Laveta Anderson v. Jenny Shih Do ( 2020 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
LAVETA ANDERSON and CHARLES J. UNPUBLISHED
TAUNT, April 23, 2020
Plaintiffs-Appellees,
v No. 344540
Oakland Circuit Court
JENNY SHIH, D.O., INOCENCIO CUESTA, LC No. 2016-153143-NH
M.D., MALINI VENKATRAM, M.D., SUCHITA
BHEEMREDDY, M.D., UNIVERSITY
PHYSICIAN GROUP, VHS PHYSICIANS OF
MICHIGAN, HARPER-HUTZEL HOSPITAL,
LEGACY HHH, VHS HARPER-HUTZEL, INC.,
VHS OF MICHIGAN, INC., LEGACY DMC,
TENET HEALTHCARE CORPORATION,
BOTSFORD GENERAL HOSPITAL, and THE
WELLNESS PLAN,
Defendants,
and,
KARTHIK YADAGIRI, PT, RUPA PATEL, PT,
THERAMATRIX, INC., doing business as
THERAMATRIX PHYSICAL
REHABILITATION, THERAMATRIX
PHYSICAL REHABILITATION,
THERAMATRIX PHYSICAL THERAPY
NETWORK, THERAMATRIX PHYSICAL
THERAPY PLAN, INC.,
Defendants-Appellants.
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LAVETA ANDERSON and CHARLES J.
TAUNT,
Plaintiffs-Appellees,
v No. 344549
Oakland Circuit Court
JENNY SHIH, D.O., INOCENCIO CUESTA, LC No. 2016-153143-NH
M.D., MALINI VENKATRAM, M.D., SUCHITA
BHEEMREDDY, M.D., KARTHIK YADAGIRI,
PT, RUPA PATEL, PT, UNIVERSITY
PHYSICIAN GROUP, VHS PHYSICIANS OF
MICHIGAN, HARPER-HUTZEL HOSPITAL,
LEGACY HHH, VHS HARPER-HUTZEL, INC.,
VHS OF MICHIGAN, INC., LEGACY DMC,
TENET HEALTHCARE CORPORATION,
BOTSFORD GENERAL HOSPITAL,
THERAMATRIX, INC., doing business as
THERAMATRIX PHYSICAL
REHABILITATION, THERAMATRIX
PHYSICAL REHABILITATION,
THERAMATRIX PHYSICAL THERAPY
NETWORK, and THERAMATRIX PHYSICAL
THERAPY PLAN, INC.,
Defendants,
and
THE WELLNESS PLAN,
Defendant-Appellant.
Before: SAWYER, P.J., and LETICA and REDFORD, JJ.
PER CURIAM.
In Docket No. 344540, defendants, Karthik Yadagiri, Rupa Patel, Theramatrix, Inc., d/b/a
Theramatrix Physical Rehabilitation, Theramatrix Physical Rehabilitation, Theramatrix Physical
Therapy Network, and Theramatrix Physical Therapy Plan, Inc. (the “Theramatrix defendants”)
appeal the trial court’s order denying their motion for summary disposition and granting a
bankruptcy trustee’s motion to be added as a party-plaintiff in this medical malpractice action. In
Docket No. 344549, defendant, the Wellness Plan, appeals the same order. This Court initially
denied defendants’ applications for leave to appeal, but our Supreme Court, in lieu of granting
leave, remanded the matters to this Court for consideration as on leave granted. Anderson v Shih,
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503 Mich. 956 (2019). Thereafter, this Court consolidated the two appeals.1 For the reasons set
forth below, we affirm.
I. FACTUAL BACKGROUND AND PROCEEDINGS
Plaintiff, Laveta Anderson (“plaintiff”), alleged in her complaint that in the spring of 2013
she began experiencing pain in her knee, finger, shoulder, back, and pelvis. In June 2013, she
sought medical treatment from her primary care physician, Dr. Jenny Shih, who diagnosed her
with arthritis and referred her to Theramatrix Rehabilitation for physical therapy. The therapy did
not resolve plaintiff’s pain but exacerbated the condition. Between December 2013 and February
2014, plaintiff was referred to and evaluated by three rheumatologists, Dr. Malini Venkatram, Dr.
Suchita Bheemreddy, and Dr. Inocencio Cuesta.
Meanwhile in the midst of seeking treatment for her medical issues, on February 25, 2014,
plaintiff filed a petition seeking protection under Chapter 7 of the bankruptcy code. The
bankruptcy court appointed Charles J. Taunt (trustee) as the trustee of plaintiff’s bankruptcy estate.
On February 27, 2014, neurologist Dr. Robert Pierce evaluated plaintiff and ordered a
spinal MRI which was performed on March 20, 2014. The results of the MRI indicated that
plaintiff suffered from spinal cord compression due to disc herniation with abnormal cord signal
and myelomalacia. The following day, on March 21, 2014, plaintiff underwent emergency spinal
surgery, which included cervical disc decompression with fusion.
During her April 2, 2014 bankruptcy creditor’s examination, plaintiff did not disclose any
information regarding a possible medical malpractice claim against defendants. In fact, she
responded “no” when asked whether she had any reason to believe that she was entitled to pursue
a lawsuit against anyone. She also circled “no” on a questionnaire that inquired whether she
believed that a doctor had committed malpractice during treatment. On June 6, 2014, the trustee
filed a report indicating that plaintiff’s bankruptcy estate had no assets to administer and on July 7,
2014, the bankruptcy court discharged plaintiff’s debts and closed her bankruptcy case.
On September 18, 2014, plaintiff consulted an attorney about a possible medical
malpractice claim against several medical professionals who allegedly failed to discover and treat
her spinal condition. Plaintiff filed a notice of intent on May 29, 2015, and on November 30, 2015,
plaintiff commenced this medical malpractice action against defendants. During her June 21, 2016
deposition, plaintiff testified that she had filed for bankruptcy protection and that her debts were
discharged in 2014. Plaintiff explained that she later consulted an attorney because she felt that
her doctors misdiagnosed her condition and that they were not serious about her well-being.
1
The original application in Docket No. 344549 was filed on behalf of both the Wellness Plan and
Jenny Shih, D.O. After the Supreme Court remanded the matter to this Court, the parties stipulated
to dismiss Dr. Shih from the appeal.
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On December 18, 2017, 18 months after defendants first learned of plaintiff’s 2014
bankruptcy case, defendants Malini Venkatram and University Physician Group2 moved for
summary disposition on the ground that plaintiff’s complaint should be dismissed because she
lacked the capacity to sue since her medical malpractice action constituted property of her
bankruptcy estate, and only the trustee in bankruptcy as representative of the estate had standing
to file this suit. Alternatively, defendants argued that, because plaintiff failed to disclose her
potential medical malpractice action as an asset in her Chapter 7 disclosures, the doctrine of
judicial estoppel barred her from pursuing her claims. Several other defendants, including
appellants herein, concurred in the summary disposition motion. Plaintiff opposed the motion on
the ground that during her bankruptcy proceeding she did not have sufficient knowledge to alert
her to a possible medical malpractice action. Plaintiff also argued that judicial estoppel did not
bar her claim because she unintentionally failed to disclose a possible cause of action as the result
of mistake or inadvertence.
Plaintiff’s attorney advised the bankruptcy trustee on January 31, 2018, of plaintiff’s
medical malpractice action. That same day, the trustee obtained the bankruptcy court’s permission
to reopen plaintiff’s Chapter 7 bankruptcy case. On February 1, 2018, the trustee filed a notice of
withdrawal of Chapter 7 Trustee’s Report of No Distribution and filed a Notice of Assets and
Notice to Creditors. Then, on March 19, 2018, plaintiff filed in the bankruptcy court amendments
to her bankruptcy schedules. In amended Schedule A/B, plaintiff identified an interest in a possible
personal injury claim in the amount of $5,000,000. She amended her Schedule C to claim as
exempt, among other things, the proceeds from a possible personal injury claim. On April 11,
2018, the bankruptcy court appointed plaintiff’s attorney as the trustee’s special counsel for
purposes of pursuing and representing the trustee in plaintiff’s medical malpractice action.
On May 16, 2018, the trustee moved to be added as a party-plaintiff in the medical
malpractice action under the mandatory joinder rule, MCR 2.205(A). The trustee asserted that the
estate’s claims were not time-barred because they related back to the filing of plaintiff’s complaint.
Alternatively, the trustee argued that the discovery rule applicable to medical malpractice claims
rendered his claims timely because he did not discover a possible cause of action until January
2018. In their response, the Theramatrix defendants argued that the addition of a new party did
not relate back to the filing of the complaint, and therefore, the trustee’s claims were time-barred.
The trial court granted the trustee’s motion to enforce mandatory joinder and denied
defendants’ motions for summary disposition. Thereafter, these appeals ensued.
II. STANDARDS OF REVIEW
Defendants moved for summary disposition under MCR 2.116(C)(5), (7), and (10). We
review de novo a trial court’s decision on a motion for summary disposition. Lowrey v LMPS &
LMPJ, Inc, 500 Mich. 1, 5-6; 890 NW2d 344 (2016). We review the entire record to determine
whether the moving party was entitled to summary disposition. Maiden v Rozwood, 461 Mich.
109, 118; 597 NW2d 817 (1999). Whether a party has standing is a legal question that we also
2
On October 10, 2018, the parties stipulated to dismiss defendants Dr. Venkatram and University
Physician Group.
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review de novo. Barclae v Zarb, 300 Mich. App. 455, 467; 834 NW2d 100 (2013). A party may
assert that a plaintiff lacks standing and the legal capacity to sue by summary disposition motion
under MCR 2.116(C)(5). See Pontiac Police & Fire Retiree v Pontiac No 2, 309 Mich. App. 611,
619; 873 N.W.2d 783 (2015). To preserve a motion under MCR 2.116(C)(5), “a party must raise
the issue in its first responsive pleading or in a motion filed prior to that pleading.” Id. (quotation
marks and citations omitted). In reviewing a motion under MCR 2.116(C)(5), we must consider
the pleadings, depositions, admissions, affidavits, and other documentary evidence submitted by
the parties. UAW v Central Mich Univ Trustees, 295 Mich. App. 486, 493; 815 NW2d 132 (2012).
MCR 2.116(C)(7) “permits summary disposition where the claim is barred by an applicable
statute of limitations.” Nuculovic v Hill, 287 Mich. App. 58, 61; 783 NW2d 124 (2010). When
addressing such a motion, a trial court must accept as true the allegations of the complaint unless
contradicted by the parties’ documentary submissions. Patterson v Kleiman, 447 Mich. 429, 434
n 6; 526 NW2d 879 (1994). Although not required to do so, a party moving for summary
disposition under MCR 2.116(C)(7) may support the motion with affidavits, depositions,
admissions, or other admissible documentary evidence, which the reviewing court must consider.
Maiden, 461 Mich. at 119. If no material facts are disputed, whether a plaintiff’s claim is barred
by the applicable statute of limitations is a question of law for the court to determine. Dextrom v
Wexford Co, 287 Mich. App. 406, 429; 789 NW2d 211 (2010).
A motion for summary disposition brought pursuant to MCR 2.116(C)(10) tests the factual
support of a plaintiff’s claim. “In reviewing a motion under MCR 2.116(C)(10), this Court
considers the pleadings, admissions, affidavits, and other relevant documentary evidence of record
in the light most favorable to the nonmoving party to determine whether any genuine issue of
material fact exists to warrant a trial.” Walsh v Taylor, 263 Mich. App. 618, 621; 689 NW2d 506
(2004) (citation omitted).
III. ANALYSIS
A. CAPACITY TO SUE
Defendants argue that the trial court erred by not granting them summary disposition
because at the time plaintiff filed her complaint she lacked the legal capacity to sue since her claim
belonged to her bankruptcy estate and only the trustee had standing to bring the medical
malpractice claim. We disagree.
“When a debtor files a Chapter 7 bankruptcy petition, all of the debtor’s assets become
property of the bankruptcy estate, see 11 USC § 541, subject to the debtor’s right to reclaim certain
property as ‘exempt,’ § 522(l).” Schwab v Reilly, 560 U.S. 770, 774; 130 S. Ct. 2652; 177 L. Ed. 2d
234 (2010). A potential cause of action constitutes an asset that must be included in the schedule
of assets and liabilities. Spohn v Van Dyke Pub Sch, 296 Mich. App. 470, 481-482; 822 NW2d 239
(2012). Because potential causes of action belong to the bankruptcy estate, the debtor loses
standing to pursue such claims and the right to pursue the cause of action is vested in the trustee
for the benefit of the estate. Young v Indep Bank, 294 Mich. App. 141, 144; 818 NW2d 406 (2011).
However, there are exceptions to this general rule. A debtor may commence suit on a potential
cause of action that existed before or during the life of the bankruptcy with permission from the
bankruptcy court or if the trustee abandons the cause of action. Id. at 144. Further, under § 522
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of the bankruptcy code, 11 USC 522, a debtor is permitted to exempt certain types of property
from the estate, which would enable the debtor to retain the property exempted postbankruptcy.
Schwab, 560 U.S. at 774-776.
In this case, after defendants filed their motions for summary disposition, the trustee moved
to reopen the bankruptcy case. Thereafter, on March 19, 2018, plaintiff amended her property
schedule to include as an asset her personal injury claim related to her medical malpractice action
against defendants. Plaintiff claimed as exempt the potential proceeds from the action as permitted
under provisions of 11 USC 522(d). Since that filing, the trustee has not objected to the claimed
exemption and has indicated that he does not intend to object to the exemption. In his motion for
joinder filed in the trial court, the trustee stated that he “readily admits that [plaintiff] is entitled to
an exemption for this litigation.” Moreover, a stipulation entered in the bankruptcy action
extending the trustee’s time to object to the exemption explains that “[s]uch an extension is
necessary so that an allocation of damages can be ascertained in order to determine the extent of
[Ms. Anderson’s] allowable exemption.” The validity of the claimed exemption in the bankruptcy
court is not at issue.
Because plaintiff has claimed an exemption to the proceeds of a possible personal injury
claim, she is a real party in interest and possesses the capacity to bring her medical malpractice
claims. This conclusion is supported by Szyszlo v Akowitz, 296 Mich. App. 40; 818 NW2d 424
(2012), a case in which the plaintiff claimed that he was rendered cortically blind after a surgery
on April 11, 2006. About three months after the surgery, in July 2006, the plaintiff filed a
bankruptcy petition. Then, in September 2006, the petition was amended to add a potential medical
malpractice claim as an asset and the plaintiff listed his claim for personal injury from medical
malpractice as an exemption. Id. at 44-45. In April 2008, the bankruptcy trustee filed a report
indicating that no property was available for distribution and that the bankruptcy estate had been
fully administered resulting in the bankruptcy court closing the bankruptcy case. Id. at 45. On
October 3, 2008, one week before the expiration of the limitations period for the medical
malpractice claim, the plaintiff filed his malpractice complaint. Id.
In April 2010, the defendants in Szyszlo moved for summary disposition on the ground that
the plaintiff lacked legal capacity to bring the medical malpractice claim. As in this case, the
defendants argued that the trustee of the plaintiff’s bankruptcy estate solely held an interest in the
malpractice claim. Id. at 46. The trial court granted the motion, but this Court reversed, concluding
that at the time the plaintiff filed suit, he was the real party in interest. Id. at 47. Citing federal
precedent, this Court acknowledged that until and unless the trustee abandoned the estate’s interest
in the lawsuit, any amounts recovered in the lawsuit above the amount of the statutory exemption
would flow to the bankruptcy estate. Id. at 49, citing Wissman v Pittsburgh Nat’l Bank, 942 F2d
867, 872 (CA 4, 1991). However, this interest by the trustee did not eliminate the debtor’s interest
in the lawsuit because “the statutory exemption to which the plaintiff was entitled, ‘represents a
present, substantial interest and provides the necessary standing for them to pursue the action.’ ”
Id. at 49, citing Wissman, 942 F2d at 872 (emphasis in original). This Court explained that,
“having an undisputed exemption for the potential lawsuit, plaintiff had standing and was a proper
party to bring this suit.” Id. at 50.
Applying the foregoing analysis to the case at bar, because plaintiff claimed an undisputed
exemption to the proceeds from her medical malpractice action, the trial court correctly concluded
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that plaintiff had the capacity to bring this suit. Further, consistent with the holding in Szyszlo,
any funds recovered in the medical malpractice action in excess of the sum of the administrative
fees, exemptions, and the debt owed by the estate to creditors, remain plaintiff’s property. Id.
Therefore, the trial court did not err by denying defendants’ motions for summary disposition on
the ground that plaintiff lacked standing to sue. Because we conclude that plaintiff had the legal
capacity and standing to sue in this case, we find it unnecessary and decline to address plaintiff’s
argument that defendants waived their argument in this regard.
Defendants tacitly admit that Szyszlo supports the proposition that claimed exemptions in
a bankruptcy case establish the debtor’s standing. They assert, however, that standing is only
conferred if the exemptions are claimed before filing the state court complaint. Thus, defendants
argue that the present case is factually distinguishable from Szyszlo. Specifically, defendants note
that in Szyszlo, the plaintiff claimed his amended exemption before expiration of the limitations
period for his medical malpractice action. Defendants further observe that in this case, when
plaintiff claimed her exemption in the bankruptcy court in March 2018, the limitations period on
her malpractice claim had expired. The distinction on which defendants rely, however, does not
render the holding in Szyszlo inapplicable, nor does it warrant a different result.
Plaintiff asserts that even if we interpret Szyszlo as requiring that the bankruptcy exemption
be claimed before the expiration of the limitations period on her medical malpractice claim, that
requirement has been met. Plaintiff argues that she did in fact claim an exemption before the
limitations period expired. Plaintiff relies on the tolling provisions of MCL 600.5856(a), which
provides that the statutory limitations period is tolled at the time a complaint is filed if a copy of
the summons and complaint are timely served on the defendants. We find it unnecessary to engage
in the tolling analysis proffered by plaintiff because the amendment of plaintiff’s bankruptcy
disclosure and exemptions related back to the filing of the bankruptcy petition.
Under the Bankruptcy Code, a debtor may amend schedules “without limitation of whether
the case is open or reopened after closing.” In re Muscato, 582 B.R. 599, 602 (Bankr WD New
York, 2018) (quotation marks and citations omitted). In this case, after the trustee moved to reopen
the bankruptcy case, plaintiff amended the requisite schedules to disclose and exempt her interest
in a possible personal injury claim. Moreover, these amendments related back to the filing of the
bankruptcy petition on February 25, 2014. In In re Hale, 511 B.R. 870, 879 (Bankr WD Mich,
2014), the court held that “[w]hen a debtor amends an exemption, it relates back to the bankruptcy
case filing date.” Similarly, in In re OBrien, 443 B.R. 117, 131 (Bankr WD Mich, 2011), the court
held that “[w]hether an exemption is claimed at the beginning of the case or whether an exemption
is claimed later in the case by amendment, the exemption is determined as of the filing date.
Regardless of when an exemption is subsequently claimed by a debtor in the case, it must relate
back.” Applying these principles, plaintiff’s exemption related back to the filing date of the
bankruptcy petition which occurred before the expiration of the limitations period for her medical
malpractice claims against defendants. Accordingly, the trial court did not err when it denied
defendants’ motions for summary disposition. The court correctly concluded that plaintiff
possessed the legal capacity to bring her medical malpractice claims against defendants.
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B. JUDICIAL ESTOPPEL
Next, defendants assert that the trial court erred by concluding that the judicial estoppel
doctrine did not bar plaintiff’s medical malpractice claims. We disagree because the doctrine does
not apply to the circumstances in this case.
“Judicial estoppel is an equitable doctrine, which generally prevents a party from prevailing
in one phase of a case on an argument and then relying on a contradictory argument to prevail in
another phase.” Spohn, 296 Mich. App. at 479 (quotation marks and citations omitted). The
doctrine is invoked “to preserve the integrity of the courts by preventing a party from abusing the
judicial process through cynical gamesmanship.” Id. at 479-480 (quotation marks and citations
omitted). In Opland v Kiesgan, 234 Mich. App. 352, 363-364: 594 NW2d 505 (1999), this Court
explained that the judicial estoppel doctrine is to be applied with caution and serves to prevent
litigants from deliberate manipulation of the courts by arguing opposing positions “to suit an
exigency of the moment.” Id. at 364 (citations omitted). Further, “[j]udicial estoppel is an
extraordinary remedy to be invoked when a party’s inconsistent behavior will otherwise result in
a miscarriage of justice.” Id. (quotation marks and citations omitted).
In Spohn, this Court explained the application of the doctrine in the context of bankruptcy
proceedings:
[T]o support a finding of judicial estoppel, [a reviewing court] must find that: (1)
[the plaintiff] assumed a position that was contrary to the one that she asserted
under oath in the bankruptcy proceedings; (2) the bankruptcy court adopted the
contrary position either as a preliminary matter or as part of a final disposition; and
(3) [the plaintiff’s] omission did not result from mistake or inadvertence. [Spohn,
296 Mich. App. at 480-481 (citations omitted).]
In Spohn, the plaintiff’s underlying claims were related to alleged workplace sexual
harassment occurring during the last four months of 2008. Id. at 472. In November 2008, the
plaintiff filed for protection under Chapter 13 of the bankruptcy code. The plaintiff’s proposed
Chapter 13 plan filed in December 2008 did not refer to her potential sexual harassment lawsuit.
Id. Although the trustee objected to the bankruptcy plan, the bankruptcy court ultimately
confirmed the plan in February 2009. Id. at 474. Because the plaintiff failed to make payments in
accordance with the bankruptcy plan, the trustee moved to dismiss the plaintiff’s petition on
August 2009. In September 2009, plaintiff sued the defendants in state court. The bankruptcy
court dismissed the plaintiff’s petition in March 2010. Id. at 474. During August 2010, the
defendants in her sexual harassment case moved for summary disposition on the ground that the
plaintiff was judicially estopped from pursuing her claim because of her failure to include the
potential lawsuit as an asset in her bankruptcy proceeding. The defendants reasoned that the
plaintiff’s omission established that she asserted a contrary position in the circuit court from that
assumed in the bankruptcy court. In response, the plaintiff asserted that on the date of filing her
bankruptcy petition, she had no reason to believe that she had a viable sexual harassment claim.
She further argued that based on her inability to pay pursuant to the plan, her petition would be
dismissed, thereby obviating the need for an amendment or disclosure. The plaintiff also asserted
that the failure to disclose the potential lawsuit constituted mistake or inadvertence because she
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had no motive to conceal. Ultimately, the trial court granted summary disposition based on the
judicial estoppel doctrine. On appeal, this Court affirmed. Id. at 472.
This Court first considered whether the plaintiff assumed a position that was contrary to
the one she asserted under oath in the bankruptcy proceeding. In resolving this inquiry in the
affirmative, this Court noted that the plaintiff “did not include her potential sexual harassment
lawsuit on her bankruptcy petition and did not amend that petition to list the possible cause of
action while the bankruptcy remained pending.” Id. at 481. Indeed, this Court twice noted that
the plaintiff did not seek to amend the petition. Id. at 482.
We find this case distinguishable from Spohn. Here, it is undisputed that plaintiff neglected
to include her potential malpractice claim in her original petition. Such an oversight would be a
position contrary to the position that she has taken in the current case. Unlike Spohn, however,
plaintiff took corrective measures. On January 31, 2018, plaintiff’s counsel contacted the trustee,
advised him of the malpractice claim, and then, on that same day, the trustee moved the bankruptcy
court to reopen plaintiff’s bankruptcy case. Plaintiff then amended her bankruptcy schedules to
include the possible personal injury claim as an asset. The bankruptcy court accepted the
amendment. As a result, plaintiff complied with her responsibilities under the bankruptcy code,
and by the amendment corrected her otherwise contrary position. Moreover, in light of the
amended filings and the fact that the bankruptcy matter remains pending, the bankruptcy court has
not adopted “the contrary position.” Accordingly, defendants cannot establish the first and second
requirements for the application of judicial estoppel.
The record also indicates that plaintiff’s failure to disclose the potential asset in the
bankruptcy court arose from mistake or inadvertence and did not arise from some ulterior motive
to deliberately manipulate the courts through cynical gamesmanship to achieve success on one
position in the bankruptcy court and then argue a different position to gain advantage in this case.
In this regard, this Court in Spohn explained:
In determining whether [the plaintiff’s] conduct resulted from mistake or
inadvertence, [the reviewing] court considers whether: (1) [the plaintiff] lacked
knowledge of the factual basis of the undisclosed claims; (2) [the plaintiff] had a
motive for concealment; and (3) the evidence indicates an absence of bad faith. In
determining whether there was an absence of bad faith, [the reviewing court] will
look, in particular, at [the plaintiff’s] “attempts” to advise the bankruptcy court of
[the plaintiff’s] omitted claim. [Spohn, 296 Mich. App. at 480-481 (citations
omitted).]
In Spohn this Court noted that, based on the plaintiff’s own allegations and admissions, the
events comprising her sexual harassment claim occurred primarily in September 2008 through
early December 2008. The plaintiff filed her bankruptcy petition on November 28, 2008. The
plaintiff last worked on January 6, 2009. On that same day, the plaintiff and her husband discussed
her potential sexual harassment lawsuit with an attorney. Id. at 484. Given these facts, this Court
concluded that the plaintiff could not legitimately dispute her awareness and knowledge of her
undisclosed claim. Id. Nevertheless, she took no action to inform the bankruptcy court. This
Court explained that a “debtor need not know all the facts or even the legal basis for the cause of
action; rather, if the debtor has enough information . . . prior to confirmation to suggest that it may
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have a possible cause of action, then that is a ‘known’ cause of action such that it must be
disclosed.” Id. at 484 (citation omitted).
By contrast, the record in this case establishes that plaintiff treated with defendants between
June 2013 and February 2014. She filed her bankruptcy petition on February 25, 2014, about one
month before she sought treatment from another care provider who ordered an MRI that revealed
her severe spine condition that required emergency surgery the next day. Plaintiff’s bankruptcy
case closed in July 2014. Plaintiff first consulted with an attorney in September 2014. The record
reflects that, at the earliest, plaintiff learned of her medical care providers’ misdiagnosis when she
learned the results of her MRI after the filing of the bankruptcy petition. The trial court correctly
found that at the time that plaintiff initially filed her bankruptcy petition, she lacked knowledge of
her potential claim.
Whether a plaintiff had a motive to conceal is also relevant when considering if a plaintiff’s
omission constituted mistake or inadvertence. A finding of bad faith is likewise relevant. Spohn,
296 Mich. App. at 485-488. Regarding these two inquiries, the Court in Spohn again considered
whether the plaintiff ever attempted to advise the bankruptcy court of the omitted claim. Id. at
485, 486-487. In Spohn, the plaintiff made no attempt to advise the bankruptcy court of her
potential sexual harassment lawsuit, nor did she attempt to amend her bankruptcy petition or
schedules. This Court found that such omissions supported a finding that the plaintiff acted in bad
faith. Id. at 487.
In this case by contrast, plaintiff contacted the trustee, advised him of her claims, and after
the bankruptcy court reopened her bankruptcy case, plaintiff amended her filings. The facts and
circumstances of this case do not permit the conclusion that plaintiff concealed her claim or acted
in bad faith. Therefore, the trial court did not clearly err when it found an absence of bad faith.
Finally, declining to apply the doctrine of judicial estoppel under the circumstances of this
case advances the general purpose of the doctrine. If plaintiff is allowed to proceed with her
medical malpractice action, there is no danger of inconsistent rulings considering the fact that the
bankruptcy matter has been reopened and remains pending, to the potential benefit of her creditors
should she prevail, because plaintiff identified her malpractice claim as a potential asset of her
bankruptcy estate. Further, application of the doctrine is not necessary to avoid a miscarriage of
justice. Plaintiff’s failure to disclose her potential claim in the bankruptcy court placed her
creditors, not the present defendants, in jeopardy. In this regard, the bankruptcy court is equipped
to address the consequences of a debtor’s omissions. Moreover, application of judicial estoppel
in this case has the potential of causing a miscarriage of justice by preventing plaintiff from
pursuing her claim to the detriment of her creditors. If plaintiff prevails in her medical malpractice
claim, a portion of the proceeds would be eligible for disbursement to her creditors. If the judicial
estoppel doctrine were applied in this case and plaintiff’s claims dismissed, plaintiff’s creditors
would be deprived of recovery of some of the amounts owed by plaintiff. Therefore, because
defendants cannot establish the requirements necessary for application of the judicial estoppel
doctrine, and application of the doctrine under the circumstances of this case would not further the
doctrine’s purpose, we conclude that the trial court did not err by denying defendants summary
disposition on judicial-estoppel grounds.
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C. JOINDER OF THE TRUSTEE
Defendants challenge the trial court’s decision to grant the trustee’s May 2018 motion
under MCR 2.205 to be joined as a plaintiff to this action. We find no error.
We review for an abuse of discretion a trial court’s decision regarding joinder. Mason Co
v Dep’t of Community Health, 293 Mich. App. 462, 489; 820 NW2d 192 (2011). However, whether
the relation-back doctrine is applicable is a question of law that we review de novo. Local
Emergency Fin Assistance Loan Bd v Blackwell, 299 Mich. App. 727, 740-741; 832 NW2d 401
(2013).
MCR 2.205(A), governs necessary joinder of parties and provides:
Subject to the provisions of subrule (B) and MCR 3.501, persons having
such interests in the subject matter of an action that their presence in the action is
essential to permit the court to render complete relief must be made parties and
aligned as plaintiffs or defendants in accordance with their respective interests.
The trial court found that the trustee had an interest in the subject matter of the action and
that his presence in the action was essential to permit the court to render complete relief. The trial
court further found that the statute of limitations did not bar the trustee’s claims because the
addition of the trustee as a party related back to the original filing of the complaint. Consequently,
the trial court granted the trustee’s motion. In doing so, the court rejected defendants’ contention
that allowing the trustee to join the litigation would be futile because the trustee’s claims were not
pursued within the statutory limitations period.
The bankruptcy code provides that the property of the bankruptcy estate consists of “all
legal or equitable interests of the debtor in property.” 11 USC 541(a)(1). Property of the estate
specifically includes causes of action that have accrued before the filing of the petition. Spohn,
296 Mich. App. at 481-482. The trustee of plaintiff’s bankruptcy estate, therefore, has an interest
in plaintiff’s medical malpractice claim. The parties did not dispute that the trustee has an interest
in plaintiff’s medical malpractice claim. Defendants, however, argue that the trustee should have
been denied permission to join the case because the statutory limitations period had expired barring
its claimed interest. We disagree because the trial court correctly held that the trustee’s claims
related back to the filing of the original complaint.
“The doctrine of ‘relation back’ was devised by the courts to associate the amended matter
with the date of the original pleading, so that it would not be barred by the statute of limitations.”
LaBar v Cooper, 376 Mich. 401, 405; 137 NW2d 136 (1965) (citation omitted). In general, “the
relation-back doctrine does not extend to the addition of new parties.” Miller v Chapman
Contracting, 477 Mich. 102; 730 NW2d 462 (2007) (quotation marks and citations omitted).
However, both before and after the Supreme Court’s Miller decision, this Court recognized an
exception to the general rule. In Hayes-Albion Corp v Whiting Corp, 184 Mich. App. 410, 418; 459
NW2d 47 (1990), this Court explained that under certain circumstances, the relation-back doctrine
extends to newly added parties, stating:
[W]e find that where the original plaintiff had, in any capacity, an interest in the
subject matter of the controversy, the defendant had notice of the interest of the
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person sought to be added as a plaintiff, and the new plaintiff’s claim arises out of
the conduct, transaction or occurrence set forth or attempted to be set forth in the
original pleading, then a new plaintiff may be added and the defendant is not
permitted to invoke a limitations defense.
More than 20 years later, in Local Emergency, 299 Mich. App. at 741-742, this Court
confirmed the validity of the exception articulated in Hayes-Albion. This Court affirmed the trial
court’s holding that the relation-back doctrine applied and that the defendant could not invoke a
statute-of-limitations defense and explained:
In this case, as the trial court recognized, the original plaintiff—the Board—
had an interest in the subject matter of the litigation. The claims of the added
plaintiff—the Attorney General—were identical to those of the Board and arose out
of the same conduct set forth in the original complaint. Both plaintiffs represented
the interests of the state, and defendant was fully aware of the Attorney General’s
interest given that the Attorney General filed the original complaint against
defendant. In addition, there is no question that defendant was fully apprised of the
claims against him and was prepared to defend against them. Further, as the trial
court determined when it granted the Board’s motion to amend the complaint and
as we have concluded in this appeal, defendant was not prejudiced by the addition
of the Attorney General as a party. [Id.]
The same fundamental principles apply in this case. Plaintiff and the trustee both have an
interest in this medical malpractice action. Plaintiff seeks recompense for her personal injury
arising from defendants’ alleged malpractice. The trustee has an interest in any recovery plaintiff
may obtain to potentially pay plaintiff’s creditors. Plaintiff has a claimed exemption under which
she may be entitled to any surplus from her recovery on her claims in this action. Plaintiff’s and
the trustee’s interests are essentially identical, having arisen from the same transactions and
occurrences of medical malpractice set out in the original complaint. Defendants knew of the
trustee’s interest as early as June 21, 2016, when plaintiff testified in her deposition regarding her
bankruptcy. At the time the trustee moved for joinder, defendants had known of his possible claims
for approximately two years. Further, defendants had knowledge of and were prepared to defend
the trustee’s claims because they had been defending plaintiff’s claims for two years. Notably, the
record indicates that, because of plaintiff’s alignment of interests with the trustee’s, the bankruptcy
court appointed plaintiff’s counsel as special counsel to represent the trustee in this action. Under
the circumstances of this case, defendants cannot establish any prejudice as a result of the trustee’s
joinder in this litigation. Accordingly, the trial court did not err by allowing the trustee to join in
this matter. Nor did it err by ruling that defendants’ statute-of-limitations defense lacks merit.
Defendants challenge in particular the trial court’s ruling that they had notice of the
trustee’s interests. They argue that, under Hayes-Albion, it must be shown that they had notice of
the trustee’s interest before the expiration of the limitations period. They then argue that because
they only learned of the trustee’s interest during the June 2016 deposition, allegedly more than two
years after plaintiff’s medical malpractice claim accrued, this requirement has not been satisfied.
We disagree because defendants attempt to rely on an additional requirement not contemplated by
this Court’s published decisions.
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In Hayes-Albion, although this Court observed that a trial court should consider whether
the defendant had notice within the statutory period of the added plaintiff’s claims, id. at 417, this
Court clarified that of greater concern is whether the defendant had knowledge of the transactional
base of the claim, as timely pleaded by the original plaintiff. The Court’s ultimate concern was
whether the defendant would be prepared to defend the claims. Moreover, when setting forth its
holding, this Court did not specify such a requirement but established that joinder is appropriate if
“the defendant had notice of the interest of the person sought to be added as a plaintiff.” Id. at
418. This holding is consistent with the Court’s concern that a defendant not be prejudiced by the
addition of a new plaintiff. In this case, the trustee does not have and has not asserted independent
claims against defendants. Rather, the trustee’s interests are essentially identical to plaintiffs and
rest solely on plaintiff’s claims of which defendants have been aware of and defended against since
the inception of this case.
We also note that in Local Emergency, a more recent decision, this Court did not require
that the defendant have notice within the statutory period. Indeed, when this Court revisited the
relation-back doctrine and considered the holding in Hayes-Albion, it considered that portion of
Hayes-Albion that required a showing that “the defendant had notice of the interest of the person
sought to be added as a plaintiff.” Local Emergency, 299 Mich. App. at 741.
Notwithstanding the foregoing analysis, defendants argue that our Supreme Court’s
decision in Miller controls and compels a conclusion that the trustee’s claims do not relate back to
the filing of plaintiff’s original complaint. Miller, however, is distinguishable.
In Miller, 477 Mich. at 104, the original plaintiff suffered personal injury in a motor vehicle
accident in 2000. In March 2002, the plaintiff petitioned for protection under Chapter 7 of the
bankruptcy code. The defendants sought summary disposition contending that the plaintiff lacked
real party in interest status and lacked standing to sue. The defendants argued that all of the
plaintiff’s rights regarding the 2000 accident were transferred to the bankruptcy trustee and the
trustee was the sole party who could pursue the lawsuit. Id. In response, the plaintiff moved for
leave to amend the complaint under MCR 2.118 to correct the “misidentification” of the named
plaintiff to substitute the bankruptcy trustee as the named plaintiff. Id. at 104-105. The trial court
denied plaintiff’s motion and dismissed the lawsuit. On appeal, this Court affirmed.
In Miller, our Supreme Court adopted this Court’s opinion and affirmed this Court’s
decision that the bankruptcy trustee, not the plaintiff, was the real party in interest and that the
plaintiff’s motion sought to add a party and not merely correct a misnomer. Id. at 104-105. It
further approved this Court’s analysis regarding the relation-back doctrine respecting amendments
of claims and defenses under MCR 2.118, and affirmed this Court’s conclusion that the relation-
back doctrine and the misnomer doctrine do not apply to the addition of new parties or the
substitution of a wholly new and different party to the proceedings. Id. at 106-107.
This case is distinguishable from Miller because there the bankruptcy trustee constituted
the only party with an interest in the underlying matter. Unlike here, the plaintiff in Miller had not
preserved an interest in the proceeds of the automobile negligence action through a claimed
exemption. Thus, the analyses employed by this Court in both Hayes-Albion and Local Emergency
were not warranted by the facts presented in Miller. By contrast, as explained herein, both plaintiff
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and the trustee have independent standing to pursue the medical malpractice action. This factual
distinction renders Miller inapposite.
Finally, we find merit to the trustee’s alternative argument that because his motion was
filed within six months of discovery of his potential cause of action, his claims are not time-barred.
In a medical malpractice action, an individual normally has two years from the time a claim accrues
to commence suit. MCL 600.5805(8). A claim based on medical malpractice “accrues at the time
of the act or omission that is the basis for the claim of medical malpractice, regardless of the time
the plaintiff discovers or otherwise has knowledge of the claim.” MCL 600.5838a(1). However,
the limitations period is subject to a six-month “discovery rule.” MCL 600.5838a(2) provides, in
pertinent part:
Except as otherwise provided in this subsection, an action involving a claim
based on medical malpractice may be commenced at any time within the applicable
period prescribed in section [MCL 600.5805] or sections [MCL 600.5851 to
600.5856], or within 6 months after the plaintiff discovers or should have
discovered the existence of the claim, whichever is later. However, except as
otherwise provided in section 5851(7) or (8), the claim shall not be commenced
later than 6 years after the date of the act or omission that is the basis for the claim.
The burden of proving that the plaintiff, as a result of physical discomfort,
appearance, condition, or otherwise, neither discovered nor should have discovered
the existence of the claim at least 6 months before the expiration of the period
otherwise applicable to the claim is on the plaintiff. A medical malpractice action
that is not commenced within the time prescribed by this subsection is barred.
In this case, it is undisputed that the trustee did not learn of the medical malpractice action,
or any facts related thereto, until he was contacted by plaintiff’s attorney on January 31, 2018.
After learning of the matter, the trustee immediately moved to reopen the bankruptcy matter. Then,
on May 16, 2018, well within six months of learning of the cause of action, the trustee filed his
motion to enforce joinder.
Defendants argue that the discovery rule in medical malpractice actions only applies to the
knowledge of a plaintiff-patient injured or damaged by the medical treatment. Nothing in the plain
language of the statute limits its application so narrowly. “The goal of statutory interpretation is
to discern and give effect to the intent of the Legislature.” Barclae, 300 Mich. App. at 466 (citation
omitted). The first step in this process is to review the statutory language. Spectrum Health Hosps
v Farm Bureau Mut Ins Co of Mich, 492 Mich. 503, 515; 821 NW2d 117 (2012). “Unless
statutorily defined, every word or phrase of a statute should be accorded its plain and ordinary
meaning, taking into account the context in which the words are used.” Id. (quotation marks and
citations omitted). “If the statutory language is unambiguous, then the Legislature’s intent is clear
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and judicial construction is neither necessary nor permitted.” Barclae, 300 Mich. App. at 466-467.
The plain language of the statute does not endorse defendants’ interpretation.
Affirmed.
/s/ David H. Sawyer
/s/ Anica Letica
/s/ James Robert Redford
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