Order Michigan Supreme Court
Lansing, Michigan
April 6, 2007 Clifford W. Taylor,
Chief Justice
130456 Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
STATE AUTOMOBILE MUTUAL Robert P. Young, Jr.
INSURANCE COMPANY, Stephen J. Markman,
Justices
Plaintiff-Appellant,
v SC: 130456
COA: 254461
Wayne CC: 03-319297-CZ
GEOFFREY N. FIEGER, FIEGER,
FIEGER & SCHWARTZ, P.C., and
FIEGER, FIEGER, SCHWARTZ &
KENNEY, P.C.,
Defendants-Appellees.
_________________________________________/
On order of the Court, the application for leave to appeal the November 8, 2005
order of the Court of Appeals is considered and, pursuant to MCR 7.302(G)(1), in lieu of
granting leave to appeal, we VACATE the November 8, 2005 order of the Court of
Appeals and AFFIRM the Wayne Circuit Court order dismissing plaintiff’s case for
different reasons.
State Automobile Mutual Insurance Company (“State Auto”) provided uninsured
motorist benefits to John Rogers, who was killed in an automobile accident. State Auto
had a judgment lien securing the $450,000 it paid to Rogers. Geoffrey Fieger represented
Rogers’s estate in a wrongful death action against the City of Detroit and obtained a jury
verdict in favor of Rogers. After the appeals process was exhausted, the Wayne Circuit
court issued an order disbursing the jury verdict. Pursuant to the January 9, 1999 order of
the Wayne Circuit Court, Fieger was paid his costs of litigating the case for Rogers’s
estate and his attorney’s fee. The order then allocated the remainder of the total award
among Rogers’s estate, State Auto, and a third lien holder, which is not a party to this
appeal. Instead of awarding State Auto the full amount of its lien, the court discounted
the amount State Auto was entitled to by one-third. Rogers’s estate received the
remainder of the verdict. Thereafter, State Auto brought an action in Oakland Circuit
Court against Fieger, alleging conversion and breach of fiduciary duty. The circuit court
held that summary disposition was inappropriate, but the Court of Appeals reversed,
holding that summary disposition in favor of Fieger was proper because “the Oakland
Circuit Court could not grant [State Auto] relief without effectively reversing or vacating
2
part of Wayne Circuit Court Judge Callahan’s January 6, 1999 order.” State Auto Mut
Ins Co v Fieger, unpublished opinion per curiam of the Court of Appeals, issued
February 14, 2003 (Docket No. 231590). The Court of Appeals then ordered State Auto
to “commence an action for relief from judgment pursuant to MCR 2.612(C)(1)(f) in
Wayne Circuit Court.” Id.
State Auto did not appeal that decision to this Court. Instead, it brought the
present action for relief from judgment. The Wayne Circuit Court dismissed State Auto’s
action. State Auto appealed, and the Court of Appeals issued a four-part order remanding
the case to the Wayne Circuit Court for further fact-finding and more specific rulings.
State Auto appealed to this Court, which, while retaining jurisdiction, remanded to the
Wayne Circuit Court for further fact-finding. The Wayne Circuit Court has complied
with that order, and this Court now vacates the order of the Court of Appeals and
remands for summary disposition in favor of Fieger for the following reasons.
After this Court affirmed the verdict in favor of Rogers’s estate in the original
action, Fieger received a proper attorney fee based on the total recovery less costs. The
remainder of the verdict was then divided between Rogers’s estate and the lien holders.
Fieger did not receive any more money from the verdict. Thus, the unrecovered portion
of State Auto’s lien inured to the benefit of Rogers’s estate, not to Fieger. Therefore, the
source of State Auto’s loss is Rogers’s estate, which is not a party to these proceedings.
Therefore, albeit for different reasons, the Wayne Circuit Court properly dismissed this
case.
In this case, defendant seeks a stay of proceedings until final disposition of
pending federal litigation, wherein defendant initiated a lawsuit challenging the
constitutionality of the Michigan Supreme Court recusal rule. See Fieger v Ferry, 471 F
3d 637 (CA 6, 2006).
In the recent past, defendant has filed numerous motions for the recusal of one or
more Michigan Supreme Court Justices, either in his capacity as a party or as an attorney
on behalf of his clients. Each of the prior motions for recusal has involved various
allegations of claimed bias, principally stemming from Michigan Supreme Court judicial
campaigns. All of the previous motions for recusal have been denied. Graves v Warner
Bros, 469 Mich 853 (2003); Gilbert v DaimlerChrysler Corp, 469 Mich 883 (2003);
Harter v Grand Aerie Fraternal Order of Eagles, 693 NW2d 381 (2005); Grievance
Administrator v Fieger, 472 Mich 1244 (2005); McDowell v City of Detroit, 474 Mich
999 (2006); Stamplis v St John Health Sys, 474 Mich 1017 (2006); Heikkila v North Star
Trucking, Inc, 474 Mich 1080 (2006); and Lewis v St John Hosp, 474 Mich 1089 (2006).
The pending motion to stay this case asserts no new basis for recusal. Rather, the
motion is predicated entirely on allegations made in the previous eight motions that have
been considered and denied.
3
As we have each done in connection with these past motions, and as Justices must
do in connection with every motion for disqualification, we have each looked into our
consciences in this case and concluded that we are able to accord fair, impartial and equal
treatment to plaintiff’s counsel and his clients.
Further, the motion is predicated on the erroneous notion that disqualification of a
Justice of the Michigan Supreme Court is governed by the disqualification procedure set
forth in MCR 2.003. On the contrary, this procedure has never been held applicable to
disqualification of Justices. See, e.g., Adair v State of Michigan, 474 Mich 1027, 1043
(2006) (statement of Cavanagh, J.), 1029 n 2, (statement of Taylor, C.J., and Markman,
J.); In re JK, 468 Mich 202, 220 (2003) (statement of Weaver, J.). Throughout its
history, the disqualification procedure followed in the Michigan Supreme Court is similar
to the one followed in the United States Supreme Court. See Statement of Recusal
Policy, United States Supreme Court, November 1, 1993; Laird v Tatum, 409 US 824,
833, 837; 93 S Ct 7; 34 L Ed 2d 504 (1972); Jewell Ridge Coal Corp v Local 6167, 325
US 897; 65 S Ct 1550; 89 L Ed 2007 (1945) (Jackson, J., concurring).
There being no new asserted basis that would warrant a stay of proceedings, the
motion is DENIED.
CAVANAGH and KELLY, JJ., would grant the motion for stay.
WEAVER, J., concurring in part and dissenting in part, states as follows:
I concur in the result only of the order vacating the November 8, 2005 order of the
Court of Appeals and affirming the Wayne Circuit order dismissing plaintiff’s case as the
circuit court correctly decided this case on February 25, 2005, over two years ago.
I dissent from the participation of the majority of four, Chief Justice Taylor and
Justices Corrigan, Young, and Markman in this case, where Mr. Geoffrey N. Fieger is a
party. For my reasons in detail, see my dissent in Grievance Administrator v Fieger, 476
Mich 231, 328-347 (2006) (Weaver J., dissenting), and my dissent to the denial of the
motion for stay in Grievance Administrator v Fieger, 477 Mich 1228, 1231-1271 (2006)
(Weaver J., dissenting).
I also dissent from the order denying defendant’s motion for stay of proceedings
pending Mr. Fieger’s lawsuit in the United States District Court for the Eastern District of
Michigan concerning Michigan’s disqualification rules governing Supreme Court
justices. See Fieger v Ferry, 471 F3d 637 (CA 6, 2006). I would grant the motion to
stay.
4
Furthermore, although MCR 2.003 is inadequate and in need of reform, which
reform I have urged,1 without success for almost 4 years, this Court to undertake action
and achieve, the disqualification of justices is governed by the disqualification procedure
contained in MCR 2.003. Although the majority of four asserts the contrary, the past four
years have exposed inconsistencies in the standards that individual justices apply to
themselves when making their decision to participate, or not to participate, in a case. At
times the justices have applied the court rule governing the disqualification of judges,
MCR 2.003, to themselves, and at times they have not.
For example, in Adair v Michigan, 474 Mich 1027, 1043 (2006), Chief Justice
Taylor and Justice Markman stated that “[p]ursuant to MCR 2.003(B)(6), we would each
disqualify ourselves if our respective spouses were participating as lawyers in this case,
or if any of the other requirements of this court rule were not satisfied.” Justice Young
concurred fully in this legal analysis. Id. at 1053. Similarly, in Grosse Pointe Park v
Michigan Municipal Liability & Prop Pool, 473 Mich 188 (2005), then-Chief Justice
Corrigan used the remittal of disqualification process of MCR 2.003(D). At other times,
however, the same justices have not followed the provisions of MCR 2.003. For
example, in Gilbert v DaimlerChrysler Corp, 469 Mich 883, 889 (2003), then-Chief
Justice Corrigan and Justices Taylor, Young, and Markman denied a motion for
reconsideration of the Court’s order denying the motion for disqualification and did not
refer the motion to the State Court Administrator for the motion to be assigned to another
judge for review de novo, as would be proper under MCR 2.003(C)(3).
Assertions that justices can continue to look into their consciences and conclude
they are able to accord fair, impartial, and equal treatment to parties’ counsel and clients
without any independent check on justices’ decisions are incorrect. This method is
insufficient and inadequate to meet the due process rights of parties and their counsel.
Further, while it appears to continue to be for some justices a “tradition” of this Court for
a justice who disqualifies himself or herself from a case to not give written reasons, and
to sometimes apply MCR 2.003 to himself or herself, and to sometimes not, it is a
1
Since May 2003, I have repeatedly called for this Court to recognize, publish for public
comment, place on a public hearing agenda, and address the need to have clear, fair,
orderly, and public procedures concerning the participation or disqualification of justices.
See, e.g., statements of Weaver, J., in In re JK, 468 Mich 202 (2003); Gilbert v
DaimlerChrysler Corp, 469 Mich 883 (2003); Advocacy Org for Patients & Providers v
Auto Club Ins Ass’n, 472 Mich 91 (2005); McDowell v Detroit, 474 Mich 999 (2006);
Stamplis v St John Health Sys, 474 Mich 1017 (2006); Heikkila v North Star Trucking,
Inc, 474 Mich 1080 (2006); Lewis v St John Hosp, 474 Mich 1089 (2006); Adair v
Michigan, 474 Mich 1027 (2006); Grievance Administrator v Fieger, 476 Mich 231
(2006); Grievance Administrator v Fieger, 477 Mich 1228 (2006); People v Parsons,
Docket No. 132975 (2007); Ruiz v Clara’s Parlor, Docket No. 130847 (2007); and Neal
v Dep’t of Corrections, 477 Mich ___ (Docket No. 130862, issued March 23, 2007).
5
“tradition of secrecy” and inadequacy that must for all justices end now. An impartial
judiciary is “ill served by casting a cloak of secrecy around the operations of the courts
. . . .”2
YOUNG, J., concurs and states as follows:
I concur with the order vacating the Court of Appeals order and affirming the
Wayne Circuit Court’s dismissal of this case. I write separately to address Justice
Markman’s discussion of the implications of the collateral source rule on this case.
Because the direct beneficiary of the collateral source rule, the city of Detroit, has not
been a part of this case for some time, and because applying the collateral source rule
does not remedy the trial court’s decision to reduce plaintiff State Automobile Mutual
Insurance Company’s (State Auto) lien, the collateral source rule is wholly irrelevant to
the final disposition of this case.
The collateral source rule is designed to prevent double recovery by plaintiffs.
After a trier of fact reaches a verdict for a plaintiff, the court must enter an order of
judgment. MCL 600.6306(1). The judgment must contain a number of elements of
damages, including “[a]ll past economic damages, less collateral source payments as
provided for in section 6303.” MCL 600.6306(1)(a). Section 6303 allows for “evidence
to establish that [an] expense or loss was paid or is payable, in whole or in part, by a
collateral source . . . .” MCL 600.6303(1). If the court determines that a portion of the
past economic damages was paid by a collateral source, then the court must reduce the
judgment by that amount. Id. However, payments subject to a statutory or contractual
lien are not eligible for deduction as “collateral sources” under the statute. MCL
600.6303(4). This is because the amount due to the lien holder must still be paid.
After calculating the proper amount of the judgment, the court finds whether the
attorney’s contingent fee is “appropriate,” by determining if the fee is one-third or less of
“the net sum recovered after deducting from the amount recovered all disbursements
properly chargeable to the enforcement of the claim or prosecution of the action.” MCR
8.121(C)(1) (emphasis added). After subtracting the appropriate costs and attorney fee,
the remainder of the judgment belongs to the plaintiff, subject to any liens. Therefore,
any reduction in the liens inures to the benefit of the plaintiff, not his or her attorney.
In this case, defendant Geoffrey N. Fieger successfully represented the estate of
John Rogers in a lawsuit against the city of Detroit for Rogers’s wrongful death. Plaintiff
State Auto was Rogers’s insurer and had paid $450,000 in benefits. Pursuant to the
insurance contract, State Auto had a right of reimbursement for any damages recovered
by Rogers, up to the amount of the benefits paid. After the verdict in favor of Rogers, the
city of Detroit sought to reduce the judgment by State Auto’s payment. This Court held
2
Scott v Flowers, 910 F2d 201, 213 (CA 5, 1990).
6
that even though Fieger did not provide the proper statutory notice of the verdict to the
lien holders, the trial court did not abuse its discretion by extending the period for lien
holders to assert their rights. Rogers v Detroit, 457 Mich 125, 156-157 (1998).
Therefore, on remand, the Wayne Circuit Court refused to allow the city a setoff for State
Auto’s insurance payments in the judgment. After the city paid the judgment, the court
allowed Fieger to deduct his costs and attorney fee pursuant to the contingency fee
contract between Rogers and Fieger. See MCR 8.121(C)(1). The remaining amount was
Rogers’s, subject to the liens. Instead of allowing the lien holders to recover the full
amount of their liens, the court reduced them by one-third, increasing Rogers’s recovery.
Fieger could not benefit from the reduction in State Auto’s recovery because he already
received his attorney fee.
Justice Markman apparently disagrees with this Court’s decision in Rogers
regarding the collateral source rule, arguing that State Auto’s payment was in fact a
collateral source. I fail to see how overruling that holding would affect the disposition of
this case in any way. If State Auto’s payment was a collateral source, then the court
would have reduced the judgment against the city of Detroit by $450,000. The court
would have then allowed Fieger to deduct his costs and attorney fees. The remaining
amount would have been distributed among the lien holders and Rogers (assuming that
State Auto would not lose its right to recovery under MCL 600.6303(3)). If the court
again reduced the liens by one-third, State Auto would still only recovery $300,000.3
Justice Markman is correct that Fieger’s attorney fee would be reduced by $150,000
under this scenario; however, the beneficiary of that reduction would have been the city
of Detroit, not State Auto.4
The collateral source rule does not advance State Auto’s theory that Fieger was the
beneficiary of the $150,000 reduction of its lien. The only party that benefited from that
reduction was Rogers.
3
Justice Markman questions why a court applying the collateral source rule would reduce
the liens by one-third. The majority’s order holds that the source of State Auto’s loss is
the Rogers, supra, trial court’s decision to reduce State Auto’s lien to the benefit of
Rogers. Justice Markman believes that the source of State Auto’s loss was the trial
court’s decision not to apply the collateral source rule, even though this Court explicitly
held that the trial court “properly ruled concerning the collateral source rule.” Rogers at
157. Justice Markman fails to acknowledge that regardless of the proper application of
the collateral source rule, the trial court’s decision to reduce the lien by one-third caused
State Auto’s loss. The collateral source rule does not affect that decision.
4
Fieger did “benefit” from the larger recovery, but he did not benefit at State Auto’s
expense. The larger recovery caused a loss to the city of Detroit. As noted in the
previous footnote, the only way to make State Auto whole is to reduce the final
disbursement to Rogers by the total amount of State Auto’s lien.
7
MARKMAN, J., concurs and states as follows:
Although I concur with the dismissal of this complex dispute, I respectfully
disagree with the Court’s order, which states that defendant received a “proper attorney
fee based on the total recovery less costs.”
The collateral source rule, MCL 600.6303(1), requires a court to determine
whether any damages have been paid by a collateral source, such as an insurance
company, and, if so, to reduce a judgment by the amount that has been paid by the
collateral source. This rule operates to reduce the amount of money an attorney
representing a plaintiff on a contingent fee basis will recover. This is because an attorney
working for a contingent fee is entitled to a percentage of the judgment; however, if the
“judgment” is reduced as it is under the collateral source rule, the contingent fee will
necessarily be reduced as well.
The instant dispute presents a significant issue under MCL 600.6303(1) – where
there has been a payment from a collateral source, should a contingent attorney fee be
calculated on the basis of the judgment or on the basis of the judgment less the collateral
source payment? On the one hand, plaintiff’s attorney can fairly be said to be responsible
for the recovery of the entire judgment and entitled to his contractual share; on the other
hand, that portion of the judgment embodying the collateral source payment presumably
has already been made available to the plaintiff and thus plaintiff cannot be said to have
been enriched to that extent by his attorney’s efforts. To allow an attorney to recover a
contingent fee based on the judgment, rather than the judgment less the collateral source
payment, would effectively require plaintiff to pay more than the contingency percentage
of the amount by which he has benefited from the judgment.
In MCL 600.6303(1), the Legislature seems to have determined that a contingent
fee should not be calculated on the portion of a judgment already paid from a collateral
source. Therefore, the trial court in the instant case erred by not reducing plaintiff’s
judgment by the amount received from a collateral source. Because plaintiff’s attorney in
the underlying action (the defendant in the instant action) received an attorney fee based
on the total judgment, rather than the judgment less the amount received from a collateral
source, he did not receive a “proper attorney fee,” as the majority asserts.
Plaintiff here sues defendant to recover $150,000 that plaintiff alleges defendant
improperly received as an attorney fee in an earlier case. In that case, plaintiff held a
$450,000 lien on a judgment because of uninsured motorist benefits that it had paid to the
original plaintiff. After the Wayne Circuit Court distributed approximately $300,000 to
plaintiff from the judgment, plaintiff filed a complaint against defendant in the Oakland
Circuit Court, alleging that defendant improperly received the missing $150,000 as an
attorney fee. The Oakland Circuit Court held that the complaint could proceed in that
8
forum. However, on appeal from that holding, the Court of Appeals ruled that plaintiff
had improperly filed the complaint in Oakland County and that it must instead commence
an action for relief from judgment in Wayne County, where the original case had been
tried. Plaintiff then filed suit against defendant in Wayne County. The Wayne Circuit
Court dismissed the action, but the Court of Appeals ordered a remand to that court, and
directed the trial court to rule on several issues. Plaintiff appealed to this Court, arguing
that two of the issues raised had been decided previously in its favor, and hence
constituted law of the case. This Court ordered a remand to the trial court to rule on two
issues and retained jurisdiction. After the trial court held a hearing, the case returned to
this Court.
MCL 600.6303(1) applies when: (1) the original plaintiff commenced a personal
injury action to recover for economic loss and (2) a portion of that loss was paid by a
collateral source. The original plaintiff here sought recovery for economic loss arising
from the decedent’s wrongful death in a car accident involving employees of the city of
Detroit, and plaintiff paid $450,000 in uninsured motorist benefits to the original
plaintiff. Therefore, § 6303(1) applies.5
Because MCL § 6303(1) applies in the instant case, the trial court should have
reduced the judgment by the amount paid by the collateral source, i.e., plaintiff. In this
case, however, the Wayne Circuit Court did not reduce the judgment by the amount paid
by plaintiff. Consequently, defendant received an attorney fee based on the total
judgment, rather than the judgment less the collateral source payment.
In his concurrence, Justice Young claims that “the collateral source rule is wholly
irrelevant to the final disposition of this case,” ante at 5, because Rogers, the plaintiff in
the underlying case, not defendant, benefited from the failure to apply the collateral
source rule. Ante at 6. I respectfully disagree. Because defendant received one-third of
the total judgment, rather than one-third of the redefined judgment under MCL
5
MCL 600.6303(4) provides, “‘collateral source’ means benefits received or receivable
from an insurance policy . . . .” It also provides, “Collateral source does not include
benefits paid by a person . . . or other legal entity entitled by contract to a lien against the
proceeds of a recovery by a plaintiff in a civil action for damages, if the contractual lien
has been exercised pursuant to subsection (3).” MCL 600.6303(3) provides, “Within 10
days after a verdict for the plaintiff, plaintiff’s attorney shall send notice of the verdict by
registered mail to all persons entitled by contract to a lien against the proceeds of
plaintiff’s recovery.” Because the benefits were received from an insurance policy and
the contractual lien was not exercised pursuant to subsection 3, i.e., notice was not sent
within 10 days, plaintiff seems to be a “collateral source.”
9
600.6303(1), it is clear that he benefited from the court’s failure to apply the collateral
source rule.6
Although defendant was improperly awarded an attorney fee, dismissal
nonetheless seems warranted. The Court of Appeals decision expressly ordered plaintiff
“to commence an action for relief from judgment pursuant to MCR 2.612(C)(1)(f)” in the
Wayne Circuit Court. Because the Court of Appeals directed plaintiff to commence an
action pursuant to this provision, plaintiff was obligated to comply with its procedures.
MCR 2.612(C)(1) states that “[o]n motion and on just terms,” a court “may relieve a
party . . . from a final judgment, order, or proceeding.” MCR 2.612(C)(1) requires
plaintiff to file a “motion” in the underlying case. Yet, instead of filing a proper motion,
plaintiff commenced an independent action against defendant. Plaintiff thus appears to
have failed to comply with the order of the Court of Appeals. For this reason only, I
concur with the result reached by this Court.
6
Justice Young contends that “the source of State Auto’s loss is the Rogers trial court’s
decision to reduce State Auto’s lien to the benefit of Rogers.” Ante at 6 n 3. I believe
that the source of State Auto’s loss is the trial court’s decision to reduce State Auto’s lien
and the trial court’s decision not to apply the collateral source rule. Had the trial court
not made these two errors, State Auto would have received the $450,000 that it was owed
and both Rogers and defendant would have received something less. Because the trial
court’s errors benefited both Rogers and defendant, State Auto did not err in seeking to
recover from defendant.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
April 6, 2007 _________________________________________
d0403 Clerk