Old Orchard by the Bay Associates v. Hamilton Mutual Insurance

434 Mich 244 OLD THE ORCHARDBY BAY ASSOCIATESv HAMILTON MUTUAL INSURANCE COMPANY 3). (Calendar Argued January Docket No. 82516. No. Decided 20, 1990. March Bay brought Old Orchard the Associates an action in n against the Oakland Circuit Court Hamilton Mutual Insurance Company, alleging surety it was liable under a bond for relating apartment latent defects to the construction of an project 1981, following discovery owned In Old Orchard. and mediation, parties, order, by stipulated voluntarily the submit- dispute statutory ted their entire In arbitration. plaintiff, comput- arbitration tribunal entered an award ing filing interest from date of the of the circuit court complaint statutory judgment pursuant at the rate to MCL 600.6013; MSA 27A.6013. Hamilton Mutual claimed that awarding arbitrators erred in interest other than that allowa- statute, ble under the 19.4, court, from the of the date arbitration award. The Fred- Ziem, J., award, including erick C. confirmed the the award of Danhof, C.J., Appeals, interest. The Court of J. and P. Swal- J., dissenting low, (Mackenzie, part), unpub- J. held in an opinion per lished curiam that MCL MSA 19.4 should (Docket 93161). applied plaintiff appeals. have been No. opinion by joined In an Cavanagh, Justice Chief Justice Riley Brickley, Boyle, Supreme and Justices Archer, and Court held: Where a contract have no stipulate arbitrate and do not later to an interest entitlement rate, original dismissed, action is not may be awarded on the from date of the entered, until the and such interest also be awarded thereafter until the paid, provided in MCL MSA 27A.6013. govern potentially awarding Two statutes of interest _1. References 2d, Usury Jur Am Interest and 74. §§ Award; See Index to Annotations under Arbitration and Con- tracts; Judgments, Orders, Decrees; Prejudgment Interest. Hamilton dispute. prevailing party in contractual to the awarding of interest where the MSA 19.4 authorizes applies It of entitlement to interest. fail to on the matter types disputes specified contract are founded verdict, referees, reports formally by resolved less arbitrators, by according to of assessment or other mode Statutory the until from the date of interest accrues law. 600.6013; payment judgment MCL MSA is rendered. or money payment on all the of interest 27A.6013 authorizes although mandatory, is judgments in civil actions and awarded may vary applicable parties within certain the interest rate the provision applies parameters. statutory that in a by legal question given purely to be resolved action a except parties stipulate statutory interpretation, to where the of the matter schedule or otherwise on an interest case, agreement. part In this the of their arbitration interest as holding Appeals on erred in that interest an arbitra- Court of by governed founded on a contract is tion award in an action awarding statutory 438.7; for MSA 19.4. The rationale MCL 600.6013; primarily MSA 27A.6013 is to under MCL party compensate prevailing for use of the funds the loss the money judgment, well as to offset the costs of a as awarded as action, prompt provide bringing an incentive for a court settlement. civil action and the broad definition a 2. Given stipulation parties the of a to arbitrate made in context lawsuit, judgment plaintiff properly was in favor of filed pursuant confirm- to a civil action. The trial court’s order made complaint preceded ing award was a the arbitration judgment. money not a case where the in This is ended money judgment rendered was not made a court lacked procedural in of a action. Nor it a case attributes civil brought solely action was obtain a which an Rather, confirming parties chose to arbitrate an award. 600.6013; complaint. only MSA after apply money judgments which are ordered 27A.6013does contractually agreed upon as the result of means case, power to this a court lacks the alter. In resolution which filed, clearly complaint had was trial court whfen the presented By jurisdiction to it. to decide the contract claim jurisdiction stipulating over the that would retain court clearly court to dispute, to allow the consented confirming award. arbitrator’s enter case, applied this the statutes are As to the facts of 3. statutory interpreta- the rules of conflict. Under irreconcilable tion, prejudgment interest must on the be awarded basis 600.6013; pari MSA 27A.6013. The rule of construction in apply. materia does not The Revised Judicature Act authoriza- prejudgment tion for interest is remedial in nature and is liberally policy encouraging construed. The is in way higher no frustrated the award of rate of at litigation point 600.6013;

an earlier in the under MCL flexibility specifying 27A.6013. The have some appropriate prejudgment rate of interest. 600.6013; 4. The 1965 amendment MCL MSA 27A.6013 repeals implication by necessary MSA 19.4 to the extent that the two interest statutes are in conflict. MCL repeals part MSA 27A.6013 of MCL providing interest, in the interval be- liquidation tween or ascertainment of the amount owed and payment either of or amount in actions by filing founded on contracts commenced awith court, i.e., civil contract actions. Levin, concurring, Justice stated that the arbitrators did not authority including interest, exceed their in the award computed provided 27A.6013, in MCL from complaint parties the date the was filed. While the did specifically on whether interest was to be added to the award, agreed, they arbitration, submitting dispute to to power whether, confer on the arbitrators the to decide as a statutory interpretation, matter of contract rather than inter- question est would be added to an award. The whether interest arbitrators, should be awarded is one for the and not the Supreme Court, to decide. result, Griffin, concurring Justice in the stated that because Court, the issue is not before the no decision should be made regarding provide cases in which arbitrators do not include or part for interest as of an award. Reversed and remanded. Money — Judgment — — —

Interest Contract Civil Action Arbitration. dispute agreement

Where the to a contract have no arbitrate, stipulate and do not later an interest entitlement rate, original dismissed, statutory and the action is not may judgment on awarded from the date of the complaint entered, until the and such may interest also be awarded thereafter until the (MCL 27A.6013). paid Orchard Old v Hamilton op the Court Dykema (by Steiner, Jr., Gossett W.A. Porter) plaintiff. Thomas W.B. for the (by Hill, Lewis, Adams, Goodrich & Tait Jimm Jackson) F. White and Peter A. for the defendant. Cavanagh, J.

i litigation This out of a construction con- arises dispute property plaintiff, owner, tract between general surety, and its plaintiff, contractor’s defendant. The Bay Associates, filed February 10, 1978, in Oakland alleging Court, defendant, Circuit Mutual surety Hamilton Company, Insurance was liable under a relating bond for latent defects to the con- apartment project of an which Old Or- struction chard owns. litigation pending was for three The years, during time which commenced discovery, in 1980 the case was mediated.

By stipulated February 6, 1981, order filed Old voluntarily and Hamilton Mutual Orchard ted their submit- statutory entire arbitration.1 proceedings, including The arbitration extensive stipulation part read in as follows: being This matter is submitted for resolution arbitration Industry in American Arbitration Association. . . . in this purpose with accordance the Construction Rules of the Any award entered into aforesaid arbitration be entered as a jurisdiction and this Court Court has retained for the enforcing any such award. . stipulation terms conform arbitration this 3.602(A), requirements set forth MCR 600.5001-600.5040; citing MCL MSA 27A.5001-27A.5040. Such an arbitrate, agreement consent of making its generally, only by the mutual to revocable parties. Upon MCL MSA 27A.5011. the agreement, jurisdiction of had this trial court enforce and to thereunder. terms render on award 600.5025; MSA 27A.5025. the Court throughout place evidentiary hearings, 1985.2 took years five after the execu- On December agreement, the Commercial tion of the arbitration an Tribunal entered Arbitration plain- plus interest, $300,000, in favor tiff.3 award to Old Orchard

The arbitrator’s interest computed from the date of was statutory judgment circuit court rate, at Subsequently, 600.6013; MSA 27A.6013. motions, Hamilton Mutual filed several defendant including awarding erred a claim that arbitrators under interest other than that allowable statute, 19.4, from the date the arbitration award. respects on the award in all trial court confirmed including May 21, 1986, of the award confirmation statutory judgment rate. at the appealed Defendant Hamilton Mutual on several Appeals, unpublished Court of an issues. The opinion, except issues, affirmed on all to the split decision, In a the Court of interest award. Appeals held that MCL should was denied for stated to November construction contract. 800. After in the instant suit which was filed after tiff. F arbitration, Defendant Hamilton Mutual filed Several additional summary judgment & T give complete picture Contractors, being 11, 1976, on the lower sued March alleging f Later, & net claim facts, court without f t, & principal, 1985. though dismiss plaintiff of the nature t’s $639,949.43 a motion on filed suit prejudice, pending completion sued defendant f & directly arbitration. t’s claim of the instant lawsuit. was still owed was reduced against plaintiff relevant, January against The motion 30, 1985, to $390,000 must be on the plain- $331,- Finally, into between f & t under a consent entered pursue plaintiff obligated plaintiff, arbitration with became defendant, agree- According to instant ment, Hamilton Mutual. that consent percent plaintiff pay sixty of the remainder of must f t & through monetary recovery might which be obtained arbitra- $30,000, expenses proceeding, full not to exceed as a settle- tion less against plaintiff. & ment of f t’s claims v Hamilton Opinion of the Court applied, allowing have been for an award of five percent from the annual interest date of the 1985 award.4 granted plaintiff’s application

We the for leave appeal, denying applica- to while the defendant’s appeal cross-appellant.5 tion for leave to as Mich 891 The defendant that claims the plaintiff only is to interest from date entitled percent at the arbitration a five award annual reject rate under MCL MSA 19.4. We argument reverse decision of the Court of and Appeals on the issue interest and hold follows: (1) dispute where to a no have contract (2) stipu- arbitrate, to later do not (assuming late to an interest entitlement or rate (3)(a) dismissed),6 original action is not statu- tory is awardable on the from the date of the until (b) entered, is such also paid, awardable thereafter until as provided in MCL MSA 27A.6013.

ii discussing merits, Before the relevant statu- 4Judge Mackenzie dissented and would have affirmed the trial issues, including court on all the interest award. plaintiff application its framed terms of two distinct issues: Appeals clearly holding Issue I: Is the Court of erroneous suit, plaintiff, having right prejudg-

that a filed forfeits its to ment interest under later [MSA 27A.6013] entering voluntary stipulation into a with the to defendant submit entire their to arbitration? Appeals’ ruling II: Issue Will the Court of cause material permitted injustice legisla- if it stand where contravenes policies encourage tive fair arbitration and to ensure com- pensation prevailing plaintiffs? n 22. See 434 op the Coukt briefly. statutes tory provisions Two forth are set govern of interest potentially dispute. party prevailing contractual of interest the award 438.7; MSA 19.4 authorizes the matter fail to where applies to It in an action. entitlement specified disputes types contract on a founded report "by formally verdict, less are resolved by arbitrators, or assessment referees, award by any by other court or of the the clerk made according .” . . . Statu to law of assessment mode tory 19.4 438.7; MSA accrues MCL under interest payment or until award of the from the date thereupon.7 is rendered 27A.6013 authorizes 600.6013; MSA MCL money judgments payment on all s.”8 such award of The in "civil action awarded provides: implied, express or when- on contracts In all actions founded money amount in shall thereof in the execution ever verdict, party, by liquidated of either in favor or ascertained arbitrators, referees, made report or assessment award of by any mode of assessment or other the clerk of the court verdict, lawful, report, law, according unless such it shall be aside, award, and receive to allow shall be set or assessment liquidated, until upon so ascertained such amount interest payment dered; thereupon thereof, judgment and ren- shall be or until recording judgment, making up such and in thereto, included shall be added interest on such amount in the judgment. provides: 27A.6013 (1) money judgment recovered on a be allowed Interest shall action, provided .... in this section a civil 1980, (2) complaints in an action June For filed before having a rate of involving instrument than a written other per year, exceeding interest on the 6% June from the date shall be calculated 1, 1980, per year after June and on and rate of at 6% rate of at the to the date of satisfaction annually. compounded per year 12% Hamilton Opinion op the Court statutory judgment interest under MCL although mandatory, MSA 27A.6013 is applicable may vary the interest rate within cer- parameters.9 tain

hi statutory provision applies in a given legal question purely action is a to be re- interpretation, except solved means of parties stipulate where the to an interest schedule or otherwise on the matter of interest as part agreement.10 of their arbitration dispute, agreed upon however, in the instant the matter of interest. never alleges Plaintiff Old Orchard it was error Appeals for the Court of to state as a broad rule that "interest on an arbitration an action governed by founded on a contract agree. 19.4.”11 We This conclusion is based on language a close examination of both the history issue, of the two interest statutes at as well 9 example, 600.6013(3); 27A.6013(3), For under MCL where a complaint 1, 1980, judgment may vary is filed before June interest percent annually between six and twelve until the date is entered, depending But, parties’ agreement, any. on the if the after judgment, may percent (except date of not exceed seven for period 1980, elapses 31, May the after which after in which percent annually). case interest not exceed thirteen 600.6013(5); 27A.6013(5), by See also MCL as amended 1986 178, 1, 1,1986. PA effective October § 10 regarding by Where there is a contractual interest, awarded, the entitlement to or the rate of a dispute intent of the matter of contract, question founded on a of interest is one of the Therefore, parties. primarily since arbitration is a contract, stipulation parties, entered before or filed, specifying applicable prejudg- after the is rate of interest, postcomplaint normally binding. ment 11 Co, Bay Associates v Hamilton Mutual Ins (Docket unpublished curiam, 11, opinion per January decided 1988 93161), slip op, p 8, citing Casualty Surety No. Western & Co v (1986). 83, 89; City, App Garden 151 Mich 390 NW2d 687 434 Mich 244

252 op Opinion the Court sought purposes Legislature as accomplish enacting provisions. these IV Arbor, Ann Court stated in White v As this (1979), Advisory 554, 562; Mich 281 NW2d Constitutionality 294, of 1972 PA re (1973), interpre- 441, 478; Mich 208 NW2d 469 requires the Court to infer tative task at hand legislative language in the intent from the used statute, as well as to consider the lan- guage special subject in the context of the matter meaning which it of the statute addressed. light general purpose must be viewed "in sought accomplished sought to be or the evil to be White, the constitution or statute.” remedied supra at 562. awarding statutory

The rationale for primarily under 27A.6013 compensatory one. The Revised Judicature Act purpose compensat- interest statute serves the ing prevailing party of the use of the loss money judgment, funds awarded as a as well as offsetting bringing In the costs of action. court Bedford, 517, 534-536; Denham v (1980), NW2d 168 this Court wrote: Michigan Legislature in has dictated that terest should accrue from the date of complaint. legislative purpose . . . was [T]he prevailing compensate party delay for the damages payment of money and to cover the costs .[12] litigation . . . awarding purpose The second inter- 1, 4; citing Waldrop Rodery, App See also id. at v 34 Mich (1971) (Levin, DAIIE, J.); n NW2d Wood 17; 321 NW2d 653 v Hamilton Opinion op the Court provide prompt est is to an incentive for settle- Gage Co, ment. See v Ford Motor 423 Mich (1985). statutory 257; 377 NW2d 709 prejudgment interest under 27A.6013 in suits to on an collect insurance con- pre- context, illustration; tract is a useful in this interest serves a distinct deterrent func- encouraging tion both settlement at an earlier from, discouraging delaying time and a defendant litigation solely payment to make later at a time. Corp, See Matich v Modern Research (1988). 12-15; 420 NW2d plaintiff case, In this filed a any resolve a contract in the absence of prior agreement to arbitrate or appropriate rate. Is this a "civil ac- resulting recovery tion” in a in the "money damages” governed form of and therefore prejudgment provisions of MCL plaintiff’s 600.6013; recovery Or, MSA 27A.6013? is the properly "liquidation” more considered a pursuant or "ascertainment” of of an arbitrator” and therefore debt the "award

governed by 438.7; MSA 19.4?

Since there have been two Michigan, just interest statutes in rather than one. recently, Until was more scheme orderly.13By exploring history of the two inter- they statutes, est common one can see that share both purposes origins. as well as common summary A of the evolution of the two interest interpreted statutes which must be is summarized statutes, historical evolution these interest as described above, Griffin, Prejudgment in contract ac is discussed in tions, 67 Mich B J 250 434 Mich 244

254 op the Court margin.14 right judgment The in Michigan originated in 1827 territorial statute an to interest from created an entitlement which of Terri- was entered. See Laws time Michigan, p tory In an even earlier of (an 1809), rate of act of a conventional statute (at specific of six rate interest was authorized percent) only a few under contract —with (The copied specified exceptions. from 1809 act was Territory statute, of of a Vermont see Laws Michigan, pp [1884].) then 61-62 Both statutes together chapter appeared the Revised of Statutes of 1838.15 summary history plaintiff provides very of succinct

the two statutes: sections, addressing topics Chapter 6 nine all of contained 3, precursor money interest. Section of MCL [MSA and (7 19.15(1)], legal percent annually defined the rate of interest 8, or, precursor writing, up percent). agreed to 10 Section if otherwise 27A.6013], provided for inter- to MCL 600.6013 [MSA judgments money all or decrees. est on unchanged substantially and Section which has remained 19.4], complemented as MCL section is now codified 8 438.7 [MSA by allowing judgment” on interest "until as to debts based contract. The interest under section 9 accrues from the date the "liquidated amount of the debt becomes statute can become or ascertained.” The recognizes any ways by number of which an amount verdict, liquidated "by report or ascertained: of

referees, arbitrators, by or made assessment court, by any accord- clerk of the other mode assessment ing to law.” . . . the former Sections 8 and 9 were never in conflict because only after the and the latter section covered covered interest relationship century, recodifications, only judgment. complementary until the This the sections continued for more than a between through to section 8 and various several amendments enactment, By PA 1. until 1965 sec. Legislature the accrual date MCL 600.6013 amended 8) (the of section so that interest descendant [MSA 27A.6013] from on a thereafter be "calculated the date would complaint.” heading published The two sections were under the same —"Title Account, VII, Money, Chapter Money Verdicts, Interest of Of and of the subheading— Judgments, same &c.”—and under the v Hamilton Opinion op the Court placement language provisions of these indicate were intended they further (now common purpose. Section 8 27A.6013) applied to all actions resolved (now resolution, means of formal and § 19.4) applied to contract-based claims where the amount owed was to be deter- referees, report arbitrators, mined award of or by any other mode of assessment according to Yet, purpose law. provisions both was the same as is language evident from their and func- tion. The two statutes were coordinated to accom- plish the goal same of compensating for the loss of the use of funds wrongfully detained for the period when they unpaid. were due but

The subsequent of history provisions, the two 1965, prior to does not alter this conclusion. While provisions these have since been as- signed separate chapters in the Compiled Laws,16 was, 1965, their language until essentially Verdicts, statutes, Judgments, they "Interest &c.” The two as 1838, appeared in read as follows: received, may upon judg- Sec. Interest be allowed and all law, recovery any money, upon ments at all decrees in for the of sums of and chancery, payment any money, for the sums of may whatever be the form or cause of in action or suit which made; such interest MCL or decree shall be rendered or and such predecessor be collected on execution. [The 600.6013; MSA 27A.6013.] express implied, Sec. 9 In all actions founded on contracts or prosecution any money wherever in the thereof amount in liquidated party, by shall be verdict, or in ascertained favor of either referees, report arbitrators, award of or assess- court, by any ment made assessment verdict, the clerk of the other mode of according law, lawful, to or assessment shall it shall be unless such award, aside, report, be set allow account, liqui- and receive interest on such so ascertained or dated, thereof, payment until or until shall there- rendered, upon making up recording and in such thereto, judgment, the interest on such amount shall be added judgment. in included 1846, The 1838 statute was reenacted in a statute which com- 434 Mich op the Court originally 438.7; MCL as when enacted. the same formerly 19.4, §9 of the 1838 Revised Stat- MSA (The unchanged. substantively utes, has remained provision, only in made to this minor amendments 1846, 34, ch in nature. See RS were editorial §7.) did 600.6013; MCL MSA 27A.6013 also changes undergo any major even it was moved and edited.17 600.6013; its MCL

Since amendment prevailing 27A.6013, however, entitles MSA party from entry to the of a provisions Moreover, civil action. MCL various designed clearly 600.6013; 27A.6013 are encourage compensate to prevailing party settlement and to money wrongfully the value of

for generally, Erhart, See, Rittenhouse v obtained. (1985) (discus- 190-193; 380 NW2d 27A.6013, of how MCL its sion present clearly form, amendments, as of the goals). to further seeks both MSA 27A.6013 and Both Legisla- were enacted the same ture. Given manner their enactment and the similar functions two statutes have performed century, than a the amend- more in 1965 ment of MSA 27A.6013 together prior provide Money” bined the sections that "Interest of (wherein specified) legal a rate of conventional interest and for (the prejudgment 9 the interest former 8 and of §§ statute). per phrase per rate of seven "at centum annum” §6, added to the but otherwise it was reenacted as it was appeared end 34, RS, 1838. See 6. ch § (predecessor 8 of the Section 1838 Revised Statutes 27A.6013) 600.6013; original along from was moved its location prejudgment provision. See 1915 PA ch 20. side § change significance language was addition of The other some specifying be "in a civil This amendment action.” in 1961 when Act of 1915 recodified as came Revised Judicature the Judicature was Act, 60, §6013, PA see 1961 ch where it today. remains v Hamilton Court problematic. highly The extension of that interest awards causes two statute to formerly compatible statutes to be irreconcila- concluding Only by §6013 ble conflict. provision repealed has implication, by necessary insofar as civil ac- concerned, are can sense be made of the tions statutes. two interest repeals by implication favored, it

While are question legislative intent whether or not is a repeal of an earlier statute there has been such Attorney subsequently Gen- enacted one. See Joyce, 619, 621; eral ex rel Owen v (1926); Yarger Hastings, City NW 863 413, 417; 134 Mich legislative expression NW2d latest pre- entitlement interest must control where two interest specifically statutes address the issue of entitle- ment and cannot be harmonized.

VI Plaintiff maintains that the enactment of 1965 repealed PA 240 MSA 19.4 to the might apply it extent that to the award of arbitra- unique tion under circumstances which agreed arbitration was to in this case. The 1965 clearly amendment prejudgment broadened the entitlement

interest under MCL 27A.6013. argues

The defendant that the stat- two interest overlap, position utes do not but this is untenable given plain language First, of the two statutes. argument assumes that MCL MSA 19.4 provides the exclusive entitlement to interest even conñrming money judgment after a court enters Yet, an arbitration award. this cannot be recon- language 600.6013; MSA ciled with the of MCL Mich op the Court requires interest be awarded that 27A.6013 which complaint. More- of the from the date terms, does 19.4 its own over, 438.7; MSA MCL contends; defendant far as the not extend as "only of interest fact, the award it authorizes upon . . . rendered’ shall be 'until award, verdict, etc.” arbitration coverage overlapping of the two statutes regarding to entitlement a conflict creates appears prejudgment irreconcil- that be harmoniously apply only way the two able. The interest the same apply provisions at them both be to would application Yet, time. such simultaneous prevailing recovery yield a double would party to the award from the date of surely judgment. with inconsistent This date any legislative intent.18 Since rational view of application appears way justify to be no there only other,19 we find over the one of the statutes and MCL 27A.6013 MCL MSA applied conflict, to the as 19.4 are MSA facts of this case. plaintiff’s entitle- that the

The defendant contends governed prejudgment exclu- ment sively ignores argument 19.4. This 438.7; MSA express 600.6013; MSA terms of MCL money judgment applies re- to a 27A.6013 which Perhaps, defendant con- action. covered cludes a civil applies only 438.7; permitted are when recoveries of interest While such double Wood, supra, thereby, no legislative purpose n 12 see is served clear such justified here. A double at issue result can be under statutes prejudgment under both MCL pre overcompensate the 19.4 would and MCL 27A.6013 vailing party purposes of the statute in contradiction of Legisla Thus, produce assume that result. we would an absurd thereby apply authorize two statutes and did not intend to both ture recovery of interest. sources of simply textual clues do not contain interest statutes The two provisions two should which of the to how one would decide as given priority in what circumstances. Hamilton Opinion of the Court by reading narrowly. here that statute too applies awards, 438.7; MSA 19.4 to arbitration by report verdict, well as to awards entered referees, assessment made the clerk of the Following logic court, or otherwise. of defen- argument awarding prejudg- dant’s would result in jury 438.7; ment interest on a verdict under MCL though exclusively, precludes 19.4, MSA even it money damages in a "civil action.” 600.6013; But this result would make MCL MSA inoperative plainly applies. 27A.6013 where it Thus, we are constrained the rules of statu- tory construction to award interest in 600.6013; the instant on the basis of MCL by resorting statutory 27A.6013 MSA to rules of interpretation. Normally, two statutes which share purpose object interpreted a common are to be pari appropriate materia. This is the rule to apply where two statutes are enacted the same assembly purpose. with a common The rule re- quires strictly the two statutes be construed interpreting so to avoid one in a manner that purpose defeats the main subject. of another on the same Michigan Telephone Co, Detroit v Bell 374 (1965), 543, 558, 561; Mich 132 NW2d 660 cert den (1965); Co, 107 US Richardson v Jackson (1989). 377, 384; Mich 443 NW2d 105 reconciled, But where the two statutes cannot be apply. this rule of construction does not Specifically, pari the rule inof materia does not likely uphold- control here ing it would since result policy 438.7; 19.4, embodied MCL MSA tending statute, the earlier in a manner to contra- plain language subsequent dict the (i.e., of the statute 27A.6013). People MSA See ex Byrne, 284, 288; rel Pellow v 272 Mich 261 NW (1935), quoting v Recorder’s Voorhies Court (1922). Judge, 155, 157-158; NW 434 Mich Opinion of the Court attempt

Any judicial a restriction into to read however, 27A.6013, is fore- prejudg- Court cannot refuse to award closed. This (from in a "civil action” the date ment interest complaint) in contravention the plain language 27A.6013. ap- we to hold that MCL Were plaintiff prejudg- plies and that is not entitled to complaint, it from the date of the ment Voorhies, the rule of since force would violate preserved. thereby statutes could not of See, two Michigan, generally, Rathbun 544-545; 280 35NW 600.6013; MSA conclusion that MCL

Our applies supported by the 27A.6013 rule that prejudg- Act Revised Judicature authorization interest is remedial in nature and so must be ment supra liberally 528-529, Denham, construed. at citing MSA 27A.102.

VII of a "civil Given the broad definition stipula- Michigan, given parties action” tion to arbitrate filed properly made in the of a context lawsuit, we conclude that plaintiff pursuant "civil favor of was made a action.”

This has defined the term "civil action” Court enough broadly the re- so that this suit satisfies quirements 27A.6013.20The of MCL confirming trial award was court’s order arbitration complaint preceded by and ended in a 20 by filing A as an "action is commenced "civil action” is defined 101). 2.101(B) (formerly complaint See a court.” MCR GCR with rule); v (codifying Buscaino MSA 27A.1901 court also MCL (1971) (a Rhodes, 474, 481; 189 civil action is 385 Mich NW2d filing complaint by the of a in the context of the statutes commenced of context). limitations, every as well as other v Hamilton Opinion op the Court money judgment. Furthermore, not this is a case money judgment where the rendered was not procedural made a "court” or lacked the attrib- Rather, utes of a civil action.21 a trial court entered dispute here. distinguish We this case from those actions brought purpose which are for the sole of obtain- ing confirming asking the award. In apply 19.4, the court upon interpreting defendant relies cases the two inapplicable interest statutes that are to the in- Morgan App Kamil, stant suit. See 144 Mich (1985), 171; 375 lv NW2d den (1985); Casualty Surety Western & Co v Garden (1986). City, App 83; 151 Mich 390 NW2d 687 parties salient fact in this case is that the chose to only filing complaint. By after the arbitrate Morgan, supra, agreed contrast, in had prior complaint; to arbitrate moreover, the circuit court dismissed the case entering compelling after an order arbitration.22 supra, Casualty Surety Co, Western & involved a preexisting agreement also. cases,

In these two as well as in Osinski v Ass’n, possessed (Workers’ Compensation Appeal Board is not a court and is not (pursuant agreement 600.6013; order interest. rule does not address whether (pending arbitration or an lack of In that Indeed, ^[22] Under yet See Solakis v compelling jurisdiction. final and the MCR MSA to MCR situation, moreover, means that MCL the trial court outcome judicial power), to arbitrate. 3.602(C), 410, 499-502; 27A.6013, governs arbitration, application Roberts, 3.602[C]), of arbitration) the court 395 Mich do not for such an order has been made. The where the arbitration and Detroit v Detroit Police Officers the 438.7; dismiss a the court even if the civil action is NW2d must presence the entitlement MSA 13, 21; issue a or having granted the existence or terms of must dismiss the case for 19.4, of a 233 NW2d 1 stay rather prior after proceedings if an order prejudgment entering than MCL arbitration stayed (1975) stay are an 244 434 Mich

262 Opinion of the Court (1976), DAIIE, 426; NW2d 76 App 69 Mich specifies 19.4 438.7; MSA held that MCL Courts entered judgments on to interest the entitlement Also, the award. to confirm arbitrator’s merely were held in those cases proceedings action. circuit court bringing to the prior 19.4, in those 438.7; MSA Thus, by MCL applying re- correct cases, Appeals reached Court sults.23 not 600.6013; apply does MSA 27A.6013

MCL the result ordered as which are money judgments means of upon agreed contractually power to alter. lacks resolution which court to apply the failure justifies This rationale phase 600.6013; prejudgment to the MSA 27A.6013 cases, But, in the above even litigation. have 600.6013; might 27A.6013 autho- MCL rjzed MSA party required if prejudgment applicable since we rate of interest is the We do what decide required this case. This Court the issue to decide are not to settle Roberts, supra allowable the interest rate n 21 at Solakis v fixed according percent 438.7; to the terms at five MSA 19.4 under MCL 438.7; 19,15(1), 438.31; yet, 19.4 held that MCL MSA op compensation right to interest workers’ determines awards 438.31; specified percent per in MCL annum rate is MSA fixed five 19.15(1). on this this legislative history 19.4 doubt of MCL casts possibility rate that proposition that the interest raises the and specified the one in ‘MCL shall be interest statute borrows ("The Griffin, Legislature e.g., supra See, n at 27A.6013. MSA intended MCL interest of 27A.6013]”). Statutes, now interest of the Revised that the 19.4, the same rate as the should have Statutes, now 600.6013 [MSA the Revised Indeed, history specific language of MCL "legal suggests rate” was intended to establish that it MSA interest, wrongfully money de- interest for than the rate of rather primary on establish limits was transactions tained. insofar purpose Its and to is concerned rate as the conventional usury. of the prohibition facilitate enforcement interest on verdicts whether the allowance of not decide We also do Motyka "purely statutory,” v judgments Michigan see (1932), 396, 398; Co, Detroit, 244 NW G H & M R invoked, express statute could even where no Wilson allowable 510, 514-519; Co, Lead Div Doehler-Jarvis of Nat’l NW2d 263 v Hamilton op Opinion the Court pay successfully it had moved to vacate the award (1) ground on the there that was no enforceable (2) agreement arbitrate, or that the arbitrator’s Gavin, decision must be set aside. See DAIIE v 416 (1982). 407, 440-441; Mich In 331 NW2d Mor- gan, supra at MSA 27A.6013 governed may have the award of if the Court had not the dismissed com- plaint. cases, In the above all governs postjudgment 27A.6013 est, the award inter- according plain language.24 to its argues Defendant that "this case is not a civil arbitrate, action because an whether complaint, reached before precludes after the of a subject a circuit exercise mat court’s jurisdiction pending.” ter while the arbitration is Morgan incorrectly The defendant relies on the support decision to Court in view the trial subject jurisdiction this lost case matter over this agree lawsuit when entered into their ment to arbitrate.25 filed,

When the instant was trial clearly jurisdiction court had decide con- 24Thus, Casualty Co, supra Surety Court in Western & at "nothing was it incorrect when stated that authorizes interest on an (with exception arbitration the arbitration discussed) statute to be [MCL whether awarded 19.4] panel.” the court or the arbitration MSA 19.4 properly be referred to as the "arbitration interest since it statute” variety authorizes award of of other contexts and it is not the exclusive source of entitlement to interest on an arbitration award. 25 Morgan plaintiff party Court stated: “Since was a to the agreement, subject juris the circuit lacked court matter 176, citing over the lawsuit.” diction Id. at v Int 'l Pharmakon Bowes Lab, Inc, (1981). App 410; 111 Mich NW2d view, contrary namely, subject For the the court does not lack jurisdiction matter to decide an arbitrable under MCL 600.5001(2), 600.5025; 27A.5001(2), 27A.5025, see DAIIE Mau- rizio, App 166; (1983), Mich 341 NW2d Hendrickson v Moghissi, 290, 295-296; (1987), App Mich 404 NW2d 728 Campbell Hosp, App 558-559; John v St 428 NW2d 711 434 op the Court stating presented By in their to it.

tract claim jurisdic- stipulation "retain[ ] court that the would parties clearly dispute, con- tion” over the court enter sented to allow confirming stip- this award. Given arbitrator’s jurisdiction properly ulation, retained the court conforming the decision to entered a and of the arbitrator.26 history 600.6013; MCL MSA of The text and simply 438.7; MSA 19.4 do 27A.6013 and MCL support prevails party the conclusion that a who proceeding to is entitled in an arbitration less prejudgment in is when the award made of a the context civil action.

VIII policy encouraging no arbitration in of higher way the award a rate frustrated point litigation under an in interest at MCL earlier 600.6013; 27A.6013. The have flexibility appropriate specifying rate some prejudgment interest. drafting require By agreements that arbitra- precedent any disputes tion as a condition prevent bringing action, an a court entitle- prejudgment under MCL ment arising prior ever 600.6013; MSA 27A.6013 from the award. encourage prevent of an action to confirm the arbitrator’s

Thus, this will the result of case neither discourage parties,

nor who intend litigation, engaging from arbitration. 27A.6013 of MCL demands satisfied, however, must when a "civil action” judg- filed is not dismissed has been and before ment entered on the arbitration award._ (the legal equitable power MSA 27A.5025 and See parties’ and to enforce to render court thereunder). judgment on v Hamilton Levin, J.

IX sum, In we hold that the 1965 amendment MSA 27A.6013 repeals implication to necessary the extent the two interest statutes are in conflict. MCL 600.6013; MSA 27A.6013 repeals part of MCL 438.7; MSA 19.4 providing for inter- est, in the interval liquidation between or ascer- tainment of the amount owed and either payment of or judgment on that amount in actions "founded on contracts” commenced by filing court, i.e., with a civil contract actions.

Thus, we reverse the decision of the Court of Appeals, and remand the case for of a entry judg- ment awarding prejudgment conformity with this opinion.

Riley, C.J., Brickley, Boyle, Archer, JJ., Cavanagh, concurred with J.

Levin, J. (concurring). question presented is whether the circuit court erred in entering confirming an arbitration award for an amount, $300,000, plus interest statutory com- puted from the date the complaint in this action was filed in the circuit court.

I would hold that the arbitrators did not exceed their authority when they included the award interest, computed provided statute, as in the from the date the complaint I was filed. therefore with the that this Court majority should reverse the decision of the Court of Appeals, which held that the circuit court should not have confirmed an award that included prejudgment and should have allowed interest only from the date of of entry the award. by Levin, J.

I Company Mutual Insurance was Hamilton had general contractor that bankrupt of a surety housing complex for Old a multifamily constructed bond surety Associates. by Bay Orchard for defects in materials provided protection that there workmanship. Orchard claimed Old $390,000 exceeding in an amount were defects this after action years amount of the bond. Three Orchard, stipu- was commenced Old to lated that matter was be submitted with the in accordance resolution American Arbi- Industry Construction Rules An Michigan. tration order was Association stipu- pursuant entered circuit court "remanding provid- lation case to arbitration” ing judg- that be entered any "may ment in this and this Court has retained Court enforcing purpose for the such jurisdiction award.” providing filed an award1

The arbitrators $300,000 plus Old Orchard pay Hamilton should $300,000 computed Act2 6013 of the Revised Judicature pursuant § commenced in the from the date the action was the state- circuit court. The award concluded with all ment it in "full claims was settlement submitted to this arbitration.” confirm, and, moved after hear- ing the circuit entered a objections, judge judg- $300,000 plus ment on the award $366,000 6013. computed pursuant over to § reversed,3 holding that Appeals The Court of January unpublished opinion Almost five Old Orchard 11,1988 600.6013; MSA 27A.6013. years by (Docket later. per curiam of the Court of Bay No. 93161). Associates Hamilton Mutual v Appeals, Ins decided Co, Hamilton Levin, J. pursuant have been awarded to a interest should percent provides statute4 that for interest at five per only entry of an award. annum after

ii majority that The holds as a matter law parties agreed where the have not to arbitrate complaint stipulate filed, before a is but thereafter original to missed, and the action is not dis- arbitrate pur- prejudgment interest should added be § suant to 6013. majority prejudgment

The that states interest pursuant § need not parties stipulate added to 6013 be where "agree or otherwise on the matter interest,” where, case, in the but instant parties agree interest, do not on the matter of governs.5 the statute parties agree specifically

While the did not on pursuant §6013 whether was to be they agreed, submitting award, added to dispute arbitration, confer the arbitrators power whether, to decide as a matter of con- The majority MSA 19.4. MCL states: 19.15(1). statutory provision applies given action legal purely question is a interpretation, except to be resolved means of parties stipulate where the to an interest part schedule or otherwise on the matter of interest as agreement.10 their arbitration in the instant dis however, pute, agreed upon never matter interest. agreement by Where there is a contractual interest, regarding the entitlement or the rate of interest to awarded, contract, question founded on a Therefore, parties. is one of the intent of the since contract, primarily stipulation arbitration is entered specifying interest, a matter filed, parties, before or after the applicable postcomplaint rate of normally binding. [Ante, p 251.] 434 Mich Opinion Levin, J. interpretation, interest tract rather than be added to an award. would parties specifi- holding of the In that the failure cally meant, of interest on the matter question interpretation contract, the agreed they the matter of inter- had "never interpretation majority est,”6 its substitutes interpretation In the instant of the arbitrators. the case, is the same because arbitrators

the result pursuant But, § 6013. in another added case, approach majority’s mean that would although the interest must be added to an award provided for inter- had not included or arbitrators part est as of the award.

hi questions cases, In of contract inter- arbitrability pretation often concern —whether dispute is arbitrable or excluded from arbitration. arbitrability context, In the United States Supreme ruled that arbitration "should not Court positive it be said with be denied unless suscep- clause is not assurance that the arbitration interpretation that covers the asserted tible of an approach dispute.”7 adopted of the This Court Supreme when it said that a United States Court weigh competing should not claims of con- court give interpretation because to do so would tract assigned court task to the arbitrator— "to the application namely, interpretation contract.”8_

6See n 5. Co, Navigation of America v Warrior & Gulf United Steelworkers (1960). 574, 582-583; 1347; 4 L Ed 2d 1409 363 US 80 S Ct Dist v Kaleva-Norman-Dickson Kaleva-Norman-Dickson School Teachers’ Ass’n, 583, 594-595; NW2d The Court continued: Hamilton Levin, J. question interpretation While of contract presented in the instant case does not concern arbitrability, awarding but rather whether scope powers was within the conferred on question arbitrators, it whether was within powers deny their to award or is neverthe- interpretation, less, because it concerns contract confided to the arbitrators it can unless be said "positive with assurance” that the submission to susceptible interpreta- arbitration is "not of an permit tion” that would the arbitrators to decide whether to award interest. positive

This Court cannot state with assurance that susceptible to submission arbitration in this is case only interpretation ques- one on the deciding dispute involving In whether a an issue of contract arbitrable, interpretation temptation provisions dispute. guard against a court should interpretation to make its own of the substantive encompassing of the contract the merits of the parties agreed If the have that an arbitrator shall questions interpretation, decide of contract the merits of the dispute are for the arbitrator. weighing pros Where a court finds itself and cons of each party’s interpretation contract, provisions of substantive likely gone astray. question it is that the court has for the correct, interpretation court is not whether one or another is parties agreed

but whether the have that an arbitrator shall competing interpretations decide which of the is correct. AFSCME, Similarly, 204; see St Clair Prosecutor v 425 Mich 388 (1986); NW2d 231 Port Huron Area School Dist v Port Huron Ed Ass’n, 143; 426 Mich 393 NW2d 811 contracting Arbitration is a matter of contract. In for arbitra- tion, parties generally agree to substitute an arbitrator for a judge jury ques- and as factfinder and decision maker on all tions, ily legal. questions "primar- factual and Whether of law are ordinarily province or even within the arbitration” question of contract and not of It law. is well within the province to a commercial to arbitration allow the fact, questions arbitrator agreements contracts for to decide of law as well as of generally to arbitrate have been construed as questions deciding of law as well as of fact. [DAIIE Gavin, (1982) 446-447; (Levin, v 416 Mich 331 NW2d 418 J., concurring).] Griffin, J. be awarded or must tion whether not, there Court should This pursuant §6013. that, and declare interpretation fore, its impose agree specifically not did because interest, be beyond it would the matter inter to decline to award of the arbitrators power whether question pursuant est §6013.9 6013 is pursuant awarded § should be Court, arbitrators, this for one decide. I with Griffin, I in the result. J. concur too far. goes opinion the Court’s Levin that Justice us, I not decide would it is not before Because not include or do case where arbitrators today of the award. part interest as for provide reasoning Waldrop Rodery, 34 Mich that the To the extent reasoning (1971), 1; App is inconsistent with NW2d Waldrop. longer opinion, no follow I would this Union, Corp, 448 317 v Lorillard Int’l Local See Tobacco Workers (CA 1971), Appeals States Court of where the United F2d for ployer against action an em in a union’s the Fourth Circuit declared bargaining specific performance clause of a collective grievances: employee providing for detailing provisions what contract contain While a compensate particular applied for a remedies should be contracts, contracts, commonly breach, not. do like other labor bargain they an for when include Part of what arbitration agreement provision "informed is the in a labor bring grievance,

judgment” can to bear on a that the arbitrator Therefore, we especially . . . the formulation of remedies. as to remedies, that, although is silent as conclude the the remedy fashioning appropriate is not an addition of an deciding obligations imposed by In that the the contract. pay promotion provide agreement cases, for retroactive did not usurped function of the arbitrator. Court the District

Case Details

Case Name: Old Orchard by the Bay Associates v. Hamilton Mutual Insurance

Court Name: Michigan Supreme Court

Date Published: Mar 20, 1990

Citation: 454 N.W.2d 73

Docket Number: 82516, (Calendar No. 3)

Court Abbreviation: Mich.