One Court of Justice

In Walter Toebe Constr. Co. v. Department of Treasury, No. 291764, published on Sept. 2, 1010, after release on July 27, 2010, the Michigan Court of Appeals considered whether property is considered industrial personal property based on the definition contained in the general property tax act (“GBTA”), rather than the assessor’s classification.  The now-repealed single business tax act defined industrial personal property as personal property “classified as industrial personal property” under the GBTA.  Thus, the Court of Appeals concluded, the SBTA did not import the definition of industrial personal property from the GBTA, but rather the classification of the property by the tax assessor.  Because the tax assessor had determined the property was commercial personal property – albeit erroneously – the Treasury Department was entitled to rely on that classification and was not required to make an independent assessment of the property.

Plaintiff worked as a painter on the Mackinac Bridge for over 25 years, for various employers.  Plaintiff was working for Allstate Painting Company, Inc. (Allstate) in May 2005 when he injured his right knee.  Plaintiff filed a petition seeking benefits from Allstate, which did not have workers’ compensation insurance.  Although the magistrate granted Plaintiff an open award of benefits against Allstate, Plaintiff was unable to collect.  Subsequently, Plaintiff filed this action seeking benefits from defendants Mackinac Bridge Authority (the Authority) and American Painting Company, Inc. (American Painting) under Section 171 of the Workers’ Disability Compensation Act (WDCA), the statutory employment provision.  MCL 418.171.  The magistrate applied res judicata, or claim preclusion, to dismiss Plaintiff’s claim against the Authority and American Painting because the magistrate concluded Plaintiff could have brought his Section 171 claim in his earlier action against Allstate.  The Workers’ Compensation Appellate Commission (WCAC) affirmed the magistrate’s dismissal in a 2-1 decision.  In Bennett v. Mackinac Bridge Authority, No. 287628, the Court of Appeals reversed the decision of the WCAC and remanded the case to the magistrate for reinstatement.  The Court of Appeals concluded that application of the doctrine of res judicata in this case to bar Plaintiff’s Section 171 claim against defendants would subvert the intent of the Legislature because it would, in effect, read a rule of mandatory party joinder in Section 171.  The Court of Appeals explained that the Legislature has, in other provisions, required the joinder of parties or prescribed methods for compelling the joinder of parties, and neither provision exists in Section 171.  Thus, the Court of Appeals determined that the an injured employee may bring separate workers’ compensation actions against a direct employer and statutory employer under Section 171 without having to join all potentially liable parties in a single action.

On August 26, 2010, the Court of Appeals published its decision in McLean v. Phenix, affirming the trial court’s holding that Michigan’s “medical care or treatment” exception to governmental immunity, found in MCL 691.1407(4), extends to treatment for mental, as well as physical, diseases and illnesses.  The Court found MCL 691.1407(4) clear and unambiguous; accordingly, the Court confined its analysis to the statutory language.  The statute provides immunity does not extend “to a governmental agency or an employee or agent of a governmental agency with respect to providing medical care or treatment to a patient…”  The section includes no qualifier or other language limiting the exception to care directed at physical maladies.  Therefore, the Court affirmed the trial court’s holding that the “medical care or treatment” exception did not apply in a suit arising out of a community mental health service agency’s care for the plaintiff’s decedent.  However, because the plaintiffs did not allege the CEO of the defendant had provided care to the decedent, the Court reversed the holding of the trial court with respect to him.

The Michigan Court of Appeals published its per curiam opinion on August 12, 2010 in Dawe v. Dr. Reuvan Bar-Levav & Assocs., P.C., No. 269147, on remand from the Michigan Supreme Court.  The Supreme Court reversed the Court of Appeals™ original opinion and held that a patient may pursue a common-law, medical-malpractice claim against her treating mental-health professional if the professional negligently placed the patient in danger of harm from another patient.  Our discussion of the Michigan Supreme Court™s March 30, 2010 decision remanding the case to the Court of Appeals can be found here.

On remand, the Court of Appeals largely adopted Judge Smolenski™s dissent in the earlier Court of Appeals™ opinion and concluded that defendant psychiatrists owed a duty of care to their patient to protect her from harm by a third party.  Further, the Court of Appeals held that a reasonable jury could conclude that the defendants proximately caused the plaintiff™s injuries “ being shot by defendants™ former patient with whom she had been placed in group therapy. The defendants knew or should have known that the former patient would form improper emotional attachments to persons in his group therapy and that he might seek to harm those persons and therefore should not have placed the former patient in group therapy. Read more »

On August 10, 2010, the Court of Appeals published its per curiam opinion in River Investment Group, LLC v. Casab, No. 290645.  In this case, the Wayne County Treasurer foreclosed on plaintiff’s property and sold that property to defendant.  Plaintiff initiated an action in circuit court for damages against defendant based on alleged improvements plaintiff had made to the property after the foreclosure,where plaintiff alleged that it had not received notice of the foreclosure.  The circuit court dismissed that action for lack of jurisdiction, finding that the court of claims had exclusive jurisdiction over such an action.  The Court of Appeals affirmed this ruling.  The Court found that MCL 600.6519 and MCL 600.6437 confer jurisdiction to the court of claims to hear claims against the state, but they do not preclude the court from exercising any additional jurisdiction that my be provided elsewhere by the Legislature.  Specifically, the Court of Appeals found that MCL 211.78l(2), indicates that the court of claims will have exclusive jursidiction over any claims for monetary damages arising out of a failure to provide notice of a tax foreclosure, regardless of whether the defendant is a public or private entity.  Thus, summary disposition of plaintiff’s claims was appropriate in the circuit court.

In a 4-3 decision filed on July 31, 2010, the Michigan Supreme Court overruled its 2006 decision that held that actions brought pursuant to MCL 600.5851(1) are subject to the no-fault automobile insurance act’s one-year-back rule. In Univ of Mich Regents v. Titan Ins Agency, No. 136905, the Michigan Supreme Court held that MCL 600.5821(4), which preserves the rights of state entities to file suit, also preserves the state entities’ rights to recover damages incurred more than one year before the action is filed.  Specifically, MCL 600.5821(4) exempts state entities from the statutory one-year-back rule, which precludes recovery “for any portion of the loss incurred more than 1 year before the date on which the action was commenced.”  MCL 500.3145(1). The Michigan Supreme Court overruled Liptow v. State Farm Mut Ins Co, a Court of Appeals decision which held to the contrary, and Cameron v Auto Club Ins Ass’n, the 2006 Michigan Supreme Court case on which Liptow relied.  The majority opinion, authored by Chief Justice Kelly, and joined by Justices Cavanagh, Hathaway, and Weaver (except for the “Stare Decisis” part), concluded that Cameron was wrongly decided and that a compelling justification exists for overruling it. The Michigan Supreme Court concluded that there was a compelling justification to overturn precedent based on its determination that Cameron has proved unworkable, that reliance on its holding has been of short duration, that it is detrimentally prejudicial to public interests and that it represents an abrupt and largely unexplained departure from precedent.  Read more »

Under Michigan’s no-fault automobile-insurance statute, an accident victim typically does not have the right to sue the person who caused the accident.  Instead, the victim is entitled to recover directly from the insurer, without regard to fault, thereby obtaining a certain and prompt recovery for economic loss, but giving up the uncertain possibility of greater relief through tort law.  The statute provides, however, a limited exception:  an injured person may sue under tort law “if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.”  MCL § 500.3135(1) (emphasis added).  The legislature defined “serious impairment of body function” to mean “an objectively manifested impairment of an important body function that affects the person’s general ability to lead his or her normal life.”  MCL § 500.3135(7).

In McCormick v. Carrier, No. 136738 (July 31, 2010), the Michigan Supreme Court interpreted the phrase “serious impairment of body function” and, in a 4-to-3 decision, overturned the Court’s 2004 decision in Kreiner v. Fisher, 471 Mich. 109 (2004), that had interpreted the same language.  The majority (with Justice Cavanagh writing for Chief Justice Kelly and Justices Weaver and Kelly) held that a serious impairment of body function exists if there is “(1) an objectively manifested impairment (observable or perceivable from actual symptoms or conditions) (2) of an important body function (a body function of value, significance, or consequence to the injured person) that (3) affects the person’s general ability to lead his or her normal life (influences some of the plaintiff’s capacity to live in his or her normal manner of living).”  In a lengthy dissent, Justice Markman (joined by Justices Corrigan and Young) argued that the majority improperly eliminated any temporal requirement from consideration of the third prong.  The justices also divided over the proper application of stare decisis:  Justice Cavanagh spoke for his and Chief Justice Kelly’s view in the primary opinion, Chief Justice Weaver and Hathaway each wrote separately on the topic, and Justice Markman devoted a substantial part of the dissent to the doctrine.  The different opinions in McCormick thus provide insight not just into the current state of no-fault insurance law but also into the ongoing debate among the justices over judicial philosophy and the role of stare decisis.  Further discussion of the case follows after the jump.

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On July 13, 2010, the Michigan Supreme Court issued an order in Beattie v. Mickalich, SC No. 139438.  In lieu of granting leave to appeal, the Michigan Supreme Court reversed the judgment of the Court of Appeals and remanded the case to the trial court for further proceedings.  The Michigan Supreme Court stated that a plaintiff is not required to plead a claim in avoidance of the limitations on liability provided in the Equine Activity Liability Act (EALA), MCL § 691.1663 et seq.  The Michigan Supreme Court further stated that although EALA abolished strict liability for horse owners, it did not abolish negligence actions against horse owners.  Justice Markman, joined by Chief Justice Kelly, wrote a separate statement concurring in the Court’s order and responding to the dissent.  The dissent, in a statement authored by Justice Young, and joined by Justices Weaver and Corrigan, opined that the EALA only allows a negligence claim when it involves a negligent act or omission beyond the inherently risky equine activity, making the activity even more dangerous.  We previously discussed the Court of Appeals opinion here.

On July 13, 2010, the Michigan Supreme Court published Justice Corrigan’s majority opinion in Holman v. Rasak, No. 137993.  In this case, the Court was presented with the question of whether the federal Health Insurance Portability and Accountability Act (“HIPAA”) prevented defense counsel from conducting an ex parte interview of a plaintiff’s treating physician.  Justice Corrigan, joined by Justices Cavanagh, Young, Markman and Kelly concluded that it did not.

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During the plaintiff’s employment with Kellogg, he received a disciplinary action that resulted in a 34-day suspension.  The plaintiff subsequently filed a grievance regarding this disciplinary action.  Dissatisfied with the grievance process, plaintiff then requested copies of his personnel records regarding the grievance procedure.  Kellogg obliged and provided plaintiff’s personnel record to his attorney.  But plaintiff also requested notes from grievance meetings or other notes that management kept, which Kellogg refused to provide.  Plaintiff then filed this lawsuit, claiming that Kellogg violated the Bullard-Plawecki Employee Right to Know Act (ERKA) by refusing to release the requested notes.  The trial court granted Kellogg’s motion for summary judgment, finding that the notes are exempt from disclosure.  On June 22, 2010, the Court of Appeals published its opinion in Wright v. Kellogg Co., No. 290130, affirming the trial court.  ERKA establishes an employee’s right to examine personnel records.  ERKA expressly defines “personnel record,” which includes a record that identifies an employee and “is used or has been used, or may affect or be used relative to that employee’s . . . disciplinary action.”  MCL § 423.501(2)(c).  However, the following is a statutory exception to the general definition of “personnel record”:  ”[r]ecords limited to grievance investigations which are kept separately and are not used for the purposes provided in this subdivision.”  MCL § 423.501(2)(c)(vi).  The Court of Appeals concluded that the requested notes fell within this exclusion.

On June 15, 2010, the Court of Appeals issued its consolidated per curiam opinion in the cases of American Home Assurance Company v. Michigan Catastrophic Claims Association, No. 287153 and Ace American Insurance Company v. Michigan Catastrophic Claims Association, No. 292539.  Both of these cases raised the question of the effect of a deductible (in the underlying insurance policy between a no-fault insurer and its policyholder) on the Michigan Catastrophic Claims Association’s (“MCCA”) statutory indemnification responsibility.  Under MCL § 500.3104(2), the MCCA is obligated to indemnify member insurers for ultimate net loss that exceeds $325,000.  The MCCA had taken the position that member insurers could not include deductible amounts owed by policyholders in reaching the $325,000 threshold.  The Court of Appeals disagreed, ruling that the No-Fault Act held the insurer liable for the entire amount of no-fault benefits owed, regardless of the deductible, and therefore the entire amount of benefits paid count toward the statutory threshold, regardless of the existence of a deductible.  However, the Court of Appeals did find that a member insurer must turn over the deductible amounts it receives from the policyholder, up to the amount the MCCA reimbursed the insurer.  Additionally, the Court found that MCCA is subrogated to the insurer’s rights to the deductible, and is entitled to pursue payment of that deductible if the insurer does not.

Municipalities have no inherent power to regulate land through zoning, but the state legislature has, in the Michigan Zoning Enabling Act, delegated some zoning authority to local governments.  This delegation, however, is limited, including with respect to special-use permits.  In particular, MCL § 125.3502(1) provides that a zoning ordinance “shall specify . . . [t]he special land uses and activities eligible for approval.”  In Whitman v. Galien Township, No. 287991, the Court of Appeals vacated a special-use permit because the ordinance at issue lacked the requisite specificity.

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On June 8, 2010, the Court of Appeals published its opinion in Michigan Basic Property Insurance Association v. Office of Financial and Insurance Regulation, No. 293766.  Here, the Michigan Basic Property Insurance Association (“MBPIA”) requested a 18.9% rate increase from the state Insurance Commissioner based on an actuarial report.  The MBPIA, which is governed by the Commissioner, is an insurance pool created to provide property insurance to qualified individuals that cannot obtain such insurance in the standard market.  The relevant statute provides that MBPIA “rates . . . shall be equal to the weighted average of the 10 voluntary market insurer groups with the largest premium volume in this state.”  MCL § 500.2930a(1).  With this statutory authority, the Commissioner rejected the requested rate increase because it had been calculated on the base rates of those insurers, without regard to the discounts offered by those insurers resulting in a lower premium actually charged to consumers.  This constituted a break from the Commissioner’s prior position regarding the use of base rates only in such calculations.  MBPIA appealed this determination to the circuit court, which reversed the Commissioner’s decision.  Now, in an opinion authored by Judge Fort Hood, the Court of Appeals reverses the circuit court and reinstates the Commissioner’s decision.  Specifically, the Court of Appeals found the statute to be ambiguous, but that the Commissioner’s interpretation was consistent with the legislative intent to ensure fairness and reasonableness in rates charged by MBPIA.  Specifically, in this context, the Commissioner reasoned that its position regarding the use of base rates needed to be revised, and the statutory term “rates” had to include offered discounts (versus merely the base rates), because over recent years base rates had been artificially inflated to account for such discounts.  The Court of Appeals found that there were no cogent reasons for overturning this interpretation, particularly where the MBPIA’s own actuaries noted that other methods of acceptable actuarial analysis would yield a decrease in rates.  Judge Bandstra filed a concurring opinion arguing that a close reading of the statutory language suggests it refers to actual premiums charged (derived from the base rates minus applicable discounts) versus merely the base rates.

On June 8, 2010, the  Court of Appeals published its decision in Henry Ford Health System v. Esurance Insurance Co., No. 288633.  In this case, a hospital was seeking to recover no-fault insurance benefits from a vehicle’s insurer to cover the costs incurred in treating a passenger injured when that vehicle hit a utility pole.  At the time of the accident, however, the vehicle had been stolen from its owner.  The trial court had denied cross motions for summary disposition, and a jury had found that this passenger had unlawfully taken the vehicle, and the trial court entered a judgment in favor of the insurer.  In an opinion authored by Judge Murphy, the Court of Appeals found that the trial court had erred in denying the hospital’s motion for summary disposition, reversed the trial court’s judgment, and directed judgment be entered in favor of the hospital.  The case focused on the section of the No-Fault Act that provides that a person is not entitled to benefits if “[t]he person was using a motor vehicle or motorcycle which he or she has taken unlawfully . . . .”  MCL § 500.3113(a).  Judge Murphy focused on the words “has taken,” pointing out that the phrase indicates a past or completed act.  In this case, the injured person did not take the vehicle—it had already been stolen, and his girlfriend had borrowed the car (knowing it was stolen) and picked him up, and he simply rode as a passenger through the time he was injured.  Thus, the injured person did not participate in the “taking” of the vehicle.  Judge Murphy argues that if the Legislature had wanted to exclude unlawful “use” of the vehicle from no-fault benefits, it easily could have done so.  But because the Legislature chose to limit the exclusion to someone who had actively “taken”  the vehicle, that exclusion did not apply in this case and the hospital was entitled to recover no-fault benefits.

For purposes of preemption, “it is the activity being regulated rather than the actor who is being regulated that matters . . . .”  On May 25, 2010, the Court of Appeals published its opinion in Patterson v. Citifinancial Mortgage Corp., No. 287370, affirming the trial court’s decision that plaintiffs’ claims against a national bank regarding mortgage transactions were preempted under federal law.  The Court of Appeals concluded that the National Bank Act, 12 U.S.C. § 1 et seq., and corresponding federal regulations, preempts this action even though it arises out of conduct by independent agents working for the national bank that were not licensed or registered under state law.  The Court of Appeals rejected plaintiffs’ argument that preemption protection was not available to the national bank because the allegations were based on the actions of a third party.  The regulation at issue, promulgated by the Office of the Comptroller of the Currency (OCC), allows national banks to make real-estate loans without regard to state law.  Following the Supreme Court’s decision in Watters v. Wachovia Bank, NA, 550 U.S. 1 (2000), the Court of Appeals focused on the exercise of the national bank’s power to make real-estate transactions.  Here, the independent agents’ conduct was done in furtherance of the national bank’s power to make real-estate loans.

 

On May 25, 2009, the Michigan Supreme Court published its decision in DeCosta v. Gossage, No. 137480.  In a plurality opinion authored by Justice Weaver and joined by Justice Hathaway (with Justices Kelly and Cavanagh concurring in the result), the Court found that the notice of intent to sue on a medical-malpractice claim, sent by plaintiff to defendant’s prior business address effectively tolled the limitations period, and the Court of Appeals erred by affirming the dismissal of plaintiff’s complaint on the statute of limitations.  The relevant statute provided that “[t]he notice of intent to file a claim . . . shall be mailed to the last known professional business address.”  MCL § 600.2919b(2).  Additionally, the Legislature has provided for the tolling of the limitations period where a timely notice of intent is given.  MCL § 600.5856(c)  In this case, the plaintiff mailed the notice of intent before the limitation period expired, but defendant received it (forwarded from prior address) three days after the limitations period expired.  Justice Weaver reasoned that even if the notice was not sent to the correct address at the time, it was a minor defect which did not effect any party’s substantial rights.  Additionally, she noted that the statute does not require receipt of a notice of intent before the limitations period expired, therefore the date of mailing was the key date and the date of receipt was irrelevant.  Justice Markman, joined by Justices Corrigan and Young, dissented, arguing that the statute explicitly required the notice be sent to the last-known business address.  Here, plaintiff had visited defendant’s new location and the events underlying the alleged malpractice took place at the new location.  The dissent argued that the Court’s ruling created a situation where the period of limitations would be tolled “as long as an improperly addressed notice was mailed before the limitations period expired and the notice is eventually received by a defendant.”

The Michigan Supreme Court granted leave to appeal in Tus v. Hurt, No. 139769.  The case arose after a mortgage company foreclosed on a house nearly 15 years after the last payment had been made and despite the fact that the house had been sold to a new owner.  The Court of Appeals ruled that the circuit court erred by quieting title in the name of the new owners who had failed to timely exercise their right of redemption because the circuit court’s action was an attempt to do equity contrary to the requirement of statutory law.  In the order granting leave, the Michigan Supreme Court instructed the parties to “include among the issues to be briefed the effect, if any, on this case of Brydges v. Emmendorfer, 311 Mich. 274, 279 (1945) (holding that “[t]he statute of limitations does not control the question of laches in equitable actions”) and Stokes v. Millen Roofing Co., 466 Mich. 660, 671-72 (2002) (concluding that courts should not avoid the application of a statute under the guise of equity because a statutory penalty is excessively punitive or harsh).”  The Court invited two sections of the State Bar of Michigan as well as the Michigan Association of Mortgage Professionals, the Michigan Mortgage Lenders Association, the Michigan Association of Realtors, the Michigan Association of Community Bankers, the Michigan Bankers Association, the American Civil Liberties Union of Michigan, the University of Michigan Law School General Clinic, and the Michigan Association for Justice to file briefs amicus curiae.

Justice Young issued an order denying the Attorney Grievance Administrator’s motion for him to participate in Grievance Administrator v. Miller, No. 140081.  Justice Young declined to participate in whether to grant leave in Miller because the grievance arose from Shelden Miller’s alleged unethical conduct while handling an employment lawsuit against AAA.  While the lawsuit was pending, Justice Young was general counsel for AAA.  Citing the new recusal standard, Justice Young refused to participate in the case even though his tenuous connection to the underlying litigation did not create any actual bias against any party.  Justice Young explained, “I believe that no basis exists for my disqualification in this case, but I chose the safest course under the new amorphous disqualification rule by voluntarily declining to participate in order to avoid a strategic or politically motivated motion to disqualify me, followed by the second guessing of my colleagues.”  The result of Justice Young’s decision not to participate is that the Court was unable to muster the four votes necessary to grant leave to appeal and thus leave was denied over the dissent of Justices Corrigan, Markman, and Weaver.

On April 29, 2009, the Court of Appeals published a per curiam opinion in Oshtemo Charter Twp. v. Kalamazoo County Road Commission, No. 292980, in which it vacated a preliminary injunction order that was based on a typographical error in a recent amendment to the Michigan Vehicle Code.  The lower court had enjoined Kalamazoo County Road Commission (“KCRC”) from invalidating Oshtemo Charter Townsip’s truck route ordinance under recently enacted MCL § 257.726(3) because that new subsection cross-referenced incorrect sections of the Code.  The Court of Appeals reversed, ruling that the trial court should have applied the doctrine of “scrivener’s error” to avoid construing the new subsection in a manner that rendered it completely nugatory. Read more »

On April 27, 2010, the Court of Appeals published a per curiam opinion in Chelsea Investment Group LLC v. City of Chelsea, No. 288920.  In this contract action, the Court of Appeals affirmed the trial court’s order entering judgment in favor of defendants after a bench trial.  However, the Court of Appeals vacated the trial court’s order with respect to the trial court’s calculation of interest.

On this issue of first impression, the Court of Appeals considered whether MCL § 600.6013(8), which allows an award of interest on a money judgment, requires interest to be calculated at six-month intervals from the date of the complaint, or whether the statute requires interest to be calculated every six months on July 1 and January 1 from the date of the complaint.  The Court of Appeals viewed the language of this provision requiring that “interest on a money judgment [be] calculated at 6-month intervals from the date of the filing of the complaint at a rate of interest equal to . . . United States treasury notes during the 6 months immediately preceding July 1 and January 1 . . .” as plain and unambiguous.  MCL § 600.6013(8).  The Court of Appeals interpreted this provision to require that “interest on a judgment be re-calculated every six months from the date of the filing of the complaint using the interest rates announced on July 1 or January 1, whichever is ’immediately preceding’ the complaint’s six-month anniversary date.”  As an example, the Court of Appeals explained that for a complaint filed in August 2008, interest would be calculated in February 2009 using the January 1 interest rate, and calculated again in August 2009, using the July 1 rate. Read more »

A Michigan statute makes it a felony to steal certain items (“any wheel, tire, air bag, catalytic converter, radio, stereo, clock, telephone, computer, or other electronic device”) located “in or on” certain vehicles (“any motor vehicle, house trailer, trailer, or semitrailer”).  MCL § 750.356a (emphasis added).  Marvin Miller was charged under this statute for stealing a cell phone that was in a truck, and he asked the trial court to quash the charge on the theory that the statute applied only to telephones that were permanently attached to a vehicle.  The trial court accepted this argument.  In People v. Miller, No. 294566 (Apr. 15, 2010), the Court of Appeals reversed.  Noting that nothing in the statute required that the telephone be permanently attached to the vehicle, just that it be “in or on” the vehicle, the Court explained that the charged conduct fell squarely within the plain language of the statute.