Perkins v. Riverside Ins. Co. of America, Docket Nos. 71702

• Decision Date: 22 May 1985
• Docket Number: Docket Nos. 71702,71703
• Citation: 367 N.W.2d 336,141 Mich.App. 379
• Parties: Nadine PERKINS, Individually and as Guardian of Kuhn C. Perkins, a minor, Plaintiff-Appellee, v. RIVERSIDE INSURANCE COMPANY OF AMERICA and Transamerica Insurance Corporation of America, Defendants-Appellants. RIVERSIDE INSURANCE COMPANY, Plaintiff-Appellant, v. Nadine D. PERKINS, Individually and as Guardian of Kuhn C. Perkins, Defendant- Appellee, and Janet Louise Perkins, as Guardian of Daniel K. Perkins and Coreen E. Perkins, Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 336

367 N.W.2d 336

141 Mich.App. 379

Nadine PERKINS, Individually and as Guardian of Kuhn C.

Perkins, a minor, Plaintiff-Appellee, v. RIVERSIDE INSURANCE COMPANY OF AMERICA and Transamerica

Insurance Corporation of America, Defendants-Appellants.

RIVERSIDE INSURANCE COMPANY, Plaintiff-Appellant, v. Nadine D. PERKINS, Individually and as Guardian of Kuhn C.

Perkins, Defendant- Appellee,

and

Janet Louise Perkins, as Guardian of Daniel K. Perkins and

Coreen E. Perkins, Defendant.

Docket Nos. 71702, 71703.

Court of Appeals of Michigan.

Submitted Nov. 7, 1984.

Decided March 18, 1985.

Released for Publication May 22, 1985.

Sinas, Dramis, Brake, Boughton, McIntyre & Reisig, P.C. by George T. Sinas, Lansing, for plaintiff-appellee.

Dilley, Dewey & Waddell, P.C. by Jonathan S. Damon, Grand Rapids, for defendant-appellants.

Before KELLY, P.J., and BEASLEY and STEMPIEN ^*, JJ.

KELLY, Presiding Judge.

These cases involve the distribution of no-fault survivors loss benefits under a policy insuring David Norman Perkins, who was fatally injured in an automobile accident on January 25, 1981. The deceased left a modern domestic entanglement. On May 13, 1981, Nadine Perkins filed suit in Ingham County Circuit Court both on her own behalf and as guardian of her minor son, Kuhn C. Perkins, seeking benefits, interest and attorney fees from the defendant-insurer, Riverside Insurance Company (now Transamerica Insurance Corporation of America). Unaware of this action, defendant filed suit six days later in Kent County Circuit Court, interpleading plaintiffs and Janet Louise Perkins, as guardian of her children, Daniel and Coreen. ¹ Following consolidation of the cases in Ingham County Circuit Court, plaintiffs and defendant filed motions for summary judgment under GCR 1963, 117.2(3) and all claims were disposed of by an order of summary judgment dated May 19, 1983. Defendant appeals from the order, challenging the trial court's determination of the amount to be set off against the no-fault benefits as well as the trial court's award of interest. Plaintiffs have not filed a cross-appeal. We affirm.

The following facts were stipulated to by all parties, including Daniel and Coreen Perkins. David Norman Perkins was killed in an automobile accident that occurred on January 25, 1981. The accident did not occur in the course of his employment. Prior to the accident, he was married to and living with Nadine Perkins, with whom he had one minor child, Kuhn Perkins. The decedent had previously married and divorced Janet Louise Perkins, with whom he had two minor children, Daniel and Coreen. As a result of the divorce judgment, decedent was required to pay child support for Daniel and Coreen in the amount of $35 per child per week, or $151.66 per child per month.

The decedent was insured under a no-fault insurance policy with defendant which, as a result of his death, provided survivors loss benefits in the amount of $1,870 per 30-day period. Because the decedent had also been employed by the Michigan Department of State Police as a State Trooper for approximately 13 years, he was covered under the Department of Public Safety pension, accident and disability fund act, M.C.L. § 28.101 et seq.; M.S.A. § 3.331 et seq. Upon his death, Nadine Perkins began receiving a monthly pension of $483.60. Also as a result of his death, Nadine, Kuhn, Daniel and Coreen each began receiving $153 per month in social security survivors benefits.

Defendant does not dispute its liability for no-fault benefits. Defendant does, however, contend that the no-fault benefits should be reduced by the amount of the pension received by Nadine Perkins. The trial court rejected defendant's position as do we.

Section 3109(1) of the no-fault act provides:

"Benefits provided or required to be provided under the laws of any state or the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for the injury." M.C.L. § 500.3109(1); M.S.A. § 24.13109(1).

The intent of the Legislature in enacting § 3109(1) was to "reduce or contain the cost of basic insurance" by eliminating duplication of certain benefits. O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 544, 273 N.W.2d 829 (1979), app. dis. 444 U.S. 803, 100 S.Ct. 22, 62 L.Ed.2d 16 (1979). Assuming that a claimant is entitled to other benefits under federal or state law, the test for determining whether no-fault insurance benefits must be reduced by the amount of the governmental benefit is two-pronged:

(1) the governmental benefit must substantially serve the same purpose as that served by the no-fault benefits, and

(2) the governmental benefit must be payable as a result of the same accident. Jarosz v. DAIIE, 418 Mich. 565, 577, 345 N.W.2d 563 (1984).

If both prerequisites are satisfied, then the governmental benefits are said to duplicate the no-fault benefits and setoff is required. Id., at 580, 345 N.W.2d 563. Under Jarosz, social security old age benefits do not duplicate no-fault benefits.

Nadine Perkins's monthly pension of $483.60 is payable under M.C.L. § 28.107(4); M.S.A. § 3.337(4), which provides:

"If a member who continues as a member of the department of state police on and after the date he acquires 10 years of service credit and dies leaving a surviving spouse prior to the effective date of the member's retirement, while a member of the department, that spouse shall receive a pension computed in the same manner, in all respects, as if the member had retired effective the day preceding the date of death, and nominated the spouse as beneficiary. The amount of pension payable monthly to the surviving spouse shall be equal to the member's years of service credit, not to exceed 25 years, multiplied by 2% of his average annual salary for his last 2 years of service. Payment of the pension shall begin the first day of the calendar month next following the month in which the member dies. The retirement allowance shall continue to the spouse until death. If there is no surviving spouse, or upon the spouse's death, then the pension shall be paid to the children under the age of 18 years, of such member, share and share alike. In the event of the spouse's death, and no eligible children, there shall be paid to the deceased member's estate or his legal representatives any residual accumulated contributions and interest made by him into the fund. A monthly benefit shall not be payable under this section if a monthly allowance is payable under any other section of this act."

Nadine Perkins's pension is thus payable under state law and must be scrutinized under the Jarosz test to determine whether it duplicates no-fault insurance benefits.

It is not seriously disputed that both benefits are payable as a result of the same accident. ² The dispositive inquiry is whether Nadine Perkins's pension serves substantially the same purpose as that served by the no-fault benefits. The trial court concluded that the same purpose was not served by the no-fault survivors loss benefits and the police pension:

"The no-fault survivors' benefit protects dependents against the loss of a wage earner's support. The benefits are payable because the wage earner is no longer working and able to provide the support. Conversely, this pension protects a widow from losing the spouse's retirement security. Here the pension benefits are paid to Mrs. Perkins only because her husband is unable to receive them because of his death. The pension is an asset Mr. Perkins was entitled to based on his contributions and his years of service. Mrs. Perkins receives the pension only as his beneficiary.

"Since it is designed to provide protection against a different kind of loss, the pension does not duplicate the no-fault survivors' benefit. Therefore, the Defendant is not entitled to a setoff for the pension benefits received by Mrs. Perkins."

We agree with the trial court's analysis. No-fault survivors benefits are designed to replace the loss of income or wages that decedent would have enjoyed had he continued his employment. Jarosz, supra, p. 580, 345 N.W.2d 563. No-fault survivors benefits thus duplicate workers' compensation benefits, Mathis v. Interstate Motor Freight System, 408 Mich. 164, 289 N.W.2d 708 (1980), and social security survivors loss benefits, O'Donnell, supra.

Contrary to the defendant's argument on appeal, however, we find that the State Police pension is intended to protect the decedent's retirement contributions and is not intended to replace decedent's wages. M.C.L. § 28.107(4); M.S.A. § 3.337(4) clearly refers to the pension as a retirement benefit. Under that provision, a spouse is entitled to a pension computed as if the deceased had retired the day preceding his or her death. Further, the pension is referred to as a "retirement allowance" payable to the widow until death only if the trooper had accrued at least 10 years of service.

We find support for our interpretation of M.C.L. § 28.107(4); M.S.A. § 3.337(4) in Teddy v. Dep't of State Police, 102 Mich.App. 412, 420-422, 301 N.W.2d 876 (1980), in which this Court held that recovery of a state police pension does not bar recovery of a workers' compensation award. The Court found that the pension received under M.C.L. § 28.107; M.S.A. § 3.337 is intended as a retirement pension and does not, therefore, duplicate workers' compensation benefits intended to replace income loss. Our opinion extends the analysis one step further: the Michigan State Police pension does not duplicate no-fault survivors loss benefits intended to replace income loss. ³ We...