Michigan Court of Appeals; Docket No. 61085; Published
Judges T. M. Bums, Beasley, and Hansen; Unanimous; Opinion by Judge T.M. Burns
Official Michigan Reporter Citation: 123 Mich App 416; Link to Opinion 
STATUTORY INDEXING:
Tolling of Limitations Upon Submission of Claim [§3145]
Limitations Period for PPI Claims [§3145(2)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
This is an important unanimous Opinion by Judge T. M. Burns regarding the issue of the "tolling" of the one year statute of limitations set forth in §3145 of the No-Fault Act. The case involved a property protection insurance benefits subrogation action. Plaintiff insurance company had paid for damages to the home of its insured caused by the operation of a motor vehicle by defendant's insured. The plaintiff insurance company gave written notice of the subrogation within the one year notice period and the two insurance companies promptly commenced negotiation. About a year after receiving the notice, defendant insurance company gave notice that it was denying all liability for the claim because the one year no-fault statute of limitations had expired. The trial judge rejected this contention and entered a judgment in favor of plaintiff. The defendant appealed and the Court of Appeals affirmed.
In his opinion, Judge Bums adopted the tolling rule set forth in the previous Court of Appeals decision in Richards v American Fellowship (item number 101). Judge Bums noted that this issue had produced a split of authority among different panels of the Court of Appeals as well as the Federal Court decision which considered the issue. In favor of the Richards rule is Lansing General Hospital v Gomez (item number 518) and the decision in Andrews v Allstate 479 F Supp 481 (Ed Mich, 1979) (item number 282). Rejecting the Richard rule are the cases of English v Home Insurance Company (item number 553), Allstate v Frankenmuth (item number 464), and Aldrich v Auto-Owners (Item number 403).
Judge Bums rejected the underlying assumptions of the cases which refused to adopt the Richards rule. He noted that the recent opinion of the Michigan Supreme Court in Ford Motor Company v Lumbermens Mutual 413 Mich 22, (1982) strongly supports the concept embraced in Richards. In this decision, the Michigan Supreme Court held that statutory form fire insurance policy is to be interpreted as tolling the statute of limitations between the plaintiffs giving notice of the claim and the insurance company's denial of same.
Furthermore, Judge Burns stated that a defendant insurance company can protect itself from stale claims by properly responding to a plaintiff’s claim. A tolling rule does not create more stale claims. In addition, Judge Burns stated that the Richards rule was consistent with promoting negotiations and discouraging litigation. If tolling did not occur during the time that the parties were discussing a claim, the plaintiff would be forced to file a lawsuit in the middle of negotiations thereby jeopardizing the process of settlement and unnecessarily increasing the amount of insurance litigation.
Finally, the Court of Appeals was not bothered by the fact that the parties in this case were two insurance companies. The Court held that the rationale of the rule applied equally to insurance companies as it does to individual plaintiffs. In either situation refusing to adopt the tolling rule could cause insurance companies to procrastinate in the processing of claims and otherwise hamper negotiations.
