Facts – After discovery, Defendant moved for Summary Disposition. The Trial Court denied Defendant’s Motion. Before the Order was entered, Plaintiff’s claim was submitted to Mediation. Both parties rejected the unanimous award in Plaintiff’s favor. Subsequently, the Court of Appeals granted Defendant leave to appeal the Trial Court’s denial of its Motion for Summary Disposition. The Court of Appeals affirmed the Trial Court, but the Supreme Court reversed. Accordingly, the case was remanded to the Trial Court to grant Defendant’s Motion for Summary Disposition.

On remand, Defendant moved for entry of an Order granting Summary Disposition, and for its costs and attorney fees pursuant to MCR 2.403(O). Defendant requested Mediation sanctions in the amount of $31,618.00 which included its appellate attorney fees. The Trial Court entered an Order granting Summary Disposition but denied the request for payment of Defendant’s appellate attorney fees. Additionally, the Trial Court allowed only a small portion of Defendant’s expenses for the reason that Plaintiff’s claim was not frivolous and because the appellate ruling established legal precedent benefiting the Defendant.

In reversing the Trial Court’s Decision, the Court of Appeals held that as a general rule, attorney fees are not recoverable either as an element of costs or damages unless allowance of a fee is expressly authorized by statute or court rule. However, the plain language of the Mediation court rule which was in effect at the time of rejection, allowed recovery of a reasonable attorney fee for services necessitated by the rejection of the Case Evaluation. The rule neither expressly allowed nor disallowed appellate attorney fees. The Court found that appellate attorney fees may be awarded under MCR 2.403(O)(b)(6) because (1) they are not excluded, (2) a Trial is not necessary to trigger sanctions, and (3) the applicable ultimate "verdict" for determining sanctions is that after appellate review.

The underlying purpose of the court rule is to encourage settlement and deter protracted litigation by placing the burden of litigation costs on the party that required the case to proceed toward Trial by rejecting the Mediators’ Evaluation. To exclude appellate attorney fees would frustrate the purpose of the rule to impose litigation costs on the rejecting party.

The Court also addressed MCR 2.403(O)(11) which indicates that if the "verdict" is the result of a Motion, the Court may, in the interest of justice, refuse to award actual costs. This panel felt that if a Trial Court finds that based on all of the facts and circumstances of a particular case, unusual circumstances exist, it may invoke the "interest of justice" exception, refusing to award costs or attorney fees, or awarding something less than "actual costs". The Trial Court must however articulate the bases for its Decision. The matter was remanded to the Trial Court for a review of its determination in that regard in light of this Opinion. Haliw v City of Sterling Heights, Michigan Court of Appeals Published Decision dated August 5, 2003, Docket No. 237269.

Recommendation – This Decision is significant for the reason that there is now a Published Decision which would allow recovery of appellate costs and attorney fees. A word of caution however, one’s ability to recover Case Evaluation sanctions will greatly depend upon the version of the Case Evaluation court rule in effect at the time of rejection. This rule has been significantly modified from time to time, and thus it will be incumbent upon the practitioner to advise as to whether certain costs are in fact recoverable under the circumstances. This case was a 2-1 Decision with Judge Helene White dissenting. We shall advise in the event the Michigan Supreme Court sees fit to modify this result.

Facts – Plaintiff was injured in an automobile accident. She was a covered dependent under a medical insurance plan issued by Daimler-Chrysler. Plaintiff was also insured under a no-fault automobile policy issued by AAA. The health insurer paid medical expenses as a result of injuries sustained in the auto accident. Plaintiff filed a third-party negligence action against the driver and owner of the other vehicle involved.

Plaintiff settled her third-party lawsuit. The health insurer sought to recover the medical expenses which it had paid, from Plaintiff’s personal injury settlement, based on a subrogation provision in its administrative manual. The Trial Court found in favor of the health insurer and ordered that Plaintiff reimburse Daimler-Chrysler for medical expenses out of her third-party tort settlement.

In reversing the Trial Court’s Decision, the Michigan Court of Appeals held that as a matter of practice, "subrogation" is simply the principle under which an insurer that has paid a loss under an insurance policy, is entitled to all the rights and remedies belonging to the insured against the third party with respect to any loss covered by the policy. In other words, a subrogee stands in the shoes of the subrogor and acquires no greater rights than those possessed by the subrogor.

The Michigan No-Fault statute bars recovery of medical expenses from third-party tort feasors arising out of ownership, maintenance or use of a motor vehicle. Plaintiff’s settlement proceeds therefore did not include compensation for medical expenses. The Court found that the insurance contract in this case was not ambiguous. As subrogee, the health insurer was only entitled to recover what Plaintiff was entitled to recover. Steinmann v Auto Club and Daimler-Chrysler Health Plan, Michigan Court of Appeals Published Decision dated August 14, 2003, Docket No. 239113.

Recommendation – This office was involved in defense of the third-party personal injury action. Daimler-Chrysler (health insurer) claimed ERISA status which it argued, entitled it to recover from third-party settlement proceeds. There is federal case law which would allow such recovery under certain circumstances. As such, if in the course of investigating a claim, one becomes aware of a potential lien or right of reimbursement, steps should be taken to preserve that right of recovery in the event a settlement is negotiated. Failure to do so could have significant consequences.

Facts – Plaintiffs Amy and Stewart had been drinking at a bar. They both left the parking lot on Mr. Amy’s motorcycle (with Stewart as a passenger). Mr. Amy drove only a short distance before striking the rear of a Michigan State Police cruiser which was stopped in the right northbound lane with its emergency lights activated. At the time of the accident, the cruiser had stopped to provide assistance to a driver whose vehicle had become disabled. There were no shoulders on the roadway. It was undisputed that when the vehicle became disabled, the driver maneuvered it into the right-hand lane near the curb and turned on her emergency warning flashers. The trooper intended to eliminate the hazard created by the disabled vehicle by pushing it off from the roadway. Before that maneuver could be accomplished however, Mr. Amy collided with the police cruiser.

The Court conducted a very lengthy analysis of various sections of the No-Fault Code prior to concluding that both the disabled vehicle and the police cruiser were involved motor vehicles. Further, the Court determined that both vehicles were unreasonably parked given the risk involved to third-party drivers. In essence, the Court felt that a vehicle parked on the traveled portion of a highway presents an unreasonable risk of injury.

In addition, the Court did not feel that the fact that a police cruiser was involved (even though it was considered an emergency vehicle by statute) would relieve an insurer from the payment of no-fault benefits to the injured claimants. As such, the insurers of both vehicles were obligated to share equally in the payment of no-fault benefits to each claimant. Amy v MIC General Insurance Corp., et al, Michigan Court of Appeals Published Decision dated August 14, 2003, Docket No. 237055.

Recommendation – When presented with a claim for first-party benefits, a determination should be made as to whether there may be other motor vehicles involved in the accident. If so, an argument may be made that one or more additional insurers are obligated to share in the payment of no-fault benefits.

Facts – Buchannan was involved in an automobile accident in 2000 and sustained a closed head injury rendering him legally incapacitated. A conservator was appointed who subsequently retained an attorney who provided legal services. A claim was submitted to Titan. A portion of the legal fee was reimbursed.

The Court of Appeals held that Titan was not responsible for paying legal fees incurred by the petitioner in pursuit of tort claims on behalf of the estate. Many of the services rendered were not essential to the care or to the restoration of the health of Mr. Buchannan. In addition, because there was no evidence that Buchannan’s personal injury protection benefits were overdue, no statutory attorney fees could be awarded. Nichols & Eberth, P.C., v Titan Insurance Company, Michigan Court of Appeals Unpublished Decision dated August 12, 2003, Docket No. 238939.

Recommendation – When presented with a claim for reimbursement of costs associated with a guardian/conservatorship, or for legal fees in assisting with the handling of the estate, great care should be made to review each and every claimed service so as to determine whether same is payable pursuant to the Michigan No-Fault Act. It is not enough that a conservator’s expenses would not have been incurred but for the accident.

Facts – Plaintiff was injured when her vehicle was struck from behind while stopped at a traffic light. She was not insured at the time, and Defendant was assigned her claim for personal protection insurance benefits. In reversing the Trial Court’s denial of Summary Disposition, the Court of Appeals held that for a motor vehicle to be involved in an accident, it must actively contribute. There must be an active link between the injury and the use of the motor vehicle as a motor vehicle. Plaintiff’s car was stopped at a traffic light, in use as a motor vehicle rather than a stationary object. Although it was not in motion, Plaintiff’s vehicle had an active link to the accident. The accident would not have occurred without Plaintiff’s presence at the stoplight. O’Malley v Farmers Insurance Exchange, Michigan Court of Appeals Unpublished Decision dated August 7, 2003, Docket No. 239585.

Recommendation – Generally speaking, if an automobile is being operated upon a public highway, it most probably will be found to have been utilized as a motor vehicle. Always take the opportunity to determine whether Michigan No-Fault statutes might bar relief.

Facts – Plaintiff tripped and fell on a ledge created where a concrete entrance walk met a concrete pad. She testified that she was looking straight ahead, and attributed her fall only to the existence of the ledge. Plaintiff also claimed that the sidewalk was deeply shaded by vegetation, making the concrete sections which comprised the ledge, difficult to see.

In upholding the Trial Court’s grant of Summary Disposition, the Court of Appeals held that steps and differing floor levels are not ordinarily actionable unless unique circumstances surrounding the area made the situation unreasonable dangerous. In this Court’s Opinion, the alleged condition was typical and common and did not present an uniquely high likelihood of harm. Warber v Trinity Health Corporation, Michigan Court of Appeals Unpublished Decision dated August 21, 2003, Docket No. 239665.

Recommendation – In this particular case, it would appear as if the defense had provided the Court with fairly detailed documentation of the condition which existed. It is suggested that photographs be obtained as quickly as possible after notification of injury.

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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