Dte Electric Company v. Theut Products Inc ( 2015 )

STATE OF MICHIGAN
COURT OF APPEALS
DTE ELECTRIC COMPANY, formerly known as UNPUBLISHED
THE DETROIT EDISON COMPANY, September 29, 2015
Plaintiff-Appellant,
v No. 322701
St. Clair Circuit Court
THEUT PRODUCTS, INC., and JOHN DOE LC No. 13-001035-NF
INSURANCE COMPANY,
Defendants-Appellees.
Before: GADOLA, P.J., and JANSEN and BECKERING, JJ.
PER CURIAM.
Plaintiff appeals as of right the order granting summary disposition in favor of defendant
Theut Products, Inc. (Theut). We affirm.
I. FACTS AND PROCEDURAL HISTORY
This case arises from a June 4, 2012 incident in which a cement truck owned by Theut
caught overhead electrical lines and pulled down five utility poles owned by plaintiff in Clay
Township, Michigan. The Clay Township Fire Department filed an incident report, which
provided that the cement truck was insured with “EMC Ins Co.” The traffic crash report for the
incident indicated that the no-fault insurance provider was “EMC Ins,” and it listed an insurance
policy number. Before filing the complaint, plaintiff’s attorney conducted a search for insurance
companies with the acronym “EMC” in their name. Plaintiff’s attorney found two insurance
companies with the slightly different acronym “ECM” in their names, but the insurance
companies merged and changed their name to Socius Insurance Agency Services, Inc.
On April 3, 2013, plaintiff filed a complaint in the trial court against Theut and John Doe
Insurance Company (JDIC). Plaintiff alleged that Theut was liable for negligent operation of a
motor vehicle and that JDIC was liable for property protection benefits under the no-fault act,
MCL 500.3101 et seq. A summons was signed on April 3, 2013, and issued on April 15, 2013.
The summons was addressed to Theut. The summons and complaint were served on Theut on
May 6, 2013. Scott Hopfinger, the controller of Theut, forwarded the summons and complaint to
EMC Insurance Company (EMC) within a week of May 6, 2013. According to Hopfinger, he
did not hire Theut’s attorney. Instead, EMC’s attorneys contacted him after he forwarded the
summons and complaint to EMC. Theut’s attorney filed an appearance on behalf of Theut on
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May 29, 2013. Theut filed an answer and a notice of affirmative defenses on June 28, 2013.
Theut asserted that it was not liable since the electrical lines were too low and the applicable
limitations period in MCL 500.3145(2) barred plaintiff’s claim.
Plaintiff filed a motion to amend the complaint to list Socius Insurance Agency Services,
Inc., as the insurance provider. The day after plaintiff filed the motion, Theut’s attorney sent an
e-mail to one of the attorneys for plaintiff, informing him that the name of the insurance
company is “EMC Insurance.” Theut filed a response to plaintiff’s motion for leave to amend
the complaint, which stated, in relevant part, that EMC is the proper insurance provider. Plaintiff
filed a reply brief, which requested that the court amend each reference to JDIC in the complaint
to EMC. The trial court denied the motion since the amendment was futile. The court reasoned
that plaintiff failed to notify the insurance company of the action within the one-year limitations
period outlined in MCL 500.3145(2).
Plaintiff filed a motion for reconsideration, arguing that EMC was not an authorized no-
fault insurer and that EMCASCO Insurance Company (EMCASCO) was the likely no-fault
insurer. Theut filed a response to the motion for reconsideration, acknowledging that
EMCASCO is its no-fault insurance provider and stating that EMC is another name for
EMCASCO. The trial court denied reconsideration. Theut then filed a motion for summary
disposition, arguing that it was not liable since it maintained the proper no-fault security under
MCL 500.3101. Theut attached to its motion the no-fault insurance policy that was in place
during the incident. The name “EMC Insurance Companies” appeared at the top of the policy.
However, the policy also referred to the insurer as “Employers Mutual Casualty Company.”
Plaintiff filed a response to Theut’s motion for summary disposition, arguing that Theut was
liable if it was uninsured and that Theut waived the issue since it failed to state in its answer that
it had a no-fault insurance policy. Plaintiff argued that the court should bar Theut under the
doctrine of judicial estoppel from asserting that it has no-fault coverage.
The trial court entered an order to dismiss the case against JDIC since JDIC was not
served with process within the proper time frame. Plaintiff filed a motion to set aside the order
dismissing the action against JDIC, arguing that JDIC submitted to the jurisdiction of the court
by appearing in the action. Plaintiff also filed a motion requesting that the court enter a default
judgment against JDIC. The trial court determined that plaintiff failed to show diligence in
determining the identity of the insurance company. The court reasoned that plaintiff did not file
a motion to amend the name of the insurance company in the complaint to EMC, and EMC was
not served with process. The trial court also granted summary disposition in favor of Theut,
reasoning that Theut’s tort liability was abolished when it obtained no-fault coverage under MCL
500.3101(1).
II. MOTION TO AMEND THE COMPLAINT
Plaintiff first argues that the trial court abused its discretion when it denied plaintiff’s
motion to amend the complaint and plaintiff’s motion for reconsideration. We disagree.
This Court reviews for an abuse of discretion a trial court’s decision on a motion to
amend a complaint. Diem v Sallie Mae Home Loans, Inc, 307 Mich. App. 204, 215-216; 859
NW2d 238 (2014). “ ‘The trial court abuses its discretion when its decision results in an
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outcome that falls outside the range of reasonable and principled outcomes.’ ” Sulaica v
Rometty, 308 Mich. App. 568, 589-590; 866 NW2d 838 (2014) (citation omitted). This Court
reviews de novo “the question whether a claim is barred by the statute of limitations and the
issue of the proper interpretation and applicability of the limitations periods.” Stephens v
Worden Ins Agency, LLC, 307 Mich. App. 220, 227; 859 NW2d 723 (2014). This Court reviews a
trial court’s decision on a motion for reconsideration for an abuse of discretion. Aroma Wines &
Equip, Inc v Columbian Distrib Servs, Inc, 303 Mich. App. 441, 451; 844 NW2d 727 (2013), aff’d
497 Mich. 337 (2015).
Motions to amend a complaint are ordinarily granted. Diem, 307 Mich. App. at 216.
MCR 2.118(A)(1) provides, “A party may amend a pleading once as a matter of course within 14
days after being served with a responsive pleading by an adverse party, or within 14 days after
serving the pleading if it does not require a responsive pleading.” MCR 2.118(A)(2) adds,
“Except as provided in [MCR 2.118(A)(1)], a party may amend a pleading only by leave of the
court or by written consent of the adverse party. Leave shall be freely given when justice so
requires.” A trial court may deny a motion to amend for the following reasons:
(1) undue delay, (2) bad faith or dilatory motive on the part of the movant, (3)
repeated failure to cure deficiencies by amendments previously allowed, (4)
undue prejudice to the opposing party by virtue of allowance of the amendment,
or (5) futility of the amendment. Absent bad faith or actual prejudice to the
opposing party, delay, alone, does not warrant denial of a motion to amend.
[Diem, 307 Mich. App. at 216 (citation and quotation marks omitted).]
The trial court did not abuse its discretion when it refused to allow plaintiff to amend its
complaint since the amendment would have been futile. MCL 500.3145(2) provides, “An action
for recovery of property protection insurance benefits shall not be commenced later than 1 year
after the accident.” The complaint was filed in the trial court on April 3, 2013, but plaintiff did
not file a motion to amend the complaint to include the proper insurance company defendant
until after the one-year limitations period expired. Therefore, the limitations period expired.
Plaintiff argues that the limitations period was tolled under MCL 600.5856. MCL
600.5856 provides, in part:
The statutes of limitations or repose are tolled in any of the following
circumstances:
(a) At the time the complaint is filed, if a copy of the summons and
complaint are served on the defendant within the time set forth in the supreme
court rules.
(b) At the time jurisdiction over the defendant is otherwise acquired.
MCR 2.102(D) explains, in part:
A summons expires 91 days after the date the complaint is filed.
However, within those 91 days, on a showing of due diligence by the plaintiff in
attempting to serve the original summons, the judge to whom the action is
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assigned may order a second summons to issue for a definite period not exceeding
1 year from the date the complaint is filed. If such an extension is granted, the
new summons expires at the end of the extended period.
The limitations period in MCL 500.3145(2) was not tolled. “The filing of a ‘John Doe’
complaint does not toll the statute of limitation with respect to parties not yet specifically
named.” Rheaume v Vandenberg, 232 Mich. App. 417, 424; 591 NW2d 331 (1998). Thus, the
filing of the complaint against JDIC did not toll the limitations period with regard to EMC. See
id. Furthermore, even assuming that the filing of the “John Doe” complaint could have tolled the
limitations period, plaintiff failed to serve a copy of the summons and complaint on the insurance
company, as discussed in further detail below. See MCL 600.5856(a). Finally, the court did not
otherwise acquire jurisdiction over the insurance company since the insurance company failed to
appear in the case, as discussed in further detail below. See MCL 600.5856(b). Therefore, the
one-year limitations period was not tolled when plaintiff filed the “John Doe” complaint. See
MCL 600.5856.
Plaintiff also did not merely seek to correct a misnomer in the complaint when it moved
to amend the complaint. In general, a party may amend a misnomer in a pleading unless the
effect of the amendment is an entire change of the party. Miller v Chapman Contracting, 477
Mich. 102, 106; 730 NW2d 462 (2007). “The misnomer doctrine applies only to correct
inconsequential deficiencies or technicalities in the naming of parties . . . .” Id. at 106-107. This
includes when a corporate party is sued under the wrong name, but service was made on the right
party. Id. at 107. The misnomer doctrine does not apply if the plaintiff attempts to “add a
wholly new and different party.” Id. In this case, plaintiff sought to add an entirely new party to
the case, rather than amend an inconsequential deficiency or technicality in the name of a party.
See id. at 106-107. Service was never made on the right party. Id. at 107. Therefore, the
misnomer doctrine does not permit plaintiff to amend the complaint. See id. at 106-107.
Plaintiff argues that this Court’s decision in Matti Awdish, Inc v Williams, 117 Mich. App.
270; 323 NW2d 666 (1982), controls the outcome in this case. In Matti Awdish, the plaintiffs
sued the defendant, arguing that the defendant’s negligent operation of a motor vehicle damaged
the plaintiffs’ property. Id. at 272. The complaint did not name the defendant’s insurer as a
party to the action. Id. The trial court denied the plaintiffs’ motion to amend the complaint
because the one-year limitations period in MCL 500.3145(2) expired. Id. This Court held that
the limitations period was tolled since the defendant forwarded the claim to the insurer, the
insurer hired the law firm that defended the case, and the insurer “literally conducted the
defense.” Id. at 278-279. This Court emphasized that the insurer had actual knowledge of the
lawsuit and conducted the defense on behalf of the defendant. Id.
However, this case is distinguishable from Matti Awdish since the limitations period in
MCL 500.3145(2) is no longer subject to judicial tolling. In Secura Ins Co v Auto-Owners Ins
Co, 461 Mich. 382, 385-387; 605 NW2d 308 (2000), the Michigan Supreme Court clarified that a
property protection insurance claim under MCL 500.3145(2) is not subject to judicial tolling.
The Court explained that the statute was clear and that “[t]he Legislature has decreed that
property damage claims must be brought within one year of the accident.” Id. at 387. Thus, the
trial court could not toll the limitations period outlined in MCL 500.3145(2) under the doctrine
of judicial tolling. See id. Furthermore, this case is distinguishable from Matti Awdish since
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plaintiff filed a “John Doe” complaint, and the filing of a “John Doe” complaint does not toll the
limitations period with regard to an unnamed party. See Rheaume, 232 Mich. App. at 424.
Finally, Matti Awdish is not binding since it is a pre-1990 decision of this Court. See Barrow v
City of Detroit Election Comm, 301 Mich. App. 404, 420 n 8; 836 NW2d 498 (2013) (noting that
a pre-1990 decision of this Court is not binding). Therefore, Matti Awdish does not control the
outcome in this case. For the reasons discussed above, the trial court did not err in denying
plaintiff’s motion to amend the complaint since the amendment was futile. See Diem, 307 Mich
App at 216.
The trial court also did not err when it denied reconsideration. In general, a trial court
will not grant a motion for reconsideration that presents the same issue that the court ruled on
either explicitly or impliedly. MCR 2.119(F)(3). “In order to establish the right to relief, the
party bringing the motion for reconsideration must establish that the trial court made a palpable
error and a different disposition would result from correction of the error.” Huntington Nat’l
Bank v Daniel J Aronoff Living Trust, 305 Mich. App. 496, 516; 853 NW2d 481 (2014). Plaintiff
argued in its motion for reconsideration that Matti Awdish controlled the outcome in this case
and that Theut failed to identify its no-fault insurer. Plaintiff did not establish that the trial court
made a palpable error with regard to the one-year limitations period or that a different disposition
should result from correction of the error. Therefore, the trial court properly denied the motion
for reconsideration. See MCR 2.119(F)(3); Huntington Nat’l Bank, 305 Mich. App. at 516.
III. DISMISSAL OF JDIC
Plaintiff argues that the trial court erred when it refused to set aside the dismissal of JDIC
and denied plaintiff’s motion to recognize that JDIC appeared in the action and enter a default
judgment. We disagree.
The issue involves the proper interpretation and application of several court rules. This
Court reviews de novo the proper application and interpretation of a court rule. Rental Props
Owners Ass’n of Kent Co v Kent Co Treasurer, 308 Mich. App. 498, 532; 866 NW2d 817 (2014).
MCR 2.102(E)(1) dictates that an action may be dismissed as follows:
(1) On the expiration of the summons as provided in [MCR 2.102(D)], the
action is deemed dismissed without prejudice as to a defendant who has not been
served with process as provided in these rules, unless the defendant has submitted
to the court’s jurisdiction. As to a defendant added as a party after the filing of
the first complaint in the action, the time provided in this rule runs from the filing
of the first pleading that names that defendant as a party.
MCR 2.105(J)(3) provides that “[a]n action shall not be dismissed for improper service of
process unless the service failed to inform the defendant of the action within the time provided in
these rules for service.” MCR 2.102(F) provides:
A court may set aside the dismissal of the action as to a defendant under
[MCR 2.102(E)] only on stipulation of the parties or when all of the following
conditions are met:
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(1) within the time provided in [MCR 2.102(D)], service of process was in
fact made on the dismissed defendant, or the defendant submitted to the court’s
jurisdiction;
(2) proof of service of process was filed or the failure to file is excused for
good cause shown;
(3) the motion to set aside the dismissal was filed within 28 days after
notice of the order of dismissal was given, or, if notice of dismissal was not given,
the motion was promptly filed after the plaintiff learned of the dismissal.
Plaintiff argues in its brief on appeal that JDIC was served with process. However, as
discussed above, JDIC was not the real name of Theut’s insurer. Therefore, there was no way
that JDIC was served with a copy of the summons and complaint since JDIC did not exist. To
the extent that plaintiff argues that EMC was served with process, there is no indication that
EMC was ever served with process. Instead, Hopfinger sent EMC a copy of the summons that
was directed to Theut and complaint that was directed to Theut and JDIC. Thus, EMC was never
served with copy of the summons and complaint, and the situation does not merely involve
improper service of process. See MCR 2.105(J)(3). In addition, plaintiff did not show due
diligence in attempting to serve the original summons on the correct insurance company, which
would have allowed the trial court to issue a second summons. Plaintiff’s argument in the trial
court was that it could not identify Theut’s insurer and that EMC was merely a trade name for
the insurance company. However, the traffic crash report and the incident report both identified
EMC as Theut’s insurer. In addition, Theut submitted evidence in the trial court indicting that a
basic Internet search would have revealed the relationship between EMC and EMCASCO. See
MCR 2.102(D). Therefore, the insurance company was not served with process, and the trial
court did not err in refusing to grant a second summons since plaintiff did not show due
diligence. See MCR 2.102(D) and (F).
Additionally, jurisdiction was not otherwise acquired when Theut’s attorney took actions
that indirectly benefitted EMC. MCR 2.117(A)(1) provides:
A party may appear in an action by filing a notice to that effect or by
physically appearing before the court for that purpose. In the latter event, the
party must promptly file a written appearance and serve it on all persons entitled
to service. The party’s address and telephone number must be included in the
appearance.
MCR 2.117(B)(1) provides:
An attorney may appear by an act indicating that the attorney represents a
party in the action. An appearance by an attorney for a party is deemed an
appearance by the party. Unless a particular rule indicates otherwise, any act
required to be performed by a party may be performed by the attorney
representing the party.
Plaintiff argues in its brief on appeal that jurisdiction was otherwise acquired over JDIC
when the insurance company appeared in the action. However, JDIC could not appear in the
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action since it was a fictitious entity. To the extent that plaintiff argues that EMC appeared in
the action as JDIC, plaintiff’s argument also fails. No attorney took any action on behalf of
EMC during the case. Instead, every action that the defense took was on behalf of Theut. The
fact that Theut’s answer and response to plaintiff’s motion to amend the complaint were
favorable to EMC did not render the actions of Theut’s attorney actions on behalf of EMC. In
addition, Theut’s attorney was not acting on behalf of EMC when he requested extensions of the
time to file the answer on behalf of Theut. Therefore, the insurance company did not appear in
the case. See MCR 2.102(F)(1); MCR 2.117(A)(1) and (B)(1).
Similarly, the court did not err in refusing to grant a default judgment since, as discussed
above, the insurance company was not served with a copy of the summons and complaint, and it
did not submit to the court’s jurisdiction. See MCR 2.603(A) (outlining the procedure for entry
of a default judgment); MCR 2.108(A)(1) (providing that a defendant must file and serve a copy
of the answer within 21 days of being served with the summons and complaint). Therefore, the
trial court properly denied plaintiff’s motions to overturn the dismissal of JDIC and to recognize
that JDIC appeared in the case. See MCR 2.102(F)(1); MCR 2.117(A)(1) and (B)(1).
IV. SUMMARY DISPOSITION
Plaintiff argues that the trial court erred when it granted summary disposition in favor of
Theut. We disagree.
This Court reviews de novo a trial court’s decision on a motion for summary disposition.
Bullard v Oakwood Annapolis Hosp, 308 Mich. App. 403, 408; 864 NW2d 591 (2014). The trial
court did not distinguish whether it granted summary disposition under MCR 2.116(C)(8) or
MCR 2.116(C)(10). However, since the trial court considered evidence outside of the pleadings
when it granted summary disposition in favor of Theut, the issue is analyzed under MCR
2.116(C)(10). See id. at 408 n 2. “A motion for summary disposition under MCR 2.116(C)(10)
challenges the factual sufficiency of a claim, and we consider the evidence—including
‘affidavits, depositions, admissions, or other documentary evidence’—in the light most favorable
to the nonmoving party.” Id. at 408 (citation omitted). Summary disposition is proper if “ ‘there
is no genuine issue regarding any material fact and the moving party is entitled to judgment as a
matter of law.’ ” Id. (citation omitted).
The trial court did not err in granting summary disposition in favor of Theut since MCL
500.3135(3) precluded tort liability. MCL 500.3135(3) abolishes tort liability stemming from
the ownership, use, or maintenance of a motor vehicle in the state for which security was
obtained under MCL 500.3101, with several exceptions that plaintiff does not claim apply in this
case. Theut provided evidence that it maintained security for the payment of benefits under
MCL 500.3101(1) since it produced the no-fault policy that was in effect during the incident.
Thus, MCL 500.3135(3) abolished Theut’s tort liability stemming from the use of the cement
truck. See MCL 500.3135(3).
However, plaintiff argues that Theut was required to argue that MCL 500.3135(3)
abolished its tort liability in its answer or notice of affirmative defenses, and its failure to do so
waived the defense. A party must raise an affirmative defense in the party’s response pleading
or in a motion for summary disposition that is filed before the first response pleading. Citizens
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Ins Co of America v Juno Lighting, Inc, 247 Mich. App. 236, 241; 635 NW2d 379 (2001). “The
failure to raise an affirmative defense as required by the court rule constitutes a waiver of that
affirmative defense.” Stanke v State Farm Mut Auto Ins Co, 200 Mich. App. 307, 312; 503 NW2d
758 (1993). “An affirmative defense is a defense that does not controvert the plaintiff’s
establishing a prima facie case, but that otherwise denies relief to the plaintiff.” Id. “[I]t is a
matter that accepts the plaintiff’s allegation as true and even admits the establishment of the
plaintiff’s prima facie case, but that denies that the plaintiff is entitled to recover on the claim for
some reason not disclosed in the plaintiff’s pleadings.” Id. Thus, “ ‘[a]n affirmative defense
presumes liability by definition.’ ” Citizens Ins Co of America, 247 Mich. App. at 241 (citation
omitted; alteration in original). MCR 2.111(F)(3) provides:
Affirmative defenses must be stated in a party’s responsive pleading,
either as originally filed or as amended in accordance with MCR 2.118. Under a
separate and distinct heading, a party must state the facts constituting
(a) an affirmative defense, such as contributory negligence; the existence
of an agreement to arbitrate; assumption of risk; payment; release; satisfaction;
discharge; license; fraud; duress; estoppel; statute of frauds; statute of limitations;
immunity granted by law; want or failure of consideration; or that an instrument
or transaction is void, voidable, or cannot be recovered on by reason of statute or
nondelivery;
(b) a defense that by reason of other affirmative matter seeks to avoid the
legal effect of or defeat the claim of the opposing party, in whole or in part;
(c) a ground of defense that, if not raised in the pleading, would be likely
to take the adverse party by surprise.
In Premo v United States, 599 F3d 540, 546 (CA 6, 2010), the United States Court of
Appeals for the Sixth Circuit held that application of the no-fault act was not an affirmative
defense, but rather, constituted the governing law in the case. “ ‘Though not binding on this
Court, federal precedent is generally considered highly persuasive when it addresses analogous
issues.’ ” Fed Home Loan Mtg Ass’n v Kelley (On Reconsideration), 306 Mich. App. 487, 494 n
7; 858 NW2d 69 (2014) (citation omitted).
The abolishment of tort liability under MCL 500.3135(3) is not an affirmative defense. It
is not listed as an example of an affirmative defense under MCR 2.111(F)(3)(a). Additionally,
Theut did not seek to avoid the legal effect of or defeat plaintiff’s claim under MCR
2.111(F)(3)(b). Theut never admitted in its answer that the allegations in plaintiff’s complaint
were true or that plaintiff established a prima facie case against it. See Stanke, 200 Mich. App. at
312; Premo, 599 F3d at 546. Rather, MCL 500.3135(3) was the governing law that abolished
Theut’s tort liability in the case. See Stanke, 200 Mich. App. at 312; Premo, 599 F3d at 546.
Furthermore, Theut prevented surprise when it stated in its notice of affirmative defenses that
“[p]art or all of the damages sought by the Plaintiff may not be recoverable under the applicable
law.” See MCR 2.111(F)(3)(c). Therefore, Theut’s claim that MCL 500.3135(3) abolished its
liability was not an affirmative defense, and Theut did not waive the argument that MCL
500.3135(3) bars plaintiff’s claim. See Stanke, 200 Mich. App. at 312.
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The trial court also did not err in allowing Theut to adopt the position that it had no-fault
insurance coverage. “ ‘Judicial estoppel precludes a party from adopting a legal position in
conflict with a position taken earlier in the same or related litigation. The doctrine protects the
integrity of the judicial and administrative processes.’ ” Wells Fargo Bank, NA v Null, 304 Mich
App 508, 537; 847 NW2d 657 (2014) (citation omitted). Theut did not adopt a legal position
that was in conflict with another position that it took earlier in the case when it stated in its
response to plaintiff’s motion to amend the complaint that its insurer was EMC. Instead, Theut
maintained that EMC was its insurer throughout the proceedings. Furthermore, the identity of
Theut’s insurer was a factual issue, rather than a legal issue. See id. Additionally, the trial
court’s decision to deny plaintiff’s motion to amend the complaint was based on plaintiff’s
failure to bring the claim against the insurance company within the one-year limitations period.
The precise name of the insurance company was irrelevant to the trial court’s decision.
Accordingly, the trial court properly granted summary disposition in favor of Theut.
Affirmed.
/s/ Michael F. Gadola
/s/ Kathleen Jansen
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