Lewis v. Detroit Auto. Inter-Insurance Exchange

• Decision Date: 17 September 1986
• Docket Number: INTER-INSURANCE,Docket Nos. 74127,72940
• Citation: 393 N.W.2d 167,426 Mich. 93
• Parties: Jessie LEWIS, Plaintiff-Appellee, and State of Michigan, Department of Social Services, Intervening Plaintiff- Appellee, v. DETROIT AUTOMOBILEEXCHANGE, Defendant-Appellant. Lester R. DIONNE, Plaintiff-Appellant, v. DETROIT AUTOMOBILEEXCHANGE, Defendant-Appellee.
• Court: Michigan Supreme Court

Page 167

393 N.W.2d 167

426 Mich. 93

Jessie LEWIS, Plaintiff-Appellee, and State of Michigan, Department of Social Services, Intervening Plaintiff- Appellee, v. DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Defendant-Appellant.

Lester R. DIONNE, Plaintiff-Appellant, v. DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Defendant-Appellee.

Docket Nos. 74127, 72940.

Supreme Court of Michigan.

Argued Feb. 6, 1986.

Decided Sept. 17, 1986.

David J. Franks, Rader, Eisenberg & Feldman, P.C. by Merrill Gordon, Rader & Eisenberg, P.C. by Ronald B. Rader, Detroit, for Lewis.

Plunkett, Cooney, Rutt, Watters, Stanczyk & Pedersen by Mary Catherine Rentz, Kenneth M. Mattson, Detroit, for Detroit Auto. Inter-Insurance Exchange in No. 74127.

Robert A. Canner, Southfield, for Dionne.

James G. Gross, Detroit, Dickinson, Brandt, Hanlon, Becker & Lanctot by James H. Schoolmaster, Mt. Clemens, MacArthur, Cheatham, Acker & Smith, P.C. by James G. Gross, Detroit, for Detroit Auto. Inter-Insurance Exchange in No. 72940.

WILLIAMS, Chief Justice.

In this opinion we consider the question whether the "one year back" limit on recovery of no-fault insurance benefits contained in M.C.L. § 500.3145(1); M.S.A. § 24.13145(1) should be tolled from the date a claimant makes a specific claim for benefits to the date the insurer formally denies liability, provided the claimant pursues the claim with reasonable diligence. We hold that such tolling best reflects the purposes of the no-fault statute.

I. FACTS--LEWIS

On November 13, 1978, Jessie Lewis, a pedestrian, was struck by an automobile driven by Larry Perkins and insured by defendant Detroit Automobile Inter-Insurance Exchange. The defendant was notified of the accident by its insured on November 14, 1979. The plaintiff's guardian, Hattie Shaw, contacted the defendant regarding plaintiff's medical expenses. Because the accident report listed Ms. Shaw's residence at 16151 Whitcomb as the plaintiff's address, the defendant told her to On June 19, 1979, defendant's agent telephoned plaintiff's attorney, requesting further medical reports and the name of the insurer of automobiles at the Whitcomb address. In September and October, defendant responded to inquiries from the hospital by stating that it was awaiting necessary information from plaintiff's attorney. On November 14, 1979, plaintiff's attorney wrote defendant, asking if the claim was going to be paid. The letter stated that plaintiff had complied with all defendant's requests and asked, if defendant was going to deny benefits, that the denial and the reasons therefor be in writing. On November 19, 1979, defendant responded by letter, stating, "The file has been reviewed by my supervisor, concerning possible payment. He has requested the name of the insurers of the autos housed at the Whitcomb street address." On January 23, 1980, plaintiff submitted to defendant an affidavit stating that his residence at the time of the accident was 15887 Robson.

                contact her own insurer for payment. 1  On March 10, 1979, Mr. Lewis' attorney notified the defendant that his client would be making a claim for benefits under the no-fault act, M.C.L. § 500.3101et seq.;  M.S.A. § 24.13101 et seq.   On March 15, 1979, the defendant, noting the plaintiff's statement of residence on Whitcomb, replied by letter, stating, "At this point it does not appear we will be in a position to afford PIP benefits to Mr. Lewis." 2  On May 5, 1979, plaintiff's attorney submitted to defendant an affidavit regarding his residence at the time of the accident. 3  On May 8, 1979, defendant mailed plaintiff's attorney an application for benefits and requested an additional affidavit stating plaintiff's residence at the time of the accident.  Defendant also inquired as to the names of other household members and [426 Mich. 97] as to Mr. Lewis' employment.  On June 11, 1979, Lewis' attorney returned the application for benefits which listed "medical bills to date" of $3,186. 4
                

On February 22, 1980, plaintiff filed suit. The Department of Social Services intervened as plaintiff to recoup amounts paid pursuant to Medicaid. M.C.L. § 400.106; M.S.A. § 16.490(16). The defendant's motion for accelerated judgment based on the one-year-back rule was denied. The jury returned a verdict for plaintiff of $27,120.70.

The Court of Appeals affirmed and certified, pursuant to Administrative Order No. 1984-2, that its decision in this case conflicted with the holding of another panel in Kransz v. Meredith, 123 Mich.App. 454, 332 N.W.2d 571 (1983). By order of June 24, 1985, this Court granted leave to appeal. 422 Mich. 927.

II. FACTS--DIONNE

Plaintiff Lester Dionne was injured on July 9, 1975, when his motorcycle, insured by defendant DAIIE, collided with an automobile. The accident occurred on the

premises of plaintiff's employer. Mr. Dionne's attorney notified defendant of the accident on July 2, 1976. On July 8, 1976, plaintiff's attorney submitted a number of medical bills in connection with the claim. On October 16, 1976, defendant mailed plaintiff's attorney a number of forms which were completed and returned on January 6, 1977. On March 31, 1977, defendant wrote to plaintiff's attorney requesting further information regarding the claim. Plaintiff's attorney did not respond. Over a year later, on July 7, 1978, plaintiff filed suit in Wayne Circuit Court. The court granted accelerated judgment to the defendant on the basis of the one-year-back rule. The Court of Appeals affirmed. We first held this case in abeyance pending decision in Welton v. Carriers Ins. Co., 421 Mich. 571, 365 N.W.2d 170 (1985). By order of June 24, 1985, we granted leave to appeal. 422 Mich. 930.

III. DISCUSSION

In Tom Thomas, Inc. v. Reliance Ins. Co., 396 Mich. 588, 242 N.W.2d 396 (1976), this Court considered a provision in an insurance contract which limited the time for bringing suit on the policy to twelve months after loss or discovery of loss. We held there that the period of limitation was tolled from the time the insured gave notice of loss until formal denial of the claim. In In re Certified Question: Ford Motor Co. v. Lumbermens Mutual Casualty Co., 413 Mich. 22, 319 N.W.2d 320 (1982), we applied a similar tolling concept to the limitation provision of a statutory fire insurance policy.

The Court of Appeals, in Richards v. American Fellowship Mutual Ins. Co., 84 Mich.App. 629, 270 N.W.2d 670 (1978), lv. den. 406 Mich. 862 (1979), applied the Tom Thomas rationale to the one-year-back rule contained in § 3145 of the no-fault act. The Richards panel held that the one-year limitation was tolled from the time the insured provided notice of loss until a formal denial of liability. Other panels of the Court of Appeals have declined to follow Richards, resulting in conflicting lines of authority in that Court. Compare Lansing General Hospital v. Gomez, 114 Mich.App. 814, 319 N.W.2d 683 (1982), and Joiner v. Michigan Mutual, 137 Mich.App. 464, 357 N.W.2d 875 (1984) (following Richards ) with Aldrich v. Auto-Owners, 106 Mich.App. 83, 307 N.W.2d 736 (1981); Allstate Ins. v. Frankenmuth Ins., 111 Mich.App. 617, 314 N.W.2d 711 (1981), English v. Home Ins. Co., 112 Mich.App. 468, 316 N.W.2d 463 (1982), and Kransz v. Meredith, supra.

In Welton v. Carriers Ins. Co., supra, this Court considered a case in which the plaintiff was injured in a work-related motor vehicle accident in which the defendant insurance company was both the no-fault and the workers' compensation carrier. The plaintiff urged this Court to adopt the Richards analysis tolling the § 3145 one-year-back rule. We declined to reach the Richards question, however, because of our holding that the plaintiff's notice to the defendant insurance company of his workers' compensation claim was not sufficient to trigger tolling of his no-fault claim, even assuming the validity of the Richards tolling principle. The Welton opinion stated that, if such tolling were adopted, it would begin only when a claim for specific benefits was submitted to the insurer. In a footnote, the Court recognized that Tom Thomas and Ford permitted tolling as of the date of notice. The Court reasoned that "the peculiar nature of the statutory no-fault limitation provision" justified a more strictly tailored rule.

"First, the fire insurance limitation provision operates as an absolute bar to suits not brought within one year of discovery (or inception) of the loss. Absent a tolling rule, the fact that either an insured has promptly notified the insurer of the loss or the insurer has already partially paid the claim would have no effect on that bar. With no-fault, the statute has a built-in 'tolling' permitting later suit once notice is given or partial payment been made. Thus, the consequences of the one-year cutoff, and the corresponding need for relief by tolling as of the date notice is given, is more "Second, the specified procedure for claim and recovery of fire insurance benefits includes greater built-in delays, shortening the insured's already limited time to sue, than does the no-fault law. Following a covered fire loss, the insured generally has 60 to 90 days to file proof of loss, after which the insurer has 60 days to pay or settle the claim. Additional delays may arise when the insurer does not promptly submit proof of loss forms or promptly 'accept' the proof of loss once submitted. See Tom Thomas, 396 Mich 592-593 . The no-fault law simply provides that payment of a claim is overdue if not paid within 30 days after proof of loss is received by the insurer. MCL 500.3142(2); MSA 24.13142(2). Accordingly, the one-year period in which a fire insurance plaintiff may sue is more substantially curtailed by the recovery mechanism than is the no-fault limitation period, further warranting an earlier tolling date.

drastic in the case of fire insurance actions than with no-fault.

"Finally, the fact that the Legislature has already provided a tolling provision for...