Pamela Denise Wright v. Lm General Insurance Co

STATE OF MICHIGAN
COURT OF APPEALS
PAMELA DENISE WRIGHT, UNPUBLISHED
May 3, 2018
Plaintiff-Appellant,
v No. 338131
Wayne Circuit Court
LM GENERAL INSURANCE COMPANY, LC No. 16-004055-NI
Defendant-Appellee.
Before: BORRELLO, P.J., and SAWYER and JANSEN, JJ.
PER CURIAM.
In this no-fault insurance dispute, plaintiff appeals the order of the circuit court granting
defendant’s motion for summary disposition after plaintiff failed to timely file a response to the
motion. We affirm.
I. RELEVANT FACTS AND PROCEDURAL HISTORY
Plaintiff was injured in a car accident on May 18, 2015 while riding as a passenger in a
vehicle owned and operated by Dnisha Brannon. Brannon had purchased an insurance policy
with defendant in April of 2015. However, defendant later voided that policy based on
Brannon’s material misrepresentation during the application process. When originally procuring
an auto insurance policy with defendant, Brannon had allegedly claimed that she had been
insured for the previous two years by AAA Insurance Company. Defendant later learned that
Brannon’s previous insurer was actually Progressive Insurance Company, and Progressive
Insurance Company had also rescinded Brannon’s policy due to material misrepresentation
during the application process. In addition, a man claiming to be Brannon had added several
vehicles to Brannon’s policy at various points in time, although the vehicles were ultimately
removed when Brannon advised defendant that the vehicles were not hers and that she had not
added them to the policy. Defendant also claimed that while investigating plaintiff’s and
Brannon’s claims regarding the accident, it had learned that the accident had not occurred as they
had reported it, and that none of the damage to Brannon’s vehicle was caused by the reported
accident.
Plaintiff requested defendant pay her uninsured motorist benefits, as well as personal
protection insurance (PIP) benefits under the no-fault act, MCL 500.3101 et seq. Defendant
denied plaintiff’s claim for several reasons. They asserted, inter alia, that plaintiff’s injuries
-1-
predated the accident; that defendant was not negligent with respect to the accident; that plaintiff
was negligent for failing to wear a seatbelt and because she was impaired by alcohol or other
controlled substances at the time of the accident; and that plaintiff’s claims were barred by the
fraud provision of Brannon’s policy, because Brannon had procured the policy through
misrepresentation. Defendant also noted that plaintiff had failed to appear for two scheduled
independent medical examinations.
Plaintiff filed a complaint with the circuit court seeking to compel defendant to pay
benefits. Defendant subsequently filed a motion for summary disposition pursuant to MCR
2.116(C)(8) and (10), reasserting its claim that plaintiff’s claims for PIP benefits and uninsured
motorist (UM) benefits were barred by the fraud exclusion in Brannon’s policy. Plaintiff
attempted to file a response to defendant’s motion three days after the deadline imposed by the
trial court in its summary disposition schedule, but it was rejected by the court’s e-filing system.
The court granted defendant’s motion for summary judgment based on plaintiff’s failure to file a
timely response, and based on its finding that the motion was “properly supported” as required
by MCR 2.116(G)(2), (3).
Plaintiff filed a motion for reconsideration, arguing that the court’s decision to dismiss
the case was “draconian” in light of her “extensive” injuries. Plaintiff also argued that the court
could have punished her for filing her response late by imposing a fine or other more moderate
sanctions, and that justice was not served when the court made a decision without hearing from
both parties. The court denied plaintiff’s motion, and this appeal followed.
II. FAILURE TO TIMELY RESPOND
Plaintiff first argues that the trial court acted improperly when it granted defendant’s
motion for summary disposition without hearing from both parties. We disagree.
Generally, this Court would review a trial court’s decision not to entertain motions or
responses to such motions filed after the deadline set forth in its scheduling orders for an abuse
of discretion. Kemerko Clawson LLC v RxIV Inc, 269 Mich. App. 347, 349; 711 NW2d 801
(2005). However, because plaintiff failed to preserve this issue below, our review is for plain
error affecting plaintiff’s substantial rights. Rivette v Rose-Molina, 278 Mich. App. 327, 328; 750
NW2d 603 (2008).
According to plaintiff, the trial court erred when it dismissed her case without
considering her arguments because our legal system favors disposition of litigation on the merits,
and it violates fundamental principles of justice to dismiss a case without hearing from both
parties. However, in Kemerko Clawson LLC v RxIV Inc, 269 Mich. App. 347, 349; 711 NW2d
801 (2005), this Court stated that MCR 2.401(B)(2) provides that “a trial court ‘shall establish
times for events the court deems appropriate, including . . . (ii) the amendment of pleadings,
adding of parties, or filing of motions . . . .’ Under this rule, the trial court has the discretion to
decline to entertain motions beyond the stated deadline.” It follows that the trial court would
have the discretion to decline to entertain an untimely response to a motion. Additionally,
adherence to the court rule “promotes the efficient management of the trial court’s docket.” Id.
at 350. Therefore, in situations like the instant case, where a party has been provided with
-2-
adequate notice of the scheduling timeframe, a court does not violate due process principles by
declining to “entertain motions [or responses] beyond the stated deadline.” Id. at 349.
In this case, following the filing of defendant’s motion for summary disposition, the trial
court entered a summary disposition schedule, which provided that all “responses to the motion
shall be e-filed, and electronic service completed upon all parties by 4:00 p.m. on March 21,
2017. MCR 2.119(e)(3).” The trial court went on to state:
If a timely response brief is not filed the [c]ourt SHALL assume that the non-
moving party, whether or not represented by counsel, does not have any authority
for his/her/its position(s) and moving party’s motion will be granted. See Moore v
Whiting, unpublished per curiam [opinion] of the Court of Appeals, issued
November 10, 2015 (No. 323697).
While we acknowledge that Moore is unpublished, and therefore not binding precedent, MCR
7.215(C)(1), the authority for this Court’s decision in Moore comes from this Court’s published
opinion in Kemerko. In Kemerko, this Court held that MCR 2.401(B)(2)(a)(ii) affords trial
courts the ability to set deadlines through scheduling orders, and a trial court does not abuse its
discretion, or in this case, plainly err, by strictly adhering to the deadlines set in its scheduling
orders. Kemerko, 269 Mich. App. at 350-353.
Our review of the record indicates that the trial court set a deadline of March 21, 2017 for
plaintiff to file her response to defendant’s motion for summary disposition. For whatever
reason, plaintiff did not attempt to file her response until March 24, 2017, three days past the
deadline set in the scheduling order, and in fact, the filing was never accepted for e-filing.
Accordingly, we conclude that the circuit court did not plainly err by granting defendant’s
motion based on plaintiff’s failure to comply with the court’s summary disposition schedule.
III. PLAINTIFF AS AN INNOCENT THIRD PARTY
Second, plaintiff argues that even if Brannon’s alleged fraud were to be established, it
does not bar plaintiff from obtaining relief under the no-fault act. We disagree.
We review a trial court’s decision regarding a motion for summary disposition de novo.
Lowrey v LMPS & LMPJ, Inc, 500 Mich. 1, 5-6; 890 NW2d 344 (2016). A motion for summary
disposition brought under MCR 2.116(C)(10) “tests the factual sufficiency of the complaint,”
Shinn v Mich Assigned Claims Facility, 314 Mich. App. 765, 768; 887 NW2d 635 (2016) (citation
omitted), and should be granted where “there is no genuine issue regarding any material fact and
the moving party is entitled to judgment as a matter of law.” West v Gem Motors Corp, 469
Mich. 177, 183; 665 NW2d 468 (2003).
“The moving party has the initial burden to support its claim for summary disposition by
affidavits, depositions, admissions, or other documentary evidence.” McCoig Materials, LLC v.
Galui Constr, Inc, 295 Mich. App. 684, 693; 818 NW2d 410 (2012). The court must consider all
of the admissible evidence in a light most favorable to the nonmoving party. Liparoto Constr,
Inc v Gen Shale Brick, Inc, 284 Mich. App. 25, 29; 772 NW2d 801 (2009). However, the party
opposing summary disposition under MCR 2.116(C)(10) “may not rely on mere allegations or
-3-
denials in pleadings, but must go beyond the pleadings to set forth specific facts showing that a
genuine issue of material fact exists.” Oliver v Smith, 269 Mich. App. 560, 564; 715 NW2d 314
(2006) (citation omitted). “A genuine issue of material fact exists when the record, giving the
benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable
minds might differ.” Bahri v IDS Prop Cas Ins Co, 308 Mich. App. 420, 423; 864 NW2d 609
(2014) (citation and quotation marks omitted).
Plaintiff argues that she was entitled to receive PIP benefits even though she was not
insured, and even though Brannon’s policy was later voided, pursuant to MCL 500.3114.
According to plaintiff, the statute provides that an individual in her position is a beneficiary, so
she was therefore eligible to receive statutory benefits even if the insurance policy was voided.
In response, defendant contends that it was not liable to pay benefits to plaintiff under MCL
500.3114(4)(a) and (b) because the statute states that “the insurer” of the owner, registrant, or
operator of a vehicle is liable to the occupant of the vehicle, and because Brannon’s policy was
void at the time of the alleged accident, “it was undisputed that there was no insurance in effect
at the time of the accident. Therefore, defendant claims, it cannot be liable to plaintiff under this
statutory provision because it was not ‘the insurer’ ” under the statute. We find defendant’s
position to be persuasive.
MCL 500.3114 provides, in pertinent part, as follows:
(4) Except as provided in subsections (1) to (3), a person suffering
accidental bodily injury arising from a motor vehicle accident while an occupant
of a motor vehicle shall claim personal protection insurance benefits from insurers
in the following order of priority:
(a) The insurer of the owner or registrant of the vehicle occupied.
(b) The insurer of the operator of the vehicle occupied.
Defendant asserts that Brannon’s policy was “void ab initio,” or null from the moment the
contract was entered into, due to Brannon’s material misrepresentations in the application
process. See Black’s Law Dictionary (7th ed). Therefore, according to defendant, no policy was
in place when the accident occurred, and plaintiff is not entitled to statutory benefits under the
innocent third party rule.
Previously, under the innocent third party rule, where an automobile insurer rescinded a
policy for fraud, it could not avoid paying benefits under the no-fault act to innocent third parties
where the third party was injured in an accident that occurred while the policy was in effect. See
Auto-Owners Ins Co v Johnson, 209 Mich. App. 61, 63-64; 530 NW2d 485 (1995). However,
following our Supreme Court’s decision in Titan Ins Co v Hyten, 491 Mich. 547; 817 NW2d 562
(2012), this Court subsequently held in Bazzi v Sentinel Ins Co, 315 Mich. App. 763, 767, 771-
773; 891 NW2d 13 (2016), lv gtd __ Mich __; 894 NW2d 590 (2017), that the “innocent third
party” rule did not survive Hyten. In Bazzi, this Court held that although our Supreme Court’s
decision in
-4-
Titan did not involve a no-fault insurance claim for PIP benefits, we nonetheless
are convinced that Titan compels the conclusion that the innocent-third-party rule
does not apply to a claim for those benefits. That is, if an insurer is entitled to
rescind a no-fault insurance policy because of fraud, it is not obligated to pay any
benefits under that policy, including PIP benefits to a third party innocent of the
fraud. [Bazzi, 315 Mich. App. at 770.]
Plaintiff argues that this Court should not rely on Bazzi because the plaintiff’s application
for leave to appeal has been granted in that case, “signaling the possibility of a change in the
outcome.” See Bazzi, __ Mich __; 894 NW2d 590. However, unless and until our Supreme
Court reaches a decision in Bazzi, we are compelled to follow it as binding precedent. The trial
court did not err by doing the same.
Plaintiff also argues that defendant’s reliance upon this Court’s decision in Bahri in its
motion for summary disposition was misplaced because Bahri does not apply to a passenger.
Plaintiff further asserts that Bahri was distinguished by this Court’s recent decision in Shelton v
Auto-Owners Insurance Company, 318 Mich. App. 648; 899 NW2d 744 (2017), in which this
Court held that uninsured passengers are eligible for benefits, payable by the insurer, pursuant to
the no-fault statute rather than the insurance policy in situations where the insurance policy has
been voided for fraud or misrepresentation.
In Shelton, the plaintiff was injured in a car accident while she was a passenger in a
vehicle operated by an individual who was insured by the defendant; the defendant sought to
exclude her from receiving PIP benefits based on a fraud provision in the subject insurance
policy. Shelton, 899 NW2d at 746-747. Relying on Bahri, the defendant argued that the fraud
policy exclusion applied to the plaintiff “despite the fact that she is not a policyholder” because
“the evidence demonstrate[d] beyond a question of fact that [the plaintiff] engaged in fraud as
defined in the policy” in claiming benefits from the defendant. Id. This Court held that “[t]he
law governing application of the policy exclusion in Bahri is not applicable in this case” because
in Bahri, the fraud provision applied to the plaintiff, who was the policyholder. Id. at 747. “In
this case, however, Shelton was not a party to, nor an insured under, the policy; she was injured
while a passenger, and because neither she nor her spouse or resident relative had a no-fault
policy, defendant was required to pay her benefits pursuant to statute, not pursuant to a
contractual agreement.” Id. However, Shelton is distinguishable from the instant case.
In Shelton, the policy at issue had not been rescinded at the time of the accident. Rather,
the defendant in Shelton argued that the plaintiff had committed a fraud in her claim for PIP
benefits, and sought to exclude her from coverage based on this fraud. In the instant case,
defendant argued that it was not liable to pay plaintiff benefits under the statute based on
Brannon’s fraud in procuring the policy, and based on its voiding of the policy because of
Brannon’s fraud as of its effective date—prior to the date of the accident. Contrary to plaintiff’s
argument, Shelton does not stand for the proposition that a passenger may not be excluded from
receiving PIP benefits under the insured’s policy based on the insured’s fraud, as this conclusion
would conflict with this Court’s holding in Bazzi abolishing the innocent third party rule.
Plaintiff failed to rebut defendant’s claim that the insurance policy issued to Brannon was
void ab initio due to material representations made in her application for insurance in a timely
-5-
response to defendant’s motion for summary disposition. Accordingly, no genuine issues of
material fact exist upon which reasonable minds could differ. Even when the record is viewed in
a light most favorable to plaintiff as the non-moving party, defendant was not Brannon’s insurer
at the time of the accident in question, and plaintiff is not entitled to the protection of the
innocent third party rule, as it did not survive this Court’s decision in Bazzi. Accordingly, we
conclude that defendant was entitled to summary disposition.
Affirmed.
/s/ Stephen L. Borrello
/s/ David H. Sawyer
/s/ Kathleen Jansen
-6-