William James Hardrick v. Allstate Insurance Company ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
WILLIAM JAMES HARDRICK, UNPUBLISHED
April 14, 2016
Plaintiff-Appellee,
v No. 326270
Oakland Circuit Court
AUTO CLUB INSURANCE ASSOCIATION, LC No. 2008-091361-NF
Defendant-Appellant,
and
ALLSTATE INSURANCE COMPANY,
Defendant.
Before: O’CONNELL, P.J., and MARKEY and O’BRIEN, JJ.
PER CURIAM.
Defendant Auto Club Insurance Association (ACIA) appeals by leave granted1 the trial
court’s order granting the motion of plaintiff, William James Hardrick, to admit evidence of a
$28 an hour attendant care rate that ACIA paid Hardrick’s parents after September 2009.
Because the trial court failed to weigh the relative prejudicial effect and probative value of the
evidence, and because the evidence’s prejudicial effect outweighed its marginal probative value,
we reverse.
I. FACTUAL BACKGROUND
A prior panel of this Court stated the background facts of this case, which the parties do
not dispute for the purposes of this appeal:
In May 2007, a car struck Hardrick, then aged 19, as he walked home
from work. Hardrick suffered a traumatic brain injury resulting in cognitive
1
Hardrick v Allstate Ins Co, unpublished order of the Court of Appeals, entered September 15,
2015 (Docket No. 326270).
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deficits and emotional instability. Extensive hospital-based rehabilitation yielded
only minimal therapeutic gains. In 2008, Hardrick’s psychiatrist recommended
around-the-clock attendant care “for supervision and safety.” Hardrick’s parents
provide the prescribed attendant care.
ACIA admitted responsibility for paying Hardrick’s personal protection
insurance (PIP) benefits, “consisting of all reasonable charges incurred for
reasonably necessary products, services and accommodations for an injured
person’s care, recovery, or rehabilitation.” MCL 500.3107(1)(a). ACIA
classified Hardrick’s parents as “home health aides,” and paid them a rate of
$10.25 to $10.50 an hour for the attendant care they provided. Hardrick filed this
lawsuit seeking a determination that his parents qualified as “behavioral
technicians,” entitling them to charge a higher hourly rate. Throughout the
litigation, the parties disputed only the “reasonable charge” for Hardrick’s
parents’ services. ACIA never contested the number of hours Hardrick’s parents
worked providing attendant care or its responsibility to pay PIP benefits.
Before trial, the circuit court determined that ACIA had violated its
discovery orders by providing belated and incomplete responses to discovery
requests. Hardrick pursued a default judgment, but the court opted to impose a
“lesser sanction.” The court precluded ACIA from presenting any witnesses or
evidence. As a result, ACIA was limited to cross-examining Hardrick’s witnesses
and challenging his proffered evidence. [Hardrick v Auto Club Ins Ass’n, 294
Mich. App. 651, 656-657; 819 NW2d 28 (2011).]
The jury awarded Hardrick attendant-care services at a rate of $28 an hour. Id. at 655. This
Court determined that the trial court abused its discretion by imposing a discovery sanction that
was, in effect, even harsher than a default judgment. Id. at 661-662. This Court vacated the
judgment and remanded for further proceedings. Id. at 681.
On remand, the trial court determined that “the period of the dispute in this case shall end
on the date of the original jury verdict; any post-period disputes shall not be litigated in this
matter.” The parties have remained in active litigation since this Court’s remand, and Hardrick
moved to admit evidence that ACIA paid a $28 an hour rate to Hardrick’s parents for attendant
care after September 2009. ACIA responded that the $28 an hour rate was based solely on the
jury’s award in September 2009, and that it paid the award amount to avoid further litigation and
potential penalty interest. ACIA also contended that admitting the evidence would be unfairly
prejudicial because it would perpetuate the prior, unfair verdict into the new trial, and because
ACIA would have to respond to the evidence with a lengthy explanation for why it was paying
$28 an hour. In response, Hardrick argued that ACIA continued to pay $28 an hour even after
this Court vacated the jury’s verdict.
The trial court ruled that the $28 an hour figure was relevant and that its prejudicial effect
did not substantially outweigh its probative value. Regarding the parties’ arguments concerning
the relative probative value and prejudicial effect of the evidence, it stated,
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[t]he juries aren’t stupid, they can see through arguments on both sides and make
a determination of whether or not the twenty-eight dollars is worth anything, and
it’s not appropriate for this court to preclude that information from them, because
I think that there has been a prima facie showing that it’s relevant and to the
extent that the parties want to argue about its weight, I think that it is well within
the reasoned decision making of the jury to make an evaluation of that evidence,
and therefore, I will admit it.
II. STANDARD OF REVIEW
The trial court may answer preliminary questions concerning the admissibility of
evidence. MRE 104(A). This Court reviews for an abuse of discretion preserved challenges to
the trial court’s evidentiary rulings. Edry v Adelman, 486 Mich. 634, 639; 786 NW2d 567
(2010). The trial court abuses its discretion when its decision falls outside the range of
principled outcomes. Id. The trial court also abuses its discretion when it erroneously applies
the law. In re Waters Drain Drainage Dist, 296 Mich. App. 214, 220; 818 NW2d 478 (2012).
This Court reviews de novo the preliminary questions of law surrounding the admission of
evidence, such as whether a rule of evidence bars admitting it. Dep’t of Transp v Frankenlust
Lutheran Congregation, 269 Mich. App. 570, 575; 711 NW2d 453 (2006).
III. ANALYSIS
First, ACIA contends that the trial court erred when it determined that the evidence was
relevant under MRE 401 and 402. We disagree.
The trial court may only admit relevant evidence. MRE 402. Relevant evidence is
evidence that has any tendency to make a fact of consequence more or less probable. MRE 401;
Morales v State Farm Mut Auto Ins Co, 279 Mich. App. 720, 731; 761 NW2d 454 (2008).
Evidence is relevant and material if it is offered to prove or disprove a matter at issue in the case.
Id. The evidence need not directly prove or disprove an element of the plaintiff’s claim to be
material, it need only be a fact of consequence to the action. Id. This is a minimal threshold; the
evidence need not provide conclusive proof or be sufficient in any way. Hardrick, 294 Mich
App at 668.
Under the no-fault act, an insurer is liable to pay benefits for bodily injuries arising out of
the use of a motor vehicle. MCL 500.3105(1). These expenses are limited to “allowable
expenses.” MCL 500.3107(1)(a). To be an allowable expense
(1) the expense must be for an injured person’s care, recovery, or rehabilitation,
(2) the expense must be reasonably necessary, (3) the expense must be incurred,
and (4) the charge must be reasonable. [Douglas v Allstate Ins Co, 492 Mich. 241,
259; 821 NW2d 472 (2012).]
Generally, the compensation that a caregiver actually received for provided attendant care
services “is highly probative of what constitutes a reasonable charge for her services.” Douglas,
492 Mich. at 277.
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In this case, the amount it was reasonable for Hardrick’s attendant caretakers to charge
was a fact of consequence because it is an element of whether those charges are allowable
expenses. ACIA actually paid Hardrick’s caregivers $28 an hour, even after this Court vacated
the invalid jury verdict in April 2011. Regardless of its reasons for continuing to do so, this was
an amount that Hardrick’s caregivers actually received. We conclude that the evidence is
probative because it is an amount that ACIA voluntarily paid and that the caregivers actually
received for attendant care. See Douglas, 492 Mich. at 277. However, under the circumstances
of this case, we conclude that the evidence is not highly probative.
The amount that ACIA paid the caregivers in April 2011 is attenuated from the issues at
trial by both time and circumstance. While the remoteness of an act does not affect the
admissibility of the evidence, it does affect its weight. See People v Yost, 278 Mich. App. 341,
405; 749 NW2d 753 (2008). The disputed time at issue is May 2007 to September 2009, and the
amount of compensation that Hardrick’s caregivers were actually receiving at that time was
between $10.25 and $10.50 an hour. The $28 an hour figure does not reflect what Hardrick’s
caregivers actually received at the time at issue in this case.
The amount also does not reflect what ACIA thought was reasonable for services; it
reflected what the jury thought was reasonable after an unfair process. It is unclear whether
ACIA was required to continue to pay $28 an hour after this Court vacated the jury verdict, but
changing the amount might have required ACIA to engage in additional litigation,2 and may
have subsequently entitled Hardrick to penalty interest.3 While Hardrick contends that he is not
arguing estoppel, that is not the point—the point is that ACIA did not choose the $28 an hour
figure and, had ACIA changed the rate at which it was paying the Hardricks, it may have
required or prompted further litigation. This tends to make the $28 an hour figure less probative.
We conclude that the trial court did not err by concluding that the evidence was relevant
under MRE 401 and 402. Because of the circumstances of this case, the evidence is only
marginally probative. But even so, marginally probative evidence is relevant and admissible
under MRE 401 and 402. See Morales, 279 Mich. App. at 731; Hardrick, 294 Mich. App. at 668.
2
“[A]bsent some evidence that there has been a substantial change in facts and circumstances,
the trial court would be acting within its discretion to refuse to set the matter [of whether a
reduced attendant care rate would be reasonable] down for a further evidentiary hearing.”
Manley v Detroit Auto Inter-Ins Exchange, 425 Mich. 140, 159; 388 NW2d 216 (1986). While
either party may move for a redetermination of future expenses on the basis of a change in
circumstances, the jury award is appropriate until the trial court modifies it. Rose v State Farm
Mut Auto Ins Co, 274 Mich. App. 291, 295; 732 NW2d 160 (2006).
3
“Personal protection insurance benefits are overdue if not paid within 30 days after an insurer
receives reasonable proof of the fact and of the amount of loss sustained.” MCL 500.3142(2).
The rate of interest on an overdue payment is 12% per annum. MCL 500.3142(3). Additionally,
in a no-fault action, a prevailing plaintiff is entitled to attorney fees if the insurer unreasonably
refused to pay a claim. MCL 500.3148; Shanafelt v Allstate Ins Co, 217 Mich. App. 625, 635;
552 NW2d 671 (1996).
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Second, ACIA contends that even if the evidence is relevant, its prejudicial effect
substantially outweighs its probative value and MRE 403 bars admitting it. We agree. We
conclude that the trial court erred when it did not explain its conclusions regarding the relative
weights of the prejudicial effect and probative value, but instead left this issue to the
determination of the jury. Additionally, we conclude that the prejudicial effect of the evidence
substantially outweighs its probative value.
MRE 403 provides that, even if evidence is relevant, the trial court may not admit it if the
danger of its prejudicial effect substantially outweighs its probative value. The prejudicial effect
of the evidence substantially outweighs its probative value when evidence is only marginally
probative and there is a danger that the trier of fact may give it undue or preemptive weight.
People v Crawford, 458 Mich. 376, 398; 582 NW2d 785 (1998). To determine this, the court
must weigh the evidence’s probative value against the danger of unfair prejudice, confusing the
issues, misleading the jury, causing undue delay, wasting time, or presenting cumulative
evidence. MRE 403; Rock v Crocker, 308 Mich. App. 155, 173; 863 NW2d 361 (2014).
The trial court has the best opportunity to contemporaneously assess the relative weight
of the evidence’s probative value and prejudicial effect. People v Blackston, 481 Mich. 451, 462;
751 NW2d 408 (2008). When considering an evidentiary challenge under MRE 403, the trial
court should explain its conclusions concerning those weights. Crawford, 458 Mich. at 398.
The trial court ruled that the evidence did have “some probative value” and that the
prejudicial effect of the evidence did not outweigh its probative value. However, the trial court
did not explain this conclusion. It did not even address ACIA’s prejudicial effect arguments,
instead determining that, “to the extent that the parties want to argue about its weight, I think
that’s well within the reasoned decision making of the jury to make an evaluation of that
evidence . . . .” However, the trial court, not the jury, was required to determine the relative
weight of the prejudicial effect of the evidence as an initial matter. See Crawford, 458 Mich. at
398. Our review indicates that two of ACIA’s arguments regarding the prejudicial effect of the
evidence have merit.
First, the evidence is inherently prejudicial. Evidence of a prior verdict is prejudicial
because it creates the possibility that the jury will defer to the earlier result rather than deciding
the case on the evidence before it. Coleman Motor Co v Chrysler Corp, 525 F2d 1338, 1351
(CA 3, 1975); Engquist v Oregon Dep’t of Agriculture, 478 F3d 985, 1009-1010 (CA 9, 2007).4
Hardrick’s argument that the $28 an hour figure does not require any reference to the prior
verdict is unpersuasive. The $28 an hour figure was inextricably tied to the previous, unfair jury
verdict because it was the rate the jury awarded, and ACIA began paying the rate immediately
4
While not binding, federal authority may be persuasive when the language of the federal
analogue is similar. Garg v Macomb Co Comm Mental Health Servs, 472 Mich. 263, 283; 696
NW2d 646 (2005). Michigan relevance rules and federal relevance rules are similar, and
Michigan courts have looked to federal precedent to interpret Michigan relevance rules. See
People v VanderVliet, 444 Mich. 52, 68, 74-75; 508 NW2d 114 (1993) (considering federal
authority when interpreting MRE 404(b), which concerns the relevance of prior acts evidence).
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after the verdict. Allowing Hardrick to present evidence that is so closely tied to an unfair
verdict creates the possibility that the new jury will rely on the flawed verdict.
Second, the evidence is prejudicially time-consuming and confusing because its
admission will require ACIA to present extensive evidence on extraneous issues to explain the
figure. Evidence has the potential to mislead and confuse the jury when it leads to a “minitrial”
on an extraneous issue, such as when the opposing party must respond to marginally probative
evidence with witnesses and proofs well outside of facts material to the issues. Rock, 308 Mich
App at 173-174. In this case, the evidence is only marginally probative and to adequately
explain it will require ACIA to substantially depart from the crucial fact at issue, which is the
reasonableness of the attendant care rate from May 2007 to September 2009. ACIA would have
to call witnesses to talk about the previous trial and appeal process to explain why it began
paying the $28 an hour rate and why it continued paying it after the appeal. This would require
ACIA to explain concepts of estoppel and no-fault penalty interest that have little to do with
what rate was reasonable for attendant care services from May 2007 to September 2009. This is
particularly inefficient when nothing prevents Hardrick from offering the same evidence that it
offered at the first trial.
We conclude that the trial court erred by failing to explain its conclusions regarding the
relative weight and probative value of the evidence. The trial court’s decision to admit the
evidence fell outside the range of reasonable outcomes because in this case, the evidence was
only marginally probative and the dangers of the evidence—including that the jury would give
the evidence undue weight and that it would lead to a confusing minitrial on extraneous issues—
were high.
We reverse and remand. As the prevailing party, ACIA may tax costs. MCR 7.219(A).
We do not retain jurisdiction.
/s/ Peter D. O’Connell
/s/ Jane E. Markey
/s/ Colleen A. O’Brien
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