Cooper v. Auto Club Ins. Ass'n
| Decision Date | 25 June 2008 |
| Docket Number | Docket No. 132792.,Calendar No. 2. |
| Citation | 481 Mich. 399,751 N.W.2d 443 |
| Parties | Amyruth L. COOPER, by her Next Friend, Sharon L. Strozewski, and Loralee A. COOPER, by her Next Friend, Sharon L. Strozewski, Plaintiffs-Appellants, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee. |
| Court | Michigan Supreme Court |
At issue is whether plaintiffs' common-law cause of action for fraud is subject to the one-year-back rule of MCL 500.3145(1). Because the one-year-back rule only applies to actions brought under the no-fault act, and because a fraud action is not a no-fault action, i.e., an "action for recovery of personal protection insurance benefits payable under [the no-fault act] for accidental bodily injury," MCL 500.3145(1), but instead is an independent and distinct action for recovery of damages payable under the common law for losses incurred as a result of the insurer's fraudulent conduct, we hold that a common-law cause of action for fraud is not subject to the one-year-back rule. Therefore, we reverse in part the judgment of the Court of Appeals and remand the case to the trial court for further proceedings consistent with this decision.
In January 1987, plaintiffs Amyruth and Loralee Cooper sustained severe brain injuries in an automobile accident that occurred while they were passengers in a car driven by their mother, Sharon Strozewski. From the time they were discharged from the hospital in October 1987, both sisters have required 24-hour attendant care. By the fall of 1989, Loralee did not need as much nursing care, but still needed attention beyond what a babysitter could provide. Amyruth has required continuous skilled nursing care, which has been provided through an agency paid by defendant, plaintiffs' automobile insurer.
At the time of the accident, Strozewski was working at GTE, earning approximately $50 a day. In the fall of 1989, defendant's claims representative, Jim Hankamp, suggested to Strozewski that she quit her job and stay at home to care for Loralee full-time. Defendant offered to pay Strozewski $50 a day, and she accepted by signing an agreement. In September 1991, the parties agreed to increase the payments to Strozewski to $75 a day. In October 1998, the rate was effectively increased to $6.50 an hour and, after that, it progressively increased up to $10 an hour by October 2000. According to defendant, as of December 26, 2003, defendant had paid more than $5.6 million in personal protection insurance (PIP) benefits under the no-fault act for the girls' care.
Plaintiffs filed this lawsuit in 2003, alleging that defendant had failed to pay all the PIP benefits that were due under the no-fault act because it underpaid Strozewski for the attendant care she had provided to her daughters at home over the years. Defendant filed a motion for partial summary disposition arguing, among other things, that because the amended Revised Judicature Act (RJA), MCL 600.5851(1),1 states that the minority/insanity tolling provision applies only to actions brought under this act, the saving provision does not apply to no-fault actions to toll the one-year-back rule of MCL 500.3145(1). The trial court denied the motion, and the Court of Appeals denied defendant's application for leave to file an interlocutory appeal. Unpublished order of the Court of Appeals, entered July 1, 2004 (Docket No 254659). Two weeks later, the Court of Appeals issued its opinion in Cameron v. Auto Club Ins. Ass'n, 263 Mich.App. 95, 687 N.W.2d 354 (2004), which held that the minority/insanity provision of MCL 600.5851(1) applies only to actions filed under the RJA and, therefore, it does not toll an action brought under the no-fault act. Defendant filed an application for leave to appeal in this Court, which was denied, 471 Mich. 915, 688 N.W.2d 509 (2004), as was defendant's motion for reconsideration. 471 Mich. 956, 690 N.W.2d 102 (2004).
In August 2004, following the Court of Appeals decision in Cameron, plaintiffs amended their complaint to assert a new cause of action for fraud. Plaintiffs alleged that defendant had fraudulently induced Strozewski to accept an unreasonably low compensation rate for her in-home attendant care services. Specifically, plaintiffs alleged that defendant had committed fraud by telling Strozewski: (1) that if she did not quit her job and accept $50 a day for providing 24-hour attendant care for Loralee, she would be personally responsible for paying for Loralee's nursing care; (2) that she had a parental obligation to provide attendant care for her children, which reduced defendant's legal obligation to pay attendant care benefits, and that if she did not agree to take care of Loralee for $50 a day, Loralee would have to be institutionalized; (3) that the attendant-care rate was not negotiable and that a higher rate was not available even though, in reality, defendant was paying other insureds as much as $7 an hour for providing similar attendant care; (4) that she was required to sign a contract before she could recover continuing no-fault benefits; (5) that case-management expenses were paid at the same rate as attendant-care benefits; and (6) that attendant care could not be paid to family members at the market rate or agency rate, i.e., the rate normally paid by the insurance agency to other caregivers. Plaintiffs allege that, as a result of defendant's fraud, they sustained the following damages: (1) inadequate payments for attendant-care services; (2) loss of payments for case-management expenses, i.e., expenses incurred for the services rendered by a case manager; (3) loss of payments for room and board expenses; and (4) inadequate payments of no-fault benefits.
While the denial of defendant's first motion for partial summary disposition was still on appeal, defendant filed a second motion for partial summary disposition, arguing that Strozewski could not recover in-home attendant-care benefits for services rendered before the filing of the complaint. The trial court denied the motion, and defendant did not file an interlocutory appeal.
Several months later, defendant filed a third motion for partial summary disposition, arguing that, under MCL 500.3145(1), plaintiffs could not recover benefits for any services that were rendered more than one year before the filing of the original complaint. The trial court denied the motion. Defendant filed an interlocutory application for leave to appeal, which was denied by the Court of Appeals. Unpublished order of the Court of Appeals, entered January 12, 2005 (Docket No. 259729). Defendant then filed a second application for leave to appeal in this Court, which was denied. 472 Mich. 858, 691 N.W.2d 457 (2005).
After this Court denied leave to appeal, the parties stipulated the entry of a judgment that resolved their differences over the amounts of damages that plaintiffs would be able to recover over the various periods at issue. This judgment preserved defendant's right to appeal the trial court's adverse decisions with regard to issues that were raised by either party in defendant's three motions for partial summary disposition.
Defendant then filed a claim of appeal. The Court of Appeals affirmed in part, reversed in part, and remanded for entry of an order of partial summary disposition in favor of defendant. Unpublished opinion per curiam of the Court of Appeals, issued November 21, 2006 (Docket No. 261736). The Court of Appeals held that this Court's decision in Cameron v. Auto Club Ins. Ass'n, 476 Mich. 55, 718 N.W.2d 784 (2006), which affirmed the Court of Appeals decision in that case, was dispositive of defendant's claim that plaintiffs may not recover PIP benefits relating to any losses incurred more than one year before plaintiffs filed their original complaint. Moreover, it held that plaintiffs' fraud claim was subject to the one-year-back rule of MCL 500.3145(1) because the claim was nothing more than a no-fault claim couched in fraud terms. We granted plaintiffs' application for leave to appeal. 478 Mich. 861, 731 N.W.2d 406 (2007).
Issues of statutory interpretation and other questions of law are reviewed de novo. Devillers v. Auto Club Ins. Ass'n, 473 Mich. 562, 566-567, 702 N.W.2d 539 (2005). The grant or denial of a motion for summary disposition is also reviewed de novo. McClements v. Ford Motor Co., 473 Mich. 373, 380, 702 N.W.2d 166 (2005).
The Michigan no-fault act, MCL 500.3145(1), provides, in relevant part:
An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided herein has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment of personal protection insurance benefits for the injury. If the notice has been given or a payment has been made, the action may be commenced at any time within 1 year after the most recent allowable expense, work loss or survivor's loss has been incurred. However, the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced. [Emphasis added.]
The one-year-back rule of this provision limits recovery of PIP benefits to those incurred within one year before the...
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