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Appeal Succeeds Despite Waived Argument

In a lawsuit, it’s usually a good sign when the opposing party does not contest your motion for summary disposition. Not only does the court nearly always grant the motion, but also the other side has waived its right to contest the issues on appeal. But there are rare occasions when the nonmoving side can find relief even when it has seemingly waived its arguments.

In RJMC Corporation v Tomei, the Michigan Court of Appeals provided such extraordinary relief. In the case, Defendant had foreclosed upon Plaintiff. Plaintiff then filed suit alleging it was entitled to $333,439.86 in surplus proceeds from the foreclosure sale. According to Plaintiff, the total loan balance at the time of the foreclosure sale had been $860,474.04, not the $1,193,912.90 that was paid. Plaintiff contended that it was entitled to the difference between these two amounts.

In August 2018, Plaintiff filed a motion for partial summary disposition under MCR 2.116(C)(10). Plaintiff argued that there was no genuine issue of material fact concerning whether the amount Defendant paid for the property at the foreclosure sale exceeded the amount that was actually due by $333,439.86. In support of its motion, it attached the mortgage, an affidavit from a certified public accountant (CPA), and the handwritten ledger. Defendant did not file a response, and it failed to appear at the hearing.

The trial court granted Plaintiffs’ motion “[b]ased on the . . . argument of plaintiff’s counsel as to the amount of money that’s owed his client and the reasons set forth there in the papers, . . . there being no response by way of any answer or affidavit or documentary evidence showing that there are genuine issues for trial.” Plaintiff stipulated to the dismissal of its remaining claims in that action, and the trial court accordingly dismissed the claims. This addressed all claims in that case, and the trial court entered a final judgment for that case on September 13, 2018.

A different action filed by Defendant against Plaintiff, however, remained pending. Defendant’s counsel filed a motion for relief from judgment under MCR 2.612 or for amendment of the judgment under MCR 2.611, arguing that the September 2018 order could not constitute a final order because the two cases had been consolidated and Defendant’s claims against Plaintiff were still pending. Defendant failed to advance any arguments concerning the interest rate or the grant of partial summary disposition. The trial court denied the motion. Defendant appealed.

On appeal, Defendant raised for the first time its arguments that the documentation created an issue of fact regarding whether the interest rate was simple or compound and that, accordingly, the trial court erroneously granted partial summary disposition.

The Court of Appeals first noted that Defendant had failed to raise the issue in the trial court and it would “ordinarily” not be subject to review. However, much to Plaintiff’s chagrin, the Court then went on to say “we have decided to address this issue despite the failure to preserve it.” The Court explained that it was invoking a little-used rule that states: “Unpreserved claims are reviewed for plain error, which ‘occurs at the trial court level if (1) an error occurred (2) that was clear or obvious and (3) prejudiced the party, meaning it affected the outcome of the lower court proceedings.’”

The Court of Appeals found that the trial court committed plain error by determining that there was no issue of fact as to the interest rate. The Court of Appeals opined that the documentation submitted in favor of Plaintiff’s Motion for Summary Disposition actually created an issue of fact as to the interest rate rather than clarifying it. The Court noted that since the initial burden of proof is on the moving party, Defendant’s failure to respond to the Motion was not dispositive. The Court of Appeals reversed the entry of judgment and remanded for further proceedings.

Two lessons can be taken from this case. First, moving parties should make sure their motions are properly supported no matter how strong the underlying claims are. Parties should take care to ensure that the evidence leads to the proper conclusion. On the opposite side, sometimes a seemingly hopeless situation can still have a possible solution. While parties should never assume they can successfully appeal a decision they didn’t contest, sometimes there are avenues worth pursuing.

The attorneys at Dalton & Tomich, PLC have extensive experience in all aspects of litigation. If you have a difficult situation, please do not hesitate to contact us. We would be happy to speak with you.

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