Johnson v. Recca

• Decision Date: 30 July 2012
• Docket Number: Docket No. 143088.
• Parties: JOHNSON v. RECCA.
• Court: Michigan Supreme Court

492 Mich. 169

821 N.W.2d 520

JOHNSON

v.RECCA.

Docket No. 143088.

Supreme Court of Michigan.

Argued April 4, 2012.

Decided July 30, 2012.

Skupin & Lucas, P.C., Alpena, (by Joseph F. Lucas), for plaintiff.

Garan Lucow Miller, P.C., Arbor, (by Daniel S. Saylor), for defendant.

Willingham & Coté, P.C., East Lansing, (by Kimberlee A. Hillock and John A. Yeager), for the Insurance Institute of Michigan.

MARKMAN, J.

We granted leave to appeal to consider whether, in a third-party tort action, damages for replacement services are recoverable pursuant to MCL 500.3135(3)(c).¹ Because “replacement services” is not among the categories listed in MCL 500.3135(3)(c), damages for replacement services are not recoverable in such an action. Accordingly, we reverse the Court of Appeals' judgment in part and reinstate the trial court's grant of summary disposition in defendant's favor on plaintiff's economic damages claim for replacement services expenses.

I. FACTS AND HISTORY

In July 2004, while walking through a gas station parking lot, plaintiff was struck by a motor vehicle driven by defendant, who was insured by Allstate Property and Casualty Insurance Company. At the time, plaintiff lived with Harrietta Johnson, her ex-mother-in-law. Neither woman owned a vehicle, and neither was insured. Plaintiff filed a third-party tort claim against defendant, seeking damages for replacement services pursuant to MCL 500.3135(3)(c). The trial court granted summary disposition in defendant's favor, concluding that plaintiff could not recover damages for replacement services pursuant to MCL 500.3135(3)(c). The Court of Appeals reversed, concluding that plaintiff could recover damages for replacement services under MCL 500.3135(3)(c). Johnson v. Recca, 292 Mich.App. 238, 249, 807 N.W.2d 363 (2011). Defendant appealed, and we granted leave, limited to the issue whether MCL 500.3135(3)(c) includes within its scope the cost of replacement services rendered more than three years after the date of the motor vehicle accident. Johnson v. Recca, 490 Mich. 926, 805 N.W.2d 503 (2011). ²

II. STANDARD OF REVIEW

We review de novo motions for summary disposition brought under MCR 2.116(C)(10). Dressel v. Ameribank, 468 Mich. 557, 561, 664 N.W.2d 151 (2003). We also review de novo issues of statutory interpretation. Eggleston v. Bio–Med. Applications of Detroit, Inc., 468 Mich. 29, 32, 658 N.W.2d 139 (2003).

III. ANALYSIS

At issue is whether, in a third-party tort action, damages for replacement services are recoverable pursuant to MCL 500.3135(3)(c). Under the no-fault automobile insurance act, MCL 500.3101 et seq., insurance companies are required to provide first-party insurance benefits, referred to as personal protection insurance (PIP) benefits for certain expenses and losses. MCL 500.3107; MCL 500.3108. PIP benefits are payable for four general categories of expenses and losses: survivor's loss, allowable expenses, work loss, and replacement services. “Survivor's loss” is defined in MCL 500.3108(1), and “allowable expenses,” “work loss,” and replacement services are defined as follows in MCL 500.3107(1): ³

(a) Allowable expenses consisting of all reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person's care, recovery, or rehabilitation. Allowable expenses within personal protection insurance coverage shall not include charges for a hospital room in excess of a reasonable and customary charge for semiprivate accommodations except if the injured person requires special or intensive care, or for funeral and burial expenses in the amount set forth in the policy which shall not be less than $1,750.00 or more than $5,000.00.

(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. Work loss does not include any loss after the date on which the injured person dies. Because the benefits received from personal protection insurance for loss of income are not taxable income, the benefits payable for such loss of income shall be reduced 15% unless the claimant presents to the insurer in support of his or her claim reasonable proof of a lower value of the income tax advantage in his or her case, in which case the lower value shall apply. Beginning March 30, 1973, the benefits payable for work loss sustained in a single 30–day period and the income earned by an injured person for work during the same period together shall not exceed $1,000.00, which maximum shall apply pro rata to any lesser period of work loss. Beginning October 1, 1974, the maximum shall be adjusted annually to reflect changes in the cost of living under rules prescribed by the commissioner [of the Office of Financial and Insurance Regulation] but any change in the maximum shall apply only to benefits arising out of accidents occurring subsequent to the date of change in the maximum.

(c) [ Replacement services ] Expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or herself or of his or her dependent. [Emphasis added.]

Although the no-fault act generally abolishes tort liability arising from the ownership, maintenance, or use of a motor vehicle, MCL 500.3135 provides several exceptions to the general rule. One such exception is set forth in MCL 500.3135(3), which provides in relevant part:

Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle with respect to which the security required by [MCL 500.3101] was in effect is abolished except as to:

* * *

(c) Damages for allowable expenses, work loss, and survivor's loss as defined in [MCL 500.3107 to MCL 500.3110] in excess of the daily, monthly, and 3–year limitations contained in those sections. The party liable for damages is entitled to an exemption reducing his or her liability by the amount of taxes that would have been payable on account of income the injured person would have received if he or she had not been injured. [Emphasis added.]

“An overarching rule of statutory construction is that this Court must enforce clear and unambiguous statutory provisions as written.” United States Fidelity & Guaranty Co. v. Mich. Catastrophic Claims Ass'n (On Rehearing), 484 Mich. 1, 12, 795 N.W.2d 101 (2009) (USF & G ) (quotation marks and citation omitted). MCL 500.3135(3)(c) is a clear and unambiguous provision, providing that “[d]amages for allowable expenses, work loss, and survivor's loss” are recoverable in a third-party tort action. MCL 500.3135(3)(c) does not mention damages for replacement services. Therefore, in a third-party tort action, damages for replacement services are not recoverable pursuant to MCL 500.3135(3)(c),⁴ and the Court of Appeals erred by holding otherwise.

IV. THE COURT OF APPEALS ERRED

Contrary to our present holding, the Court of Appeals held that damages for replacement services are recoverable in a third-party tort action. Johnson, 292 Mich.App. at 249, 807 N.W.2d 363. Apparently in agreement with our conclusion that only damages for those categories of PIP benefits actually mentioned in MCL 500.3135(3)(c) are recoverable, it grounded its holding in the observation that “replacement services” constitutes “merely one category of allowable expenses.” Id. at 247, 807 N.W.2d 363. For the reasons explained in this opinion, we disagree. Instead, we believe that “replacement services” and “allowable expenses” constitute separate and distinct categories of PIP benefits under the statute.

A. STATUTORY ORGANIZATION

The first and most obvious criticism of the Court of Appeals' conclusion that replacement services constitutes a subcategory of allowable expenses is that this simply overlooks the Legislature's own statutory organization, which makes clear that allowable expenses and replacement services constitute separate and distinct categories of PIP benefits. “Allowable expenses” are described in MCL 500.3107(1)(a), “replacement services” are described in MCL 500.3107(1)(c), and “work loss” expenses are described in-between in MCL 500.3107(1)(b). “Replacement services” are not described or referred to in the same subdivision as “allowable expenses,” nor are “replacementservices” described in any subpart of “allowable expenses.” This organization of MCL 500.3107 clearly indicates that “replacement services” constitutes a category of PIP benefits that is separate and distinct from “allowable expenses.”

“We interpret th[e] words in [the statute in] light of their ordinary meaning and their context within the statute and read them harmoniously to give effect to the statute as a whole.” People v. Peltola, 489 Mich. 174, 181, 803 N.W.2d 140 (2011). Statutory interpretation requires courts to consider the placement of the critical language in the statutory scheme. USF & G, 484 Mich. at 13, 795 N.W.2d 101. In doing so, courts “must give effect to every word, phrase, and clause in a statute and avoid an interpretation that would render any part of the statute surplusage or nugatory.” State Farm Fire & Cas. Co. v. Old Republic Ins. Co., 466 Mich. 142, 146, 644 N.W.2d 715 (2002). The Court of Appeals' interpretation improperly rendered the Legislature's organization nugatory by giving no effective meaning to the Legislature's compartmentalization of “allowable expenses” and “replacement services.” ⁵

B. GRIFFITH v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

The Court of Appeals also misread our decision in Griffith v. State Farm Mut. Auto. Ins. Co., 472 Mich. 521, 697 N.W.2d 895 (2005). In Griffith, the plaintiff was severely injured in a motor vehicle accident. After the plaintiff returned home from a nursing...