Triplett v. St. Amour

• Decision Date: 28 September 1993
• Docket Number: No. 4,Docket No. 94059,A,4
• Citation: 507 N.W.2d 194,444 Mich. 170
• Parties: Victor Bruce TRIPLETT, Trinity Chemical Company, a Michigan corporation, and Federated Mutual Insurance Company, a Minnesota corporation, Plaintiffs-Appellees, v. Patricia Louise ST. AMOUR and William St. Amour, jointly and severally, Defendants-Appellants. Calendarpril Term.
• Court: Michigan Supreme Court

Page 194

507 N.W.2d 194

444 Mich. 170

Victor Bruce TRIPLETT, Trinity Chemical Company, a Michigan corporation, and Federated Mutual Insurance Company, a Minnesota corporation Plaintiffs-Appellees, v. Patricia Louise ST. AMOUR and William St. Amour, jointly and severally, Defendants-Appellants.

Docket No. 94059.

Calendar No. 4, April Term.

Supreme Court of Michigan.

Argued March 31, 1993.

Decided Sept. 28, 1993.

[444 Mich. 172] Fordney, Cady, Mastromarco & Jahn, P.C. by Victor J. Mastromarco, Jr. and Jo Ellen O'Connor, Saginaw, for plaintiffs-appellees.

Sumpter, Perry & McDonald P.C. by Thomas E. McDonald, Cheboygan, for defendants-appellants.

BEFORE THE ENTIRE BENCH

OPINION

BOYLE, Justice.

The plaintiffs, composed of the alleged tortfeasor ¹ in a previous action, his employer, and its insurer, have brought an independent action at law for fraud seeking money damages issuing from a fraudulently induced settlement agreement. The circuit court granted summary disposition for the defendant, which the Court of Appeals reversed. We believe the summary disposition was appropriate, and we therefore reverse the judgment of the Court of Appeals and reinstate the judgment of the circuit court.

I

Following a two-car collision that occurred in February 1986, Patricia St. Amour, the driver of one automobile, and her husband ² brought a personal injury action in Cheboygan Circuit Court against the driver of the other automobile, Victor Bruce Triplett, and against his employer, Trinity Chemical Company, which owned the other car. Mrs. St. Amour claimed that as a result of the accident she suffered a traumatic shoulder dislocation. As insurer of the vehicle driven by Triplett, Federated Mutual Insurance Company assumed the defense of that action. Following discovery, which included extensive inquiries concerning Mrs. St. Amour's alleged shoulder injury, the parties entered into a settlement agreement pursuant to which Mrs. St. Amour and her husband were paid $20,000, and an order dismissing the action with prejudice was entered by the circuit court on May 3, 1988.

Thereafter, Mrs. St. Amour brought another action against her own no-fault carrier, State Farm Insurance Company, claiming entitlement to benefits relating to the same automobile accident that it had refused to pay. During the course of that lawsuit, it was ascertained that less than thirty days before the accident involving Triplett, Mrs. St. Amour had been treated by Dr. John M. Thiel, a bone and joint specialist, for a serious injury to her shoulder. The St. Amours then filed a third lawsuit against Dr. Thiel alleging a breach of the physician-patient privilege for disclosing a prior treatment of her shoulder condition.

After learning through that litigation of Dr. Thiel's prior treatment, the present action was filed March 17, 1989, in Kalkaska Circuit Court by Triplett, Trinity Chemical Company, and Federated Mutual Insurance Company, as plaintiffs. They allege that during the course of discovery in the original action, the St. Amours fraudulently concealed Mrs. St. Amour's preaccident physical condition. Plaintiffs allege that defendants made misrepresentations via sworn deposition testimony, sworn answers to interrogatories, and counsel's statements and pleadings signed as the agent of the defendants. In this action, plaintiffs do not request rescission of the settlement agreement or of the order of dismissal entered by the Cheboygan Circuit Court. Rather, the complaint alleges an action at law for fraud and seeks monetary damages resulting from execution of the fraudulently induced settlement agreement, as well as costs associated with defending the original case.

The St. Amours moved for summary disposition pursuant to MCR 2.116(C)(8), contending that plaintiffs had failed to state a claim upon which relief could be granted. They also moved for a change of venue and requested the imposition of sanctions for improper venue.

In an opinion dated April 25, 1990, the Kalkaska Circuit Court granted defendants' motion for summary disposition. Relying on Rogoski v. Muskegon, 107 Mich.App. 730, 309 N.W.2d 718 (1981), it concluded that an independent action at law for fraud could not be maintained because the prior action was a bar under either res judicata or collateral estoppel principles. The court indicated that plaintiffs were limited to seeking relief from judgment in accordance with MCR 2.612(C)(1). The court opined that an action in equity for relief would not be available under MCR 2.612(C)(3) because this case does not involve extrinsic fraud. In view of its grant of defendants' motion for summary disposition, the court declined to rule on the issue of venue or the request for costs or sanctions under MCR 2.223(B). ³ Plaintiffs appealed the order granting summary disposition in favor of defendants, and defendants appealed from the denial of sanctions for improper venue.

The Court of Appeals reversed and remanded for further proceedings. 194 Mich.App. 335, 486 N.W.2d 146 (1992). Citing Courtney v. Feldstein, 147 Mich.App. 70, 382 N.W.2d 734 (1985), the Court ruled that a judgment entered pursuant to an allegedly fraudulently induced settlement agreement does not bar a separate action for damages resulting from the fraud. It did not address the issue of venue and declined to award sanctions.

Both sides then applied for leave to appeal in this Court, which we granted. 441 Mich. 902, 496 N.W.2d 292 (1992).

II

The narrow issue presented in the instant case is whether this Court should recognize an independent action at law to recover damages for a fraudulently induced judgment when the instant plaintiff was the defendant in the original tort action and the instant defendant was the releasor of the previous tort claim. ⁴ The instant plaintiffs stress that such an independent action is necessary to restore them to their prefraud position. They also advance the goal of deterring fraud. MCR 2.612(C), ⁵ the court rule allowing relief from judgment, is, according to the plaintiffs, incapable of accomplishing this end. However, because the balance between the worthwhile goals advanced by the plaintiffs and the equally significant concern for the finality of judgments is appropriately addressed by the court rules, we see no need to adopt the new cause of action requested by the plaintiffs.

Although the plaintiffs have failed to direct the Court to any cases that allows a fraud action under the present circumstances, and our independent research has likewise failed to find cases directly on point that might offer guidance, it is not difficult to imagine that under the reasoning of the plaintiff, it would be a rare case in which a tortfeasor in the first action, upon finding that the plaintiff had acted fraudulently during settlement negotiations, would move to rescind the settlement under MCR 2.612(C). The tortfeasor would generally be better off ratifying the settlement and suing for fraud, thereby guaranteeing that the maximum exposure of liability would be the amount previously paid to the plaintiff. Such action by the tortfeasor would completely protect it from a trial in which the jury might award a judgment considerably larger than the settlement figure. This protection would also serve to greatly strengthen the tortfeasor's hand in negotiating a settlement of the second suit. The predictable outcome is that the price of final settlement would be substantially reduced.

The cases involving the releasers of tort claims in the first action are inapposite. While there appears to be a national split of authority regarding whether a "releasor of a tort claim may stand upon a fraudulently induced release and maintain a separate fraud action," DiSabatino v. United States Fidelity & Guaranty Co., 635 F.Supp. 350, 352 (D.Del.1986); see also Kordis v. Auto Owners Ins. Co., 311 Mich. 247, 18 N.W.2d 811 (1945), ⁶ or is limited to rescinding the settlement agreement and pursuing the original suit, Shallenberger v. Motorists Mutual Ins. Co., 167 Ohio St. 494, 5 O.O.2d 173, 150 N.E.2d 295 (1958), neither the cases from foreign jurisdictions nor Michigan precedent supports what the plaintiff asks this Court to today recognize the ability of the tortfeasor in the original action to stand upon the plaintiff's release and sue for fraud. The public policy justifications for recognizing a fraud suit in the above circumstances are not present here.

The balanced approach that MCR 2.612(C) represents to remedy fraudulently induced judgments would be upset if the plaintiff's fraud action was recognized in Michigan. Likewise, the attempt represented by MCR 2.612(C)(2) to enforce the finality of judgments by imposing a one-year period of limitation on the legal remedies available under the rule could also become inconsequential. The plaintiff asserts that such a drastic practical effect is necessary to vindicate the interests of the defrauded party. However, under these circumstances, MCR 2.302(G)(3)(a), (4) provides a remedy to the defrauded tortfeasor that makes him whole without recognizing a new and unique tort action. ⁷

Under MCR 2.309(B)(1), (3), a party must sign an interrogatory certifying an answer, which "must include such information as is available to the party served...." MCR 2.302(G)(3)(a), (4) provides sanctions in the discovery context when a certification is not "consistent with these rules...." If it were shown that Mrs. St. Amour fraudulently failed to list a doctor and the trial court granted the defendant in the original action relief under MCR 2.612, the trial court would be empowered to "impose ... an appropriate sanction, which may include an order to pay the amount of the reasonable expenses incurred because of the violation, including reasonable attorney fees." MCR 2.302(G)(4). Such a sanction would effectively "vindicate the interests of the defrauded party," dissenting op. at 210, which in the case of the defendant in the original...