Juncaj v. C & H Industries, 95587

• Decision Date: 18 September 1987
• Docket Number: No. 95587,95587
• Citation: 161 Mich.App. 724,411 N.W.2d 839
• Court: Court of Appeal of Michigan — District of US
• Parties: Ljena JUNCAJ, Plaintiff-Appellee, v. C & H INDUSTRIES and Allstate Insurance Company, Defendants-Appellants, and The Second Injury Fund, Defendant-Appellee.

Page 839

411 N.W.2d 839

161 Mich.App. 724

Ljena JUNCAJ, Plaintiff-Appellee, v. C & H INDUSTRIES and Allstate Insurance Company, Defendants-Appellants, and The Second Injury Fund, Defendant-Appellee.

No. 95587.

Court of Appeals of Michigan.

Submitted June 18, 1987.

Decided July 21, 1987.

Released for Publication Sept. 18, 1987.

Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston & Waldman, P.C., Detroit by Melvyn J. Kates and Granner S. Ries, for plaintiff-appellee.

Sinn, Day, Felker, Chinitz & Lovernick, P.C., Bloomfield Hills by Gilbert M. Chinitz, for defendants.

Before HOOD, P.J., and WEAVER and WARSHAWSKY, ^* JJ.

PER CURIAM.

This case comes to us by way of an order of the Supreme Court 426 Mich. 858, 393 N.W.2d 175, remanding the case for a determination whether res judicata applies to bar a reduction in plaintiff's workers' compensation award.

On November 25, 1975, while plaintiff was working for defendant C & H Industries, the middle finger of her right hand was severed by a machine on which she was working. In September, 1976, plaintiff filed a petition for workers' compensation benefits, and on July 19, 1978, a hearing referee granted plaintiff benefits in the amount of $79 per week from November 25, 1975, to June 30, 1978, and from then until further order of the Bureau of Workers' Disability Compensation. The referee relied on Jolliff v. American Advertising Distributors, Inc, 49 Mich.App. 1, 211 N.W.2d 260 (1973), lv. den. 391 Mich. 780 (1974), in setting the rate at $79.00 per week. In Jolliff, we held that minimum compensation rates established by M.C.L. Sec. 418.351; M.S.A. Sec. 17.237(351) (hereinafter Sec. 351) ¹ could be adjusted upwards by the cost- of-living adjustment provision in M.C.L. Sec. 418.355; M.S.A. Sec. 17.237(355) (hereinafter Sec. 355) ². Jolliff, supra, at 4, 211 N.W.2d 260. ³ The order in the instant case awarding plaintiff $79 per week was not appealed by defendants.

On December 20, 1981, the Supreme Court overruled Jolliff in Gusler v. Fairview Tubular Products, 412 Mich. 270, 315 N.W.2d 388 (1981), reh. gtd. 414 Mich. 1102, 323 N.W.2d 909 (1982), app. dis. 414 Mich. 1102 (1983). In Gusler, the Court held that the Legislature, in enacting Secs. 351 and 355, did not intend the minimum rates to be adjusted. Gusler, supra, at 285-298, 315 N.W.2d 388. On the basis of the decision in Gusler, defendant's insurer in the instant case, Allstate Insurance Company, reduced the rate it was paying plaintiff from $79 per week to $66.67 per week.

Claiming that defendants improperly reduced her weekly rate, plaintiff requested a Rule V hearing. ⁴ Plaintiff argued that res judicata applied to the July 19, 1978, order of the referee awarding her $79 per week, so that the amount could not be reduced to $66.67 per week. At the hearing, the referee denied relief, finding that defendants' action was proper under Gusler. On June 8, 1983, plaintiff filed an application for review with the Worker's Compensation Appeal Board. On May 14, 1985, the WCAB reversed, relying on Riley v. Northland Geriatric Center, 140 Mich.App. 72, 362 N.W.2d 894 (1985). In Riley, this Court held that Gusler was not binding precedent since the Gusler plaintiff had requested rehearing before the Supreme Court and, before rehearing was held, the parties had dismissed the appeal pursuant to stipulation. Riley, supra, at 77, 362 N.W.2d 894.

Defendants filed an application for leave to appeal to this Court, which was denied on August 5, 1985. Defendants thereupon filed an application for leave to appeal to the Michigan Supreme Court. On March 24, 1986, the Supreme Court ordered that the application be held in abeyance pending its decision in Riley, which had been appealed. On August 7, 1986, the Supreme Court issued its decision in Riley, reversing our Riley decision and holding that Gusler was binding precedent when it was decided on December 30, 1981. Riley v. Northland Geriatric Center, 425 Mich. 668, 391 N.W.2d 331 (1986). The Supreme Court thereupon remanded the instant case to us for consideration of plaintiff's res judicata issue and the issue of the retroactivity of Gusler.

On appeal, plaintiff claims that res judicata applies to the July 19, 1978 order awarding plaintiff $79 per week and that, therefore, notwithstanding Gusler and despite the fact that the bureau was without authority to award that amount, she should continue to receive $79 per week. We do not agree. In Gusler, the Supreme Court specifically set forth the retroactivity of that decision:

"In the interest of fairness we do not believe our holding should affect any disability compensation payments already made. Consequently, no recipient will be obligated to repay sums already received by reason of the erroneous computation formula we have nullified today. However, any benefits due and not yet paid or to be awarded after the date of this opinion shall be in accord with this ruling." Gusler, supra, at 298, 315 N.W.2d 388.

This statement makes it clear that payments not yet due were to be reduced to the statutory minimum.

In Riley, supra, the plaintiff sustained a back injury at work, and the hearing referee awarded her $119 per week, adjusted in accordance with Jolliff. No appeal was taken. However, after Gusler was decided, the plaintiff's employer filed a petition for a determination of whether it could reduce the plaintiff's benefits. The hearing referee directed reduction of benefits, but the WCAB reversed, holding that res judicata barred a reduction. This Court affirmed, holding that Gusler was not binding authority since leave to appeal had been granted but the parties had dismissed the appeal. Riley v. Northland Geriatric Center, 140 Mich.App. 72, 77, 362 N.W.2d 894 (1985). The Supreme Court reversed, holding that Gusler was binding authority when it was decided on December 30, 1981. Riley v. Northland Geriatric Center, 425 Mich. 668, 391 N.W.2d 331 (1986). However, the Court did not address the plaintiff's res judicata argument and the issue of the retroactivity of Gusler, choosing instead to remand the case to us for a determination of the issues. Justice Levin, however, would have addressed the retroactivity and res judicata issues. We agree with Justice Levin's statements:

"I would also decide the retroactivity and res judicata issues. Again, the questions have been fully briefed in this Court by both sides of the controversy.

A

"In Gusler, [412 Mich. at] p 298 , the majority opinion concluded with the following statement:

"In the interest of fairness we do not believe our holding should affect any disability compensation payments already made. Consequently, no recipient will be obligated to repay sums already received by reason of the erroneous computation formula we have nullified today. However, any benefits due and not yet paid or to be awarded after the date of this opinion shall be in accord with this ruling."

"The majority thus indicated that Gusler would apply to cases decided before December 30, 1981, as to payments made after that date. Although the majority opinion did not go into an extended retroactivity/res judicata analysis, that is what the opinion stated.

"The question of retroactivity is, as set forth in Gusler, ultimately one of fairness. There is nothing unfair in applying the rule stated in Gusler, which appears to have been reaffirmed today on varying analyses, from and after the date of the announcement of the opinions of the justices in Gusler.

"The statement in the foregoing concluding paragraph of the majority opinion in Gusler was surely adequate notice to the workers' compensation department, the WCAB, bench and bar, that Jolliff should no longer be followed. The 'interest of fairness' adverted to in Gusler, that prompted this Court to state that Gusler should not 'affect any disability compensation payments already made,' does not require that the effect of Gusler be deferred until this Court has reaffirmed Gusler. It would not be 'unfair' to hold in the instant case that, as declared in Gusler, 'any benefits due and not yet paid or to be awarded after the date of [the Gusler opinion] shall be in accord with th[e] ruling' stated in Gusler that the minimum rates are not subject to adjustment.

"To defer the effectiveness of the overruling of Jolliff beyond the filing on December 30, 1981, of the Gusler opinions would be unfair to employers and their insurers who have been required to pay out large sums because of an incorrect construction of Sec. 355.

B

"There is no constitutional impediment to changing, upwards or downwards, workers' compensation benefits after an adjudication awarding such benefits. See Franks v White Pine Copper, 422 Mich 636, 653-654; 375 NW2d 715 (1985), where this Court said that '[w]orkers' compensation benefits are social-welfare income-maintenance benefits,' and that '[i]n providing for such benefits, the Legislature did not covenant not to amend the legislation,' and that an award of such benefits is not insulated 'from substantive change by subsequent legislation.'

"A workers' compensation award differs from a lump sum tort judgment in that it operates prospectively and is subject to change in response to subsequent events. Just as a change in legislation may result in an upward or downward adjustment in the amount of benefits, so too a change in a rule of law announced by judicial decision may effect a change in the amount of the benefits payable.

"The doctrine of res judicata does not preclude giving effect to such a change in law. In Socialist Workers Party v Secretary of State, 412 Mich 571, 584; 317 NW2d 1 (1982), this Court adopted the view expressed in the Restatement of Judgments that although an issue has been actually litigated and determined by a valid and final judgment, relitigation of the issue between the parties is not precluded where the issue is one of law and '[a] new determination is warranted in order to take account of an intervening...