One Court of Justice

COA Opinion: Property classified under single business tax act as industrial personal property depends on tax assessor’s classification, rather than definition in general property tax act

Sarah Lindsey — Fri, 03 Sep 2010 20:40:48 +0000

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 The now-repealed single business tax act defined industrial personal property as personal property “classified as industrial personal property” under the GBTA.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.

COA Opinion: An indemnity agreement which does not require notice of a defense may allow the indemnitee to recover defense costs incurred prior to providing notice of the underlying action to the indemnitor

Jason Byrne — Thu, 02 Sep 2010 14:20:33 +0000

On August 31, 2010, the Court of Appeals published its earlier, July 1, 2010, opinion in Ajax Paving Industries, LLC v. VanOpdenbosch Construction Co., No. 288452. The primary issue in this case concerned the fees and costs incurred by a contractor in defending a tort action, arguably covered under an indemnity clause in a contract between the contractor and its subcontractor. After finding that the indemnity clause was sufficiently broad to cover the underlying action, the Court of Appeals turned to the question of liability under that clause for the fees and costs incurred by the contractor during the 18 months it defended that case without notifying the subcontractor. The Court of Appeals found that, because the indemnity clause did not require the contractor to notify the subcontractor of the underlying action or tender the defense of that action to the subcontractor, the contractor is entitled to complete indemnification of all of its fees and costs incurred in defending the underlying case, without limitation.

COA Opinion: Joinder of all potentially liable parties is not required in workers’ compensation actions

Julie Lam — Thu, 02 Sep 2010 00:04:55 +0000

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.

COA Opinion: Arbitrary time limit for witness testimony constitutes an abuse of discretion

Jason Byrne — Wed, 01 Sep 2010 18:45:14 +0000

On August 31, 2010, the Court of Appeals published its per curiam decision in Barksdale v. Bert’s Martketplace, No. 290329, where plaintiff challenged the conduct of a sexual harassment trial where the the judge limited the testimony of the owner of the defendant business to a half-hour per side, and ended plaintiff counsel’s direct examination of that witness at the end of that time, not allowing re-direct or an offer of proof. The Court of Appeals found the time limitation to be arbitrary under the circumstances of this case, as it was unrelated to the complexity of the case or the time taken for other witnesses. Additionally, the Court of Appeals found that the trial court’s failure to take an offer of proof meant that there was no record that would permit a finding of harmless error, meaning the case would have to be reversed and remanded for a new trial as a result of the trial court’s abuse of discretion.

COA Opinion: Criminal acts exclusion bars insurance coverage for careless discharge of a firearm

Jason Byrne — Wed, 01 Sep 2010 18:09:05 +0000

On August 31, 2010, the Court of Appeals published Judge Wilder’s opinion in Auto Club Group Ins. Co. v. Booth, No. 290430, reversing the trial court’s conclusion that the insured was covered under his homeowner’s policy in response to an injury claim from the victim of a negligent shooting. Here, several people were in the insured’s home when the intoxicated insured retrieved his automatic handgun and, thinking that there was no round in the chamber, placed the barrel the gun against the wrist of another man whereupon the weapon discharged (the insured could not recall pulling the trigger), causing significant injuries to the other individual. The insured pled no contest to a misdemeanor charge of careless discharge of a firearm resulting in injury. The injured party filed suit against the insured, but the homeowner’s insurer denied coverage citing an exclusion in the policy that barred coverage for injuries resulting from “a criminal act or omission.” The Court of Appeals found that while the insured’s no contest plea in the criminal case was not conclusive proof that the insured had committed a crime, the undisputed record clearly established that the insured had control over the gun, knew it had a loaded magazine, and held it against another person’s wrist (all while intoxicated), was sufficient to prove the careless discharge of a firearm. Thus, the Court of Appeals reversed the trial court and found that the insurer was entitled to summary disposition.

If you would like more information on the criminal acts exclusion and, in particular, the effect of criminal pleas on the application of that exclusion, you may be interested in this article. The present case is in line with the article’s conclusion that a no contest plea preserves an insured’s right to argue that they are entitled to coverage, but that the facts of the case may ultimately establish the applicability of the criminal acts exclusion.

COA Opinion: Surviving spouse did not breach agreement to execute mutual wills where agreement did not expressly restrict disposition of assets

Julie Lam — Mon, 30 Aug 2010 15:02:26 +0000

Carlton and his wife Viola had a son and a daughter. The daughter is the deceased mother of Carlton and Viola’s two granddaughters, Melady and Melinda. Carlton and Viola executed identical wills, a revocable trust agreement, and an agreement to execute mutual wills, all of which reflected an estate plan to establish a trust for the benefit of Melady for life, with the remainder to the issue of Carlton and Viola. Viola died first. Subsequently, Carlton transferred title from assets that had been jointly owned by Carlton and Viola to be titled jointly in his and Melady’s name or to name Melady as beneficiary. Carlton and Viola’s son and other granddaughter brought this action requesting that the probate court impose a constructive trust on certain assets in Melady and her husband’s control, alleging that Carlton transferred the assets in violation of the agreement to execute mutual wills. After a hearing, the probate court found that the agreement to execute mutual wills was valid and binding, that nothing in the agreement restricted what the surviving party could do with the the joint assets, and that Carlton’s transfer of assets did not constitute a breach of the agreement. The probate court granted summary disposition in favor of Melady and her husband, and in a per curiam opinion, In re Estate of Carlton J Leix, No. 291406, the Court of Appeals affirmed. The Court of Appeals held that there was no implied limitation in an agreement to execute mutual wills that limits the surviving spouse’s ability to transfer assets as he or she pleases.

MSC Opinion: Shay v. Aldrich

John Bursch — Mon, 30 Aug 2010 10:53:57 +0000

In an opinion released after the Michigan Supreme Court’s July 31 end of term, the Court reinvigorated the latent-ambiguity doctrine by holding that the word “all” in a liability release did not actually mean “all” where extrinsic evidence demonstrated that the parties to the release meant less than “all.”

Plaintiff Shay alleged that he was assaulted by police officers from Melvindale, and that the inaction of additional officers from Allen Park amounted to gross negligence. Following the acceptance of case-evaluation awards, the two Allen Park officers were dismissed from the case, and a trial date was set for the three Melvindale officers. Shay executed two releases, one with each of the Allen Park officers, purporting to release not only the two officers, but “all other persons.” Two months later, the Melvindale officers moved for summary disposition, asserting that the language “all other persons” contained in the releases effectively released them as well. The officers relied heavily on Romska v. Opper, 594 N.W.2d 853 (Mich. Ct. App. 1999), in which the Court of Appeals held that the language “all other parties” in a release was unambiguous and, therefore, there was no need to look beyond the language of the release to determine its scope. The trial court denied the officers’ motion, but the Court of Appeals reversed, relying on Romska.

The Michigan Supreme Court reversed, holding that courts may consider extrinsic evidence of the intended scope of a release when an unnamed party seeks to enforce third-party-beneficiary rights based on the broad released language, but the evidence presented establishes that an ambiguity exists with respect to the intended scope of the release. Although the release language was facially unambiguous, the Court reiterated that extrinsic evidence may be used to show that a latent ambiguity exists. Here, Shay presented extrinsic evidence to support his argument that the release language was ambiguous, thus precluding the grant of summary disposition in favor of the Melvindale officers. Justices Markman, Corrigan, and Young dissented, observing that parol evidence under the guise of a claimed latent ambiguity is not permissible to vary, add to, or contradict the plainly expressed terms of a writing, or to substitute a different contract for it, to show an intention or purpose not therein expressed. The opinion can be found here.

MSC Opinion: People v. Szalma

Nicole Mazzocco — Mon, 30 Aug 2010 00:14:00 +0000

On August 26, 2010, the Michigan Supreme Court published its opinion in People v. Szalma, No. 140021. The Court held that where the trial judge determined that a prosecutor failed to present sufficient evidence to convict the defendant, the double-jeopardy clauses of the United States Constitution and the Michigan Constitution prohibit retrial.

Defendant George Szalma was charged with first-degree criminal sexual conduct based on allegations that he had used his finger to penetrate the anus of his four-year-old son. At trial, the prosecutor and the defense attorney agreed that first-degree criminal sexual conduct required the prosecutor to prove that the defendant acted with sexual intent. Following the prosecutor’s case, the defense moved for a directed verdict. The trial court granted the motion, stating that the prosecutor had failed to present any evidence that the defendant acted with sexual intent. The Court of Appeals reversed and remanded for a new trial.

The Michigan Supreme Court granted leave to consider whether the double-jeopardy clauses of the United States Constitution and the Michigan Constitution prevented retrial. The Court noted that the double-jeopardy clauses bar such retrial where “the ruling of the trial judge, whatever its label, actually represents a resolution, correct or not, of some or all of the factual elements of the offense charged.” The Court then held that trial court’s finding that the prosecutor presented no evidence to support sexual intent met this requirement. The prosecutor also asked the Court to consider whether the double-jeopardy bar was affected by fact that sexual intent is not an element of the crime. The Court held this argument waived by the prosecutor’s assent to its inclusion at trial.

Justice Cavanaugh, joined by Chief Justice Kelly, concurred. He disagreed with the majority’s lengthy analysis, considering the result compelled by United States Supreme Court precedent. The majority believed that these cases were not controlling, but, nonetheless, reached the same conclusion.

COA Opinion: Evidence obtained pursuant to a search that violated defendant’s Fourth Amendment rights need not be suppressed if officer relied in good faith on case law that is later overturned

Sarah Lindsey — Sat, 28 Aug 2010 15:54:38 +0000

A search of the defendant’s car after he was arrested and in police custody was unconstitutional under Arizona v. Gant, 129 S. Ct. 1710 (2009), decided on the day of the defendant’s suppression hearing. In Gant, the Supreme Court ruled that police may search a vehicle incident to an arrest only “when the arrestee is unsecured and within reaching distance of the passenger compartment at the time of the search,” or when it is “reasonable to believe evidence relevant to the crime of arrest might be found in the vehicle.” 129 S. Ct. at 1719. In People v. Short, No. 292288 (published Aug. 26, 2010), the Michigan Court of Appeals explained that Gant applied retroactively, and the police search of the defendant’s car was unconstitutional. But exclusion of evidence is not an automatic remedy for an unlawful search. The exclusionary rule is designed to deter police misconduct, and therefore, courts have recognized a good-faith exception to the rule. Addressing this issue of first impression, the Court of Appeals concluded that an officer’s reliance on valid case law which was later overturned may form the basis of an officer’s good faith and avoid exclusion of the disputed evidence at trial. Because the search was lawful under well-established case law at the time of the arrest, the Court of Appeals upheld the trial court’s application of the good faith exception to the exclusionary rule.

COA Opinion: “Medical care or treatment” exception to governmental immunity applies to treatment of mental illnesses

Kevin Kileen — Fri, 27 Aug 2010 21:11:38 +0000

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.