Court Opinion

ID: 4644506
Source: CourtListenerOpinion
Date Created: 2020-12-18 10:07:57.731883+00
Date Added: 2024-06-11T08:00:45.835217
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

ESTATE OF JANET L. PARKS, by DOWAYNE F.                              UNPUBLISHED
PARKS, Personal Representative,                                      December 17, 2020

               Plaintiff-Appellee,

v                                                                    No. 349546
                                                                     Isabella Circuit Court
JOE K. SANDY,                                                        LC No. 17-014166-NI

               Defendant,
and

PIONEER STATE MUTUAL INSURANCE
COMPANY,

               Defendant-Appellant.

Before: O’BRIEN, P.J., and M. J. KELLY and REDFORD, JJ.

PER CURIAM.

        Defendant Pioneer State Mutual Insurance Company appeals by leave granted1 the trial
court order granting plaintiff’s motion to reinstate an uninsured motorist coverage (UIM) claim
against Pioneer. For the reasons stated in this opinion, we reverse and remand for entry of an order
dismissing plaintiff’s UIM claim against Pioneer.

                                        I. BASIC FACTS

       On October 9, 2016, Janet Parks was walking in a parking lot when Joe Sandy struck her
with his motor vehicle. Parks died of her injuries, and plaintiff, as Parks’s estate’s personal
representative, brought a wrongful death suit against Sandy. Plaintiff also brought suit against
Pioneer, alleging that Parks had a UIM policy with a provision for a $250,000 maximum limit and

1
 Estate of Janet L. Parks v Sandy, unpublished order of the Court of Appeals, entered November
5, 2019 (Docket No. 349546).

                                                -1-
that Sandy was “underinsured for residual tort liability.” Because Sandy’s insurance policy’s
maximum limit for bodily injury liability was $100,000, plaintiff sought to recover from Pioneer
any damages in excess of $100,000.

       Relevant to this appeal, Section 5 of Park’s insurance policy included the following UIM
provisions:

        A. We will pay compensatory damages which an “insured” is legally entitled to
           recover from the owner or operator of an “underinsured motor vehicle” because
           of bodily injury”:

        1. Sustained by an “insured”; and

        2. Caused by an accident.

        The owner’s or operator’s liability for these damages must arise out of the
        ownership, maintenance or use of the “underinsured motor vehicle”.

        We will pay under this coverage only if 1, and 2, below applies:

        1. The limits of liability under any Bodily Injury Liability bonds or policies
           applicable to the “underinsured motor vehicle” have been exhausted by
           payment of judgments or settlements; and

        2. The “insured” or legal representative seeking underinsured benefits under this
           coverage section has requested and we have provided written consent to the
           insured or legal representative’s acceptance of any judgment or settlement.

        We will not be bound by any judgment obtained or settlements for damages made
        without our written consent.

The policy defines an “underinsured motor vehicle” as “a land motor vehicle . . . to which a Bodily
Injury Liability . . . policy applies at the time of the accident but its limit for Bodily Injury Liability
is less than the limit of liability for this coverage.”

       Before trial, plaintiff and Pioneer stipulated to dismiss without prejudice plaintiff’s UIM
claim against Pioneer.2 Consequently, only plaintiff’s wrongful-death claim against Sandy

2
  On appeal, plaintiff contends that Pioneer refused to consent to allow plaintiff to settle with Sandy
for Sandy’s policy limits. Plaintiff implies that Pioneer was engaging in gamesmanship by
refusing to consent to a settlement, thereby forcing plaintiff to litigate its claim against Sandy
before it could proceed with its claim against Pioneer. However, we note that plaintiff could have
taken alternative actions, such as filing suit against Pioneer to obtain permission to settle with
Sandy. See Andreson v Progressive Marathon Ins Co, 322 Mich. App. 76, 80-81; 910 NW2d 691
(2017) (noting that after the UIM insurer declined to consent to settlement the plaintiff filed suit
to obtain that permission). See also Commercial Union Ins Co v Liberty Mut Ins Co, 426 Mich.
-2-
proceeded to a jury trial. Following the trial, the jury found that Sandy was negligent, that Parks
was 50% comparatively negligent, and that Parks’s damages arising from the motor-vehicle
accident were $200,000. Because of the jury’s comparative-negligence determination, the trial
court entered a judgment of $100,000 against Sandy.

        As required by the UIM policy, plaintiff sent a letter to Pioneer requesting that Pioneer
“consent to accept the Judgment.” Pioneer replied in writing that plaintiff had “permission to
accept payment . . . in the amount of the Judgment together with interests and costs.”
Subsequently, plaintiff filed a motion to reinstate its UIM claim against Pioneer. Plaintiff argued
that because the $100,000 judgment against Sandy exhausted his policy limits and because Pioneer
had consented to the judgment, plaintiff was free to pursue its claim for UIM benefits against
Pioneer. Pioneer opposed the motion, arguing in relevant part that plaintiff’s claim for UIM
benefits was barred by the doctrine of collateral estoppel. Pioneer asserted:

        [C]ollateral estoppel would bar Plaintiff’s claim against Defendant Pioneer . . .
        because Plaintiff’s claims for compensation arising out of this subject accident were
        fully and fairly litigated during the trial involving Defendant Joe. K. Sandy, where
        it was determined by a jury that the extent of Plaintiff’s damages, recoverable in
        this action was $100,000. That sum, and any costs payable to Plaintiff as a result
        of the jury verdict will be fully paid by the insurance carrier for Defendant Joe K.
        Sandy.

        In response, plaintiff argued that collateral estoppel did not bar reinstating the claim
because plaintiff was “not seeking double recovery” from Pioneer, but was seeking “excess
damages that are owed to [plaintiff] above and beyond Defendant Sandy’s liability policy limit.”
Plaintiff also noted that Parks’s UIM policy expressly provided that Pioneer “will not be bound by
any judgment or settlements for damages made without our written consent.” Plaintiff argued that
“if [Pioneer] was not going to be bound by any judgment of the jury in the first action, then Plaintiff
should also not be bound by the same.”

        Following oral argument, the trial court issued a written opinion and order granting
plaintiff’s motion to reinstate. The court concluded that collateral estoppel was inapplicable
because the jury had found in plaintiff’s favor when it found that Sandy was negligent. In addition,
the court held that Pioneer’s attempt to bind plaintiff to “the same judgment” that Pioneer had “no
intention of being bound by” was contrary to public policy. The trial court reasoned that Pioneer
had “sought two bites at the apple in this case, using the law as both a sword and shield.” The
court explained:

127, 136-137; 393 NW2d 161 (1986) (recognizing that insurers have an implied duty to act in
good faith, and defining “bad faith” as conduct that is “arbitrary, reckless, indifferent, or [that is
an] intentional disregard of the interests of the person owed a duty.”). Thus, if plaintiff believed
that Pioneer was acting in bad faith when it denied consent to settle, plaintiff could have brought
a claim alleging the same. Given that plaintiff never pursued a claim against Pioneer based upon
Pioneer’s failure to consent to settlement prior to the jury trial, the record is devoid of any evidence
supporting that Pioneer was engaging in gamesmanship at the expense of its insured.

                                                  -3-
       As affirmed by counsel for Pioneer at the motion hearing, Pioneer always
       contemplated the possibility of a second jury trial. If, at the first trial, the jury had
       awarded plaintiff more than the $100,000.00 limit of Mr. Sandy’s policy, Pioneer
       could have used the law and its policy language as a shield, refused to be bound by
       the jury verdict, and forced a second trial. Now, because the jury returned a verdict
       of $100,000.00, Pioneer is attempting to use the law as a sword by forcing plaintiff
       to be bound by the jury’s verdict even though plaintiff would not have been able to
       hold Pioneer to the jury verdict had it been more favorable to plaintiff. Such a result
       would be unconscionable, against Pioneer’s own contractual agreement, and
       against public policy. Plaintiff entered into a contract with Pioneer for underinsured
       motorist coverage, purchasing insurance above the minimum state mandated
       coverage. If Pioneer is able to use the law as both a sword and a shield in this way,
       plaintiff’s contract with Pioneer would be illusory, which would be a clear violation
       of public policy.

        Thereafter, the trial court denied Pioneer’s motion for reconsideration, clarifying that it had
not made “any ruling that the insurance policy was actually unconscionable or violative of public
policy.” Instead, the court “simply stated that certain circumstances may render it so.” The trial
court added that its “ruling was not solely or even principally based on these public policy
concerns.”

                                  II. COLLATERAL ESTOPPEL

                                  A. STANDARD OF REVIEW

        Pioneer argues that because collateral estoppel bars plaintiff’s claim, the trial court erred
by reinstating plaintiff’s claim for UIM benefits. This Court reviews for an abuse of discretion the
trial court’s decision to reinstate a claim. Wickings v Article Enterprises, Inc, 244 Mich. App. 125,
138; 624 NW2d 197 (2000). A court abuses its discretion when its decision is “outside the range
of reasonable and principled outcomes.” Saffian v Simmons, 477 Mich. 8, 12; 727 NW2d 132
(2007). We also review de novo the application of collateral estoppel. Radwan v Ameriprise Ins
Co, 327 Mich. App. 159, 164; 933 NW2d 385 (2018). In addition, the interpretation of an insurance
policy is reviewed de novo. Rory v Continental Ins Co, 473 Mich. 457, 464; 703 NW2d 23 (2005).

                                           B. ANALYSIS

        Because UIM coverage is not required by Michigan law, “the terms of coverage are
controlled by the language of the contract itself, not by statute.” Dawson v Farm Bureau Mut Ins
Co of Mich, 293 Mich. App. 563, 568; 810 NW2d 106 (2011). Parks’s insurance policy provides
UIM benefits up to $250,000. Yet, before any benefits are available under the policy, a number
of prerequisites must be satisfied, including that Pioneer must only pay compensatory damages
that plaintiff is “legally entitled to recover” from the owner or operator of an underinsured motor
vehicle. In order to qualify as an underinsured motor vehicle, the vehicle involved in the crash
must be “a land motor vehicle . . . to which a Bodily Injury Liability . . . policy applies at the time
of the accident but its limit for Bodily Injury Liability is less than the limit of liability for this
coverage.” Here, as Sandy’s bodily injury liability policy limit was $100,000 and the UIM policy
had a limit of $250,000, Sandy’s vehicle qualified as an underinsured motor vehicle. However,

                                                 -4-
because plaintiff may only recover compensatory damages that it is “legally entitled to recover
from” Sandy, a determination of the amount owed under the policy is inextricably linked to a
determination of the amount of damages plaintiff is “legally entitled to recover” from Sandy.

        A jury determined that Sandy was negligent, that Parks was 50% comparatively negligent,
and that plaintiff’s damages were $200,000. Thus, when the damage award is reduced to account
for Parks’s comparative negligence, the jury’s verdict represents a finding that the compensatory
damages that plaintiff is “legally entitled to recover” from Sandy is $100,000. Because Sandy’s
bodily injury liability policy limit was $100,000, following entry of the $100,000 judgment against
Sandy, plaintiff successfully recovered the exact amount of compensatory damages that it was
legally entitled to recover against Sandy.

        Notwithstanding the jury’s verdict, plaintiff now seeks to have a second trial, this time
against Pioneer. Plaintiff appears to hope that, following a second trial, it will receive a verdict
indicating that the amount of compensatory damages that it can recover from Sandy will be in
excess of Sandy’s $100,000 policy, thereby allowing plaintiff to collect additional money under
the UIM policy.3 Pioneer argues that collateral estoppel bars plaintiff’s claim for UIM benefits
because the issue of what damages plaintiff was legally entitled to recover was actually litigated
in the first action, plaintiff had a full and fair opportunity to litigate the issue, and mutuality of
estoppel is not required because Pioneer is using collateral estoppel defensively against a party
who had a fair and full opportunity to litigate the issue.

        “Collateral estoppel bars relitigation of an issue in a new action arising between the same
parties or their privies when the earlier proceeding resulted in a valid final judgment and the issue
in question was actually and necessarily determined in that prior proceeding.” In re Application
of Indiana Michigan Power Co to Increase Rates, 329 Mich. App. 397, 408; 942 NW2d 639 (2019)
(quotation marks and citation omitted). “Generally, application of collateral estoppel requires (1)
that a question of fact essential to the judgment was actually litigated and determined by a valid
and final judgment, (2) that the same parties had a full and fair opportunity to litigate the issue,
and (3) mutuality of estoppel.” Radwan, 327 Mich. App. at 165-166 (quotation marks and citation
omitted). Mutuality of estoppel generally requires the party “taking advantage of the earlier
adjudication” to have been “bound by [the earlier action] had it gone against him.” Monat v State
Farm Ins Co, 469 Mich. 679, 684-685; 677 NW2d 843 (2004) (quotation marks and citation
omitted).

        The first two requirements of collateral estoppel have been met. In the earlier action, the
amount of compensatory damages that plaintiff was legally entitled to recover from Sandy was
actually litigated and determined by a valid and final judgement. See Rental Props Owners Ass'n

3
  On appeal, it is not clear whether plaintiff wishes to pick and choose which aspects of the first
jury’s verdict are binding and which are not, or whether plaintiff wants to completely redo the first
trial, this time against a different defendant. For example, it is unclear whether plaintiff wishes to
once again litigate whether Sandy was negligent and whether Parks was comparatively negligent.
What is clear is that plaintiff wishes to relitigate the issue of damages, i.e., for a redetermination
of the amount of compensatory damages that it is entitled to recover from Sandy, the owner or
operator of the underinsured motor vehicle.

                                                 -5-
of Kent Co v Kent Co Treasurer, 308 Mich. App. 498, 529; 866 NW2d 817 (2014) (noting that a
question of fact is not “actually litigated” unless it is “put into issue by the pleadings, submitted to
the trier of fact, and determined by the trier.”). Given that the question of fact actually litigated in
the first action—the amount of damages plaintiff is legally entitled to recover from Sandy—is
identical, not merely similar to an essential element of plaintiff’s UIM claim against Pioneer, see
id. (stating that the issue in the two actions “Must be identical, and not merely similar”), the first
requirement for application of collateral estoppel is plainly satisfied. Moreover, there is nothing
on the record suggesting that plaintiff had anything short of a full and fair opportunity to litigate
the amount of damages that it was legally entitled to recover from Sandy during the first action.
Thus, on this record, we may only conclude that plaintiff did, in fact, have a full and fair
opportunity to litigate the issue during the earlier action, thereby satisfying the second prerequisite
to the application of collateral estoppel.

        The parties dispute whether the third requirement—mutuality of estoppel—is required
before collateral estoppel will apply in this case. Yet, resolution of that question is plainly
governed by our Supreme Court’s decision in Monat. The Monat Court concluded that when
“collateral estoppel is being asserted defensively against a party who has already had a full and
fair opportunity to litigate the issue, mutuality is not required.” Monat, 469 Mich. at 680-681
(emphasis added); see also Radwan, 327 Mich. App. at 166 (applying Monat). Here, because
Pioneer is seeking to assert collateral estoppel defensively against plaintiff and because plaintiff
has already had a full and fair opportunity to litigate the issue of damages, mutuality is not required.

         On appeal, plaintiff seeks to distinguish Monat so as to prevent its application. The
distinctions, however, are not meaningful. In Monat, the jury returned a verdict of no cause of
action, whereas in this case the jury in the first action found that plaintiff had satisfied each element
of its negligence claim against Sandy. However, despite that distinction, as a practical matter this
case is identical to Monat. In Monat, the plaintiff sought a more favorable outcome in a second
trial, and in this case, plaintiff is also seeking a more favorable outcome in a second trial. It is of
no consequence that the Monat plaintiff sought to relitigate negligence whereas plaintiff is likely
only seeking to relitigate the amount of compensatory damages that it is legally entitled to recover
from Sandy. In both instances, the purpose of the second action is to allow relitigation of an issue
essential to the determination of the first action so as to permit the plaintiff an opportunity to obtain
a more favorable outcome. As a result, we discern no rational basis to decline to apply Monat to
the facts of this case. Mutuality of estoppel is not required in this case because Pioneer is asserting
it defensively against plaintiff, who had a full and fair opportunity to litigate the issue of the amount
of compensatory damages that it was legally entitled to recover from Sandy in the first trial.

        In sum, collateral estoppel bars plaintiff from relitigating the amount of compensatory
damages it is entitled to recover from Sandy. Because the amount of damages plaintiff is entitled
to recover from Sandy is not in excess of the amount of damages plaintiff did, in fact, recover from
Sandy as a result of the first action, no UIM benefits remain available to plaintiff under the terms
of Parks’s insurance policy. It is irrelevant that, under different circumstances, Pioneer might have
opted to use the policy language to avoid being bound by the judgment in the first action. Under
the facts and circumstances actually present in this case, Pioneer consented to be bound by the
judgment and the judgment resulted in plaintiff receiving all damages that it was legally entitled
to recover from Sandy.

                                                  -6-
          Notwithstanding the applicability of the doctrine of collateral estoppel, plaintiff suggests
that it is entitled to litigate its UIM claim against Pioneer because of “public policy.” However, in
its opinion on reconsideration, the trial court clarified that it was not relying on public-policy
considerations as a basis for reinstating plaintiff’s UIM claim against Pioneer. Therefore, we
decline to address this issue further.

        Reversed and remanded for further proceedings consistent with this opinion. Pioneer may
tax costs as the prevailing party. MCR 7.219(A). We do not retain jurisdiction.

                                                              /s/ Colleen A. O’Brien
                                                              /s/ Michael J. Kelly
                                                              /s/ James Robert Redford

                                                 -7-