Allstate Insurance Company v. Dominique Jamia Johnson ( 2023 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
ALLSTATE INSURANCE COMPANY, UNPUBLISHED
May 25, 2023
Plaintiff-Appellee,
v No. 360079
Wayne Circuit Court
DOMINIQUE JAMIA JOHNSON, LC No. 20-009080-NF
Defendant-Appellant.
Before: RICK, P.J., and SHAPIRO and O’BRIEN, JJ.
PER CURIAM.
In this no-fault action, MCL 500.3101 et seq., defendant appeals by leave granted1 the trial
court’s order granting plaintiff’s motion for summary disposition. We reverse and remand for
further proceedings.
I. BACKGROUND
This case arises from a motor vehicle accident that occurred on November 23, 2014.
Defendant owned the 2000 Chevrolet Malibu that was involved in the accident. The insurance
policy on the Malibu expired shortly after March 2014, and thus the vehicle was uninsured at the
time of the accident. Because the car had no insurance, defendant instructed her boyfriend, Eric
Jackson, not to drive it. Nevertheless, Eric’s father, Melvin Jackson, got permission from Eric to
drive the Malibu. In a deposition, Melvin testified that he knew defendant owned the Malibu and
that he obtained permission to drive the vehicle from Eric, not defendant, despite knowing that
Eric was not the owner of the vehicle. Melvin confirmed that he never had a conversation with
defendant regarding the Malibu and that “defendant did not specifically tell [Melvin that he] could
take the car.” Melvin subsequently got into a car accident while driving the Malibu on M-10 in
Detroit, Michigan. Melvin and a passenger, Joi Jackson, were injured in the accident and sought
no-fault insurance benefits. The claim was assigned to plaintiff, which paid $1,463,962.93 to
1
See Allstate Ins Co v Johnson, unpublished order of the Court of Appeals, entered May 6, 2022
(Docket No. 360079).
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Melvin and Joi in personal protection insurance (PIP) benefits, adjustment expenses, and attorney
fees.
In July 2020, plaintiff filed a complaint seeking subrogation against defendant pursuant to
MCL 500.3177(1). In response, defendant admitted she owned the Malibu and that, “at the time
of the accident, the Uninsured Vehicle was uninsured in violation of the Michigan No-Fault Act,
MCL 500.3101, et seq.” Defendant did not expressly raise an affirmative defense regarding
Melvin using the Malibu without defendant’s permission. However, defendant did raise a defense
that “[p]laintiff is not entitled to the payment of personal protection insurance benefits, pursuant
to MCL 500.3113.”2
In September 2021, plaintiff moved for summary disposition under MCR 2.116(C)(9)
(failure to state a valid defense) and (C)(10) (no genuine issue of material fact). Plaintiff claimed
that defendant’s answer to the complaint admitted all of the essential elements of the claim, and
that summary disposition was therefore proper under MCR 2.116(C)(9). Plaintiff explained that:
(1) defendant was the owner of the Malibu, (2) the Malibu was uninsured, and (3) Melvin drove
the Malibu on a highway on the day of the accident. Defendant’s answer did not dispute these
allegations. Additionally, plaintiff argued there was no question of fact regarding whether it was
entitled to subrogation against defendant under MCL 500.3177(1), given that all of the other
elements of plaintiff’s claim were undisputed. Thus, said plaintiff, summary disposition under
MCR 2.116(C)(10) was also proper.
In a response to plaintiff’s motion, defendant argued that there was a genuine issue of
material fact regarding whether Melvin had her permission to use the uninsured Malibu.
Defendant argued that she did not permit Melvin to operate the Malibu on a public highway. Thus,
she bore no financial responsibility for the accident because defendant complied with the no-fault
act. Further, defendant argued that plaintiff was not “[t]he insurer obligated to pay personal
protection insurance” for the accident because MCL 500.3113(a) states that a person who takes a
vehicle unlawfully is ineligible for no-fault benefits. Since Melvin did not have permission to
drive the Malibu and was ineligible to receive no-fault benefits, the benefits that plaintiff paid were
not compensable under the no-fault act.
In October 2021, defendant filed a motion to amend her answer to the complaint and argued
that she erroneously stated the Malibu was uninsured in violation of the no-fault act. Defendant
explained that although the Malibu was uninsured, it was not required to be insured under
MCL 500.3101(1) of the no-fault act, which only requires vehicles that are operated or moved on
a highway to be insured. Defendant requested leave to amend her answer to conform to the proofs
of her affidavit and Melvin’s deposition testimony, which showed that she told Eric that the vehicle
was not be to driven because it was uninsured and that she had not given anyone permission to
drive the Malibu. Thus, defendant concluded, the Malibu was not required to be insured because
2
MCL 500.3113 provides, “[a] person is not entitled to be paid personal protection insurance
benefits for accidental bodily injury if . . . [t]he person was willingly operating or willingly using
a motor vehicle or motorcycle that was taken unlawfully, and the person knew or should have
known that the motor vehicle or motorcycle was taken unlawfully.”
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she had not given anyone permission to drive the vehicle on a public highway. In response,
plaintiff pointed out that defendant delayed filing her motion to amend for 14 months, and argued
that allowing defendant to amend her answer after such a long delay was unreasonable and would
significantly prejudice plaintiff.
At a hearing on the motions, the trial court concluded that defendant’s lack-of-permission
defense was an affirmative defense that was waived as a result of her failure to raise it in her first
responsive pleading. The court also observed that there was no dispute that defendant owned the
Malibu at the time of the accident and that the Malibu was uninsured. The trial court then granted
plaintiff’s motion for summary disposition. Concluding that defendant’s request to amend her
answer would be futile, the court also denied defendant’s motion to amend her answer. In an order
entered after the hearing, the court granted plaintiff’s motion for summary disposition under
MCR 2.116(C)(9) and (C)(10), and entered a judgment against defendant in the amount of
$1,463,962.93. This appeal followed.
II. ANALYSIS
A. SUMMARY DISPOSITION
Defendant argues the trial court erred when it granted plaintiff’s motion for summary
disposition under MCR 2.116(C)(9) and (C)(10). We agree.
We “review de novo a trial court’s decision on a motion for summary disposition.” El-
Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159; 934 NW2d 665 (2019). Summary
disposition is proper under MCR 2.116(C)(9) “if a defendant fails to plead a valid defense to a
claim,” as well as “when the defendant’s pleadings are so clearly untenable that as a matter of law,
no factual development could possibly deny the plaintiff’s right to recovery.” Capital Area Dist
Library v Mich Open Carry, Inc, 298 Mich App 220, 227; 826 NW2d 736 (2012) (quotation marks
and citation omitted). “Only the pleadings may be considered when the motion is based on subrule
(C)(8) or (9).” MCR 2.116(G)(5).
When considering a motion under MCR 2.116(C)(10), “a trial court must consider all
evidence submitted by the parties in the light most favorable to the party opposing the motion.”
El-Khalil, 504 Mich at 160. Only when there is no genuine issue of material fact may the motion
be granted. Id. “A genuine issue of material fact exists when the record leaves open an issue upon
which reasonable minds might differ.” Id. (quotation marks and citation omitted).
Plaintiff brought its claim for reimbursement pursuant to MCL 500.3177(1), which states:
The insurer obligated to pay personal protection insurance benefits for
accidental bodily injury to a person arising out of the ownership, maintenance, or
use of an uninsured motor vehicle as a motor vehicle may recover all benefits paid,
incurred loss adjustment costs and expenses, and incurred attorney fees from the
owner or registrant of the uninsured motor vehicle or from his or her estate. . . . For
purposes of this section, an uninsured motor vehicle is a motor vehicle with respect
to which security as required by sections 3101(1) and 3102 is not in effect at the
time of the accident.
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Thus, an insurer is only able to recover benefits for uninsured vehicles which are required to
maintain security under MCL 500.3101(1) and MCL 500.3102. MCL 500.3101(1) states that
“[s]ecurity is only required to be in effect during the period the motor vehicle is driven or moved
on a highway.”3
Regarding MCR 2.116(C)(9), defendant first argues that MCL 500.3102(2) required
plaintiff to show that she permitted the Malibu to be driven on a highway as part of its case-in-
chief. MCL 500.3102(2) states, in relevant part:
(2) An owner or registrant of a motor vehicle or motorcycle with respect to which
security is required, who operates the motor vehicle or motorcycle or permits it to
be operated upon a public highway in this state, without having in full force and
effect security complying with this section or section 3101 or 3103 is guilty of a
misdemeanor. [Emphasis added.]
This subsection only states that a person who permits the use of an uninsured vehicle is guilty of
a misdemeanor; therefore, it merely establishes a criminal penalty for persons violating the no-
fault act’s requirements. MCL 500.3102(2). Consequently, we find that defendant’s argument
regarding MCL 500.3102(2) lacks merit.
However, defendant also argues that MCL 500.3113 limits plaintiff’s right to subrogation
against defendant under MCL 500.3177(1). Specifically, defendant argues plaintiff was not an
“insurer obligated to pay” benefits. We agree. MCL 500.3113 provides:
A person is not entitled to be paid personal protection insurance benefits for
accidental bodily injury if at the time of the accident any of the following
circumstances existed:
(a) The person was willingly operating or willingly using a motor vehicle
or motorcycle that was taken unlawfully, and the person knew or should have
known that the motor vehicle or motorcycle was taken unlawfully.
“Because a taking does not have to be larcenous to be unlawful, the phrase ‘taken unlawfully’ in
MCL 500.3113(a) applies to anyone who takes a vehicle without the authority of the owner,
regardless of whether that person intended to steal it.” Spectrum Health Hosps v Farm Bureau
Mut Ins Co, 492 Mich 503, 518; 821 NW2d 117 (2012).
In her answer, defendant pleaded that, pursuant to MCL 500.3113, plaintiff was not entitled
to subrogation against defendant. Although she did not expressly argue that this was so because
Melvin unlawfully drove her Malibu, she nevertheless pleaded a valid defense to plaintiff’s claim.
Summary disposition under MCR 2.116(C)(9) is only proper when “the defendant’s pleadings are
3
MCL 500.3102(1) concerns requirements for nonresident owners of unregistered vehicles, and is
thus not relevant to this case. MCL 500.3102(2) states owners of vehicles who “operate[] the
motor vehicle . . . or permit[] it to be operated upon a public highway” without having no-fault
insurance are guilty of a misdemeanor.
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so clearly untenable that as a matter of law, no factual development could possibly deny the
plaintiff’s right to recovery.” Capital Area Dist Library, 298 Mich App at 227 (quotation marks
and citation omitted). Because further factual development could establish that Melvin did not
have defendant’s permission to use the Malibu, suggesting that plaintiff’s claim for recovery could
be denied, this claim is not untenable within the meaning of MCR 2.116(C)(9). Therefore, the
trial court ultimately erred by granting plaintiff’s motion for summary disposition under
MCR 2.116(C)(9).
Concerning MCR 2.116(C)(10), defendant argues that a genuine issue of material fact
exists regarding whether she gave Melvin permission to use the Malibu. However, “[a] defense
not asserted in the responsive pleading . . . is waived.” MCR 2.111(F)(2). Defendant failed to
raise the defense that she did not give Melvin permission to use her vehicle regarding
MCL 500.3102 in her responsive pleading. Defendant also never amended her answer prior to the
filing of plaintiff’s motion for summary disposition. Thus, we agree with the trial court that
defendant’s argument of permissive use of the Malibu regarding MCL 500.3102 was waived.
However, defendant also argues that a genuine issue of material fact exists regarding
whether plaintiff was “[t]he insurer obligated to pay personal protection insurance benefits” under
MCL 500.3177. As noted above, MCR 500.3113 states that a person is not entitled to no-fault
benefits if he used a motor vehicle that was “taken unlawfully.” Again, an unlawful taking “applies
to anyone who takes a vehicle without the authority of the owner, regardless of whether that person
intended to steal it.” Spectrum Health Hosps, 492 Mich at 518. We agree there is a genuine issue
of material fact concerning whether Melvin had defendant’s permission to use the Malibu. Melvin
testified that only Eric gave Melvin permission to use the Malibu. Melvin also testified he knew
defendant owned the vehicle and that “[defendant] did not specifically tell [Melvin that he] could
take the car.” Considering the evidence in the light most favorable to defendant, the nonmovant,
reasonable minds could differ regarding whether Melvin had authority to use the Malibu, and
consequently, whether plaintiff was obligated to pay benefits to Melvin. Thus, the trial court erred
when it granted plaintiff’s motion for summary disposition under MCR 2.116(C)(10).
B. AMENDMENT OF THE PLEADINGS
Defendant next argues that the trial court erred when it denied defendant’s motion for leave
to amend her answer. We agree.
“The grant or denial of a motion for leave to amend pleadings is reviewed for an abuse of
discretion.” Titan Ins Co v North Pointe Ins Co, 270 Mich App 339, 346; 715 NW2d 324 (2006).
“A trial court does not abuse its discretion when its decision falls within the range of principled
outcomes.” Rock v Crocker, 499 Mich 247, 255; 884 NW2d 227 (2016).
As noted above, a defense not asserted in a responsive pleading is considered waived under
MCR 2.111(F)(2). However, MCR 2.111(F)(3) states that affirmative defenses “must be stated in
a party’s responsive pleading, either as originally filed or as amended in accordance with
MCR 2.118.” (Emphasis added.) Under MCR 2.118(A)(2), “leave [to amend a pleading] shall be
freely given when justice so requires.” Further, “[a] party may move to amend its affirmative
defenses at any time, and leave should be granted freely unless doing so would prejudice the other
party.” Glasker-Davis v Auvenshine, 333 Mich App 222, 230; 964 NW2d 809 (2020).
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Additionally, as it relates to the specific motion for summary disposition at issue in this case, this
Court has opined that “[i]f a trial court grants summary disposition pursuant to MCR 2.116(C)(8),
(C)(9), or (C)(10), the court must give the parties an opportunity to amend their pleadings pursuant
to MCR 2.118, unless the amendment would be futile.” Yudashkin v Linzmeyer, 247 Mich App
642, 651; 637 NW2d 257 (2001) (quotation marks and citation omitted); see also MCR 2.116(I)(5)
(stating the court shall give parties the opportunity to amend their pleadings under MCR 2.118,
“unless the evidence then before the court shows that amendment would not be justified”).
Defendant’s answer was filed on August 25, 2020, and the motion to amend was filed on
October 5, 2021; thus, it is clear that there was a significant delay between the filing of the answer
and the motion to amend the pleadings. Plaintiff argues that it would be prejudiced if defendant
were permitted to amend her answer after so long a delay. However, “[d]elay, alone, does not
warrant denial of a motion to amend . . . .” Decker v Rochowiak, 287 Mich App 666, 682; 791
NW2d 507 (2010) (quotation marks and citation omitted). Instead, “[l]eave to amend should be
denied only for particularized reasons, such as undue delay, bad faith or dilatory motive on the
movant’s part, repeated failure to cure deficiencies by amendment previously allowed, undue
prejudice to the opposing party, or where amendment would be futile.” Miller v Chapman
Contracting, 477 Mich 102, 105; 730 NW2d 462 (2007).
There is no indication that defendant’s delay in filing the motion to amend was done in bad
faith. Moreover, plaintiff has not shown that amendment of the answer would cause it to suffer
actual prejudice, which exists if the amendment “would prevent the opposing party from receiving
a fair trial, for example, the opposing party would not be able to properly contest the matter raised
in the amendment because important witnesses have died or necessary evidence has been destroyed
or lost.” Weymers v Khera, 454 Mich 639, 659; 563 NW2d 647 (1997). No such issues have been
presented in this case. We further conclude that the undue delay has not prejudiced plaintiff
because plaintiff has been aware of Melvin’s deposition testimony, in which he testified that he
did not receive permission from defendant to use the Malibu, since at least 2017. Thus, an
amendment to the pleadings to include a defense concerning permissive use of the vehicle would
not prevent plaintiff from receiving a fair trial. Plaintiff had been on notice of Melvin’s statements
regarding the issue of permissive use of the Malibu, and should have no difficulty contesting this
matter.
Additionally, the amendment of defendant’s pleading would be justified under the
circumstances. See MCR 2.116(I)(5). Here, the evidence before the Court shows that there is a
question of fact regarding whether Melvin had permission from defendant to use the Malibu.
Melvin testified that Eric was the only person who gave him permission to use the Malibu, that he
knew defendant owned the vehicle, and that “[defendant] did not specifically tell [Melvin that he]
could take the car.” Thus, we conclude an amendment to defendant’s answer is justified and would
not be futile. Yudashkin, 247 Mich App at 651.
III. CONCLUSION
We conclude that the trial court erred when it granted plaintiff’s motion for summary
disposition under MCR 2.116(C)(9) and (C)(10) because defendant pleaded a valid defense to
plaintiff’s claim and there is a genuine issue of material fact regarding whether Melvin used the
Malibu without defendant’s permission as the owner of the vehicle. Additionally, the trial court
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abused its discretion when it denied defendant’s motion for leave to amend her answer, where
amendment would not be futile or prejudicial to plaintiff.
Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Michelle M. Rick
/s/ Douglas B. Shapiro
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