Secura Insurance v. Auto-Owners InsuranceSecura Insurance v. Auto-Owners Insurance
Lead
This case presents a question that has divided previous Court of Appeals panels—whether there should be “judicial tolling” of the one-year period of limitation on property damage claims under subsection 3145(2) of the no-fault insurance act.
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On March 2, 1996, a car driven by defendant Auto-Owners Insurance Company’s insured, William J. Glore, Jr., left the road and struck a utility pole. Plaintiff Secura Insurance Company’s complaint alleges that the impact caused electrical power lines to fall across the electrical service line running to the home of its insureds. This, in turn, caused substantial damages to the house’s circuits and wiring, and an electrical surge igniting several fires in the home, with resulting smoke and fire damage to the house and its contents. Secura alleges that it reimbursed its insureds some $157,000, and, under the terms of the policy, became subrogated to their claims for that amount.
On May 3, 1996, Secura’s adjuster, James Disbrow, wrote to Glore seeking reimbursement for the fire loss. An Auto-Owners claims representative, J. D. Beyerhelm, wrote back about a month later, advising Disbrow that defendant insured Glore, asking Dis-brow to “forward your proofs,” and requesting documentation that the loss resulted from the accident. The letter also noted that police reports made no mention of the fire that it was alleged that Glore started. Auto-Owners apparently assigned a claim number to the matter at that time.
Over the next several months, there were discussions and exchanges of correspondence between Secura and Auto-Owners. Disbrow’s affidavit states that he advised Auto-Owners of the total monetary value of the plaintiffs’ damages in “late January, 1997.” Further, there appears to be no dispute that at that time Disbrow called Beyerhelm. During the conversation, Disbrow asked if Auto-Owners was willing to waive the one-year period of limitation on the plaintiffs’ property protection insurance benefit claim. After consulting with his superior, Beyerhelm advised Disbrow that Auto-Owners would not waive the statute, and that Secura would have to bring suit to recover property protection benefits.
This action was filed on April 1, 1997, just short of thirteen months after the March 2, 1996, accident.
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Defendant Auto-Owners moved for summary disposition on the ground that the action was not filed within one year after the accident and thus was barred under
The circuit court noted that panels of the Court of Appeals had reached different results on the issue whether the one-year period was tolled during negotiations between
Secura appealed, and the Court of Appeals affirmed.
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Secura argues that the doctrine of judicial tolling is well established. For example, Tom Thomas Organization, Inc v Reliance Ins Co,
However, we agree with the Court of Appeals panels in USF&G and the instant case that there is no tolling in property protection insurance cases. The difference in the language of subsections 1 and 2 of § 3145 is decisive. The Lewis majority recognized tolling under subsection 1. However, that subsection includes language indicating that the Legislature intended that the one-year limitation period would be suspended by the giving of notice:
An action for recovery of personal protection insurance benefits payable under this chapter for accidental bodily injury may not be commenced later than 1 year after the date of the accident causing the injury unless written notice of injury as provided herein has been given to the insurer within 1 year after the accident or unless the insurer has previously made a payment of personal protection insurance benefits for the injury. If the notice has been given or a payment has been made, the action may be commenced at any time within 1 year after the most recent allowable expense, work loss or survivor’s loss has been incurred. However, the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced. The notice of injury required by this subsection may be given to the insurer or any of its authorized agents by a person claiming to be entitled to benefits therefor, or by someone in his behalf. The notice shall give the name and address of the claimant and indicate in ordinary language the name of the person injured and the time, place and nature of his injury. [Emphasis added.]
The language of subsection 2, applicable to this case, is starkly lacking in such a qualification and merely provides:
An action for recovery of property protection insurance benefits shall not be commenced later than 1 year after the accident.
It is a fundamental principle of statutory construction that, “a clear and unambiguous statute leaves no room for judicial construction or interpretation.” Coleman v Gurwin,
The Court of Appeals correctly read the statute as precluding creation of a judicial tolling provision, and its judgment is therefore affirmed. Preferred Risk Mut Ins Co v State Farm Mut Automobile Ins Co, supra, is overruled.
Notes
Preferred Risk was followed in Norfolk & W R Co v Auto Club Ins Ass’n, 894 F2d 838 (CA 6, 1990).
Now MCR 7.215(H).
The correctness of the holding in the divided Lewis decision is not before us.
The defendant has suggested several plausible reasons why the Legislature would provide for tolling of personal protection insurance claims under subsection 1, but not for property damage claims. The former may involve ongoing damages, which may not be entirely known within the first year. Property damages are more likely to be determined soon after the accident. Second, property protection insurance benefit claims are often between insurance companies, sophisticated parties aware of statutory limitation periods and their ramifications.
However, given the clear language of the statute, evidencing no intention that there be tolling in property damage cases, we need not resort to such a policy-based analysis.
Dissenting Opinion
(dissenting). I would hold that
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As this Court has stated in the past, limitation periods are not inflexible. See Lewis v DAIIE,
[T]he mere fact that a federal statute providing for substantive liability also sets a time limitation upon the institution of suit does not restrict the power of the federal courts to hold that the statute of limitations is tolled under certain circumstances not inconsistent with the legislative purpose. [American Pipe & Construction Co v Utah,414 US 538 , 559;94 S Ct 756 ;38 L Ed 2d 713 (1974).]
Similarly, Michigan courts have used their power to toll limitation periods in insurance cases when the circumstances have not been inconsistent with legislative purposes. For example, in Tom Thomas Organization, Inc v Reliance Ins Co,
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The majority argues that the restrictive language of subsection 3145(2) speaks for itself, but that position turns a deaf ear to the analytical voice of this Court. In Ford Motor Co, supra, this Court held the following statutory language to allow tolling:
No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equily unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss. [MCL 500.2832 ; MSA 24.12832; see also Ford Motor Co, supra at 34-40.]
In this case, we are asked to toll
An action for recovery of property protection insurance benefits shall not be commenced later than 1 year after the accident.
Comparing the language of these provisions, neither appears to allow tolling more or less than the other. Thus, I would employ the same analysis used in Ford Motor Co and subsequent cases of this Court.
When interpreting the limitation provision at issue in that case, the Ford Motor Co Court relied on our earlier decision in Tom Thomas, supra, and considered the legislative intent behind the limitation period. Ford Motor Co, supra at 32. Later decisions of this Court have also considered legislative intent when deciding whether to toll limitation provisions, specifically the limitation provisions in the no-fault act. See Welton v Carriers Ins Co,
“Tolling the statute when the insured submits a claim for specific benefits would not appear to detract from the policies underlying the one-year limitation on recovery. By submitting a timely and specific claim, the insured serves the interest in preventing stale claims by allowing the insurer to assess its liability while the information supporting the claim is relatively fresh. A prompt denial of the claim would barely affect the running of the limitation period, while a lengthy investigation would simply ‘freeze’ the situation until the claim is eventually denied. In effect, the insured would be charged with the time spent reducing his losses to a claim for specific benefits plus the time spent deciding whether to sue after the claim is denied.” [Lewis, supra at 101, quoting Welton, supra at 578-579.]
The legislative purposes behind limitation provisions, preventing stale claims and easing crowded dockets, are either inapplicable or contrary to the majority’s decision. First, preventing stale claims from reaching our courts is not a consideration in this case, because the defendant insurer can protect itself from, stale claims by promptly responding to a policyholder’s claim. Thus, whether insurers must deal with stale claims is uniquely within their own control. Next, the majority’s interpretation
Indeed, the consistency of tolling with these legislative purposes has led earlier courts that have considered this precise question to toll subsection 3145(2). In Preferred Risk Mut Ins Co v State Farm Mut Automobile Ins Co,
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Thus, I would trace the analysis used by this Court in the past when it has interpreted limitation provisions, an analysis that has considered legislative purposes. In this case, tolling the limitation period while the claim is pending with the insurer is entirely consistent with those purposes. Therefore, I would reverse the judgment of the Court of Appeals, and toll the limitation period of
The majority distinguishes this Court’s decision in Lewis on the basis of language it highlights in subsection 3145(1) “indicating that the Legislature intended that the one-year limitation period would be suspended by the giving of notice.” Ante at 386. A careful reading of Lewis, however, reveals that the basis of our decision there was preserving legislative purposes, and not the sentence the majority highlights. In fact, the Lewis dissent argued that the language of subsection 3145(1) clearly was opposed to our decision in that case. Lewis, supra at 104-105 (Brickley, J., highlighting this language from subsection 3145(1): “ ‘However, the claimant may not recover benefits for any portion of the loss incurred more than 1 year before the date on which the action was commenced’ ”). Id. at 105. Thus, the majority relies on a phantom distinction to differentiate the instant case from Lewis, because applying the same analysis used in Lewis supports tolling the statute.
A subsequent panel of the Court of Appeals rejected the approach taken in Preferred Risk. USF&G Co v Amerisure Ins Co,
Though it discussed the statutory language, the basis of the USF&G panel’s decision was factual. It stated that because the insured was so late in presenting its claim:
[E]ven if there were tolling of the statute of limitations between the date of the making of a specific claim [as required under Welton, supra] and the date of defendant’s denial of liability, that tolling would not save this action from operation of the statute of limitations. [BSF&G, supra at 7.]
Thus, that Court’s discussion of the statutory language was mere dicta, it did not bind the lower courts in the instant case, and has limited persuasive value.