K.G. ex rel. Gray v. State Farm Mut. Auto. Ins.

• Decision Date: 01 December 2009
• Docket Number: Case No. 2:09-cv-11550.
• Citation: 674 F.Supp.2d 862
• Parties: K.G., a minor, by her Next Friend, Jessica GRAY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

674 F.Supp.2d 862

K.G., a minor, by her Next Friend, Jessica GRAY, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, et al., Defendants.

Case No. 2:09-cv-11550.

United States District Court, E.D. Michigan, Southern Division.

December 1, 2009.

Paul J. Whiting, Marc E. Lipton, Southfield, MI, for Plaintiff.

Marcy A. Tayler, Zausmer, Kaufman, Farmington Hills, MI, Donald C. Brownell, Vandeveer Garzia, Troy, MI, William E. McDonald, Jr., Worsfold MacFarlane McDonald, PLLC, Grand Rapids, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART SUMMARY JUDGMENT BY PLAINTIFF KG AGAINST STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, GRANTING PENALTY INTEREST AND GRANTING ATTORNEYS FEES IN FAVOR OF PLAINTIFF AGAINST STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (docket no. 19), DENYING SUMMARY JUDGMENT MOTION BY STATE FARM (docket no. 21) AND DENYING AS MOOT SUMMARY JUDGMENT MOTIONS BY FARMERS INSURANCE EXCHANGE (docket no. 24) AND BY ENCOMPASS INSURANCE COMPANY (docket no. 26)

STEPHEN J. MURPHY, III, District Judge.

KG, a minor, by her next friend and mother Jessica Gray, is suing State Farm Mutual Automobile Insurance Company ("State Farm"), Encompass Insurance Company ("Encompass") and Farmers Insurance Exchange ("Farmers") for no-fault personal protection benefits for injuries arising from a hit-and-run accident that occurred in May, 2008. Encompass insured a vehicle that is alleged to have struck KG. Farmers insured a vehicle that was loaned to KG's mother and parked at KG's house at the time of the accident. State Farm is the insurance company assigned to be liable for the claim by the Michigan Assigned Claims Facility under MCL 500.3172 because of a dispute between two insurance companies over liability for the accident. This suit was filed by KG in state court on March 26, 2009 and removed to this Court by defendant Encompass on the basis of diversity of citizenship.

Before the Court are four cross-motions for summary judgment related to the suit's allegations and seeking of coverage, penalty interest and attorneys fees arising from the hit and run accident. For the reasons stated below, the Court grants summary judgment in favor of KG against State Farm, the assigned insurer, with penalty interest and attorneys fees in an amount to be determined. As for KG's summary judgment motion against Farmers and Encompass, and Farmers' and Encompass' motions for summary judgment against KG, the Court does not reach the merits of these motions and rather denies them as moot because KG is not the proper plaintiff in an action against Farmers and Encompass. The Court finds, instead, that the Michigan statute requires that State Farm, the assigned insurer, is the proper plaintiff in any action against Farmers and Encompass, and may at its option file a suit against those insurance companies pursuant to MCL 500.3172. Such a suit must be filed in state court, however, because this Court would not have jurisdiction due to a lack of complete diversity between the defendant insurance companies.

FACTS

On May 22, 2008, the plaintiff, KG, was six years old and resided with her parents, Jessica Gray and Kevin Gray, at 15032 Seymour, Detroit. Complaint ¶ 7-9. At approximately 7:45 pm. on that day, KG was struck by an automobile while playing on the front lawn of her home with her brothers. Complaint ¶ 10-11. The driver of the automobile drove away after striking KG and has never been identified. KG suffered permanent and severe injuries as a result. Complaint ¶ 12.

Jessica Gray testified that she did not witness the accident that injured KG. Jessica testified that she was inside cooking dinner when her oldest son ran into the house and told her that KG had been hit by a car. Jessica Gray dep. p. 34. Jessica ran outside the house and saw KG "balled up like a wounded animal." Id. Various neighbors were outside of the house, but Jessica did not know their names because the Gray family had just moved into the house. Id. p. 35. Jessica herself never saw the car that hit KG.

The complaint alleges that the automobile that struck KG was a 1999 Plymouth Breeze, gray in color, with a VIN # 1P3EJ6X2XN566660 and Michigan License Plate #BLP1248. Complaint, ¶ 11. The complaint further alleges that the owner of the 1999 Plymouth, John Dominick Romanowski, insured that vehicle with defendant Encompass. Id., ¶ 28. The allegations in the complaint appear to be based upon a police report that identifies a 1999 Plymouth Breeze, VIN #1P3EJ46X2XN566660, as the vehicle that struck KG. See Police Report No. 0805220489.1, Exhibit A to State Farm's Motion for Summary Judgment. According to that police report, the 1999 Plymouth Breeze stolen from Romanowski was abandoned and recovered at 8:15 p.m. at Schoenherr and Park Grove and impounded. Id. A second Detroit Police Department Crime Report states that a 1999 Plymouth Breeze owned by John Dominick Romanowski, VIN # 1P3EJ46X2XN566060, was stolen on May 22, 2008 at 6:00 p.m. from a fast food restaurant at 13340 E. Jefferson, Detroit. See Police Report No. 0805220518.1, Exhibit A to State Farm's Response to KG's motion for summary judgment. This second police report states, however, that Romanowski's vehicle was recovered at 7:00 p.m. See id., p. 3.

On the date of the accident, a 1999 Aerostar Van titled, registered and owned by Eugenia Smith, was sitting in the driveway of the Gray house. Complaint, ¶ 15. The 1999 Aerostar van had been loaned to Jessica Gray by Eugenia Smith for temporary use in January 2008. Id. ¶ 16. The van stopped running about 60 days after Smith loaned the van to Jessica Gray, but Gray still kept it at her house. Id. ¶ 17. Smith maintained an insurance policy on the 1999 Aerostar through defendant Farmers, and that policy was in full force and effect on the date of the accident. Id.

Plaintiff notified both Farmers and Encompass of KG's accident and her claims for no fault benefits under the Farmers policy covering the Aerostar van parked at the Gray house and under the Encompass policy covering the Plymouth that is alleged to have struck KG. Farmers and Encompass both denied payment of no fault benefits to KG.

In accordance with MCL 500.3172(3)(a), KG notified the Michigan Assigned Claims Facility of KG's claims on June 26, 2008. On July 9, 2009, the Michigan Assigned Claims Facility notified KG that it had assigned defendant State Farm to be liable for and to make payment of KG's no fault claims. KG has demanded that State Farm pay her medical expenses and other no fault expenses, but State Farm has refused to pay any personal insurance benefits.

KG has now filed suit against all three defendant insurance companies. In her complaint, KG asserts that the defendants have unreasonably refused to pay or have unreasonably delayed in making proper payments of no fault benefits to KG, contrary to MCL 500.3148. KG seeks an order of this Court that defendant State Farm, Encompass or Farmers begin paying plaintiff's no fault benefits immediately; or that defendant State Farm to begin paying plaintiff's no fault benefits and pursuant to MCL 500.3172 file suit against defendant Farmers and defendant Encompass to recoup the payments for plaintiff's no fault benefits; and order whichever defendant the Court orders to pay no fault benefits to also pay plaintiff's attorneys fees in the amount of $40,000.00.

JURISDICTION

This Court has jurisdiction over this matter because there is complete diversity between the parties and the amount in controversy exceeds $75,000.

SUMMARY JUDGMENT STANDARD

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment is appropriate if the moving party demonstrates that there is no genuine issue of material fact regarding the existence of an essential element of the nonmoving party's case on which the nonmoving party would bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Martin v. Ohio Turnpike Comm'n, 968 F.2d 606, 608 (6th Cir.1992).

ANALYSIS

I. KG's Motion for Summary Judgment Against State Farm

The pending summary judgment motions depend upon the interpretation of the Michigan no fault statute, MCL 500.3101 et seq. A federal court, sitting in diversity, must apply the law of the forum state. Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503, 506 (6th Cir.2003); Stalbosky v. Belew, 205 F.3d 890, 893 (6th Cir.2000). The following rules of statutory construction have been handed down by the Michigan Supreme Court:

The rules governing interpretation of statutes are well established. The cardinal rule of statutory construction is to identify and to give effect to the intent of the Legislature. Mull v. Equitable Life, 444 Mich. 508, 514, n. 7, 510 N.W.2d 184 (1994); Coleman v. Gurwin, 443 Mich. 59, 65, 503 N.W.2d 435 (1993). The first step in ascertaining such intent is to focus on the language in the statute itself. Thornton v. Allstate Ins. Co., 425 Mich. 643, 648, 391 N.W.2d 320 (1986). If the statutory language is certain and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. Mull and Coleman, supra.

Where the meaning of statutory language is not clear, judicial construction becomes necessary. Courts are to accord statutory words their ordinary and generally accepted meaning. Id. Moreover, when courts interpret a particular phrase in a statute, they must, whenever possible, construe the phrase in such a way that the interpretation does not conflict with, or deny effect to, other portions of the statute. Grand Rapids v. Crocker, 219 Mich. 178, 182-183, 189 N.W. 221 (1922). Finally, when courts interpret the no-fault...