Michigan Court of Appeals; Docket # 346636; Unpublished
Judges Redford, Cavanagh, and Servitto; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Release and Settlements
SUMMARY:
In this unanimous unpublished per curiam decision arising out of a first-party action for no-fault PIP benefits, the Court of Appeals affirmed the trial court’s partial summary disposition order in favor of the defendant, Auto-Owners Insurance Company, regarding the scope of a release related to the plaintiff’s claims for no-fault PIP benefits that Auto-Owners and the plaintiff, Arthur Krumm, executed in a previous first-party lawsuit. The Court of Appeals determined that the trial court did not err in determining that the release was unambiguous and barred Krumm from seeking payment of all outstanding medical bills.
Krumm’s first lawsuit against Auto-Owners resulted in a settlement and dismissal. As part of the settlement, the parties executed two released: a no-fault release and an attendant care release. In this action, the plaintiff’s second against Auto-Owners for breach of contract for failure to pay PIP benefits, Auto-Owners moved for partial summary disposition, arguing that the no-fault release executed in the prior lawsuit released Auto-Owners from liability for paying any of Krumm’s outstanding medical bills. Krumm argued, in response, that the no-fault release was ambiguous and that the trial court should consider extrinsic evidence to establish that the parties intended it to cover only Krumm’s attendant care services, not all of his no-fault benefits. The trial court found the release to be unambiguous, however, and granted partial summary disposition in favor of Auto-Owners.
On appeal, Krum first argued that the trial court erred by ruling that the releases were unambiguous and therefore declining to consider extrinsic evidence to establish the parties’ intent. The Court of Appeals disagreed, finding no ambiguity in the release.
In this case, the record reflects that the parties settled their dispute and entered two releases. The first release provided for plaintiff’s full release and discharge of defendant from all liability under the subject insurance policy for all no-fault benefits up through and including October 16, 2015, in return for defendant’s payment of the settlement amount. We find no ambiguity in the language of this release. The terms of the second release specify plainly that the parties intended that the $210,000 settlement included payment of all attendant care services provided to plaintiff through October 17, 2015, and payment of that sum constituted payment of all payable benefits. We find no ambiguity in the language of this release. Although the no-fault release and the attendant care release specify two different dates, the two documents are not rendered ambiguous regarding the parties’ intent for the subject of the releases or their scope. The date differences do not signify that the subject of the releases limited the settlement only for attendant care services and not all no-fault benefits. The parties plainly agreed to resolve all disputed claims and plaintiff agreed to release and discharge defendant from all liability for such claims. The trial court did not err by finding that the releases lacked ambiguity.
Krumm next argued that the two releases, when read together, create an ambiguity regarding their subject matter. The Court of Appeals again disagreed, noting that the no-fault release unambiguously concerned all no-fault benefits and that the two releases, when read together, “harmoniously cover all such claims.”
Krumm next argued that the trial court erred by refusing to set aside the no-fault release under MCR 2.612(C)(1) and/or MCR 2.612(C)(1)(f). The Court of Appeals disagreed on both counts.
Auto-Owners argued on appeal that Krumm could not seek relief from the no-fault release because he had not tendered back the $210,000 settlement amount from the prior lawsuit, and with this, the Court agreed.
“A plaintiff may challenge a release on the basis of fraud, but not until he has tendered the consideration he received in exchange for the release.” Collucci v Eklund, 240 Mich App 654, 659; 613 NW2d 402 (2000). Plaintiff has not tendered back the settlement amount before, or at the time of, the filing in the complaint. “Consequently, the release effectively bars plaintiff’s claims unless he can demonstrate that one of the exceptions to the tender-back requirement applies.” Id. “The only recognized exceptions in Michigan [to the tender-back requirement] are a waiver of the plaintiff’s duty by the defendant and fraud in the execution.” Stefanac v Cranbrook Ed Community (After Remand), 435 Mich 155, 165; 458 NW2d 56 (1990). Defendant did not waive plaintiff’s duty to tender back the settlement amount because defendant raised the release as an affirmative defense. Collucci, 240 Mich App at 660. Although plaintiff has raised fraudulent misrepresentation as a defense to the no-fault release, plaintiff asserts fraud in the inducement, not fraud in the execution. See Stefanac, 435 Mich at 165-166 (discussing the difference between fraud in the inducement and fraud in the execution). Because plaintiff failed to tender back the settlement amount, and the two exceptions to the tender-back requirement are not present, the no- fault release precludes plaintiff’s claim. Collucci, 240 Mich App at 658-661.
