William Cox v. Farm Bureau Mutual Insurance Company of Michigan

STATE OF MICHIGAN
COURT OF APPEALS
WILLIAM COX, UNPUBLISHED
June 14, 2018
Plaintiff,
and
MICHIGAN INSTITUTE OF PAIN AND
HEADACHE, PC, doing business as METRO
PAIN CLINIC,
Intervening Plaintiff-Appellant,
and
CITY XPRESS, LLC, and MAXIMUM REHAB
PHYSICAL THERAPY, LLC,
Intervening Plaintiffs,
and
TOTAL HEALTH REHAB, LLC,
Intervening Plaintiff Cross-
Appellant,
v No. 336326
Wayne Circuit Court
FARM BUREAU MUTUAL INSURANCE LC No. 15-002187-NI
COMPANY OF MICHIGAN,
Defendant-Appellee/Cross-
Appellee.
WILLIAM COX,
Plaintiff-Appellant,
and
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MICHIGAN INSTITUTE OF PAIN AND
HEADACHE, PC, doing business as METRO
PAIN CLINIC, CITY XPRESS, LLC,
MAXIMUM REHAB PHYSICAL THERAPY,
LLC, and TOTAL HEALTH REHAB, LLC,
Intervening Plaintiffs,
v No. 336353
Wayne Circuit Court
FARM BUREAU MUTUAL INSURANCE LC No. 15-002187-NI
COMPANY OF MICHIGAN,
Defendant-Appellee.
WILLIAM COX,
Plaintiff,
and
MICHIGAN INSTITUTE OF PAIN AND
HEADACHE, PC, doing business as METRO
PAIN CLINIC, MAXIMUM REHAB PHYSICAL
THERAPY, LLC, and TOTAL HEALTH REHAB,
LLC,
Intervening Plaintiffs,
and
CITY XPRESS, LLC,
Intervening Plaintiff-Appellant,
v No. 336356
Wayne Circuit Court
FARM BUREAU MUTUAL INSURANCE LC No. 15-002187-NI
COMPANY OF MICHIGAN,
Defendant-Appellee.
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Before: SAWYER, P.J., and CAVANAGH and FORT HOOD, JJ.
PER CURIAM.
These appeals arise from the same lower court file involving first-party no-fault claims
asserted by the allegedly injured person as well as numerous intervening medical providers. In
Docket No. 336326, intervening plaintiff, Michigan Institute of Pain and Headache, PC (MIPH),
appeals as of right an order granting summary disposition in favor of defendant, Farm Bureau
Mutual Insurance Company of Michigan, pursuant to MCR 2.116(C)(10), and a cross-appeal
from the same order was filed by intervening plaintiff, Total Health Rehab, LLC (Total Health).
In Docket No. 336353, plaintiff, William Cox, appeals as of right the same order. In Docket No.
336356, intervening plaintiff, City Xpress, LLC (City Xpress), appeals as of right the same
order. The appeals were consolidated. Cox v Farm Bureau Mut Ins Co of Mich, unpublished
order of the Court of Appeals, entered February 8, 2017 (Docket Nos. 336326, 336353, 336356).
We affirm in part (on alternative grounds), reverse in part, and remand for further proceedings
consistent with this opinion.
This case arises out of a motor vehicle accident that occurred on July 3, 2014, in which
plaintiff claims to have been injured. Plaintiff filed this action against defendant, his no-fault
insurer, seeking the payment of personal injury protection benefits. The medical providers
intervened seeking to recover from defendant the amounts owed to them for providing services
to plaintiff. Defendant sought summary disposition on the ground that plaintiff committed fraud
in various ways, including that, even though his doctor had indicated that plaintiff was disabled
from driving, plaintiff used a rental car during July of 2014 and drove to and from Baldwin,
Michigan on July 26 and 27 of 2014. After initially denying defendant’s request for summary
disposition on the basis of plaintiff’s alleged fraud, the trial court granted defendant’s motion for
reconsideration and then granted summary disposition to defendant pursuant to MCR
2.116(C)(10) on the ground that plaintiff committed fraud. These appeals followed.
Plaintiff and the intervening medical providers argue on appeal that the trial court erred in
granting summary disposition to defendant pursuant to MCR 2.116(C)(10) on the basis of
plaintiff’s purported fraud because a genuine issue of material fact exists concerning whether
plaintiff engaged in fraud. We agree. However, with respect to the claims of the medical
providers, defendant is entitled to summary disposition pursuant to MCR 2.116(C)(8) because
the medical providers lack a statutory cause of action under Covenant Med Ctr, Inc v State Farm
Mut Auto Ins Co, 500 Mich. 191; 895 NW2d 490 (2017). The medical providers shall be
afforded an opportunity on remand to amend their complaints to assert claims under an
assignment of benefits theory.
Defendant’s argument that the medical providers are unable to pursue their claims in light
of Covenant was not raised below (given that Covenant had not been issued yet), but that does
not preclude review. This Court has “rejected preservation arguments relating to Covenant and
exercised our discretion to review Covenant arguments that were not raised before, addressed
and decided by, the trial court.” Bronson Healthcare Group, Inc v Mich Assigned Claims Plan,
___ Mich App ___, ___; ___ NW2d ___ (2018) (Docket No. 336088); slip op at 2.
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Specifically, we have recognized that a defense of “failure to state a claim on
which relief can be granted” cannot be waived, we have emphasized our
discretion to consider unpreserved questions of law, and we have acknowledged
that, with regard to cases pending when Covenant was decided, a defendant
should not be faulted for failing to challenge a healthcare provider’s statutory
right to bring a claim because pre-Covenant caselaw would have rendered any
such arguments futile. [Id. at 2-3, citing W A Foote Mem Hosp v Mich Assigned
Claims Plan, 321 Mich. App. 159, 173-174; 909 NW2d 38 (2017), lv pending.]
We will therefore consider the question of law posed by defendant’s Covenant argument. See
Bronson Healthcare Group, ___ Mich App at ___; slip op at 3.
A trial court’s decision on a motion for summary disposition is reviewed de novo.
Johnson v Recca, 492 Mich. 169, 173; 821 NW2d 520 (2012). The trial court granted summary
disposition to defendant under MCR 2.116(C)(10) on the fraud issue.
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. Summary disposition
is appropriate if there is no genuine issue regarding any material fact and the
moving party is entitled to judgment as a matter of law. 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.
[Bank of America, NA v Fidelity Nat’l Title Ins Co, 316 Mich. App. 480, 488; 892
NW2d 467 (2016) (quotation marks and citations omitted).]
With respect to the Covenant issue raised by defendant regarding the claims of the
medical providers, review is proper under MCR 2.116(C)(8). See Bronson Healthcare Group,
___ Mich App at ___; slip op at 2. Although defendant moved for summary disposition under
MCR 2.116(C)(10), a party’s failure to cite the correct subrule is not fatal if the record supports
review under the proper subrule. Wells Fargo Bank, NA v Null, 304 Mich. App. 508, 517; 847
NW2d 657 (2014). Also, affirmance of summary disposition for defendant on the basis of
Covenant with respect to the medical providers’ claims is not precluded merely because the trial
court granted summary disposition to defendant on other grounds. “When this Court concludes
that a trial court has reached the correct result, this Court will affirm even if it does so under
alternative reasoning.” Messenger v Ingham Co Prosecutor, 232 Mich. App. 633, 643; 591
NW2d 393 (1998).
Summary disposition is proper under MCR 2.116(C)(8) if the nonmoving
party “has failed to state a claim on which relief can be granted.” Such claims
must be so clearly unenforceable as a matter of law that no factual development
could possibly justify recovery. In reviewing the outcome of a motion under
MCR 2.116(C)(8), we consider the pleadings alone. We accept the factual
allegations in the complaint as true and construe them in a light most favorable to
the nonmoving party. [Kuznar v Raksha Corp, 481 Mich. 169, 176; 750 NW2d
121 (2008) (some quotations marks and citations omitted).]
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A trial court’s decision regarding a motion for reconsideration is reviewed for an abuse of
discretion. St John Macomb-Oakland Hosp v State Farm Mut Auto Ins Co, 318 Mich. App. 256,
261; 896 NW2d 85 (2016). A trial court abuses its discretion when its decision falls outside the
range of reasonable and principled outcomes. Id.
The interpretation of an insurance policy presents a question of law that is reviewed de
novo. Dancey v Travelers Prop Cas Co, 288 Mich. App. 1, 7; 792 NW2d 372 (2010). “Because
insurance policies are contractual agreements, they are subject to the same rules of contract
interpretation that apply to contracts in general.” Sherman-Nadiv v Farm Bureau Gen Ins Co of
Mich, 282 Mich. App. 75, 78; 761 NW2d 872 (2008). Unambiguous language must be enforced
as written. Century Surety Co v Charron, 230 Mich. App. 79, 82-83; 583 NW2d 486 (1998). A
court must “give effect to every word, phrase, and clause in a contract and avoid an interpretation
that would render any part of the contract surplusage or nugatory.” Klapp v United Ins Group
Agency, Inc, 468 Mich. 459, 468; 663 NW2d 447 (2003).
We agree with defendant’s argument that the intervening medical providers’ claims are
barred by Covenant. Therefore, summary disposition in favor of defendant with respect to the
medical providers’ claims is proper under MCR 2.116(C)(8).
In Covenant, 500 Mich. at 195-196, 217-218, our Supreme Court held that healthcare
providers lack an independent statutory cause of action against no-fault insurers to recover
personal injury protection benefits. The holding in Covenant applies retroactively to cases that
were pending on direct appeal when Covenant was decided. Bronson Healthcare Group, ___
Mich App at ___; slip op at 2, citing W A Foote Mem Hosp, 321 Mich. App. at 196. The present
case was pending on direct appeal when Covenant was decided. Hence, the holding in Covenant
is applicable, and the intervening medical providers in this case lack an independent statutory
claim against defendant. Defendant is thus entitled to summary disposition pursuant to MCR
2.116(C)(8) with respect to the intervening medical providers’ claims because the intervening
medical providers have no independent statutory cause of action against defendant. See Bronson
Healthcare Group, ___ Mich App at ___; slip op at 2.
On remand, however, the intervening medical providers shall be afforded an opportunity
to amend their complaints to assert claims premised on an assignment of benefits theory. In
Covenant, 500 Mich. at 217 n 40, our Supreme Court recognized that an insured may “assign his
or her right to past or presently due benefits to a healthcare provider.” Therefore, in holding that
a defendant was entitled to summary disposition under Covenant, this Court has allowed a
healthcare provider to file a motion to amend its complaint to assert a claim under an assignment
of benefits theory. See Bronson Healthcare Group, ___ Mich App at ___; slip op at 3, citing W
A Foote Mem Hosp, 321 Mich. App. at 196. Such an opportunity should be afforded here because
Covenant had not yet been issued when this case was litigated below and the intervening medical
providers thus were unaware that they did not possess an independent statutory cause of action.
Defendant argues that such an opportunity should not be afforded because the insurance policy in
this case precludes an assignment of benefits without defendant’s consent and because any claim
premised on an assignment of benefits theory would be barred by the one-year-back rule of MCL
500.3145(1). It is premature to address those issues because they have not yet been litigated
below. It is unknown at this time whether any assignment of benefits has occurred or will be
asserted by the intervening medical providers as a theory of liability against defendant. If they
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do assert claims under an assignment of benefits theory, the intervening medical providers
should at least have an opportunity on remand to present any arguments concerning the
applicability or enforceability of the policy provision that defendant claims bars such an
assignment without its consent and concerning the applicability of the one-year-back rule in this
situation. 1 Accordingly, the intervening medical providers on remand shall be allowed to amend
their complaints to assert an assignment of benefits theory.
Next, we agree with plaintiff and the intervening medical providers that the trial court
erred in granting summary disposition to defendant pursuant to MCR 2.116(C)(10) because a
genuine issue of material fact exists concerning whether plaintiff engaged in fraud. The no-fault
policy issued by defendant to plaintiff contained the following provision:
C. Fraud or Concealment
The entire policy will be void if, whether before or after a loss, you, any
family member, or any insured under this policy has:
1. intentionally concealed or misrepresented any material fact or
circumstance;
2. engaged in fraudulent conduct; or
3. made false statements;
relating to this insurance or to a loss to which this insurance applies.
This Court has explicated the elements for establishing fraud in this context as follows:
To void a policy because the insured has willfully misrepresented a
material fact, an insurer must show that (1) the misrepresentation was material,
(2) that it was false, (3) that the insured knew that it was false at the time it was
made or that it was made recklessly, without any knowledge of its truth, and (4)
that the insured made the material misrepresentation with the intention that the
insurer would act upon it. A statement is material if it is reasonably relevant to
1
This Court has recently held that an anti-assignment clause in a no-fault policy is unenforceable
to prohibit an assignment that occurred after the loss or the accrual of the claim to payment
“because such a prohibition of assignment violates Michigan public policy that is part of our
common law as set forth by our Supreme Court.” Jawad A Shah, MD, PC v State Farm Mut
Auto Ins Co, ___ Mich App ___, ___; ___ NW2d ___ (2018) (Docket No. 340370); slip op at 9,
citing Roger Williams Ins Co v Carrington, 43 Mich. 252, 254; 5 N.W. 303 (1880), and Rory v
Continental Ins Co, 473 Mich. 457, 469-471; 703 NW2d 23 (2005). See also Jawad A Shah, MD,
PC, ___ Mich App at ___; slip op at 10-12 (discussing the application of the one-year-back rule
in this context). Because the application of the one-year-back rule has not yet been litigated
below, it is not discussed further.
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the insurer’s investigation of a claim. [Bahri v IDS Prop Cas Ins Co, 308 Mich
App 420, 424-425; 864 NW2d 609 (2014) (citation omitted).]
If the fraud exclusion bars plaintiff from recovering benefits, then it also bars recovery by the
intervening medical providers because they stand in plaintiff’s shoes in this case. See id. at 424
(“Because intervening plaintiffs stood in the shoes of the named insured, if plaintiff cannot
recover benefits, neither can intervening plaintiffs.”). Further, this Court has explained:
Reliance on an exclusionary clause in an insurance policy is an affirmative
defense; therefore, [the insurer] has the burden of proof. An insurance company
has the burden to prove that one of the policy’s exclusions applies. Thus, to
obtain summary disposition, the insurer must show that there is no question of
material fact as to any of the elements of its affirmative defense. [Shelton v Auto-
Owners Ins Co, 318 Mich. App. 648, 657; 899 NW2d 744 (2017) (quotation marks
and citation omitted).]
When fraud is asserted as an affirmative defense, the defendant must demonstrate fraud by a
preponderance of the evidence. See Stein v Home-Owners Ins Co, 303 Mich. App. 382, 387-391;
843 NW2d 780 (2013); Mina v Gen Star Indemnity Co, 218 Mich. App. 678, 685; 555 NW2d 1
(1996), rev’d in part on other grounds 455 Mich. 866 (1997).
In granting summary disposition to defendant on the fraud issue, the trial court stated:
Well the Plaintiff here is making a claim, No. 1 he’s getting, the insurance
company is paying for him to have a rental car for the month of July.
Then at the same time he’s making claims for a replacement service,
somebody to drive him around and he’s up north driving around in the rental car.
So that’s enough fraud under [Bahri], the motion is granted.
The trial court’s reasoning is flawed. The fact that plaintiff obtained rental car coverage
on his policy and used that coverage after his accident does not establish that he committed fraud
by claiming replacement services that included driving services during that time period.
Whether plaintiff was disabled had nothing to do with his use of his rental car coverage. Further,
the fact that plaintiff drove to Baldwin on July 26, 2017, to sign a lease for an apartment, and
then drove back to his apartment in Farmington Hills the next day, while also claiming
replacement services were performed by Chris Ridgell on those dates, including driving services
by Ridgell on July 27, 2017, does not establish fraud as a matter of law.
On July 24, 2014, plaintiff’s physician, Dr. Nazih Iskander, signed a disability certificate
indicating that plaintiff needed household or replacement services and attendant care and that he
was disabled from driving, all for the period of July 24, 2014 through August 24, 2014. The fact
that plaintiff drove during a period in which his doctor instructed him not to drive could mean
that plaintiff was not disabled or as injured as he claimed to be, or it could mean that plaintiff
simply disobeyed his doctor’s instruction not to drive because he wanted to sign the apartment
lease in Baldwin and had no one else to drive him there. It is also reasonable to infer that
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plaintiff could have needed replacement services on the same dates that he drove to and from
Baldwin because plaintiff was not in Baldwin for the entire day on either of those dates, Ridgell
could have performed some services while plaintiff was not present, and plaintiff could have
experienced greater pain or exhaustion after returning home from a long drive on July 27, 2017.2
A reasonable trier of fact could infer that plaintiff was engaging in fraud, but for the reasons
stated, a reasonable inference also exists that plaintiff did not engage in fraud. “The trial court is
not permitted to assess credibility, weigh the evidence, or resolve factual disputes” when
deciding whether to grant summary disposition pursuant to MCR 2.116(C)(10). Pioneer State
Mut Ins Co v Dells, 301 Mich. App. 368, 377; 836 NW2d 257 (2013).
Defendant also suggests that City Xpress engaged in fraud because it submitted an
invoice for transporting plaintiff to Dr. Iskander’s office on July 23, 2014, but plaintiff’s first
appointment with Dr. Iskander was on July 24, 2014. Defendant apparently infers that plaintiff’s
first appointment with Dr. Iskander was on July 24, 2014, because that was the date on which Dr.
Iskander signed the first disability certificate. Even assuming that plaintiff did not see Dr.
Iskander until July 24, 2014, defendant has not demonstrated as a matter of law that City Xpress
committed fraud; the evidence on this record does not rule out innocent explanations for why
City Xpress has submitted an invoice for transporting plaintiff to Dr. Iskander’s office on July
23, 2014, such as that plaintiff had to go the office to fill out forms or that he had an appointment
2
Indeed, those are the very explanations given by plaintiff and Ridgell in their November 23,
2016 affidavits attached to plaintiff’s motion for reconsideration. Moreover, in his deposition,
the transcript of which is attached to MIPH’s motion for reconsideration, defendant’s adjuster,
Lawrence Clark, acknowledged that a person’s pain could subside for part of a day if the person
was on pain medication and that Clark himself has disobeyed a doctor’s order. Clark also
recognized that an insured may use various means of transportation to a medical appointment
regardless of whether the insured is disabled. Clark further acknowledged that the disability
certificate could be interpreted as meaning that plaintiff should not drive or that it is
recommended that he not drive so as not to aggravate his injuries, rather than that he is
physically unable to drive. We do not rely on the affidavits of plaintiff and Ridgell or the
deposition of Clark in analyzing this issue because those items were not submitted until plaintiff
and MIPH moved for reconsideration and thus were not before the trial court when it granted
summary disposition to defendant. This Court may “only consider what was properly presented
to the trial court before its decision on the motion.” Pena v Ingham Co Road Comm, 255 Mich
App 299, 310; 660 NW2d 351 (2003); see also Gorman v American Honda Motor Co, Inc, 302
Mich. App. 113, 120; 839 NW2d 223 (2013) (noting that “appellate review of the trial court’s
decision is limited to the evidence that had been presented at the time the motion was decided.”);
Innovative Adult Foster Care, Inc v Ragin, 285 Mich. App. 466, 474 n 6; 776 NW2d 398 (2009)
(declining to consider on appeal evidence that was first presented in support of a motion for
reconsideration). Rather than rely on these documents, we have simply reasoned from the
evidence presented at the time of the trial court’s decision on the summary disposition motion
that defendant, who has the burden of proof on the fraud defense, Shelton, 318 Mich. App. at 657,
has failed to demonstrate that there is no genuine issue of material fact concerning whether
plaintiff engaged in fraud.
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that was rescheduled. Defendant fails to address these possible explanations or to establish that
there is no genuine issue of material fact on the issue of fraud.
Defendant further suggests that plaintiff’s purchase of a Yukon Denali in September 2014
demonstrates fraud as a matter of law because City Xpress claims to have provided medical
transportation to plaintiff from July 23, 2014, through November 28, 2014. According to
defendant, plaintiff’s use of the rental car in July 2014 and his purchase of the Denali
demonstrate that he did not need medical transportation. Plaintiff testified that he has not yet
driven the Denali; rather, his mother and Ridgell used the vehicle to take plaintiff to his
appointments. Defendant fails to address the possibility that plaintiff sometimes used medical
transportation companies such as City Xpress to attend his medical appointments and at other
times was driven to appointments by his mother or Ridgell. 3 A genuine issue of material fact
exists regarding whether plaintiff committed fraud on this point.
On appeal, defendant does not appear to rely on plaintiff’s purported fraud in submitting
a claim for damage to the rental vehicle arising from an alleged hail storm on July 27, 2014, nor
did the trial court cite this as a reason for granting summary disposition to defendant. In any
event, the evidence submitted in connection with the summary disposition motion does not
establish as a matter of law that defendant engaged in fraud with respect to the damage to the
rental vehicle. Although defendant attached to its summary disposition motion defendant’s
letters indicating that it had prospectively canceled plaintiff’s no-fault policy effective on
October 6, 2014, on the ground that plaintiff had engaged in fraud with respect to the claim that a
hail storm had caused the damage to the rented vehicle, defendant did not attach any report or
documentation regarding its investigator’s conclusion that the damage to the rental vehicle was
mechanically induced rather than caused by hail. Plaintiff testified in his deposition that he
encountered a hail storm on his way back from Baldwin on July 27, 2014, and the hail storm
“messed the rental [car] up . . . .” At the very least, a genuine issue of material fact exists
concerning whether the rental vehicle was damaged by a hail storm as plaintiff claims or whether
the claim of damage arising from a hail storm was instead fraudulent.
Accordingly, a genuine issue of material fact exists concerning whether plaintiff engaged
in fraud. The trial court thus erred in granting summary disposition to defendant under MCR
2.116(C)(10).
Plaintiff and the intervening medical providers also argue that the trial court erred in
granting defendant’s motion for reconsideration of the trial court’s earlier order denying
defendant’s motion for summary disposition on the basis of fraud. MCR 2.119(F)(3) provides:
3
The replacement service forms completed by Ridgell refer to driving services on various dates
without specifying the place to which Ridgell drove plaintiff on each date; it is thus not possible
from the existing record to determine whether Ridgell purported to have driven plaintiff to the
same medical appointments to which City Xpress claimed in its invoices to have driven plaintiff.
The existing record thus does not demonstrate fraud on this point as a matter of law.
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Generally, and without restricting the discretion of the court, a motion for
rehearing or reconsideration which merely presents the same issues ruled on by
the court, either expressly or by reasonable implication, will not be granted. The
moving party must demonstrate a palpable error by which the court and the
parties have been misled and show that a different disposition of the motion must
result from correction of the error.
The language of the above court rule plainly indicates that the trial court’s discretion is not
restricted by the criteria set forth in the rule. As this Court has explained, MCR 2.119(F)(3)
“does not categorically prevent a trial court from revisiting an issue even when the motion for
reconsideration presents the same issues already ruled on; in fact, it allows considerable
discretion to correct mistakes.” Macomb Co Dep’t of Human Servs v Anderson, 304 Mich. App.
750, 754; 849 NW2d 408 (2014). See also Mich Bank-Midwest v D J Reynaert, Inc, 165 Mich
App 630, 646; 419 NW2d 439 (1988) (“The court rule does not prevent a court’s exercise of
discretion on when to give a party a ‘second chance’ on a motion it has previously denied.”).
Here, the trial court’s decision to revisit its prior summary disposition determination did not fall
outside the range of reasonable and principled outcomes, but as discussed, the trial court’s
ultimate determination on reconsideration that defendant was entitled to summary disposition
under MCR 2.116(C)(10) was nonetheless erroneous. In other words, it was not unreasonable or
unprincipled for the trial court to grant reconsideration, but its ultimate decision on the summary
disposition motion was erroneous for the reasons explained above.
Affirmed in part (on alternative grounds), reversed in part, and remanded for further
proceedings consistent with this opinion. We do not retain jurisdiction.
/s/ David H. Sawyer
/s/ Mark J. Cavanagh
/s/ Karen M. Fort Hood
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