Opinion ID: 1985364
Heading Depth: 2
Heading Rank: 2

Heading: Retroactive Application of Profit

Text: In these companion cases, both defendants argue that this Court's decision in Profit should be applied prospectively rather than retroactively. [T]he general rule is that judicial decisions are to be given complete retroactive effect.... [C]omplete prospective application has generally been limited to decisions which overrule clear and uncontradicted case law. Hyde v. Univ. of Michigan Bd. of Regents, 426 Mich. 223, 240, 393 N.W.2d 847 (1986). In Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the United States Supreme Court stated: In our cases dealing with the nonretroactivity question, we have generally considered three separate factors. First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied ... or by deciding an issue of first impression whose resolution was not clearly fore-shadowed.... Second, it has been stressed that we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.... Finally, we have weighed the inequity imposed by retroactive application, for [w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the `injustice or hardship' by a holding of nonretroactivity. [Citations omitted.][ [6] ] This Court has also applied the three-part test set forth in Chevron and Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965). In Riley v. Northland Geriatric Ctr. (After Remand), 431 Mich. 632, 644-646, 433 N.W.2d 787 (1988), we stated: Courts have acknowledged that resolution of the retrospective-prospective issue ultimately turns on considerations of fairness and public policy.... While fairness is a goal, certain rules or principles have evolved which provide guidance in resolving the retroactive-prospective dilemma.... [T]he Court weighed (1) the purpose to be served by the new rule, (2) the extent of reliance on the old rule, and (3) the effect of retroactivity on the administration of justice. In Tebo v. Havlik, 418 Mich. 350, 360, 343 N.W.2d 181 (1984), this Court stated that [a]ppreciation of the effect a change in settled law can have has led this Court to favor only limited retroactivity when overruling prior law. Therefore, the first criterion that must be determined in deciding whether a judicial decision should receive full retroactive application is whether that decision is establishing a new principle of law, either by overruling clear past precedent on which the parties have relied or by deciding an issue of first impression where the result would have been unforeseeable to the parties. If the decision does not announce a new principle of law, then full retroactivity is favored. Before any question of the retroactive application of an appellate decision arises, it must be clear that the decision announces a new principle of law. A rule of law is new for purposes of resolving the question of its retroactive application... either when an established precedent is overruled or when an issue of first impression is decided which was not adumbrated by any earlier appellate decision. [ People v. Phillips, 416 Mich. 63, 68, 330 N.W.2d 366 (1982).] In People v. Doyle, 451 Mich. 93, 545 N.W.2d 627 (1996), this Court held that the holding in People v. Bewersdorf, 438 Mich. 55, 475 N.W.2d 231 (1991), applied retroactively to the defendant. Bewersdorf held that the habitual offender act [7] was applicable to third and subsequent convictions for operating a motor vehicle while under the influence of intoxicating liquor (OUIL). [8] In Bewersdorf, this Court, for the first time, interpreted the relationship between the habitual offender act and the Motor Vehicle Code and found that there was no conflict between the two statutes. This decision overruled People v. Tucker, 177 Mich.App. 174, 441 N.W.2d 59 (1989), in which the Court of Appeals held that a person who had two or more OUIL-3d convictions could not be charged as an habitual offender. In deciding to apply Bewersdorf retroactively in Doyle, this Court stated: Our decision is based on our belief that Bewersdorf was not an unforeseeable decision that had the effect of changing the law. Therefore, Bewersdorf did not establish a new rule of law in Michigan jurisprudence. [ Id. at 101, 545 N.W.2d 627.] Our decision in Profit was not an unforeseeable decision that had the effect of changing the law. It is clear from the language of Profit, that this Court was not creating a new rule of law. The opinion concludes as follows: In so holding, we follow O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 273 N.W.2d 829 (1979), in which this Court held that social security survivors' benefits are required to be subtracted, Thompson v. Detroit Automobile Inter-Insurance Exchange, 418 Mich. 610, 344 N.W.2d 764 (1984), in which this Court held that social security disability benefits paid to dependents of an injured wage earner are required to be subtracted, and Mathis v. Interstate Motor Freight System, 408 Mich. 164, 289 N.W.2d 708 (1980), in which this Court held that workers' compensation benefits are required to be subtracted from the no-fault work loss benefits otherwise payable for an automobile injury. [ Profit, 444 Mich. at 288, 506 N.W.2d 514.] Therefore, Profit simply reaffirmed the existing law, which was misinterpreted by the Court of Appeals. Even a reading of the Court of Appeals opinion in Profit supports the rationale that reversal of that Court's holding would not be unexpected or unforeseeable. In deciding that the defendant may not set off plaintiff's social security disability payments, the Court of Appeals opined: Were we writing on a clean slate, we would decide in defendant's favor. Duplication of governmental benefits is repugnant to the purposes and objectives of the no-fault act and to the plain language of § 3109(1). In enacting the 1974 amendment, § 3109a, the Legislature intended to encourage and promote greater coordination, not greater duplication. We reluctantly follow Tatum [ v Government Employees Ins. Co., 431 Mich. 663, 431 N.W.2d 391 (1988) ] and hold that, despite the plain language of § 3109(1), defendant may not setoff plaintiff's social security disability payments from plaintiff's work-loss personal protection insurance benefits because defendant failed to offer to the plaintiff a policy of no-fault insurance which would not [sic] coordinate this governmental benefit. [187 Mich.App. at 62, 466 N.W.2d 354 (emphasis in original).][ [9] ] In Bewersdorf, this Court addressed a question of statutory interpretation that had not been previously addressed and gave effect to an unambiguous statute, thereby, implementing the intent of the Legislature. In deciding to apply the Bewersdorf holding retroactively, this Court in Doyle stated that, in light of the clear language of the statute as enacted by the Legislature, it cannot be maintained that our Bewersdorf decision was unforeseeable. We did not change the law. We gave effect to an unambiguous statute, implementing the intent of the Legislature. Thus, the law was as we interpreted it to be, because of the nature of the unambiguous statutory language. [ Id. at 104, 545 N.W.2d 627.] As in Bewersdorf, the language of the disputed statute in the present cases is unambiguous. MCL 500.3109(1); MSA 23.13109(1) provides as follows: Benefits provided or required to be provided under the laws of any state or the federal government shall be subtracted from the personal protection insurance benefits otherwise payable for the injury. As noted above, even the Court of Appeals panel deciding Profit found that [d]uplication of governmental benefits is repugnant to the purposes and objectives of the no-fault act and to the plain language of § 3109(1). 187 Mich.App. at 62, 466 N.W.2d 354. In addition to the unambiguous language of the statute, the Legislature's intent when enacting the statute supports this Court's reasoning in Profit. As this Court stated in Tebo v. Havlik, supra at 366-367, 343 N.W.2d 181: The no-fault insurance act was a radical restructuring of the rights and liabilities of motorists. Through comprehensive action, the Legislature sought to accomplish the goal of providing an equitable and prompt method of redressing injuries in a way which made the mandatory insurance coverage affordable to all motorists.... The obvious purpose of the setoff provisions of the act is to eliminate duplicate benefits. The act reduces the amount that the insurance companies must pay out, making it possible for them to reduce the amount that they must charge, and it does so only in those situations where benefits are redundant. O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 546, 273 N.W.2d 829 (1979). In effect, the Legislature made a trade-off. Those who were required to participate in the no-fault scheme gave up the possibility of redundant recoveries, but they were intended to receive the benefit of lower insurance rates. Before the Court of Appeals decision in Profit, this Court had twice determined that social security benefits were [b]enefits provided or required to be provided under the laws of the federal government and shall be subtracted from the no-fault personal protection insurance benefits otherwise payable for an automobile injury. See O'Donnell and Thompson, supra . Only if this Court's decision can be said to be unexpected or indefensible in light of the law in place at the time of the acts in question would there be a question about whether to afford the decision complete retroactivity. People v. Sexton, 458 Mich. 43, 64, 580 N.W.2d 404 (1998). It can hardly be considered unexpected or indefensible that this Court would reverse a Court of Appeals decision that was contrary to the clear and unambiguous language of the statute, the legislative intent behind the statute, and two prior opinions of this Court. Defendants argue and we recognize that a published decision of the Court of Appeals is controlling precedent for trial courts. MCR 7.215(C)(2). [10] Defendants argue that because the Court of Appeals holding in Profit was precedent for the trial courts, it was the then-existing law at the time the disputed no-fault personal protection insurance benefits were paid. However, this argument fails to recognize the hierarchal nature of the court system, as well as the clear and unambiguous language of the statute. In Doyle, this Court stated: Additionally, the Court stated that its Tucker decision was the law on the date of defendant's offense and that retroactive application of Bewersdorf would [therefore] undermine the rule of law in this state. This approach taken by the Court of Appeals overlooks the hierarchal nature of the court system, as well as the special rule of the Legislature when it provides a clear statutory enactment. In the view of the Court of Appeals majority, the rule of law in this state is more offended by the retroactive application of a controlling decision by this Court, than it is by a continued application of an erroneous and overruled decision by the Court of Appeals. [ Id. at 108-109, 545 N.W.2d 627 (citations omitted).] Therefore, M.C.L. § 500.3109(1); MSA 13109(1), by its plain language applies as to whether social security benefits are to be subtracted from the no-fault personal protection insurance benefits paid by the plaintiffs to the defendants. In Doyle, supra at 111, 545 N.W.2d 627, this Court, quoting Ross v. Oregon, 227 U.S. 150, 163, 33 S.Ct. 220, 57 L.Ed. 458 (1913), stated: A judicial inquiry investigates, declares and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end. Legislation, on the other hand, looks to the future and changes existing conditions by making a new rule to be applied thereafter to all or some part of those subject to its power. In Doyle, this Court found that the Court in Bewersdorf fulfilled its judicial role and gave effect to valid laws that existed at the time the defendant committed the offense at issue regardless of the fact that the Court of Appeals had previously and erroneously interpreted the disputed statute. So too in the present cases, as in Profit, the Court of Appeals misinterpreted the statute as not requiring that social security benefits be subtracted from no-fault personal protection insurance benefits. This decision was in direct conflict with the plain language of the statute, the intent of the Legislature in enacting the statute, and two previous decisions by this Court holding that social security benefits are to be subtracted from no-fault personal protection insurance benefits. In Profit, this Court fulfilled its judicial role and gave effect to valid laws that existed before and during the time plaintiffs made the no-fault personal protection insurance payments to defendants. The Court of Appeals misinterpretation of the statute served to thwart the legislative intent and the mandated result. Doyle, supra at 111, 545 N.W.2d 627. This Court's decision in Profit was not an unforeseeable decision that had the effect of changing the law, nor did it establish a new rule of law. Rather, it reaffirmed the existing law that was misinterpreted by the Court of Appeals. Accordingly, we hold that the Court of Appeals misinterpreted the law as it existed at the time. This misinterpretation was in direct conflict with the plain language of the statute, the legislative intent, and two prior decisions of this Court. Therefore, this Court's subsequent overruling of the Court of Appeals is to be given retroactive application in the present cases.