Fidelity and Deposit Co. of Maryland v. Newman

• Court: Court of Appeal of Michigan
• Writing for the Court: KELLY
• Citation: Fidelity and Deposit Co. of Maryland v. Newman, 311 N.W.2d 821, 109 Mich.App. 620 (Mich. App. 1981)
• Decision Date: 21 September 1981
• Docket Number: Docket No. 51112
• Parties: FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a Maryland Corporation, as assignee and subrogee of Frankenmuth Mutual Insurance Company, a Michigan Corporation, Plaintiff, v. William G. NEWMAN, Defendant and Third Party Plaintiff-Appellant, v. Ted BOSCHMA, Third Party Defendant-Appellee, v. Frank SPAULDING, Jan Louis Scmedding, Uri Gill, Roger Dale Nowlin, Alan Houston, Robert Pankow, Diane Skates, Jim Fisher, Earl David Laskey, William Douglas Burks, Third Party Defendants. 109 Mich.App. 620, 311 N.W.2d 821

Page 821

311 N.W.2d 821

FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a Maryland

Corporation, as assignee and subrogee of

Frankenmuth Mutual Insurance Company, a Michigan Corporation, Plaintiff, v. William G. NEWMAN, Defendant and Third Party Plaintiff-Appellant, v. Ted BOSCHMA, Third Party Defendant-Appellee, v. Frank SPAULDING, Jan Louis Scmedding, Uri Gill, Roger Dale

Nowlin, Alan Houston, Robert Pankow, Diane Skates,

Jim Fisher, Earl David Laskey, William

Douglas Burks, Third Party

Defendants.

Docket No. 51112.

109 Mich.App. 620, 311 N.W.2d 821

Court of Appeals of Michigan.

Sept. 21, 1981.

[109 MICHAPP 621] Colista, Green & Adams by Richard C. Kaufman, Detroit, for defendant Newman.

Myron F. Poe, Royal Oak, for third-party defendant Boschma.

Before MAHER, P. J., and R. B. BURNS and KELLY, JJ.

KELLY, Judge.

This appeal presents the question of whether an intentional tortfeasor who is being sued for a tort involving the breach of a fiduciary duty may seek contribution from an alleged joint intentional tortfeasor. Defendant-third-party plaintiff William Newman seeks review of the issue after a lower court granted third-party defendant Ted Boschma's motion for summary judgment pursuant to GCR 1963, 117.2(1).

Plaintiff Fidelity and Deposit Company of Maryland[109 MICHAPP 622] initiated this action against Newman alleging that he misappropriated and diverted funds belonging to his employer, Frankenmuth Mutual Insurance Company. The complaint also alleged that Newman filed $47,748.19 in false automobile claims with Frankenmuth. Pursuant to a contract of bond, Fidelity paid Frankenmuth and sought repayment of the funds from Newman.

Newman filed a third-party complaint against a number of third-party defendants. Ted Boschma, one of the third-party defendants, brought a motion for summary judgment, arguing that contribution among intentional tortfeasors was not a recognized doctrine in Michigan. The lower court agreed, holding:

"I do know that the general rule of law and equity * * * (is) * * * that a person seeking the tort relief should come in with clean hands. * * * (T)he general principle of law is courts are not open to help those who are engaged in illegal activity. * * * Our courts are for people who haven't committed transgression themselves."

The standard used to review a lower court's grant of a motion for summary judgment based on GCR 1963, 117.2(1) is well settled. The motion is to be tested by the pleadings alone. Todd v. Biglow, 51 Mich.App. 346, 349, 214 N.W.2d 733 (1974), lv. den. 391 Mich. 816 (1974). The motion tests the legal basis of the complaint, not whether it can be factually supported. Partrich v. Muscat, 84 Mich.App. 724, 729, 270 N.W.2d 506 (1978). The factual allegations of the complaint are taken as true, along with any inferences or conclusions which may fairly be drawn from the facts alleged. Id., 729-730, 270 N.W.2d 506. Unless the claim is so clearly unenforceable as a matter of law that no factual development [109 MICHAPP 623] can possibly justify a right to recover, the motion under the subrule should be denied. Id., 730, 270 N.W.2d 506.

The statutory provision which delineates the basic right of contribution among tortfeasors is M.C.L. § 600.2925a; M.S.A. § 27A.2925(1). The excerpt which governs contribution among joint tortfeasors states in part:

"(1) Except as otherwise provided in this act, when 2 or more persons become jointly or severally liable in tort for the same injury to a person or property or for the same wrongful death, there is a right of contribution among them even though judgment has not been recovered against all or any of them.

"(8) This section does not apply to breaches of trust or of other fiduciary obligations."

This statute is substantially similar to the Uniform Contribution Among Tortfeasors Act. The commissioners' comment to subsection 1(g) of that act states:

"The meaning is clear. It is not intended that the act should extend to liabilities arising out of breaches of fiduciary relationships." 12 ULA, § 1(g), p. 66.

This particular subsection of the statute has not been interpreted by a Michigan court. However, the Florida District Court of Appeals addressed the effect of this section in Eason v. Lau, 369 So.2d 600 (Fla.App., 1978), cert. den. 368 So.2d 1365 (Fla., 1979). In Eason, plaintiff sued a number of defendants alleging a tort involving breach of a fiduciary relationship. When plaintiff voluntarily dismissed one of the defendants, the remaining defendants moved for summary judgment claiming the [109 MICHAPP 624] dismissal released all defendants. The trial court denied defendants' motion and they appealed.

On appeal plaintiff argued that Fla.Stat. § 768.041 allowed the release of one tortfeasor without affecting his right against the other tortfeasors. Defendants argued that the common law rule that the release of one tortfeasor released all tortfeasors applied because Fla.Stat. § 768.31, which is the same as M.C.L. § 600.2925a; M.S.A. § 27A.2925(1), repealed Fla.Stat. § 768.041. The court rejected defendant's argument citing Fla.Stat. § 768.31(2)(g), which is the same as M.C.L. § 600.2925a(8); M.S.A. § 27A.2925(1)(8). The court stated:

"It syllogistically follows, therefore, that if the tort charged sub judice involved breach of trust or other fiduciary obligation and that F.S. 768.31 (the Uniform Contribution Among Tortfeasors Act) is not applicable to breaches of trust or other fiduciary obligation and if 768.041 is applicable to all torts, as held by the Supreme Court in the Batchelor case (321 So.2d 73 (Fla., 1975)), then the conclusion is inescapable that F.S. 768.31 is inapplicable and F.S. 768.041 is controlling. F.S. 768.041 being controlling, the common law rule is inapplicable; therefore the release of Virgo did not operate as a release or discharge of the other joint tortfeasors." Id., 602.

In this case, Newman, as an appraiser and claims adjuster for Frankenmuth, had a fiduciary duty to refrain from misappropriating and diverting funds belonging to his employer. He also had a fiduciary duty not to file false claims with his employer. Plaintiff's action against Newman is based upon his alleged breaches of duty making M.C.L. § 600.2925a; M.S.A. § 27A.2925(1) inapplicable. Because Newman does not have a statutory right to contribution, he must demonstrate a common [109 MICHAPP 625] law right to contribution to avoid summary judgment.

The general rule of contribution allows a defendant who pays more than his share of a judgment to recover contribution against other tortfeasors who have failed to pay their respective shares. Caldwell v. Fox, 394 Mich. 401, 417, 231 N.W.2d 46 (1975). At common law, an exception to this rule was created denying the right of contribution to intentional wrongdoers. Id., 417, 231 N.W.2d 46; Prosser, Torts (4th ed.), § 50, p. 305. Because of the liberalized joinder rules, American courts extended this exception to include negligent wrongs. Caldwell, supra, 418, 231 N.W.2d 46. To avoid this extension, a number of states, including Michigan, adopted statutes which gave joint tortfeasors the right to contribution. Prosser, supra, 307. In Moyses v. Spartan Asphalt Paving Co., 383 Mich. 314, 174 N.W.2d 797 (1970), the Court examined M.C.L. § 600.2925; M.S.A. § 27A.2925 which was the predecessor to M.C.L. § 600.2925a; M.S.A. § 27A.2925(1). The Court held that the statute only applied to joint tortfeasors. Id., 331, 174 N.W.2d 797. The Court also examined the common rule bar...