Facts – Plaintiff (the insurer of an at-fault driver) settled with an injured party in the underlying personal injury act. It then filed a complaint against certain defendants for statutory contribution.

The issue of whether the 1995 Tort Reform legislation permits contribution in cases where one tortfeasor settled with an injured party, is a question of first impression. The Court of Appeals found that because the 1995 Tort Reform legislation abolished joint and several liability, replacing it with "fair share liability", a party's exposure to liability is limited to its own pro-rata degree of fault. A party's decision to voluntarily pay pursuant to a settlement must be attributed to its own assessment of liability based on its own negligence. University of Michigan Regents v Lawson, et al., ______ Mich ______ (2002).

Recommendation – Except in very limited circumstances (for example, an employer's vicarious liability for the act or omission of an employee), a settling party will not be entitled to seek contribution from another potentially at-fault party. As such, a settlement should be based solely upon the insured's degree of exposure.

INSURANCE

Facts – Plaintiff owned a market which was burned as a result of arson. The insurer refused to pay the claim. The trial court granted summary disposition, finding that Plaintiff failed to sufficiently complete a proof of loss form as required by the policy. As such, he could not maintain a breach of contract action.

The Michigan Court of Appeals held that a contract is substantially performed when all of the essentials necessary for full accomplishment of the purposes contracted for have been performed to such a degree that the party obtains substantially what is called for by the contract. There are three intended purposes of the proof of loss:

1. Allowing the insurer an opportunity to investigate the loss;

2. Allowing the insurer to estimate its rights and liabilities; and

3. Preventing fraud.

Failure to provide specific information regarding the cash value of an insurance loss indicates that the insured did not substantially comply with the proof of loss requirement. Jajo v Hartford Casualty Insurance Company, Michigan Court of Appeals Unpublished Decision dated November 26, 2002, Docket Number 237955.

Recommendation – The proof of loss form submitted by the insured must contain information regarding the value or the amount of Plaintiff's claim. Failure to supply adequate information should result in a denial of the claim.

Facts – Plaintiff was involved in an automobile accident. She refused medical treatment at the scene. The next day, she presented to the emergency room complaining that a sensation resembling electricity had traveled up the back of her head. An exam detected no abnormalities except for pre-existing carpal tunnel. Plaintiff was informed that at worst, she likely experienced a muscle spasm. Plaintiff consulted her family physician on various occasions complaining of pain in the low back, left hip and knees. A diagnosis of cervical, thoracic and lumbar fibromyositis and right knee arthralgia was given. X-rays and MRI revealed no abnormalities attributable to the accident.

Plaintiff filed suit alleging that she had sustained a serious impairment of body function. The trial court granted Defendant's Motion for Summary Disposition, noting that according to the evidence, objective testing was within normal limits. The trial court concluded that subjective complaints of pain did not constitute a serious impairment of body function.

The Court of Appeals reversed the trial court, limiting its decision to whether Plaintiff had established a genuine issue of fact as to the existence of a medically identifiable injury or condition. It held that muscle spasms are an objectively manifested impairment (Franz v Woods, 145 Mich App 169 [1985]; Harris v Lemicex, 152 Mich App 149 [1986]) (Waller v Continental Insurance Company, et al., Michigan Court of Appeals Unpublished Decision dated November 22, 2002, Docket Number 234323.)

Recommendation – This decision appears to conflict with prior case law holding that medical findings of muscle spasms, tenderness and limited flexion do not rise to the level of objective manifestations of injuries which generally support a finding of serious impairment of body function (Williams v Payne, 131 Mich 403 [1984]; Flemings v Jenkins, 138 Mich App 788 [1984]). Fortunately, the Waller Opinion is Unpublished and carries no precedential value. We shall continue to advise on this issue as developments occur.

Facts – Plaintiff filed suit to recover damages for injuries sustained in an automobile accident. The trial court dismissed his complaint, finding that Plaintiff's injuries did not meet the serious impairment threshold. The trial court apparently assumed that Plaintiff had suffered an objectively manifested injury that impaired an important body function, but found that the injury did not affect Plaintiff's ability to lead his normal life.

In upholding the trial court's decision, the Court of Appeals found that Plaintiff did not undergo extensive medical treatment and continued to work full time, missing only two days of work. He had minor limitations using his left hand and stopped playing golf for a time. Despite some pain and occasional headaches, Plaintiff had since resumed his normal activities, albeit to a lesser extent than previously. Reekwald v L.E. Best Transportation, Inc., et al., Michigan Court of Appeals Unpublished Decision dated November 26, 2002, Docket Number 236802.

Recommendation – Again, the Court of Appeals has demonstrated that it is more than willing to uphold the dismissal of a No-Fault personal injury claim where it is based on relatively minor injury. An aggressive position should be taken as to those types of claims.

Facts – Plaintiff was injured in an automobile accident. His primary health insurance provider (which appears to have been an ERISA carrier) paid medical expenses. At the time of the accident, Plaintiff also had a No-Fault insurance policy with Defendant DAIIE, which provided for the coordination of benefits.

Plaintiff initiated a third-party lawsuit for non-economic damages. The parties settled the lawsuit for an undisclosed amount. Plaintiff's policy with his health insurer contained a provision which required Plaintiff to reimburse it from any third-party recovery, for any sums expended on Plaintiff's behalf for the accident. When Plaintiff failed to reimburse his health carrier, it initiated suit in Federal Court. That action resulted in an Opinion concluding that the insurer was entitled to reimbursement from the Plaintiff. Plaintiff subsequently filed the instant action seeking reimbursement from DAIIE for the money which it had to pay to the health carrier from the third-party recovery.

In a non-unanimous opinion, the Court of Appeals held that because Plaintiff elected to purchase coordinated No-Fault benefits in exchange for a reduced premium, Plaintiff was not entitled to reimbursement from DAIIE. In essence, the Court refused to follow the prior majority ruling in Yerkovich v AAA (231 Mich App 54 [1998]; reversed on other grounds at 461 Mich 732 [2000]), which held that a No-Fault insurer was required to reimburse the insured for sums paid by the insured to an ERISA provider. The Court of Appeals found it illogical to hold the insurer liable for a risk that it did not assume. In this case, Plaintiff pocketed savings by electing to coordinate the employer sponsored health benefits with the No-Fault insurance. Dunn v DAIIE, ______ Mich App ______ (2002).

Recommendation – This is a significant decision as it would relate to the payment of first-party benefits by a No-Fault insurer, especially where there is an ERISA carrier involved. We anticipate that the Michigan Supreme Court will further review this decision.

Facts – Plaintiff was injured at work while repairing a truck. He did not own a car and did not have automobile insurance at the time of the accident. He sought PIP benefits under a No-Fault policy issued by Defendant to his mother as a relative domiciled in her household. In upholding the trial court's grant of summary disposition in favor of Defendant, the Michigan Court of Appeals stated that several factors should be considered in determining domicile, and those factors should be weighed or balanced with each other because no one factor is determinative.

Relevant factors include the subjective or declared intent of the claimant to remain indefinitely in the insured's household, the formality of the relationship between claimant and members of the household, whether the place where the claimant lives is in the same house, the same curtilage, or upon the same premises as the insured, and the existence of another place of lodging for the person alleging domicile (Workman v DAIIE, 404 Mich 477 [1979]).

When considering whether a child is domiciled with the child's parents, other relevant factors would include whether the child continues to use the parent's home as the child's mailing address, whether the child maintains some possessions with the parents, whether the child uses the parent's address on the child's driver's license or other documents, whether a room is maintained for the child at the parent's home and whether the child is dependant upon the parents for support (Dairyland Insurance Company v Auto Owners Insurance Company, 123 Mich App 675 [1983]).

In this case, the Plaintiff was divorced, was approximately thirty (30) years old and lived with his girlfriend in a carriage house apartment located next to his parent's home. This was a separate residence and Plaintiff paid monthly rent. The evidence established that Plaintiff's living arrangement was independent from his parent's household. Fowler v Auto Club Insurance Association, et al., ______ Mich App ______ (2002).

Recommendation – When attempting to determine residency in a first-party priority situation, multiple factors must be considered. Additional areas of inquiry might include voter's registration, income tax returns filed with state, federal and local governmental entities, checking/banking accounts and medical records. All of the foregoing documents would contain residence addresses and may be of some value in your investigation.

Facts – State Farm appealed as of right, the Probate Court's Order requiring it to pay attorney fees incurred by Petitioner as Conservator of his daughter's Estate. The daughter was an infant when she suffered injuries in an automobile related accident. State Farm paid her medical expenses and had been paying for her care as a part of the family's PIP benefits. As a result of that payment, the father established an estate for his daughter and was appointed Conservator. At issue were attorney fees that were incurred in the filing of the first annual account for the conservatorship.

In reversing the Probate Court's determination, the Michigan Court of Appeals held that services performed by a guardian or conservator can be allowable expenses if a person is so seriously injured in an automobile accident that it is necessary to appoint a guardian or conservator for that person. Such was not the case in this action. The Court found that it was insufficient that the conservator's expenses would not have been incurred but for the accident. The expenses must be necessary for the injured person's care because of the accident.

On a related issue, the Court also indicated that pursuant to statute, Probate Courts do have concurrent jurisdiction over contract claims brought by an Estate. As such, the Probate Court did have jurisdiction to hear and decide this issue. Shields v State Farm Mutual Automobile Insurance Company, ______ Mich App ______ (2002).

Recommendation – When evaluating a claim for guardian/conservator fees presented pursuant to Heinz v Auto Club, 214 Mich App 195 (1995), a determination must be made as to the underlying basis for said claim. According to this decision, such expenses must be causally connected to the injured person's care, recovery or rehabilitation.

Facts – The original defendant had filed a Notice of Non-Party Fault pursuant to MCR 2.112(K)(3) identifying MEC as an entity who may potentially share fault. MCR 2.112(K)(4) indicates that a party served with Notice of Non-Party Fault under this subrule, may file an amended pleading stating a claim or claims against the non-party within ninety-one (91) days of service of the notice identifying that non-party. Plaintiff amended his complaint to add MEC without leave of the court.

The Court of Appeals held that although the court rule plainly allows a Plaintiff to file an amended complaint adding a non-party, it does not specifically mention whether leave of the court is also required. The pertinent portion of the revised Judicature Act (MCL 600.2957[2] indicates that leave of the court is required to file an amended complaint. The statute and court rule do not conflict. The statute merely includes more detail than the court rule. As such, Plaintiff's amended complaint was improperly filed. Williams v Arbor Home, Inc., et al., Michigan Court of Appeals Published Decision dated December 17, 2002, Docket Number 225693.

Recommendation – This case is significant inasmuch as Leave to Amend under the above court rule is rarely sought. Plaintiff's failure to follow the requisite procedure may result in dismissal of his or her claim against a party added under MCR 2.112(K).

Should you have any questions or comments regarding this or any of our newsletters, please feel free to contact us by voice 989.799.3033, e-mail jtc@saginaw-law.com or write to Collison & Collison, P.C., 5811 Colony Drive, North, P.O. Box 6010, Saginaw, MI 48608-6010.

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