Popma v. Auto Club Ins. Ass'n

• Decision Date: 01 April 1994
• Docket Number: No. 7,No. 96795,96795,7
• Citation: 446 Mich. 460,521 N.W.2d 831
• Parties: Edward POPMA, Jr., Plaintiff-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee. Calendar,
• Court: Michigan Supreme Court

Page 831

521 N.W.2d 831

446 Mich. 460

Edward POPMA, Jr., Plaintiff-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee.

No. 96795.

Calendar No. 7, April Term, 1994.

Supreme Court of Michigan.

Argued April 6, 1994.

Decided Aug. 26, 1994.

Williams, Klukowski, Fotieo, Szczytko by Paul A. Williams, Grand Rapids, for plaintiff.

Nancy L. Bosh and James G. Gross, Detroit, for defendant.

Opinion

MICHAEL F. CAVANAGH, Chief Justice.

This no-fault insurance case presents two questions: (1) whether a person working less than full-time is "temporarily unemployed" as that term is used in M.C.L. § 500.3107a; M.S.A. § 24.13107(1), AND (2)¹ whether a claimant may subtract the amount of attorney fees paid to secure an award of social security disability benefits from the amount of those benefits subject to setoff pursuant to M.C.L. § 500.3109(1); M.S.A. § 24.13109(1). ²

We hold that a person who is employed, even one who is employed less than full-time, is not, by definition, unemployed. Plaintiff's work loss is, therefore, calculated pursuant to M.C.L. § 500.3107(1)(b); M.S.A. § 24.13107(1)(b), and limited to what he would have earned had he not been involved in the accident. We remand this case to the trial court for a determination of plaintiff's work loss.

We also hold that the entire amount of social security disability benefits that plaintiff is entitled to are subject to setoff pursuant to § 3109(1), including the amount of those benefits paid directly to plaintiff's attorney as a fee. A contrary holding would allow plaintiff to shift the burden of his attorney fees onto his no-fault insurer in violation of our common law. Moreover, it would allow plaintiff a double recovery, to the extent of the attorney fees, because the disability benefits paid to his attorney discharged a debt of the plaintiff without a corresponding decrease in his work-loss benefits.

I

The facts in this case are largely undisputed. The plaintiff broke his leg in a one-car accident on September 23, 1988. The defendant is plaintiff's no-fault insurer. The plaintiff brought suit in Kent Circuit Court to recover, among other things, work-loss benefits. Both parties moved for summary disposition on the basis of the following facts.

Beginning on August 18, 1988, and continuing until the time of the accident, plaintiff worked part-time jobs at both Manpower ³ and Norm's Restaurant in Grand Rapids. While working part-time, plaintiff also received unemployment compensation, apparently because his wages did not exceed one-half the amount of unemployment compensation due. ⁴ Almost four months before the accident, plaintiff had been employed full-time, making $10.47 an hour at Hydaker-Wheatlake in Traverse City. He worked there from April 18, 1988, until he was fired on June 2, 1988. ⁵ This was plaintiff's last full-time job before the accident.

The trial court held that plaintiff was temporarily unemployed because he did not have a full-time job at the time of the accident. Because he was temporarily unemployed, the trial court reasoned, § 3107a applied and his work loss was equal to what he earned during his last month of full-time employment at Hydaker-Wheatlake multiplied by the number of weeks of disability. The trial court also held that the entire amount of plaintiff's social security disability benefits, including the portion paid directly to his attorney as a fee, had to be set off against his no-fault benefits pursuant to § 3109(1).

Defendant appealed as of right the trial court's order granting plaintiff summary disposition, and the plaintiff cross-appealed that part of the order allowing defendant to set off the entire amount of social security disability benefits. The Court of Appeals reversed the decision of the trial court regarding the work-loss issue, but affirmed the setoff.

It is clear ... that the Legislature has seen fit to authorize work-loss benefits for persons whose work status falls within one of only two categories--employed or temporarily unemployed. Irrespective of the nature of the work being performed, an underemployed person is, by definition, employed. Plaintiff, as an employee of both Manpower and Norm's Restaurant, was employed at the time of the accident. He was therefore entitled to benefits as set forth in § 3107(1)(b) and not § 3107a.

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Neither the fact that plaintiff's attorney received his fee directly from the Social Security Administration nor the fact that this money never actually passed through plaintiff's hands precludes a setoff for the entire amount of social security disability benefits to which plaintiff was entitled. [199 Mich.App. 653, 657-658, 502 N.W.2d 378 (1993).]

In a concurring opinion, Judge Connor held that although he agreed that plaintiff was not temporarily unemployed at the time of the accident, the amount of money plaintiff would have earned is a factual question and no facts were adduced at trial establishing plaintiff's actual work loss. Accordingly, he concluded that the case should be remanded and the plaintiff allowed to present proofs regarding the amount of his work loss.

II

The first question presented by this case requires that we examine, once again, the interplay between §§ 3107(1)(b), and 3107a of the no-fault act.

A

The provisions governing the award of work-loss benefits are contingent on the employment status of the claimant at the time of the accident. Section 3107(1)(b) applies when a claimant is working at the time of the accident, while § 3107a applies when a claimant is temporarily unemployed. Section 3107 provides, in part:

(1) Except as provided in subsection (2), personal protection insurance benefits are payable for the following:

* * * * * *

(b) Work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured. [M.C.L. § 500.3107(1)(b); M.S.A. § 24.13107(1)(b).]

Section 3107a provides, in its entirety:

Subject to the provisions of section 3107(1)(b), work loss for an injured person who is temporarily unemployed at the time of the accident or during the period of disability shall be based on earned income for the last month employed full time preceding the accident. [M.C.L. § 500.3107a; M.S.A. § 24.13107(1).]

Although the specific issue presented in this case appears to be one of first impression for this Court, ⁶ we examined the interplay between §§ 3107 and 3107a in MacDonald v. State Farm Mutual Ins. Co., 419 Mich. 146, 350 N.W.2d 233 (1984). A careful reading of both the majority and dissenting opinions in MacDonald shows that this Court unanimously agreed to several principles underlying § 3107a.

For example, all agreed that the legislative purpose behind § 3107a was to address the implication created by § 3107(1)(b) that one must actually be employed at the time of the accident to qualify for work-loss benefits. Indeed, the Legislative Analysis of HB 4221, which became § 3107a, bears this out:

"[The lack of a concise definition of loss of income in § 3107(b) ] has given rise to certain problems in connection with persons who are seasonally employed or temporarily unemployed as a result of lay-offs, and who are disabled as a result of an auto accident. In the case of a worker who is unemployed at the time of an accident or during the period of disability, the law might be construed as providing for no work loss benefits since the worker would have had no income at that time, had he/she not been injured. In addition, disabled workers are not entitled to unemployment compensation since benefits are not payable to a person who is unable to work. An unemployed worker who is disabled in an auto accident may thus find him/herself without benefits of either sort." [MacDonald, supra at 152-153, 350 N.W.2d 233, quoting Analysis, H.B. 4221, November 21, 1975.]

Moreover, all agreed that § 3107a was designed to provide work-loss benefits for a claimant who is temporarily unemployed at the time of the accident because of a lack of available employment or one who becomes temporarily unemployed during a period of disability. In so holding, the majority observed:

The phrase "temporarily unemployed," it is evident to us, refers to the unavailability of employment, not the physical inability to perform work. The legislative analysis of H.B. 4221 reveals a legislative concern with those who but for their disability could have received unemployment compensation as a substitute income. [MacDonald, supra at 153, 350 N.W.2d 233, see also Cavanagh, J., dissenting, at 156-157, 350 N.W.2d 233.]

By enacting § 3107a, the Legislature intended to remedy the situation in which a claimant is precluded from receiving any work-loss benefits because the claimant is unemployed at the time of the accident. Therefore, § 3107a permits a temporarily unemployed claimant to recover work-loss benefits when they would have previously been automatically precluded from doing so. However, the primary focus is on the availability of work at the time of the accident.

B

Our application of § 3107a in this case is guided by MacDonald. The plaintiff has not distinguished the case at bar from MacDonald ⁷ and we see no principled reason to depart from MacDonald' § analysis regarding the legislative intent ⁸ underlying § 3107a. In MacDonald, this Court held that § 3107a applies when a claimant suffers an unavailability of work at the time of the accident. Plaintiff in this case has not shown an unavailability of work at the time of the accident. Indeed, the fact that he was working two part-time jobs shows that work suitable to his qualifications and experience was available. Moreover, the fact that plaintiff was employed logically precludes any finding of unemployment.

The Legislature did not define the word "unemployed" as used in § 3107a, therefore, its ordinary meaning applies. M.C.L. § 8.3a; M.S.A. § 2.212(1). Reference to a dictionary...