Grace Transportation Inc v. Farm Bureau General Insurance Company

STATE OF MICHIGAN

COURT OF APPEALS

GRACE TRANSPORTATION, INC., STEFAN UNPUBLISHED
GLOWACKI, JOSEPH MEDICAL SUPPLY, and January 31, 2017
UTICA PHYSICAL THERAPY,

Plaintiffs-Appellants,

v No. 329276
Wayne Circuit Court
FARM BUREAU GENERAL INSURANCE LC No. 14-016070-NF
COMPANY OF MICHIGAN,

Defendant-Appellee.

Before: BECKERING, P.J., and SAWYER and SAAD, JJ.

PER CURIAM.

In this action for the recovery of no-fault benefits, plaintiffs appeal the trial court’s order
that granted summary disposition in favor of defendant insurer. Plaintiffs are medical, physical
therapy, transportation, and medical-supply providers that seek to recover payment for services
rendered to the insured, Ester Hermez, who was injured in an automobile accident. For the
reasons provided below, we affirm.

I. STANDARD OF REVIEW

This Court reviews a trial court’s ruling on a motion for summary disposition de novo.
Bernardoni v City of Saginaw, 499 Mich 470, 472; 886 NW2d 109 (2016). Defendant filed its
motion for summary disposition pursuant to MCR 2.116(C)(10) and (C)(7).

A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency
of the complaint. Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817 (1999). When ruling
under this subrule, the Court considers all affidavits, pleadings, depositions, admissions, and
other evidence submitted by the parties and views them in the light most favorable to the party
opposing the motion. Id. The motion is properly granted when (1) the proffered evidence fails
to establish a genuine issue regarding any material fact and (2) the moving party is entitled to
judgment as a matter of law. Anzaldua v Neogen Corp, 292 Mich App 626, 630; 808 NW2d 804
(2011).

A motion brought under MCR 2.116(C)(7) is properly granted if, among other things, a
“prior judgment” bars the current action.

-1-
 The applicable standard of review under MCR 2.116(C)(7) requires us to
accept all plaintiff’s well-pleaded allegations as true and to construe them most
favorably to the plaintiff. In reviewing a C(7) motion, the court must consider all
affidavits, pleadings, depositions, admissions, and documentary evidence filed or
submitted by the parties. The motion should not be granted unless no factual
development could provide a basis for recovery. [Jones v State Farm Mut Auto
Ins Co, 202 Mich App 393, 396-397; 509 NW2d 829 (1993) (citation omitted).]

II. ANALYSIS

In Dawoud v State Farm Mut Auto Ins Co, ___ Mich App ___; ___ NW2d ___ (Docket
Nos. 327915 & 327927, issued October 18, 2016); slip op, p 4, this Court concluded that a
service provider’s claim for personal protection insurance (PIP) benefits is, in some
circumstances, “derivative of the injured party’s claim to PIP benefits” and that where the
injured party’s claim against an insurer for PIP benefits is dismissed for discovery violations, the
service provider’s claim should likewise be dismissed. In Dawoud, which involved a
consolidated appeal, two of the same service providers that are parties to the present appeal,
Grace Transportation, Inc., and Utica Physical Therapy (the service providers) intervened by
stipulation in a case where the individual plaintiffs, allegedly involved in motor vehicle
accidents, sued State Farm for PIP benefits. Id. at ___ (slip op at 2). After the plaintiffs failed to
comply with discovery orders and did not attend three scheduled depositions, the trial court
dismissed their claims with prejudice. Id. In the separate action brought by the service
providers, State Farm moved for summary disposition and argued that where the individual
plaintiffs’ claims were dismissed, this amounted to an adjudication on the merits pursuant to
MCR 2.504, which barred the service providers from pursuing their claims. Id.

While the service providers relied on this Court’s decision in Wyoming Chiropractic
Health Clinic, PC v Auto-Owners Ins Co, 308 Mich App 389; 864 NW2d 598 (2014), and MCL
500.3112 to argue that the trial court’s decision in Dawoud was erroneous, this Court concluded
that such reliance was misplaced and not persuasive. Dawoud, ___ Mich App at ___ (slip op at
3-4). Specifically, this Court recognized that the text of MCL 500.3112 did not address the issue
presented on appeal in Dawoud, namely whether a service provider can proceed against an
insurer once the injured party’s claim is dismissed. Id. at ___ (slip op at 4). The Dawoud Court
also observed that Wyoming Chiropractic was not on point, where it merely considered the issue
of a service provider’s standing to pursue a claim for PIP benefits against an insurer and did not
address the issue of whether a service provider’s claim ought to be dismissed where the injured
party’s claim was dismissed for a discovery violation. Id. Specifically, the Dawoud Court held,
in pertinent part, as follows:

These arguments are not persuasive. As already noted, the standing issue
in Wyoming Chiropractic had little to do with the issue in this appeal.
Additionally, the service providers agree that if an injured party’s claim fails for
“substantive” reasons, the provider is precluded from obtaining PIP benefits.
Thus, they inherently recognize that a provider’s claim to PIP benefits, at least in
some circumstances, is derivative of the injured party’s claim to PIP benefits.
Accordingly, this case boils down to the specific question of whether the
dismissal of plaintiffs’ underlying claims with prejudice due to discovery

-2-
 violations should be treated differently than a “substantive” dismissal “on the
merits.” We hold that it should not be treated differently. [Id.]

Observing that the dismissal of the plaintiffs’ claims in Dawoud for discovery violations
amounted to an adjudication on the merits pursuant to the applicable court rule, MCR
2.504(B)(3), the Dawoud Court stated, in pertinent part, as follows:

And, because the [trial] court did not provide otherwise in its order for
dismissal, its dismissal of [the] plaintiffs’ claims operated as “an adjudication on
the merits” with regard to their rights to PIP benefits under the clear language of
the applicable court rule[1]. Further, as the service providers have acknowledged,
if an insured’s claim is substantively barred on the merits, any derivative claims
necessarily fail as well. See Covenant Med Ctr v State Farm Mut Auto Ins Co,
313 Mich App 50, 54; 880 NW2d 294 (2015); Moody v Home Owners Ins Co,
304 Mich App 415, 440-441; 849 NW2d 31 (2014), rev’d on other grounds 499
Mich 211 (2016). [Dawoud, ___ Mich App at ___ (slip op at 5).]

Moreover, in Chiropractors Rehab Group, PC v State Farm Mut Auto Ins Co, 313 Mich
App 113, 126, 130; 881 NW2d 120 (2015), app held in abeyance 882 NW2d 132 (2016), this
Court, after carefully reviewing prior case law, held in pertinent part as follows:

[A] healthcare provider’s eligibility to recover medical expenses is
dependent on the injured party’s eligibility for no-fault benefits under the
insurance policy.

* * *

In light of this caselaw, we conclude that a healthcare provider’s ability to
recover an injured party’s medical expenses under the no-fault act is dependent
on the injured party’s eligibility for no-fault benefits. [Footnote omitted;
emphasis added.]

In Chiropractors Rehab Group, a consolidated appeal involving two cases, this Court ultimately
concluded that genuine issues of material fact existed to withstand the defendant no-fault
insurer’s motions for summary disposition pursuant to MCR 2.116(C)(10) on the question of
whether the injured parties’ were eligible for no-fault benefits under the applicable insurance
policies. Id. at 135. In Chiropractors Rehab Group, the injured parties in the consolidated cases
had not submitted to medical examinations (ME) and examinations under oath (EUO). Id. at
117, 119. The Court held, in pertinent part, as follows:

[T]he injured parties’ failure to submit to the MEs and EUOs requested by State
Farm did not demonstrate that there is no genuine issue of material fact as to
whether plaintiffs, as the injured parties’ healthcare providers, were entitled to no-

1
MCR 2.504(B)(3)

-3-
 fault benefits as a matter of law, because the injured parties’ failure to comply
does not conclusively establish the ineligibility of the injured parties to PIP
benefits and plaintiffs’ related inability to recover payment for services from State
Farm. [Id. (emphasis added).]

Conversely, in Chiropractors Rehab Group, if the injured parties had been ineligible to receive
PIP benefits, then the plaintiff would have been precluded from recovering from State Farm as
well.

Here, there is no question that Hermez was barred from recovering PIP benefits. Her
lawsuit to recover PIP benefits was dismissed in Case No. 13-016116-NF when the court granted
defendant’s motion for summary disposition. The grant of summary disposition acts as an
adjudication on the merits. Mable Cleary Trust v Edward-Marlah Muzyl Trust, 262 Mich App
485, 510; 686 NW2d 770 (2004) (“[A] summary disposition ruling is the procedural equivalent
of a trial on the merits that bars relitigation on principles of res judicata.”), overruled in part on
other grounds Titan Ins Co v Hyten, 491 Mich 547, 555 n 4; 817 NW2d 562 (2012); see also
MCR 2.504(B)(3); Al-Shimmari v Detroit Med Ctr, 477 Mich 280, 296-297; 731 NW2d 29
(2007). Thus, consistent with Dawoud and the other cited caselaw, because plaintiffs’ claims are
derivative and because the underlying claim is barred, plaintiffs’ claims against defendant are
likewise barred, and the trial court properly granted defendant’s motion for summary
disposition.2

Affirmed. Defendant, as the prevailing party, may tax costs pursuant to MCR 7.219.

/s/ David H. Sawyer
/s/ Henry William Saad

2
Because plaintiffs’ claims are conclusively barred on this ground, we need not address the trial
court’s other ground for granting summary disposition—that plaintiffs’ claims are barred
because they were precluded under the one-year rule in MCL 500.3145(1).

-4-