Michigan Supreme Court Lansing, Michigan
Syllabus Chief Justice: Justices: Elizabeth T. Clement Brian K. Zahra Richard H. Bernstein Megan K. Cavanagh Elizabeth M. Welch Kyra H. Bolden Kimberly A. Thomas
This syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
HAIRSTON v LKU
Docket No. 166473. Argued on application for leave to appeal December 4, 2024. Decided April 4, 2025.
Darnell Hairston filed writs of garnishment in the Ottawa Circuit Court against Burlington Insurance Company and Evanston Insurance Company for the unpaid balance of a judgment that was awarded to plaintiff following a jury trial. Plaintiff was seriously injured while operating soybean processing machinery as an employee of Zeeland Farm Soya, Inc, a division of Zeeland Farm Services, Inc. (collectively, ZFS). Specialty Industries, Inc., assisted ZFS in the design, installation, and maintenance of the machinery in the facility where plaintiff was injured. Plaintiff sued ZFS, as well as an employee of ZFS, Josh Woldring, who was originally identified as “Josh LKU [Last Name Unknown].” Plaintiff later amended his complaint to include Specialty Industries, Inc., as a defendant, asserting claims of products liability, negligence, and gross negligence; Specialty Industries was insured by Burlington and Evanston. Plaintiff and ZFS accepted a case evaluation award, and the trial court entered a stipulated order dismissing the claims against ZFS; the case evaluation process did not resolve plaintiff’s claims against Specialty Industries. The action then proceeded to trial, at the conclusion of which the jury awarded $13,489,447.04 to plaintiff, plus an additional $240,451.02 in case evaluation sanctions. Burlington provided the primary insurance policy for ZFS with a $1 million limit per occurrence. Evanston provided a commercial excess liability policy with an $8 million limit for a single occurrence. Neither Burlington nor Evanston was named as a defendant in the underlying tort action, and plaintiff did not obtain a judgment against either insurer. The parties stipulated that Burlington and Evanston would provide coverage up to their respective limits plus additional coverage for interest. Specifically, Burlington paid plaintiff $1,108,416.47, and Evanston paid plaintiff $8,640,736.94. Plaintiff and Specialty Industries thereafter entered into an agreement whereby Specialty Industries agreed to pay plaintiff $1 million and assign to plaintiff its claims against Burlington and Evanston, including a claim of bad-faith refusal to settle. In exchange, plaintiff agreed that he would not execute the remainder of the judgment against Specialty Industries. Thereafter, plaintiff and Specialty Industries jointly moved for proceedings supplemental to judgment, asserting that before trial, plaintiff had submitted settlement offers to Specialty Industries with demands as low as $1.5 million and that Specialty Industries’ highest settlement offer was $600,000—which was a lower amount than the case evaluation award that Specialty Industries rejected. Plaintiff sought additional discovery, arguing that Specialty Industries’ actions might have constituted bad-faith refusal to settle. Before that motion was decided, Burlington and Evanston filed an action in federal court, seeking a declaration that the insurers had acted in good faith and absolving them of any further obligations under the judgment. The state trial court, Jon Hulsing, J., later denied plaintiff and Specialty Industries’ request for supplemental proceedings and stated that the federal court was the proper forum or, alternatively, that plaintiff and Specialty Industries could file a breach-of-contract action or seek declaratory relief against Burlington and Evanston in a different court with jurisdiction to resolve the matter. After the hearing, plaintiff served writs of garnishment on Burlington and Evanston, and Burlington and Evanston moved to quash and dismiss the writs. The trial court entered an order granting Burlington’s and Evanston’s motions on the basis that the writs were improper because there was no judgment before the writs were issued that Burlington and Evanston had acted in bad faith; the trial court also imposed sanctions against plaintiff for filing the writs after the court had rejected the motions for supplemental proceedings. The trial court denied plaintiff and Specialty Industries’ motion for reconsideration, and they appealed. In a published decision, the Court of Appeals, RICK, P.J. and YATES, J. (SHAPIRO, J., concurring in part and dissenting in part), affirmed in part and reversed in part the trial court’s order. ___ Mich App ___ (November 21, 2023) (Docket No. 363030). Relevant here, the Court of Appeals determined that they were bound to follow Rutter v King, 57 Mich App 152 (1974), which held that a validly assigned claim for bad- faith refusal to settle can be litigated in a garnishment proceeding rather than through a separate legal proceeding. For that reason, the Court of Appeals reversed the trial court’s order granting Burlington’s and Evanston’s motions to quash and dismissing the writs of garnishment. The Court of Appeals affirmed the trial court’s order awarding sanctions, stating that the trial court did not clearly err to the extent it determined that plaintiff filed the writs for an improper purpose. Burlington sought leave to appeal, and the Supreme Court ordered oral argument on the application to consider “whether a claim of bad-faith refusal to settle by an insurer can be litigated in a writ of garnishment.” 513 Mich 1058, 1058 (2024).
In a unanimous opinion by Justice BOLDEN, in lieu of granting leave to appeal, the Supreme Court held:
Garnishment proceedings are governed by the applicable statutes and court rules. For a debt to be subject to garnishment, the debt must be wholly due and without contingency unless otherwise specifically authorized by statute or court rule. MCR 3.101(G)(1), which sets forth the categories of assets that are subject to garnishment, does not include in those categories claims of bad-faith refusal to settle. Specifically, an unresolved claim of bad-faith refusal to settle is not subject to garnishment under MCR 3.101(G)(1) because such a claim is not sufficiently liquidated and therefore cannot serve as the basis for the claim to be resolved through garnishment. Because plaintiff and Specialty Industries’ claim of bad-faith refusal to settle was merely a potential claim that was not suitably liquidated, it could not be resolved through garnishment proceedings. The Court of Appeals erred by relying on Rutter rather than analyzing the relevant statutes and court rules governing garnishment proceedings and erred by reversing the trial court’s order granting summary disposition to Burlington and Evanston and quashing the writs of garnishment. Rutter was wrongly decided to the extent it suggested that courts may look beyond the applicable statutes and court rules to determine whether jurisdiction may be exercised through garnishment.
1. Garnishment is a proceeding through which a party seeks to obtain a payment due, and a legal claim must be sufficiently liquidated before garnishment may attach. Thus, for a debt to be subject to garnishment, the debt must be wholly due and without contingency unless otherwise specifically authorized by statute or court rule. MCL 600.4011(1)(b) provides that circuit courts have power by garnishment to apply certain property or obligations, or both, to satisfy a claim evidenced by contract, a Michigan judgment, or a foreign judgment; for purposes of Subsection (1)(b), an obligation is one that is owed to the person against whom the claim is asserted if the obligor is subject to the judicial jurisdiction of the state. MCR 600.4011(2) provides circuit courts authority to exercise garnishment jurisdiction, but the subrule requires courts to exercise that jurisdiction in accordance with the Michigan Court Rules. In other words, jurisdiction is only proper when permitted by Michigan’s court rules. Of note here, MCR 3.101 governs postjudgment garnishment. MCR 3.101(G)(1) lists the categories of assets that are subject to garnishment, including Subrule (G)(1)(a) (garnishee is liable for all tangible or intangible property belonging to the defendant in the garnishee’s possession); Subrule (G)(1)(d) (garnishee is liable for all debts, whether or not due, owing by the garnishee to the defendant); and Subrule (G)(1)(g) (garnishee is liable for all judgments in favor of the defendant against the garnishee). Potential, unresolved claims of bad-faith refusal to settle are not listed in MCR 3.101(G)(1) as a category subject to garnishment and, regardless, are not sufficiently liquidated and certain to allow for garnishment proceedings. Claims of bad-faith refusal to settle, even when resolved through a trial court, are highly complicated and unsuitable for resolution through garnishment proceedings. Further, although MCR 3.101(M) explains the procedures that must be followed when litigating disputes about a garnishee’s liability, the type of claim must be suited for garnishment before those procedures may be followed. Importantly, the procedures for garnishment are not as robust as standard civil trial procedures and are ill-suited for litigating a claim of bad-faith refusal to settle. Thus, notwithstanding that MCR 3.101(M)(1) provides that “if there is a dispute regarding the garnishee’s liability . . . , the issue shall be tried in the same manner as other civil actions,” a claim of bad-faith refusal to settle is unsuited for garnishment and the information required to be provided in a request and writ for garnishment is insufficient to put a putative garnishee fully on notice of the substance of the underlying tort claim to properly defend against it. This is an additional reason why a claim must be sufficiently liquidated to proceed through garnishment.
2. MCR 3.101(G)(1) did not permit garnishment under the facts of this case. MCR 3.101(G)(1)(a)—which permits garnishment for “all . . . property belonging to the defendant in the garnishee’s possession or control when the writ is served on the garnishee, unless the property is represented by a negotiable document of title held by a bona fide purchaser for value other than the defendant”—did not provide jurisdiction over this garnishment proceeding to the trial court because (1) Burlington and Evanston had already paid the full amount of their policy limits so neither was in possession of monetary insurance proceeds when the writs of garnishment were served, and (2) there had been no determination that the insurers owed any damages to plaintiff or Specialty Industries. MCR 3.101(G)(1)(d), which permits garnishment for “all debts, whether or not due, owing by the garnishee to the defendant when the writ is served on the garnishee, except for debts evidenced by negotiable instruments or representing the earnings of the defendant,” also did not apply because, at the time the writs were served, it was premature to conclude that either insurer owed any debt to Specialty Industries. Stated differently, the debt remained uncertain until plaintiff or Specialty Industries proved that either insurer was liable for the asserted bad-faith refusal to settle. Therefore, neither MCR 600.4011 nor MCR 3.101(G)(1)(d) allowed the trial court to assert jurisdiction to secure the uncertain, contingent debt through a garnishment proceeding. Finally, MCR 3.101(G)(1)(g), which permits garnishment for “all judgments in favor of the defendant against the garnishee in force when the writ is served on the garnishee,” did not provide the trial court with jurisdiction because plaintiff and Specialty Industries did not have a judgment against either insurer; thus plaintiff and Specialty Industries failed to establish that their claim was sufficiently liquidated for the subrule to provide the trial court with jurisdiction over the garnishment proceeding. Because plaintiff and Specialty Industries had only a potential, contingent claim against the insurers, the trial court did not abuse its discretion by granting summary disposition to Burlington and Evanston and quashing the writs.
3. The Court of Appeals erred by reversing the trial court without analyzing MCR 3.101(G)(1) and instead holding that Rutter was binding. In Rutter, the plaintiff, who believed that the defendant insurer had engaged in bad-faith refusal to settle, served a writ of garnishment against the defendant insurer when the plaintiff was left with a judgment in excess of the coverage limits of the defendant’s insurance policy. The trial court granted the defendant insurer’s motion to dismiss, and the plaintiff appealed. The Rutter Court reversed the trial court order, reasoning that a claim of bad-faith refusal to settle resulting in an excess judgment was sufficiently liquidated for garnishment to attach because the excess damage amount was ascertainable given the clearly quantifiable difference between the policy’s limits and the jury’s verdict. Although the plaintiff’s claim was contingent—because it would not become due and payable until the plaintiff established bad faith—all the events that would have established liability had already occurred, so it was subject to garnishment. The Court of Appeals erred when it found that there were no factual distinctions between this case and Rutter. Contrary to the Court of Appeals’ conclusion, Rutter was not binding on the Court of Appeals because it was decided before November 1, 1990. In addition, the Rutter Court failed to address the garnishment court rules in place at the time it was decided, and Rutter was decided before MCR 3.101(G)(1) was adopted. The Court of Appeals in this case and the panel in Rutter both erred by failing to interpret the relevant court rules. Rutter was therefore wrongly decided to the extent it suggested that courts may look beyond the applicable statutes and court rules to determine whether jurisdiction may be exercised through garnishment. For these reasons, the Court of Appeals erred when it reversed the trial court order granting summary disposition to Burlington and Evanston and quashing the writs of garnishment.
Court of Appeals’ judgment reversed and case remanded to the trial court for further proceedings.
Justice THOMAS did not participate because the Court considered this case before she assumed office. Michigan Supreme Court Lansing, Michigan
OPINION Chief Justice: Justices: Elizabeth T. Clement Brian K. Zahra Richard H. Bernstein Megan K. Cavanagh Elizabeth M. Welch Kyra H. Bolden Kimberly A. Thomas
FILED April 4, 2025
STATE OF MICHIGAN
SUPREME COURT
DARNELL HAIRSTON,
Plaintiff/Garnishee Plaintiff- Appellee,
v No. 166473
JOSH LKU, ZEELAND FARM SERVICES, INC., ZEELAND FARM SOYA, INC., and ZFS LICENSING, INC.,
Defendants, and
SPECIALTY INDUSTRIES, INC., Defendant-Appellee,
and
BURLINGTON INSURANCE CO., Garnishee Defendant-Appellant,
and EVANSTON INSURANCE CO., Garnishee Defendant.
BEFORE THE ENTIRE BENCH (except THOMAS, J.)
BOLDEN, J. This case requires us to determine whether a claim that insurers engaged in bad-
faith refusal to settle can be litigated through the filing of a writ of garnishment.
Specifically, we must decide whether the trial court abused its discretion when it held that
a claim of bad-faith refusal to settle could not be litigated through a garnishment
proceeding and granted garnishee-defendants’ motions to quash plaintiff’s writs of
garnishment. Although we have never addressed this question, the Court of Appeals, in
Rutter v King, 57 Mich App 152; 226 NW2d 79 (1974), held that the defendant’s alleged
wrongful refusal to settle a claim was sufficiently liquidated to be resolved through a writ
of garnishment rather than through a separate legal proceeding. Here, the Court of Appeals
considered Rutter to be binding and reversed the trial court’s order granting the motions to
quash. Hairston v LKU, ___ Mich App ___; ___ NW3d ___ (November 21, 2023) (Docket
No. 363030); slip op at 6-10.
We now hold that the Court of Appeals erred. The Legislature has authorized trial
courts to exercise their jurisdiction to hear writs of garnishment in accordance with our
court rules. MCL 600.4011. The applicable court rule, MCR 3.101(G)(1), defines the
assets that can be obtained through a garnishment proceeding and does not include claims
of bad-faith refusal to settle. Rutter was decided before MCR 3.101(G)(1) was adopted,
but to the extent that Rutter’s analysis lends itself to interpreting MCR 3.101(G)(1) more
2 broadly than it is written, it was wrongly decided. We reverse and remand to the trial court
for further proceedings consistent with this opinion.
I. FACTS AND PROCEDURAL HISTORY
On August 29, 2016, plaintiff, Darnell Hairston, was hired to work as a plant operator
at a soybean processing facility owned or operated in Ottawa County by defendant Zeeland
Farm Services, Inc. (ZFS). 1 Plaintiff’s first day working in the plant was September 19,
2016. Less than three weeks later, plaintiff sustained serious injuries while operating
machinery on the job. As a result of these injuries, plaintiff required medical attention,
including the amputation of his right hand and right forearm.
On June 19, 2017, plaintiff sued ZFS and Josh Woldring, the team leader in the
division where plaintiff worked at the time of his injury. 2 Plaintiff later moved to amend his
complaint to add Specialty Industries, Inc., as a defendant. Specialty Industries was the
contractor hired to assist ZFS in the design, installation, and maintenance of the soybean
processing machinery in the facility where plaintiff was injured. Plaintiff raised claims of
products liability, negligence, and gross negligence against Specialty Industries, specifically
1 Defendant Zeeland Farm Services, Inc., is a corporation that owns, licenses, or operates several divisions, including the division where plaintiff was injured, defendant Zeeland Farm Soya, Inc. The disputes in this case do not require us to distinguish between these defendants in any meaningful sense, so for the purposes of this opinion, both defendants will be collectively referred to as ZFS. 2 When plaintiff initially filed this lawsuit, he did not know Woldring’s last name. Plaintiff sued him as Josh LKU, a shorthand reference for “last name unknown.” See Hairston, ___ Mich App at ___; slip op at 2. The caption to the case still reflects Josh LKU as a named defendant.
3 alleging that Specialty Industries’ negligence in the design of the machinery caused
plaintiff’s injuries. The trial court granted plaintiff’s motion to amend.
On December 6, 2019, the court entered a stipulation to dismiss ZFS and Woldring
from the litigation because plaintiff, ZFS, and Woldring had accepted a case evaluation
award. However, the case evaluation process did not yield a resolution of plaintiff’s claims
against Specialty Industries, and these claims proceeded to trial. 3
After a seven-day trial, the jury found that Specialty Industries was negligent and
grossly negligent and that the gross negligence was the proximate cause of plaintiff’s
injuries. Further, the jury attributed 80% of the fault to Specialty Industries. On December 3,
2021, the trial court entered a judgment against Specialty Industries for $13,489,447.04, with
an additional $240,451.02 in case evaluation sanctions. 4
Specialty Industries had insurance policies in effect with two separate insurers that
are applicable to this accident. Garnishee-defendant-appellant Burlington Insurance
Company provided the primary insurance policy with a $1 million limit per occurrence, and
garnishee-defendant-appellant Evanston Insurance Company provided a commercial excess
liability policy with an $8 million limit for a single occurrence. Neither Burlington nor
Evanston was named as a defendant in the underlying tort action, nor has plaintiff obtained
3 Specialty Industries rejected a case evaluation award of $800,000. 4 Michigan operates under a comparative negligence regime that “ ‘distributes legal responsibility according to the fault of the respective parties.’ ” Placek v Sterling Hts, 405 Mich 638, 660; 275 NW2d 511 (1979), quoting Schwartz, Comparative Negligence (Indianapolis: Allen Smith Co, 1974), § 21.3, p 347. The jury attributed no fault to plaintiff; 80% fault to Specialty Industries; and 20% fault to ZFS, which was no longer a party to the case at the time of trial. Neither the allocation of fault nor the judgment amount is the subject of this appeal.
4 a judgment against either insurer. The parties stipulated that Burlington and Evanston—as
Specialty Industries’ insurers—would provide coverage up to these respective limits plus
additional coverage for interest. Specifically, the parties stipulated that Burlington would
satisfy a partial judgment amount of $1,108,416.47, and Evanston would satisfy an additional
$8,640,736.94.
The stipulation was entered, and Burlington and Evanston satisfied these payments to
plaintiff. However, the judgment was only partially satisfied. 5 On January 18, 2022, plaintiff
and Specialty Industries entered into an agreement whereby Specialty Industries agreed to
pay plaintiff $1,000,000 and assigned to plaintiff any and all possible actions against
Burlington and Evanston, including claims of bad-faith refusal to settle. 6 In exchange,
plaintiff agreed that he would not execute the remainder of the judgment against Specialty
Industries.
Subsequently, plaintiff and Specialty Industries jointly moved for proceedings
supplemental to the judgment. In the motion, the parties asserted that before trial, plaintiff
submitted settlement offers to Specialty Industries with demands as low as $1.5 million and
that Specialty Industries’ highest settlement offer was $600,000—lower than the case
evaluation amount that Specialty Industries rejected. Plaintiff and Specialty Industries also
5 The total judgment amount, including sanctions, was $13,729,898.06. The parties stipulated that Burlington and Evanston would combine to cover a total of $9,749,153.41 of that obligation. The judgment also included a requirement that interest would accrue with every day the judgment remained past due and unsatisfied. Accordingly, after this stipulation, Specialty Industries owed at least $3,980,744.65 to plaintiff to satisfy the total judgment. 6 With Specialty Industries providing this additional amount to plaintiff, at least $2,980,744.65 remained as a judgment amount yet to be satisfied.
5 asserted that during settlement negotiations, Burlington did not provide Specialty Industries
with an amount that Burlington would provide through the policy to facilitate settlement and
Evanston offered nothing. Plaintiff and Specialty Industries argued that the insurers’ actions
may have constituted bad-faith refusal to settle and requested that the court exercise its
discretion to permit additional discovery to facilitate the collection of the outstanding
judgment.
The trial court denied the motion after a hearing. 7 The trial court held that a different
lawsuit was required because there remained questions of fact about whether Burlington and
Evanston had engaged in bad faith and that a different forum might be required to litigate
this claim. 8 The trial court opined that the federal action commenced by Burlington and
7 Prior to the hearing, Burlington and Evanston filed a lawsuit against plaintiff and Specialty Industries in the United States District Court for the Western District of Michigan, seeking a declaratory judgment providing that they did not engage in bad-faith refusal to settle. Although the trial court noted that the federal proceeding might be the appropriate venue for continuing to litigate the merits of the claim, the federal lawsuit has no bearing on the question before this Court and is not further addressed within this opinion. 8 Notably, during the hearing, counsel representing Burlington stated the following:
Ultimately, as [plaintiff’s counsel] has indicated and as his pleadings have stated, he intends to file a bad faith claim against Burlington and against Evanston and he intends to seek over-policy limits to pay for the remainder of the judgment. His first step to do that, your Honor, is to file a lawsuit either in the form of a writ of garnishment or in the form of a declaratory judgment action. Once that’s done, the parties go through initial disclosures and ultimately at that point they’re entitled to seek discovery, but the law does not permit a deviation from that. It does not permit [plaintiff’s counsel] to seek discovery now.
Plaintiff and Specialty Industries now argue that this statement was an express waiver by Burlington of its right to contest the propriety of the current postjudgment garnishment
6 Evanston was the proper forum to litigate the unresolved claim of bad-faith refusal to settle.
Alternatively, the court opined that plaintiff could file a breach-of-contract action or seek
declaratory relief against Burlington and Evanston in a different court with jurisdiction to
resolve the matter.
After the hearing, plaintiff served writs of garnishment against Burlington and
Evanston for the amount of the judgment yet to be satisfied. Burlington filed a garnishee
disclosure, denying any special debt to Specialty Industries and denying any possession of
Specialty Industries’ property that could be liquidated through garnishment. Burlington and
Evanston separately moved to quash and dismiss plaintiff’s writs of garnishment. Plaintiff
and Specialty Industries opposed the motions. 9 After a hearing, the trial court granted the
motions, holding that plaintiff failed to state a claim under MCR 2.116(C)(8), and thus, no
relief could be granted. 10 Plaintiff and Specialty Industries unsuccessfully moved for
reconsideration.
proceedings. Without expressing any position on whether a party could waive into a garnishment proceeding, we reject the invitation to categorize Burlington’s position as waiving any legal rights. “[W]aiver is the intentional relinquishment of a known right.” Sweebe v Sweebe, 474 Mich 151, 156-157; 712 NW2d 708 (2006) (quotation marks and citation omitted). “[A] waiver must simply be explicit, voluntary, and made in good faith.” Id. at 157. We disagree that these statements constitute a waiver. Instead, we consider Burlington’s position to be nothing more than advocating that postjudgment discovery was an improper venue for litigating the issues raised in plaintiff’s and Specialty Industries’ joint motion. 9 Although plaintiff served the writs on Burlington and Evanston, Specialty Industries joined plaintiff by filing a joint brief opposing Burlington’s and Evanston’s motions to quash and dismiss. 10 The trial court also ordered sanctions against plaintiff premised on its conclusion that plaintiff had acted in contravention of the previous postjudgment order and had presented
7 Plaintiff and Specialty Industries appealed. The Court of Appeals affirmed in part,
reversed in part, and remanded. Hairston, ___ Mich App at ___; slip op at 2, 10. Burlington
sought leave to appeal in our Court, and we ordered oral argument on the application.
Hairston v LKU, 513 Mich 1058 (2024). Specifically, we asked the parties to address
“whether a claim of bad-faith refusal to settle by an insurer can be litigated in a writ of
garnishment.” Id., citing MCR 3.101(G)(1) and Rutter, 57 Mich App 152.
II. ANALYSIS
A. STANDARD OF REVIEW
This case requires us to review whether the trial court properly granted Evanston’s
and Burlington’s motions for summary disposition. On appeal, we review de novo a trial
court’s grant or denial of summary disposition. Ray v Swager, 501 Mich 52, 61-62; 903
NW2d 366 (2017). Questions involving the proper interpretation of statutes and our court
rules are questions of law, which are also reviewed de novo. See CAM Constr v Lake
Edgewood Condo Ass’n, 465 Mich 549, 553; 640 NW2d 256 (2002) (explaining that
“interpretation of a court rule, like a matter of statutory interpretation, is a question of
law”). “De novo review means we review the legal issues independently without deferring
to the legal interpretation of the lower courts.” Carter v DTN Mgt Co, ___ Mich ___, ___;
___ NW3d ___ (July 29, 2024) (Docket No. 165425); slip op at 9, citing Safdar v Aziz, 501
Mich 213, 217; 912 NW2d 511 (2018).
frivolous legal arguments. Because plaintiff did not appeal that issue in this Court, we do not address it within this opinion.
8 A decision regarding a motion to quash a writ of garnishment is reviewed for an
abuse of discretion. Brookdale Cemetery Ass’n v Lewis, 342 Mich 14, 19; 69 NW2d 176
(1955) (holding that “there was no abuse of discretion in quashing the writs of
garnishment”) (quotation marks and citation omitted). A trial court abuses its discretion
when its decision falls outside the range of reasonable and principled outcomes. Woodman
v Dep’t of Corrections, 511 Mich 427, 439; 999 NW2d 463 (2023), citing Maldonado v
Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006). A court necessarily abuses
its discretion when its decision is based on an error of law. Woodman, 511 Mich at 439-
440, citing Pirgu v United Servs Auto Ass’n, 499 Mich 269, 274; 884 NW2d 257 (2016).
B. LEGAL BACKGROUND
1. WRITS OF GARNISHMENT
Garnishment is a proceeding through which a party seeks to obtain a payment due.
See generally 38 CJS, Garnishment, § 1. This Court has long held that a legal claim needs
to be sufficiently liquidated before garnishment may attach. In Detroit Post & Tribune Co
v Reilly, 46 Mich 459; 9 NW 492 (1881), we held that in a libel suit, garnishment was
improper because “until a judgment was entered up on [sic] the verdict there is no
indebtedness that could be garnisheed.” Id. at 460, citing Hill v Bowman, 35 Mich 191
(1876).
Whether garnishment is authorized is a statutory question that must be strictly
construed. MCL 600.4011; see also Krakowsky v Margolis, 255 Mich 3, 5; 237 NW 28
(1931); Nationsbanc Mtg Corp of Ga v Luptak, 243 Mich App 560, 564; 625 NW2d 385
(2000). The pertinent statutory language explains, in part:
9 (1) . . . [T]he court has power by garnishment to apply the following property or obligation, or both, to the satisfaction of a claim evidenced by contract, judgment of this state, or foreign judgment, whether or not the state has jurisdiction over the person against whom the claim is asserted:
(a) Personal property belonging to the person against whom the claim is asserted but which is in the possession or control of a third person if the third person is subject to the judicial jurisdiction of the state and the personal property to be applied is within the boundaries of this state.
(b) An obligation owed to the person against whom the claim is asserted if the obligor is subject to the judicial jurisdiction of the state.
(2) Except as provided in sections 4061 and 4061a, the court may exercise the jurisdiction granted in this section only in accordance with the Michigan court rules. Except as otherwise provided by sections 4061 and 4061a and the Michigan court rules, the state and each governmental unit within the state, including but not limited to a public, municipal, quasi- municipal, or governmental corporation, unincorporated board, public body, or political subdivision, may be proceeded against as a garnishee in the same manner and with the same effect as a proceeding against an individual garnishee. [MCL 600.4011.]
Thus, although MCL 600.4011(2) “provides the authority for the circuit court to exercise
garnishment jurisdiction, the court must do so within the parameters established in the
Michigan Court Rules.” Royal York of Plymouth Ass’n v Coldwell Banker Schweitzer Real
Estate Servs, 201 Mich App 301, 305; 506 NW2d 279 (1993).
Here, plaintiff served a writ of garnishment corresponding to the unsatisfied debt
resulting from the judgment plaintiff obtained against Specialty Industries at trial. Through
an assignment, plaintiff obtained from Specialty Industries the right to attempt to collect
on that debt against Burlington and Evanston. Plaintiff and Specialty Industries are seeking
postjudgment garnishment of the remaining debt. Thus, MCR 3.101, which governs
postjudgment garnishment, guides our analysis. MCR 3.101(G)(1) articulates several
10 categories of assets that may be subject to garnishment. It explains, in pertinent part, as
follows:
Subject to the provisions of the garnishment statute and any setoff permitted by law or these rules, the garnishee is liable for
(a) all tangible or intangible property belonging to the defendant in the garnishee’s possession or control when the writ is served on the garnishee, unless the property is represented by a negotiable document of title held by a bona fide purchaser for value other than the defendant;
* * *
(d) all debts, whether or not due, owing by the garnishee to the defendant when the writ is served on the garnishee, except for debts evidenced by negotiable instruments or representing the earnings of the defendant;
(g) all judgments in favor of the defendant against the garnishee in force when the writ is served on the garnishee[.] [MCR 3.101(G)(1).]
This case asks us to determine whether an unresolved claim alleging that insurers—
here, Burlington and Evanston—engaged in bad-faith refusal to settle, resulting in a jury
award in excess of the liability covered by their plans, falls within the scope of MCR
3.101(G)(1).
2. THE COURT OF APPEALS’ DECISION IN RUTTER
The question presented in this case is a matter of first impression for this Court, but
decades ago, the Court of Appeals held that garnishment was permissible in a decision that
was never appealed in this Court. Rutter, 57 Mich App 152. Similar to the facts in the
instant matter, Rutter involved a plaintiff who served a writ of garnishment against a
defendant insurer when the plaintiff was left with a judgment in excess of the defendant’s
11 insurance policy coverage limits. Id. at 155. The plaintiff in Rutter also believed that the
insurer engaged in bad-faith refusal to settle. Id. at 156. The trial court granted summary
disposition in the insurer’s favor, and the matter eventually proceeded to a bankruptcy
court, which assigned the debtor’s claim against the insurer to the plaintiff. Id. at 156-157.
The question of whether the trial court abused its discretion in determining that the plaintiff
could not proceed directly through garnishment of the insurer for the excess amount due
was then appealed in the Court of Appeals. Id. at 155. The Court of Appeals reversed. Id.
at 172.
Rutter, which was decided before MCR 3.101(G)(1) was adopted, first noted that
several jurisdictions considering this question were split on the answer, but that the result
depended largely on the provisions written in those states’ garnishment statutes. 11 Id. at
166. The panel found that the distinction between jurisdictions was whether the underlying
claim sounded in tort, contract, or both; jurisdictions denying garnishment as a proper
remedy found that the action sounded in tort, and jurisdictions allowing garnishment found
that it sounded, at least in part, in contract. Id. at 166-167. The panel then noted that the
claim at issue sounded both in tort and contract because the insurer’s obligation to protect
its insured from an excess judgment arose out of contract and the failure to do so sounded
in tort. Id. at 168. In this sense, Rutter concluded that a claim of bad-faith refusal to settle
resulting in an excess judgment was “sufficiently liquidated” for garnishment to attach
11 MCR 3.101(G)(1) is part of the Michigan Court Rules, which were first adopted in 1985. Rutter was decided in 1974, 11 years before their enactment, at a time when the Michigan General Court Rules of 1963 were still in effect. Although the governing statute before us, MCL 600.4011, was the statute in effect at the time Rutter was decided, the relevant court rule has now changed, given the intervening enactment of the Michigan Court Rules.
12 because the excess damage amount was ascertainable given the clearly quantifiable
difference between the policy’s limits and the jury’s verdict. Id. at 169-170. Although the
plaintiff’s claim was contingent—because it would not become due and payable until the
plaintiff established bad faith—all the events that would have established liability had
already occurred, so it was subject to garnishment. Id. at 170, citing 38 CJS, Garnishment,
§ 87, p 291; Allstate Ins Co v Morrison, 146 Ind App 497; 256 NE2d 918 (1970). The
panel concluded that as a matter of efficiency, it made little sense to require the judgment
creditor to initiate a new lawsuit to determine whether it could establish its claim and, for
those reasons, reversed the trial court’s decision. Rutter, 57 Mich App at 172.
3. LOWER COURTS’ ANALYSES OF THE CLAIM OF BAD-FAITH REFUSAL TO SETTLE
As already noted, the trial court granted Burlington’s and Evanston’s motions for
summary disposition. The trial court observed that “[t]here is no judicial determination[,]
nor is there a judgment, that either or both of the garnishees acted in bad faith” and, given
that MCR 3.101(G)(1)(g) requires that a judgment must be “in force when the writ is served
on the garnishee,” the claim could not be pursued through a writ of garnishment. Holding
otherwise would allow plaintiff to “use the garnishment action to try to obtain the very
judgment that he intends to garnish.” The trial court also rejected plaintiff’s reliance on
Rutter because it was decided before MCR 3.101(G)(1) was adopted and the Court of
Appeals had not cited Rutter in subsequent cases, instead strictly adhering to the language
of the court rule when deciding these questions. Thus, the trial court granted the motions
for summary disposition.
13 The Court of Appeals reversed, concluding that—despite the evolution of our court
rules—Rutter was binding in holding, as a matter of law, that a plaintiff who had been
assigned a claim of bad-faith refusal to settle could litigate the insurer’s liability through a
garnishment proceeding. Hairston, ___ Mich App at ___; slip op at 7-8. The panel held
that the trial court should have concluded that Rutter was binding for the purposes of stare
decisis because, although Rutter was decided before MCR 3.101(G)(1)(g) was adopted,
there was a substantially similar provision in the governing body of court rules at the time,
namely GCR 1963, 738.5(6). Id. at ___; slip op at 7-8. Further, the panel concluded that,
although Rutter did not cite GCR 1963, 738.5(6), it “impliedly rejected the contention that
that rule precluded application of the writ to such a claim” when it rejected the claim that
a claim of bad-faith refusal to settle was unliquidated and sounded in tort. Id. at ___; slip
op at 8. Next, the panel rejected the idea that decisions more recently decided than Rutter
undermined its holding because there had been no binding caselaw addressing claims for
bad-faith refusal to settle. Id. at ___; slip op at 8. Simply put, the Court of Appeals found
no factual distinctions between this case and Rutter, so it held that the trial court erred by
declining to apply its binding precedent when granting the motions for summary
disposition. Id. at ___; slip op at 10.
C. APPLICATION
We reverse. We hold that the claim of bad-faith refusal to settle brought by plaintiff
and Specialty Industries against Burlington and Evanston is not sufficiently liquidated to
be litigated through garnishment proceedings. Thus, the trial court did not abuse its
discretion when it quashed the writs of garnishment at issue.
14 Garnishment is appropriate as to “[p]ersonal property belonging to the person
against whom the claim is asserted but which is in the possession or control of a third
person,” MCL 600.4011(1)(a), or “[a]n obligation owed to the person against whom the
claim is asserted,” MCL 600.4011(1)(b). Jurisdiction may be exercised “only in
accordance with the Michigan court rules.” MCL 600.4011(2) (emphasis added).
Garnishment statutes are to be strictly construed. Krakowsky, 255 Mich at 5. Thus,
jurisdiction is only proper when permitted by our court rules. See Merriam-Webster’s
Collegiate Dictionary (11th ed) (defining “only,” in pertinent part, as “a single fact or
instance and nothing more or different”). Accordingly, whether summary disposition was
appropriate requires an interpretation of the applicable court rule, MCR 3.101(G)(1).
1. MCR 3.101(G)(1) DOES NOT PERMIT CLAIMS OF BAD-FAITH REFUSAL TO SETTLE TO BE RESOLVED THROUGH GARNISHMENT
The claim of bad-faith refusal to settle at issue here does not fall within MCR
3.101(G)(1). Plaintiff and Specialty Industries offer no analysis of the MCR 3.101(G)(1)
subrules that would allow the trial court to exercise jurisdiction over these writs of
garnishment. Rather, they argue that the court rules should not be strictly read because
strict construction leads to absurd or unintended results by way of inefficiency and because
the Court of Appeals correctly held that Rutter was binding. We reject both arguments.
Plaintiff’s theory allows for three possible avenues for a writ of garnishment under
MCR 3.101(G)(1), which are described in Subrules (1)(a), (d), and (g). None of these
subrules provides for the trial court to assert jurisdiction over this unresolved claim of bad-
faith refusal to settle because each subrule requires the claim to be more settled and less
15 contingent than the claim offered as the basis for the writs of garnishment served on
Burlington and Evanston.
To start, MCR 3.101(G)(1)(a) permits garnishment for “all . . . property belonging
to the defendant in the garnishee’s possession or control when the writ is served on the
garnishee, unless the property is represented by a negotiable document of title held by a
bona fide purchaser for value other than the defendant[.]” Given that Burlington and
Evanston have already paid the full amount of their policy limits, it cannot be said that
either insurer was in possession of monetary insurance proceeds owed to Specialty
Industries when the writs of garnishment were served. Plaintiff and Specialty Industries
do not argue otherwise, but instead, they suggest that the unpaid debts attached to the
assignment plaintiff received from Specialty Industries. However, until that claim can be
litigated to conclusion, there is no determination that either Burlington or Evanston owes
any damages to plaintiff or Specialty Industries. Thus, plaintiff and Specialty Industries
have not established that the amount they sought to garnish was property in possession of
the insurers that was owned by Specialty Industries, and MCR 3.101(G)(1)(a) does not
permit garnishment.
Next, MCR 3.101(G)(1)(d) permits garnishment for “all debts, whether or not due,
owing by the garnishee to the defendant when the writ is served on the garnishee, except
for debts evidenced by negotiable instruments or representing the earnings of the
defendant[.]” However, at the time the writs of garnishment were served, it was premature
to conclude that either insurer owed any debt to Specialty Industries. For a debt to be
subject to garnishment, the general rule is that the debt “must be due absolutely, and
without contingency” unless otherwise specifically authorized by statute or court rule.
16 38 CJS, Garnishment, § 98. Until plaintiff or Specialty Industries has proven that either
insurer is liable for their bad-faith refusal to settle, the debt remains uncertain and is not
due. Neither MCL 600.4011 nor MCR 3.101(G)(1)(d) allows a trial court to assert
jurisdiction to secure this uncertain, contingent debt through a garnishment proceeding.
Finally, MCR 3.101(G)(1)(g) permits garnishment for “all judgments in favor of the
defendant against the garnishee in force when the writ is served on the garnishee[.]”
However, as the trial court correctly concluded, plaintiff and Specialty Industries do not
have a judgment against either insurer. Rather, what they have is merely a potential cause
of action against them and a maximum monetary limit of damages for that new claim. Any
liability and legal theories have yet to be established, and the insurers were never parties
to the initial lawsuit. Plaintiff and Specialty Industries have not shown that their claim was
sufficiently liquidated for the court rules to authorize the trial court to take jurisdiction to
resolve the matter through a proceeding instituted by serving a writ of garnishment. Before
plaintiff has valid writs of garnishment to serve against the garnishees—i.e., the insurers—
he must possess more than a mere potential, contingent claim. He does not, and the trial
court did not abuse its discretion, or otherwise err, by granting summary disposition and
quashing the writ. 12
The Court of Appeals reversed the trial court without analyzing MCR 3.101(G)(1),
instead holding that Rutter was binding. This was erroneous.
12 Because we hold that the court rules do not support the trial court having jurisdiction over this claim, it is unnecessary for us to consider Burlington’s argument that the Court of Appeals’ judgment deprived Burlington of its constitutional rights.
17 2. ERRORS IN RUTTER’S ANALYSIS
First, we note that Rutter was decided in 1974, and there is no requirement under
our court rules that a subsequent panel of the Court of Appeals must follow caselaw of the
Court of Appeals decided prior to November 1, 1990. MCR 7.215(J)(1). As we have
previously stated, “subsequent panels [of the Court of Appeals] are not bound under MCR
7.215(J)(1) to follow a rule established in a published opinion against their better judgment
if it predates November 1, 1990[.]” Schaumann-Beltran v Gemmete, 509 Mich 979, 980
n 1 (2022). The trial court correctly asserted many valid reasons for doubting Rutter’s
continuing viability.
The primary reason why Rutter is no longer valid is that it was decided before MCR
3.101(G)(1) was adopted. The Court of Appeals declined to interpret MCR 3.101(G)(1)
and instead relied on Rutter. Hairston, ___ Mich App at ___, slip op at 9-10. The Court
of Appeals noted similarities between MCR 3.101(G)(1) and several subrules of its
predecessor, GCR 1963, 738, and explained that, although Rutter did not analyze GCR
1963, 738, Rutter “impliedly rejected the contention that that rule precluded application of
the writ to such a claim.” Id. at ___; slip op at 8. However, the Court of Appeals rested
on this conclusion rather than analyzing the applicable current court rules. Rutter erred by
failing to address the garnishment court rules in place at the time of its holding, and the
Court of Appeals panel in this case made the same mistake, instead noting that the
predecessor court rules were considered by implication in Rutter. Id. at ___; slip op at 8.
We reject this analysis. The answer to this question lies in the interpretation of our court
rules, which neither this Court of Appeals panel nor Rutter interpreted in reaching their
holdings.
18 Instead of interpreting the court rules, Rutter concluded that a claim of bad-faith
refusal to settle did not sound exclusively in tort and that other jurisdictions that had denied
garnishment concluded that those claims sounded in tort. Rutter, 57 Mich App at 166-169.
Next, Rutter held that the damages were ascertainable and that “all the events that would
establish liability have occurred and the only remaining contingency is the establishment
of bad faith.” Id. at 170. But subsequent opinions of our Court have established that claims
of bad faith in this context are not sufficiently liquidated and require scrutiny by a fact-
finder.
3. GARNISHMENT REQUIRES CLAIMS TO BE SUFFICIENTLY LIQUIDATED
Two cases highlight the reasons that an unresolved claim of bad-faith refusal to
settle is not sufficiently liquidated and cannot serve as the basis for resolution through
garnishment. Both cases demonstrate that a claim of bad-faith refusal to settle is more
complicated than being reduced to a holding that the claim was ripe for garnishment
because “all the events that would establish liability have occurred . . . .” Rutter, 57 Mich
App at 170.
First, in Commercial Union Ins Co v Liberty Mut Ins Co, 426 Mich 127, 137-139;
393 NW2d 161 (1986), this Court articulated 12 factors that may be included in jury
instructions when a fact-finder is determining whether liability exists for bad faith. No
single factor is dispositive, id. at 137, and “[a] microscopic examination, years after the
fact, made with the luxury of actually knowing the outcome of the original proceeding is
not appropriate,” id. at 139. Second, in Frankenmuth Mut Ins Co v Keeley, 433 Mich 525;
447 NW2d 691 (1989), this Court considered how damages to an insured party were to be
19 limited when an insurer breached its duty to settle a claim. In separate opinions by Justice
ARCHER, joined by Chief Justice RILEY, and concurring opinions by Justice BOYLE and
Justice CAVANAGH, the Court adopted an excess-judgment rule, holding that “when an
insurer has exhibited bad faith in failing to settle a claim on behalf of its insured, and a
judgment in excess of the policy limits results, the insurer is liable for the excess without
regard to whether the insured has the capacity to pay.” Id. at 528 (opinion by ARCHER, J.);
id. at 544 (CAVANAGH, J., concurring); id. (BOYLE, J., concurring). Justice LEVIN
dissented, proposing a rule that would “accept the essence of the judgment rule by
eliminating the need to show partial payment, but provide protection for insurers along the
lines of the prepayment rule by precluding collection on the judgment from the insurer
beyond what is or would actually be collectable from the insured.” Id. at 565 (LEVIN, J.,
dissenting). On rehearing, Justice LEVIN’s dissent was adopted as the majority approach.
Frankenmuth Mut Ins Co v Keeley (On Rehearing), 436 Mich 372, 376; 461 NW2d 666
(1990). These cases collectively show that claims of bad-faith refusal to settle, even when
resolved through a trial court, are highly complicated and unsuitable for resolution through
garnishment proceedings.
Further, although MCR 3.101(M) explains the procedures to follow when litigating
disputes about a garnishee’s liability, the type of claim must be suited for garnishment
before these procedures may be followed. Notably, the procedures for garnishment are not
as robust as standard civil trial procedures and are ill-suited for litigating a claim of bad-
faith refusal to settle. For example, a creditor initiating garnishment proceedings must file
the request and writ for garnishment on a form generated by the State Court Administrative
Office (SCAO). MCR 3.101(C). Unlike the requirements for filing a complaint, the court
20 rules governing garnishment do not require a creditor to set forth factual allegations or a
theory of liability in their request and writ for garnishment, nor do SCAO forms provide
space for that information. MCR 3.101(D); SCAO, Form MC 12 (March 2023)
[https://perma.cc/EY3T-VKJ9]; SCAO, Form MC 13 (November 2024)
[https://perma.cc/XX4V-AA2T]. So notwithstanding that MCR 3.101(M)(1) provides that
“[i]f there is a dispute regarding the garnishee’s liability . . . , the issue shall be tried in the
same manner as other civil actions,” a claim of bad-faith refusal to settle is still unsuited
for garnishment and the information required to be provided in a request and writ for
garnishment is insufficient to put a putative garnishee fully on notice of the substance of
the underlying tort claim to properly defend against it. This is an additional reason why a
claim must be sufficiently liquidated to proceed through garnishment.
MCR 3.101(G)(1) does not permit this claim of bad-faith refusal to settle to be
resolved through garnishment proceedings. The trial court correctly interpreted MCR
3.101(G)(1) when it granted the motions for summary disposition and quashed the writs of
garnishment. The Court of Appeals erred by looking to Rutter as binding and compelling
in this case rather than looking to and properly interpreting the court rules. In the process,
the Court of Appeals reached the wrong result. To the extent that Rutter suggests that
courts may look beyond the applicable statutes and court rules to determine whether
jurisdiction may be exercised through garnishment, it was wrongly decided.
III. CONCLUSION
The claim that Burlington and Evanston may have engaged in bad-faith refusal to
settle is merely a potential claim, which is not sufficiently liquidated to be suitably resolved
21 through garnishment proceedings. Such a claim is not permitted by MCR 3.101(G)(1).
The Court of Appeals erred by reversing the trial court. Accordingly, we reverse the
judgment of the Court of Appeals and remand the case to the Ottawa Circuit Court for
further proceedings consistent with this opinion.
Kyra H. Bolden Elizabeth T. Clement Brian K. Zahra Richard H. Bernstein Megan K. Cavanagh Elizabeth M. Welch
THOMAS, J., did not participate because the Court considered this case before she assumed office.