Court Opinion

ID: 9931476
Source: CourtListenerOpinion
Date Created: 2024-02-09 06:04:56.442709+00
Date Added: 2024-06-11T12:17:01.817643
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

DALAL ABDELMAGUID, Personal Representative                           FOR PUBLICATION
of the ESTATE OF MAGED ABDELMAGUID,                                  February 8, 2024

               Plaintiff-Appellee,

v                                                                    No. 361674
                                                                     Wayne Circuit Court
DIMENSIONS INSURANCE GROUP, LLC, doing                               LC No. 21-017604-NI
business as TRM OF OHIO,

               Defendant-Appellant.

Before: CAMERON, P.J., and BORRELLO and O’BRIEN, JJ.

CAMERON, P.J. (concurring in part and dissenting in part).

         In this tort action arising out of a trucking accident, the insured had a $1 million primary
insurance policy and a $2 million excess policy. The underlying case was settled quickly for $5
million—more than both policy limits combined. The agreement included a term wherein plaintiff
agreed that it would collect $1 million (the primary policy limit), and not pursue any further
recovery against the insured for the outstanding $4 million in damages. In return, plaintiff received
an assignment of rights from the insured. Plaintiff then used the assignment to sue the insurance
agent who it alleged had negligently procured an excess insurance policy. According to plaintiff,
the insurance agent failed to communicate the terms of the excess policy, resulting in the denial of
the insured’s claim. In terms of damages, the complaint alleged that the insurance agent’s
negligence had caused the insured to be underinsured, resulting in inadequate coverage to pay for
the judgment in the underlying case. In other words, plaintiff asserted that its damages were the
uncollected $4 million judgment, even though the underlying assignment agreement capped
liability at $1 million. Defendant moved for summary disposition under MCR 2.116(C)(8),
arguing plaintiff’s claims were premature and legally deficient. The trial court denied the motion,
which the majority affirms in this appeal.

        Looking at the substance of the majority’s analysis, I agree that the consent judgment
arising from the assignment agreement cannot be used as the basis for damages in this case. And,
although I differ with the reasons for its validity, I also agree with the majority’s conclusion that
the assignment agreement is presumptively valid. However, I disagree that plaintiff’s complaint

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was sufficient to sustain defendant’s motion for summary disposition and with several propositions
of law set forth in the majority opinion. I therefore concur in part, and dissent in part.

                             I. SUFFICIENCY OF THE COMPLAINT

         Defendant moved for summary disposition under MCR 2.116(C)(8), the purpose of which
is to test the sufficiency of plaintiff’s complaint. Veritas Auto Machinery, LLC v FCA Int’l
Operations, LLC, 335 Mich App 602, 607; 968 NW2d 1 (2021). Plaintiff’s complaint alleged
negligence, breach of fiduciary duty and misrepresentation—all of which require a plaintiff to
plead damages. Highfield Beach at Lake Mich v Sanderson, 331 Mich App 636, 666; 954 NW2d
231 (2020); Nyman v Thomson Reuters Holdings, Inc, 329 Mich App 539, 552; 942 NW2d 696
(2019); Zaremba Equip, Inc v Harco Nat’l Ins Co, 280 Mich App 16, 38-39; 761 NW2d 151
(2008). The damages alleged in plaintiff’s complaint were predicated entirely on the $5 million
consent judgment. But, as the majority correctly concludes, the consent judgment cannot be used
in this litigation as evidence of damages. This, of course, leads to the natural conclusion that the
complaint in this case is defective to the extent it relies on the consent judgment as the basis for
damages.

        The majority and I disagree about the significance of this defect. I believe that plaintiff’s
complaint is fatally deficient because it relies on the $5 million assignment agreement as its sole
evidence of damages. When we remove the consent judgment from consideration, plaintiff did
not allege any other damages in connection with its claims. Therefore, the complaint is fatally
flawed such that the trial court was required to have granted the (C)(8) motion for summary
disposition and, in my view, erred when it concluded otherwise. On this conclusion alone, I would
reverse the trial court’s order denying summary disposition.

        The restrictive terms of the assignment agreement shed light on why plaintiff has not
alleged other damages in its complaint. The assignment agreement stated, in part: “Assignee
[(plaintiff)] specifically agrees not to take any action to collect on any unsatisfied balance of the
Consent Judgment in excess of the $927,377.93 paid under the remaining available insurance
coverage, so long as assignor cooperates in [plaintiff’s] pursuit of the assigned claims.” (Emphasis
added). Here, it is undisputed the insured has fully cooperated with plaintiff’s assigned claims.1
More importantly, plaintiff has agreed “not to take any [further] action to collect on any unsatisfied
balance of the Consent Judgment.” This agreement renders the unsatisfied $4 million balance
uncollectable and, for plaintiff’s purposes, meaningless. Ironically, plaintiff seeks to use the very
same unenforceable judgment that it helped create, and promised not to enforce, against a third
party who was not a party to the assignment agreement.

1
  At oral argument, plaintiff explained that the insured’s cooperation (or lack of cooperation) is
irrelevant to the viability of its claims against the insurance agent. To the contrary, plaintiff insists
that damages are the uncollected $4 million judgment that would have been paid by his excess
carrier, in whole or in part, had it not been for the negligence of the insurance agent.

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                     II. VALIDITY OF THE ASSIGNMENT AGREEMENT

        Turning to the assignment agreement, I agree that it is valid, but for reasons that differ from
the majority. Michigan has a long-standing principle that parties hold a general freedom of
contract. See, e.g., Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 256; 819 NW2d 68
(2012); quoting Rory v Continental Ins Co, 473 Mich 457, 469; 703 NW2d 23 (2005) (“It is a
‘bedrock principle of American contract law that parties are free to contract as they see fit, and the
courts are to enforce the agreement as written absent . . . a contract in violation of law or public
policy.’ ”). Here, the assignment agreement was a contract between plaintiff and the insured. As
such, courts are obligated to enforce the contract by its plain terms. See Davis v LaFontaine
Motors, Inc, 271 Mich App 68, 73; 719 NW2d 890 (2006) (“Courts must discern the parties’ intent
from the words used in the contract and must enforce an unambiguous contract according to its
plain terms.”). I therefore disagree that the assignment agreement is valid for “policy” reasons.
Rather, I believe that upholding the assignment agreement on the basis of policy runs contrary to
our jurisprudence. I would instead rely on well-established principles of contractual interpretation
to enforce the assignment agreement. Plaintiff and the insured executed a valid contract and,
therefore, courts are obligated to enforce it.

                                            III. POLICY

         I am also not persuaded that the stated “policy” supporting such assignments are applicable
to this case. The majority cites to a number of cases from other states that have permitted these
assignment agreements. These sister states hold that policy necessitated upholding an assignment
agreement to prevent negligent parties from escaping liability. E.g. Stateline Steel Erectors, Inc v
Shields, 150 NH 332, 336; 837 A2d 285 (2003). But none of the foreign cases cited by the majority
opinion involve an excess insurance policy. Instead, those cases concern plaintiffs who, unlike
plaintiff in this case, were left without any possibility of renumeration because the primary insurer
had denied coverage. Here, plaintiff recovered the entire coverage amount under the insured’s
primary insurance policy. Thus, the majority’s reliance on the foreign cases’ policy reason—
preventing a negligent party from escaping liability—is distinguished from our plaintiff, who was
not left without insurance coverage.

         Like the majority, I am concerned about the risk of fraud or collusion underlying this
agreement. The majority cites to Stateline Steel Erectors, Inc, 150 NH at 336, which warns “there
is a real risk of collusion” when “the insured, who is the tortfeasor, and the injured party . . . enter
into a prejudgment release and a covenant not to execute in favor of the tortfeasor.” (Citation
omitted). This is exactly what happened here. Unlike the majority, my concerns about collusion
are not assuaged because the primary carrier agreed to settle the case for the $1 million policy
limit. At best, the insurer’s decision reflects its assessment that its liability for damages exceed
the $1 million policy limit. It does not, however, suggest that the $5 million damages figure was
above board. To the contrary, the parties acted entirely consistent with their economic incentives.
The insured’s incentive was to resolve the case within the $1 million primary policy, which it did.
There is little reason to believe that the insured, a small trucking company, would be particularly
concerned about whether the settlement agreement included damages of $5 million or $20 million,
so long as plaintiff agreed it would not pursue those damages against the insured. On the other
hand, plaintiff’s incentive was, quite correctly, to maximize recovery for the estate. When a
plaintiff is structuring a settlement agreement with an eye for using the agreement as the measure

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of damages against a third party that is not yet a party to the litigation, the risk of fraud and
collusion is obvious.2
       For these reasons, I concur in part and dissent in part.

                                                              /s/ Thomas C. Cameron

2
  Litigants with adversarial interests routinely use our court rules in a way that would have
eliminated my concerns of fraud and collusion in this case. For instance, when plaintiff in the
underlying case discovered that the insurance agent had potential liability arising from this
accident, plaintiff should have sought leave to amend the complaint to add defendant to the case.
Similarly, the insured could have moved to join defendant as a third-party defendant. See MCR
2.204. Needless to say, this was not done.

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