Mention of a Non-Party in Affirmative Defense Insufficient to Toll Statute of Limitations as to that Non-Party

In a published decision, the Michigan Court of Appeals has held that mention of a potentially responsible non-party at fault in a class action suit was insufficient as a notice of non-party at fault within the meaning of Michigan Court Rule (MCR) 2.112(K), and therefore insufficient to “toll” the statute of limitations to allow amendment of the plaintiffs’ complaint to add that party to the lawsuit.

The issue in this case arose when the trial court judge allowed amendment of the complaint in the underlying class action to occur to add a defendant, Consumers Energy (Consumers), even after the statute of limitations as to Consumers had run.

The Court allowed the amendment on the basis that the statute of limitations could be extended because the original defendant named Consumers as a potentially responsible nonparty in an affirmative defense in its answer (which was filed 2 (technically 3) days before the statute of limitations would have expired as to Consumers).  However, the original Defendant never filed a notice of fault of nonparties as required by MCR 2.112(K).

Consumers was added to the lawsuit via an amended complaint, with the trial court ruling that despite the failure to comply with MCR 2.112(K), the affirmative defense was sufficient to allow the filing of the amended complaint and toll the statute of limitations. The original Defendant Michigan Petroleum clearly had notice and knew or should have known that Consumers was likely to be a potential defendant and could have filed a proper “notice of nonparty at fault”.

On August 4, 2009 a fire occurred at a building owned by the defendant Michigan Petroleum Technologies (Michigan Petroleum) and destroyed the building.  The fire was very large and involved noxious fumes and smoke.  An investigator from Consumers performed a site investigation at the location of the fire on August 5, 2009.  A subsequent investigation performed by Consumers and an independent engineer hired by them concluded that Consumers was not to blame for the fire.

Within a few weeks of the fire, Consumers received letters from two separate law firms, implying that Consumers was responsible and would be named as a defendant in a lawsuit by either Michigan Petroleum or the insurance company that insured the building.  Neither the building owner (Michigan Petroleum), nor the insurance company that insured the building filed any claim or lawsuit against Consumers.

On June 20, 2012, a personal injury class action lawsuit was filed in Genessee County Circuit Court naming only Michigan Petroleum as a defendant and seeking damages in tort, among other claims including nuisance (all of the claims in the underlying lawsuit are subject to the three-year statute of limitations in the revised judicature act (RJA), MCL 500.5805(10)).

Michigan Petroleum did not file a notice of non-party at fault within the 30 days provided by MCL 600.2957(2).

On August 2, 2012 (two days before the expiration of the statute of limitations as against Consumers), Michigan Petroleum filed an answer.

On October 8, 2012, after the three-year statute of limitations had run as to Consumers, the circuit court entered a “stipulated order” allowing, inter alia, the plaintiffs to “add” Consumers as a defendant in the lawsuit.

An “amended” complaint was served on Consumers on October 19, 2012, alleging causes of action in nuisance and negligence, all governed by the three-year statute of limitations as pronounced in the RJA.

The legal issue then briefed and argued in early 2013 was whether the naming of a party by a defendant in an affirmative defense under MCR 2.111(F) has the same legal effect as the filing of a “notice of nonparty fault” under MCR 2.112(K).  The significance is that MCR 2.112(K) then allows for “tolling” of the statute of limitations pursuant to MCL 600.2957(2).

The trial court did not squarely address that issue.  Rather, the trial court found since there were no cases stating that an affirmative defense is insufficient, the naming of the potential nonparty at fault (Consumers) in the affirmative defense was “sufficient” to activate the “tolling” provision of MCL 600.2957(2) and therefore the trial court denied Consumers’ motion to dismiss.

The COA had originally denied leave to appeal.  The Supreme Court remanded as on leave granted.

This is a published opinion which (1) clarifies the specificity with which one must name a “non-party at fault” for purposes of comparative fault allocation as against that party; and, more importantly, (2) rejects the trial court’s reasoning that mere mentioning of a potentially responsible party in the defendant’s affirmative defense is sufficient to put that party on notice and subject it to a lawsuit even after the statute of limitations has expired as to that party.

Read the opinion here:  Taylor.et.al.v.MPT.et.al.OPN

Effective appellate representation demands different skills than those required by litigation attorneys.  Appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying errors for appeal, and developing a strategy to raise those issues that will be addressed by appellate courts, appellate attorneys are capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.

We are also experienced at navigating through all appellate courts to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.

Below are some of the recent significant cases prosecuted by the Appeals and Legal Research Group.

• Omian v. Chrysler, LLC, Michigan Court of Appeals Docket No. 310743, remanded by Supreme Court as on leave granted, Supreme Court No. 146908, oral argument presented July 16, 2014 by Carson J. Tucker for Chrsyler, LLC
• Moore v. Nolff’s Construction and Travelers Ins., Michigan Court of Appeals Docket No. 313478 and 313440 (consolidated), application and cross-application granted and oral argument in Court of Appeals presented July 2014 by Carson J. Tucker for Nolff’s Construction and Travelers Insurance
• Arbuckle v. GM, Michigan Court of Appeals Docket No. 310611, oral argument in Court of Appeals presented May 2014 by Carson J. Tucker for GM
• Yono v. MDOT, ___ Mich. App. ___ (201_), amicus curiae brief filed for Michigan Municipal League and Michigan Townships Association on June 16, 2014, after remand by Carson J. Tucker
• Estate of Truett v. Wayne County, Unpublished Opinion of the Michigan Court of Appeals, dated May 6, 2014 (Docket No. 313638), briefed and argued by Carson J. Tucker for Wayne County
• Omian v. Chrysler Group, LLC, 495 Mich. 859 (2013), application filed by Carson J. Tucker, Supreme Court remand to Court of Appeals on leave granted, oral argument to be held in July 2014
• Ghanam v. John Does, 303 Mich. App. 522 (2013), application to appeal filed in Supreme Court by Carson J. Tucker
• State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
• Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae filed for Michigan Townships Association, Macomb County, Oakland County and Wayne County, et al., by Carson J. Tucker
• Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
• Huddleston v. Trinity Health, et al., 495 Mich. 976 (2014), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
• Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
• Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
• Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
• Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
• McMurtrie v Eaton Corp, 490 Mich 976 (2011)
• Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
• Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
• Stokes v Chrysler, 481 Mich 266 (2008)
• Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
• Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Insurance Carrier Covering Worker’s Initial Injury Wage-Loss Benefits May Apportion Liability for Wage-Loss Benefits With Insurance Carrier Covering Worker’s Second Disabling Injury Suffered While the Employee was Performing “Reasonable Employment” Work

In a published opinion after a remand order from the Michigan Supreme Court, the Court of Appeals has ruled that under the Workers’ Disability Compensation Act (WDCA), an insurance carrier responsible for paying worker’s compensation (wage-loss benefits) for an employee’s initial disabling injury, may apportion its liability for wage-loss benefits with the insurance carrier covering the employee when he incurred a separate disabling injury, which was suffered by the employee during his performance of light-duty “reasonable employment” work as the result of the initial injury.

“[W]hen a partially disabled employee suffers another injury while performing reasonable employment” within the meaning of MCL 418.301(5), allocation among or reimbursement by and between insurance carriers separately covering the two risks may occur.  Slip Op. at 3.

After remand from the Supreme Court, the Court of Appeals holds that an insurance carrier originally covering an employee’s worker’s compensation benefits, and who was liable for wage-loss benefits based on an initial 1993 injury, and after the employee returned to reasonable employment, could not be stuck with 100 percent of the costs of covering the employee’s total wage-loss benefits based on his original wages, after the employee suffered a subsequent, totally disabling back injury in 1998 while covered by another insurance carrier and while working at a lower wage.

The Michigan Compensation Appellate Commission (the Commission) originally ruled that the initial insurance carrier, Pacific, was responsible for the total wage-loss benefits and could not offset or receive allocation from American (which insured the employee when he suffered a totally disabling 1998 back injury) based on the difference between the original wages and the lower reasonable-employment wages he was earning at the time of his second injury.

This is a significant decision because it answers a question left open by the Supreme Court’s opinion interpreting MCL 418.301(5) in Arnold v. GM, 456 Mich. 682 (1998), which generally confirmed that an employee suffering a disabling injury after returning to reasonable employment work was entitled to the wage-loss benefits based on his or her original wage at the time of the initial injury.

Arnold, as the COA points out here, did not address the situation present in the instant case concerning whether the carrier covering the risk during the initial injury, who is required by MCL 418.301(5) to pay benefits on the basis of the original wage, not the favored work wage, could seek apportionment and/or reimbursement if a second, subsequent carrier happened to be “on the risk” when the employee suffered a second, disabling injury while performing the reasonable work employment at a lower wage.

Here, instead of Pacific, the initial carrier, being liable for 100 percent of the wage-loss benefits for the employee based on the employee’s wages at the time of his 1993 injury, American, the subsequent carrier is required to pay Pacific a differential based on the wages being earned by the employee during the reasonable work employment and at the time of his second, totally disabling injury in 1998.

This creates a very important avenue in the relevant case to seek apportionment and reimbursement where a second, subsequent insurer is on the risk at the time an employee suffers a second, disabling injury while performing the reasonable employment work within the meaning of MCL 418.301(5) and MCL 418.301(5)(e).

As the COA panel notes in this opinion, general principles of worker’s compensation law require employers to pay only their share of an employee’s wage-loss during the time a partially disabled employee is earning post-injury wages.  The COA reasoned that even though MCL 418.301(5), nor the WDCA in general, contained explicit statutory  bases to apportion liability among carriers in this situation, the result would be unjust to require the initial carrier to pay 100 percent of the subsequent wage-loss benefits suffered as the result of the second, disabling injury suffered while the employee was covered by a subsequent workers’ compensation insurance carrier.

The opinion is attached here:  Nichols v. Howmet Corp., et al. (After Remand) (for Publication)

Supreme Court to Consider Meaning of “Bodily Injury” Under Motor Vehicle Exception

I am writing an amicus curiae (friend of the court) brief on behalf of Wayne County and Michigan Townships Association, among others, in this public liability case in which the Supreme Court has granted the State of Michigan’s application for leave to appeal to address whether “bodily injury” liability available against the government under the “motor vehicle” exception to governmental immunity encompasses damages other than those directly related to those associated with corporeal physical injury to the plaintiff. The case will have a significant impact on the day-to-day operations of the government and the decision will have consequences upon the ability of governmental entities to fund public services.

See my previous post about this case here:

Supreme Court to Consider Scope of “Bodily Injury” Under Motor Vehicle Exception

Police Vehicle in Pursuit of Fleeing Motorcycle “Involved” in Motorcyclist’s Accident with Another Vehicle and County Liable to Participate with Auto Insurer in Reimbursement for Medical Care

In, State Farm v. MMRMA, the Michigan Court of Appeals addressed whether a police vehicle in pursuit of an uninsured motorcyclist who was fleeing was sufficiently “involved” in an accident between the motorcyclist and another vehicle such that the insurer of the latter vehicle (State Farm) could seek pro rata contribution from the county’s insurer, the Michigan Municipal Risk Management Authority (MMRMA) for reimbursement of medical and other expenses for the motorcyclist’s injuries.

The county sheriff observed the motorcyclist exceeding the speed limit and engaged to pursue and stop him.  After a chase at speeds of nearly 100 miles per hour, the sheriff lost sight of the motorcyclist, who had turned onto a winding dirt road.  The sheriff continued down the dirt road and soon noticed a plume of smoke in the distance.  He came upon a vehicle, which had collided with the motorcycle.  The motorcyclist was severely injured.  State Farm, the insurer of the motor vehicle that collided with the motorcycle paid personal insurance protection to the motorcyclist for his injuries in the amount of $675,114.16.  State Farm then sought contribution from MMRMA, which refused, asserting the sheriff’s vehicle was not involved in the accident.

State Farm filed a declaratory judgment action seeking contribution under Michigan Compiled Law (MCL) 500.3114(5), which provides:

A person suffering accidental bodily injury arising from a motor vehicle accident which shows evidence of the involvement of a motor vehicle while an operator or passenger of a motorcycle shall claim personal protection insurance benefits from insurers in the following order of priority:

(a) The insurer of the owner or registrant of the motor vehicle involved in the accident.

(b) The insurer of the operator of the motor vehicle involved in the accident.

(c) The motor vehicle insurer of the operator of the motorcycle involved in the accident.

(d) The motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident.

There were other issues raised in this appeal, but the primary, and therefore dispositive, issue concerned the question whether the motorcyclist’s accident arose out of a motor vehicle accident which involved the county sheriff’s patrol car.  If yes, then the county’s insurer was required by the terms of MCL 500.3114(5) to participate pro rata in the reimbursement by State Farm of the motorcyclist’s PIP benefits.

The Court of Appeals concludes the county sheriff’s patrol car was “involved” in the accident.  The Court states the motorcyclist’s injuries “shows evidence of the involvement” of the county sheriff’s patrol vehicle.  The Court relies on a 1995 Supreme Court case in which the court held a police vehicle pursuing a fleeing motorist was sufficiently “involved” in a multi-vehicle crash involving the motorist even though the police vehicle had backed off the chase moments before the accident.

In my judgment, reliance on the 1995 case is out of line with more recent pronouncements on causation by the Supreme Court.  See, for example, my discussion of another recent case in which, relying on more modern Supreme Court precedent, the Court of Appeals held that where a motorcyclist who avoided a collision with another vehicle, an auto insurer would not be responsible to reimburse medical expenses incurred by the motorcyclist.  That post discussing the case is here:  DMC v. Progressive – Hospital Not Entitled to Reimbursement from Auto Insurer Where Motorcyclist’s Injuries Caused by Attempt to Avoid Collision with Motor Vehicle

Granted, the statutory provision in that case is the more general causation statement in MCL 500.3105, but the Court of Appeals here attempts nonetheless to distinguish “single vehicle” involvement with multi-vehicle involvement in the accident by relying on the vitality of the 1995 Turner decision by the Supreme Court.   Such a causation analysis seems contrary to the causation analysis employed in the more recent decision McPherson, discussed in my previous noted blog post, and further discussed in my post about that case here:  McPherson v. McPherson – Recent Pronouncement by Supreme Court on Level of Causation Required Under No-Fault Act

Considering the Supreme Court’s more recent pronouncement in McPherson, the dubious nature of the causation analysis employed in the 1995 Turner decision, the facts presented here, and other contrary Court of Appeals opinions, I believe this case is destined for further appellate treatment by the Supreme Court.

There are different statutory provisions at stake, but the attenuated nature of the causation analysis employed by the Court of Appeals in the instant case does seem to warrant further treatment by Michigan’s One Court of Justice.

We shall see.

For more information about this and other similar cases contact Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.  For more information about Lacey & Jones, click on the following practice area company pages on Linked In.

Lacey & Jones, LLP’s Appeals and Legal Research Group

Lacey & Jones, LLP’s Insurance Coverage and Recovery Group

Lacey & Jones, LLP’s Civil Litigation Group

Police Vehicle in Pursuit of Fleeing Motorcycle “Involved” in Motorcyclist’s Accident with Another Vehicle and County Liable to Participate with Auto Insurer in Reimbursement for Medical Care

In, State Farm v. MMRMA, the Michigan Court of Appeals addressed whether a police vehicle in pursuit of an uninsured motorcyclist who was fleeing was sufficiently “involved” in an accident between the motorcyclist and another vehicle such that the insurer of the latter vehicle (State Farm) could seek pro rata contribution from the county’s insurer, the Michigan Municipal Risk Management Authority (MMRMA) for reimbursement of medical and other expenses for the motorcyclist’s injuries.

The county sheriff observed the motorcyclist exceeding the speed limit and engaged to pursue and stop him.  After a chase at speeds of nearly 100 miles per hour, the sheriff lost sight of the motorcyclist, who had turned onto a winding dirt road.  The sheriff continued down the dirt road and soon noticed a plume of smoke in the distance.  He came upon a vehicle, which had collided with the motorcycle.  The motorcyclist was severely injured.  State Farm, the insurer of the motor vehicle that collided with the motorcycle paid personal insurance protection to the motorcyclist for his injuries in the amount of $675,114.16.  State Farm then sought contribution from MMRMA, which refused, asserting the sheriff’s vehicle was not involved in the accident.

State Farm filed a declaratory judgment action seeking contribution under Michigan Compiled Law (MCL) 500.3114(5), which provides:

A person suffering accidental bodily injury arising from a motor vehicle accident which shows evidence of the involvement of a motor vehicle while an operator or passenger of a motorcycle shall claim personal protection insurance benefits from insurers in the following order of priority:

(a) The insurer of the owner or registrant of the motor vehicle involved in the accident.

(b) The insurer of the operator of the motor vehicle involved in the accident.

(c) The motor vehicle insurer of the operator of the motorcycle involved in the accident.

(d) The motor vehicle insurer of the owner or registrant of the motorcycle involved in the accident.

There were other issues raised in this appeal, but the primary, and therefore dispositive, issue concerned the question whether the motorcyclist’s accident arose out of a motor vehicle accident which involved the county sheriff’s patrol car.  If yes, then the county’s insurer was required by the terms of MCL 500.3114(5) to participate pro rata in the reimbursement by State Farm of the motorcyclist’s PIP benefits.

The Court of Appeals concludes the county sheriff’s patrol car was “involved” in the accident.  The Court states the motorcyclist’s injuries “shows evidence of the involvement” of the county sheriff’s patrol vehicle.  The Court relies on a 1995 Supreme Court case in which the court held a police vehicle pursuing a fleeing motorist was sufficiently “involved” in a multi-vehicle crash involving the motorist even though the police vehicle had backed off the chase moments before the accident.

In my judgment, reliance on the 1995 case is out of line with more recent pronouncements on causation by the Supreme Court.  See, for example, my discussion of another recent case in which, relying on more modern Supreme Court precedent, the Court of Appeals held that where a motorcyclist who avoided a collision with another vehicle, an auto insurer would not be responsible to reimburse medical expenses incurred by the motorcyclist.  That post discussing the case is here:  DMC v. Progressive – Hospital Not Entitled to Reimbursement from Auto Insurer Where Motorcyclist’s Injuries Caused by Attempt to Avoid Collision with Motor Vehicle

Granted, the statutory provision in that case is the more general causation statement in MCL 500.3105, but the Court of Appeals here attempts nonetheless to distinguish “single vehicle” involvement with multi-vehicle involvement in the accident by relying on the vitality of the 1995 Turner decision by the Supreme Court.   Such a causation analysis seems contrary to the causation analysis employed in the more recent decision McPherson, discussed in my previous noted blog post, and further discussed in my post about that case here:  McPherson v. McPherson – Recent Pronouncement by Supreme Court on Level of Causation Required Under No-Fault Act

Considering the Supreme Court’s more recent pronouncement in McPherson, the dubious nature of the causation analysis employed in the 1995 Turner decision, the facts presented here, and other contrary Court of Appeals opinions, I believe this case is destined for further appellate treatment by the Supreme Court.

There are different statutory provisions at stake, but the attenuated nature of the causation analysis employed by the Court of Appeals in the instant case does seem to warrant further treatment by Michigan’s One Court of Justice.

We shall see.

For more information about this and other similar cases contact Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.  For more information about Lacey & Jones, click on the following practice area company pages on Linked In.

Lacey & Jones, LLP’s Appeals and Legal Research Group

Lacey & Jones, LLP’s Insurance Coverage and Recovery Group

Lacey & Jones, LLP’s Civil Litigation Group

Court of Appeals Enforces Indemnity Agreement’s Duty to Defend Provision and Affirms Imposition of “Reasonable Settlement” Upon Nursing Services Company that Refused to Defend Hospital After Hospital Provided Notice

This opinion provides a classic example of the consequences of an indemnitor ignoring or refusing to take up the defense and then participate in a contractual indemnitee’s settlement discussions against a plaintiff in an underlying lawsuit.

The plaintiff in this case, the hospital, entered into an agreement with a nursing staff company, the defendant, wherein the latter agreed to defend and indemnify the hospital against “all demands, class actions, or causes of action based upon or arising out of the acts or omissions of” the nursing staff company.

Plaintiff in the underlying lawsuit, the estate of a deceased patient of the hospital, filed a wrongful death action against the hospital, alleging negligence and vicarious liability against the hospital “based on acts performed by the nursing staff” provided by the nursing staff company.

The hospital provided notice to the nursing staff company and provided it with a copy of the lawsuit.  The hospital also informed the nursing staff company of a scheduled facilitation and formally requested the nursing staff company to participate.  Despite receiving notice, the nursing staff company did not participate, nor did it take up the defense of the hospital pursuant to the indemnity agreement.

The hospital entered into a settlement agreement with the decedent’s estate.  It then filed suit against the nursing staff company stating causes of action in contractual indemnification, common-law indemnification, and contribution.  The trial court entered judgment for the hospital and the nursing staff company appealed.

The Court of Appeals (Riordan, O’Connell, and Hoekstra) affirmed.  The Court recited the rule that where an indemnitor has notice of an action and declines the tender of the claim and refuses to participate in the defense of the indemnitee in the underlying lawsuit, the indemnitor will be bound by any reasonable, good faith settlement the indemnitee might thereafter enter into with the plaintiff in the underlying lawsuit.  Slip Op. at 2.  Moreover, the Court noted, where the indemnitor has notice of the claim and refuses to defend the indemnitee under the indemnity agreement, the indemnitee need only demonstrate potential liability to the claimant in the underlying suit, rather than actual liability.

This principle applies not only to indemnitee agreements but also to insurance policies and where insurance companies receive notice of a claim and refuse to defend under a reservation of rights.  The same consequence obtains such that if the insured settles the underlying lawsuit on the basis of potential liability (and, in the insurance context, this would apply even to claims that may not be covered precisely because the insurer did not reserve its rights under the policy), the insurer will be liable for any reasonable, good faith settlement.

It should also be noted that in the insurance context, the rule in Michigan is that the right to recover from the insurer in such circumstances is ex contractu, i.e., outside the policy’s terms and conditions, and thus, neither the policy limits, nor any reserve provisions or “defense costs” limitations (e.g., burning limits policies) apply.

In short, in the latter circumstance, the insurance company would be required by common law principles of indemnity to make the settling insured whole.

With this particular panel of the Court of Appeals having ruled unequivocally in favor of the hospital, I seriously doubt the Supreme Court would take this case up.

Here is the opinion: Henry Ford Health System v. ACT-1 Group et al.opn