Court Opinion

ID: 9879881
Source: CourtListenerOpinion
Date Created: 2023-09-27 18:47:32.028167+00
Date Added: 2024-06-11T07:48:03.693564
License: Public Domain

Gleicher, J. (dissenting).
  

   A release is a contract. We interpret contracts according to their plain and unambiguous terms. We do not add or ignore words. We disdain interpretative methodologies premised on "reasonableness." "A fundamental tenet of our jurisprudence is that unambiguous contracts are not open to judicial construction and must be
   
    enforced as written
   
   ."
   
    Rory v. Continental Ins. Co.
   
   ,
   
    473 Mich. 457
   
   , 468,
   
    703 N.W.2d 23
   
   (2005).
  

   Given these well-settled rules, the majority's conclusion that the plain words of the parties' release do not mean what they say, and instead must be viewed against the backdrop of "the record and the procedural posture of this case as a whole," is nothing short of remarkable. Contrary to
   
    Rory
   
   and every rule of contract interpretation, the majority has rewritten the parties' release.
  

   This is not a hard case, and its resolution should be as simple as the rule set out in
   
    Rory
   
   . Charles Hendon, Jr., sustained personal injuries in an accident with an uninsured vehicle. Plaintiff, VHS Huron Valley-Sinai Hospital, Inc., provided Hendon with healthcare services related to the accident. Hendon filed a first-party lawsuit against defendant, Sentinel Insurance Company, seeking uninsured motorist (UIM) benefits, but failed to include in his lawsuit a claim for no-fault personal protection insurance (PIP) benefits. Hendon and Sentinel settled Hendon's UIM claim. Huron Valley then sued Sentinel for payment of Hendon's medical expenses. Sentinel contended that its liability for Hendon's medical expenses should have been litigated in Hendon's UIM case and that res judicata barred the suit. The circuit court denied Sentinel's summary disposition motion on this ground. Sentinel and Huron Valley settled their dispute by entering into a release. The parties agreed that Sentinel would pay Huron Valley $61,712.18, plus costs and interest, "if Sentinel's position regarding
   
    res judcata
   
   /release [sic] is ultimately rejected by the Michigan Court of Appeals or Supreme Court."
  

   At least two other paragraphs of the release addressed (and repeated) that the sole issue to be presented on appeal was "regarding
   
    res judcata
   
   /release." The 2015 release made no mention of Huron Valley's standing (or alleged lack thereof). Nor did the release reference a healthcare provider's statutory right to sue.
  

   We decided Sentinel's appeal in Huron Valley's favor in October 2016. Not surprisingly, our decision focused exclusively on the doctrine of res judicata; after all, that was the only issue that the parties had agreed to present to us. We held that because Huron Valley and Hendon were not in privity, res judicata did not apply. We did not consider Huron Valley's standing to sue, because the issue was never raised. We did not evaluate whether healthcare providers possess a statutory cause of action against insurers, because consistent with the release it signed, Sentinel argued only that Huron Valley's claim for PIP benefits could have been resolved
   in Hendon's UIM action, implicating res judicata principles. Displeased with our rejection of this argument, Sentinel applied for leave to appeal in the Supreme Court.
  

   In May 2017, the Supreme Court decided
   
    Covenant Med. Ctr., Inc. v. State Farm Mut. Auto. Ins. Co.
   
   ,
   
    500 Mich. 191
   
   ,
   
    895 N.W.2d 490
   
   (2017), holding that healthcare providers lack standing to maintain direct causes of action against insurers to recover PIP benefits. Sentinel now contends that despite the plain and unambiguous language of the release, it is not liable to Huron Valley because the hospital had no cause of action in the first place.
  

   Sentinel's argument would be compelling if it had made it in the trial court or settled the underlying case with a release reserving that issue for appeal. Instead, Sentinel elected to sign a release that carved out for appeal only a single, specific and narrow question: whether the doctrine of res judicata barred Huron Valley's claim. In other words, Sentinel waived any argument that Huron Valley lacked standing. It deliberately elected to forgo this appellate claim. If Sentinel suspected that a standing argument had legal legs, it should have identified "standing" in the release as an issue to be presented to an appellate court.
  

   Perhaps the release did not preserve a standing claim because the parties' bargain
   
    required
   
   Sentinel to waive the issue. Perhaps Sentinel's counsel calculated incorrectly that the Supreme Court would decide
   
    Covenant
   
   differently. We need not speculate because our Supreme Court has forcefully and effectively instructed that if a contract's words are unambiguous, we look no further to ascertain the parties' intent. The words lend themselves to but one interpretation in this case: Sentinel agreed to appeal on res judicata grounds and waived its potential standing argument.
  

   The majority makes much of the fact that Sentinel raised the issue of standing in the trial court by including it as an affirmative defense. This proves my point: Sentinel knew an important legal issue existed that might entirely preclude Huron Valley's claim. Yet Sentinel deliberately decided to forgo asserting a standing challenge when it signed a release plainly limiting its appeal to "res judicata." This is called a waiver.
  

   The majority's reliance on the
   
    absence
   
   of language in the release "indicating that defendant intended to clearly and unequivocally waive its legal position with respect to plaintiff's standing" turns the law of contracts-and waiver-upside down. "[A]n unambiguous contract reflects the parties' intent as a matter of law."
   
    In re Egbert R. Smith Trust
   
   ,
   
    480 Mich. 19
   
   , 24,
   
    745 N.W.2d 754
   
   (2008). In other words, the parties to a contract are bound by what they say, not by what they do not say. We do not rewrite unambiguous contracts by intuiting what a party really meant to say or speculating about subjective intent. We do not bail out parties who forget to include a provision or who make a bad prediction and elect to go in one direction rather than another. "Courts have long held parties to agreements they make, regardless of the harshness of the results."
   
    Nexteer Auto. Corp. v. Mando America Corp.
   
   ,
   
    314 Mich.App. 391
   
   , 396,
   
    886 N.W.2d 906
   
   (2016).
   
    6
   

   The majority ignores the law and repudiates the plain language of the release. Instead of holding Sentinel to the bargain it made, the majority tosses a lifeline, excusing Sentinel's waiver by hypothesizing that before the Supreme Court decided
   
    Covenant
   
   , Sentinel "may have reasonably surmised that any challenges to plaintiff's standing would have been rejected by the trial court and the appellate courts." This breathtaking and contrived exemption from the words of the contract suggests that because Sentinel reasonably expected that a standing argument would go nowhere, it could nevertheless preserve the claim without including it in the release.
   
    Rory
   
   forcefully condemns such reasoning: "When a court abrogates unambiguous contractual provisions based on its own independent assessment of 'reasonableness,' the court undermines the parties' freedom of contract."
   
    Rory
   
   ,
   
    473 Mich. at 468-469
   
   ,
   
    703 N.W.2d 23
   
   . And although this Court has held that
   
    Covenant
   
   applies retroactively to cases awaiting review in which the issue was raised, this Court has never extended the retroactivity rule to embrace cases that have been
   
    settled
   
   .
  

   Sentinel made a choice. It settled the claims brought by Huron Valley. As part and parcel of that settlement, Sentinel agreed in writing to limit its appeal to an argument regarding res judicata, thereby forgoing any and all other legal claims. Having made its bed, Sentinel must lie in it. Any other result violates bedrock principles of contract law and flies in the face of decades of contract jurisprudence. I would hold that based on the clear and unambiguous language of the release, Sentinel's
   
    Covenant
   
   argument comes too late, and respectfully dissent.
  

    The majority cites
    
     Nexteer
    
    as authority for its holding that a waiver of a right requires language reflecting a specific intent to waive the right. In
    
     Nexteer
    
    ,
    
     314 Mich.App. at 393
    
    ,
    
     886 N.W.2d 906
    
    , however, this Court upheld the validity of a stipulation that stated that " '[a]n agreement to arbitrate this controversy ... exists [but] is not applicable.' " (Alterations in original.) One party, Mando, changed its mind about arbitration, and sought to reassert the arbitration agreement. This Court held that the stipulation's language "that the arbitration provision 'was not applicable' " constituted an express and binding waiver.
    
     Id
    
    . at 395,
    
     886 N.W.2d 906
    
    . We pointed out that
   

    Mando was aware of the arbitration clause in the nondisclosure agreement, and it was aware of Nexteer's general allegations in its complaint. It had the ability to apply the language of the arbitration clause to the complaint in order to decide whether it should pursue arbitration. After stipulating that the arbitration provision did not apply, Mando may not now argue that the arbitration provision does in fact apply. [
    
     Id
    
    . at 397,
    
     886 N.W.2d 906
    
    .]
   

     Nexteer
    
    assuredly does not stand for the proposition that a waiver may be enlarged by reference to legal arguments not mentioned in the waiver. The majority's groundbreaking proposition that stipulated waiver language may be interpreted to mean more than it says contravenes
    
     Nexteer
    
    ,
    
     Rory
    
    , and countless other cases. That is why publication is required under MCR 7.215(B)(3) ("A court opinion must be published if it ... alters, modifies, or reverses an existing rule of law[.]").