MICHAEL MCCAUL V MODERN TILE & CARPET
Annotate this Case
Download PDF
STATE OF MICHIGAN
COURT OF APPEALS
MICHAEL McCAUL,
UNPUBLISHED
July 20, 2004
Plaintiff-Appellant,
v
No. 245758
Kalamazoo Circuit Court
LC No. 02-000306-NO
MODERN TILE & CARPET,
Defendant-Appellee.
Before: Neff, P.J., and Zahra and Murray, JJ.
NEFF, P.J. (dissenting).
I respectfully dissent. MCL 418.641(2)1 presents a legal quandary that at first glance
defies a just resolution given the applicable statute of limitations. In my view, for reasons
explained below, the most efficient and equitable resolution is to toll the limitations period
during the worker’s compensation proceedings that are the basis of the civil action under
subsection 641(2). I agree that existing precedent precludes such tolling. Nonetheless, I
conclude that plaintiff’s action is not time-barred because his claim under MCL 418.641(2) did
not accrue until he was denied worker’s compensation benefits on October 14, 1999. I would
therefore reverse the grant of summary disposition.
I
Under subsection 171(4)2 of the Worker’s Compensation Disability Act (WDCA), the
Legislature expressly authorized civil actions against employers who fraudulently induce
1
MCL 418.641(2) provides: “The employee of an employer who violates the provisions of
section 171 or 611 [MCL 418.171 or MCL 418.611] shall be entitled to recover damages from
the employer in a civil action because of an injury that arose out of and in the course of
employment notwithstanding the provisions of section 131 [MCL 418.131.]”
2
. MCL 418.171(4).
-1-
employees to pose as independent contractors.3 In doing so, the Legislature could not have
intended to burden injured workers or the courts with duplicative, parallel administrative and
civil actions. It is illogical to require claimants to pursue simultaneous and often unnecessary
civil litigation merely to avoid a time bar to a civil action under MCL 418.641(2). If a worker’s
compensation claimant reasonably and in good faith files a compensation claim, only to be
denied benefits sometime later on a ground that would permit recovery of damages in an
alternative civil action under subsection 641(2), the statute of limitations should not operate to
bar the civil action that the Legislature expressly contemplated under these circumstances. Such
a result renders the worker’s compensation scheme inadequate as a remedy. Moreover, it
frustrates the administration of justice and does not further the purpose or goal of the limitations
statute.
The California Supreme Court addressed these exact concerns in Elkins v Derby, 12 Cal
3d 410; 525 P2d 81 (1974), in deciding whether the statute of limitations on a plaintiff’s personal
injury action was tolled for the period during which he pursued his worker’s compensation
remedy against defendant:
Although defendants point out that plaintiff could have preserved his rights
despite the statute of limitations by simultaneously commencing a civil action and
a compensation claim, we believe that the statute may properly be tolled for the
period during which plaintiff pursued his compensation remedy. . . . [A]n
awkward duplication of procedures is not necessary to serve the fundamental
purpose of the limitations statute, which is to insure timely notice to an adverse
party so that he can assemble a defense when the facts are still fresh. The filing of
a compensation claim accomplishes this purpose and the tolling of the statute does
not frustrate it. . . .
Defendants' suggested duplicative procedures would impose a heavy burden
on all concerned. Such procedures would entail the filing of cases in our heavily
burdened superior courts that would be mooted whenever the board decided it had
jurisdiction to grant relief. Such procedures also would impose upon the claimant
the burden of alleging contradictory pleas, for example, that he both was and was
not an employee at the time of his injury or that his injury both did and did not
arise from the course of his employment. Although the [worker’s compensation
system seeks to establish a nontechnical means to recover for industrial injuries a
dual filing requirement presupposes a professional knowledge without which the
worker would forfeit all right to recover. [Id. at 412-413.]
3
Subsection 171(4) provides in relevant part: “Principals willfully acting to circumvent the
provisions of this section or section 611 by using coercion, intimidation, deceit, or other means
to encourage persons who would otherwise be considered employees within the meaning of this
act to pose as contractors for the purpose of evading this section or the requirements of section
611 shall be liable subject to the provisions of section 641 [MCL 418.641].”
-2-
In concluding that the statute of limitations was properly tolled, the Elkins Court noted
that whenever the exhaustion of administrative remedies is a prerequisite to the initiation of a
civil action, the running of the limitation period is tolled for the time consumed by the
administrative proceeding. Id. at 414. Likewise, when an injured person has several legal
remedies and reasonably and in good faith, pursues one of them, the running of the limitations
period is tolled if the defendant is not thereby prejudiced. Id. Additionally, policy
considerations supported tolling because the suspension of the running of the limitations period
in this and similar cases did not frustrate achievement of the primary purpose of the limitations
statute, i.e., timely apprising a defendant of claims. Id. at 417.
Equally important, and particularly relevant here, is the court’s observation that
duplicative proceedings were inequitable to the injured party and would be “inefficient,
awkward, and laborious.” Id. at 420. A duplicative filing requirement is inequitable to an
injured party because the worker’s compensation system was designed to afford a simple and
nontechnical path to relief for claimants:
Unaware . . . that he may be entitled to a remedy only in [a] court or overwhelmed
by seemingly inscrutable distinctions between “employees” and “independent
contractors” or injuries arising within and without “the course of employment,” an
injured party can easily lose his tort remedy while devoting his attention to
pursuing a compensation claim. Id. at 419.
The Elkins Court’s observations regarding simultaneous administrative and civil court actions is
particularly apropos to recourse under subsection 641(2). Duplicative administrative and court
proceedings are burdensome to the injured party, the employer, and the already overtaxed
judicial system. Elkins, supra at 420. These duplicative efforts are for naught whenever the
compensation board concludes that the injured party is entitled to relief. Id. Further, requiring
duplicative actions in this case, as in many cases, require an injured party to simultaneously
argue before different tribunals propositions that are mutually inconsistent, e.g., that the claimant
was and was not an employee or was and was not an independent contractor. Id. at 420.
In this case, as in Elkins, plaintiff reasonably and timely pursued a worker’s
compensation claim following his injury. Plaintiff began working for defendant in 1976 as a
carpet installer. In 1989 or 1990, at defendant’s insistence, plaintiff formed a sole proprietorship
and signed a contract identifying him as an independent contractor. He purchased a worker’s
compensation insurance policy for his sole proprietorship. When plaintiff was injured in 1996,
he filed a worker’s compensation claim against his sole proprietorship and against defendant.
On January 21, 1998, the magistrate granted plaintiff’s claim against his sole proprietorship but
denied his claim against defendant, finding that plaintiff was not an employee of defendant.
Both parties appealed to the Worker’s Compensation Appellate Commission (WCAC), which in
a split decision issued on October 14, 1999, denied all claims for benefits.
In this case, as in Elkins, tolling the running of the limitations period during the pendency
of the compensation proceedings does not frustrate the goal of statutes of limitations. “Statutes
of limitation are procedural devices intended to promote judicial economy and the rights of
defendants.” Stephens v Dixon, 449 Mich 531, 534; 536 NW2d 755 (1995). Defendant was
-3-
clearly apprised of plaintiff’s claim on the basis of the worker’s compensation proceedings and
therefore allowing the civil action to proceed does not invade defendant’s rights.
Although the same factors weigh in favor of tolling the statute of limitations in this case
as in Elkins, Michigan courts have strictly construed the tolling statute, MCL 600.5856,4 to
preclude its application to administrative proceedings in general, and worker’s compensation
proceedings in particular. Dunlap v Clinton Valley Ctr, 169 Mich App 354, 358-359; 425 NW2d
553 (1988); see also Mair v Consumers Power Co, 419 Mich 74, 82-83; 348 NW2d 256 (1984).
In my view, Michigan should follow the view of the California courts to permit tolling the
limitations period for purposes of actions under subsection 641(2), which logically will follow
from an adverse worker’s compensation determination. Because our courts’ strict construction
of the tolling statute does not permit such tolling with respect to claims under subsection 641(2),
legislative action is necessary to avoid the multitude of duplicative filings that will undoubtedly
occur to protect an unsuccessful compensation claimant’s recourse to a civil action. The
Legislature could not have intended to provide a procedural shield to potentially liable employers
at the same time it provided a substantive sword to injured claimants under the WDCA.
II
Despite the strict construction of exceptions to the statute of limitations, Mair, supra at
80, our courts have recognized that equitable relief is appropriate under certain circumstances
with regard to determining when a statute of limitations begins to run. Stephens, supra at 534536. Except as otherwise expressly provided, a claim accrues at the time the wrong upon which
the claim is based was done regardless of the time when damage results. MCL 600.5827;
Stephens, supra at 534. The courts have held that the term “wrong” in this context “refers to the
date on which the plaintiff was harmed by the defendant’s negligent act, not the date on which
the defendant acted negligently.” Stephens, supra at 534-535. “Otherwise, a plaintiff’s cause of
action could be barred before the injury took place.” Id. at 535. Further, the “discovery rule”
delays commencement of the running of a statute of limitations in certain cases when the
claimant does not become aware of the basis for an action until sometime after an injury has
occurred. Id. at 535-536.
Although the discovery rule is not available in ordinary negligence cases when a plaintiff
merely misjudges the severity of a known injury, the discovery rule has been more liberally
applied in other contexts, such as medical malpractice, products liability actions, and negligent
misrepresentation. Id. at 537; see also Zimmer v A T & T Co of Michigan, 947 F Supp 302, 308309 (ED Mich, 1994) (hybrid § 301 claim against an employer for breach of a collective
bargaining agreement and against a union for breach of the duty of fair representation accrued
when the union alerted the plaintiff that it would not pursue a grievance, i.e., when the plaintiff
discovered or in the exercise of reasonable diligence should have discovered the acts constituting
4
MCL 600.5856 was recently amended, but the amendment does not affect the application of the
statute in this case.
-4-
the alleged violation). In these contexts, evidentiary records are rarely diminished by the passage
of time, and hence the concern for protecting defendants from any loss of evidence or fading
memories of witnesses is less significant. Stephens, supra at 537. Similarly, in this case, there is
little danger of a loss of evidence with regard to the claim that defendant fraudulently induced
plaintiff to pose as an independent contractor.
Given the rules governing accrual, it is clear that plaintiff’s claim did not accrue until the
time that he was denied worker’s compensation benefits on October 14, 1999, the date of the
WCAC decision. Until that time, plaintiff suffered no harm and had no basis for a civil action
against defendant. Plaintiff had purchased worker’s compensation insurance for his sole
proprietorship, which he clearly presumed would cover his injuries. Upon his work-related
injury in 1996, he filed a compensation claim. After a trial, the magistrate awarded plaintiff
benefits against Citizens Insurance Company, the worker’s compensation carrier for the sole
proprietorship. Although the magistrate denied plaintiff’s claim for benefits as an employee of
defendant, plaintiff nevertheless was awarded worker’s compensation benefits for his injury.
For all practical purposes, at that time plaintiff had not suffered harm warranting a civil
action against defendant under subsection 641(2) because he may not pursue double-recovery for
his injuries.5 Smeester v Pub-N-Grub, Inc (On Remand), 208 Mich App 308, 312; 527 NW2d 5
(1995). Thus, only at the point the WCAC reversed the magistrate’s award of worker’s
compensation benefits and denied plaintiff’s claim altogether was plaintiff harmed such that he
had reason to pursue a civil action under subsection 641(2) against defendant.
I conclude that plaintiff filed his civil action within the applicable three-year limitations
period. Plaintiff was denied worker’s compensation benefits by the decision of the WCAC on
October 14, 1999. He filed this action on May 23, 2002, within three years of the date his claim
accrued.
In deciding whether to strictly enforce a period of limitation or impose the discovery rule,
the court must carefully balance when the plaintiff learned of the injuries, whether the plaintiff
was given a fair opportunity to bring suit, and whether the defendant’s equitable interests would
be unfairly prejudiced by tolling the statute of limitations. Stephens, supra at 536. A logical
application of accrual principles to the facts of this case compels a conclusion that plaintiff’s
action is not time-barred.
/s/ Janet T. Neff
5
Plaintiff conceivably could have proceeded on the limited basis that defendant’s carrier, rather
than the sole proprietorship’s carrier, was responsible for payment of benefits.
-5-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.