Title: AMYRUTH L COOPER V AUTO CLUB INS ASSN
Citation: N/A
Docket Number: 132792
State: Michigan
Issuer: Michigan Supreme Court
Date: June 25, 2008

_______________________________ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michigan Supreme Court 
Lansing, Michigan 
Chief Justice:  
Justices: 
Clifford W. Taylor  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Opinion 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
FILED JUNE 25, 2008 
AMYRUTH L. COOPER, by her Next Friend, 
SHARON L. STROZEWSKI, AND LORALEE 
A. COOPER, by her Next Friend, SHARON L. 
STROZEWSKI, 
Plaintiffs-Appellants, 
v 
No. 132792 
AUTO CLUB INSURANCE ASSOCIATION, 
Defendant-Appellee. 
BEFORE THE ENTIRE BENCH 
MARKMAN, J.  
At issue is whether plaintiffs’ common-law cause of action for fraud is 
subject to the one-year-back rule of MCL 500.3145(1).  Because the one-year­
back rule only applies to actions brought under the no-fault act, and because a 
fraud action is not a no-fault action, i.e., an “action for recovery of personal 
protection insurance benefits payable under [the no-fault act] for accidental bodily 
injury,” MCL 500.3145(1), but instead is an independent and distinct action for 
recovery of damages payable under the common law for losses incurred as a result 
 
 
  
 
 
 
 
of the insurer’s fraudulent conduct, we hold that a common-law cause of action for 
fraud is not subject to the one-year-back rule.  Therefore, we reverse in part the 
judgment of the Court of Appeals and remand the case to the trial court for further 
proceedings consistent with this decision. 
I. FACTS AND PROCEDURAL HISTORY 
In January 1987, plaintiffs Amyruth and Loralee Cooper sustained severe 
brain injuries in an automobile accident that occurred while they were passengers 
in a car driven by their mother, Sharon Strozewski. From the time they were 
discharged from the hospital in October 1987, both sisters have required 24-hour 
attendant care. By the fall of 1989, Loralee did not need as much nursing care, but 
still needed attention beyond what a babysitter could provide.  Amyruth has 
required continuous skilled nursing care, which has been provided through an 
agency paid by defendant, plaintiffs’ automobile insurer. 
At the time of the accident, Strozewski was working at GTE, earning 
approximately $50 a day. In the fall of 1989, defendant’s claims representative, 
Jim Hankamp, suggested to Strozewski that she quit her job and stay at home to 
care for Loralee full-time. Defendant offered to pay Strozewski $50 a day, and 
she accepted by signing an agreement.  In September 1991, the parties agreed to 
increase the payments to Strozewski to $75 a day.  In October 1998, the rate was 
effectively increased to $6.50 an hour and, after that, it progressively increased up 
to $10 an hour by October 2000.  According to defendant, as of December 26, 
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2003, defendant had paid more than $5.6 million in personal protection insurance 
(PIP) benefits under the no-fault act for the girls’ care. 
Plaintiffs filed this lawsuit in 2003, alleging that defendant had failed to 
pay all the PIP benefits that were due under the no-fault act because it underpaid 
Strozewski for the attendant care she had provided to her daughters at home over 
the years. Defendant filed a motion for partial summary disposition arguing, 
among other things, that because the amended Revised Judicature Act (RJA), 
MCL 600.5851(1),1 states that the minority/insanity tolling provision applies only 
to actions brought under this act, the saving provision does not apply to no-fault 
actions to toll the one-year-back rule of MCL 500.3145(1). The trial court denied 
the motion, and the Court of Appeals denied defendant’s application for leave to 
file an interlocutory appeal.  Unpublished order of the Court of Appeals, entered 
July 1, 2004 (Docket No. 254659).  Two weeks later, the Court of Appeals issued 
its opinion in Cameron v Auto Club Ins Ass’n, 263 Mich App 95; 687 NW2d 354 
(2004), which held that the minority/insanity provision of MCL 600.5851(1) 
applies only to actions filed under the RJA and, therefore, it does not toll an action 
1 MCL 600.5851(1) provides: 
Except as otherwise provided in subsections (7) and (8), if the 
person first entitled to make an entry or bring an action under this act 
is under 18 years of age or insane at the time the claim accrues, the 
person or those claiming under the person shall have 1 year after the 
disability is removed through death or otherwise, to make the entry 
or bring the action although the period of limitations has run. This 
section does not lessen the time provided for in section 5852. 
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brought under the no-fault act.  Defendant filed an application for leave to appeal 
in this Court, which was denied, 471 Mich 915 (2004), as was defendant’s motion 
for reconsideration. 471 Mich 956 (2004). 
In August 2004, following the Court of Appeals decision in Cameron, 
plaintiffs amended their complaint to assert a new cause of action for fraud. 
Plaintiffs alleged that defendant had fraudulently induced Strozewski to accept an 
unreasonably low compensation rate for her in-home attendant care services. 
Specifically, plaintiffs alleged that defendant had committed fraud by telling 
Strozewski: (1) that if she did not quit her job and accept $50 a day for providing 
24-hour attendant care for Loralee, she would be personally responsible for paying 
for Loralee’s nursing care; (2) that she had a parental obligation to provide 
attendant care for her children, which reduced defendant’s legal obligation to pay 
attendant care benefits, and that if she did not agree to take care of Loralee for $50 
a day, Loralee would have to be institutionalized; (3) that the attendant-care rate 
was not negotiable and that a higher rate was not available even though, in reality, 
defendant was paying other insureds as much as $7 an hour for providing similar 
attendant care; (4) that she was required to sign a contract before she could recover 
continuing no-fault benefits; (5) that case-management expenses were paid at the 
same rate as attendant-care benefits; and (6) that attendant care could not be paid 
to family members at the market rate or agency rate, i.e., the rate normally paid by 
the insurance agency to other caregivers.  Plaintiffs allege that, as a result of 
defendant’s fraud, they sustained the following damages: (1) inadequate payments 
4  
 
 
 
 
 
 
for attendant-care services; (2) loss of payments for case-management expenses, 
i.e., expenses incurred for the services rendered by a case manager; (3) loss of 
payments for room and board expenses; and (4) inadequate payments of no-fault 
benefits. 
While the denial of defendant’s first motion for partial summary disposition 
was still on appeal, defendant filed a second motion for partial summary 
disposition, arguing that Strozewski could not recover in-home attendant-care 
benefits for services rendered before the filing of the complaint.  The trial court 
denied the motion, and defendant did not file an interlocutory appeal. 
Several months later, defendant filed a third motion for partial summary 
disposition, arguing that, under MCL 500.3145(1), plaintiffs could not recover 
benefits for any services that were rendered more than one year before the filing of 
the original complaint. The trial court denied the motion.  Defendant filed an 
interlocutory application for leave to appeal, which was denied by the Court of 
Appeals. Unpublished order of the Court of Appeals, entered January 12, 2005 
(Docket No. 259729).  Defendant then filed a second application for leave to 
appeal in this Court, which was denied.  472 Mich 858 (2005). 
After this Court denied leave to appeal, the parties stipulated the entry of a 
judgment that resolved their differences over the amounts of damages that 
plaintiffs would be able to recover over the various periods at issue.  This 
judgment preserved defendant’s right to appeal the trial court’s adverse decisions 
5  
 
 
 
 
 
  
  
 
 
with regard to issues that were raised by either party in defendant’s three motions 
for partial summary disposition. 
Defendant then filed a claim of appeal.  The Court of Appeals affirmed in 
part, reversed in part, and remanded for entry of an order of partial summary 
disposition in favor of defendant.  Unpublished opinion per curiam of the Court of 
Appeals, issued November 21, 2006 (Docket No. 261736).  The Court of Appeals 
held that this Court’s decision in Cameron v Auto Club Ins Ass’n, 476 Mich 55; 
718 NW2d 784 (2006), which affirmed the Court of Appeals decision in that case, 
was dispositive of defendant’s claim that plaintiffs may not recover PIP benefits 
relating to any losses incurred more than one year before plaintiffs filed their 
original complaint. Moreover, it held that plaintiffs’ fraud claim was subject to 
the one-year-back rule of MCL 500.3145(1) because the claim was nothing more 
than a no-fault claim couched in fraud terms.  We granted plaintiffs’ application 
for leave to appeal. 478 Mich 861 (2007). 
II. STANDARD OF REVIEW 
Issues of statutory interpretation and other questions of law are reviewed de 
novo. Devillers v Auto Club Ins Ass’n, 473 Mich 562, 566-567; 702 NW2d 539 
(2005). The grant or denial of a motion for summary disposition is also reviewed 
de novo. McClements v Ford Motor Co, 473 Mich 373, 380; 702 NW2d 166 
(2005). 
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III. ANALYSIS 
A. FRAUD ACTIONS AND ONE-YEAR-BACK RULE 
The Michigan no-fault act, MCL 500.3145(1), provides, in relevant part: 
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. 
[Emphasis added.] 
The one-year-back rule of this provision limits recovery of PIP benefits to those 
incurred within one year before the date on which the no-fault action was 
commenced. PIP benefits include “all reasonable charges incurred for reasonably 
necessary products, services and accommodations for an injured person’s care, 
recovery, or rehabilitation.”  MCL 500.3107(1)(a). 
Plaintiffs argue that by alleging in their amended complaint that defendant 
fraudulently induced Strozewski to accept an unreasonably low compensation rate 
for her in-home attendant-care services, plaintiffs brought a common-law fraud 
claim that is distinct from a no-fault claim for benefits, and that such claim 
therefore is not subject to the one-year-back rule of MCL 500.3145(1).  A fraud 
action is not subject to the one-year-back rule of MCL 500.3145(1) because the 
one-year-back rule applies only to actions brought under the no-fault act, and a 
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fraud action is a distinct and independent action brought under the common law. 
A fraud action is not an “action for recovery of [PIP] benefits payable under [the 
no-fault act] for accidental bodily injury.”  Rather, in the context of an insurance 
contract, a fraud action is an action for recovery of damages payable under the 
common law for losses incurred as a result of the insurer’s fraudulent conduct. 
There is a distinction between claiming that an insurer has refused to pay no-fault 
benefits to its insureds and claiming that the insurer has defrauded its insureds.  A 
fraud action is conceptually distinct from a no-fault action because: (1) a fraud 
action requires an insured to prove several elements that are different from those 
required in a no-fault action; (2) a fraud action accrues at a different time than a 
no-fault action; and (3) a fraud action permits an insured to recover a wide range 
of damages that are not available in a no-fault action. 
To assert a no-fault claim, an insured must demonstrate that the insured is 
entitled to benefits “for accidental bodily injury arising out of the ownership, 
operation, maintenance or use of a motor vehicle as a motor vehicle” without 
regard to fault, and that the insurer is obligated under an insurance contract to pay 
those benefits, but failed to do so timely.  MCL 500.3105.2  To assert an 
actionable fraud claim, on the other hand, an insured must demonstrate: 
2 MCL 500.3105 provides: 
(1) Under personal protection insurance an insurer is liable to 
pay benefits for accidental bodily injury arising out of the 
(continued . . .) 
8  
 
 
 
 
 
 
                                                 
 
 
 
 
“(1) That [the insurer] made a material representation; (2) that 
it was false; (3) that when [the insurer] made it [the insurer] knew 
that it was false, or made it recklessly, without any knowledge of its 
truth and as a positive assertion; (4) that [the insurer] made it with 
the intention that it should be acted upon by [the] plaintiff; (5) that 
[the] plaintiff acted in reliance upon it; and (6) that [the plaintiff] 
thereby suffered injury. Each of these facts must be proved with a 
reasonable degree of certainty, and all of them must be found to 
exist; the absence of any one of them is fatal to a recovery.”  [Hi-
Way Motor Co v Int’l Harvester Co, 398 Mich 330, 336; 247 NW2d 
813 (1976), quoting Candler v Heigho, 208 Mich 115, 121; 175 NW 
141 (1919).] 
A fraud claim is clearly distinct from a no-fault claim.  First, a fraud claim 
requires proof of additional elements, such as deceit, misrepresentation, or 
concealment of material facts, and the substance of such claim is the insurer’s 
wrongful conduct. Unlike a no-fault claim, a fraud claim does not arise from an 
insurer’s mere omission to perform a contractual or statutory obligation, such as 
(continued . . .) 
ownership, operation, maintenance or use of a motor vehicle as a 
motor vehicle, subject to the provisions of this chapter. 
(2) Personal protection insurance benefits are due under this 
chapter without regard to fault. 
(3) Bodily injury includes death resulting therefrom and 
damage to or loss of a person’s prosthetic devices in connection with 
the injury. 
(4) Bodily injury is accidental as to a person claiming 
personal protection insurance benefits unless suffered intentionally 
by the injured person or caused intentionally by the claimant. Even 
though a person knows that bodily injury is substantially certain to 
be caused by his act or omission, he does not cause or suffer injury 
intentionally if he acts or refrains from acting for the purpose of 
averting injury to property or to any person including himself. 
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its failure to pay all the PIP benefits to which its insureds are entitled.  Rather, it 
arises from the insurer’s breach of its separate and independent duty not to deceive 
the insureds, which duty is imposed by law as a function of the relationship of the 
parties.3  Second, unlike an action for no-fault benefits, which arises when the 
insurer fails to pay benefits, an action for fraud arises when the fraud is 
perpetrated. Hearn v Rickenbacker, 428 Mich 32, 39; 400 NW2d 90 (1987). 
Finally, under a no-fault cause of action, the insureds can only recover no-fault 
benefits, whereas under a fraud cause of action, the insureds may recover damages 
for any loss sustained as a result of the fraudulent conduct,4 which may include the 
equivalent of no-fault benefits, reasonable attorney fees, damages for emotional 
distress, and even exemplary damages.  See Phillips v Butterball Farms Co, Inc 
(After Second Remand), 448 Mich 239, 250-251; 531 NW2d 144 (1995); 
Veselenak v Smith, 414 Mich 567, 574; 327 NW2d 261 (1982); Phinney v 
Perlmutter, 222 Mich App 513, 527; 564 NW2d 532 (1997); Clemens v Lesnek, 
200 Mich App 456, 463-464; 505 NW2d 283 (1993). 
3 “[T]he relationship between insurers and their insureds is ‘sufficient to 
permit fraud to be predicated upon a misrepresentation.’”  Hearn v Rickenbacker, 
428 Mich 32, 39; 400 NW2d 90 (1987), quoting Drouillard v Metropolitan Life 
Ins Co, 107 Mich App 608, 621; 310 NW2d 15 (1981). 
4 “In a fraud and misrepresentation action, the tortfeasor is liable for 
injuries resulting from his wrongful act, whether foreseeable or not, provided that 
the damages are the legal and natural consequences of the wrongful act and might 
reasonably have been anticipated.” Phinney v Perlmutter, 222 Mich App 513, 
532; 564 NW2d 532 (1997). 
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Therefore, “[a]lthough mere allegations of failure to discharge obligations 
under [an] insurance contract would not be actionable in tort, where, as here, the 
breach of separate and independent duties are alleged, [the insureds] should be 
allowed an opportunity to prove [their] causes of action.”  Hearn, 428 Mich at 40 
(citation omitted); see also Roberts v Auto-Owners Ins Co, 422 Mich 594, 603­
604; 374 NW2d 905 (1985) (tort actions survive in a contractual setting as long as 
the tort action is based on a breach of duty that is distinct from the contract); 
Kewin v Massachusetts Mut Life Ins Co, 409 Mich 401, 422; 295 NW2d 50 (1980) 
(tort actions may survive when an insurer breaches a duty that existed 
“independent of and apart from the contractual undertaking”).  “[T]ort liability 
abolished by the no-fault act is only such liability as arises out of the defendant’s 
ownership, maintenance or use of a motor vehicle, not liability which arises out of 
other conduct . . . .”  Citizens Ins Co of America v Tuttle, 411 Mich 536, 542; 309 
NW2d 174 (1981); see also Shavers v Attorney General, 402 Mich 554, 623; 267 
NW2d 72 (1978) (the no-fault act only “partially abolish[ed] the common-law 
remedy in tort for persons injured by negligent motor vehicle tortfeasors . . . .” 
[emphasis added]); Bak v Citizens Ins Co of America, 199 Mich App 730, 737­
738; 503 NW2d 94 (1993) (“The enactment of the no-fault act did not extinguish 
common-law doctrines predating that legislation.”). 
That common-law fraud claims survive even where a self-contained 
system, such as the no-fault system, exists is further suggested by this Court’s 
decisions in the context of the dramshop act.  The dramshop act, MCL 436.1801 et 
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seq., states that it provides “the exclusive remedy for money damages against a 
licensee arising out of the selling, giving, or furnishing of alcoholic liquor.”  MCL 
436.1801(10).  In Manuel v Weitzman, 386 Mich 157, 164-165; 191 NW2d 474 
(1971), overruled in part on other grounds by Brewer v Payless Stations, Inc, 412 
Mich 673 (1982), this Court held that the dramshop act does not abrogate actions 
arising out of other unlawful conduct, and that tavern owners remain liable for 
injuries arising out of breach of other common-law duties.5  Similarly, the no-fault 
act, which provides the remedy for injuries arising out of “the ownership, 
maintenance or use of a motor vehicle,”6 MCL 500.3105(1), does not abrogate 
actions arising out of the breach of other common-law duties.  Nothing in the no­
fault act or other relevant law suggests that insurers are exempt from liability for 
5 This Court stated: 
We specifically approve the following statement in [De Villez 
v Schifano, 23 Mich App 72, 77; 178 NW2d 147 (1970)]: 
“We hold that the dramshop act affords the exclusive remedy 
for injuries arising out of an unlawful sale, giving away, or 
furnishing of intoxicants. King v. Partridge, 9 Mich App 540, 543 
(1968). However, the act does not control and it does not abrogate 
actions arising out of unlawful or negligent conduct of a tavern 
owner other than selling, giving away, or furnishing of intoxicants, 
provided the unlawful or negligent conduct is recognized as a lawful 
basis for a cause of action in the common law.”  [Manuel, 386 Mich 
at 164-165.] 
6 We note that the question whether the no-fault act provides the exclusive 
remedy for injuries arising out of “the ownership, maintenance or use of a motor 
vehicle” is not relevant here because the insureds argue that their injuries arose out 
of the insurer’s fraudulent conduct, not out of “the ownership, maintenance or use 
of a motor vehicle.” 
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breaching other common-law duties by, for example, misrepresenting material 
facts and deceiving their insureds. The fact that the dispute would not have arisen 
in the absence of the no-fault insurance contract does not mean that the action 
brought by the insureds is a no-fault action. 
Defendant argues, and the Court of Appeals appears to assert, that where 
the damages sought by the insureds are defined in terms of additional PIP benefits, 
the insureds’ cause of action must necessarily be considered a “no-fault action 
couched in fraud terms.”  Cooper v Auto Club Ins Ass’n, unpublished opinion per 
curiam of the Court of Appeals, issued November 21, 2006 (Docket No. 261736), 
at 2. We respectfully disagree.  Although the nature of the damages sought may 
constitute a useful indicator of the precise nature of the claim, this factor alone 
cannot be viewed as dispositive. 
The fact that a lawsuit seeks to recover a loss that was 
covered by an insurance policy, alone, should not dictate the nature 
of a plaintiff’s claims . . . Although the contract of insurance may be 
one source of the insurer’s obligation to pay the loss, the insurer may 
also be held liable for tortious conduct that is wholly separable from 
its purely contractual duties. [Hearn, 428 Mich at 40-41.] 
Where fraudulent conduct results in the loss, or reduced payment, of PIP benefits, 
plaintiffs are entitled to seek damages for their entire loss, including the equivalent 
of the no-fault benefits. See Phinney, 222 Mich App at 532.  It should not be seen 
as unusual that damages for fraud in a statutory context would be more than 
randomly related to lost statutory benefits.  Simply because the insureds choose to 
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measure their loss from the fraudulent conduct, in whole or in part, on the basis of 
lost PIP benefits does not transform their claim into a no-fault claim. 
Therefore, where an insured’s claim arises not out of the insurer’s mere 
failure to pay no-fault benefits, but out of the insurer’s fraudulent 
misrepresentations, which might have ultimately led to payment of reduced no­
fault benefits to the insureds, the courts are faced with a fraud claim, as opposed to 
a no-fault claim. Because fraud claims are independent of and distinct from no­
fault claims, the one-year-back rule of the no-fault act simply does not apply. 
Consequently, where the insureds state a fraud cause of action, this Court 
need not resort to its equitable power to prevent the one-year-back rule’s 
application.  In Devillers, 473 Mich at 590-591, this Court stated that, in the 
context of a no-fault claim, this Court may exercise its equitable power to avoid 
the application of the one-year-back rule if there are allegations of fraud, mutual 
mistake, or other unusual circumstances.7  Because Devillers “concerns those 
statutory claims brought pursuant to the no-fault act,” i.e., no-fault actions, 
Devillers is not pertinent in cases involving independent fraud actions.  West v 
Farm Bureau Gen Ins Co of Michigan (On Remand), 272 Mich App 58, 65; 723 
NW2d 589 (2006).  Thus, where the insureds state a common-law fraud claim, 
wholly separate from a no-fault claim, this Court need not consider an equitable 
7 In Devillers, however, this Court concluded that because there was “no 
allegation of fraud, mutual mistake, or any other ‘unusual circumstance’ . . .  there 
[was] no basis to invoke the Court’s equitable power.”  Devillers, 473 Mich at 
591. 
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exception to the application of the one-year-back rule because the no-fault rules 
simply do not apply.8 
B. CAUTIONARY