Kerby v. Auto-Owners Insurance

187 Mich. App. 552 (1991) 468 N.W.2d 276

KERBY
v.
AUTO-OWNERS INSURANCE COMPANY

Docket No. 122270.

Michigan Court of Appeals.

Decided February 20, 1991, at 9:10 A.M.

Walz & Warba, P.C. (by Mark J. Warba), for the plaintiff.

Sullivan, Ward, Bone, Tyler, Fiott & Asher, P.C. (by Dennis K. Taylor), for the defendant.

Before: DOCTOROFF, P.J., and MAHER and CAVANAGH, JJ.

PER CURIAM.

Defendant, plaintiff's no-fault insurance carrier, appeals as of right from an order granting plaintiff's motion for partial summary disposition. We reverse.

In 1986, plaintiff began operating an adult foster care home by herself, doing the cooking, cleaning, and general maintenance. In September 1987 plaintiff was involved in an automobile accident, sustaining injuries preventing her from running the home. Consequently, plaintiff hired replacement workers to perform the work she could no longer perform.

Although plaintiff was paid personal protection insurance benefits, including work-loss benefits, pursuant to MCL 500.3107(b); MSA 24.13107(b), she commenced the instant action, claiming she was not paid the full amount of benefits to which she was entitled under § 3107(b).

On the basis of a determination that plaintiff was one hundred percent disabled, and using plaintiff's 1987 income tax return, defendant determined that plaintiff was entitled to $17,440 annually in reimbursable work-loss benefits under § 3107(b). Plaintiff claims, however, that, in addition to this amount, she is also entitled to reimbursement for the cost of hiring others to run the foster care home. Defendant denied liability for such expenses. The parties filed cross motions for summary disposition, and the trial court ruled in favor of plaintiff, finding that expenses for replacement business services were reimbursable as wage-loss benefits under § 3107(b).

Defendant now appeals as of right, claiming that expenses for replacement business services are not reimbursable as wage-loss benefits. We agree.

Section 3107(b) of the no-fault insurance act provides:

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 and expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or herself or of his or her dependent.

There is apparently no dispute that expenses for replacement business services are not reimbursable under the latter "replacement services" component of § 3107(b), because the statute expressly limits reimbursement for replacement services to those services necessary for the benefit of the injured person, not for income. With respect to the "work-loss" component of § 3107(b), the plain language of the statute defines work loss as "loss of income from work." As noted in Miller v State Farm Mutual Automobile Ins Co, 410 Mich. 538, 563; 302 NW2d 537 (1981), work-loss benefits are limited by definition to the loss of wage or salary income.

Thus, the plain language of the statute appears to preclude reimbursement for replacement business services as work-loss benefits. Additionally, in Adams v Auto Club Ins Ass'n, 154 Mich. App. 186, 192; 397 NW2d 262 (1986), this Court held that where the claimant is self-employed, loss of income contemplates the deduction of business expenses.

We also note that the no-fault act was patterned after the Uniform Motor Vehicle Accident Reparations Act. MacDonald v State Farm Mutual Ins Co, 419 Mich. 146, 151; 350 NW2d 233 (1984). Section 1(a)(5)(ii) of the UMVARA, the counterpart to § 3107(b) in the no-fault act, provides:

"Work loss" means loss of income from work the injured person would have performed if he had not been injured, and expenses reasonably incurred by him in obtaining services in lieu of those he would have performed for income, reduced by any income from substitute work actually performed by him or by income he would have earned in available appropriate substitute work he was capable of performing but unreasonably failed to undertake. [14 ULA, Civil Procedural & Remedial Laws, p 43. Emphasis added.]

While the emphasized language in the UMVARA would arguably include, as work loss, those replacement service expenses sought by the plaintiff in this case, this language was not included within the definition of work loss under § 3107(b) of the no-fault act. Thus, it may be presumed that the Legislature considered, but rejected, the proposed language in the UMVARA, and, by doing so, did not intend replacement business service expenses to be recoverable as work-loss benefits under the no-fault act. Michigan Mutual Ins Co v Carson City Texaco, Inc, 421 Mich. 144, 148; 365 NW2d 89 (1984); Spencer v Hartford Accident & Indemnity Co, 179 Mich. App. 389, 399; 445 NW2d 520 (1989).

Accordingly, on the basis of our review of the plain language of § 3107(b), as well as prior case law and the Legislature's decision to reject the broader language in the UMVARA, we conclude that the trial court erred in holding that plaintiff's replacement business service expenses were recoverable as "work-loss" benefits under § 3107(b) of the no-fault act.^[1]

Reversed.

NOTES

[1] We disagree with the trial court's conclusion that where a self-employed injured person uses funds received as work-loss benefits to hire a replacement, he has no means of recovering those funds, because, if a replacement were hired, and, thus, the business continued, income would continue to be generated by the business. Indeed, if the plaintiff in this case were permitted to recover her replacement business service expenses, she would effectively be receiving not only the benefits based on her annual net income, but also the income generated from the continued operation of the business, with the salary of the business replacements being paid by defendant. Surely, this is not the intent of § 3107(b).