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Gueye v State Farm Mut Auto Ins Co, et al (COA – PUB 9/22/2022; RB #4477) 

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Michigan Court of Appeals; Docket #358992; Published
Judges Cavanagh, Garrett, and Yates; Authored
Official Michigan Reporter Citation: Forthcoming; Link to Opinion


STATUTORY INDEXING:
Court Orders for Failure to Comply with Section 3151 and Section 3152 [§3153]

TOPICAL INDEXING:
Exclusions from Underinsured Motorist Benefits [Underinsured Motorist Coverage]
Exclusions from Uninsured Motorist Benefits [Uninsured Motorist Benefits]


SUMMARY:
In this unanimous, published decision authored by Judge Garrett, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Plaintiff Malick Gueye’s action for uninsured or underinsured motorist ("UM/UIM") coverage against Defendant State Farm Mutual Automobile Insurance Company (“State Farm”), but remanded for a determination of whether the dismissal should be deemed with or without prejudice.  The Court of Appeals also reversed the trial court’s summary disposition order dismissing Gueye’s first-party action for no-fault PIP benefits against State Farm, and remanded for further proceedings consistent with its opinion.  As to Geuye’s claim for UM/UIM coverage, the Court held that Gueye was barred from filing suit for said coverage because of a provision in his policy which required that he submit to a requested insurance medical examination (“IME”) or examination under oath (“EUO”) prior to filing his complaint.  State Farm requested that he undergo both, numerous times, pre-suit, but he failed to do so.  As to Gueye’s claim for no-fault PIP benefits the Court of Appeals held that the trial court erred by imposing the most severe sanction under MCL 500.3153, based entirely on its “simply yes-or-no finding that [Gueye] did not attend an IME.”  Dismissal of a no-fault claim in its entirety is but one order a trial court is permitted to enter under MCL 500.3153 as a sanction for failing to comply with a valid IME request, but before entering that most drastic sanction, a trial court must first weigh the applicable factors set forth in Vicencio v Ramirez, 211 Mich App 501 (1995), which dealt with the appropriateness of dismissal based on discovery violatons during litigation.

Malick Gueye was injured in a motor vehicle accident, after which he applied for no-fault PIP benefits and demanded UM/UIM coverage from his automobile insurer, State Farm.  State Farm requested that Gueye attend an IME, scheduled for September 16, 2020, but Gueye did not attend.  State Farm then requested that Gueye submit to an EUO, scheduled for October 6, 2020, as well as a rescheduled IME, on October 28, 2020.  Gueye’s counsel responded that Gueye would be out of the country on the dates provided, but that Gueye was agreeable to scheduling an EUO over Zoom.  On October 1, 2020, State Farm denied Gueye’s claim for PIP benefits based on his failure to attend the originally-scheduled IME, but on October 12, 2020, reached out to Gueye’s counsel about scheduling the EUO over Zoom.  Gueye’s counsel responded as follows:

“I would have [rescheduled the EUO] as I indicated in my prior email; however, your client decided to suspend [Gueye’s] benefits due to a single missed IME so I don’t see the point in further cooperation. In light of that letter we are likely going to file a lawsuit shortly and will then have an obligation to sit for deposition anyway.”

State Farm twice more requested that Gueye appear for an EUO, in October and November, 2020, after which an employee of Gueye’s counsel again responded that a lawsuit was forthcoming and that an EUO would be duplicative of a deposition that would surely be taken.  State Farm responded, “Okay thanks—has suit been filed yet?” after which Gueye filed his complaint.

State Farm moved for summary disposition as to both Gueye’s action for PIP benefits UM/UIM coverage, arguing that the former should be dismissed based on Gueye’s failure to cooperate and that the latter should be dismissed based on Gueye’s failure to attend an EUO.  Specifically as to the latter, State Farm highlighted three provisions in Gueye’s policy, the first of which required that a UM/UIM claimant ‘submit to an examination under oath . . . as reasonably often as [State Farm] require[s],’ the second of which required that a UM/UIM claimant ‘be examined  as reasonably often as [State Farm] may require by physicians, doctors, and healthcare professionals chosen and paid by [State Farm][,]’ and the third which stated that a legal action for UM/UIM coverage may not be brought against State Farm if the above two requirements are not complied with.  Based on Gueye’s noncooperation with State Farm’s requests and the policy language, the trial court granted summary disposition as to both his action for PIP benefits and UM/UIM coverage.

The Court of Appeals affirmed the trial court’s dismissal of Gueye’s claim for UM/UIM coverage, noting that entitlement to such coverage is entirely contractual and holding that Gueye failed to comply with the unambiguous policy requirement that he submit to any IME or EUO requested by State Farm prior to filing suit.  The Court also rejected Gueye’s arguments that (1) State Farm’s “Okay thanks” response constituted a waiver of the policy’s requirement, (2) the EUO was not ‘reasonably’ sought for purposes of the subject provision given the arbitrary nature of its scheduling, and (3) State Farm was the first to breach the contract by denying his claim for no-fault benefits.  With respect to the second argument, the Court interpreted the policy term ‘reasonably’  to mean that “State Farm is not required to schedule the EUO ‘reasonably’ based on Gueye’s schedule or location; rather, the word ‘reasonably’ refers to the frequency of State Farm’s requests for an EUO.”  With respect to the third argument, the Court noted that Gueye breached the contract first by failing to appear for the September 16, 2020 IME.

“As discussed earlier, because UM/UIM benefits are not required by the no-fault act, the terms of the insurance contract control any potential entitlement to UM/UIM benefits. Stoddard, 249 Mich App at 460. The trial court correctly observed that the insurance contract unambiguously provided that ‘Plaintiff’s submission to both an [IME] and an [EUO] are required as conditions precedent to the Plaintiff’s ability to file suit.’ This was a valid and enforceable contract provision, see Yeo, 219 Mich App at 257, and it is undisputed that Gueye failed to submit to both the IME and EUO that State Farm requested. Therefore, the trial court did not err in dismissing Gueye’s claim for UM/UIM benefits because there was no genuine issue of material fact that Gueye violated a contractual requirement that was a necessary condition precedent to filing suit.

. . .

Gueye failed to establish that State Farm expressly agreed to waive its contractual rights or made a declaration that inferred an intent to waive strict performance of the contract. Gueye repeatedly claims State Farm admitted the EUO was unnecessary, but a review of the e-mail communications above reveals no such admission. If anything, State Farm’s communications reflect only (1) its attempts to offer Gueye a chance to submit to an EUO and (2) its unanswered inquiry into whether Gueye had filed his lawsuit yet. Neither of these communications expressly or impliedly establish an intent by State Farm to waive the EUO requirement. Indeed, State Farm’s repeated attempts to schedule an EUO before Gueye filed suit would suggest otherwise.

. . .

Gueye also references the word ‘reasonably’ in the EUO provision of the insurance contract, arguing that the EUO was not ‘reasonably’ sought given the arbitrary nature of the scheduling process and State Farm’s alleged unwillingness to accommodate his absence from the country. But the language of the insurance contract reveals that Gueye misconstrues the meaning of ‘reasonably.’ The insurance contract states, in relevant part: ‘[E]ach insured, or any other person or organization making claim or seeking payment . . . must, at our option, submit to an examination under oath, provide a statement under oath, or do both, as reasonably often as we require.’ Thus, State Farm is not required to schedule the EUO ‘reasonably’ based on Gueye’s schedule or location; rather, the word ‘reasonably’ refers to the frequency of State Farm’s requests for an EUO. Gueye’s interpretation of this language is therefore incorrect.

Finally, Gueye claims State Farm was the first to breach the insurance contract by denying his request for no-fault benefits, thereby relieving him of any obligations he might have had under the insurance contract. This argument falls short, however, for the simple reason that Gueye was the first party to breach the insurance contract. The undisputed facts show that Gueye did not appear for the requested September 16, 2020 IME before State Farm denied his request for no- fault benefits. For all these reasons, the trial court did not err in dismissing Gueye’s claim for UM/UIM benefits.”

The Court then remanded Gueye’s action to the trial court to determine whether dismissal should be with or without prejudice, based on the analysis set forth in Thomson v State Farm Ins Co, 232 Mich App 38 (1998). 

“Although we agree that the trial court properly dismissed Gueye’s claim for UM/UIM benefits, the trial court did not specify whether dismissal was with or without prejudice. In Thomson v State Farm Ins Co, 232 Mich App 38, 45; 592 NW2d 82 (1998), this Court addressed whether the failure to comply with an EUO policy provision should result in dismissal with or without prejudice. The Thomson Court held: ‘[I]f the noncompliance is wilful, the dismissal must be with prejudice; if the noncompliance is not wilful, the dismissal must be without prejudice.’ Id. at 55. This Court explained that willful noncompliance ‘involves something more than merely knowingly failing to appear for an EUO.’ ”

The Court of Appeals then turned to Gueye’s action for PIP benefits, holding that the trial court erred in dismissing his no-fault claim in its entirety—pursuant to MCLs 500.3151 and 500.3153—without first considering whether a lesser sanction might be more appropriate.  The Court noted that in Vicencio, it set forth various factors which a court should consider before imposing the severe sanction of dismissal based on a discovery violation during litigation.  Although MCL 500.3153 sets forth sanctions for failure to cooperate with pre-suit investigations of claims for no-fault PIP benefits, the Court held that trial courts should nonetheless consider the Vicencio factors before imposing the most severe sanction—“[a]n order rendering judgment by default against the disobedient person as to his entire claim or a designated part of it”—set forth in MCL 500.3153.

“On the other hand, MCL 500.3153, by authorizing court orders for noncompliance with MCL 500.3151, only comes in effect once litigation is underway. And MCL 500.3153 provides that a trial court’s order must be ‘just.’ This inclusion of a requirement to only enter orders ‘as are just’ suggests that, when entering an order under MCL 500.3153, the trial court must consider a range of factors. This is particularly true when the trial court seeks to impose the severe sanction of dismissal; the trial court’s analysis should go beyond a simple yes-or-no finding that an insured did not attend an IME. Put differently, before dismissing a no-fault claim under MCL 500.3153, the trial court should ‘carefully evaluate all available options on the record and conclude that the sanction of dismissal is just and proper.’ Vicencio, 211 Mich App at 506. We recognize that the missed IME in this case was not a discovery violation, because litigation had not yet begun. But the discretionary language of MCL 500.3153, together with the analysis from Drew, shows that the legal framework for reviewing dismissals as a discovery sanction is the best analogue to the circumstances before us. Accordingly, before dismissing a no-fault claim under MCL 500.3153, a trial court should consider the applicable Vicencio factors, including the availability of alternative sanctions, and decide whether dismissal is just.

. . .

On remand, the trial court should consider the applicable factors discussed in Vicencio to determine whether the sanction of dismissal is appropriate for Gueye’s no-fault claim. This includes ‘the party’s history of refusing to comply with previous court orders.’ Vicencio, 211 Mich App at 507. From our review of the record, it does not appear that State Farm ever moved to compel Gueye’s attendance at an IME once litigation began. While noncompliance with a court order compelling attendance at an IME is not required to dismiss the case, whether any court orders were violated is a proper consideration on remand. The Vicencio factors also include ‘whether a lesser sanction would better serve the interests of justice.’ Id. In analyzing this factor, the trial court should ‘carefully evaluate all available options on the record,’ id. at 506, including, in this case, consideration of the options specifically provided for by the Legislature under MCL 500.3153. Whether dismissal ultimately proves to be the appropriate resolution is for the trial court to decide.”


Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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