Radu v. Herndon & Herndon Investigations, Inc.

• Citation: 838 N.W.2d 720,302 Mich.App. 363
• Decision Date: 29 August 2013
• Docket Number: Docket No. 304485.
• Court: Court of Appeal of Michigan — District of US
• Parties: RADU v. HERNDON & HERNDON INVESTIGATIONS, INC.

302 Mich.App. 363

838 N.W.2d 720

RADU

v.HERNDON & HERNDON INVESTIGATIONS, INC.

Docket No. 304485.

Court of Appeals of Michigan.

Submitted Aug. 6, 2013, at Detroit.

Decided Aug. 29, 2013, at 9:05 a.m.

Cummings, McClorey, Davis & Acho, PLC, Livonia (by Timothy Young and Karen M. Daley), for Walter and Lindsay Radu.

Hewson & Van Hellemont, PC, Oak Park (by James F. Hewson and Jerald Van Hellemont), for Herndon & Herndon Investigations, Inc.

Law Offices of Mark A. Hypnar, PC, Bloomfield Hills (by Mark A. Hypnar), for Timothy Herndon.

Kaufman, Payton & Chapa, PC, Farmington Hills (by Ralph C. Chapa, Jr.), and James G. Gross, PLC, Detroit (by James G. Gross), for Herndon & Herndon Investigations, Inc, and Timothy Herndon.

Potter, DeAgostino, O'Dea & Patterson, Auburn Hills (by Steven M. Potter and Rick J. Patterson) for Charles Farley.

Before: SERVITTO, P.J., and CAVANAGH and WILDER, JJ.

PER CURIAM.

Plaintiffs, Walter and Lindsay Radu, appeal as of right an order granting two motions for summary disposition in favor of defendants Herndon & Herndon Investigations, Inc (Herndon Investigations), and Timothy Herndon (Herndon), pursuant to MCR 2.116(C)(7), on the basis of release and statutory immunity. We affirm. Plaintiffs also appeal as of right an order granting a motion for summary disposition in favor of defendant Charles Farley (Farley) pursuant to MCR 2.116(C)(7) (governmental immunity) and (C) (10). We affirm in part and vacate in part.

On December 17, 2005, there was a fire in the engine compartment of plaintiffs' 2004 Jeep Grand Cherokee that plaintiff Walter Radu (Walter) had driven to a local park. Walter, a firefighter for the Dearborn Fire Department, claimed that he parked the vehicle, got out of it and, as he was walking away, heard a noise. When he looked back, he saw smoke coming from the passenger-side front wheel well. He then returned to the vehicle and attempted to start it so that he could drive it to the fire department located close to the park. When smoke started coming through the interior heating vents, he got out of the vehicle and called 911. There were no witnesses in the park at the time who have been identified. A deputy from the Oakland County Sheriff's Office and firefighters from the Commerce Township Fire Department responded to the vehicle fire. After the fire was extinguished, the vehicle was towed to a local facility and was placed in an outdoor storage lot. The fire was not considered suspicious in nature by the firefighter in charge or the deputy.

On the same day, plaintiffs filed an insurance claim with Auto Club Insurance Association (ACIA). On December 30, 2005, ACIA hired defendant Herndon Investigations to investigate the claim. On January 2, 2006, defendant Herndon examined the vehicle to determine the origin and cause of the fire. During his inspection, Herndon noticed that the main fuel line was severed at the rear of the engine compartment on the driver's side, as well as at the fuel rail connection. After Herndon completed his entire investigation, he concluded that the fire was incendiary in nature. The Oakland County Sheriff's Office's fire investigation unit was contacted.

On January 5, 2006, defendant Charles Farley, a certified fire investigator for the Oakland County Sheriff's Office (OCSO), requested that ACIA provide him with insurance information related to plaintiffs' vehicle and ACIA's fire investigation. On January 6, 2006, Farley conducted an examination of the vehicle. He noted that the fuel line located at the rear of the engine block, on the driver's side, was cut and that the metal joint from the fuel rail to the fuel line was also cut. Farley also noticed that about 18 inches of the fuel line was missing. After Farley completed his initial investigation, he concluded that the fire was incendiary in nature. However, Farley continued to investigate the matter, supplementing his initial report several times through October 2, 2007, but his opinion did not change. Therefore, he submitted to the prosecutor's office a request for a warrant review and attached his reports, witness statements, and other information. The prosecutor's office decided to prosecute, and Walter was charged with burning insured property in violation of former MCL 750.75, see MCL 750.76, effective April 3, 2013, and insurance fraud in violation of MCL 500.4511(1). Although he was bound over as charged after a finding of probable cause, the prosecutor eventually filed a petition for a nolle prosequi, which was granted.

Also in 2007, plaintiffs filed a complaint against ACIA, alleging breach of contract with regard to ACIA's denial of their insurance claim. In 2008, that matter was resolved and the parties entered into a release, settlement agreement, and nondisclosure agreement. The settlement agreement released ACIA, as well as its employees and representatives, from any related “claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever....” The nondisclosure agreement was executed by all persons and entities involved in the litigation, including Herndon and all the attorneys involved.

In 2009, plaintiffs filed the complaint at issue in this matter, arising from defendants' investigation of the vehicle fire. In count I, plaintiffs alleged a claim of malicious prosecution against all defendants, asserting that they initiated the criminal prosecution against Walter after their cursory fire investigation led to their unsupported accusations of arson. In count II, plaintiffs alleged a claim of injurious falsehood against all defendants, asserting that their cursory and incomplete fire investigation resulted in false, published, and injurious accusations that led to significant damages. In count III, plaintiffs alleged a claim of tortious interference with economic relationships against all defendants, asserting that their false, published accusations caused the denial of plaintiffs' insurance claim, the denial of future insurance coverage, and detrimental employment and business repercussions. In count IV, plaintiffs alleged a claim of intentional infliction of emotional distress against all defendants, asserting that defendants' conduct and accusation of arson were so outrageous in character and so extreme in degree as to go beyond all possible bounds of decency. In count V, plaintiffs alleged claims of negligence against the Herndon defendants and gross negligence against Farley. In count VI, plaintiffs alleged an invasion of privacy claim against all defendants, asserting that defendants improperly disclosed their investigations to Walter's employer and discussed potential criminal charges, thus intruding on plaintiffs' right to privacy. In count VII, plaintiffs alleged an abuse of process claim against Farley, asserting that he abused the criminal investigation process for his own purpose and inappropriately appeared at Walter's place of business unannounced to discuss potential criminal charges with Walter's supervisor. In count VIII, plaintiffs alleged that Walter was denied due process because defendants conspired to pursue the criminal prosecution against him in violation of 42 USC 1983. In count IX, plaintiffs alleged that Walter was denied equal protection under the law because defendants acted in concert and in an arbitrary and capricious manner in violation of 42 USC 1983.

Eventually, the Herndon defendants filed two motions for summary disposition. In the first motion, brought pursuant to MCR 2.116(C)(7), the Herndon defendants argued that they were entitled to statutory immunity. They argued that plaintiffs' claims arose from the fact that they provided information regarding their fire investigation to Farley and, eventually, criminal charges were brought against Walter. However, they were immune from civil liability pursuant to the Fire Prevention Code, MCL 29.4(6), because the fire investigation report was provided to Farley, without fraud or malice, and upon written request during his investigation of suspected arson. The Herndon defendants also argued that they were entitled to immunity pursuant to the Insurance Code, MCL 500.4509(2) and (3), because their fire investigation information was provided to Farley, without malice and upon written request, during Farley's investigation of suspected insurance fraud. Further, plaintiffs' allegations of malice were without merit as a matter of law because Herndon did not have knowledge that his statements were false and he did not act with reckless disregard with regard to the veracity of his statements.

Plaintiffs responded to the Herndon defendants' motion, arguing that they were not entitled to statutory immunity. Plaintiffs claimed that Herndon acted with malice because he provided false information that he knew to be false or, at least, acted with reckless disregard as to whether his information was false. In particular, plaintiffs argued that Herndon “recklessly disregarded the fact that the fuel line was separated, dislodged or otherwise removed after the fire.” Moreover, the statutes cited by the Herndon defendants do not grant immunity to the author of the information that was ultimately furnished to the authorities by the insurance company, ACIA. Therefore, plaintiffs argued, the Herndon defendants were not entitled to statutory immunity.

In their second motion for summary disposition, brought pursuant to MCR 2.116(C)(7), the Herndon defendants argued that plaintiffs' claims were barred as a consequence of the release plaintiffs entered into with ACIA. In particular, the Herndon defendants argued that the release included ACIA's “representatives” and, when they conducted the fire investigation at issue in this matter, the Herndon defendants were acting as “representatives” of ACIA. Plaintiffs opposed this motion, arguing that the Herndon defendants were not entitled to benefit from the release because they were not “representatives” of ACIA; rather, they were...