Johnson v. Wausau Ins. Co.

• Decision Date: 24 March 2009
• Docket Number: Docket No. 281624.
• Court: Court of Appeal of Michigan — District of US
• Parties: JOHNSON v. WAUSAU INSURANCE COMPANY.

769 N.W.2d 755

283 Mich. App. 636

JOHNSON v. WAUSAU INSURANCE COMPANY.

Docket No. 281624.

Court of Appeals of Michigan.

Submitted March 11, 2009, at Detroit.

Decided March 24, 2009.

Approved for publication May 12, 2009, at 9:00 a.m.

Bagley & Langan P.L.L.C. (by Ronald C. Puzio, Jr.), Waterford, for Tammy Johnson.

The Law Office of Gail L. Storck (by Gail L. Storck), Troy, for Wausau Insurance Company and Nationwide Indemnity, Inc.

Before: SAAD, C.J., and BANDSTRA and HOEKSTRA, JJ.

PER CURIAM.

In this action for breach of a no-fault insurance contract and fraud, in which plaintiff, Tammy Johnson, sought payment of personal protection insurance benefits, plaintiff appeals by leave granted the trial court's order granting partial summary disposition to defendants Wausau Insurance Company and Nationwide Indemnity, Inc. Because the one-year-back rule of MCL 500.3145(1) bars plaintiff's no-fault claim for benefits that accrued before July 20, 2005, and because plaintiff cannot establish the reliance element of her fraud claim, we affirm.

I. BASIC FACTS AND PROCEDURAL HISTORY

On October 5, 1983, Nancy Eastman, then 10 months old, suffered severe brain injuries in an automobile accident. Eastman's parents were unable to care for her after her release from a hospital. Dorothy Bencheck agreed to care for Eastman and subsequently became Eastman's legal guardian.

Defendant Wausau Insurance Company¹ insured Eastman's father through a no-fault insurance policy. According to letters from defendant, as a settlement for any claims Eastman may have had against her father,² it paid $37,500 to Eastman. The settlement money was placed in a fund under the protection of the probate court. Defendant also agreed to pay Bencheck $20 a day for her care of Eastman.

According to Bencheck, she called defendant "constantly," on "[d]ifferent occasions, different times" about whether she was entitled to additional benefits for caring for Eastman. She was told, usually by Albert Abdey, a claims adjuster, that defendant had paid everything that it was going to pay to Eastman and that she should petition the probate court to get money from the settlement proceeds. Bencheck testified that defendant never informed her that she was entitled to attendant care benefits that were paid on an hourly basis. In 1989, Bencheck suffered financial difficulty, and after the probate court denied a request for money from Eastman's settlement proceeds, she was no longer able to care for Eastman.

In April 1990, plaintiff took over the care of Eastman. She received $20 a day from defendant for caring for Eastman. The payment, at some time, increased to $21 a day. When plaintiff inquired about the increase, Abdey replied that it was a cost of living adjustment. There was no testimony from plaintiff that she ever asked Abdey if she was entitled to receive additional benefits for caring for Eastman.

Abdey admitted that he never advised either Bencheck or plaintiff that they were entitled to attendant care benefits based on an hourly rate. He did not believe they were entitled to such benefits because such benefits "make[] it [the caring of the disabled person] a job." Further, he did not recall Bencheck ever asking him if she was entitled to additional benefits. And, even if she had, Abdey would not have advised her of any benefits because defendant was paying the benefits it had agreed to pay in the settlement.

In the summer of 2006, plaintiff sued defendant for breach of contract. The complaint was later amended to include a claim for fraud or fraudulent misrepresentation. Plaintiff alleged that defendant, despite having knowledge that Eastman required supervision 24 hours a day, never told or advised her that she was entitled to attendant care benefits. Plaintiff also alleged that, when she inquired about whether she was entitled to additional benefits, defendant told her that no additional benefits were available to her. Plaintiff alleged that defendant made material representations that were false, made the representations knowing that they were false or made them recklessly without knowledge of the truth, made the representations with the intent that plaintiff would rely on them, and that plaintiff did rely on the representations.

Defendant moved for partial summary disposition under MCR 2.116(C)(8) and (10). Defendant argued that, because plaintiff's cause of action arose out of the no-fault act, MCL 500.3101 et seq., the one-year-back rule of MCL 500.3145(1) barred plaintiff's claim for benefits that accrued before July 20, 2005. Defendant further argued that plaintiff had not shown that it had committed any fraud or misrepresentation. In response, plaintiff argued that defendant had made material misrepresentations concerning the benefits available for Eastman's care because defendant, despite knowing that Eastman required constant supervision, represented to plaintiff and Bencheck that they were not entitled to any benefits beyond the $20 (and later $21) daily payments. The trial court granted the motion for partial summary disposition. Because it concluded that there was no factual issue concerning whether the elements of fraud had been established, the trial court refused to exercise its equitable power to avoid application of the one-year-back rule. It barred plaintiff from recovering any personal protection insurance benefits that were available for the care of Eastman under the nofault act before July 20, 2005.

Plaintiff moved this Court for leave to appeal the trial court's order. We granted plaintiff's application. Johnson v. Wausau Ins. Co., unpublished order of the Court of Appeals, entered June 6, 2008 (Docket No. 281624).

II. ANALYSIS

On appeal, plaintiff maintains that the trial court erred by granting defendant's motion for partial summary disposition because when the submitted documentary evidence is considered in a light most favorable to her, questions of material fact exist regarding whether defendant committed fraud in connection with its failure to provide attendant care benefits to plaintiff and Bencheck for their care of Eastman. In particular, plaintiff argues that Abdey intentionally misrepresented that attendant care benefits based on an hourly rate were not available for the care of Eastman and that plaintiff and Bencheck relied on his representations to their financial detriment, evidenced by the fact that they just accepted the $20 (and later $21) daily payments.

A. STANDARD OF REVIEW

This Court reviews de novo a trial court's decision on a motion for summary disposition. Gillie v. Genesee Co. Treasurer, 277 Mich.App. 333, 344, 745 N.W.2d 137 (2007). Defendant moved for summary disposition under MCR 2.116(C)(8) and (10). The trial court did not specify under which subrule it was granting the motion. Because the parties relied on matters beyond the pleadings, we will treat the motion as being granted under MCR 2.116(C)(10). Silberstein v. Pro-Golf of America, Inc., 278 Mich.App. 446, 457, 750 N.W.2d 615 (2008). A motion for summary disposition brought pursuant to MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Mulcahy v. Verhines, 276 Mich.App. 693, 698, 742 N.W.2d 393 (2007). The Court must consider all the pleadings, affidavits, depositions, admissions, and other documentary evidence submitted by the parties in a light most favorable to the nonmoving party. Id. at 698-699, 742 N.W.2d 393. Summary disposition is properly granted if the evidence presented establishes that no genuine question of material fact exists and the moving party is entitled to judgment as a matter of law. Id. at 699, 742 N.W.2d 393.

B. APPLICABLE LAW

"Under MCL 500.3107, family members are entitled to reasonable compensation for the services they provide at home to an injured person in need of care." Bonkowski v. Allstate Ins. Co., 281 Mich.App. 154, 164, 761 N.W.2d 784 (2008).³ For purposes of this appeal, there appears to be no dispute that plaintiff and Bencheck were entitled to compensation beyond the $20 (and later $21) daily payments for their care of Eastman.

MCL 500.3145(1), the one-year-back rule of the no-fault act, provides in pertinent 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 survivors 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.]

In Devillers v. Auto Club Ins. Ass'n, 473 Mich. 562, 574, 586, 702 N.W.2d 539 (2005), the Supreme Court held that the last sentence of MCL 500.3145(1) must be applied as written: a claimant's recovery for personal protection insurance benefits is limited to losses incurred during the one year that precedes commencement of the action. The Court overruled Lewis v. Detroit Automobile Inter-Ins. Exch., 426 Mich. 93, 393 N.W.2d 167 (1986), in which the Court had extended the doctrine of judicial tolling to the one-year-back rule, such that the one-year-back limitation was tolled from the time the insured makes a specific claim for benefits until the date the claim is formally denied. Devillers, supra at 577, 586, 702 N.W.2d 539. Nonetheless, the Court held that in "unusual circumstances," i.e., fraud or mutual mistake, a court may invoke its equitable power to avoid application of the one-year-back rule. Id. at 590-591, 702 N.W.2d 539.

The six elements of actionable fraud were set...