If you are involved as a plaintiff or a defendant in a civil case involving possible money damages (e.g. personal injury, medical malpractice, dog bites, breach of contract, etc.), then it is likely that you will experience case evaluation. Essentially, your case will be submitted to a panel of three attorneys who will read summaries, listen to brief argument and decide what kind of appropriate number that the case should settle for. This is a means of alternate dispute resolution designed to streamline the court’s docket and encourage case disposition short of trial. However, unlike mediation or facilitation, there are consequences to a party rejecting the proposed case evaluation award that everyone should know.
WHAT CASES ARE SUBJECT TO CASE EVALUATION?
“A court may submit to case evaluation any civil action in which the relief sought is primarily money damages or division of property.” MCR 2.403(A)(1). Case evaluation is generally not ordered for purely equitable actions such as injunctions or declaratory judgments, and is not ordered in divorce or child custody cases. However, many cases usually request a combination of legal and equitable relief, so the entire transaction may be turned into the panel for evaluation and recommendation. “A court may exempt claims seeking equitable relief from case evaluation for good cause shown on motion or by stipulation of the parties if the court finds that case evaluation of such claims would be inappropriate.” MCR 2.403(A)(3). Case evaluation is required for tort claims filed in circuit court where damages requested by the plaintiff are more than $25,000.00. MCR 2.403(A)(2). Usually, case evaluation is scheduled in a case near the end of the discovery period when both sides have a good idea how strong their case is and what the evidence will be. Claims that are $25,000.00 or less in district court may be sent to case evaluation if ordered by the judge or by motion of one or both parties, but they are not required to. MCR 2.403(A)(4).
A party who objects to case evaluation must file a written motion requesting removal from the ADR calendar within 14 days after receiving notice and must be heard within 14 days unless the court orders otherwise. MCR 2.403(C)(1). Either way, the motion must be heard before the case is actually submitted to case evaluation. A party cannot object after the fact just because they don’t like the result.
WHO ARE THE CASE EVALUATORS?
Case evaluation panels are composed of 3 people. MCR 2.403(D)(1). Generally, the panel consists of local attorneys who are selected on a rotation basis from a list. To be eligible to serve as a case evaluator, a person must meet the following qualifications:
- “The applicant must have been a practicing lawyer for at least 5 years and be a member in good standing of the State Bar of Michigan. The plan may not require membership in any other organization as a qualification for service as a case evaluator (e.g. local bar associations).” MCR 2.404(B)(2)(a).
- “An applicant must reside, maintain an office, or have an active practice in the jurisdiction for which the list of case evaluators is compiled.” MCR 2.404(B)(2)(b).
- “An applicant must demonstrate that a substantial portion of the applicant’s practice for the last 5 years has been devoted to civil litigation matters, including investigation, discovery, motion practice, case evaluation, settlement, trial preparation, and/or trial.” MCR 2.404(B)(2)(c).
- “If separate sublists are maintained for specific types of cases, the applicant must have had an active practice in the practice area for which the case evaluator is listed for at least the last 3 years.” MCR 2.404(B)(2)(d).
“A judge may be selected as a member of a case evaluation panel, but may not preside at the trial of any action in which he or she served as a case evaluator.” MCR 2.403(D)(3). If possible, the ADR clerk should take prospective case evaluators and put them on separate lists for various types of cases. MCR 2.404(B)(4)(a). Beyond that, the ADR clerk should try to categorize possible case evaluators onto lists of those “who primarily represent plaintiffs, primarily represent defendants, and neutral case evaluators whose practices are not identifiable as representing primarily plaintiffs or defendants.” MCR 2.404(B)(4)(b). “If sublists of plaintiff, defense, and neutral case evaluators are maintained for a particular type of case, the panel shall include one case evaluator who primarily represents plaintiffs, one case evaluator who primarily represents defendants, and one neutral case evaluator.” MCR 2.404(C)(2). If a judge is on the case evaluation panel, then he or she is considered the neutral case evaluator.
“A case evaluator may not be called as a witness at trial.” MCR 2.403(D)(4). Just like the rules regarding mediations and settlement negotiations, what is said during a case evaluation stays in case evaluation and cannot be used against the other side at trial.
WHAT IS THE COST OF CASE EVALUATION?
Each party must send a check for $75.00 to the ADR clerk within the time specified in the notice for the case evaluation hearing. MCR 2.403(H)(1). If a judge is a member of the panel, the fee is $50.00. There is only one fee per party even if there is counterclaims, cross-claims or third-party claims. MCR 2.403(H)(2). However, the fee may be refunded if the judge sets aside the order for case evaluation or the parties notify the ADR clerk at least 14 days before case evaluation that the case has settled, been dismissed or summarily disposed. MCR 2.403(H)(4).
At least 14 days before case evaluation, each party must serve a copy of their case evaluation summary and supporting documents. MCR 2.403(I)(1). If a party fails to file this case evaluation summary on time, it “subjects the offending attorney or party to a $150 penalty to be paid in the manner specified in the notice of the case evaluation hearing.” MCR 2.403(I)(2). “An offending attorney shall not charge the penalty to the client, unless the client agreed in writing to be responsible for the penalty.”
WHAT HAPPENS AT THE CASE EVALUATION HEARING?
The case evaluation hearing is not a court hearing and no recording is made. It may occur at the courthouse, but it could be elsewhere. “A party has the right, but is not required, to attend a case evaluation hearing.” MCR 2.403(J)(1). No testimony will be taken from any party, but “[i]f scars, disfigurement, or other unusual conditions exist, they may be demonstrated to the panel by a personal appearance.” Although case evaluations are generally more relaxed in formality than court proceedings, the following rules apply:
- “The rules of evidence do not apply before the case evaluation panel. Factual information having a bearing on damages or liability must be supported by documentary evidence, if possible.” MCR 2.403(J)(2).
- “Oral presentation shall be limited to 15 minutes per side unless multiple parties or unusual circumstances warrant additional time. Information on settlement negotiations not protected [by privilege] and applicable insurance policy limits shall be disclosed at the request of the case evaluation panel.” MCR 2.403(J)(3).
- “Statements by the attorneys and the briefs or summaries are not admissible in any court or evidentiary proceeding.” MCR 2.403(J)(4).
- “Counsel or the parties may not engage in ex parte communications with the case evaluators concerning the action prior to the hearing. After the evaluation, the case evaluators need not respond to inquiries by the parties or counsel regarding the proceeding or the evaluation.” MCR 2.403(J)(5).
WHAT HAPPENS AFTER THE CASE EVALUATION HEARING?
“Within 14 days after the hearing, the panel will make an evaluation and notify the attorney for each party of its evaluation in writing.” MCR 2.403(K)(1). The evaluation must award a specific dollar amount for all the claims of any one party against another party. MCR 2.403(K)(2). The evaluation cannot award any amounts for equitable claims, but they can be considered for determining the appropriate amount for any legal claims. MCR 2.403(K)(3). The case evaluation panel does not have to state their reasons for granting a particular award. However, the panel must specify if the award was unanimous or not.
Within 28 days of being served with the case evaluation award, each party must make a decision whether to accept or reject the award. MCR 2.403(L)(1). Even if there are separate awards on multiple claims, the party must either accept or reject the evaluation in its entirety as to a particular opposing party. “There may be no disclosure of a party’s acceptance or rejection of the panel’s evaluation until the expiration of the 28-day period, at which time the ADR clerk shall send a notice indicating each party’s acceptance or rejection of the panel’s evaluation.” MCR 2.403(L)(2). A party that fails to file a written acceptance or rejection is considered to have automatically rejected the award.
“If all the parties accept the panel’s evaluation, judgment will be entered in accordance with the evaluation, unless the amount of the award is paid within 28 days after notification of the acceptances, in which case the court shall dismiss the action with prejudice.” MCR 2.403(M)(1). If only part of an action has been submitted to case evaluation and all of the parties accept the evaluation, then the court shall enter an order disposing of those claims and the equitable claims can proceed to trial as usual. MCR 2.403(M)(2). An acceptance by all resolves the legal claims and includes all fees, costs and interest to the date it was entered. “The ADR clerk shall place a copy of the case evaluation and the parties’ acceptances and rejections in a sealed envelope for filing with the clerk of the court.” MCR 2.403(N)(4). “In a nonjury action, the envelope may not be opened and the parties may not reveal the amount of the evaluation until the judge has rendered judgment.” Id.
WHAT HAPPENS IF THE CASE EVALUATION AWARD IS REJECTED?
“If all or part of the evaluation of the case evaluation panel is rejected, the action proceeds to trial in the normal fashion.” MCR 2.403(N)(4). However, the rejection of a case evaluation award can have serious consequences.
“If a party has rejected an evaluation and the action proceeds to verdict, that party must pay the opposing party’s actual costs unless the verdict is more favorable to the rejecting party than the case evaluation. However, if the opposing party has also rejected the evaluation, a party is entitled to costs only if the verdict is more favorable to that party than the case evaluation.” MCR 2.403(O)(1). A “verdict” means one of the following:
- A jury verdict. MCR 2.403(O)(2)(a).
- A verdict after a bench trial with the judge. MCR 2.403(O)(2)(b).
- A judgment entered as a result of a ruling on a motion after rejection of the case evaluation award. MCR 2.403(O)(2)(c). An order disposing of a case on summary disposition is considered a verdict. Peterson v Fertel, 283 Mich App 232; 770 NW2d 47 (2009). However, the court may refuse to award actual costs based on such a motion if it is in the interest of justice to do so. MCR 2.403(O)(11). Some “unusual circumstances” in which a court can refuse actual costs “in the interest of justice” include, for example, ““where a legal issue of first impression or public interest is present, where the law is unsettled and substantial damages are at issue, where there is a significant financial disparity between the parties, … where the effect on third persons may be significant,” or where the prevailing party engages in misconduct, such as gamesmanship. Harbour v Correctional Medical Services, Inc, 266 Mich App 452, 466; 702 NW2d 671 (2005).
In determining whether a verdict is “more favorable”, the 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, and, if applicable, by making the adjustment of future damages.” MCR 2.403(O)(3). After the adjustment, the following determinations are made:
- The verdict is considered more favorable to a defendant if it is more than 10 percent below the evaluation. If not, the rejecting defendant has to pay the plaintiff’s actual costs.
- The verdict is considered more favorable to the plaintiff if it is more than 10 percent above the evaluation. If not, the rejecting plaintiff has to pay the defendant’s actual costs.
- If the evaluation was zero, a verdict finding that a defendant is not liable to the plaintiff shall be deemed more favorable to the defendant.
“Actual costs” include both:
- “[T]hose costs taxable in any civil action.” MCR 2.403(O)(6)(a). However, case evaluation sanctions do not include appellate attorney fees and costs. Haliw v City of Sterling Heights, 471 Mich 700; 691 NW2d 753 (2005).
- “[A] reasonable attorney fee based on a reasonable hourly or daily rate as determined by the trial judge for services necessitated by the rejection of the case evaluation, which may include legal services provided by attorneys representing themselves or the entity for whom they work, including the time and labor of any legal assistant…”. MCR 2.403(O)(6)(b). The Michigan Supreme Court has stated that the trial court should calculate the reasonable hourly and daily rate based on those rates customarily charged in the locality for similar legal services and multiplying that rate by the reasonable number of hours expended. Smith v Khouri, 481 Mich 519; 751 NW2d 472 (2008).
A request for costs must be filed and served by the prevailing party within 28 days after entry of judgment or an order denying a motion for new trial, a motion to set aside the judgment, or a motion for reconsideration. MCR 2.403(O)(8). However, “if the action is based on a tort or another legal theory seeking damages for personal injury, property damage, or wrongful death, a verdict awarding damages shall be adjusted for relative fault.” MCR 2.403(O)(10). For example, if the plaintiff prevailed against the rejecting defendant but the jury found the plaintiff to be 30% at fault, then the actual costs will be reduced by 30%.
Costs shall not be awarded if the case evaluation award was not unanimous. MCR 2.403(O)(7). If case evaluation results in a nonunanimous award, a case may be ordered to a subsequent case evaluation hearing conducted without reference to the prior case evaluation award, or other alternative dispute resolution processes, at the expense of the parties.
THE BOTTOM LINE
The decision to accept or reject a case evaluation award can have serious financial ramifications. In many ways, case evaluation feels like coercion to settle a case cheaply when you think you can get more money at trial. However, it can be a gamble to reject the award and “go for it” when you risk paying heavy sanctions in the event of a loss. You need nothing less than the most knowledgeable and skilled legal representation in your corner to guide you through these tough rules and help you obtain the best outcome in your situation.
If you or a loved one have questions about case evaluation or need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.