Michigan Supreme Court; Docket No. 94617; Published
Opinion by Justice Griffin; Unanimous
Official Michigan Reporter Citation: 444 Mich 638; Link to Opinion 
STATUTORY INDEXING:
Work Loss Benefits: Nature of the Benefit [§3107(1)(b)]
Work Loss Benefits: Calculation of Benefits [§3107(1)(b)]
Work Loss Benefits: Mitigation Requirement [§3107(1)(b)]
Work Loss Benefits: Loss of Earning Capacity [§3107(1)(b)]
TOPICAL INDEXING:
Uniform Motor Vehicle Accident Reparations Act (UMVARA)
CASE SUMMARY:
In this unanimous Opinion by Justice Griffin, the Supreme Court affirmed the decision of the Court of Appeals (Item No. 1558), holding that where the injured plaintiff could not return to her pre-accident job because it had been filled during her absence, she was entitled to receive work loss benefits based upon the wage differential between her pre-accident job and a lower paying post-accident job. The Supreme Court reversed and remanded for further proceedings that portion of the Court of Appeals decision which awarded wage loss benefits to the plaintiff for the period beyond her voluntary termination of the post-accident job. The Supreme Court held that the circumstances of this case required the trial court to determine the issue of plaintiffs obligation to mitigate damages.
At the time plaintiff was injured in an automobile accident she was employed as an office manager. Four months following her injury she was released to return to work, however, during her absence her job had been filled. After seeking alternative employment for six months, plaintiff found another job with another company at substantially lower pay with an income differential of approximately $234 per week. Hartford, however, terminated payment of any work loss benefits after plaintiff obtained this new employment, contending that its obligation to plaintiff for work loss benefits ended once she accepted other employment. Hartford contended that plaintiff’s claim for work loss benefits based upon the differential between her income before her injury and her income in the new employment after recovering from her injury was an effort to seek "loss of earning capacity" damages which, based upon Ouellette v Kenealy, 424 Mich 83 (1985), are not recoverable under the no-fault act.
In rejecting Hartford's argument on the issue of wage differential between the old and the new employment, the Supreme Court held that the Ouellette, supra, decision was in fact persuasive authority for plaintiffs position that her claim for work loss benefits under §3107(l1(b) is distinct and separate from any claim that might be made for lost earning capacity. The Supreme Court agreed with the decision in Nawrocki v Hawkeye Security Insurance Company, 83 Mich App 135 (1978) which held:
"The cases which discuss earning capacity damages stress repeatedly that plaintiff’s right is to recover not what he would have earned but what he could have earned. This contrasts sharply with the language of the statute [§3107(l)(b)] before us: 'benefits are payable for ... loss of income from work an injured would have performed ...'," (emphasis in original)
The Supreme Court also noted that no challenge was presented by this appeal to the ruling in Nawrocki, supra, that an injured person's right to work loss benefits under §3107(1)(b) is not necessarily limited to the period of his disability. The Court of Appeals in Nawrocki, supra, held, and it has been settled law since then, that eligibility for §3107(1)(b) work loss benefits, while subject to other statutory limitations, is not restricted to the period of disability if the insured's continued loss of income is attributable to injury incurred in the accident. Therefore, the Supreme Court upheld the decision of the circuit court and the Court of Appeals affirming that plaintiff was entitled to wage loss differential for that period of time while she was employed at a lower paying job.
The Supreme Court also addressed the issue of plaintiff’s duty "to mitigate damages in the context of a claim for work loss benefits. In this case, after plaintiff obtained her new employment at a lower rate of pay and worked at that job for approximately two months, she quit that job voluntarily. The trial court ruled that plaintiff’s voluntary termination of that post-accident job resulted in no further obligation on the part of Hartford to pay work loss benefits. The circuit court on appeal upheld the district court trial judge's decision on this issue, on the grounds that after plaintiff quit this post-accident job, her work loss was no longer "a direct consequence of her auto accident." On appeal from the circuit court, a divided panel of the Court of Appeals reversed that portion of the circuit court's decision that denied benefits following plaintiffs voluntary termination of her post-accident job. The Court of Appeals held that plaintiff was entitled to continue to receive work loss benefits based upon the same "wage differential" computations utilized in paying plaintiff during the time that she was employed in that post-accident job. The Court of Appeals felt that this decision did not reward plaintiff for quitting her job, nor did it reward defendant for the happenstance that plaintiffs new job did not work out. The Court of Appeals felt that its decision on this issue implicitly recognized that plaintiff was forced to take the new job because of accident related injuries.
On appeal to the Supreme Court, the Supreme Court considered Hartford's arguments that plaintiff’s voluntary termination of her post-injury job constituted a supervening, independent event that severed the chain of causation, thus precluding recovery of benefits, and also, Hartford's argument that plaintiff was not entitled to continue benefits because she had failed to mitigate her damages.
With regard to the first argument, Hartford contended that under the decisions in MacDonald v State Farm, 419 Mich 146 (1984) and Luberda v Farm Bureau, 163 Mich App 457 (1987), plaintiff’s voluntary discontinuation of her post-accident job acted to suspend further work loss benefits payable by Hartford. In MacDonald, the injured party had suffered a heart attack following his automobile accident injuries. In Luberda, the injured party was incarcerated subsequent to his automobile accident related injuries. In those two cases, the Court of Appeals held that these subsequent events acted to suspend any further obligation of the no-fault carrier to pay work loss benefits for the reason that the subsequent events were independent, intervening events unrelated to the injuries sustained in the automobile accident.
The Supreme Court distinguished MacDonald, supra, and Luberda, supra, from the instant case on the basis that in MacDonald and Luberda, the subsequent events were unrelated to the automobile accident injuries. In this case, plaintiff’s effort to find suitable work after her pre-accident job was lost due to her injuries was directly related and attributable to the automobile accident and the injuries incurred. If it were not for the accident, plaintiff would have likely continued to perform her work as office manager at her former employment. The Supreme Court held that plaintiff’s effort to find other suitable work, is not to be equated for purposes of causation determination with the unrelated heart attack in MacDonald or the imprisonment for crime in Luberda. Therefore, plaintiff’s voluntary termination of her post-accident job was not a supervening event that broke the "but for" chain of causation.
Finally, the Supreme Court addressed the issue of mitigation of damages asserted by Hartford. On this issue, the Supreme Court agreed with Hartford that the right to work loss benefits provided by §3107(l)(b) of the no-fault act is subject to the common law obligation to mitigate damages.
The Supreme Court recognized in its opinion that the no-fault act does not explicitly mention mitigation of damages as a qualification for work loss benefits. Further, the court acknowledged that the legislature did not adopt certain language found in the parallel "UMVARA work loss" provision, allowing for reduction of work loss benefits by the amount of income that the injured person "would have earned in available appropriate substitute work he was capable of performing but unreasonably failed to undertake." UMVARA, §l(a)(5)(ii). Nevertheless, the Supreme Court held that in spite of the absence of explicit mention in the act of a duty to mitigate, and in spite of the fact that the Legislature did not adopt mitigation language from the parallel UMVARA, the common law rule requiring an injured party in a contract or tort action to mitigate damages applies in suits for work loss benefits under the no-fault act. The Supreme Court relied on the Court of Appeals decision in Bak v Citizens Insurance Company, 199 Mich App 730 (1993) (Item No. 1612) which held that the Legislature's failure to adopt UMVARA "in toto" does not command the conclusion that the Legislature has abrogated the common law duty to mitigate. The Supreme Court also recognized that a decision requiring the injured plaintiff to mitigate damages is good policy that serves the overall goals of the no-fault act. Therefore, the Supreme Court reversed the Court of Appeals decision awarding continued wage differential no-fault benefits after plaintiff voluntarily terminated her post-accident job. The Supreme Court remanded that portion of the decision to the trial court for further proceedings and a determination of the issue concerning plaintiffs obligation to mitigate damages.
