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Facts – In this case, Plaintiff, Robert Walters was involved in an automobile accident with the Defendant, Nathan Nadell on May 11, 2001. Plaintiff filed a Complaint on February 28, 2004 but was unable to serve the Defendant before the original and second summons expired because the Defendant was serving in the military. During that time, the statute of limitations expired. On October 21, 2004, Plaintiff filed a second Complaint raising the same claims. Defendant was served with the Summons and Complaint on December 10, 2004. Defendant filed a Motion seeking dismissal on the ground that the Statute of Limitations had expired before Plaintiff filed his second Complaint. Plaintiff argued that the period of limitations was tolled pursuant to MCL 600.5853. The trial court granted the Motion and dismissed Plaintiff’s Complaint with prejudice. On appeal, Plaintiff argued the tolling provisions of the SCRA required reversal in addition to the period of limitations being tolled under MCL 600.5853.

The Court of Appeals affirmed the trial court and declined to address Plaintiff’s SCRA argument holding that it was unpreserved for appellate review.

The Supreme Court noted that the Soldiers’ and Sailors’ Civil Relief Act of 1940 underwent significant changes in 2003 when Congress enacted the SCRA. The Michigan Supreme Court reasoned that the 2003 amendments did not insert any ambiguity into the meaning of the tolling provision which was previously addressed by the U.S. Supreme Court when it held the Act was "unambiguous, unequicocal, and unlimited". The Court of Appeals noted that the statutory language change from "shall not" to "may not" rendered the tolling discretionary. The Supreme Court held that the term "may not" as used in 50 USC Appendix 526(a) has the same meaning as "cannot" or its predecessor "shall not". Therefore, the provision clearly provides the time a servicemember is in the military is excluded from any period of limitations.

The court then considered whether a mandatory tolling provision permits waiver. The SCRA is clear that a servicemember may waive the protections of the Act pursuant to 517(a) which provides that "[a] servicemember may waive any of the rights and protections provided by the this Act." The court then opined that waiver under the SCRA is not limited to servicemembers pursuant to Appendix 502. The court noted Plaintiff was seeking to transform the SCRA into a sword to preserve his lawsuit without having timely invoked its provisions. This would be against the express purpose of the Act and inconsistent with providing more protections to a nonservicemember than a servicemember. Therefore, the mandatory tolling provision may be waived by a nonservicemember Plaintiff asserting a claim against a servicemember.

Given the fact that Plaintiff failed to preserve that issue for appellate review by raising it in the trial court, it was waived under the "raise or waive" rule. Therefore, the holding of the trial court and the Court of Appeals was affirmed by the Michigan Supreme Court. Walters v Nadell, Michigan Supreme Court Opinion No. 131479, Filed June 25, 2008.

Recommendation – When presented with a case filed against a servicemember involving a question whether the tolling provision of the SCRA applies, a determination must be made whether Plaintiff invoked the mandatory tolling provision.

Facts – Plaintiffs minors, Amyruth and Loralee Cooper sustained severe brain injuries in a January, 1987 automobile accident. Both sisters required 24-hour attendant care. By the Fall of 1989, Loralee did not need nursing care but, required care beyond what a babysitter could provide. Amyruth required continuous skilled nursing care which was provided through an agency paid by Defendant. At the time of the accident, their mother was working for GTE earning approximately $50.00 per day. In the Fall of 1989, Defendant’s claim representative suggested to the mother that she quit her job and stay home to care for Loralee full time. Defendant offered to pay $50.00 a day and she accepted by signing an agreement. In September, 1991, payments were increased to $75.00 per day. In October, 1998, the rate was $6.50 per hour which progressively increased to $10.00 per hour by October, 2000. Plaintiff filed suit in 2003 alleging Defendant failed to pay all PIP benefits that were due under the no-fault act because it underpaid attendant care which was provided to her daughters at home over the years. Defendant filed several motions for partial summary disposition which were all denied. Following denial of Defendant’s Interlocatory Application for Leave to Appeal, the Court of Appeals issued its opinion in Cameron v Auto Club Insurance Ass’n, 263 Mich App 95 (2004). Following that decision, Plaintiffs amended their Complaint to assert a new cause of action for fraud. Plaintiffs alleged Defendant had fraudulently induced the mother to accept an unreasonable low compensation rate for her in-home attendant care services. Plaintiffs’ allegations were alleged with specificity. The parties then stipulated to entry of judgment which preserved Defendant’s right to appeal the trial court’s adverse decisions regarding the three motions for partial summary disposition. The Court of Appeals affirmed in part, reversed in part and remanded for entry of an Order of Partial Summary Disposition in favor of Defendant. Specifically, the court held Plaintiffs may not recover PIP benefits relating to any laws incurred more than one year before Plaintiffs file their original complaint. In addition, Plaintiffs’ fraud claim was subject to the one year back rule of MCL 500.3145(1) because the claim was nothing more than a no-fault claim couched in fraud terms. The Michigan Supreme Court then granted Leave to Appeal.

Plaintiff maintained their common law fraud claim was distinct from a no-fault claim for benefits and that such claim is not subject to the one year back rule of MCL 500.3145(1). The court noted that a fraud claim is clearly distinct from a no-fault claim. First, a fraud claim requires proof of additional elements, such as deceit, misrepresentation, or concealment of material facts. Second, an action for fraud arises when the fraud is perpetrated. Lastly, the insureds may recover damages for any loss sustained as a result of the fraudulent conduct, which may include the equivalent of no-fault benefits, reasonable attorneys fees, damages for emotional distress, and even exemplary damages. Defendant maintained that the damages sought by the insureds are defined in terms of PIP benefits and the cause of action must necessarily be considered a "no-fault action couched in fraud terms".

The court held the insureds claim arose not out of the insurers mere failure to pay no-fault benefits, but out of the insurer’s fraudulent misrepresentations, which might have ultimately led to payment of reduced no-fault benefits to the insureds. Because fraud claims are independent of and distinct from no-fault claims, the one year back rule of the no-fault act simply does not apply. Where the insureds state a fraud cause of action, the court need not resort to its equitable power to prevent the one year back rule’s application. The court noted in Devillers that a court may exercise its equitable power to avoid the application of the one year back rule if there are allegations of fraud, mutual mistake, or unusual circumstances.

The Supreme Court then went on to instruct lower courts that fraud must be pled with particularity by clear, satisfactory and convincing evidence. In the initial stages of litigation, some insureds may attempt to circumvent the application of the one year back to defeat insurers motions for summary disposition by subsequently asserting fraud. Cooper v Auto Club Insurance Association, Michigan Supreme Court Opinion No. 132792, Filed June 25, 2008

Recommendation – The insurer must be aware when adjusting a claim that any actions which could be construed as fraud will defeat the application of the one year back rule if the claim is pled with particularity.

Facts – In this case, Plaintiff was injured in two separate car accidents. His treating physician prescribed physical therapy and referred him to Defendant, PT Works, Inc. He was treated from April 2, 2003 through August 28, 2003 incurring a bill in the amount of $29,150.00. Allstate refused to pay the bill when submitted by PT Works. Plaintiff filed a lawsuit for no-fault benefits and subsequently assigned his claim to PT Works. Allstate moved for summary disposition claiming that PT Works was unlawfully incorporated under the Business Corporations Act (BCA) and not under the Professional Services Corporation Act (PSCA) and therefore was not obligated to pay no-fault benefits because they were not "lawfully" rendered, MCL 500.3157. The trial court denied Allstate’s motion concluding that physical therapy did not constitute "professional services" under the PSCA. The Court of Appeals affirmed holding that treatment was "lawfully" provided under MCL 500.3157 because it was rendered by a properly licensed physical therapist.

On appeal to the Michigan Supreme Court it held that PT Works was unlawfully incorporated under the BCA. It was PT Works’ position that under the expressed terms of the BCA, Defendant could not challenge the corporate status. However, it adopted its prior analysis and concluded that the improper corporation under the BCA did not render the treatment unlawful under MCL 500.3157. The first issue for the court was whether the insurer challenging the corporate status had statutory standing to raise that claim. Pursuant to MCL 450.1221 of the BCA, the statute creates a single exception to the general rule by granting the Attorney General the sole authority to challenge whether a corporation has been properly incorporated under the BCA. Therefore, Allstate lacked statutory standing to challenge the corporate status of PT Works. Allstate argued that MCL 500.3157 provided a specific exception to that general rule. The court held however, MCL 450.1221 was a more specific provision and, therefore, prevailed over MCL 500.3157. Because Allstate lacked statutory standing to assert that PT Works was improperly incorporated, the decision of the Court of Appeals was affirmed albeit on alternative grounds. Miller v Allstate Insurance Company, Michigan Supreme Court Opinion No. 134393 and 134406, Filed July 2, 2008.

Recommendation – When presented with an issue whether a healthcare provider lawfully provided treatment, the insurer lacks standing to challenge whether the entity was lawfully incorporated.

Facts – Plaintiffs sued Defendants in Wayne County Circuit Court alleging they committed malpractice. Defendants moved for a change of venue to Oakland County contending they performed the auditing services at Dimmitt’s offices. Defendants maintained the original injury occurred in Oakland County. Plaintiffs responded the Defendants had generated the reports on which Plaintiffs relied in Defendant’s Wayne County office. The trial court denied Defendants’ motion. The Court of Appeals reversed holding that the original injury occurred when Plaintiffs first relied on Defendants allegedly faulty reports at Dimmitts’s place of business, Oakland County.

Specifically, Dimmitt received financial backing for its businesses through unsecured Promissory Notes from numerous investors. These unsecured Promissory Notes were subordinate to Dimmitt’s obligation to Standard Federal Bank. Standard Federal required Dimmitt to provide interim and year end financial statements. Defendants were the entity which provided reports and statements. Dimmitt discovered that a significant portion of its assets had been vastly overstated in addition to accounting errors and omissions which led to the present lawsuit.

The Supreme Court in its analysis overruled Bass v Combs, 238 Mich App 16 (1999), to the extent that it held that venue was proper in the county where the negligent omissions of the Defendant occurred rather than a county where the original injury suffered by Plaintiff occurred. The court noted it is the original injury, not the original breach of standard of care that establishes venue under MCL 600.1629(1)(a) and (b). The courts must look to the first injury resulting from an act or omission of Defendant to determine where venue is proper. In this case, Plaintiffs did not suffer their original injury when the relied on Defendants reports. The original injury did not occur until Plaintiffs allegedly suffered an actual injury as a result of their reliance upon Defendants’ services. The first injury suffered occurred when Plaintiff could not satisfy its financial obligations and was forced to liquidate. Given both Plaintiffs’ principal places of business were located in Oakland County, the alleged original injury occurred in Oakland County. Dimmitt & Owens Financial, Inc. v Doliotte & Touche, Michigan Supreme Court Opinion No. 134087, Filed July 9, 2008.

Recommendation – When determining if venue is proper, the location of the original injury is where the first actual injury occurred that resulted from an act or omission of another, not where Plaintiff contends that it first relied upon the act or omission which caused injury.

Facts – In this case, Jeffrey Woodman, signed a party invitation on his son’s behalf that was provided by Defendant which contained a waiver and hold harmless provision. Defendant’s premises contained large inflatable play equipment for her son’s fifth birthday. On the day of the party, Defendant’s employee conducted a "safety talk" to the guests. In addition, written rules were posted on the slide and wall which informed guests not to jump from the slide. Notwithstanding, Plaintiff’s son jumped from the top of the slide breaking his leg. On the child’s behalf, Plaintiff filed a Complaint alleging gross negligence, negligence and a violation of the Michigan’s Consumer Protection Act. Defendant filed an Answer denying Plaintiff’s claims and asserting affirmative defenses including waiver. Defendant moved for summary disposition on all three counts. More specifically Defendant argued that the child’s father signed a valid release, the slide constituted an open and obvious hazard, Defendant had no duty to supervise the child because his parents were with him at the time of the accident and that it did not make any misrepresentations in violation of the MCPA. Plaintiff moved for summary disposition regarding Defendant’s affirmative defense of waiver arguing that Defendant’s waiver was invalid as a matter of law because a parent may not waive, release or compromise claims by or against his or her child. The trial court determined that the waiver signed by the minor’s parent was valid and dismissed Plaintiff’s claim for ordinary negligence. The court denied Defendant’s motion to dismiss Plaintiff’s gross negligent claim because it found that a reasonable finder of fact could conclude from the conduct it constitutes a substantial indifference as to whether an injury resulted from the operation of the slide. Recognizing that negligence cannot be imputed to a child under the age of seven, the trial court reasoned that if negligence cannot be imputed, how can their claim be barred from the open and obvious doctrine. Further, the trial court declined to dismiss the MCPA claim until further development.

In Docket No. 275079, Plaintiff argued that law and public policy of the State precludes effectuation of a pre-injury waiver signed by a parent on behalf of his or her minor child. In Docket No. 275882, Defendant challenged the failure of the trial court to dismiss Plaintiff’s gross negligence claim and the violation of the MCPA.

The court noted there are two types of cases which recognize exceptions to the preclusion of a parent’s unilateral authority to waive or release a child’s claim. The first type deals with specific, statutorily created exceptions. The second type is used to uphold the validity of a pre-injury waiver on public policy argument. In analyzing the status of the law in Michigan, a parent has no authority merely by virtue of the parental relationship to waive, release or compromise claims of his or her child. The court held that the pre-injury waiver in this case cannot be construed as valid. The case was remanded to the trial court for reinstatement of Plaintiff'’ negligence claim. However, the court found that Defendant did take certain steps or precautions to prevent injury and reversed the trial court’s granting Defendant’s motion for summary disposition on gross negligence. Lastly, the trial court erred as a matter of law by failing to grant Defendant’s motion for summary disposition in regard to the MCPA claim because it is not an appropriate basis upon which Plaintiff could recover. Woodman v KERA, L.L.C., 280 Mich App 125 (2008).

Recommendation – When presented with a case of parental waiver, in analyzing the status of the law in Michigan, a parent has no authority merely by virtue of the parental relation to waive, release or compromise claims of his or her child a parent has no authority merely by virtue of the parental relationship to waive, release or compromise claims of his or her child.

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