Foster Swift Professional Negligence E-News
July 10, 2008
On July 9, 2008, the Michigan Supreme Court held that the location where the "original injury" occurs for purposes of determining venue under MCL 600.1629(1)(a) and (b) is "where the first actual injury occurs that results from an act or omission of another, not where a plaintiff contends that it first relied on the act or omission that caused the injury." Dimmitt & Owens Financial, Inc. v Deloitte & Touche (ISC), L.L.C. (Docket No. 134087).
Plaintiffs sued defendants in Wayne County alleging accounting malpractice in relation to an audit. Defendants sought a change of venue to Oakland County, where the audit had been performed, arguing that venue was proper in Oakland pursuant to MCL 600.1629(1)(a) because Oakland was the "county in which the original injury occurred." Plaintiffs argued against the venue change, asserting that they relied in Wayne County on the reports and that annual engagement letters, meetings and audit staffing decisions, letters seeking documents and spreadsheets in preparation for conducting the audit and document review had all originated from or occurred at defendants’ headquarters in Wayne County. The trial court denied defendants’ motion to change venue. The Michigan Court of Appeals reversed.
The Michigan Supreme Court affirmed the result reached by the Court of Appeals but rejected the analysis that venue was proper where the plaintiffs relied on the audit, explaining that MCL 600.1629(1)(a) states that venue "in an action based on tort or another legal theory seeking damages for personal injury, property damage, or wrongful death," is appropriate in "the county in which the original injury occurred…." The Supreme Court declared that for purposes of venue determination under MCL 600.1629(1)(a), the location of the "original injury" is "where the first actual injury occurs."
The Supreme Court distinguished between potential injury (which is insufficient to state a negligence cause of action and therefore which cannot establish venue) and actual injury. Under this analysis, the Court determined that venue was appropriate in Oakland County because that was where the first original injury from the alleged malpractice occurred: Plaintiffs’ inability to satisfy its financial obligations. The location where Plaintiffs’ relied is not sufficient: "reliance only created a potential injury."
This case is important because of the Michigan Supreme Court’s clarification of where the "original injury" occurred for purposes of determining venue under MCL 600.1629(1)(a) and (b).