Cruz v. STATE FARM MUTUAL AUTOMOBILE INS. CO.

• Decision Date: 09 August 2000
• Docket Number: Docket No. 206120.
• Citation: 241 Mich. App. 159,614 N.W.2d 689
• Parties: Peter CRUZ, Jr., Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

614 N.W.2d 689

241 Mich. App. 159

Peter CRUZ, Jr., Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.

Docket No. 206120.

Court of Appeals of Michigan.

Submitted September 7, 1999, at Grand Rapids.

Decided May 16, 2000, at 9:05 a.m.

Released for Publication August 9, 2000.

R. Kevin Thieme, Grand Rapids, for the plaintiff.

Tolley VandenBosch Walton Korolewicz & Brengle, P.C. (by Lawrence Korolewicz and Mark J. Colon), Grand Rapids, for the defendant.

Before McDONALD, P.J., and NEFF and SMOLENSKI, JJ.

McDONALD, P.J.

Plaintiff appeals as of right from the trial court's order granting defendant's motion for summary disposition pursuant to MCR 2.116(C)(10). We affirm in part and reverse in part.

On October 26, 1994, plaintiff was involved in an automobile accident. Plaintiff alleges that he was seriously injured when an uninsured motorist negligently struck his automobile. At the time of the accident, plaintiff was insured by defendant. Plaintiff's policy included uninsured motorist coverage and the statutorily mandated first-party coverage. The policy also includes the following examination under oath (EUO) provision, contained in an amendatory endorsement to the policy:

2. REPORTING A CLAIM—INSURED'S DUTIES

a. The following provision is added to item 5:

The person making the claim also shall answer questions under oath when asked by anyone we name, as often as we reasonably ask, and sign copies of the answers.

Plaintiff made a claim with defendant seeking both first-party no-fault benefits and uninsured motorist benefits. Pursuant to the above policy provision, defendant initially requested that plaintiff make "a recorded statement" and later, through its attorney, repeatedly asked plaintiff to submit to an EUO in this matter. Defendant claimed that it needed to obtain the EUO to investigate plaintiff's claim. Plaintiff had been involved in an earlier automobile accident in December 1992, which resulted in a brain injury, and defendant claimed it needed to discuss the circumstances of both automobile accidents and plaintiff's current medical status. Plaintiff refused to submit to the EUO, arguing that the Michigan no-fault statute did not require him to do so. Ultimately, defendant denied plaintiff's claims for uninsured motorist benefits, in November 1995, and first-party no-fault benefits, in December 1995, because plaintiff had refused to answer questions under oath.

After defendant denied plaintiff's claim for uninsured motorist benefits, plaintiff demanded arbitration pursuant to provisions in the policy providing for arbitration where the insured and defendant do not agree on whether the insured is "legally entitled to collect damages from the owner or driver of the uninsured motor vehicle." Defendant responded that plaintiff was not entitled to arbitration because he had breached the insurance contract by failing to submit to an EUO. However, plaintiff unilaterally proceeded to arbitration, appointing his arbitrator and scheduling an arbitration hearing.¹ Defendant refused to participate in the arbitration process and did not select its own arbitrator. In light of defendant's failure to select an arbitrator, plaintiff's arbitrator selected a "neutral arbitrator" and an arbitration hearing was held. The two arbitrators found that plaintiff had not breached his policy, that the uninsured motorist was at fault in the accident, and that plaintiff was entitled to $150,000. Plaintiff contended this decision was binding on defendant because the insurance policy provides that "[t]he written decision of any two arbitrators shall be binding on each party." When defendant did not respond to plaintiff's request for payment, he filed the instant action.

Plaintiff's complaint had two counts. Count one sought to confirm the arbitration award and count two sought first-party no-fault benefits. Plaintiff and defendant filed cross-motions for summary disposition. The trial court granted defendant's motion in part, dismissing count one of plaintiff's complaint and ordering plaintiff to submit to an EUO as a condition precedent to proceeding with his claim set forth in count two. Plaintiff then filed an application for leave to appeal this interlocutory order of the trial court in this Court.

While the appeal in this Court was pending, defendant scheduled an EUO, which plaintiff refused to attend. Defendant then moved for summary disposition in the trial court, and the trial court granted defendant's motion, dismissing count two of plaintiff's complaint. Plaintiff then appealed as of right to this Court. His earlier application for leave to appeal the trial court's interlocutory order was denied. Cruz v. State Farm Mut Auto Ins Co., unpublished order of the Court of Appeals, issued October 1, 1997.

Plaintiff first argues the trial court erred in granting summary disposition to defendant on count two of his complaint, seeking first-party no-fault benefits, on the basis of plaintiff's noncompliance with the EUO policy provision. Plaintiff argues the EUO provision is contrary to the no-fault insurance act. This is an issue of first impression in Michigan.

This Court reviews a motion for summary disposition de novo. Spiek v. Dep't of Transportation, 456 Mich. 331, 337, 572 N.W.2d 201 (1998). We also review issues of statutory interpretation de novo. Haworth, Inc. v. Wickes Mfg. Co., 210 Mich.App. 222, 227, 532 N.W.2d 903 (1995).

A motion pursuant to MCR 2.116(C)(10) tests the factual support for a claim. Spiek, supra at 337, 572 N.W.2d 201. The motion may be granted pursuant to MCR 2.116(C)(10) when, except with respect to damages, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Michigan Mut. Ins. Co. v. Dowell, 204 Mich.App. 81, 85, 514 N.W.2d 185 (1994). The trial court must consider the documentary evidence submitted by the parties, and giving the benefit of any reasonable doubt to the nonmoving party, the trial court must determine whether a record might be developed that would leave open an issue on which reasonable minds might differ. Id.

The purpose of Michigan's no-fault insurance system is to provide victims of automobile-related accidents with assured, adequate, and prompt payment for economic losses. Shavers v. Attorney General, 402 Mich. 554, 578-579, 267 N.W.2d 72 (1978); Miller v. Farm Bureau Mut. Ins. Co., 218 Mich.App. 221, 225-226, 553 N.W.2d 371 (1996). The no-fault act mandates that insurers "pay benefits for accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle." MCL 500.3105(1); MSA 24.13105(1); Miller, supra at 226, 553 N.W.2d 371. Because personal protection insurance benefits are mandated by the no-fault statute, the statute is the "rule-book" for deciding the issues involved in questions regarding awarding those benefits. Rohlman v. Hawkeye-Security Ins. Co., 442 Mich. 520, 524-525, 502 N.W.2d 310 (1993); Mate v. Wolverine Mut. Ins. Co., 233 Mich.App. 14, 19, 592 N.W.2d 379 (1998).

We recognize that the no-fault act does not specifically preclude or permit an EUO provision. However, we agree with plaintiff that the no-fault act sets forth the insured's duties of cooperation, and because it does not provide for an EUO provision, the provision is contrary to the no-fault act.

First, M.C.L. § 500.3145; MSA 24.13145 provides that the insured cannot bring suit for personal protection insurance benefits later than one year after the date of the accident giving rise to the injury, unless written notice has been given to the insurer within the year after the accident or if the insurer had previously made a payment of personal protection insurance benefits for the injury.

In addition to the notice of injury provision, the no-fault act provides that the insured will submit to a mental or physical examination if the mental or physical condition of the person is material to a claim that has been made, or may be made, for personal protection insurance benefits. MCL 500.3151; MSA 24.13151. This section of the no-fault act also allows a personal protection insurer to "include reasonable provisions in a personal protection insurance policy for mental and physical examination of persons claiming personal protection insurance benefits." MCL 500.3151; MSA 24.13151.

The no-fault act also provides insurers with a means for gathering information regarding a claimant's earnings and medical history, condition, and treatment. MCL 500.3158(1); MSA 24.13158(1) provides that, upon request, an employer of the injured person must furnish the insurer with information pertaining to the injured person's earnings since the injury and for a reasonable time before the injury. MCL 500.3158(2); MSA 24.13158(2) provides that upon request of the insurer, a written report of the history, condition, treatment, and dates and costs of treatment of the injured person must be furnished, and that the records regarding the injured person's history, condition, treatment, and dates and costs of treatment must be produced and permitted to be inspected and copied.

Finally, the no-fault act includes a discovery provision. MCL 500.3159; MSA 24.13159 allows a court to enter, upon good cause shown, an order for discovery in a dispute "regarding the insurer's right to discovery of facts about an injured person's earnings or about his history, condition, treatment and dates and costs of treatment."

Although defendant recognizes these provisions of the no-fault act, it contends that the statute does not provide a means for it to determine whether plaintiff's injuries were accidental. We agree with defendant that pursuant to M.C.L. § 500.3105; MSA 24.13105, it is only obligated to pay benefits for accidental injuries. MCL 500.3105(4); MSA 24.13105(4) defines bodily injury as accidental "unless suffered intentionally by the injured person or caused intentionally by the...