Michigan Court of Appeals Affirms Ruling for Clark Hill

On Nov. 12, the Michigan Court of Appeals affirmed the trial court’s award of approximately $445,000 plus a time price differential service charge of 1.5% monthly to Matt Smith’s and Cynthia Filipovich’s client Gypsum Supply Company for defendants Continental Building Company and Hartford Fire Insurance Company’s violation of the Construction Lien Act. With interest, the award to Gypsum now stands at over $900,000. This was a hard-fought and long-awaited victory because the trial court originally entered summary disposition and awarded Gypsum this amount in 2020. Because multiple defendants were involved in the case, third-party plaintiff Gypsum was forced to move to sever its claims from the remaining claims, and eventually, on March 27, 2023, was able to have a final judgment entered in its favor. Defendants immediately appealed the judgment to the Michigan Court of Appeals where they continued to drag out the case as much as possible. Finally, oral argument was heard before the Michigan Court of Appeals panel on Nov. 7, 2024. Less than one week later, the Court issued its Opinion affirming the trial court, including the monetary award and service charge differential. 

Smith, a Lansing construction law trial attorney, won at the trial court and gave the subsequent Oral Argument at the Court of Appeals. Smith successfully argued that Gypsum had a valid claim of lien in the amount of $443,205.03 for materials provided to North American Construction Enterprises LLC and Continental Building Company for improvement to property located in Ann Arbor, Michigan. Smith also demonstrated that defendants thereafter issued a “Release of Mechanics’ Lien Bond.” Upon receiving a copy of the bond from the county clerk, Gypsum reviewed it and concluded that it had no basis to object given that the bond was issued by a AAA certified bond company, Hartford, in an amount of twice of Gypsum’s lien claim. Thus, because of the defendants’ bond, Gypsum forewent the right it otherwise had to foreclose and sell the Ann Arbor property in order to collect payment. Nonetheless, the defendants refused to pay Gypsum. Smith filed a Claim of Lien complaint and subsequent complaint on the bond against the defendants and thereafter moved for summary disposition, which the trial court granted. 

Filipovich, a Detroit appellate attorney, successfully handled the appeal brief and related briefing on motions in the Michigan Court of Appeals. There, she argued that simple black letter law dictates that the defendants, having bought the liability and having bound themselves to Gypsum, must pay Gypsum for the amount owed, particularly where there was no dispute that Gypsum indeed provided the materials nor was there any warranty claim regarding the materials. Filipovich also argued that the defendants’ challenge to the time price differential service charge of 1.5% monthly was not preserved for appellate review as the defendants failed to raise the issue in the trial court. The Court of Appeals agreed with Filipovich’s arguments every step of the way and affirmed.

San Antonio senior counsel Judy Blakeway also contributed to the victory through advising to sever the claims of Gypsum in order to obtain a final judgment. Michigan law expressly disavows any comparable Federal Rule 54 severance and, unlike Texas, has little authority for severance by other means.

“As a result of this team effort, nearly five years later, our client Gypsum Supply Company finally sees a light at the end of the tunnel for payment it is rightfully due,” Smith said. “We’re delighted for the client and are pleased with the rulings from both courts.”