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Facts – The Personal Representative of the decedent’s estate brought suit against Defendant, James Allen (who was the driver of the vehicle) and Defendant Gary Keidel (as the owner of the vehicle). Prior to Trial, Plaintiff settled with the owner for $300,000.00. An Order dismissing him from the suit was entered. The case proceeded against the driver only. The driver, James Allen admitted liability and a Jury Trial was limited to the issue of Plaintiff’s damages. The Jury returned a verdict awarding Plaintiff $100,000.00 in damages. According to the Verdict Form, the question was: "What is the total amount of damages suffered by the Estate of Marion Rose Kaiser as a result of her death in this accident? Answer: $100,000.00." Following the verdict, Defendant requested the Trial Court set off the $100,000.00 Jury award for Plaintiff against the $300,000.00 already paid. Plaintiff objected. The Trial Court granted the setoff request, leaving a zero net sum owed to Plaintiff.

Plaintiff appealed as of right to the Court of Appeals and in an unpublished decision, the Court reversed the setoff and remanded the case for entry of Judgment for Plaintiff in the amount of the Jury’s verdict. Apparently, the Court of Appeals reasoned that the vehicle’s operator and the vehicle’s owner were concurrent tortfeasors. Defendant then filed Leave to the Michigan Supreme Court.

The Michigan Supreme Court stated that in vicarious liability cases, in which the latent tortfeasors fault derives completely from that of the active tortfeasor, there can be no allocation of fault. The Court noted that MCL 600.2957(1) and MCL 600.6304(1) and (8) are included among the provisions referred to as the "tort reform statutes" and are designed to allocate fault and responsibility for damages among multiple tortfeasors. The tort reform statutes have abolished joint and several liability cases in which there is more than one tortfeasor actively at fault. Pursuant to MCL 600.6304(8), "fault" is defined as "an act, an omission, conduct, including intentional conduct, a breach of warranty, or a breach of legal duty, or any conduct that could give rise to the imposition of strict liability, that is a proximate cause of the damages sustained by the party." Owner liability for an automobile operator’s negligence is statutorily created vicarious liability. In vicarious-liability cases, one tortfeasor is at fault while the other tortfeasor through a legal obligation is entirely liable for the active tortfeasor’s negligent actions. MCL 257.401(1) establishes the vicarious liability of an automobile owner for the negligent actions of the driver who uses the automobile with the owner’s permission. Pursuant to MCL 257.401(1), a vehicle owner can be held liable for the Plaintiff’s injuries without being a proximate cause of Plaintiff’s injuries. As a result, MCL 600.2957(1) and MCL 600.6304 do not apply to vehicle owner vicarious-liability cases and therefore the common law setoff rule remains the operable rule of law to determine Plaintiff’s recovery of damages. The legislature did not intend that a Plaintiff be awarded damages greater than the actual loss in a vicarious-liability case, resulting in a double recovery. Therefore, the Michigan Supreme Court reversed the Court of Appeals and held that Plaintiff’s Jury verdict against Defendant driver must be offset pro tanto by the settlement paid by the vehicle owner. Kaiser v Allen, 480 Mich 31 (2008).

Recommendation – In vicarious-liability cases, the parties are entitled to a setoff for amounts paid by a joint tortfeasor. Plaintiffs are not entitled to double recovery.

Facts – The Michigan Supreme Court consolidated two cases to discuss the issues of governmental immunity as it relates to the motor-vehicle exception. In Wesche v Mecosta County Road Commission, Plaintiff, Daniel Wesche was seated in his automobile at a red light when a Mecosta County Road Commission vehicle rear ended him. Plaintiff, Daniel Wesche maintained that he injured his cervical spine and his wife, Beverly, who was not present at the accident scene, claimed a loss of consortium. Following discovery, Defendant moved for summary disposition regarding the loss of consortium claim which was granted by the Trial Court and affirmed by the Court of Appeals.

In Kik v Sbraccia, Plaintiff, Rebecca Kik, who was pregnant, was being transported in an ambulance owned by Defendant Kinross Charter Township and operated by Defendant Sbraccia, a Township employee. Mr. Sbraccia lost control of the ambulance and it overturned in a ditch which resulted in injuries to Rebecca and premature labor. The baby died the same day. Rebecca and her husband filed an action individually and as Personal Representatives of their baby’s estate. Their Complaint alleged:

(1) Rebecca’s personal injury claim;

(2) Robert’s loss of consortium claim; and

(3) A wrongful death claim on behalf of the baby’s estate including claims for loss of society and companionship.

Defendants moved for partial summary disposition arguing that they were immune from all claims other than for bodily injury and property damage. The Trial Court rejected Defendants’ arguments and denied the motion. On appeal, the Court of Appeals affirmed in part and reversed in part. Then, a special panel of the Court of Appeals convened to resolve the conflict between Wesche and the decision in Kik. The special panel overruled Wesche and held that loss of consortium claims are permitted under the motor-vehicle exception. In both cases, Defendants applied leave to the Michigan Supreme Court.

"Except as otherwise provided in this Act, a governmental agency is immune from tort liability if the governmental agency is engaged in the exercise or discharge of a governmental function." MCL 691.1407(1). This immunity is subject to six statutory exceptions. In the case at bar, the motor-vehicle exception, MCL 691.1405 was applicable. The Court held that the language was clear and it imposed liability for "bodily injury" and "property damage" resulting from a governmental employee’s negligent operation of a government owned vehicle. Although the GTLA does not define "bodily injury", the Court noted that it simply means a physical or corporeal injury to body. The Court noted it is undisputed that a loss of consortium is not a physical injury to the body. Thus, because loss of consortium is a non-physical injury, it does not fall within the categories of damage for which the motor-vehicle exception waives immunity. The Supreme Court rejected the Kik II panel’s conclusion that the motor-vehicle exception created a threshold for liability and that once met, it permitted the recovery of damages for loss of consortium.

The Wrongful Death Act, MCL 600.2922(1) provides: "Whenever the death of a person or injuries resulting in death shall be caused by wrongful act, neglect, or fault of another, and the act, neglect, or fault is such as would, if death had not ensued, have entitled the party injured to maintain an action and recover damages. . .". The Court noted that the textual analysis is supported by case law indicating that the Wrongful Death Act is essentially a "filter" through which the underlying claim may proceed. Because the underlying claim "survives by law" and must be prosecuted under the Wrongful Death Act, the Court has held that any statutory or common law limitations on the underlying claim apply to a wrongful death action. The Court noted that if the baby had not died, the claims available under the motor-vehicle exception would have been limited to those for "bodily injury" and "property damage". Because a loss of consortium is not a "bodily injury", no such claim could have been pursued had her death not ensued. Thus, the motor-vehicle exception must apply in a wrongful death action.

Finally, the Michigan Supreme Court agreed with the Kik I panel noting that government employees are not immune from a loss of consortium claim if the requirements of MCL 691.1407(2)(c) were met. Given the fact the ambulance driver is a government employee, liability was not premised on the motor-vehicle exception but, on the foregoing provision which states that a governmental employee is immune from tort liability if his "conduct does not amount to gross negligence that is the proximate cause of the injury or damage". The Court relied upon the analysis in Kik I which was sound and indicated that the legislature chose to use different standards to determine the immunity of governmental entities and governmental employees. Therefore, MCL 691.1407(2) does not shield a governmental employee from liability for loss of consortium damages. Wesche v Mecosta County Road Commission, Michigan Supreme Court Opinion No. 129282 and Kik v Sbraccia, Michigan Supreme Court Opinion No. 132849, filed April 3, 2008.

Recommendation – When presented with a case involving a governmental agency and/or employee, it should be noted that the governmental agency is immune from liability for a loss of consortium under the motor-vehicle exception. In addition, the Wrongful Death Act does not authorize a loss of consortium claim against a governmental agency. However, governmental immunity does not shield a governmental employee from liability for a loss of consortium claim if gross negligence is proven.

Facts – In this case, Plaintiff was injured in an automobile accident on November 29, 2001. Her policy of insurance contained an underinsured motorist (UIM) coverage. An endorsement provided: "No claimant may bring a legal action against the company more than one year after the date of the accident". The policy also contained a clause prohibiting the insured from settling without Defendant’s written consent and that the Defendant "shall be obligated" to respond within 30 days of the insured’s request to settle.

On May 10, 2002, Plaintiff’s attorney notified the Defendant by mail that Plaintiff had an underinsured motorist claim, acknowledging that the policy had a limitation period that would expire on November 29, 2002. In response, Defendant informed Plaintiff that before it could give permission to settle, the claims representative needed to review the medical records. Defendant indicated that "I will be getting back in touch with you". On August 2, 2002, after not hearing a response, Plaintiff’s attorney sent another letter asking for a decision regarding consent to settle. On August 16, 2002, he sent a third letter stating he intended to "commence the process of negotiating the UIM claim" as soon as he received written permission to settle. The claim representative subsequently sent written permission to settle for $20,000.00. Thereafter, neither party took any action before November 29, 2002. On December 10, 2002, Defendant sent Plaintiff a letter indicating that the one year limitation period had expired and that Defendant would no longer consider the UIM claim. Plaintiff then filed suit five months later. Defendant moved for summary disposition. The Trial Court denied Defendant’s motion and granted Plaintiff’s motion holding that:

(1) The one year period was unreasonable and thus unenforceable as a matter of law,

(2) Defendant was estopped from asserting the limitations because of its dilatory conduct,

(3) Pursuant to Tom Thomas Org. Inc. v Reliance Ins Co., 396 Mich 588 (1976), the limitations period was tolled by Plaintiff’s May 10, 2002 letter until Defendant denied the claim, and

(4) The limitations period was too ambiguous to enforce.

The Court of Appeals affirmed, holding that the Trial Court had correctly ruled that the contractual limitations period was tolled by Plaintiff’s May 10, 2002 letter to Defendant until the denial of Plaintiff’s claim on December 10, 2002. The Supreme Court granted leave to appeal directing the parties to include among the issues to be briefed:

(1) Whether a contractual limitations period may be avoided on the basis of the doctrines of waiver or estoppel and

(2) Whether the one year limitations period contained in the insurance policy is tolled from the time a claim is made until the insurance company denies a claim.

The Court noted that it had addressed the issue of tolling the limitations period of insurance policies several times including Devillers v Auto Club Insurance Association, 473 Mich 562 (2005) where the Court held that the "one year back" limitation could not be automatically tolled because it was contrary to the express language of the statute. The Court noted Rory which emphasized that "unambiguous contracts are not open to judicial construction and must be enforced as written". Judicial conclusions regarding the "reasonableness" of unambiguous contractual provisions cannot be used to evade enforcement of the contract as written. The Supreme Court reiterated that Rory overruled Tom Thomas and its progeny and concluded that express limitations periods in optional insurance contracts are not automatically tolled as a matter of law by filing a claim. Under the plain language of the policy, Plaintiff was required to bring an action against Defendant by November 29, 2002. Plaintiff apparently relied upon the "Notice and Order of Prohibition" issued by the Office of Financial and Insurance Services prohibiting uninsured motorist benefits policies with limitation periods of less than three years. However, according to said notice, it expressly stated it did not prohibit insurers from continuing to use policies that were legally in use before the December 16, 2005 notice. The Court also noted that as a general rule, contracts are interpreted in accordance with the law in effect at the time of their formation. Thus, the one year limitation was valid at the time the parties entered into the contract. Because the one year contractual limitation period was not automatically tolled by filing a claim, the Court addressed the Trial Court’s other basis for granting motion of summary disposition.

Plaintiff’s assertion that she thought by contacting an attorney who then sent a letter to the Defendant constituted "legal action" was without merit. The Court noted that the phrase "illegal action" undisputedly means "a lawsuit". In addition, even if Plaintiff herself thought that contacting an attorney was "legal action", her attorney should have understood that "legal action" is synonymous with a "lawsuit". The Court also addressed the Trial Court’s holding that Defendant was estopped from seeking enforcement of the one year limitations provision because of its "conduct in the case at bar which resulted in numerous delays". The Supreme Court noted that a waiver is a voluntary relinquishment of a known right and neither party disputed that waiver was inapplicable. Therefore, for equitable estoppel to apply, Plaintiff must establish that:

(1) Defendant’s acts or representations induced Plaintiff to believe that the limitations period clause would not be enforced,

(2) Plaintiff justifiably relied on this belief, and

(3) She was prejudiced as a result of her reliance on her belief that the clause would not be enforced.

The Supreme Court noted that the Trial Court’s factual findings that Defendant caused delays was insufficient to grant estoppel given the fact Plaintiff’s attorney clearly expressed an awareness of the cutoff date. In addition, Plaintiff’s assertion that she relied on Tom Thomas and delayed bringing suit because she thought the one year limitation was tolled was not a reason to estop Defendant, because Defendant’s "acts or representations" did not induce Plaintiff’s delay. McDonald v Farm Bureau Insurance Company, 480 Mich 191.

Recommendation – Optional contractual provisions contained within a policy will be enforced as written if clear and unambiguous. The reliance on estoppel to avoid a contractual statute of limitations may bar application of the limitations period if Plaintiff can meet the three elements of promissory estoppel.

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