Matti Awdish, Inc. v. Williams, Docket No. 51360

• Decision Date: 01 September 1982
• Docket Number: Docket No. 51360
• Citation: 117 Mich.App. 270,323 N.W.2d 666
• Parties: , 40 A.L.R.4th 850 MATTI AWDISH, INC., a Michigan corporation, Mike Awdish, Fami Awdish, and Alla Awdish, Plaintiffs-Appellants, v. Randy WILLIAMS, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 666

323 N.W.2d 666

117 Mich.App. 270, 40 A.L.R.4th 850

MATTI AWDISH, INC., a Michigan corporation, Mike Awdish Fami Awdish, and Alla Awdish, Plaintiffs-Appellants, v. Randy WILLIAMS, Defendant-Appellee.

Docket No. 51360.

Court of Appeals of Michigan.

Submitted Feb. 18, 1982.

Decided June 22, 1982.

Released for Publication Sept. 1, 1982.

Michael Kranson, Detroit, for plaintiffs-appellants.

Denenberg, Tuffley, Thorpe, Bocan & Patrick by Michael J. Black and Susan Tukel, Southfield, for defendant-appellee.

Before MacKENZIE, P. J., and BRONSON, and THOMAS, ^* JJ.

BRONSON, Judge.

On January 30, 1979, plaintiffs filed suit against defendant, alleging that his negligent operation of a motor vehicle resulted in extensive property damage to their business premises and the loss of merchandise through theft. Farmer's Insurance Group, defendant's insurer, was not named a party in this action.

Defendant moved for summary judgment pursuant to GCR 1963, 117.2(1) on the basis that the no-fault automobile insurance act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq., rendered him immune from liability for property damage arising out of the ownership, maintenance or use of a motor vehicle. This motion was granted by the trial court. Thereafter, plaintiffs filed a motion to amend their complaint by adding Farmer's Insurance Group as a party defendant. This motion was denied by the trial court. Orders granting the defendant's motion for summary judgment and denying plaintiffs' motion to add a party defendant were formally entered on April 17, 1980. Plaintiffs appeal as of right from these orders.

The underlying facts of this dispute follow. Matti Awdish, Inc., runs a liquor store known as Dean's Wine Rack in the City of Detroit. On November 5, 1978, a vehicle operated by defendant crashed into the store at approximately 2:00 a. m. According to plaintiffs, the store was immediately boarded up after the accident. Nonetheless, three break-ins occurred before the store was repaired.

On December 6, 1978, Farmers Insurance Group offered plaintiffs a sum of money in return for a full and complete release. Plaintiffs refused the insurance company's offer because they did not believe it provided adequate compensation for their losses. This led to the suit against defendant and the instant appeal.

We will first discuss whether the trial court properly granted summary judgment in favor of defendant. Plaintiffs assert that a suit instituted against a no-fault insurer's insured constitutes a suit against the insurance company, itself. ¹ As such, plaintiffs argue that their failure to name Farmers Insurance Group as a defendant is not fatal to their right to bring this action.

Whether or not it is necessary to name the insurer as defendant in an action for property damages arising out of the ownership, maintenance or use of a motor vehicle has been considered, albeit indirectly, by two panels of this Court. In Home Ins. Co. v. Rosquin, 90 Mich.App. 682, 282 N.W.2d 446 (1979), lv. den. 408 Mich. 855 (1980), this Court was called upon to resolve a case very similar to this one. There, Home Insurance Company paid a fur shop for property damage which resulted from an accident involving several motor vehicles. Thereafter, Home Insurance, as subrogee of the fur shop, instituted suit against the drivers of the vehicles. Home Insurance did not, however, name the drivers' insurers as parties in the action. Later on, Home Insurance moved to amend its complaint to add the insurers. Two of the insurers asserted the one-year limitations period of M.C.L. § 500.3145(2); M.S.A. § 24.13145(2) as a bar. The trial court rejected this argument, but, on appeal, this Court reversed, holding that a suit against the insured is not a suit against the insurer. In Home Ins. Co., the individual defendants apparently did not move for summary judgment. As such, this Court did not address the issue of whether the insurer's suit against the individual vehicle drivers had any legal validity. By implication, however, the Court found that the insurers who had moved for summary judgment ² based on the statute of limitations could not be held liable for any verdict ultimately rendered in plaintiff's favor.

In Totzkay v. DuBois, 107 Mich.App. 575, 309 N.W.2d 674 (1981), this Court construed M.C.L. § 500.3030; M.S.A. § 24.13030, providing that an insurer shall not be named as a party defendant, and M.C.L. § 500.3121; M.S.A. § 24.13121, providing that a no-fault insurer is liable to pay benefits for property damage. The Totzkay Court found no inconsistency between the provisions, stating: "Merely because an insurer is ultimately liable does not require naming the insurer as opposed to the insured, as a defendant." ³ Id., 578-579, 309 N.W.2d 674.

We agree with the panel which decided Home Ins. Co., disagree with the panel which decided Totzkay, and conclude that in an action in which the plaintiff seeks property protection benefits arising out of the ownership, maintenance, or use of a motor vehicle the insurer, and not the insured, is the proper party defendant to the action. Pursuant to M.C.L. § 500.3121(1); M.S.A. § 24.13121(1), an insurer is liable to pay benefits for property damage caused by its insureds. By M.C.L. § 500.3135, M.S.A. § 24.13135, an insured continues to have tort liability only for noneconomic losses where death, serious impairment of body function, or permanent serious disfigurement has resulted. ⁴ Once the registrant of a motor vehicle has obtained the security mandated by M.C.L. § 500.3101(1); M.S.A. § 24.13101(1), his obligation ends and the proper party from whom to seek benefits is the insurer.

We believe that there exists a fundamental flaw with the rationale of Totzkay on the question of who is a proper defendant where property protection benefits are sought by an injured party pursuant to the no-fault act. If the panel which decided Totzkay would agree that a defendant insured can obtain summary judgment in a suit brought for economic losses, then naming the insured as a party defendant does not ensure an adjudication of the dispute on its merits. Moreover, acceptance of this conclusion inevitably leads to the further conclusion that the insurer must be a named defendant in a suit for economic losses, if plaintiff is to have his claim decided on its merits. ⁵ This, in turn, would suggest that the Totzkay Court's determination that M.C.L. § 500.3121; M.S.A. § 24.13121 and M.C.L. § 500.3030; M.S.A. § 24.13030 can be read as consistent with one another is in error. If, on the other hand, the panel which decided Totzkay believes a named insured cannot be summarily dismissed as a defendant from a suit arising out of the ownership, maintenance, or use of a motor vehicle, then the Totzkay panel is either saying: (a) that the insured may be held liable for the damages (which is contrary to the no-fault act) or (b) that even though the insured cannot be held liable for a judgment in plaintiff's favor, it is the proper named defendant (in which case someone other than the real party in interest is deemed the appropriate party to defend the suit). This latter conclusion, however, is prohibited by M.C.L. § 600.2041; M.S.A. § 27A.2041 and GCR 1963, 201.2, which require the real parties in interest to prosecute the action.

In our opinion, M.C.L. § 500.3030; M.S.A. § 24.13030, which prohibits any mention of an insurer, is inapplicable to actions seeking economic losses brought under the no-fault act. Except for those accidents in which the no-fault act is applicable, a negligent insured remains liable to an injured person for damages. The insurer merely becomes liable to the insured as a matter of contract if the insured is ultimately deemed liable to the injured party. The same is not true of one insured by a no-fault automobile policy, however. As noted above, the Legislature has eliminated tort liability for economic losses caused by negligent drivers insured under no-fault automobile policies. A no-fault insured who causes economic damage, then, is neither primarily nor secondarily liable to the injured party. No-fault insureds and insureds under other types of policies are differently situated because of their differing statutory statuses. Since, by statute, a no-fault insured cannot be held liable for economic losses, the grant of summary judgment in defendant's favor was proper.

We now turn to the question of whether the trial court should have allowed plaintiffs to add Farmers Insurance Group as a party defendant. The motion was apparently denied for the reason that the one-year limitations period of M.C.L. § 500.3145(2); M.S.A. § 24.13145(2) had already expired.

It is the general rule that when an action is instituted against one party, the applicable limitations period is not tolled against other potential parties not originally named as defendants in the suit. See, for instance, Ciotte v. Ullrich, 267 Mich. 136, 138-139, 255 N.W. 179 (1934); Browder v. International Fidelity Ins. Co., 98 Mich.App. 358, 296 N.W.2d 60 (1980). However, this proposition is not sacrosanct. Whether this rule should be applied turns on the particular circumstances of each case. Cobb v. Mid-Continent Telephone Service Corp., 90 Mich.App. 349, 355, 282 N.W.2d 317 (1979).

Although this case is close, we conclude that on the facts before us the statute of limitations should not be deemed a bar to allowing the amendment adding the insurer as a party defendant. In November, 1978, Farmers Insurance Group indicated that it would adjust plaintiffs' claim. Only when the insurer and plaintiffs could not agree on the amount of damages was this suit instituted. Defendant forwarded the complaint and summons to his insurer. The insurer, in turn, retained the law firm which provided defendant's defense in this case. It is obvious that the Farmers Insurance Group had actual knowledge of the pendency of the suit. The insurer's law firm only brought its ...