PATRICIA ALLEN V MICHIGAN BASIC PROPERTY INS ASSOCIATION
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STATE OF MICHIGAN
COURT OF APPEALS
PATRICIA ALLEN,
UNPUBLISHED
October 26, 2001
APPROVED FOR PUBLICATION
December 28, 2001
9:05 a.m.
Plaintiff-Appellee,
v
MICHIGAN BASIC PROPERTY
INSURANCE COMPANY,
No. 223009
Wayne Circuit Court
LC No. 99-916020-CK
Updated Copy
March 15, 2002
Defendant-Appellant.
Before: Zahra, P.J., and Smolenski and Talbot, JJ.
PER CURIAM.
Defendant appeals by leave granted from an order denying defendant summary
disposition in this case alleging breach of an insurance contract. We reverse and remand for
entry of an order granting summary disposition for defendant.
I. Facts
This case concerns a fire insurance policy. The policy insured against loss and damage to
plaintiff 's residence located at 14567 Mettetal, Detroit. The policy term was from July 31, 1992,
to July 31, 1993.
In late May 1993, a fire occurred at plaintiff 's residence. Thereafter, plaintiff filed a
claim for benefits under the policy. Defendant began its investigation of the claim. As part of
that investigation, defendant notified plaintiff that she was to submit to an examination under
oath and was required to provide defendant with several documents related to her ownership of
the residence. It is undisputed that plaintiff did not attend any of the examinations defendant
scheduled for August 11, 1993, August 26, 1993, and October 20, 1993. Plaintiff also
acknowledges that she did not provide any of the documents requested by defendant. Plaintiff
claims that her counsel advised her not to answer questions from defendant until after any
criminal investigation into her involvement in the fire was completed.1
1
It is not clear from the record whether plaintiff or her counsel informed defendant of her reason
for not complying with defendant's requests before filing this suit. Affidavits introduced by
defendant suggest that plaintiff did not appear at the scheduled meetings and made no effort to
(continued…)
-1-
Defendant claims that on November 5, 1993, it sent a letter to plaintiff 's counsel2
specifically denying plaintiff 's claim for benefits.3 In May 1994, defendant closed its file in
regard to plaintiff 's claim and, thereafter, pursuant to standard company policy,4 destroyed the
contents of the file.
Plaintiff was eventually charged with arson in connection with the fire at her residence,
but was found not guilty. Thereafter, in March 1996, plaintiff telephoned defendant's claim
examiner, informed the examiner that she had been absolved of criminal liability, and inquired
regarding when her claim for benefits would be paid. Defendant's agent informed plaintiff
during the telephone conversation that defendant would not be paying the claim. According to
defendant, plaintiff did not take any further action in regard to her claim until April 1999, when
she wrote a letter again demanding payment.
(…continued)
reschedule. Plaintiff 's response to defendant's motion for summary disposition suggests that
defendant was informed that plaintiff did not appear for the scheduled examinations because
criminal charges were pending.
2
According to plaintiff 's deposition testimony, she retained several attorneys at various stages of
the proceedings. However, it appears that plaintiff 's former counsel Ray A. Paige was the only
attorney retained by plaintiff at the time of defendant's investigation of the policy claim.
Defendant claims to have sent the November 5, 1993, letter to plaintiff, in care of Paige. While
plaintiff asserts on appeal that Paige was not her agent with respect to her policy claim, but,
instead, represented her only in connection with criminal matters, plaintiff testified during her
deposition that she consulted Paige after she received defendant's first notice of an examination
under oath and acknowledged that Paige was authorized to respond to the letters defendant sent
in connection with its investigation.
3
A copy of the letter contained in the lower court file states the following reasons for defendant's
denial of plaintiff 's claim:
1. Contrary to proper demand made, you have failed to render to
Michigan Basic Property Insurance Association a properly executed sworn
statement in proof of loss setting forth to the best of your knowledge and belief
that information required to be so set forth;
2. Contrary to proper demand made, you have failed to submit to an
Examination Under Oath;
3. Contrary to proper demand made, you have failed to provide Michigan
Basic Property Insurance Association with records and documents requested and
permit copying of such documents.
4
According to defendant, its common practice is to destroy the contents of claim files after the
expiration of the applicable one-year period of limitation. See MCL 500.2833(1)(q).
-2-
Plaintiff filed the present suit alleging breach of the insurance contract on May 24, 1999.
Defendant brought a motion for summary disposition under MCR 2.116(C)(7) and (10), which
was denied by the trial court. This Court granted defendant leave to appeal that decision.
II. Standard of Review
We review de novo a trial court's decision on a motion for summary disposition. Beaty v
Hertzberg & Golden, PC, 456 Mich 247, 253; 571 NW2d 716 (1997). When reviewing a grant
of summary disposition pursuant to MCR 2.116(C)(7), this Court must consider the affidavits,
pleadings, depositions, admissions, and documentary evidence then filed in the action or
submitted by the parties. MCR 2.116(G)(5); Maiden v Rozwood, 461 Mich 109, 119; 597 NW2d
817 (1999). The contents of the complaint are accepted as true unless contradicted by
documentation submitted by the moving party. Id. A motion under MCR 2.116(C)(10) tests the
factual sufficiency of the complaint. Maiden, supra at 120. The trial court must consider
affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties, MCR
2.116(G)(5), in the light most favorable to the nonmoving party. Maiden, supra. The moving
party is entitled to a judgment as a matter of law when the proffered evidence fails to establish a
genuine issue regarding any material fact. Id.
III. Analysis
A. Statute of Limitations
On appeal, defendant first argues that the trial court erred in denying summary
disposition under MCR 2.116(C)(7) because plaintiff 's suit is barred by the applicable one-year
period of limitation. MCL 500.2833 provides, in pertinent part:
(1) Each fire insurance policy issued or delivered in this state shall
contain the following provisions:
* * *
(q) That an action under the policy may be commenced only after
compliance with the policy requirements. An action must be commenced within
1 year after the loss or within the time period specified in the policy, whichever is
longer. The time for commencing an action is tolled from the time the insured
notifies the insurer of the loss until the insurer formally denies liability.[5]
Defendant asserts that because this suit was filed far beyond one year after the November 5,
1993, denial letter, the suit is barred as a matter of law. The relevant date for determining when
the limitation period commences following a tolling period after notification of loss is the date
the insurer formally denies liability. Saad v Citizens Ins Co of America, 227 Mich App 649, 652;
576 NW2d 438 (1998). Notwithstanding defendant's assertion that plaintiff 's claim was denied
5
The policy at issue in this case contains a provision that is consistent with MCL
500.2833(1)(q), stating: "No action can be brought unless the policy provisions have been
complied with and the action is started within one year after the date of loss."
-3-
on November 5, 1993, there is no evidence from which we can establish the actual date of denial
as a matter of law. According to defendant, the November 5, 1993, letter was sent to plaintiff 's
counsel, Paige, by regular mail and certified mail, return receipt requested. Paige has submitted
an affidavit in this case denying receipt of the letter and specifying that in November 1993, his
office was not located at the address to which defendant sent the letter. Moreover, plaintiff and
Paige have claimed that Paige's representation was limited to criminal matters and did not
involve plaintiff 's claim for benefits. Plaintiff claims that she never received the November 5,
1993, letter.
Significantly, defendant does not possess the certified mail receipt it claims to have
received as the result of mailing the denial letter. Defendant claims that the receipt did exist, but
was destroyed along with the rest of plaintiff 's file after the expiration of the one-year period of
limitation. Regardless of defendant's reason for no longer possessing the receipt, without such a
record and in light of plaintiff 's and her counsel's denial of receipt of the letter, we cannot
determine, as a matter of law, the date of the defendant's denial.6 Therefore, the trial court
properly denied defendant's motion under MCR 2.116(C)(7).
B. Wilful Failure or Refusal to Comply with Policy Conditions
Notwithstanding the failure of defendant's motion under MCR 2.116(C)(7), we conclude
that defendant is entitled to summary disposition under MCR 2.116(C)(10). Defendant argues
that the trial court erred in denying summary disposition under MCR 2.116(C)(10) because
plaintiff wilfully failed or refused to comply with policy conditions before commencing the
present action. We agree.
The "Conditions" section of the policy includes:
4. Your Duties After Loss. In case of a loss to covered property, you
must see that the following are done:
* * *
d. as often as we reasonably require:
(1) show the damaged property;
(2) provide us with records and documents we request and permit us to
make copies; and
(3) submit to examination under oath, while not in the presence of any
other named insured, and sign the same.
6
Defendant does not claim that its examiner's alleged oral denial of plaintiff 's request for
payment during plaintiff 's March 1996 telephone call constituted a "denial" for purposes of the
statute of limitations. MCL 500.2833(1)(q).
-4-
It is undisputed that plaintiff did not submit to any of defendant's requests for an examination
under oath and did not provide the documents requested during defendant's investigation of
plaintiff 's claim. Plaintiff asserts that she was exercising her Fifth Amendment rights when she
refused to comply with defendant's requests.7
In Thomson v State Farm Ins Co, 232 Mich App 38; 592 NW2d 82 (1998), the defendant
insurer argued for dismissal on the basis that the plaintiff did not comply with a policy provision
that required him to submit to an examination under oath as a duty after loss. This Court defined
the consequence of an insured's wilful noncompliance with an insurer's request for an
examination under oath. Id. at 45-52. This Court stated that
"wilful noncompliance" in the context at hand refers to a failure or refusal to
submit to an [examination under oath] or otherwise cooperate with an insurer in
regard to contractual provisions allowing an insurer to investigate a claim that is
part of a deliberate effort to withhold material information or a pattern of
noncooperation with the insurer.
. . . [T]he burden henceforth is on the insured to demonstrate that the
insured has not deliberately withheld material information. This burden will be
an extraordinarily difficult one to meet.
. . . [I]f the noncompliance is wilful, the dismissal must be with prejudice
. . . . [Id. at 50-51, 52, 56 (emphasis in original).]
In the present case, we conclude that despite plaintiff 's claim that her refusal to cooperate
with defendant's investigation was based on her Fifth Amendment rights, plaintiff 's conduct
constituted "wilful noncompliance" with the policy provisions, as that phrase was defined in
Thomson. As stated by this Court in Phillips v Deihm, 213 Mich App 389, 399-400; 541 NW2d
566 (1995):
The privilege against self-incrimination not only permits a person to refuse
to testify against himself at a criminal trial in which he is a defendant, but also
permits him not to answer official questions put to him in any other proceeding,
civil or criminal, formal or informal, where the answers might incriminate him in
future criminal proceedings. Allen v Illinois, 478 US 364, 368; 106 S Ct 2988; 92
L Ed 2d 296 (1986); In re Stricklin, 148 Mich App 659, 663; 384 NW2d 833
(1986).
However, a party to a civil action who invokes his Fifth Amendment privilege does so to the
peril of his claim. See Phillips, supra at 400-401 (holding that the trial court did not violate the
defendant's Fifth Amendment privilege against self-incrimination when it granted summary
disposition for the plaintiff on the basis that the defendant did not respond to the plaintiff 's
evidence).
7
We note that the criminal charge against plaintiff was not brought until June 1994,
approximately eight months after defendant's final request for an examination under oath.
-5-
Here, plaintiff chose to file her claim for benefits under the policy. Her claim was based
on the contract to which she and defendant agreed. The policy contained specific requirements
with respect to plaintiff 's duties after loss, including that plaintiff provide defendant with
documents related to her claim and that plaintiff submit to an examination under oath. Plaintiff
cannot avoid the policy requirements that she agreed to with defendant, which she herself
triggered by filing her claim, by asserting her right not to be compelled to be a witness against
herself. While plaintiff had the right to assert her Fifth Amendment privilege in response to
defendant's requests, she did so to the peril of her claim under the policy. Phillips, supra. We
further note that although plaintiff claimed not to have submitted to an examination under oath
because of her concern over future criminal charges, she also failed to provide defendant the
requested documents despite the fact that the documents concerned plaintiff 's ownership
interests in the property and did not tend to incriminate plaintiff. Under these circumstances, we
conclude that plaintiff wilfully refused to comply with the policy conditions that she agreed were
conditions precedent to any payment of benefits on a claim. Moreover, plaintiff 's refusals to
submit to an examination under oath and to provide documents requested by defendant were part
of a deliberate effort to withhold material information or a pattern of noncooperation with
defendant. Thomson, supra at 50-51. Plaintiff 's willful noncompliance with the policy demands
dismissal with prejudice. Id. at 56.8
Given that conclusion, we need not analyze the merit of defendant's argument concerning
laches. However, we note that we cannot consider defendant's decision to destroy plaintiff 's
claim file pursuant to its own company policy as a change in condition sufficient to support a
claim of laches.
Reversed and remanded for entry of an order granting defendant summary disposition.
We do not retain jurisdiction.
/s/ Brian K. Zahra
/s/ Michael R. Smolenski
/s/ Michael J. Talbot
8
Our conclusion is not altered by the fact that plaintiff eventually submitted to a court-ordered
deposition in this case. Plaintiff 's deposition was not the equivalent of the examination under
oath initially sought by defendant given that plaintiff 's questioning was not completed at a time
that defendant could make a decision regarding the merit of plaintiff 's claim as the policy
required. Also, there is no evidence that the documents defendant requested from plaintiff were
ever provided. In fact, plaintiff 's deposition testimony suggests that several of the requested
documents disappeared from plaintiff 's possession in March 1996 and cannot be made available
to defendant.
-6-
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