Court Opinion

ID: 2973368
Source: CourtListenerOpinion
Date Created: 2015-09-22 17:01:35.86636+00
Date Added: 2024-06-11T15:32:03.097849
License: Public Domain

NOT RECOMMENDED FOR FULL TEXT PUBLICATION
                           File Name: 06a0140n.06
                           Filed: February 23, 2006

                                     Nos. 04-2260, 05-1317

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

SHARON GREEN, Guardian and Conservator
of LINDA COLES, a legally incapacitated
person,

       Plaintiff-Appellant,

v.                                                      ON APPEAL FROM THE UNITED
                                                        STATES DISTRICT COURT FOR THE
BP PRODUCTS OF NORTH AMERICA, INC.,                     EASTERN DISTRICT OF MICHIGAN

       Defendant-Appellee.

                                               /

BEFORE:        COLE, CLAY and GIBBONS, Circuit Judges.

       CLAY, Circuit Judge. Plaintiff, Sharon Green, guardian and conservator of the Estate of

Linda Coles, appeals the district court’s order granting Defendant BP Products of North America,

Inc.’s (“BP”) motion for summary judgment and the district court’s order denying Plaintiff’s Rule

60(b)(2) motion to reconsider, claiming that a 1976 settlement between the estate of Linda Coles and

BP’s predecessor, Amoco Oil Company (“Amoco”), should be set aside. For the reasons set forth

in this opinion, we AFFIRM the district court’s order.

                                                   I.

               A.      Original 1974 Lawsuit and Settlement
                                      Nos. 04-2260, 05-1317

       The present action arises from a 1973 automobile accident in which Linda Coles (“Coles”),

at that time a twelve year old pedestrian, was struck by a vehicle owned by Amoco, and operated

by Amoco employee Mark Hagenow. The brain injuries Coles sustained rendered her in a

permanent vegetative state, and she is unable to walk, talk or care for herself.

       On or about May 24, 1974, Rudolph Coles, Coles’ father, individually and as a next friend

of Linda Coles, and Gladys Coles, Coles’ mother, filed suit against Mark Hagenow and Amoco in

the Wayne County Circuit Court. In the 1974 lawsuit, there were separate claims for the estate of

Linda Coles (Count I), Rudolph Coles (Count II), and Gladys Coles (Count III). The case was

removed to the United States District Court for the Eastern District of Michigan in June 1974, and

the parties engaged in discovery for over two years.

       On July 8, 1976, the parties reached a global settlement. Prior to entry of the settlement,

Nicholas Smith (who had previously been one Coles’ attorneys) and Security Bank & Trust were

appointed co-guardians of the estate of Linda Coles by the Wayne County Probate Court, and the

original Complaint was amended to list the plaintiffs as Nicholas Smith and Security Bank and Trust

Company, co-guardians of the estate of Linda Coles, a minor, and Gladys and Rudolph Coles.

       A Motion and Stipulation for Entry of Consent Judgment was filed in the district court on

July 8, 1976, settling claims both for traditional tort damages and past and future no-fault benefits

pursuant to the Michigan no-fault law. The settlement terms were reduced to three separate consent

judgments, one for the estate of Linda Coles, one for Rudolph Coles and one for Gladys Coles. The

estate of Linda Coles received $500,000 total, $250,000 in no-fault claims and $250,000 in

traditional tort claims. Rudolph and Gladys Coles received $220,000 each, including $110,000 for

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                                        Nos. 04-2260, 05-1317

their no-fault claims and $110,000 for their tort claims. The attorneys fees of $313,333.33 were

paid from the recoveries of Rudolph and Gladys Coles only, not from the estate of Linda Coles.

        Prior to signing the consent judgments on July 8, 1976, the magistrate judge held a hearing,

which was attended by all interested parties, including Coles, her co-guardians, parents, and

attorneys for defendant Amoco. During the hearing, the magistrate judge sought to ascertain

whether the settlement was in the best interest of the child. Coles’ co-guardians and parents

testified. As part of his questioning of the co-guardians, the magistrate judge asked,

        Do you understand that if you thought it in her best interests, and if you determined
        that you wanted to, its conceivable that you could try the pending case to a
        conclusion, and irrespective of the outcome of that still collect no-fault benefits for
        the child perhaps for life?

        Do you understand that if the child’s claim is settled here today no further money can
        be asked of either Amoco or Mr. Hagenow either for no-fault benefits or for damages
        under tort?

(J.A. at 229.) Both co-guardians replied “yes,” to these questions. Nicholas Smith testified that the

settlement amounts were reached after long discussions and negotiations with attorneys and

representatives of the defendants in order to arrive at a settlement that was in the best interest of

Coles and her parents. Immediately following witness testimony, the magistrate judge signed the

consent judgments, deeming the awards appropriate.

        The language of the consent judgment for Coles’ estate provides that the amounts recovered

were to be in “full settlement of all claims, including all claims for and to traditional tort damages

and, also, in full settlement of all claims and all rights for and to recovery on theory of tort liability

under the no-fault law.” (J.A. at 196.)

                B.      The 2003 Lawsuit

                                                    3
                                      Nos. 04-2260, 05-1317

       On October 7, 2003, Plaintiff Sharon Green1, guardian and conservator of the estate of Linda

Coles, filed suit in the United States District Court for the Eastern District of Michigan against BP,

claiming that BP breached its contractual obligations under the 1976 settlement and generally

claiming that BP had failed to satisfy its statutory duties towards Coles as required by the Michigan

No-Fault Act, M.C.L. § 500.3101 et seq.

       On February 23, 2004, the district court bifurcated the case for discovery purposes and to

rule upon potentially dispositive legal issues related to the enforceability of the July 8, 1976

settlement of the original lawsuit. The court ordered limited discovery to be conducted through

March 26, 2004. Defendant took the deposition of Nicholas Smith, Coles’ attorney from the 1974

lawsuit and former co-guardian of her estate, on March 22, 2004. Plaintiff took the deposition of

Conrad Kohls, another one of Coles’ attorneys from the 1974 lawsuit .

       On April 30, 2004, Defendant filed a motion for summary judgment, asserting that Plaintiff

should not be permitted to pursue this cause of action because Coles, through previous guardians,

had released all of her future no-fault claims as part of the 1976 settlement. Plaintiff responded on

May 24, 2004, claiming that a genuine issue of material fact exists as to the validity and scope of

the release, and that the settlement is void for failure to obtain probate approval, failure of the

Wayne County probate court to pass on the sufficiency of the bond; and also that the consent

judgment entered in the original lawsuit is void because it does not contain a specific waiver or

release of future benefits, and because any release of future benefits is void as being contrary to

       1
        As of April 30, 2004, Sharon Green (Linda’s sister) has been guardian and conservator of
Linda Coles and her estate. (Plaintiff’s Br. at 13) Apparently, Green is also primarily responsible
for Linda Coles’ care and maintenance.

                                                  4
                                      Nos. 04-2260, 05-1317

public policy. The district court issued an Opinion and Order dated September 8, 2004, granting

Defendant’s motion for summary judgment, finding that Coles’ guardians had in fact released her

claims to future no-fault benefits as part of the 1976 agreement.

       On November 23, 2004, Plaintiff filed a 60(b)(2) motion for reconsideration, claiming that

she had newly discovered evidence that was not available during the earlier proceeding, namely a

report dated September 19, 1976, from Dr. John Henderson, Ph.D., that estimated the lifetime cost

of caring for Coles to be $1,338,528. The district court denied this motion on February 7, 2005.

       Plaintiff filed this timely appeal on March 7, 2005.

                                                 II.

       We review a trial court’s grant of summary judgment de novo. Gerbec v. United States, 164
F.3d 1015, 1018-19 (6th Cir. 1999). “Summary judgment is appropriate so long as the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” Williams v. Int’l Paper Co,, 227 F.3d 706, 710 (6th Cir. 2000)

(quoting Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir. 1997)). When determining whether to

reach this conclusion, this Court views the evidence and draws all reasonable inferences in the light

most favorable to the non-moving party. Id; see also Smith v. Thornburg, 136 F.3d 1070, 1074 (6th

Cir. 1998).

       We believe that the district court properly determined that Defendant was entitled to

summary judgment where the 1976 settlement of Linda Coles’ claims was valid and constituted a

waiver and release of Coles’ claim to future benefits pursuant to the Michigan no-fault statute.

                                                  5
                                      Nos. 04-2260, 05-1317

               A.      The Validity of 1976 Settlement and Consent Judgments

       A settlement agreement “is a contract and is to be construed and applied as such.” Mass.

Indemnity and Life Ins. Co. v. Thomas, 520 N.W.2d 708, 710 (Mich. Ct. App. 1994). “[S]ettlement

agreements should not normally be set aside and [] once a settlement agreement is reached a party

cannot disavow it merely because he has had a ‘change of heart.’” Metro. Life Ins. Co. v. Goolsby,

418 N.W.2d 700, 701 (Mich. Ct. App. 1987). “[A]greements or consents entered into between

parties in open court will not be disturbed absent satisfactory evidence of mistake, fraud, or

unconscionable advantage.” Siegel v. Spinney, 367 N.W.2d 860, 862 (Mich. Ct. App. 1985) (citing

Meyer v. Rosenbaum, 248 N.W.2d 558, 559 (Mich. Ct. App. 1976)); see also Metro Life v. Goolsby,

418 N.W.2d at 701(stating that absent a showing of factors such as fraud or duress, courts act

properly when they enforce such agreement). The Meyer court rationalized that “[i]t is important

that parties be able to settle cases fairly and finally on the record, and such settlements should not

be upset because of any subjective hesitation or secret reservation on the part of either party.”

Meyer, 248 N.W.2d at 558.

       There are, however, further considerations that must be taken into account when the

settlement at issue concerns the interests of minors. Under Michigan law, when the settlement

agreement involves a minor, the court must make a determination that the settlement is in the best

interest of the minor. Centala v. Navrude, 186 N.W.2d 35, 37 (Mich. Ct. App. 1971). “[W]here a

judgment is rendered for plaintiff in an action by an infant through his next friend and there is no

judicial investigation of the merits, but the proceedings are merely formal, the judgment merely

colorable, merely a consent judgment, it will not be permitted to stand as a bar to a hearing on the

                                                  6
                                       Nos. 04-2260, 05-1317

merits on behalf of the infant.” Ombrello v. Duluth, S.S. & A. RY. Co., 233 N.W. 357, 359 (Mich.

1930). On the other hand, the Ombrello court held that settlement orders should not be set aside in

a situation where there is a settlement order properly entered before the court, finding it for the best

interest of the child. Id; see also Moebius v. McCracken, 246 N.W. 163, 165 (Mich. 1933) (citations

omitted).

       The court in the 1974 lawsuit properly entered the consent judgment settling the claims for

the estate of Linda Coles for $500,000, after determining that settlement was in Coles’ best interest.

At the 1976 settlement hearing, the magistrate judge reviewed the Motion and Stipulation for Entry

of Consent Judgment, called witnesses and inquired as to whether the settlement was in the best

interest of the child. All of the witnesses testified that they believed that the $500,000 settlement

to the estate of Linda Coles was in fact in Coles’ best interest. Among those called were Nicholas

Smith, co-guardian of the estate, Konrad Kohl, attorney of record, and Richard Lewis of Security

Bank and Trust (the investment officer). Lewis testified that the money, with safe and diverse

investments, would yield a return of eight percent or better, and that the investment strategy would

take into account expected inflation in the future. The fact that the court called the investment

officer responsible for handling the funds suggests that the court was concerned with the safety and

proper maintenance of the funds.

       While it is unfortunate that Plaintiff now apparently considers the funds from the 1976

settlement to be inadequate, there is no evidence in the record that mistake, duress, fraud, or

unconscionable advantage were involved in securing the consent judgment.

               B.       Waiver of Claims to Future No-Fault Benefits as Part of the 1976 Settlement

                                                   7
                                       Nos. 04-2260, 05-1317

        Plaintiff also argues that there could not have been a waiver and release of future benefits

that were payable pursuant to the Michigan no-fault statute. We disagree. Under Michigan law, a

“release is valid if it is fairly and knowingly made.” Brooks v. Holmes, 413 N.W.2d 688, 689 (Mich.

Ct. App. 1987) (citations omitted); Binard v. Carrington, 414 N.W.2d 900, 902 (Mich. Ct. App.

1987). “When a release is challenged, the party seeking to avoid the release must prove by a

preponderance of the evidence that the release should be set aside.” Binard, 414 N.W.2d at 902.

“A release is invalid if (1) the releasor was acting under duress, (2) there was misrepresentation as

to the nature of the release agreement, or (3) there was fraudulent or overreaching conduct to secure

the release.” Brooks, 413 N.W.2d at 689.

        The Michigan no-fault statute provides in relevant part that “[p]ersonal protection insurance

benefits are payable to or for the benefit of an injured person . . . .” M.C.L. § 500.3112. This statute

was in effect at the time of Coles’ accident, and the parties to the original lawsuit agreed that she

was entitled to recover personal protection insurance benefits under the statute. As part of 1976

consent judgment, however, the guardians of Linda Coles’ estate agreed to release all present and

future claims, including claims for benefits payable pursuant to the Michigan no-fault statute. The

consent judgment states in pertinent part:

        Plaintiffs . . . recover against the defendant Amoco Oil Company the damages or
        benefits aforesaid consented to in the amount of Two Hundred Fifty Thousand And
        No/100 ($250,000.00) Dollars without interest, without costs and without attorney’s
        fees in full settlement of said plaintiffs’ claims for and rights to no-fault or personal
        protection insurance benefits under the Michigan no-fault law . . . .

(J.A. at 195.) Plaintiff cannot and does not allege that the release was not knowingly made. The

language of the consent judgment clearly and unambiguously states that claims for these benefits

                                                   8
                                       Nos. 04-2260, 05-1317

were released for $250,000. Therefore, absent evidence of fraud, duress or overreaching, of which

there is none, we find that the release is valid.

                C.      The Release of Future No-Fault Benefits Was Not An Assignment

        There is no merit to Plaintiff’s claim that the release of future benefits should be voided

because the monies paid to Gladys and Rudolph Coles constituted an assignment of Coles’ right to

future benefits payable pursuant to the Michigan no-fault statute. The Michigan courts have

“defined the word ‘assignment’ in the language of Webster as meaning ‘to transfer or make over to

another;’ and in the language of Burrill's Law Dictionary as ‘to make over or set over to another; to

transfer.’” State Treasurer v. Abbott, 660 N.W.2d 714, 719 n.8 (Mich.2003) (citing Aultman, Miller

& Co. v. Sloan, 73 N.W. 123, 153 (Mich. 1897)).

        As correctly stated by Plaintiff, under the no-fault statute, “[a]n agreement for assignment

of a right to benefits payable in the future is void.” M.C.L. § 500.3143; M.S.A. § 24.13143.

Plaintiff, however, attempts to minimize the fact that the Michigan Court of Appeals has explicitly

held that the aforementioned statute does not apply to releases. “The clear language of the statute

indicates that it applies to assignments. An assignment is not a release. We have no authority or

desire to expand upon the plain language of the statute to include releases in the prohibition.” Lewis

v. Aetna Casualty & Surety Co., 311 N.W.2d 317, 318 (Mich. Ct. App. 1981) (finding the statute

inapplicable to a case in which the injured plaintiff was seeking to void a settlement agreement with

her insurer where plaintiff had signed a release for past, present, and future claims arising out of the

accident that caused her injury). “It was plaintiff’s choice to settle the dispute and sign the release,

a tactical judgment which this Court will not review.” Id. at 319.

                                                    9
                                        Nos. 04-2260, 05-1317

        Similarly, in the present case, there was no assignment of Coles’ rights to her parents.

Plaintiff claims in her briefs to this court that “It goes without saying that a significant portion of the

total payment to Rudolph and Gladys Coles represents transfer of PIP monies to them from the

Estate of Linda Coles.” (Plaintiff’s Br. at 26.) The record reveals, however, that this is a gross

misstatement of fact. As stated by the district court, “there is absolutely nothing within the parties’

joint motion, stipulation or in the Consent Judgment that establishes the existence of an assignment.

Moreover, there is no suggestion on this record that any participant in this case ever intended the

1976 settlement to be construed as an assignment.” (J.A. at 26.) For a total of $500,000.00, the

guardians of the estate of Linda Coles, as noted above, agreed in open court to a release of all future

and present claims, both traditional tort claims as well as claims under the no-fault statute. There

were two other separate consent judgments entered on behalf of Rudolph and Gladys Coles, in

settlement of their own individual claims.

        The complaint from the original 1974 lawsuit shows that Rudolph Coles filed a claim for

present and future medical expenses and cost of care, as well as a claim for loss of love, society,

companionship and services of his daughter. (J.A. at 94.) Gladys Coles similarly sued Defendants

for loss of love, society, and companionship of her daughter. (J.A. at 95.) The consent judgments

filed to settle the claims of Rudolph and Gladys Coles state that they were each recovering for their

individual claims and rights to no-fault or personal protection insurance benefits under the Michigan

no-fault law. (J.A. at 197-200.) Nothing whatsoever in the language of the judgments suggests that

there was any assignment of Linda Coles’ rights to her parents. In fact, the entry of the three

separate consent judgments expressly contradicts this notion, since the three separate judgments

                                                    10
                                       Nos. 04-2260, 05-1317

clarify what each individual Plaintiff was entitled to, as well as what rights were being waived or

relinquished.

          We therefore conclude that there was no assignment of Linda Coles’ rights under the

Michigan no-fault law, and the 1976 consent judgment for the estate of Linda Coles should not be

voided.

                 D.      The Release of Future No-Fault Benefits Should Not Be Voided For Lack Of
                         Consideration or as Contrary to Public Policy

          Plaintiff also attempts to make the argument that the $250,000 settlement for Linda’s future

personal injury benefits should be voided because the consideration was inadequate and because the

release of Coles’ claim to future no-fault benefits is against public policy. Again, we disagree.

          First of all, “as a general principle of law, courts will not inquire into the adequacy of

consideration unless it is so grossly inadequate as to shock the conscience of the court.” Binard, 414
N.W.2d at 903 (citations omitted). Plaintiff argues that the consideration paid to Linda Coles’ estate

was “manifestly inadequate,” but we do not believe, taking into account the facts of this case, that

a $500,000.00 settlement in 1974 can be considered so grossly inadequate as to shock the conscience

of the court. Coles concededly sustained serious, permanent and life-altering injuries, but the

settlement provided her the certainty of a substantial settlement amount, which her guardians

deemed to be in her best interest.

          Plaintiff also argues that the release of Coles’ right to future personal injury benefits

constitutes “a course of conduct that is cruel and shocking to the average man’s conscience.”

(Plaintiff’s Br. at 25) Again, the Michigan courts have specifically addressed this argument. In

Lewis, the court, in rejecting a public policy argument against releases in the context of future

                                                  11
                                        Nos. 04-2260, 05-1317

benefits under the no-fault statute, held that “the use of a release of future benefits in settlement of

a reasonably disputed claim does not constitute a course of conduct which is cruel or shocking to

the average man’s conception of justice.” Lewis, 311 N.W.2d at 319.

        The record reveals that in settling the 1974 lawsuit, Defendants did not actually concede

liability. This court has no way of knowing whether or not, had the case gone to trial, Defendants

would have successfully disputed Coles’ claim. Consequently, the use of the release in settling the

claims of the estate of Linda Coles was not a course of conduct shocking to the average man’s

conception of justice and the release should not be voided on these grounds.

                E.      Authority to Settle the Estate’s Claims

        Plaintiff further contends that the then co-guardians of Linda Coles’ estate were not

authorized by the Wayne County Probate Court to finalize a settlement of her claims from the 1974

lawsuit. We find this argument wholly unconvincing. Contained in the record is a copy of the

Petition For The Appointment of Guardian filed on behalf of Linda Coles in the Wayne County

Circuit Court on June 30, 1976. The petition valued the estate at $500,000.00 The Probate Court

issued a letter of authority on July 7, 1976, appointing Nicholas Smith and Security Bank and Trust

Company co-guardians of Linda Coles’ estate. This letter of authority granted the co-guardians “full

power and authority to take possession of and collect, preserve, manage and dispose of all the

property of said estate . . . .” (J.A. at 363.) The letter of authority did not indicate any restrictions.

We must therefore agree with the district court’s conclusion that “the letter of authority granted

powers to the co-guardians that were sufficiently expansive to include authority for each of them

. . . to settle the claims on behalf of Coles estate.” (J.A. at 28.)

                                                   12
                                        Nos. 04-2260, 05-1317

                 F.      The Sufficiency of The Bond

          Plaintiff lastly cites a local rule of the Wayne County Circuit Court in arguing that the

settlement is void based on the assumption that the probate court did not “pass on the sufficiency

of the bond.” The rule at issue, Local Rule 6.7(d) of the Wayne County Circuit Court of Michigan

states:

          In all actions where a minor brings a suit by next friend or guardian and the action
          is brought before the judge for discontinuance or entry of a consent judgment, it is
          necessary . . . that where the proposed settlement or judgment is for more than the
          bond set by the Probate Judge, the settlement may be approved but the judgment
          shall not be entered until the Probate Judge has passed on the sufficiency of the bond.

          As Plaintiff noted, it does appear from the record that $100.00 bond was posted in the Wayne

County Probate Court. We agree, however, with Defendant that this Court has no way of

establishing whether or not the probate court actually “passed on the sufficiency of the bond.” The

record does show, however, that the probate court approved the appointment of Nicholas Smith and

the Security Bank and Trust Company as co-guardians of the $500,000 estate of Linda Coles. One

could therefore just as easily assume that the probate court judge did “pass on the sufficiency of the

bond” as not.

          Furthermore, Plaintiff does not allege that this issue of not having passed on the sufficiency

of the bond would in any way have altered the outcome of the case. Absent case law establishing

that a failure to “pass on the sufficiency of the bond” would require voiding the settlement

agreement in such circumstances, we do not believe that we should concern ourselves with this issue

thirty years after the original lawsuit was settled.

                                                   III.

                                                    13
                                      Nos. 04-2260, 05-1317

       We review the denial of a Rule 60(b) motion under the abuse of discretion standard. Doe

v. Lexington-Fayette Urban County Government, 407 F.3d 755, 760 (6th Cir. 2005). In order to find

an abuse of discretion, this Court must have a definite and firm conviction that the trial court

committed a clear error of judgment. Id. “Relief under Rule 60(b), moreover, is ‘circumscribed by

public policy favoring finality of judgments and termination of litigation.’” Id. (quoting Waifersong

Ltd. v. Classic Music Vending, 976 F.2d 290, 292 (6th Cir. 1992)).

       The district court did not abuse its discretion in denying Plaintiff’s Rule 60(b) motion.

Plaintiff filed a motion asking the district court to reconsider its grant of Defendant’s motion for

summary judgment on the basis of newly discovered evidence that was unavailable to her during the

summary judgment proceedings. (J.A. at 36.) Plaintiff claims that if the report from Dr. Henderson

had been available during the earlier proceedings, then she would have presented it to the Court for

review, and that the court as a result would have concluded that the settlement of Coles’ claims for

$250,000 was manifestly insufficient given that Dr. Henderson opined in his report that Coles would

require over $1.3 million for her care. (J.A. at 36.)

       In rejecting Plaintiff’s argument, the district court stated that the newly discovered report was

“neither material nor controlling” and “would not have changed the final disposition of the case.”

(J.A. at 37.) The district court also noted that Dr. Henderson’s report was part of the case file in

1976, but the parties nevertheless knowingly and voluntarily settled the case for the previously

discussed amounts. Moreover, the report did not change the court’s conclusion that the 1976

settlement was not contrary to public policy.

                                                  14
                                      Nos. 04-2260, 05-1317

       We believe that the district court’s reasons for denying Plaintiff’s motion are valid and the

district court’s denial of Plaintiff’s Rule 60(b) motion was not an abuse of discretion.

                                                IV.

       For the reasons stated above, we AFFIRM the district court’s grant of Defendant’s motion

for summary judgment and denial of Plaintiff’s Rule 60(b) motion.

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