932 N.W.2d 226
Mich. Ct. App.2019Background
- ADR Consultants contracted with the Michigan Land Bank Fast Track Authority (MLB) in 2012 to provide inspection/project-management services for blight elimination; MLB could terminate for convenience with payment for deliverables and work-in-progress.
- ADR performed additional out-of-scope demolition inspection services (purportedly at $55/hr) and later managed work under the DLBA/MSHDA Hardest Hit Fund program; parties disputed whether ADR would be paid for those services or receive future work valued at $420,000 (MLB allegedly received $100 per property for ~4,200 homes = $420,000).
- ADR alleged nonpayment beginning in 2014, received a termination for convenience in April 2015, and filed a timely notice of intent and an original verified complaint in August 2015 (within the one-year notice period of MCL 600.6431(1)).
- Two years later ADR sought and was granted leave to file an amended complaint adding a $420,000 breach-of-contract claim tied to the Hardest Hit Fund work; defendants moved for summary disposition arguing the new claim was untimely under MCL 600.6431(1).
- The Court of Claims denied defendants’ motions, concluding the amended claim related back to the timely-filed original complaint and therefore was not barred; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an amended claim filed after MCL 600.6431(1)’s one-year notice period can relate back to an original, timely complaint | ADR: Yes — the amended $420,000 claim arises from the same transactional setting and thus relates back under MCR 2.118(D) | MLB/MSHDA: No — the $420,000 claim was not included in the timely notice; amendment after one year is barred by MCL 600.6431(1) (untimely) | Court: Yes — amendment may relate back; because the original complaint was valid and timely, the amended claim springs from same transaction and is not barred |
| Whether the Court of Claims erred by permitting amendment where original complaint previously admitted services were provided at no cost | ADR: Original pleading and amended theory are consistent; amendment corrects/clarifies and arises from same transaction | Defendants: Amendment is a late, inconsistent attempt to assert a claim waived or untimely | Court: Denied defendants’ futility/waiver argument; relation-back doctrine and valid original pleading permit the amendment |
| Whether Progress Mich. prohibits relation-back when an original complaint is defective | ADR: Progress Mich is distinguishable because original complaint here satisfied statutory verification and notice requirements | Defendants: Progress Mich shows courts cannot permit amendments that evade statutory notice requirements | Court: Progress Mich inapplicable — that case involved an invalid (unverified) original complaint, while ADR’s original complied with MCL 600.6431(1) |
| Whether defendants appealed the correct order | ADR: Defendants appealed wrong order (should be July 25, 2017 grant to amend) | Defendants: Appealed November 29, 2017 denial of summary disposition | Court: November 29, 2017 order was the appealable final order; defendants’ argument without merit |
Key Cases Cited
- Greenfield Const Co v Mich Dep’t of State Hwys, 402 Mich 172 (state consent to suit and conditions for liability)
- McCahan v Brennan, 492 Mich 730 (statutory notice requirements for claims against the state must be strictly enforced)
- Dextrom v Wexford Co, 287 Mich App 406 (standard of review for MCR 2.116(C)(7) and treatment of evidentiary submissions)
- Fairley v Dep’t of Corrections, 497 Mich 290 (plaintiff must satisfy MCL 600.6431(1) to subject state agencies to liability)
- Mays v Snyder, 323 Mich App 1 (failure to strictly comply with statutory notice warrants dismissal)
- Oak Const Co v Michigan, 33 Mich App 561 (one-year notice provides general notice; three-year rule provides specificity)
- Progress Mich v Attorney General, 324 Mich App 659 (an unverified original complaint is invalid and cannot be the basis for relation-back)
- Weymers v Khera, 454 Mich 639 (leave to amend ordinarily granted; MCR 2.118(A)(2) standard)
- Kostadinovski v Harrington, 321 Mich App 736 (relation-back applies so long as amendment springs from same transactional setting)