Opinion
No. 347644 No. 347663 No. 347887 No. 347915 No. 347920
05-14-2020
DION L. EVERETT, Plaintiff, and ALBERT J. DIB, Intervening Plaintiff-Appellant, v. MCLAREN OAKLAND, MCLAREN HEALTHCARE CORPORATION, MARTINA MARIE GHIARDI, TRINITY HEALTH MICHIGAN d/b/a ST. JOSEPH MERCY-OAKLAND, AMISH KAUSHIK DOSHI, CARL F. CLAVENNA, M.D., P.C., DANNY FRANCIS WATSON, M.D., PAUL D. CROISSANT, M.D., and NEURO PAIN CONSULTANTS, P.C., Defendants-Appellees. DION L. EVERETT, Plaintiff-Appellant, and MICHAEL G. HEILMANN, Intervening Plaintiff-Appellant, v. MCLAREN OAKLAND, MCLAREN HEALTHCARE CORPORATION, MARTINA MARIE GHIARDI, TRINITY HEALTH MICHIGAN d/b/a ST. JOSEPH MERCY-OAKLAND, AMISH KAUSHIK DOSHI, CECILIA CRISTINA COSMA, CARL F. CLAVENNA, M.D., P.C., DANNY FRANCIS WATSON, M.D., PAUL D. CROISSANT, M.D., and NEURO PAIN CONSULTANTS, P.C., Defendants-Appellees. DION L. EVERETT, Plaintiff, and MICHAEL G. HEILMANN, Intervening Plaintiff-Appellant, v. PAUL D. CROISSANT, GREGORY BERNARD FITZGERALD, CLAVENNA VISION INSTITUTE, CARL F. CLAVENNA, DANNY FRANCIS WATSON, CECILIA CRISTINA COSMA, AMISH KAUSHIK DOSHI, ST. JOSEPH MERCY-OAKLAND, TRINITY HEALTH MICHIGAN, and MARTINA MARIE GHIARDI, Defendants-Appellees, and DEGARA URGENT CARE, DEGARA GARDEN CITY, DEGARA, MCLAREN HEALTHCARE CORPORATION, and MCLAREN OAKLAND, Defendants. DION L. EVERETT, Plaintiff, and ALBERT J. DIB, Intervening Plaintiff-Appellant, v. PAUL D. CROISSANT, NEURO PAIN CONSULTANTS, DANNY FRANCIS WATSON, CECILIA CRISTINA COSMA, AMISH KAUSHIK DOSHI, and TRINITY HEALTH MICHIGAN d/b/a ST. JOSEPH MERCY-OAKLAND, Defendants-Appellees, and GREGORY BERNARD FITZGERALD, CLAVENNA VISION INSTITUTE, CARL F. CLAVENNA, MARTINA MARIE GHIARDI, DEGARA URGENT CARE, DEGARA GARDEN CITY, DEGARA MCLAREN HEALTHCARE CORPORATION, MCLAREN OAKLAND, Defendants. DION L. EVERETT, Plaintiff-Appellant, and MICHAEL G. HEILMANN, Intervening Plaintiff-Appellant, v. PAUL D. CROISSANT, GREGORY BERNARD FITZGERALD, CLAVENNA VISION INSTITUTE, CARL F. CLAVENNA, DANNY FRANCIS WATSON, CECILIA CRISTINA COSMA, AMISH KAUSHIK DOSHI, and TRINITY HEALTH MICHIGAN d/b/a ST. JOSEPH MERCY-OAKLAND, Defendants-Appellees, and MARTINA MARIE GHIARDI, DEGARA URGENT CARE, DEGARA GARDEN CITY, DEGARA, MCLAREN HEALTHCARE CORPORATION, MCLAREN OAKLAND, Defendants.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Oakland Circuit Court
LC No. 2017-157958-NH Before: K. F. KELLY, P.J., and BORRELLO and BOONSTRA, JJ. PER CURIAM.
In Docket Nos. 347644 and 347663, plaintiff Dion L. Everett and intervening plaintiffs, his attorneys Albert J. Dib and Michael G. Heilmann, appeal by leave granted the order issued by the circuit court granting judgment in favor of defendant Dr. Danny Francis Watson in the amount of $295,045.54, and the order granting judgment in favor of defendants Dr. Paul D. Croissant and Neuro Pain Consultants P.C. (Neuro Pain) in the amount of $137,415. In Docket Nos. 347887, 347915, and 347920, plaintiff and his attorneys appeal by leave granted those same orders as well as the circuit court order denying plaintiff's motion for relief from judgment in favor of Dr. Watson, Dr. Croissant, and Neuro Pain (the dismissed defendants). For the reasons stated below, we reverse and remand the trial court's judgments and vacate the order approving the settlement agreement.
I. BASIC FACTS
In March 2017, plaintiff filed a complaint against defendants alleging that he presented at defendant McLaren Hospital's emergency department on October 3, 2014, with symptoms indicative of hydrocephalus, commonly known as "water on the brain." However, the hospital's employees did not admit plaintiff to the hospital or take brain images, but merely gave him a prescription. Consequently, on December 3, 2014, plaintiff presented at defendant St. Joseph Mercy-Oakland (SJMO) with loss of vision in both eyes. Despite the acknowledgment of fluid on the brain, defendant SJMO and its employees released plaintiff. Finally, in January 2015, plaintiff was treated by an eye doctor who recommended that plaintiff consult with a neurosurgeon to discuss the release of fluid on the brain. Plaintiff alleged that he obtained the consult in April 2015, and his CT scan and MRI confirmed the hydrocephalus, but he was unable to regain his vision and remained blind in both eyes. Plaintiff raised claims of medical malpractice, negligence, and vicarious liability against all defendants.
On January 7, 2019, the jury trial commenced. On January 9, 2019, plaintiff and his attorneys appeared before the court to advise that a settlement agreement had been reached with regard to Dr. Watson, Dr. Croissant, and Dr. Croissant's corporate entity, Neuro Pain. The following transpired on the record between the trial court and plaintiff's counsel, Heilmann:
[Heilmann]. And by way of a record and we'll have an order that conforms with this agreement, the parties on stipulation of Counsel move to dismiss these claims that were pled, without prejudice and without payment, and conversely no party will make any claim for costs, expenses, or attorney fees against any party at this time or at any later party - - at any later time and this dismissal - - the record should reflect - - is without prejudice and that it's being brought by stipulation of the parties under 2504, which is a portion of the court rules that permits voluntary dismissal. At this time by agreement of the parties this matter will not be rebrought except for if it is brought by other counsel or Mr. Everett through other counsel that pursuant to the rule those individuals, either Mr. Everett or his attorney, would have to pay the cost of the defense pursuant to the rule 2504(D) and that ah - - the Court would not permit a refiling of the case in the absence of the payment of those costs to the respective parties and - -
[The Court]. The costs for what - - for bringing it or for what's - -
[Heilmann]. The defense.
[The Court]. - - what's already been - -
[Heilmann]. Yes.
[The Court]. - - the defense in this case.
[Heilmann]. Yes.
[The Court]. The present case.
* * *
[Heilmann]. And ah - - and the order sets forth those amounts and that's in conformity with the rule and ah - - each of the respective Counsels will affix their signature hereto and the Court we would ask - - and it doesn't have to be now we can name that time and enter that order - -
[The Court]. Okay.
[Heilmann]. - - subsequent thereto but the parties are here in the courtroom and I think that I have stated our agreement on the record and it's memorialized in this agreement.
[The Court]. Okay. My only question is whether - - why it was without prejudice but with the stip - - with the other added condition that's something that - -Counsel for Dr. Watson and Dr. Croissant and Neuro Pain both affirmed the settlement to the court. The trial court then inquired about the logistics of the written order confirming the agreement, and the following transpired on the record:
[Heilmann]. Well it's a subject of negotiation to be candid - -
[The Court]. Right.
[Heilmann]. - - and - -
[The Court]. No, I know and so that's - - I'm assuming that's why there were these other conditions so, everybody's in agreement?
[The Court]. Okay. Now I know that in previous orders sometimes it takes the parties - - or some parties have some issues with language as it relates to an order - - you know am I gonna have any of these issues or can we get that - -
[Heilmann]. Well no again it's between the parties that have been named thus far * * * and no other parties and it does not operate to dismiss any of the claims which have been pled in this case of sensible [sic] and direct agency against the respective principal in this particular case * * * that would be Trinity Health doing business as Saint Joseph Mercy-Oakland.
[The Court]. No, no, no - - I'm just saying whatever order you're going to submit to me, when is that going to be done?
[Dr. Croissant/Neuro Pain Counsel]. We have it - -
[Heilmann]. We have it right here.
[The Court]. Oh, you do okay - -
[Dr. Watson Counsel]. We can furnish you a copy.
[Heilmann]. I mean - -
[The Court]. - - so it's agreed.
[Heilmann]. - - yeah I - -
[The Court]. That's what I was wondering.The written orders were filed on January 9, 2019. The settlement agreement placed on the record indicated that it was entered into between plaintiff, Dr. Watson, Dr. Croissant, and Neuro Pain and counsel for those parties were the only individuals that proffered the settlement terms. Yet, the written agreement contained broad language that "if any action" involving "any aspects of the same claim" was filed against these dismissed defendants, plaintiff and his counsel were responsible for substantial costs. Specifically, the written agreement provided:
[Heilmann]. - - I just don't want to waste the Court's time and - - you know - -
[The Court]. No, no I - - because sometimes there are issues with the language, if the order - -
[Heilmann]. May I approach?
[The Court]. - - is done then approach.
[Heilmann]. Thank you.
[The Court]. I thought the order wasn't done.
[Heilmann]. I should hasten to add while the parties have just been agreed to be bound by it - - we haven't signed it because of the time crunch.
[The Court]. Oh, okay. Then - - no - - that's fine, have everybody sign it. I didn't realize that you had an order in place. I thought you were going to do an order.
[Heilmann]. Yeah, no I work (indiscernible).
[The Court]. So have everybody sign it um - - and submit it - - can that be done before everybody leaves or - - or are you staying.
[Dr. Watson Counsel]. We can do it right now.
[Dr. Croissant/Neuro Pain Counsel]. We'll do it right now.
[The Court]. Okay, let's do it and get it filed.
This matter having come before the Court on Stipulation of the parties through counsel, and the Court being otherwise fully advised in the premises; the Plaintiff, Dion L. Everett, on behalf of himself and all his heirs, next of kin, children, relatives companions, friends and assigns agree that the above-entitled matter entitled Dion L. Everett vs. DANNY FRANCIS WATSON, MD is to be voluntarily dismissed by the Plaintiff, Dion L. Everett, as to Defendant DANNY FRANCIS WATSON,
MD, without prejudice and without payment and no claim for costs, expenses or attorney fees except as later stated below.The written stipulated order "Approved as to form and substance" was signed by Dib as counsel for plaintiff and Scott A. Saurbier as counsel for Dr. Watson. The written order pertaining to defendants Dr. Croissant and Neuro Pain was identical except it provided that the costs to be paid in the event the claim was rebrought was $137,415.00. The written stipulated order was also signed by Dib as counsel for plaintiff and John J. Ramar as counsel for Dr. Croissant and Neuro Pain.
IT IS HEREBY ORDERED that the above captioned matter be dismissed as to Defendant, DANNY FRANCIS WATSON, MD, ONLY, without prejudice and without costs, interest or attorney's fees to any party.
IT IS FURTHER ORDERED that through this Stipulated Order the parties agree that if any action is brought against DANNY FRANCIS WATSON, MD, in the future based on or including any aspects of the same claim against DANNY FRANCIS WATSON, MD, the Court will order the payment of the costs by Dion L. Everett or any attorney on his behalf in the amount of $295,045.54 of the action previously dismissed and will stay proceedings against any plaintiff bringing suit until the payment of said costs are paid with in [sic] accordance with this order.
This is a final order as to Defendant, DANNY FRANCIS WATSON, MD, ONLY, but does not close the case.
There is no indication that the other defendants or their counsel participated or had any role in the settlement agreement because they were not identified and did not speak on the record.
There is no dispute that a mistrial was declared on January 10, 2019, for juror misconduct. A new trial was scheduled to commence on January 14, 2019. However, remaining defendant SJMO sought to file a complaint for contribution against the dismissed defendants, Dr. Watson, Dr. Croissant, and Neuro Pain. In this complaint, SJMO alleged that plaintiff's theory of liability would require it to be responsible for the action or inaction of the dismissed defendants, and it could be required to pay more than its pro rata share, warranting the contribution action.
On January 14, 2019, the trial court held a hearing on defendants' motions to consolidate the contribution complaint into the existing action and for a stay of proceedings. Because the motions were recently filed in the queue, the trial court had not received the pleadings and the parties submitted judge's copies. Counsel for SJMO argued that it was necessary to bring the dismissed defendants back into the case "so that an allocation of liability and fault could be made as to those Defendants that would be binding on them for purposes of contribution." Counsel further argued that asking the jury to identify the dismissed defendant as non-parties at fault was not binding in a subsequent contribution action. Additionally, a stay was requested because it was presumed that the dismissed defendants would need to prepare after being brought back into the case. Counsel for SJMO further represented that a judgment was not necessary to pursue a contribution action. Finally, SJMO's counsel argued that the contribution claim triggered the orders of dismissal provision requiring payment of the costs to proceed, further warranting the stay. It was represented that the "only goal" was to have the dismissed defendants included "so that everyone's liability is determined by the jury in one action."
In response, plaintiff's counsel Dib argued that the remaining defendants should have filed a cross-claim or third-party claim while the dismissed defendants were named in the action, and a judgment had to be awarded in the original action for a contribution claim to accrue. Dib submitted that SJMO's counsel was unprepared to defend the actions of the dismissed defendants, and therefore, she wanted counsel for the dismissed defendants to return to the action. In response to the trial court's inquiry regarding the lack of specific language addressing costs when the dismissed defendants were brought back into the action, Dib continued to assert that a contribution claim could not be filed because it was not ripe where a judgment had not been rendered. Further, Dib asserted that plaintiff could not be responsible for costs pursuant to the stipulated orders because plaintiff had not brought the dismissed defendants back into the action. Finally, the dismissal orders were intended to be in accordance with MCR 2.504, although the rule was not cited, and the rule provides for costs against a party that refiles. Thus, if the orders did not reflect this intent, Dib moved to set aside the orders to conform to the rule.
Counsel for the dismissed defendants, Dr. Watson, Dr. Croissant, and Neuro Pain, asserted that the language of the stipulated orders provided for payment of costs for "any action" brought against these defendants, and therefore, they were entitled to payment of the costs. Plaintiff could have avoided the import of the orders and the payment of costs by simply dismissing the vicarious liability claim premised on the actions of the dismissed defendants, and this would eliminate the contribution claim by SJMO. The trial court noted that, contrary to Dib's assessment, the orders did not "read like a voluntary dismissal" in accordance with MCR 2.504, but essentially constituted a stipulated settlement. In response to Dib's request to set aside the orders, the trial judge noted that it was not her orders, "You all signed it, you all made it." Further, the judge questioned why she should be examining the intent behind the order instead of the actual language of the order. The trial judge indicated that she would read the materials and return.
On January 15, 2019, the trial court filed an opinion and order addressing the motion for stay and for consolidation. The trial court granted the motion to join the claims of medical malpractice and contribution in a single trial "to promote the administration of justice." Alternatively, the court found that consolidation was appropriate because there were substantial and controlling common questions of law and fact. Next, the court addressed the request for stay of proceedings in light of the plain language of the stipulated orders. Specifically, the court noted that the language of the orders broadly applied to "any action" brought against [the dismissed defendants] in the future "based on or including any aspects of the same claim," the stipulated orders should be examined as contractual agreements, and an unambiguous contractual agreement must be construed as a matter of law. The trial court held:
Based on the language of the Stipulated Orders, Plaintiff and Defendants Neuro Pain, Dr. Croissant, and Dr. Watson agreed to dismiss Defendants Neuro Pain, Dr. Croissant, and Dr. Watson without prejudice. The parties also agreed that if any action was brought against the dismissed defendants, the Court would order payment of the costs and would stay the proceedings until payment of the costs are paid. The language of the Stipulated Orders is clear that "if any action" is brought against Defendants Neuro Pain Consultants, Dr. Croissant, and Dr. Watson "based on or including any aspects of the same claim," the Court "will stay proceedings against any plaintiff bringing suit." Because the language is clear and no party has
asserted that the language is ambiguous, the construction of the Stipulated Orders is a question of law for the Court.
Here, the evidence before the Court is that Plaintiff SJMO has brought a new action against Defendants Neuro Pain, Dr. Croissant, and Dr. Watson in Case No. 2019-171071-CZ and that action is based upon aspects of the same claims in this case. The Stipulated Orders require that this Court stay the proceedings against "any plaintiff bringing suit." Accordingly, this Court concludes that the proceedings in this case and Case No. 2019-171071-CZ must be stayed based on the plain language of the Stipulated Orders as Plaintiff SJMO has brought an action against Defendants Neuro Pain, Dr. Croissant, and Dr. Watson that has been joined/consolidated with this case.
Therefore, Defendants Trinity Health d/b/a St. Joseph Mercy-Oakland, Amish Doshi, M.D., and Cecilia Cosma, M.D.'s Motion for Stay of Proceedings/Adjournment is GRANTED. [Emphasis in original; citation omitted.]
After this ruling, plaintiff and his attorneys moved for relief from or to amend the stipulated orders addressing the dismissed defendants. On January 23, 2019, oral argument on the motions was heard. Heilmann argued that a review of the transcript of the settlement agreement revealed that the dismissal was pursuant to MCR 2.504, and the imposition of costs for a refiling was permitted if plaintiff brought the action again. The filing by SJMO did not invoke the costs provision, and it is trying "to take advantage of the order that was inadvertently submitted." Despite acknowledging that "we signed" the orders, Heilmann asserted that the order "is not in conformity" with the agreement, and therefore, the orders should be vacated. Counsel for the dismissed defendants disagreed, claiming that the intent of the order was to ensure that they were removed "from this case forever." Further, it was argued that at the hearing on the settlement, plaintiff's counsel stated that "no party will make any claim[.]" Because plaintiff's counsel insisted that he would not agree to dismiss the claim with prejudice, the dismissed defendants demanded the costs provision to avoid the possibility of being held responsible in a contribution action. Accordingly, there was no ambiguity or mistake in the language of the order. Rather, because the application of MCR 2.504 was discretionary with the court, the dismissed defendants insisted that the costs provision be included in the order with the caveat that counsel was also responsible for payment because plaintiff would not be able to satisfy the costs. The language was read to Heilmann over the phone, and an order was prepared and submitted to the trial court based on his approval.
The trial court ruled:
Plaintiff's motion for relief and/or amendment or correction of the dismissal orders. I think the Court's already issued an opinion as it relates to the issues that have been brought. I don't find there to be, first of all, any ambiguity in my opinion, and no need for clarification of that, so the motion - - this is 3B, motion for clarification of the opinion and order is denied.
As to 3C, Plaintiff's motion to strike Defendant's notices of non-parties at fault, this case has been stayed. I find that to be improper. That motion is denied.
As to - - as it relates to the motion for relief and/or amendment/correction of dismissal order, the parties are bound by their stipulations; that you sign, that you approve. These - - these two stipulated orders were signed and approved as to form and substance. These were negotiated, strategically chosen in terms of the language. I even emphasized to make sure that there weren't any issues with the language. There was none indicated. The order does not reflect anything as it relates - - does not cite any court rule or anything other than the agreement that was agreed to. I find no mutual mistake. The motion is denied.
I'd like orders as to all three motions before everyone leaves.
On January 30, 2019, the parties appeared before the trial court because they could not agree on the terms of a written order. The dismissed defendants sought orders providing that they were entitled to the costs, and the action was stayed until the costs were paid. Plaintiff opposed the motion, claiming that the definition of a contribution claim indicated that it was not the same claim, and therefore, the dismissed defendants did not meet the predicate for their claim to costs. The trial court ruled:
As I indicated, the Court has already ruled on Plaintiff's motion to set aside the stipulated order. The Court has already joined and/or consolidated both the underlying case and the case filed by St. Joe's. One of the main reasons was because it involved the same action, same claims for the various reasons that were stated in that - - in that order - - in that opinion and order. And I go back to the order, the stipulated order that was signed by all parties, the Plaintiff and both of the Defendants, and Defendant entities that were dismissed, that indicates that if any action is brought based on or including any aspect of the same claim, the Court will order the payment of the costs as spelled out.
The Court grants both motions. Defendant, Neuro Pain Consultants, and Dr. Croissant's motion for entry of judgment, and Defendant Danny Watson's motion for entry of judgment pursuant to the stipulated order of dismissal.
The trial court also denied plaintiff's request for reconsideration of this decision.
II. STANDARD OF REVIEW
The existence and interpretation of a contract presents a question of law that the appellate court reviews de novo. Myland v Myland, 290 Mich App 691, 700; 804 NW2d 124 (2010). The trial court's finding regarding the validity of the parties' consent to a settlement agreement is reviewed for an abuse of discretion. Vittiglio v Vittiglio, 297 Mich App 391, 397; 824 NW2d 591 (2012). This Court reviews the trial court's ultimate decision on a motion for relief from judgment for an abuse of discretion. Bullington v Corbell, 293 Mich App 549, 554; 809 NW2d 657 (2011). A trial court does not abuse its discretion unless it chooses an outcome outside the range of reasonable and principled outcomes. Maldonado v Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006).
III. PRINCIPLES OF CONTRACT LAW
"[I]n the practical realities of civil litigation, the vast majority of cases must be and are in fact settled. Wise judicial policy favors settlement between the parties." Putney v Haskins, 414 Mich 181, 189; 324 NW2d 729 (1982). "[A] consent judgment is a settlement or a contract that becomes a court judgment when the judge sanctions it." Acorn Investment Co v Mich Basic Prop Ins Ass'n, 495 Mich 338, 354; 852 NW2d 22 (2014). An agreement to settle pending litigation will be binding on the parties if it includes all of the elements of a legal contract and satisfies the requirements of MCR 2.507(G). Mich Mut Ins Co v Indiana Ins Co, 247 Mich App 480, 484-485; 637 NW2d 232 (2001). Therefore, even if a contract for the settlement of pending litigation satisfies contract principles, enforcement of the agreement will not occur unless it fulfills the specifications of MCR 2.507(G). Kloian v Domino's Pizza, LLC, 273 Mich App 449, 456; 733 NW2d 766 (2006). MCR 2.507(G) states:
MCR 2.507(G) was renumbered from MCR 2.507(H) to MCR 2.507(G). For purposes of consistency, we will cite to MCR 2.507(G), the current version of the rule.
Agreements to be in Writing. An agreement or consent between the parties or their attorneys respecting the proceedings in an action is not binding unless it was made in open court, or unless the evidence of the agreement is in writing, subscribed by the party against whom the agreement is offered or by that party's attorney.In light of MCR 2.507(G), a subsequent written consent order premised on the agreement placed on the record must conform to the terms of that agreement. See Kloian, 273 Mich App at 461. Indeed, when the parties reach an agreement, it is binding if made in open court. Nat'l Bank v Patmon, 119 Mich App 772, 778; 327 NW2d 355 (1982). If the written order contains material terms upon which an agreement was not reached, a binding contract was not established. Scholnick's Importers-Clothiers, Inc v Lent, 130 Mich App 104, 109; 343 NW2d 249 (1983). However, "any discrepancy between the settlement terms placed upon the record and those contained in the written order of judgment may be resolved by amending the judgment order." Nat'l Bank, 119 Mich App at 779. As this Court stated in Kloian, "[a] court cannot . . . 'enter an order pursuant to the consent of the parties which deviates in any material respect from the agreement of the parties.' " Kloian, 273 Mich App at 461, quoting Scholnick's Importer-Clothiers, 130 Mich App at 112.
In Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347, 349; 605 NW2d 360 (1999), the plaintiff, an employee of defendants, was hit by their delivery truck while on strike, suffering injury. On the scheduled trial date, the parties placed a settlement agreement on the record that included the settled amount. However, when the parties attempted to reduce the agreement to writing, the terms could not be reached because defendants claimed there was a condition precedent that was not satisfied including a broad release of future claims. Id. at 349-350. This Court disagreed, noting that "we do not dismiss the possibility that defendants indeed contemplated incorporating additional terms and conditions into the agreement, the time to do so was in court when the agreement was placed on the record[.]" Id. at 350. Thus, a settlement agreement placed on the record should not be expanded or altered when reduced to writing.
An agreement to settle pending litigation constitutes a contract, and the rules governing construction and interpretation of a contract apply. Clark v Progressive Ins Co, 309 Mich App 387, 394; 872 NW2d 730 (2015).
"The essential elements of a contract are parties competent to contract, a proper subject matter, legal consideration, mutuality of agreement, and mutuality of obligation." Mallory v City of Detroit, 181 Mich App 121, 127; 449 NW2d 115 (1989). Issues regarding the proper interpretation of a contract or the legal effect of a contractual clause are reviewed de novo. Fodale v Waste Mgt of Michigan, Inc, 271 Mich App 11, 16-17, 718 NW2d 827 (2006). When interpreting a contract, the examining court must ascertain the intent of the parties by evaluating the language of the contract in accordance with its plain and ordinary meaning. In re Egbert R Smith Trust, 480 Mich 19, 24, 745 NW2d 754 (2008). If the language of the contract is clear and unambiguous, it must be enforced as written. Id. A contract is unambiguous, even if inartfully worded or clumsily arranged, when it fairly admits of but one interpretation. Holmes v Holmes, 281 Mich App 575, 594; 760 NW2d 300 (2008). Every word, phrase, and clause in a contract must be given effect, and contract interpretation that would render any part of the contract surplusage or nugatory must be avoided. Woodington v Shokoohi, 288 Mich App 352, 374; 792 NW2d 63 (2010). [McCoig Materials, LLC v Galui Constr, Inc, 295 Mich App 684, 694; 818 NW2d 410 (2012).]There is a presumption that the parties understand and intend the language employed in their agreement. Chestonia Twp v Star Twp, 266 Mich App 423, 432; 702 NW2d 631 (2005). This Court must enforce a contract as written when there is only one possible interpretation. Id.
The settlement agreement reached in this case was submitted pursuant to the parties' stipulation. When a stipulated order is accepted by the trial court, it must generally be construed in accordance with the rules of contract construction. Phillips v Jordan, 241 Mich App 17, 21; 614 NW2d 183 (2000). "Like contracts, stipulated orders are agreements reached by and between the parties." Id. "Although the trial court is not necessarily constrained to accept the parties' stipulations or agreements verbatim, the trial court is entirely permitted to accept them and presume at face value that the parties actually meant what they signed." Rettig v Rettig, 322 Mich App 750, 755-756; 912 NW2d 877 (2018). "[L]itigants are not free to disregard a settlement agreement knowingly entered into on the court record and to which satisfactory evidence of mistake, fraud, or unconscionable advantage is not evident." Groulx v Carlson, 176 Mich App 484, 492; 440 NW2d 644 (1989).
In People v Metamora Water Serv, 274 Mich App 376, 385; 741 NW2d 61 (2007), this Court delineated what constitutes a stipulation and its effect:
A stipulation is an agreement, admission, or concession made by the parties in a legal action with regard to a matter related to the case. Staff v Marder, 242 Mich App 521, 535; 619 NW2d 57 (2000). The parties may enter into a stipulation to avoid delay, trouble, and expense. When the parties stipulate a set of facts, the stipulated facts are binding on the court, but stipulations of law are not binding. Id.
When the parties reach a stipulated settlement agreement, the circumstances warranting setting aside the agreement are limited because enforcement of the parties' agreement is favored:
"An agreement to settle a pending lawsuit is a contract and is to be governed by the legal principles applicable to the construction and interpretation of contracts." Walbridge Aldinger Co v Walcon Corp, 207 Mich App 566, 571; 525 NW2d 489 (1994). The bedrock of contract law is that "parties are free to contract as they see fit, and the courts are to enforce the agreement as written absent some highly unusual circumstance, such as a contract in violation of law or public policy." Wilkie v Auto-Owners Ins Co, 469 Mich 41, 51; 664 NW2d 776 (2003). In fact, "[t]he notion, that free men and women may reach agreements regarding their affairs without government interference and that courts will enforce those agreements, is ancient and irrefutable." Id. at 52. Thus, "[t]he litigant who . . . asserts [a mistake of fact defense] to a stipulation freely entered into in open court carries a heavy burden of persuasion. Every presumption of judicial care, of professional competence, and of decretal stability is against the overthrow, in the appellate court, of such stipulation and of orders and decrees based thereon." Wagner v Myers, 355 Mich 62, 68; 93 NW2d 914 (1959). Courts are bound to enforce settlement agreements absent evidence such as fraud or duress. Massachusetts Indemnity & Life Ins Co v Thomas, 206 Mich App 265, 268; 520 NW2d 708 (1994). [Draves v Draves (In re Draves), 298 Mich App 745, 767-768, 828 NW2d 83 (2012).]If a contract is unambiguous, it must be interpreted in accordance with its plain meaning. Shay v Aldrich, 487 Mich 648, 660; 790 NW2d 629 (2010). If the contract language is ambiguous, courts may examine extrinsic evidence to discern the parties' intent. Id.
"The law is well settled that one who executes a contract may protect himself from liability by a distinct agreement that it shall not become operative until there has been compliance with certain conditions thereof." Kachanowski v Cohen, 305 Mich 438, 441-442; 9 NW2d 667 (1943). "Whether a provision in a contract is a condition the nonfulfillment of which excuses performance depends upon the intent of the parties, to be ascertained from a fair and reasonable construction of the language used in the light of all the surrounding circumstances when they executed the contract." Knox v Knox, 337 Mich 109, 118-119; 59 NW2d 108 (1953).
IV. APPLICATION
Plaintiff and his attorneys assert that the trial court improperly enforced the terms of the written stipulated order because it did not comport with the oral settlement placed on the record. We agree.
Plaintiff's counsel Heilmann advised the court that a settlement had been reached between plaintiff and Dr. Watson, Dr. Croissant, and Neuro Pain. The following was the initial statement of the settlement placed on the record by Heilmann:
And by way of a record and we'll have an order that conforms with this agreement, the parties on stipulation of Counsel move to dismiss these claims that
were pled, without prejudice and without payment, and conversely no party will make any claim for costs, expenses, or attorney fees against any party at this time or at any later party - - at any later time and this dismissal - - the record should reflect - - is without prejudice and that it's being brought by stipulation of the parties under 2504, which is a portion of the court rules that permits voluntary dismissal. At this time by agreement of the parties this matter will not be rebrought except for if it is brought by other counsel or Mr. Everett through other counsel that pursuant to the rule those individuals, either Mr. Everett or his attorney, would have to pay the cost of the defense pursuant to the rule 2504(D) and that ah - - the Court would not permit a refiling of the case in the absence of the payment of those costs to the respective parties and - -It is apparent that the oral agreement placed on the record advised that it dismissed "these claims that were pled," "this matter will not be rebrought," and the trial court would not "permit a refiling of the case in the absence of the payment of those costs to the respective parties." (Emphasis added).
[The Court]. The costs for what - - for bringing it or for what's - -
[Heilmann]. The defense. [Emphasis added].
Upon further inquiry by the court about the logistics of the written order confirming the agreement, Heilmann again reiterated the agreement terms:
[The Court]. Okay. Now I know that in previous orders sometimes it takes the parties - - or some parties have some issues with language as it relates to an order - - you know am I gonna have any of these issues or can we get that - -These additional statements made by Heilmann on the record clarified that the agreement was "between the parties that have been named thus far," "no other parties" were dismissed, and the agency claim against SJMO would continue.
[Heilmann]. Well no again it's between the parties that have been named thus far * * * and no other parties and it does not operate to dismiss any of the claims which have been pled in this case of sensible [sic] and direct agency against the respective principal in this particular case * * * that would be Trinity Health doing business as Saint Joseph Mercy-Oakland.
Indeed, the terms of the oral agreement placed on the record restricted its application to the claims raised by plaintiff against Dr. Watson, Dr. Croissant, and Neuro Pain as reflected by the statements that the agreement dismissed "these claims that were pled," "this matter will not be rebrought," and the trial court would not "permit a refiling of the case in the absence of the payment of those costs to the respective parties." Further, when the court inquired of the status of the written order, Heilmann clarified that the agreement was only between the parties to the agreement. The other defendants and their counsel did not participate in the agreement. Thus, we conclude that the settlement agreement was executed between plaintiff and the dismissed defendants ("between the parties that have been named thus far") and the term "party" referred to the individuals and entities participating in the settlement agreement only and did not extend to all parties to the litigation ("and no other parties and it does not operate to dismiss any of the claims which have been pled . . . against . . . [SJMO])."
However, the written stipulated order signed by attorney Dib and approved as to form and substance stated, in pertinent part: "the parties agree that if any action is brought against DANNY FRANCIS WATSON, MD, in the future based on or including any aspects of the same claim against DANNY FRANCIS WATSON, MD, the Court will order the payment of the costs by Dion L. Everett or any attorney . . ." (Emphasis added). The stipulated order for each dismissed defendant delineated the amount of the costs and that a stay of proceedings would enter until payment occurred.
SJMO filed a contribution action against the dismissed defendants and requested a stay with the concurrence of the dismissed defendants that the filing of the contribution claim triggered the costs provision of the order, and the trial court agreed. However, the terms of the oral agreement placed on the record in accordance with MCR 2.507(G) must be contained in the subsequent written consent order, and the court cannot enter an order that deviates in any material respect from the agreement of the parties. Kloian, 273 Mich App at 461. In the present case, there is a discrepancy between the settlement terms placed on the record that limited the agreement to "this claim" being "rebrought" between "the parties," and the written agreement and the trial court's interpretation allowed a filing by "any party" to invoke the costs provision, including parties to the litigation that did not participate in the settlement agreement. Because the written order did not comport with the settlement agreement placed on the record, the discrepancy may be resolved by amending the judgments. Nat'l Bank, 119 Mich App at 779. Although the dismissed defendants may have contemplated and sought to preclude their participation in this trial "forever" and against any party, the time to address those concerns was when the agreement was placed on the record. Mikonczyk, 238 Mich App at 350. Accordingly, we vacate the written agreements reflecting the settlement placed on the record and remand for amendment.
Further buttressing our conclusion is the fact that the contract to settle pending litigation must comport with MCR 2.507(G) as well as the requirements of contract principles. Kloian, 273 Mich App at 456. When contract principles are examined, SJMO was not a party to or beneficiary of the settlement agreement entitled to initiate its enforcement.
"A valid contract requires five elements: (1) parties competent to contract, (2) a proper subject matter, (3) legal consideration, (4) mutuality of agreement, and (5) mutuality of obligation." AFT Mich v Michigan, 497 Mich 197, 235; 866 NW2d 782 (2015). "The essence of consideration—whatever form it takes—is that there be a bargained-for exchange between the parties." Calhoun Co v Blue Cross & Blue Shield, 297 Mich App 1, 13-14; 824 NW2d 202 (2012). Generally, consideration on one side of the contract involves payment of legal tender. Id.
In the present case, the parties to the contract were plaintiff, Dr. Watson, Dr. Croissant, and Neuro Pain. The bargained for consideration was a dismissal of a claim of medical malpractice against those defendants and a continued forbearance of the litigation or the payment of costs would be incurred by plaintiff and his attorneys. These parties reached an agreement regarding the terms of the dismissal and the consideration exchanged. Thus, plaintiff executed a contract designed to protect himself from liability for hundreds of thousands of dollars in costs provided he and his attorneys did not refile "the case" against the dismissed defendants. Kachanowski, 305 Mich at 441-442. Furthermore, whether SJMO's filing invokes the cost provision and plaintiff's performance is contingent on "the intent of the parties, to be ascertained from a fair and reasonable construction of the language used in the light of all the surrounding circumstances when they executed the contract." See Knox, 337 Mich at 118-119.
In this case SMJO did not appear at the settlement hearing, is not a party to the settlement agreement, and fails to delineate what, if any, consideration it provided such that it should obtain any benefit or enforcement authority to a contract to which it was not a party. Additionally, there is no indication of mutuality of agreement and mutuality of obligation by SJMO. Furthermore, it cannot be deemed a third-party beneficiary of the settlement agreement between plaintiff and the dismissed defendants. Persons that incidentally benefit from a contractual promise do not necessarily have the right to sue for breach of that promise. Brunsell v City of Zeeland, 467 Mich 293, 296, 651 NW2d 388 (2002). "Thus, only intended, not incidental, third-party beneficiaries may sue for a breach of a contractual promise in their favor." Schmalfeldt v North Pointe Ins Co, 469 Mich 422, 427, 670 NW2d 651 (2003). Accordingly, "[a] person is a third-party beneficiary of a contract only when that contract establishes that a promisor has undertaken a promise directly to or for that person." Id. at 428. Thus, when the elements of the contract are examined as well as the provisions of MCR 2.507(G), the trial court improperly interpreted and enforced the written settlement agreement that did not comport with the oral pronouncements, agreed to and accepted by the trial court which were placed on the record.
Reversed and remanded for proceedings consistent with this opinion. We do not retain jurisdiction.
/s/ Kirsten Frank Kelly
/s/ Stephen L. Borrello
/s/ Mark T. Boonstra