Charles E Ross v. Auto-Owners Insurance Company ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
CHARLES E. ROSS, UNPUBLISHED
December 4, 2018
Plaintiff-Appellant,
and
VITAL COMMUNITY CARE, ADVANCED
PAIN SPECIALISTS, PLLC, SPECTRA
CLINICAL LAB, GET WELL MEDICAL
TRANSPORT, AFFILIATED DIAGNOSTICS OF
OAKLAND, LLC
Intervening-Plaintiffs,
v No. 339005
Wayne Circuit Court
AUTO-OWNERS INSURANCE COMPANY, LC No. 15-016084-CK
Defendant-Appellee.
Before: JANSEN, P.J., and K. F. KELLY and BORRELLO, JJ.
PER CURIAM.
Plaintiff appeals by delayed leave granted1 the trial court’s order granting defendant’s
motion for summary disposition pursuant to MCR 2.116(C)(10) in this first-party no-fault action.
We reverse and remand for proceedings consistent with this opinion.
I. FACTS AND PROCEDURAL HISTORY
This appeal arises from a motor vehicle accident that occurred on November 23, 2014 in
Detroit, Michigan. Plaintiff was traveling in a motor vehicle with two of his friends when their
motor vehicle was hit by another motor vehicle after the other vehicle ran a stop sign. Plaintiff
filed a three-count complaint against defendant, first alleging a count seeking personal protection
insurance (PIP) benefits, as well as an additional count for breach of contract arising from the
1
Ross v Auto-Owners Ins Co, unpublished order of the Court of Appeals, issued November 17,
2017 (Docket No. 339005).
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non-payment of uninsured motorist benefits. In the third count of the complaint, plaintiff
requested that the trial court order defendant to pay uninsured motorist benefits. According to
plaintiff, defendant owed plaintiff “all medical bills reasonably incurred as well as loss of wages,
attendant care and replacement services” after “wrongfully” refusing and neglecting to pay these
benefits. In the complaint, plaintiff stated that at the time of the motor vehicle accident, he was
insured with defendant as he was a “resident relative of his mother.”
The pivotal issue in this appeal is whether the trial court correctly determined that
genuine issues of material fact did not exist concerning plaintiff’s alleged fraud where plaintiff
maintained that he was employed at the time of the motor vehicle accident. The deposition
testimony of both plaintiff and his employer, Cecil Clark, is determinative in this question.
Plaintiff testified that he was working for BMT, Inc. (“BMT”) at the time of the motor vehicle
accident. According to plaintiff, he did a lot of “managing” for BMT, which owned Chita’s
Nefertiti Bar and Grill, and was responsible for opening and closing the bar, taking inventory,
and taking orders for the party buses. Plaintiff worked 40 hours a week for BMT and was
considered a full-time employee. Plaintiff earned $17.50 an hour at BMT. Plaintiff was also
responsible for ordering liquor and beer, stocking these supplies and he would “be on the [party]
buses on the weekends for the concerts and all that.” In contrast, Clark testified that plaintiff was
an independent contractor for BMT, and that at the end of the year he was given a 1099 form.
Clark stated that plaintiff stopped working for BMT “around the summer of 2014[,]” but when
questioned if August of 2014 was when plaintiff actually stopped working for BMT, Clark stated
that the appropriate time frame was “[m]aybe October; September, October.” Clark later
clarified that plaintiff stopped working for BMT at the end of October 2014 and that he was not
present at a company Thanksgiving dinner in November 2014. Clark also testified that plaintiff
would self-report his hours working for BMT and that the staff at BMT also kept track of
plaintiff’s hours on a weekly basis on a “piece of paper[,]” not a time clock. In an affidavit filed
subsequent to both he and Clark’s deposition, plaintiff claimed that Clark may not have been
aware that he was working for BMT because plaintiff’s job duties often took him away from the
bar for promotional work or to ride the company’s party buses.
Defendant subsequently filed a motion for summary disposition pursuant to MCR
2.116(C)(10). As an initial matter, defendant contended that plaintiff’s claims should be
dismissed in their entirety because of plaintiff’s fraud with regard to his wage-loss claim.
Pointing to the fraud-exclusion clause in the no-fault policy, defendant asserted that where
plaintiff had fraudulently misrepresented his dates of employment, plaintiff had violated the
fraud-exclusion clause in the no-fault policy. In the alternative, defendant asserted that where
any income plaintiff lost following the accident stemmed from his voluntary resignation from his
place of employment, a causal link did not exist between the motor vehicle accident and
plaintiff’s resignation from his employer and plaintiff was precluded from seeking wage-loss
benefits pursuant to MCL 500.3107(1)(b). In his response to the motion for summary
disposition, plaintiff countered that the record did not contain any evidence of fraud on the part
of plaintiff, and that genuine issues of material fact existed with regard to plaintiff’s employment
status at the time of the motor vehicle accident. Plaintiff characterized the issue as a “he said,
she said” situation, and asserted that the apparent questions of fact and credibility ought to be
reserved for the trier of fact. Following a hearing on defendant’s motion, the trial court
concluded that the record evidence established that plaintiff had engaged in fraud and it granted
defendant’s motion for summary disposition, dismissing plaintiff’s PIP claims in their entirety as
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well as plaintiff’s claim for uninsured motorist benefits. Plaintiff now appeals by delayed leave
granted.
II. ANALYSIS
A. PLAINTIFF’S ALLEGED FRAUD
On appeal, plaintiff claims that the trial court erred in granting summary disposition in
favor of defendant on the basis of plaintiff’s alleged fraud where the record yields genuine issues
of material fact with respect to whether plaintiff was still working for BMT at the time of the
motor vehicle accident. We agree.
In Maiden v Rozwood, 461 Mich. 109, 118, 120; 597 NW2d 817 (1999), the Michigan
Supreme Court set forth the applicable standard of review for a trial court’s decision on a motion
brought pursuant to MCR 2.116(C)(10):
[The Court of Appeals] reviews the grant or denial of summary disposition
de novo to determine if the moving party is entitled to judgment as a matter of
law. In making this determination, the Court reviews the entire record to
determine whether defendant was entitled to summary disposition.
* * *
A motion under MCR 2.116(C)(10) tests the factual sufficiency of the
complaint. In evaluating a motion for summary disposition brought under this
subsection, a trial court considers affidavits, pleadings, depositions, admissions,
and other evidence submitted by the parties, MCR 2.116(G)(5), in the light most
favorable to the party opposing the motion. Where the proffered evidence fails to
establish a genuine issue regarding any material fact, the moving party is entitled
to judgment as a matter of law.
In Meemic Ins Co v Fortson, ___ Mich App ___, ___; ___ NW2d ___ (2018) (Docket
No. 337728), lv pending, slip op at 2, this Court recently articulated the legal principles that
govern when a party alleges that an insured has committed fraud:
Generally, whether an insured has committed fraud is a question of fact
for a jury to determine. See generally Shelton v Auto-Owners Ins Co, 318 Mich
App 648, 658-660; 899 NW2d 744 (2017). However, under some circumstances,
a trial court may decide as a matter of law that an individual committed fraud.
See Bahri v IDS Prop Cas Ins Co, 308 Mich. App. 420, 425-426; 864 NW2d 609
(2014). In order to establish that an individual committed fraud, the insurer must
establish (1) that the individual made a material misrepresentation, (2) that the
representation was false, (3) that when the individual made the representation he
or she knew it was false or made it with reckless disregard as to whether it was
true or false, (4) that the misrepresentation was made with the intention that the
insurer would act upon it, and (5) that the insurer acted on the misrepresentation
to its detriment. Titan Ins Co v Hyten, 491 Mich. 547, 555; 817 NW2d 562
(2012).
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In this case, the no-fault policy at issue contains the following fraud-exclusion clause:
We will not cover any person seeking coverage under this policy who has made
fraudulent statements or engaged in fraudulent conduct with respect to
procurement of this policy or to any occurrence for which coverage is sought.
In Meemic, the defendants were the parents of Justin Fortson, who was seriously injured
while riding on the hood of a motor vehicle after the driver suddenly accelerated and turned.
Meemic, ___ Mich App at ___; slip op at 1. Justin’s parents provided attendant care for him, and
submitted documentation evidencing that they did so around the clock, but a subsequent
investigation by the plaintiff insurance company revealed that Justin had been incarcerated, was
spending time with his girlfriend smoking marijuana and spending time in an in-patient
rehabilitation facility at the times that his parents claimed to be caring for him. Id. at ___; slip op
at 2. In that case, Justin’s parents admitted being aware that Justin was incarcerated and
spending time at an inpatient drug rehabilitation facility, and under such circumstances, this
Court concluded that the record supported a conclusion that the defendant parents, who
submitted attendant care documentation to the plaintiff representing that they had provided
around the clock care to Justin, had engaged in a material misrepresentation. Id. at ___; slip op
at 2-3. This Court reached that conclusion, particularly where “the payment requests were
submitted with the intention that Meemic would rely on them and remit payment to [Justin’s
parents] for constant attendant care services, despite the fact that [Justin’s parents] knew that
they were not providing” such care to their son. Id. at __; slip op at 3.
Similarly, in Bahri, the no-fault policy at issue in that case contained a similar fraud-
exclusion clause to the one at issue in this case. Bahri, 308 Mich. App. at 423-424. This Court
concluded that the fraud exclusion clause operated to bar the plaintiff’s claim seeking
replacement services pursuant to the no-fault act where the services the plaintiff sought coverage
for were initiated before the date of the motor vehicle accident. Id. at 425. In Bahri, the
defendant also put forth surveillance evidence that showed the plaintiff, on numerous discrete
occasions, performing actions that were “inconsistent with her claimed limitations.” Id. at 426.
Reasoning that the record evidence “belie[d] [the] plaintiff’s assertion that she required
replacement services,” this Court concluded that “[r]easonable minds could not differ in light of
this clear evidence that plaintiff made fraudulent misrepresentations for purposes of recovering
PIP benefits.” Id. As a result, the trial court’s decision granting summary disposition in favor of
the defendant was affirmed. Id.
More recently, in Shelton, this Court characterized the evidence of fraud in Bahri as
“unrebutted” and noted that the evidence in Shelton revealed genuine issues of material fact with
regard to the plaintiff’s alleged fraud, observing that it did not rise to the level of what the Court
was presented with in Bahri. Shelton, 318 Mich. App. at 655-656. In Shelton, the defendant had
presented investigator reports and photographs countering the plaintiff’s allegations of injuries
and requirements of medical care. Id. at 658. This Court observed that many of the photographs
at issue were blurred, and that the “subjects of the photographs so distant” that it was not
possible to discern who was being photographed and what was occurring in the photographs. Id.
In addition, the defendant’s description of incidents in the investigative reports was inconsistent
with the reports themselves, and this Court expressly stated that one instance where the plaintiff
was observed “wringing out a shirt” did not controvert her allegation that she was not capable of
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performing laundry without assistance. Id. at 658-659. The Court also rejected the defendant’s
contention that the plaintiff being seen without her back brace and bending over on two
occasions established “beyond a question of fact that [the plaintiff] has defrauded [the]
defendant.” Id. at 659.
Plaintiff points to Shelton in his brief on appeal, arguing that it is supportive of his
position that the fraud-exclusion policy in the present case is not applicable, given that he was
not an insured under the no-fault policy. In Shelton, this Court concluded that “[t]he law
governing application of the policy exclusion [regarding fraud] in Bahri [was] not applicable”
where the plaintiff in Shelton was not an insured under the no-fault policy, but instead, the
defendant was required to pay the plaintiff no-fault benefits pursuant to statute. Id. at 652.
However, in Shelton, the plaintiff was a passenger in a motor vehicle driven by another
individual when the accident at issue took place, and the plaintiff sought no-fault coverage from
the driver’s insurer, as she herself did not own a vehicle and did not reside with a relative who
did. Id. at 651. Under such circumstances, this Court observed that “the exclusionary provision
in [the] defendant’s no-fault policy does not apply to [the plaintiff] and cannot operate to bar
[her] claim.” Id. at 653, 654-655. As the Shelton Court recognized, where the plaintiff in that
case was not an individual named in the policy, a spouse of the person named in the policy, or a
relative of either the person named in the policy or his spouse, the “defendant’s policy [did] not
‘apply’ to [the plaintiff]” as set forth in MCL 500.3114(1).2 In contrast, in this case, the parties
do not dispute that plaintiff was an insured under defendant’s no-fault policy where plaintiff was
domiciled with his mother. Accordingly, plaintiff’s reliance on Shelton for his argument that the
fraud-exclusion clause is not applicable in this case is unavailing.
In any event, the record evidence, viewed in the light most favorable to plaintiff, Maiden,
461 Mich. at 120, does indeed yield genuine issues of material fact with regard to whether
plaintiff was working for BMT at the time of the motor vehicle accident. For example, plaintiff
testified during his deposition that he worked for BMT at the time of the motor vehicle accident.
According to plaintiff’s deposition testimony, his work would take him on the party buses on the
weekends. In the time preceding the motor vehicle accident, in October 2014, according to
plaintiff’s affidavit filed in this case, he was “doing a lot of promotions [for] the party buses” as
Halloween approached. Plaintiff’s work would take him away from the bar, and he would attend
“many concerts and bar hopping events with the party bus” during that time period. Plaintiff was
required to ride the party buses for the duration of the events, and, as part of his promotional
work he would visit printers to make flyers and postcards and pass them out to bars and
restaurants in the area, and post them on people’s cars. In plaintiff’s own words in his affidavit,
“Cecil Clark may not have seen me much because my hours varied and, also, I was away from
2
MCL 500.3114(1) provides that “[e]xcept as provided in subsections (2), (3), and (5), a
personal protection insurance policy described in [MCL 500.3101(1)] applies to accidental
bodily injury to the person named in the policy, the person’s spouse, and a relative of either
domiciled in the same household, if the injury arises from a motor vehicle accident. (Emphasis
added.)
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the bar doing the party buses; it was a very busy time of year.” Plaintiff considered himself still
employed by BMT at the time of the motor vehicle accident, he could make his own hours, and
in plaintiff’s opinion, Clark may have testified that plaintiff no longer worked for BMT because
“we had just missed seeing each other whenever I was working.”
In contrast, Clark’s testimony on plaintiff’s alleged termination from employment with
BMT was certainly not unequivocal. For instance, Clark first testified that plaintiff left BMT
“around the summer of 2014[,]” but later qualified his answer to reflect that plaintiff may have
left in September or October of 2014. BMT did not keep employment records for plaintiff, once
plaintiff was paid for his time any written record was destroyed by BMT staff. Clark conceded
that he was not present every day that plaintiff worked. Clark also testified that plaintiff’s
scheduled “fluctuated each week[,]” and that his work would take him away from the bar on the
party buses. Plaintiff was not formally discharged from his employment with BMT, and Clark
agreed that plaintiff’s employment “trailed off” when plaintiff stopped reporting to work in
September or October of 2014. Clark further waffled on the timing of plaintiff leaving
employment with BMT, agreeing that plaintiff left before Thanksgiving 2014, but “[n]ot too
much more before that.” While Clark could not recall exactly how far in advance of
Thanksgiving 2014 that plaintiff had left BMT’s employment, he later clarified that it was “at
least 30 days before[,]” and that plaintiff left BMT “sometime at the end of October[.]” A
genuine issue of material fact exists when “reasonable minds could differ on an issue after
viewing the record in the light most favorable to the nonmoving party.” Allison v AEW Capital
Mgnmt, LLP, 481 Mich. 419, 425; 751 NW2d 8 (2008). After reviewing the testimony of both
Clark and plaintiff, as well as plaintiff’s statement in his affidavit, reasonable minds could
certainly differ on the issue with respect to whether plaintiff was working for BMT at the time of
the motor vehicle accident. Id. Consequently, where a review of the record evidence does not
support, as a matter of law, a determination that plaintiff made a false material representation to
defendant with regard to his employment tenure with BMT, the trial court erred in granting
summary disposition in favor of defendant. Meemic, ___ Mich App at ___; slip op at 2.
Moreover, in ruling on defendant’s motion, the trial court observed that aside from
plaintiff’s affidavit and deposition testimony, written documentation did not support plaintiff’s
assertions that he was working for BMT at the time of the motor vehicle accident. However,
where plaintiff submitted admissible evidence in compliance with the court rules in response to
defendant’s motion, the trial court erroneously held that summary disposition was appropriate.
For example, MCR 2.116(G)(4) provides that once a motion brought pursuant to MCR
2.116(C)(10) “is made and supported as provided in this rule, an adverse party may not rest upon
the mere allegations or denials of his or her pleading, but must, by affidavits or as otherwise
provided in this rule, set forth specific facts showing that there is a genuine issue for trial.” In
compliance with MCR 2.116(G)(6), plaintiff produced an affidavit, as well as deposition
testimony, both of which would be “admissible as evidence” to deny the grounds stated in
defendant’s motion. Under such circumstances, the trial court’s conclusion that plaintiff did not
present evidence demonstrating a genuine issue of material fact for trial was incorrect.
Additionally, to the extent that the trial court clearly found Clark to be a more credible witness
on the issue of plaintiff’s employment with BMT, a trial court is not permitted to “make
credibility determinations[ ]” in the context of deciding a motion for summary disposition. Puetz
v Spectrum Health Hosps, 324 Mich. App. 51, 68-69; ___ NW2d ____ (2018).
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This case is also distinguishable from yet another recent case from this Court, Candler v
Farm Bureau Mut Ins Co of Mich, 321 Mich. App. 772; 910 NW2d 666 (2017), where, in the
context of determining whether the plaintiff had committed a “fraudulent insurance act” as set
forth in MCL 500.3173a(2), this Court held that genuine issues of material fact did not exist
concerning this issue where the plaintiff had submitted calendars in support of his claim for
replacement services that were fraudulent. Id. at 776, 777, 781. This Court reached this
conclusion where the record reflected that the plaintiff was indeed aware that the calendars
submitted were incorrect, and counsel for the plaintiff conceded in the trial court that the plaintiff
had forged his brother’s name to the calendars. Id. at 781. Additionally, the record reflected that
the plaintiff had moved to another city to live with his girlfriend at the time that his brother was
alleged to have been caring for him according to the calendars. Id. Under such circumstances,
this Court determined that “[n]o reasonable jury could conclude that plaintiff, despite the
presence of any head injury, was not aware that he was submitting false information that was
material to his claim for no-fault benefits.” Id. at 781-782. Unlike in Candler and Bahri, the
instant case is not one where the record evidence establishes, as a matter of law, that plaintiff
engaged in fraud. Consequently, where a review of the record evidence in the light most
favorable to plaintiff reveals that genuine issues of material fact exist concerning whether
plaintiff’s statements regarding his employment tenure with BMT were fraudulent, the trial court
erred in granting summary disposition in favor of defendant.
B. MCL 500.3107
Plaintiff also argues that the trial court should not have granted defendant’s motion for
summary disposition with regard to his claim for wage-loss benefits because genuine issues of
material fact exist regarding whether plaintiff’s loss in income is causally linked to the motor
vehicle accident. We agree.3
Plaintiff’s argument implicates MCL 500.3107(1)(b), which provides, in pertinent part, as
follows:
(1) Except as provided in subsection (2), personal protection insurance benefits
are payable for the following:
(b) Work loss consisting of loss of income from work an injured person would
have performed during the first 3 years after the date of the accident if he or she
had not been injured.
In Popma v Auto Club Ins Ass’n, 446 Mich. 460, 466; 521 NW2d 831 (1994), the
Michigan Supreme Court recognized that “[t]he provisions governing the award of work-loss
benefits [in the no-fault act] are contingent on the employment status of the claimant at the time
of the accident.” In accordance with MCL 500.3107(1)(b), a claimant’s recovery is also
3
While the trial court did not squarely address this issue in its bench ruling, we may consider
this issue where it involves a question of law and the necessary facts have been presented. Smith
v Foerster-Bolser Const, Inc, 269 Mich. App. 424, 427; 711 NW2d 421 (2006).
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confined to “what he would have earned had he not been involved in the [motor vehicle]
accident.” Popma, 446 Mich. at 463. Additionally, to qualify for benefits pursuant to MCL
500.3107(1)(b), an individual “must actually be employed at the time of the accident[.]” Popma,
446 Mich. at 468.
Importantly, the statutory language requires that work-loss damages
consist of lost income from “work an injured person would have performed.” We
explained in MacDonald v State Farm [419 Mich. 146, 152; 350 NW2d 233
(1984)] that “work-loss benefits compensate the injured person for income he
would have received but for the accident.” Thus, work-loss damages are only
available if the accident was the “but for” cause—i.e., cause-in-fact—of the work
loss. [Hannay v MDOT, 497 Mich. 45, 80; 860 NW2d 67 (2014).]
As an initial matter, recognizing that his motor vehicle accident must be the “but for”
cause of his wage loss, id., plaintiff points out that genuine issues of material fact exist for the
factfinder to resolve concerning whether he was working for BMT on the day of the motor
vehicle accident. For the reasons set forth in our analysis with regard to plaintiff’s alleged fraud,
we agree with plaintiff’s assertion that genuine issues of material fact do exist regarding whether
plaintiff worked for BMT on the day of the motor vehicle accident and summary disposition of
plaintiff’s wage-loss claim was improper.
III. CONCLUSION
We reverse the trial court’s grant of summary disposition to defendant with regard to all
claims and remand for further proceedings consistent with this opinion. We do not retain
jurisdiction. Plaintiff, as the prevailing party, may tax costs pursuant to MCR 7.219.
/s/ Kirsten Frank Kelly
/s/ Stephen L. Borrello
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