Previous/Next

Facts – In this case, the Plaintiff was injured in an automobile accident and submitted a claim for work loss benefits to Defendant, Auto Club Group. The claim was denied and a lawsuit ensued. On motion, the Trial Court awarded Plaintiff work loss benefits in addition to reasonable attorney fees. The Court of Appeals affirmed. On Appeal to the Michigan Supreme Court, the first issue was whether Plaintiff was entitled to work loss benefits under MCL 500.3107(1)(b) if he or she was the sole employee and shareholder of a Subchapter S corporation that lost more money than it paid in wages. The second issue was whether the award of attorney fees was proper.

In support of Plaintiff's claim, he provided W-2 forms which represented his income. This claim was made despite the fact that he was the sole shareholder and sole employee of a Subchapter S corporation that lost more money than it paid in wages. Defendant asserted that the corporate losses should have been considered when calculating "income" for a sole shareholder who was also the sole employee. Defendant relied upon Adams v Auto Club Insurance Association, 154 Mich App 186 (1986). The Supreme Court noted the Opinion of the Court of Appeals which stated that the Defendant presented no evidence to justify disregarding the long held rule that "[t]he corporate entity is distinct although all its stock is owned by a single individual or corporation". In addition, a corporation's separate existence will be respected unless it would subvert justice or cause a result that would be contrary to some other clearly overriding public policy. The Court of Appeals affirmed the holding that Plaintiff was entitled to work loss benefits based upon his wages and that the Court of Appeals reached the right result for the right reason.

The Court then addressed the issue whether the award of attorney fees was proper. The determinative factor was not whether the insurer ultimately was held responsible for benefits, but whether its initial refusal to pay was unreasonable. In Defendant's reliance upon Adams, it was argued that because Plaintiff was the sole shareholder and employee of a company that lost more than it paid Plaintiff in wages, Plaintiff was not entitled to work loss benefits because he suffered no loss of income. It was Defendants position that a Subchapter S corporation does not pay income taxes and that the business' profits and losses pass through to the owners. In this case, because the losses belonged to Plaintiff for tax purposes, just as they belonged to the Plaintiff in Adams, Defendant's reliance upon Adams was reasonable. The Court noted the argument was an issue of first impression. Although Adams was not directly on point, the Supreme Court held that the Trial Court clearly erred in deciding that Defendant's argument was not based upon a legitimate question of statutory interpretation. Therefore, the award of attorney fees was reversed. Ross v Auto Club Group, 481 Mich 1 (2008).

Recommendation – Since a shareholder and sole employee of a Chapter S corporation is entitled to work loss benefits if he can substantiate his claim notwithstanding the fact that the corporation lost money, a full investigation should be conducted with a view toward verifying that the corporation is a distinct entity.

Facts – In this case, Plaintiff was injured in a car accident in August, 2003. Following the accident, he was taken to the hospital where he complained of neck and back pain in addition to several other less severe injuries. He was diagnosed with a fracture of C7 and was fitted with a "c-collar" for two months. In addition, an MRI showed disc bulges at C6-7 and C5-6. Through November 2003, he complained of persistent pain in his neck with radiating numbness into his shoulders and arms. He continued to see his neurologist through January, 2004. At that time, he continued to report neck and back pain with decreased rotation and movement of both, but denied radiating numbness. He underwent physical therapy January, 2004 through February, 2004. On February 12, 2004, he was medically released to return to work three hours a day for two days a week. Approximately two to four weeks after the initial return date, he was returned full time. During the entire six months off work, he was unable to do several activities as he did pre-accident. Those activities included hunting, snowmobiling, playing softball, doing yardwork and taking long walks with his girlfriend. During the first two months following the accident, he was unable to be intimate with his girlfriend, dress himself, feed himself, drive a car, or take his son to school.

Notwithstanding the foregoing, the majority of the Court found the injuries were similar to Plaintiff, Straub and that he did not suffer a serious impairment of body function. Jones v Olson, Michigan Supreme Court Order 132385, decided April 25, 2008.

Recommendation – In this case, the Michigan Supreme Court re-affirmed Kreiner notwithstanding Plaintiff's injuries may have exceeded those of Plaintiff Straub. Plaintiff had a fracture of C7 and disc bulges at C6-7 and C5-6 with complaints of persistent pain, treatment by a neurologist, physical therapy. He was medically restricted from work for approximately six months and there was testimony he was unable to do several activities he did pre-accident. As illustrated above, it may be worthwhile to "test the waters" by filing a Motion for Summary Disposition once discovery has concluded.

Facts – In a Michigan Court of Appeals published decision dated April 12, 2007, the Court affirmed the Trial Court's order granting Defendant's Motion For Summary Disposition regarding Plaintiff's broken toe and cervical strain and reversed the Trial Court's Order denying Defendant's Motion For Summary Disposition as it related to Plaintiff's closed head injury and scar. In this case, Plaintiff was 67 years old at the time of the accident, had a bad back and could not lift things. But she otherwise was self sufficient and lead a normal life. As a result of the accident she sustained a broken toe, cervical strain, a closed head injury and a laceration above her right eyebrow when she was struck (while legally crossing a street) by a police cruiser. As a result, she wore a special soft shoe for one month. The cervical strain required her to wear a soft collar for two weeks and refrain from heavy lifting, bending, squatting and housework for three months. In addition, she experienced stiffness for six months. The scar was approximately 13 mm long above her right eyebrow. Plaintiff testified that the scar was embarrassing, itched, and occasionally became numb. She also testified that it prevented her from moving her right eyebrow in a "normal" manner. Most importantly, Plaintiff was diagnosed with a "mild traumatic brain injury" by her treating allopathic physician and she reported frequent headaches, occasional dizziness, memory problems and insomnia. She was prescribed physical therapy, speech therapy and language therapy but was not restricted from any daily activities. She contended she was no longer able to walk, dance or even cross the street, comfortably. The Trial Court maintained that Plaintiff did not suffer any "prolonged" serious disability from her injuries and that her scar was "relatively small" and thus she had not suffered a serious impairment of body function or permanent serious disfigurement.

On Appeal to the Michigan Court of Appeals, the Court agreed that Plaintiff's broken toe and cervical strain did not meet the serious impairment threshold. The Court, however, concluded that notwithstanding the fact that no allopathic physician provided the requisite testimony to satisfy the second sentence of MCL 500.3135(2)(a)(ii), the Trial erred in granting Summary Disposition with respect to the closed head injury. In addition, the Court of Appeals found that there was a factual dispute regarding the scar giving rise to a Jury question. An Appeal to the Supreme Court ensued.

The Supreme Court's Order relied upon the dissenting opinion from the Court of Appeals which affirmed the Trial Court's Order Granting Defendant's Motion For Summary Disposition. The effects of all the injuries lasted no more than four months and there were no physician imposed restrictions. Additionally, Plaintiff's post-accident life was essentially as it was pre-accident and therefore she did not suffer a serious impairment of body function. In addition, Plaintiff's permanent serious disfigurement did not rise to the level as required by MCL 500.3135(2)(a). Minter v City of Grand Rapids, Michigan Supreme Court Order No. 133988, decided April 25, 2008.

Recommendation – Although the Plaintiff's injuries in this case were not as significant as Plaintiff Jones, the Michigan Supreme Court will entertain Applications for Leave to Appeal regarding serious impairment of body function and permanent serious disfigurement if justice so requires.

Facts - Plaintiff sustained a closed head injury and other internal injuries when he was involved in an automobile accident in November, 1996. Because of the injuries, Plaintiff lived with his mother. Defendant paid benefits which included Plaintiff's room and board expenses of approximately $1,205.00 pursuant to an Arbitration Award. Following the decision of Griffith, Defendant wrote Plaintiff a letter stating that the Supreme Court decided that "items which are just as necessary for an injured person as they are for an uninjured person are not compensable under the no-fault act. Necessities such as food, shelter and utilities will be no longer be covered by Titan Insurance". Plaintiff filed suit and noted that as a result of the injuries he sustained in the accident, he was forced to reside with his mother. If his mother was unwilling or unable to care for him, he would be forced to reside with someone else who would need to monitor him 24 hours a day, 7 days a week or place him in a residential facility. On Appeal, the Court reiterated that when a Court of last resort intentionally discusses and decides a question germane to, though not necessarily decisive of the controversy, the decision is not dictum, but is a judicial act of the Court which is binding on the lower Courts. Even though it was not necessary for the Supreme Court to decide the issue of expenses for at home room and board, it specifically addressed the issue and explicitly overruled Reed. Mahle v Titan Insurance Company, Unpublished Per Curiam Opinion of the Michigan Court of Appeals, decided May 13, 2008, Docket No. 277326.

Recommendation - A no-fault insurer is not liable to pay the cost of food, room and board, clothing and toiletries to a person injured in an automobile accident who resides in a family member's home because those expenses are not necessary "for accidental bodily injury" and are not related to the person's "care, recovery, or rehabilitation".

Previous/Next

Home] [Practice Areas] [Firm History] [Attorneys] [Service Area]

[Legal Updates] [Trial Results] [Presentations] [Support Staff] [Representative Clients]

[Search] [Office Location] [Legal Links]

Send mail to: jtc@saginaw-law.com with questions or comments about this web site.