Court Opinion

ID: 4696825
Source: CourtListenerOpinion
Date Created: 2021-06-18 09:07:37.36306+00
Date Added: 2024-06-11T08:05:42.721372
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                           COURT OF APPEALS

DEBRA MARBLY,                                                         UNPUBLISHED
                                                                      June 17, 2021
              Plaintiff-Appellant,

v                                                                     No. 348911
                                                                      Wayne County Circuit
BRANDI ROBERTSON,                                                     LC No. 18-015441-NI

              Defendant,

and

AMERICAN COUNTRY INSURANCE
COMPANY,

              Defendant-Appellee.

Before: REDFORD, P.J., and BORRELLO and TUKEL, JJ.

PER CURIAM.

        Plaintiff Debra Marbly appeals as of right the trial court’s order granting defendant
American Country Insurance Company’s (ACI) motion for dismissal that was premised on
plaintiff’s failure to post a bond. For the reasons set forth in this opinion, we reverse.

                                       I. BACKGROUND

       As we explained in our prior opinion involving this dispute under the no-fault act,

               This case arises out of injuries Marbly alleges she sustained in a rear-end
       collision. At the time of the accident, Marbly was working for G1 Transportation
       (G1) as a “transport driver,” transporting patients to and from doctors’
       appointments in a minivan owned by G1 and insured by ACI. According to Marbly,
       as a result of the injuries she sustained in the accident, she required assistance from
       her daughters with everyday tasks, and she had agreed to pay them for providing
       such assistance. Through PIP coverage, Marbly sought compensation for those
       services from ACI. After ACI denied her claim, Marbly instituted this action. ACI

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       moved for summary disposition, producing surveillance footage tending to suggest
       that Marbly was able to perform many of the tasks she had claimed an inability, or
       limited ability, to perform. ACI argued that under a fraud-exclusion clause in the
       no-fault policy, Marbly’s claim for benefits was barred. The trial court agreed,
       holding that in light of the surveillance footage, reasonable minds could not differ
       about whether Marbly intentionally made material misrepresentations regarding her
       claim to benefits. Thus, the trial court granted ACI summary disposition of
       Marbly’s claim pursuant to MCR 2.116(C)(10), and it also granted ACI summary
       disposition of the intervening medical providers’ derivative claims for medical
       services rendered. [Marbly v Robertson, unpublished per curiam opinion of the
       Court of Appeals, issued January, 16, 2018 (Docket No. 333286), p 2.

        Marbly appealed, and this Court reversed the trial court’s ruling and held that “the trial
court erred by holding that the fraud-exclusion clause acted as an absolute bar to Marbly’s claim
for PIP benefits.” Id. We noted that the general priority rule in MCL 500.3114(1) requiring a
person to look to the person’s own insurer did not apply to Marbly in this case because she was
“not a named insured in a no-fault policy, has no spouse who is, and does not live with a relative
who carries no-fault insurance.” Id. at 7. Thus, we reasoned, “Either Marbly is ‘entitled’ to PIP
benefits under the no-fault policy pursuant to subsection (2) or (3), or she ‘shall claim’ PIP benefits
under subsection (4), and in either event, ACI is the insurer with priority to pay her claim.” Id.
We further explained that

       because entitlement to benefits under subsection (4) [of MCL 500.3114] is
       governed solely by statute, any fraud-exclusion clause in the no-fault policy does
       not apply to Marbly if her entitlement to benefits arises under subsection (4). Thus,
       although it is highly unlikely that a fact-finder will conclude on remand that all of
       the expenses claimed by Marbly were reasonably necessary in light of the evidence
       contradicting her asserted limitations, the trial court nonetheless erred by
       concluding that the fraud-exclusion clause barred Marbly’s claim entirely.
       [Marbly, unpub op at 8 (citation omitted).]

        Relevant to this appeal, ACI subsequently moved the trial court to enter an order requiring
Marbly to provide security for costs in the amount of $25,000 pursuant to MCR 2.109. Marbly
argued that the motion was untimely, that there was not a substantial reason for requiring security,
and that she was financially unable to furnish a security bond. The trial court granted ACI’s motion
but reduced the amount to $5,000. The trial court stated:

                Okay. I find there’s good cause to impose costs, I find that the Court
       previously made findings with respect to this matter that indicated that Ms. Marbly
       had engaged in fraudulent activities related to the claim. On that basis I do find
       that it’s appropriate to assess costs.

               I’m ordering the costs of $5000 be posted by Ms. Marbly.

        Marbly was ordered to provide the security within 30 days. When she did not, ACI moved
to dismiss the case. The trial court granted the motion to dismiss without explanation. The trial
court’s order dismissed the case with prejudice. Marbly now appeals.

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                                          II. ANALYSIS

       Marbly argues on appeal that the trial court erred by granting ACI’s motion for security
under MCR 2.109.

        “We review a trial court’s decision to require a security bond for an abuse of discretion.”
In re Surety Bond for Costs, 226 Mich App 321, 331; 573 NW2d 300 (1997). A trial court abuses
its discretion if its decision falls outside the range of reasonable and principled outcomes.
Maldonado v Ford Motor Co, 476 Mich 372, 388; 719 NW2d 809 (2006).

       MCR 2.109 provides in relevant part:

               (A) Motion. On motion of a party against whom a claim has been asserted
       in a civil action, if it appears reasonable and proper, the court may order the
       opposing party to file with the court clerk a bond with surety as required by the
       court in an amount sufficient to cover all costs and other recoverable expenses that
       may be awarded by the trial court, or, if the claiming party appeals, by the trial and
       appellate courts. The court shall determine the amount in its discretion. . . .

               (B) Exceptions. Subrule (A) does not apply in the following circumstances:

               (1) The court may allow a party to proceed without furnishing security for
       costs if the party’s pleading states a legitimate claim and the party shows by
       affidavit that he or she is financially unable to furnish a security bond.

       In In re Surety Bond for Costs, 226 Mich App at 331-332, this Court stated:

                Security should not be required unless there is a substantial reason for doing
       so. [Farleigh v Amalgamated Transit Union, Local 1251, 199 Mich App 631, 634;
       502 NW2d 371 (1993)]. A “substantial reason” for requiring security may exist
       where there is a “tenuous legal theory of liability,” or where there is good reason to
       believe that a party’s allegations are “groundless and unwarranted.” Hall v
       Harmony Hills Recreation, Inc, 186 Mich App 265, 270; 463 NW2d 254 (1990).
       If a party does not file a security bond as ordered, a court properly may dismiss that
       party’s claims. Id. at 273.

       In Hall, 186 Mich App at 270, we explained “what can constitute a substantial reason for
ordering security” as follows:

               The plaintiff’s poverty alone is not substantial reason to grant a motion for
       security. Assertion of a tenuous legal theory of liability can provide substantial
       reason to grant such a motion. An order to post security for costs can also be
       appropriate where there is good reason to believe that a party’s allegations, although
       they cannot be summarily dismissed under MCR 2.116, are nonetheless groundless
       and unwarranted. [Citations omitted.]

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        In this case, the trial court apparently believed that Marbly’s claims were founded on a
tenuous legal theory of liability or were groundless and unwarranted. In asserting this view, the
trial court relied heavily on its prior summary disposition ruling.

        However, as Marbly argues on appeal,1 MCR 2.109(B)(1) provides that the “court may
allow a party to proceed without furnishing security for costs if the party’s pleading states a
legitimate claim and the party shows by affidavit that he or she is financially unable to furnish a
security bond.” “The court’s determinations on the legitimacy of the claim and financial ability
are findings of fact and will not be reversed by this Court unless they are clearly erroneous.” Hall,
186 Mich App at 271. The decision to waive security under Subrule (B)(1) is within the trial
court’s discretion. Id.

         In the context of Subrule (B)(1), the plain language of the court rule indicates that the focus
of determining the legitimacy of the claim is on the pleadings. MCR 2.109(B)(1) (requiring that
“the party’s pleading states a legitimate claim”); Hall, 186 Mich App at 272-273 (“We note that
the trial court did not make any finding on the legitimacy of the claim set forth in plaintiffs’
pleading before ordering plaintiffs to furnish a security bond. In fact, it appears that the trial court
was not aware that it was limited to plaintiffs’ pleading. As previously indicated, we find that
plaintiffs’ pleading states a legitimate claim.”).2 “If the trial court believes that a Rule 109 bond
would be proper absent plaintiff’s poverty, he must then assess the indigent plaintiff’s financial
ability to post bond.” Id. at 271 (quotation marks and citation omitted).

        In this case, Marbly claimed in the trial court that she was financially unable to provide the
requested security, and she submitted an affidavit in support indicating that she had a monthly
income of approximately $700 with no significant assets and “no credit to speak of.” Yet, the trial
court failed to address this argument or make any findings on this issue. Although the trial court
ordered security in the amount of $5,000 rather than the $25,000 requested by ACI, the amount
ordered still represented more than 6 months of Marbly’s total income. We conclude that this
amount, combined with the lack of factual findings to support the trial court’s ruling, constituted
an abuse of discretion. Cf. Hall, 186 Mich App at 272-273 (holding that the trial court abused its
discretion by failing to make any finding from the pleadings regarding the legitimacy of the claims
and ordering a security bond that exceeded the plaintiff’s monthly income).

       We conclude by quoting at length from the opinion in Hall, which sets forth and clearly
explains the process to be employed by a trial court when considering such motions:

1
    Marbly also raised this argument in the trial court in opposing ACI’s motion for security.

2
  We acknowledge that “[i]n determining the legitimacy of a claim, a trial court is not strictly
limited to considering the plaintiff’s legal theory, but may also consider the likelihood of success
on that theory.” In re Surety Bond for Costs, 226 Mich App at 333. Here, however, the trial court
made no reference to the specific legal theories advanced in Marbly’s complaint, which included
claims for negligence and PIP benefits. As stated above, it appears that the trial court believed
Marbly’s likelihood of success was low.

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              In exercising its discretion, the court should view the required findings on
       legitimacy and financial ability in a relative sense. In [Gaffier v St Johns Hosp, 68
       Mich App 474, 478; 243 NW2d 20 (1976)], this Court thoroughly examined and
       explained how discretion should be exercised under the former version of MCR
       2.109(C)(1):

                       If the trial court believes that a Rule 109 bond would be
               proper absent plaintiff’s poverty, he must then assess the indigent
               plaintiff’s financial ability to post bond. In this regard, the rule
               attempts to balance the right of a poor plaintiff to seek justice with
               the need of a defendant to have an opportunity for security. In our
               view, the rule establishes a strong preference for waiver of the bond
               where the indigent plaintiff’s pleadings show a “meritorious
               claim”—i.e., a legitimate cause of action. In cases where the
               indigent plaintiff’s pleadings show a tenuous legal theory, the
               plaintiff’s interest in free access to the courts becomes less
               significant when weighed against the defendant’s greater need for
               security. In short, the fulcrum of the rule’s balance is the legitimacy
               of the indigent plaintiff’s theory of liability.

                        This is not to say that legitimacy of the claim will always be
               determinative. The rule clearly allows for sound trial court
               discretion. We can imagine few cases, however, where a discreet
               trial court will require an indigent plaintiff, pleading a valid theory
               of liability, to post security.

              In support of its finding of an abuse of discretion, this Court in Gaffier,
       supra, 68 Mich App p. 479, 243 NW2d 20, wrote:

                       The security provided to this one defendant was more than
               plaintiff’s yearly . . . income. Defendant’s motion gave no
               explanation of the necessity of that sum, nor indicated any particular
               hardship that would result were the bond to be denied. We cannot
               bar this plaintiff from the courts because of her poverty.

               We adopt the quoted passages from Gaffier, supra, 68 Mich App pp. 478–
       479, 243 NW2d 20, as the correct statement of how discretion should be exercised
       under the present version of the rule. . . . In doing so, we note that the rule does not
       require indigency, but merely financial inability to furnish a security bond. [Hall,
       186 Mich App at 271-272 (first ellipsis in original).

        In the present case, the trial court may have believed that the balance should tip in favor of
requiring Marbly to provide security. However, without any factual findings or reasoned
explanation demonstrating that the trial court conducted any meaningful balancing of the parties’
respective rights as required under Hall, along with the imposition (without supporting findings of
fact) of a security bond that greatly exceeded Marbly’s ability to pay, we conclude that the trial

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court’s decision was outside the range of reasonable and principled outcomes, thus constituting an
abuse of discretion. Maldonado, 476 Mich at 388.

      The trial court’s order is reversed, and this matter is remanded to the trial court to reinstate
Marbly’s cause of action.

        Reversed and remanded for reinstatement of plaintiff’s action.           We do not retain
jurisdiction. Plaintiff, having prevailed, is entitled to costs. MCR 7.219.

                                                              /s/ James Robert Redford
                                                              /s/ Stephen L. Borrello
                                                              /s/ Jonathan Tukel

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