Michigan Court of Appeals; Docket #262167; Published
Judges Hoekstra, Gage, and Wilder; unanimous
Official Michigan Reporter Citation: 269 Mich. App. 356, Link to Opinion 
On May 5, 2008, the Michigan Supreme Court AFFIRMED IN PART and REVERSED IN PART the judgment of the Court of Appeals Link to MSC Summary
STATUTORY INDEXING:
Work Loss Benefits: Nature of the Benefit [3107(1)(b)]
Requirement That Benefits Were Overdue [3148(1)]
Requirement That Benefits Were Unreasonably Delayed or denied [3148(1)]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this unanimous published opinion by Judge Wilder, the Court of Appeals held that an individual who receives wages from a corporation, but who is also the sole shareholder of the corporation, is entitled to wage loss benefits even though the corporation had operated at a net loss. At the time plaintiff was injured in a motor vehicle accident, he was the sole shareholder of a meat packing business as well as its sole employee. In the three years before the accident, plaintiff had earned $16,200, $11,250, and $12,150. The business operated at a loss each of those years. Defendant argued that under Adams v Auto Club Insurance Association [RB #950], plaintiff was not entitled to wage loss benefits because the corporation had failed to make a profit for the three years prior to the accident. The trial court disagreed. In affirming, the Court of Appeals determined that because plaintiff received wages from the business, the business expenses are irrelevant when calculating wage loss benefits. In so holding, the court stated:
“Whether the sole shareholder and employee of a corporation who receives wages from the corporation may claim work-loss benefits under a policy of insurance issued to that person as an individual is a question of first impression in Michigan.
MCL 500.3107(1)(b) provides that personal protection insurance benefits are payable for ‘[w]ork loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he or she had not been injured.’ Work loss includes not only lost wages, but also lost profit that is attributable to personal effort and self-employment.
* * *
In this case, there is no dispute that (1) plaintiff received wages as an employee of the corporation and (2) plaintiff’s remuneration from the corporation was not determined on the basis of the annual net income of the corporation. Plaintiff did not assert a work-loss claim based on the lost profits of the corporation. . . . These facts distinguish this case from Adams. We reject defendant’s argument that plaintiff’s self-employment status dictates a calculation of the gross receipts of the corporation less the corporate expenses to determine plaintiff’s net income. We emphasize that plaintiff as an individual received wages and was not remunerated on the basis of the gross receipts of the corporation. Defendant presents no evidence to justify the disregard of the long-held rule that ‘[t]he corporate entity is distinct although all its stock is owned by a single individual or corporation.’. . . Moreover, ‘[a corporation’s] separate existence will be respected, unless doing so would subvert justice or cause a result that would be contrary to some other clearly overriding public policy.’. . . Because plaintiff received wages from the corporation, and because defendant has presented no evidence to the contrary, the business expenses of the corporation are irrelevant in calculating plaintiff’s wage loss, and plaintiff is treated as being in no different position than an employee of any other corporation operating at a loss. The trial court correctly determined that plaintiff was entitled to work-loss benefits and properly granted his motion for summary disposition.”
(emphasis in original)
The court then determined plaintiff was properly awarded attorney fees under MCL 500.3148(1), because plaintiff’s claim for work-loss benefits complied with the requirements set forth by the No-Fault Act. In this regard, the court stated:
“Plaintiff’s claim complied with the requirements for work-loss benefits as delineated under the plain language of the statute. Defendant attempted to impute the corporation’s financial position to plaintiff because he was the only shareholder, despite the evidence presented to defendant that plaintiff received wages from the corporation, that plaintiff and the corporation filed separate tax returns, and that plaintiff’s work-loss claim was not predicated on lost profits of the corporation. Because plaintiff’s work-loss claim was not dependent on the net income of the corporation, and, particularly, where the record shows that the corporation was not the named policyholder or a named party in this action, we are not left with a definite and firm conviction that a mistake was made.”
