Rainbow Construction Inc v. Township of Howell
335142
| Mich. Ct. App. | Nov 14, 2017Background
- Rainbow Construction was awarded a municipal contract to extend sewer services and install culverts; disputes arose over unexpected subsurface conditions and related costs.
- Howell (Township) moved for summary disposition multiple times; the successor judge granted a motion for reconsideration of an earlier (oral) denial and then granted partial summary disposition for Howell.
- At trial the sole remaining claim (payment for excess sand backfill) was dismissed via directed verdict; the successor judge also sua sponte declared Rainbow’s amended complaint frivolous and imposed sanctions.
- Rainbow appealed, arguing the successor judge lacked authority to hear reconsideration, the municipality failed to disclose known site information (invoking an implied warranty in drawings/specifications), judicial bias, and that sanctions (including for garnishment objections) were improper.
- The Court of Appeals affirmed in part, reversed in part, and vacated the frivolous-pleading findings and attendant sanctions, but otherwise affirmed the trial-court results and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Successor judge’s authority to hear reconsideration | Successor judge was prohibited by MCR 2.613(B) from setting aside an oral denial | Original judge was absent/unable to act; successor empowered and no written order existed | Successor judge properly heard reconsideration (MCR 2.613(B) not violated) |
| Timeliness and propriety of reconsideration | Motion for reconsideration was untimely and MCR 2.119(F)(3) bars rehearing of same issues | No written order had been entered so the 21-day rule did not run; courts may revisit earlier rulings | Motion for reconsideration was timely and permissible; reconsideration not prohibited by rule cited |
| Municipality’s duty to disclose subsurface/site information (implied warranty) | Howell had an implied warranty to produce adequate drawings/specifications and must discover/verify information; lack of knowledge is not a defense | Spearin/Hersey line allows owner to allocate risk but requires disclosure of actual known adverse conditions; owner not required to discover unknown conditions | Court declined to extend Spearin/Hersey; plaintiff failed to show Howell had actual undisclosed knowledge; summary disposition on many claims proper |
| Judicial bias and sanctions for frivolous pleadings / garnishment objections | Judge displayed partiality (interruptions, denunciations, sua sponte creditor exam) and sanctions were improper; garnishment objections raised valid constitutional concerns | Judge’s conduct fell within judicial discretion; pleadings lacked legal support in trial court; garnishment objections were largely meritless | No judicial-bias reversal; however, appellate court held the frivolous-pleading and garnishment-sanction findings were clear error and vacated those sanctions |
Key Cases Cited
- United States v. Spearin, 248 U.S. 132 (established rule that contractor following owner-prepared plans is not responsible for defects in those plans)
- Hersey Gravel Co. v. State Highway Dep’t, 305 Mich 333 (owner must disclose known subsoil test results; bidders may rely on owner-prepared specifications)
- Valentini v. City of Adrian, 347 Mich 530 (municipality’s nondisclosure of known adverse subsoil conditions supports contractor recovery)
- Bank of Am., N.A. v. Fidelity Nat’l Title Ins. Co., 316 Mich App 480 (courts may revisit earlier rulings; motion for reconsideration not strictly barred by MCR 2.119(F)(3))