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### STATE OF MICHIGAN

COURT OF APPEALS

KEVIN DAWOUD and MIKHO ESSA by Next Friend BILBIL MANO and RASHA KAMEL,

Plaintiffs,

and

GRACE TRANSPORTATION, INC.,

Intervening Plaintiff,

and

UTICA PHYSICAL THERAPY,

Intervening Plai ntiff-Appellant, FOR PUBLICATION October 18, 2016

9:05 a.m.

v No. 327915 Wayne Circuit Court

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, LC No. 13-01037-NF

Defendant-Appellee.

KEVIN DAWOUD and MIKHO ESSA by Next Friend BILBIL MANO and RASHA KAMEL,

Plaintiffs,

and

GRACE TRANSPORTATION, INC.,

Intervening Plai ntiff-Appellant,

and

UTICA PHYSICAL THERAPY,-2- Intervening Plaintiff,

v No. 327927 Wayne Circuit Court

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, LC No. 13-01037-NF

Defendant-Appellee.

Before: S AAD , P.J., and J ANSEN and M. J. K ELLY , JJ.

P ER C URIAM

.

In this consolidated appeal, 1 Grace Transportation, Inc. a nd Utica Physical Therapy (collectively, “the service provi ders”) appeal the trial court’ s order that granted summary disposition in favor of defendant, State Farm, and dismissed th eir claims on the grounds that the service providers’ claims were barred because the insureds were precluded from recovery, as their underlying claims had been dismissed for discovery violat ions. For the reasons provided below, we affirm.

I. BASIC FACTS

On November 28, 2012, Kevin Dawoud, Rasha Kamel, and Mikho Ess a (“plaintiffs”) were allegedly involved in a motor vehicle accident. They appl ied for no-fault benefits through the Michigan Automobile Insurance Placement Facility. State Fa rm was assigned the claim, and plaintiffs filed a lawsuit seek ing personal protection insuranc e (“PIP”) benefits from State Farm. The service providers, who provi ded therapy and transportation services to plaintiffs, were allowed to intervene by stipulation of all parties to pursue di rect payment of their bills by State Farm. Plaintiffs, who failed to c omply with discovery orders a nd failed to attend three scheduled depositions, had their claims dismissed with prejudice. 2 Plaintiffs had no further involvement in this case and are not involved in this appeal.

Thereafter, State Farm moved for summary disposition and argue d that the dismissal of the underlying plaintiff’s case operated as an adverse adjudica tion on the merits pursuant to MCR 2.504, which bars the service providers from proceeding wit h their derivative claims. The service providers argued that their claims should be allowed to proceed because Michigan law

1 Although appellants filed separate claims of appeal from the s ame case, this Court consolidated
the two claims. Dawoud v State Farm Mut Auto Ins Co , unpublished order of the Court of Appeals, entered July 22, 2015 (Docket Nos. 327915 & 327927).

2 The trial court also originally dismissed the service provider s’ claims, but later set aside the dismissal with respect t o the service providers.-3- allows for such providers to bring a cause of action in their o wn name. Following a hearing, the trial court granted State Farm’s motion. The service providers then filed a motion for reconsideration, which t he court also denied.

II. ANALYSIS

On appeal, the service providers argue that the trial court er red when it granted State Farm’s motion for summary dis position and dismissed the case. We disagree.

Although the trial court did not s pecify the court rule it rel ied on when it granted State Farm’s motion for summary disposition, MCR 2.116(C)(10) is the applicable rule. This Court reviews de novo a trial court’s ruling on a motion for summary disposition. Marilyn Froling Revocable Living Trust v Bloomfield Hills Country Club , 283 Mich App 264, 279; 769 NW2d 234 (2009). A motion under this subrule is properly granted if there is no genu ine issue with respect to any material fact a nd the moving party is entitled t o judgment as a matter of law. Id . at 278. All documentary evidence submitted by the parties is cons idered, and it is considered in the light most favorable to the nonmoving party. Id

.

The parties agree, or at least the service providers concede, that if the elements of an injured party’s no-fault act claim fails substantively , based on the merits (for example, if the individual’s injury is not the result of an automobile accident ), any providers of services would have no claim against the insure r, because their claims are der ivative. At issue here is whether the same principle applies when the injured party’s no-fault cl aim “fails,” as it did here, due to the injured party’s failure to attend depositions and otherwise comply with discovery orders and obligations.

The service providers rely only on MCL 500.3112 and Wyoming Chiropractic Health Clinic, PC v Auto-Owners Ins Co , 308 Mich App 389; 864 NW2d 598 (2014), to support their argument that the lower court’ s decision should be reversed. M CL 500.3112 states as follows:

Personal protection insurance benefits are payable to or for t he benefit of an injured person or, in case of his death, to or for the benef it of his dependents. Payment by an insurer in good faith of personal protection insu rance benefits, to or for the benefit of a person who it believes is entitled to t he benefits, discharges the insurer’s liability to the extent of the payments unless th e insurer has been notified in writing of the claim of some other person. If ther e is doubt about the proper person to receive the bene fits or the proper apportionme nt among the persons entitled thereto, the ins urer, the claimant or any othe r interested person may apply to the circuit court for an appropriate order. The c ourt may designate the payees and make an equitable apportionment, taking into acc ount the relationship of the payees to the injured person and other fact ors as the court considers appropriate. In the ab sence of a court order directi ng otherwise the insurer may pay:

(a) To the dependents of the inj ured person, the personal prot ection insurance benefits accrued before his death without appointment of an
administrator or executor.-4- (b) To the surviving spouse, the personal protection insurance benefits due any dependent children living with the spouse.

Clearly, the text of this statute does not in any way address t he issue presented in this appeal. It says nothing about whether a provider can proceed against an in surer when the injured party’s claim has been dismissed because of a discovery violation. It merely states that an “interested party may apply to the circuit court for an appropriate order” if there is doubt a bout the proper allocation of PIP benefits, and that PIP benefits “are payable . . . for the benefit of an injured person.”

In Wyoming Chiropractic , this Court affirmed the trial court’s order that entered judgment in favor of Wyoming Chiropractic and held that a provi der has standing to bring a direct cause of action against an insurer. Wyoming Chiropractic , 308 Mich App at 396-397. After discussing MCL 500.3112 and re levant case law, this Court held that MCL 500.3112, and specifically the phrase “or for th e benefit of” in that statute , allowed a provider to bring a claim against an insurer for PIP benefits. Id . at 392-397. However, the Court only addressed whether a provider had standing under MCL 500.3112 to sue an insurer for PIP benefits. Id. at 390, 392. The parties agree that the servi ce providers here have standing under MCL 500.3112 to sue State Farm for PIP benefits. However, the narrow legal issue is whet her the service providers’ claims
for PIP benefits can survive w hen plaintiffs’ underlying claim for PIP benefits was dismissed with prejudice because plaintiffs failed to attend depositions and otherwise comply with discovery orders and obligations.

In regard to the argument that their claims for PIP benefits i s “derivative” of plaintiffs’ claim for PIP benefits, the service providers assert without fu rther explanation that “[t]he ‘derivative’ argument is precisely the standing argument [in Wyoming Chiropractic ] under a different cloak, especially here where the ‘failure’ of the inj ured parties’ claim was due to litigation misconduct and not any substantive validity of the c laim for no fault benefits.” The service providers also assert t hat an injured individual may ul timately be precluded from pursuing a cause of action for PIP benefits where he or she fai ls to abide by a court order, but that such preclusion does not invalid ate the claim for benefits on substantive grounds.

These arguments are not persuasive. As already noted, the sta nding issue in Wyoming Chiropractic has 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 t hat 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 w hether the dismissal of plaintiffs’ underlying claims with prejudice due to discovery violations sh ould be treated differently than a
“substantive” dismissal “on the m erits.” We hold that it shoul d not be treated differently.

Although the trial court did not specify the court rule under which it dismissed plaintiffs’ claims, it stated that it was dismissing them “for the reasons stated in the brief and on the record.” State Farm’s brief referenced, among other things, MC R 2.313, which pertains to the failure to provide or to perm it discovery. MCR 2.313(B)(2)(c) provides that, for failing to comply with a court’s discover y order, a court may enter-5- an order striking pleadings or parts of pleadings, staying furt her proceedings until the order is obeyed, dismissing the action or proceeding or a part of it , or rendering a judgment by default agai nst the disobedient party. [Emphasis added.]

And the court rules describe the effect given to such an involu ntary dismissal in MCR 2.504(B)(3):

Unless the court otherwise specifie s in its order for dismissal , a dismissal under this subrule or a dismissal not provided for in this rule , other than a dismissal for lack of jurisdiction or for failure to join a par ty under MCR 2.205, operates as an adjudication on the merits . [Emphasis added.]

And, because the court did not provide otherwise in its order for dismissal, its dismissal of plaintiffs’ claims operated “as an adjudication on the merit s” with regard to their rights to PIP benefits under the clear language of the applicable court rule. Further, as the service providers have acknowledged, if an insure d’s claim is substantively barre d 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 (2 016). Accordingly, the trial court did not err when it grante d State Farm’s motion for summa ry disposition with respect to the service providers’ derivative claims. 3

3 The service providers also appear to argue that the trial cour t’s decision violated due process. Their actual “argument” c onsists of the following:

The Court Rules and statutes clearly give authority for sancti ons to disobedient parties, but there is nothing that allows punishmen t for the acts of others (such punishment would seem to raise constitutional issu es as well), Mich Const, Art I, § 16 (prohibiting cruel and unusual punishme nt); Art I, § 17 (deprivation of propert y without due process).

The service providers do not dev elop any argument with respect to this purported “constitutional issue[].” Accordingly, we treat that issue as abandoned. See Mitcham v Detroit

, 355 Mich 182, 203; 94 NW2d 388 (1959) (“It is not enough for an appellant in his brief simply to announce a position or assert an error and then leave it up to this Court to discover and rationalize the basis for his claims, or unravel and elaborate for him his arguments, and then search for authority either to sustain or reject his position.” ). As the trial court noted, it appears that the service providers’ remedy is to recover the costs of t he therapy and transportation services from plaintiffs.-6- Affirmed. State Farm, as the prevailing party, may tax costs pursuant to MCR 7.219.

/s/ Henry William Saad
/s/ Kathleen Jansen /s/ Michael J. Kelly