Facts – Defendant, at the time of Deposition, indicated that he would exercise his 5th Amendment right against self incrimination because he could be subject to federal prosecution under federal bank fraud and mail and wire fraud laws. The Trial Court ordered that Defendant submit to the Deposition, at which time he could assert his 5th Amendment rights as deemed appropriate. The Court also ordered Defendant to answer all direct and cross-examination questions within the scope of his prior testimony in the bankruptcy proceeding and with respect to his guilty plea.

The Court of Appeals held that, generally, voluntary testimony given in one proceeding does not constitute a general waiver of the 5th Amendment privilege against self incrimination in a subsequent proceeding. The privilege against self incrimination does not entitle a civil Defendant to refuse to provide testimony. Rather, such Defendant may invoke the privilege only after a potentially incriminating question has been posed. Upon Defendant's assertion of his privilege, the Trial Court must then properly consider whether any direct answer to a particular question can implicate the witness and thus, whether the Defendant has a valid claim of privilege. Kitchen, et al v Newpower, et al, Michigan Court of Appeals Unpublished Decision dated October 15, 2002, Docket No. 225570.

Recommendation - Occasionally, a situation will arise which involves an insured who has been, or may be charged with a crime as a result of an accident. Claims personnel and defense counsel should be very careful in those situations to coordinate their efforts with criminal defense counsel so as not to jeopardize the insured's 5th Amendment privilege against self incrimination.

Facts – Allstate commenced a Declaratory Judgment Action requesting a determination as to whether it was obligated to defend and indemnify against a wrongful death lawsuit filed on behalf of two children, against their father and grandparents. There was no dispute that at the time of the house fire the deceased children were "insured persons" as defined in the policy.

Plaintiff appears to have claimed that because the children were no longer alive, the benefit of coverage could not accrue "directly or indirectly to an insured person". The Court of Appeals held that the benefit of coverage would accrue directly or indirectly to an insured person through the insured decedents' estates. It does not matter that a representative actually brought the suit on behalf of the estates. Allstate v Muszynski, et al, Michigan Court of Appeals Published Decision dated September 24, 2002, Docket No. 229720.

Recommendation – This appears to have been somewhat of a "creative argument" on behalf of the estates. When initially investigating a claim, one should make a determination as to whether the injured persons were actually considered "insured persons" under the policy against which the claim is made.

Facts - Plaintiff in the underlying action (Moore) filed a Complaint against a homeowner and an assailant seeking damages. Moore alleged that the homeowner opened her house to numerous minors for parties and then supplied them with alcohol. Plaintiff attended one of those parties and was assaulted when she passed out after consuming alcohol. Theories against the homeowner included gross negligence, social host liability, nuisance and premises liability. The homeowner did not initially notify her insurance carrier (Allstate) about the litigation.

After litigation had been commenced, the insured homeowner signed a Consent Judgment in which she admitted liability and agreed to damages. After the Consent Judgment was placed on the record but before Judgment was entered, Plaintiff counsel in the underlying action notified Allstate of the suit.

This Declaratory Judgment Action was filed, seeking a declaration that the homeowners' policy did not provide liability coverage for the loss alleged in the underlying litigation. The policy at issue defined "occurrence" as "an accident". The Court of Appeals agreed that the underlying Plaintiff's injuries were the result of an intentional act of a third party, not some "undersigned contingency, casualty, or happening by chance".

The underlying Plaintiff had repeatedly alleged that the homeowners' conduct of furnishing alcohol to minors was both knowing and illegal. In fact, claimant's attorney sought to admit a "Certificate of Conviction" for "selling and furnishing to a minor, and the contributing to the delinquency of a minor". Allstate Insurance Company v Morton, et al, Michigan Court of Appeals Unpublished Decision dated October 15, 2002, Docket No. 232923.

Recommendation – This case was handled by our office. As illustrated above, a "common sense" reading of the policy language in effect at the time of the accident must be made as quickly as possible. The Courts will not allow an underlying Plaintiff to "create coverage" by describing an intentional act in terms of negligence.

Facts – This case involves the shooting death of Scott Amedure by Jonathan Schmitz three days after the taping of an episode of the Jenny Jones Talk Show, during which Schmitz was surprised by Amedure's revelation that he had a secret crush on him. In the wrongful death action filed against Warner Brothers, the Jenny Jones Show and Telepictures, Plaintiff essentially contended that Defendants "ambushed" Schmitz when they taped the episode and never attempted to determine the impact which it might have had on Schmitz.

With regard to that particular issue, the Court of Appeals held that there is no legal duty obligating one person to aid or protect another, especially from the criminal acts of a third party in the absence of a special relationship. Examples of the requisite "special relationship" recognized under Michigan law include a common carrier that may be obligated to protect its passengers, an innkeeper his guests, an employer his employees, owners and occupiers of land their invitees, a doctor his patient, and business invitors or merchants their business invitees. The Courts have established a duty of reasonable care toward only those parties who are "readily identifiable as being foreseeably endangered". The Court felt that Defendants had no duty to anticipate and prevent the act of murder committed by Schmitz three days after leaving Defendants' studio and hundreds of miles away. The Court likened Defendants' relationship with Plaintiff's decedent as that of a business invitor whose duty is solely to respond reasonably to a situation. To hold otherwise would mean that merchants have an obligation to provide what amounts to police protection. Graves, et al v Warner Brothers, et al, 253 Mich App 486 (2002).

Recommendation - The dissent in this particular case pointed out the fact that the Supreme Court has not held that there is no duty to avoid actively creating a volatile situation that gives rise to a criminal act. We suspect that this matter may be finally decided by the Michigan Supreme Court. Their holding may have important ramifications as to the duty of business premises owners in general.

Facts - Plaintiff was repeatedly hit with a hammer by Defendant Dobler at a party hosted by Defendant Maldonado. Plaintiff's Complaint alleged that Maldonado was negligent in serving alcohol to Dobler who was under the age of twenty-one (21) at the time. Maldonado moved for Summary Disposition arguing that, as a matter of law, his conduct in serving alcohol to Dobler was not the proximate cause of Dobler's criminal assault upon Plaintiff. He relied upon the prior Michigan Court of Appeals case of Rogalski v Tavernier, 208 Mich App 302 (1995).

The Michigan Court of Appeals, in analyzing this particular situation, held that the Rogalski decision focused on the specific facts of that case. This Court would not assume that the prior decision was intended to hold that, as a matter of law, all violent or criminal acts of a minor that do not involve an automobile accident are unforeseeable and therefore cannot serve as the basis for social host liability. In other words, the Court felt that the issue of proximate cause was properly left to the Jury. Nichols v Dobler, et al, Michigan Court of Appeals Published Decision dated October 25, 2002, Docket No. 228050.

Recommendation - This decision basically indicates that, where an individual's actions can fairly be seen as a foreseeable consequence of the activities which took place, along with the provision of alcohol, the issue of proximate cause is a question of fact for Jury determination. As such, a thorough investigation into the facts and circumstances surrounding the events in dispute should be made as quickly as possible.

Facts - Farm Bureau insured both the Plaintiff and the Defendant in a third-party personal injury action. A first-party claim was also filed, seeking no-fault benefits. The Jury returned a verdict of no cause for action in the personal injury Trial, finding that Plaintiff did not suffer an injury. Farm Bureau moved for Summary Disposition in the first-party action, asserting that Plaintiff was barred by Collateral Estoppel from litigating the question of his injury.

In reversing the lower Court's denial of Summary Disposition, the Michigan Court of Appeals held that the Doctrine of Collateral Estoppel precludes re-litigation of an issue in a subsequent cause of action between the same parties, when the prior proceeding culminated in a valid Judgment, and the issue was actually and necessarily determined in the prior proceeding. Generally, mutuality of estoppel is a necessary element. Collateral Estoppel is mutual if the one taking advantage of the earlier adjudication would have been bound by it, had it gone against him. Mutuality of estoppel is coextensive with the requirement of identity of parties or privity.

Collateral Estoppel may be raised defensively by a Defendant in a subsequent action where that party and the Defendant in the previous action had a special relationship, such as principle and agent, where the culpability of one of the parties is premised on the liability of the other party.

In this case, the Court found that the issue of Plaintiff's injury was fully litigated to final Judgment in the first action. Farm Bureau provided the defense in both actions and would have been required to indemnify the Defendant in the third-party action if Plaintiff prevailed. The existence of Plaintiff's injury was a necessary factor in both cases. Miller v Farm Bureau Insurance, Michigan Court of Appeals Unpublished Decision dated September 27, 2002, Docket No. 231346.

Recommendations - If a situation such as the one described above should arise, a Motion For Summary Disposition based upon Collateral Estoppel should be immediately filed. The Trial Court may well grant dismissal, thereby eliminating the need for additional litigation expenses.

Facts - Plaintiff alleged that she suffered injuries as a result of the failure of the City of South Lyon to maintain a sidewalk in reasonable repair. The Michigan Supreme Court in a unanimous decision, found that the statute which imposes a general duty on municipalities to keep sidewalks adjacent to public highways under its jurisdiction in reasonable repair, does not allow a municipality to forego repairs because a defective condition of a sidewalk is open and obvious. Jones v Enertel, Inc., 467 Mich 266 (2002).

Recommendation - Whenever a claim is presented which involves a "slip and fall" at or near a public sidewalk, a thorough investigation should be conducted as to the specific location and type of defect. As in this case, a governmental entity may well have a duty to maintain, thus potentially eliminating liability on behalf of an adjacent landowner.

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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