Court Opinion

ID: 2818351
Source: CourtListenerOpinion
Date Created: 2015-07-20 07:44:00.602811+00
Date Added: 2024-06-11T15:43:38.751841
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

BRONSON HEALTH CARE GROUP, INC, d/b/a                     UNPUBLISHED
BRONSON METHODIST HOSPITAL, a                             July 16, 2015
Michigan nonprofit corporation,

              Plaintiff-Appellant,

v                                                         No. 321908
                                                          Kalamazoo Circuit Court
HOME-OWNERS INSURANCE COMPANY, a                          LC Nos. 2013-000399 NF
Michigan insurance agency,

              Defendant-Appellee.

HOME-OWNERS INSURANCE COMPANY, a                          No. 322243
Michigan insurance agency,                                Kalamazoo Circuit Court
                                                          LC No. 2012-000643 CK
              Plaintiff-Appellee,
v

ROBERT WENDELL BROWN, III,

              Defendant-Appellee,

and

BRONSON HEALTH CARE GROUP, INC, d/b/a
BRONSON METHODIST HOSPITAL, a
Michigan nonprofit corporation,

              Appellant.

Before: SERVITTO, P.J., and BECKERING and BOONSTRA, JJ.

PER CURIAM.

                                           -1-
       In this consolidated appeal,1 Appellant Bronson Health Care Group, Inc (“Bronson)
appeals in both docket numbers. In Docket No. 321908, Bronson appeals by delayed leave
granted the trial court’s denial of its motion for post-judgment intervention. In Docket
No. 322243, Bronson appeals by right from the trial court’s grant of summary disposition to
Appellee Home-Owners Insurance Company (“Home-Owners”) on the grounds that Bronson’s
claims were barred by res judicata. We reverse in both cases and remand for further proceedings
consistent with this opinion.

                     I. PERTINENT FACTS AND PROCEDURAL HISTORY

       These cases arise from an August 31, 2012 motor vehicle accident involving an
automobile driven by a non-party and a motorcycle driven by defendant Robert Brown, III
(“Brown”). Brown was injured in the accident and received treatment from, among other
providers, Bronson. Home-Owners insured the automobile involved in the accident. Bronson
provided bills to Home-Owners and requested payment under the no-fault act, MCL 500.3101, et
seq.

        Home-Owners filed a complaint for declaratory judgment against Brown2 in December of
2012, alleging that it had “made several efforts to try to investigate whether there is coverage
available, pursuant to its policy, for the injuries sustained in this matter by Defendant and Ms.
York;[3] however, Defendant has failed to cooperate with that investigation.” Home-Owners
was unable to personally serve Brown. The trial court granted Home-Owners’s motion for
alternate service. After Brown failed to respond to the alternate service, the trial court granted
Home-Owners a default against Brown. Home-Owners then moved the trial court for entry of a
default judgment against Brown. Counsel for Brown appeared at the motion hearing and argued
against the entry of a default judgment on the grounds that the alternate service was defective
and the trial court had not obtained personal jurisdiction over Brown. The trial court granted
Home-Owners a default judgment on June 3, 2013.

        Bronson filed suit against Home-Owners, seeking reimbursement for services provided to
Brown, on August 24, 2013.4 Then, on October 21, 2013, Bronson and Borgess Medical Center5
jointly moved the trial court for post-judgment intervention in Home-Owners’s declaratory
action. The trial court denied that motion, stating in relevant part:

1
 See Home-Owners Ins Co v Brown, unpublished order of the Court of Appeals, issued
November 13, 2014 (Docket No. 322243).
2
    Home-Owners did not name Bronson as a defendant in that action.
3
 York was a passenger on Brown’s motorcycle. She was not a party to either of the cases below
and is not a party to this appeal.
4
    Both cases were presided over by the same trial judge.
5
  Borgess Medical Center also provided medical services to Brown. Borgess is not a party to this
appeal and was not involved in any of the litigation below apart from filing the joint motion to
intervene.

                                                 -2-
               I am going to deny the motion. It certainly is a tricky situation because
       you have someone who has not been cooperative and an insurance company has
       to go and they have to do their investigation to see whether their coverage applies
       or not.

               And I certainly understand that it puts the hospitals in a bind because they
       may or may not have certain arguments. But I’m not aware of any requirement in
       general practice that all of the medical care providers, if there are claims that have
       been made, that they’re obligated to go out and find those individuals and sue
       those individuals, too.

                                                * * *

               But I’m not going to grant the request to intervene post-judgment in this
       case. I think the file reflects that, unfortunately, Mr. Brown was not cooperating
       and appeared to be, in the Court’s eyes, avoiding service, which is why the
       request for alternate service was made.

        On March 6, 2014, Home-Owners moved for summary disposition in Bronson’s action
against it. The trial court granted the motion on the grounds that Bronson’s claims were barred
by res judicata due to the default judgment in the other case. These appeals followed.

                                 II. DOCKET NUMBER 322243

       In Docket No. 322243, Bronson argues that the trial court erred in denying its motion for
post-judgment intervention. We agree. We review a trial court’s decision on a motion to
intervene for an abuse of discretion. Auto-Owners Ins Co v Keizer-Morris, Inc, 284 Mich. App.
610, 612; 773 NW2d 267 (2009). A trial court abuses its discretion when its decision falls
outside the principled range of outcomes. Id.

       MCR 2.209 addresses intervention, and provides in relevant part:

       (A) Intervention of Right.        On timely application a person has a right to
           intervene in an action:

                                              * * *

       (3) when the applicant claims an interest relating to the property or transaction
            which is the subject of the action and is so situated that the disposition of the
            action may as a practical matter impair or impede the applicant's ability to
            protect that interest, unless the applicant's interest is adequately represented
            by existing parties.

       “The rule for intervention should be liberally construed to allow intervention where the
applicant’s interests may be inadequately represented.” Neal v Neal, 219 Mich. App. 490, 492;
557 NW2d 133 (1996). However, “intervention may not be proper where it will have the effect
of delaying the action or producing a multifariousness of parties and causes of action.” Precision
Pipe & Supply, Inc v Meram Const, Inc, 195 Mich. App. 153, 156; 489 NW2d 166 (1992). To

                                                 -3-
that end, the requirement of a timely application requires an intervenor to be diligent in seeking
intervention and not “sit on its rights.” Id. at 157. Further, although there is not a blanket
prohibition on post-judgment intervention, see Scion, Inc v Martinez, 491 Mich. 889; 810 NW2d
33 (2012), “[t]here should be considerable reluctance on the part of the courts to allow
intervention after an action has gone to judgment and a strong showing must be made by the
applicant.” Dean v Dep’t of Corrections, 208 Mich. App. 144, 150; 527 NW2d 529 (1994).

        Our review of the record leads us to conclude that Bronson had a right to intervene under
MCR 2.209(A)(3). Bronson had an interest in the “property or transaction” that was the subject
of Home-Owner’s declaratory action, i.e., no-fault benefits paid or payable to Brown. The
record indicates that Bronson provided over $140,000 in medical services to Brown. The
resolution of the issue of whether Brown was entitled to benefits from Home-Owners would
affect Bronson’s collection of those funds. See MCL 500.3105; MCL 500.3107; see also
Munson Med Ctr v Auto Club Ins Ass’n, 218 Mich. App. 375, 378; 554 NW2d 49 (1996). Further,
because Brown failed to participate in the litigation apart from his appearance at the default
judgment motion hearing, Bronson’s absence impaired or impeded its ability to protect its
interests.

        Further, Bronson did not “sit on its rights.” Precision Pipe & Supply, Inc, 195 Mich. App.
at 157. The record is devoid of evidence that Bronson was aware of the declaratory action prior
to the entry of the default judgment. Although Home-Owners argues that statements made by
Brown’s attorney suggest some communication between the attorney and Bronson, such an
inference is tentative at best. The record does reflect that Bronson was aware of the default
judgment by August 12, 2013. Two weeks later, Bronson filed suit to protect its rights. Within
two months, it had moved to intervene in the declaratory judgment action. While Bronson could
have moved to intervene earlier rather than filing a separate suit, we do not find the relatively
short delay in filing significant, especially in light of the fact that Bronson almost immediately
took some action to protect its rights.

        Finally, while Bronson’s post-judgment intervention will extend the time for resolution of
the case, we do not find that it would “have the effect of delaying the action or producing a
multifariousness of parties and causes of action.” Precision Pipe & Supply, Inc, 195 Mich. App.
at 156. The root of the declaratory judgment action remains the determination of whether Brown
was entitled to statutory no-fault benefits from Home-Owners; Bronson’s claims are derivative
of that entitlement. See MCL 500.3107; Moody v Home-Owners Ins Co, 304 Mich. App. 415,
440; 849 NW2d 31 (2014), lv granted on other grounds 497 Mich. 957 (2015).

       We therefore conclude that the trial court abused its discretion in failing to grant
Bronson’s motion for post-judgment intervention. Accordingly, we reverse the trial court’s order
in Docket No. 322243, and remand for further proceedings consistent with this opinion.6

6
 Should other healthcare providers seek to intervene in the action below, the trial court should
analyze whether their application is timely under MCR 2.209(A). With regard to Borgess
Medical Center, which jointly with Bronson moved for intervention below, our reversal of the

                                               -4-
                                 III. DOCKET NUMBER 321908

        In Docket No. 321908, Bronson argues that the trial court erred in granting it summary
disposition on the grounds that the default judgment barred its claims through res judicata. We
agree. Although the trial court was correct in stating that in general res judicata principles may
apply to a default judgment, see Richards v Tibaldi, 272 Mich. App. 522, 531; 726 NW2d 770
(2006), we find that it erred concluding that the default judgment barred Bronson’s claims in the
instant case. The application of res judicata, as well as a trial court’s decision on a motion for
summary disposition, is reviewed de novo on appeal. Phinisee v Rogers, 229 Mich. App. 547,
551-552; 582 NW2d 852 (1998).

         The doctrine of res judicata allows the disposition of a previous suit to bar a subsequent
suit if certain conditions are met. Id. “For res judicata to apply, defendant must establish the
following: (1) the former suit was decided on the merits, (2) the issues in the second action were
or could have been resolved in the former action, and (3) both actions involved the same parties
or their privies.” Id. at 551. “A default judgment is treated the same as a litigated judgment and
is considered a decision on the merits.” Richards, 272 Mich. App. at 531. “Privity between a
party and a non-party requires both a substantial identity of interests and a working or functional
relationship . . . in which the interests of the non-party are presented and protected by the party in
the litigation.” Phinisee, 229 Mich. App. at 553 (quotation marks and citations omitted).

        In the instant case, Home-Owners argued below, and the trial court agreed, that this
Court’s decision in TCBI, P.C. v State Farm Mutual Automobile Ins Co, 289 Mich. App. 39; 795
NW2d 229 (2010), indicates that Bronson’s suit is barred by res judicata. We disagree. The
factual situation in TCBI was substantially different from the instant case. In TCBI, the injured
party had initially brought suit against his automobile insurer for non-payment of his no-fault
claims. Id. at 41. The injured party received a jury verdict of no cause of action in his case. Id.
Subsequently, the trial court held that TCBI’s claim against the insurer for medical services
provided to the injured party was barred by res judicata. Id. This Court affirmed, stating:

       Plaintiff, by seeking coverage under the policy, is now essentially standing in the
       shoes of Afful. Being in such a position, there is also no question that plaintiff,
       although not a party to the first case, was a “privy” of Afful. “A privy of a party
       includes a person so identified in interest with another that he represents the same
       legal right. . . .” [Id. at 44 (citation omitted).]

        By contrast, it was Home-Owners that initially brought a declaratory judgment action
against Brown. Brown did not “seek coverage” under a policy or otherwise, and asserted no
claims; rather, he was named as the defendant in the original suit, and appears to have been
interested principally in avoiding service, not in asserting his own claims for no-fault benefits or
in protecting Bronson’s (or other healthcare providers’) interests in determining whether Home-
Owners was liable for no-fault benefits or securing payment for services rendered by healthcare
providers. The only action taken by Brown, through his counsel, in the initial suit was a post hoc

trial court’s order permits it to intervene in the declaratory action, should it still have an interest
in the resolution of that action.

                                                 -5-
effort to have the default set aside and to prevent the resulting entry of a default judgment. Thus,
certainly at the time the default was entered, and unlike the injured party and the plaintiff in
TCBI, Bronson and Brown did not have a “substantial identity of interests,” nor did they have “a
working or functional relationship . . . in which the interests of the non-party are presented and
protected by the party in the litigation.” Phinisee, 229 Mich. App. at 553 (quotation marks and
citations omitted).7 TCBI does not compel a different conclusion, in light of the fact that the
privity of the parties in that case was not at issue, and in any event was established through the
insured’s litigation of his claim for no-fault benefits. TCBI, 289 Mich. App. at 44. We therefore
reverse the trial court’s grant of summary disposition in Docket No. 321908.8

        Reversed in both dockets and remanded for further proceedings. We do not retain
jurisdiction.

                                                              /s/ Deborah A. Servitto
                                                              /s/ Jane M. Beckering
                                                              /s/ Mark T. Boonstra

7
  The default judgment against Brown resulted from his inability to demonstrate “good cause”
for failing to answer the complaint against him and for setting aside the default. The most
critical stage of the proceedings, therefore, was the time period leading up to the entry of default,
at which time (if ever) Brown and Bronson were not in privity.
8
  We need not decide, in either docket, whether the statements made by Home-Owners’s attorney
at the default judgment motion hearing constituted a “waiver” of the application of the default
judgment to Bronson’s claims, or that the doctrine of judicial estoppel should be applied in light
of those statements.

                                                -6-