument before a court is obligated to consider such facts.

· It is proper for the trial court to consider a separate claim for summary disposition that is not set off in a separate heading as long as the language puts the other party on notice of the need to respond to the argument.