Michigan Court of Appeals; Docket #251003; Published
Judges Donofrio, Fort Hood, and Borrello; unanimous
Official Michigan Reporter Citation: 272 Mich. App. 58, Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Private Contract (Meaning and Intent)
Uninsured Motorist Benefits: Notice and Statute of Limitations for Uninsured Motorist Coverage
CASE SUMMARY:
In this unanimous published opinion by Judge Donofrio, the Court of Appeals held that a contractual limitation period was judicially tolled. In so holding, the court distinguished Devillers v Auto Club Insurance Association, 473 Mich 562 (2005) [RB #2646], on the basis Devillers involved a statutory no-fault claim. It also ruled that the Michigan Supreme Court’s holding in Rory v Continental Insurance Company, 473 Mich 457 (2005) [RB #2575], should not have retroactive application.
The plaintiff in this case was injured in a motor vehicle accident which occurred on June 20, 1999. At the time of the accident, plaintiff had no-fault insurance with defendant Farm Bureau. The policy included a provision for uninsured motorist benefits and contained a one-year limitation period. More than three years after the accident, plaintiff filed suit for breach of contract because defendant failed to provide uninsured benefits. Defendant moved for summary disposition arguing that plaintiff failed to file the action within one year of the accident. The trial court denied the motion and the Court of Appeals affirmed, finding that under Tom Thomas Organization, Inc. v Alliance Insurance Company, 396 Mich 588 (1976), the action was tolled from the time plaintiff provided notice of her loss until defendant formally denied her claim. The Michigan Supreme Court then remanded the matter for reconsideration in light of its decisions in Rory and Devillers.
On remand, the Court of Appeals again affirmed. In reaching its decision, it found that the holding in Rory should have prospective effect. In Rory, the Supreme Court overruled Tom Thomas and held that an unambiguous provision in an insurance policy that provides for a shortened limitation period is enforceable, as long as it does not violate law or public policy. In determining that Rory should be given prospective effect, the Court of Appeals noted that Rory clearly and specifically overruled Tom Thomas. Tom Thomas provided for judicial tolling and was the law in this state for 30 years. Therefore, because Rory established a new principle of law; was relied on by courts, practitioners, insureds, and insurers; and would give insurers an unfair benefit if retroactively applied, the Court of Appeals determined it should have prospective effect. In this regard, the court stated:
“Our Supreme Court considered the validity or reasonableness of a shortened one-year contractual limitations period in an insurance policy in Rory. . . . It held that an unambiguous provision in an insurance policy providing for a shortened limitations period is enforceable unless it would violate law or public policy. . . . While observing that ‘[a] mere judicial assessment of “reasonableness” is an invalid basis upon which to refuse to enforce contractual provisions,’ the Supreme Court specifically overruled its prior opinion in Tom Thomas. . . . Rory clearly and specifically overruled Tom Thomas, a decision that this Court has relied on for the proposition that a contractual limitations period in an insurance policy must be tolled from the time the insured gives notice until the insurer formally denies liability. Rory, supra at 470; Tom Thomas, supra at 596-597. Tom Thomas judicial tolling was the law in this state for nearly 30 years, relied on by courts, practitioners, insurers, and insureds alike. Plainly, the decision in Rory represents a break from solid, longstanding law in this state. . . . By retroactively applying Rory, insurers unfairly benefit from the delay they participated in creating during the adjustment process while, concomitantly, claimants suffer without recourse. Retroactive application of Rory in this case, as well as in cases with similar facts, offends general expectations of the legal process. . . . For all these reasons, we conclude . . . Rory is to be applied prospectively only in this matter and in all similar cases.
The court then found the holding Devillers was inapplicable to this case. In Devillers, the Michigan Supreme Court called Tom Thomas into question when it held that judicial tolling does not apply to the limitation period in MCL 500.3145(1). Although the Michigan Supreme Court declared that Devillers be given retroactive effect, the Court of Appeals determined Devillers did not apply to this case because it involved a statutory limitation period, while this case involved a contractual limitation period. In this regard, the court stated:
“In Devillers, . . . the Supreme Court also again called into question Tom Thomas. When the Devillers Court overruled the judicial tolling doctrine, it stated that Tom Thomas was wrongly decided because ‘[s]tatutory–or contractual–language must be enforced according to its plain meaning, and cannot be judicially revised or amended to harmonize with the prevailing policy whims of members of [the Michigan Supreme Court.]’ . . . As such, the Court declared that ‘[t]he one-year-back rule of MCL 500.3145(1) must be enforced by the courts of this state as our Legislature has written it, not as the judiciary would have had it written.’ As a result, the Supreme Court granted the defendant summary disposition to the extent that the plaintiff’s claim was barred by the one-year-back rule. . . . Regarding Devillers, our Supreme Court explicitly held that its decision in Devillers was to be applied retroactively. Devillers, supra at 587. In particular, the Court stated, ‘our decision in this case is to be given retroactive effect as usual and is applicable to all pending cases in which a challenge to Lewis’s judicial tolling approach has been raised and preserved.’ Thus, pursuant to Devillers, under MCL 500.3145(1), a plaintiff may bring suit to recover unpaid personal protection insurance claims within one year from the latest claimed expense if the plaintiff has timely filed notice or if the insurance company has previously paid benefits for the injury. Although the holding in Devillers is clearly to be applied retroactively, it is not relevant to the instant case because this case is factually distinguishable. Devillers concerns those statutory claims brought pursuant to the no-fault act, with the applicable statutes of limitations. This case does not involve the no-fault act and is proceeding strictly as an insurance contract claim wholly separate from the no-fault act and the associated statutes of limitations. Hence, the holding in Devillers is not instructive in this case.”
