Yvonne Thomas v. Geico Indemnity Company

STATE OF MICHIGAN
COURT OF APPEALS
YVONNE THOMAS, UNPUBLISHED
July 30, 2015
Plaintiff-Appellee,
v No. 320801
Oakland Circuit Court
GEICO INDEMNITY COMPANY, LC No. 2012-130264-NF
Defendant-Appellee,
and
AUTO-OWNERS INSURANCE COMPANY,
Appellant.
AUTO-OWNERS INSURANCE COMPANY,
Plaintiff-Appellant,
v No. 322167
Oakland Circuit Court
YVONNE THOMAS, LC No. 2014-139580-CK
Defendant-Appellee.
Before: SAWYER, P.J., and DONOFRIO and BORRELLO, JJ.
PER CURIAM.
In LC No. 2012-130264-NF, Yvonne Thomas brought an action for breach of contract
and declaratory relief against her no-fault insurer, Geico Indemnity Company (Geico). Pursuant
to the parties’ stipulation, the court dismissed the case without prejudice because the parties
agreed to binding arbitration. The arbitrator awarded Thomas $72,500. Thomas then filed a
motion in the trial court for entry of judgment and disbursement of the arbitration award. On
February 26, 2014, the trial court entered a judgment awarding Thomas $72,500 to be distributed
to Thomas, Thomas’ counsel, and certain healthcare providers. The order also provided that
Thomas’ employer, Auto-Owners Insurance Company (Auto-Owners), a non-party to the action,
-1-
“is not entitled to any reimbursement . . . as to any of the arbitration proceeds . . . or any wage
loss benefits paid to [Thomas] by [Auto-Owners].” In Docket No. 320801, Auto-Owners
appeals the order of right.
After the trial court entered its order in the arbitration case, Auto-Owners filed a separate
action against Thomas in LC No. 2014-139580-CK, seeking reimbursement of overpaid long-
term disability benefits that it paid to Thomas as Thomas’ employer. Auto-Owners asserted
theories of recoupment, breach of contract, and unjust enrichment. The trial court granted
Thomas’ motion for summary disposition pursuant to MCR 2.116(C)(10) based on the doctrine
of res judicata. The court concluded that the trial court’s order in the arbitration case barred
Auto-Owners’ claims. In Docket No. 322167 Auto-Owners’ appeals the order as of right.
For the reasons set forth in this opinion, in Docket No. 320801, we vacate the trial court’s
February 27, 2014 order in its entirety and remand for dismissal of the action, and in Docket No.
322167, we reverse the trial court’s award of summary disposition in favor of Thomas and
remand for further proceedings.
I. DOCKET NO. 320801
Thomas alleged in her complaint against Geico that she sustained injuries in two separate
automobile accidents. Thomas sought various medical and other personal injury protection (PIP)
no-fault benefits, including “all loss of wages less (15%) percent.” On October 25, 2013, the
trial court entered a stipulated order for dismissal without prejudice after Thomas and Geico
agreed to submit the dispute to binding arbitration. The order specified that it resolved the last
pending claim and closed the case.
The arbitrator awarded Thomas $72,500 in PIP benefits, which included $30,000 for lost
wages and $15,000 for various medical expenses. In February 2014, Thomas filed a motion for
entry of judgment in the amount of $72,500, and to have most of the arbitration proceeds
disbursed to pay alleged “liens” from various healthcare providers and to pay her counsel.
Thomas moved to have the remainder of the arbitration proceeds paid to her directly. Thomas
also requested that the court declare that Auto-Owners did not have a right of reimbursement
with respect to the arbitration proceeds if it failed to object.
Auto-Owners objected, arguing that its LTD policy entitled it to seek reimbursement of
LTD benefits previously paid to Thomas in light of the arbitrator’s award of wage-loss benefits
to Thomas. Auto-Owners appeared at the hearing on Thomas’ motion. Thomas’ counsel
conceded that Auto-Owners paid monthly LTD benefits to Thomas, but requested that Auto-
Owners clarify the amount it was seeking and the basis for the amount. After counsel for Auto-
Owners indicated that she did not know the total amount that the company was seeking for
reimbursement, the trial court ruled that Auto-Owners was not entitled to reimbursement. On
February 27, 2014, the trial court entered a written order reflecting its ruling.
On appeal, Auto-Owners challenges the trial court’s order on several grounds. The trial
court’s order amounted to a declaratory judgment with respect to Auto-Owners. “Questions of
law relative to declaratory judgment actions are reviewed de novo, but the trial court’s decision
-2-
to grant or deny declaratory relief is reviewed for an abuse of discretion.” Pioneer State Mut Ins
Co v Dells, 301 Mich. App. 368, 376; 836 NW2d 257 (2013).
The trial court did not have jurisdiction to enter an order adjudicating Auto-Owners’ right
to reimbursement. The October 25, 2013 stipulated order dismissing the arbitration case without
prejudice was the final order in the proceeding because it disposed of all claims, adjudicated the
rights and liabilities of the parties to the proceeding—i.e. Thomas and Geico, and closed the
case. The order was final because the trial court did not retain jurisdiction to do anything further.
Rooyakker & Sitz, PLLC, v Plante & Moran, PLLC, 276 Mich. App. 146, 148-152; 742 NW2d
409 (2007).
Because the trial court did not retain jurisdiction to do anything further, the trial court did
not have jurisdiction to allocate the award to other persons or entities, or to rule on whether
Auto-Owners was entitled to reimbursement. To the extent that Thomas sought a declaratory
judgment, she was required to file a complaint seeking such relief because there was no action
pending between the parties at that time. See MCR 3.602(B)(1). Moreover, where a party seeks
a declaratory judgment, it is essential that “all parties having an apparent or possible interest in
the subject matter be joined so that they may be guided and bound by the judgment.” Allstate Ins
Co v Hayes, 442 Mich. 56, 65-66; 499 NW2d 743 (1993) (quotation marks and citation omitted).
Here, to the extent that Thomas sought a declaratory judgment against Auto-Owners, she should
have filed a complaint naming Auto-Owners as a party to the action.
In short, in Docket No. 320801, the trial court did not have jurisdiction to enter the
February 27, 2014 order; therefore, we vacate the order in its entirety and remand for dismissal
of the proceeding.
II. DOCKET NO. 322167
Docket No. 322167 involves Auto-Owners’ suit against Thomas to recover
approximately $30,000 from Thomas based on theories of recoupment, breach of contract, and
unjust enrichment. The factual basis for each theory is tied to the $30,000 arbitration award for
no-fault wage loss benefits discussed in Docket No. 320801. Auto-Owners alleged that the long
term disability plan applicable to Thomas, as the company’s employee, entitles it to recover any
overpayments made based on Thomas’ receipt of deductible sources of income. The trial court
granted Thomas’ motion for summary disposition on grounds that Auto-Owners’ claims were
barred by the doctrine of res judicata.
A trial court’s decision on a summary disposition motion is reviewed de novo. Al-Maliki
v LaGrant, 286 Mich. App. 483, 484; 781 NW2d 853 (2009). We also review de novo the trial
court’s application of the doctrine of res judicata. Estes v Titus, 481 Mich. 573, 578-579; 751
NW2d 493 (2008). Summary disposition is proper under MCR 2.116(C)(7) where a party’s
-3-
claim is barred by a prior judgment.1 If there is no factual dispute, whether a plaintiff’s claim is
barred under the doctrine of res judicata is a question of law. RDM Holdings, Ltd v Continental
Plastics Co, 281 Mich. App. 678, 687; 762 NW2d 529 (2008).
The doctrine of res judicata precludes a party from commencing a subsequent action
when: “(1) the first action was decided on the merits, (2) the matter contested in the second
action was or could have been resolved in the first, and (3) both actions involve the same parties
or their privies.” Estes, 481 Mich. at 585 (quotation marks and citations omitted). In this case, as
discussed above, the trial court did not have jurisdiction to enter the February 27, 2014 order in
Docket No. 320801. Therefore, none of the elements of res judicata apply to the subsequent
proceeding. Accordingly, Auto-Owners’ claims in the subsequent action were not barred by the
doctrine of res judicata and reversal of the trial court’s order granting summary disposition on
that basis is appropriate.
In sum, in Docket No. 320801 we vacate the trial court’s February 27, 2014, order in its
entirety and remand for dismissal of the proceeding. In Docket No. 322167 we reverse the trial
court’s May 28, 2014 order granting summary disposition and remand for further proceedings.
Vacated and remanded in Docket No. 320801; reversed and remanded in Docket No.
322167. No costs awarded. MCR 7.219(A). We do not retain jurisdiction.
/s/ David H. Sawyer
/s/ Pat M. Donofrio
/s/ Stephen L. Borrello
1
Although the trial court reviewed and granted Thomas’ motion under MCR 2.116(C)(10), we
will review a court’s order of summary disposition under the correct rule. Spiek v Dep’t of
Transp, 456 Mich. 331, 338 n 9; 572 NW2d 201 (1998).
-4-