KATHLEEN MCNEEL V FARM BUREAU GENERAL INS CO OF MI
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STATE OF MICHIGAN
COURT OF APPEALS
KATHLEEN McNEEL, individually, and
WAKELIN McNEEL, as Trustee of the Kathleen
McNeel Revocable Living Trust,
FOR PUBLICATION
June 29, 2010
Plaintiffs-Appellees/CrossAppellant,
v
No. 285008
Mecosta Circuit Court
LC No. 04-16507-CK
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN,
Defendant-Appellant/CrossAppellee.
Before: M. J. KELLY, P.J., and K. F. KELLY and SHAPIRO, JJ.
K. F. KELLY, J. (dissenting.)
I respectfully dissent. In my view, plaintiffs’ claim is time-barred under MCL
500.2833(1)(q) and the trial court erred by denying defendant’s motion for summary disposition.
Further, the majority’s conclusion that a question of fact exists as to when the formal denial
occurred is erroneous because (1) it fails to apply the plain language of MCL 500.2833(1)(q), (2)
it applies the long discredited judicial tolling doctrine, and (3) it implicitly applies the doctrine of
equitable estoppel in the absence of facts supporting its application. I would reverse.
I. BASIC FACTS AND PROCEDURAL HISTORY
Plaintiffs’ property was destroyed by fire on March 18, 2003. Defendant’s policy
provided coverage to the property and contents. Plaintiffs promptly notified defendant of the
loss.
On April 17, 2003, by certified mail, defendant’s senior claims representative, Kathy
McDonald, wrote to plaintiffs’ adjuster, Stewart Shipper of Associated Adjusters, denying
coverage for the claim stating in relevant part:
Enclosed please find a copy of our Farm Bureau Mutual Farmowners Policy with
regards to the above claim. Please note on page 10 #31 Increase in Hazard.
Unless otherwise provided in writing, we will not be liable for loss occurring: b.
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while a described building, whether intended for occupancy by owner or tenant, is
vacant beyond a period of sixty days or is unoccupied beyond a period of six
months.
In speaking with Maria McNeel and Wakelin McNeel, both indicated that no one
has actually resided in the dwelling for approximately 18 months. There was no
furniture in the dwelling to constitute occupancy.
Due to the above we are denying coverage. [Emphasis added.]
On May 12, 2003, Shipper wrote defendant acknowledging receipt of defendant’s denial
of plaintiffs’ claim on the basis of “Increase in Hazard” but contested its conclusion that the
property was unoccupied and/or vacant. In addition, Shipper submitted a list of personal
property lost in the fire, as well as the cash value of the listed property. In conclusion, he
requested defendant to “reconsider [its] denial[.]”
On May 22, 2003, MacDonald wrote to Shipper, stating:
In response to your letter of May 12, 2003 we are continuing our investigation
into this matter. As soon as we have completed this investigation we will be in
contact with you to discuss your client’s claim further.
Also on May 22, 2003, by certified mail, defendant rejected plaintiffs’ “Sworn Statement in
Proof of Loss”1 and provided plaintiffs with an additional 15 days to resubmit the statement.
Defendant also specifically notified plaintiffs that “[t]his is not a denial of your claim but rather a
rejection of the Proof of Loss which was incorrectly completed.”
After additional investigation, on June 26, 2003, defendant wrote to Shipper and denied
plaintiffs’ claim:
After careful review of this matter along with additional investigations, we feel
that we are justified in our denial of the above claim.
It is [defendant’s] position that the dwelling located at 10981 W. River Rd.,
Remus, MI was vacant and unoccupied at the time of the loss and for
approximately 1 ½ years prior to this fire. This was substantiated to us by
relatives of the named insured along with neighbor’s [sic] of this dwelling.
Due to these facts we cannot honor the above claim. [Emphasis added.]
The following day, Shipper requested further reconsideration of defendant’s denial of
plaintiffs’ claim, continuing to contend that it was “wrongful.” This request did not raise any
1
Presumably, the “Sworn Statement of Loss” referred to Shipper’s earlier submission of the list
of personal property lost in the fire.
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factual dispute over the fire or its cause, but was based solely on the interpretation of the policy
terms “vacancy” and “unoccupied.” Of particular note, Shipper’s letter specifically recognized
defendant’s denial of the claim.
Three days later, on June 30, 2003, defendant reaffirmed its earlier denial of plaintiffs’
claim:
[Defendant has] also reviewed your documentation regarding the definition of
vacant. . . . Our investigation indicates that the home did not sustain sufficient
furnishings to maintain it as a residence.
Based upon the definitions provided, our investigation, and the policy language
under the increase in hazard, we must again respectfully deny the claim for fire
damage to 10981 W. River Rd[.] in Remus, Michigan of March 18, 2003.
[Emphasis added.]
On July 21, 2003, Shipper, once again, acknowledged defendant’s denial “based on an
FC&S2 reference” but requested information on how to locate the reference. On the same day,
defendant responded to the request stating:
This letter is in response to [y]our correspondence of July 21, 2003. Your letter is
incorrect in stating that we have denied the insured’s claim based on a FC&S
reference. The claim was denied based upon the facts of the loss and our
investigation, as well as the applicable policy language.
On September 24, 2003, Shipper again wrote defendant requesting further consideration.
Notably, Shipper, once again, acknowledged and recognized that the claim was denied, that
defendant could continue to deny the claim, and that the time limit to initiate litigation was
approaching:
I have reviewed defendant’s claim denial with the Insured.
I am writing to ask for an appointment with you to discuss defendant’s refusal to
respond to the claim.
The attorneys that I have spoken to state that the controlling issue will likely be a
determination as to whether the house was abandoned.
You may or may not decide to continue to deny the claim, but you should
understand the reasons the Insured believes that the house was occupied.
We can meet at your office or another agreeable location.
2
FC&S stands for “Fire, Casualty and Surety Bulletins.”
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I would like to arrange the meeting as soon as possible, in the face of your denial,
I must soon recommend an attorney for the further handling of this matter.
[Emphasis added.]
On October 14, 2003, defendant again wrote Shipper that it would continue to deny plaintiffs’
claim.
Plaintiffs filed their complaint against defendant on October 5, 2004. In April 2005,
defendant moved for summary disposition for failure to file within one year from the date of
defendant’s denial of the claim. Plaintiffs argued that no formal denial of the claim pursuant to
MCL 500.2833(1)(q) had occurred prior to October 14, 2003, such that the complaint was timely
filed. Plaintiffs further argued that defendant waived any right it had to rely on purported denials
prior to that date based on defendant’s inconsistent conduct.
The trial court denied the motion, concluding that there was a genuine issue of material
fact regarding when the denial occurred.
II. STANDARDS OF REVIEW
“Whether a period of limitation applies to preclude a party’s pursuit of an action
constitutes a question of law that we review de novo.” Detroit v 19675 Hasse, 258 Mich App
438, 444; 671 NW2d 150 (2003). We also review de novo a trial court’s ruling on a motion for
summary disposition. Benefiel v Auto-Owners Ins Co, 277 Mich App 412, 414; 745 NW2d 174
(2007). In reviewing a motion under MCR 2.116(C)(7), we must accept the plaintiff’s wellpleaded allegations as true and we must “look to the pleadings, affidavits, or other documentary
evidence to see if there is a genuine issue of material fact.” Huron Tool & Engineering Co v
Precision Consulting Servs, 209 Mich App 365, 376-377; 532 NW2d 541 (1995). If no question
of fact exists, whether the plaintiff’s claim is barred by a statute of limitations is a question for
the court. Id. at 377. “However, if a material factual dispute exists such that factual
development could provide a basis for recovery, summary disposition is inappropriate.” Id.
Further, this case also presents a question of statutory construction, which this Court reviews de
novo. People v Williams, 475 Mich 245, 250; 716 NW2d 208 (2006).
III. SUMMARY DISPOSITION WAS IMPROPERLY DENIED
Defendant argues that the trial court erred in denying its motion for summary disposition.
I agree. In my view, when the plain language of MCL 500.2833(1)(q) is applied to the facts of
this case, the necessary conclusion is that plaintiffs’ claim was untimely filed as a matter of law
and the case should have been dismissed under MCR 2.116(C)(7).
A. THE MEANING OF MCL 500.2833(1)(q)
Because it is my view that the majority fails to apply the language of MCL
500.2833(1)(q), an explanation of its meaning is necessary to understand the rule that must be
applied to the facts of this matter. The primary goal of judicial interpretation of statutes is to
ascertain and give effect to the intent of the Legislature. Neal v Wilkes, 470 Mich 661, 665; 685
NW2d 648 (2004). “If the statutory language is clear and unambiguous, judicial construction is
neither required nor permitted, and courts must apply the statute as written.” USAA Ins Co v
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Houston Gen Ins Co, 220 Mich App 386, 389; 559 NW2d 98 (1996). Nothing will be read into a
clear statute that is not within the manifest intent of the Legislature as derived from the language
of the statute itself. Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 63; 642 NW2d 663 (2002),
citing People v Wager, 460 Mich 118, 123 n 7; 594 NW2d 487 (1999).
MCL 500.2833(1)(q) provides:
(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 until the insurer formally denies liability. [Emphasis added.]
In other words, it is the rule in Michigan, under the clear language of this provision, that fire
insurance policies provide a “mandatory limitation period [for filing a lawsuit] of at least one
year, with tolling, unless a longer period is specifically set forth in the insurance policy.”
Randolph v State Farm Fire & Cas Co, 229 Mich App 102, 106-107; 580 NW2d 903 (1998).
Consistent with common sense, the statute makes the centerpiece for determining when the
limitations period begins to run the point at which an insurer has formally denied liability. It is
not surprising that the receipt of a formal denial will “unequivocally impress[] upon the insured
that the extraordinary step of pursuing relief in court must be taken,” Lewis v Detroit Auto InterIns Exchange, 426 Mich 93, 101; 393 NW2d 167 (1986), and the statute, accordingly, embodies
this concept.
Because the focus of the present dispute is when the insurer formally denied liability, the
relevant phrase of the statute, for purposes of this litigation, is “until the insurer formally denies
liability.” “Until” means “up to the time of” and “before a specified time.”3 The American
Heritage Dictionary, New College Edition (1976). Black’s Law Dictionary (5th ed) defines
“until” as:
Up to time of. A word of limitation, used ordinarily to restrict that which
precedes to what immediately follows it, and its office is to fix some point of time
or some event upon the arrival or occurrence of which what precedes will cease to
exist. [Emphasis added, citation omitted.]
3
While it should go without saying what the meaning of the word “until” is, I offer the
dictionary definition of the word here. This Court may consult a dictionary to discern a word’s
common meaning. Halloran v Bhan, 470 Mich 572, 578; 683 NW2d 129 (2004).
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Thus, under the statute, the one-year period is tolled “’from the date of a specific claim for
benefits to the date of a formal denial of liability.’” Hudick v Hastings Mut Ins Co, 247 Mich
App 602, 607; 637 NW2d 251 (2001) citing Lewis v DAIIE, 426 Mich 93, 101; 393 NW2d 167
(1986).
Our appellate courts have already parsed the meaning of the term formal denial. “A
denial of liability need not be in writing to be formal, but it must be explicit.” Mount Carmel
Mercy Hosp v Allstate Ins Co, 194 Mich App 580, 587; 487 NW2d 849 (1992). Although the
best formal notice is a writing, notice may be sufficiently direct to qualify as formal. Mousa v
State Auto Ins Co, 185 Mich App 293, 295; 460 NW2d 310 (1990). Accordingly, under this
state’s jurisprudence, a “formal denial” must be explicit and direct.
B. PLAINTIFFS’ CLAIM IS TIME-BARRED
Here, it is undisputed that the loss occurred on March 18, 2003. It is undisputed that
defendant received the proof of loss on March 19, 2003. And, as the majority agrees, it cannot
be disputed that defendant formally denied liability on June 26, 2003.4 On that date, defendant
informed plaintiffs in a letter: [w]e are justified in our denial of your claim” and “we cannot
honor [your] claim.” At that point, pursuant to the clear and unambiguous terms of MCL
500.2833(1)(q), the one-year limitation for bringing suit was no longer tolled and the limitations
period began to run.
Yet, despite this formal denial, plaintiffs continually attempted to have defendant reopen
their case rather than filing suit. Defendant, however, continued to refer back to its previous
formal denial. In each of its written statements, defendant made the following explicit reassertions of its denial:
June 30, 2003
“[W]e must again respectfully deny the claim . . . .”
July 21, 2003
“The claim was denied based upon the facts . . . .”
Oct 14, 2003
added.]
“[W]e . . . continue to deny your client’s claim.” [Emphasis
Importantly, after each reiteration of defendant’s decision to deny plaintiffs’ claim, Shipper
specifically and unequivocally acknowledged that defendant had earlier denied the claim. He
repeatedly recognized the June 26, 2003 denial as early as June 27, 2003 and as late as
September 24, 2003, and even wrote to defendant: “[I]n the face of your denial, I must soon
recommend an attorney for the further handling of this matter.” Clearly, plaintiffs knew at this
point that “the extraordinary step of pursuing relief in court must be taken.” Lewis, 426 Mich at
101.
4
In his affidavit filed with the trial, Shipper also admits that on “June 26, 2003 . . . Farm Bureau
denied the claim.”
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Thus, it is undisputed on the record that plaintiffs failed to file suit within one year of
defendant’s June 26, 2003 formal denial of liability. Consequently, their claim is time-barred
and summary disposition should have been granted in defendant’s favor. The trial court had
before it all the written documentation affecting the instant claim; and, thus the question
presented was merely a question of law. “[W]here written documents are unambiguous and
unequivocal, their construction is for the Court to decide as a matter of law.” Mount Carmel
Mercy Hosp, 194 Mich App at 588 (emphasis added);5 see also Huron Tool & Engineering Co,
209 Mich App at 377. And, as these documents plainly and obviously show, plaintiffs’
complaint, filed more than a year after the formal denial, was untimely filed under the statute.
The trial court erred by failing to properly apply the plain language of MCL 500.2833(1)(q) in
the present matter. Summary disposition in defendant’s favor should have been granted.
C. SHIPPER’S AFFADAVIT DOES NOT CREATE A QUESTION OF FACT
The majority, however, contends that a question of fact exists as to when defendant
formally denied plaintiff’s claim because further discussions ensued between the parties
regarding the claim after the June 26, 2003 denial letter. The majority relies upon the affidavit of
Shipper, who attested that defendant’s agent allegedly agreed to meet with him in September
2003 and “indicated that he would consider the claim in light of the requested documents . . . and
would only make a decision as to whether or not the claim would be denied after he had done
so.” At the outset, assuming without conceding that the affidavit is even relevant, it must be
noted that the statements of the claim adjuster are unsubstantiated in the record, are internally
inconsistent, are merely self-serving allegations, and are even contradicted by Shipper’s own
contemporaneous writings to defendant. There simply is no substantiating evidence in the record
that defendant indicated in September 2003 that it formally rescinded its denial6 and would only
deny the claim after it had reviewed certain requested documents other than plaintiffs’ claim
adjuster’s unsubstantiated statements. Such bald allegations, which are arguably also
inadmissible hearsay, without other support in the record, are insufficient to create a genuine
issue of material fact. See Town v Michigan Bell Tel Co, 455 Mich 688, 713 n 10; 516 NW2d
5
In Mount Carmel Mercy Hosp, this Court held that the following letter from the insurance
company constituted a formal denial of Naima Nafso’s claim: “Pursuant to our recent phone
conversation, Mr. Amer Nafso and Akram P. Najor live at 19214 Bauman; Detroit, MI 48203;
and are insured with State Farm, policy NO. 532736261422. Therefore, a PIP claim for Naima
Nafso must be filed with that company. We are in receipt of Mr. Nafso’s application for
benefits. We must know if anyone is taking Mr. Nafso’s place in his store; is the store suffering
a loss due to Mr. Nafso’s injuries? Please forward a copy for Mr. Nafso’s policy with
Continental Life Insurance Company.” Mount Carmel Mercy Hosp, 194 Mich App at 586-588.
This Court held that the “language of denial in the letter was unambiguous” and that the letter
constituted a formal denial as a matter of law. Id. at 588 (emphasis added).
6
As set forth in Section I, supra, defendant first formally denied plaintiff’s claim on April 17,
2003, but expressly and completely rescinded that denial in writing on May 22, 2003. The
difference between the first formal denial of liability on April 17th and the denial of liability on
June 26, 2003, is that defendant never directly and unequivocally withdrew or rescinded the June
26th denial.
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475 (1997) (RILEY, J., concurring); MCR 2.116(G)(4). Rather, the affidavit merely reflects a
desire on Shipper’s part to persuade defendant to settle the matter without a lawsuit. In
hindsight, this desire turned out to be wishful thinking and plaintiffs simply failed to assert their
rights in a timely manner as required by MCL 500.2833(1)(q). While plaintiffs may very well
have a cause of action against Shipper and/or their attorneys for failing to file the instant matter
within the limitations period, the failure to file certainly cannot be attributed to defendant.
Further, even if the affidavit created a factual dispute in regard to the parties’
correspondence, which it does not, it would nonetheless be irrelevant given that defendant
formally denied plaintiffs’ claim in June 2003 and defendant never made any direct, explicit
formal rescission of that denial. The clear and unambiguous language of MCL 500.2833(1)(q)
directs that the limitations period be tolled “until an insurer formally denies liability.” Shipper’s
on-going attempts to settle the case without litigation are immaterial and should not be a
consideration under the plain language of MCL 500.2833(1)(q). As previously noted, that
provision plainly states, in relevant part:
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 until the insurer
formally denies liability. [MCL 500.2833(1)(q) (emphasis added).]
Absolutely nothing in the plain language of this provision permits a court to create a question of
fact out of one party’s subsequent attempts to settle if it is clear on the record that a formal denial
has been made; the express language of the statute makes no exception for such behaviors or
conduct. Nothing in the provision provides for any type of re-tolling after the formal denial.
Thus, the parties’ further discussions and plaintiffs’ continual unilateral submissions of
additional information and requests to reconsider the denial did not, and could not have, operated
to rescind defendant’s formal denial of liability. The majority’s conclusion that a question of
fact exists as to when the formal denial occurred based on events that happened after the formal
denial, that it admits occurred on June 26, 2003, ignores the statute’s plain and unambiguous
language in order to avoid the statue’s effect.
IV. THE MAJORITY WRONGLY INVOKES JUDICIAL TOLLING
In support of its position that a question of fact is presented, the majority invokes the
doctrine of judicial tolling thereby enabling litigants to evade the limitations period of MCL
500.2833(1)(q).7 Litigants may now easily avoid the consequences of a statutorily mandated
7
Ironically, even under the majority’s interpretation of MCL 500.2833(1)(q), plaintiffs’ claim
would still be barred. For example, the limitations period began to run on June 26, 2003 when
defendant formally denied the claim as the majority concedes. Even assuming that the October
10, 2003 meeting resulted in a re-tolling of the one-year time limitation, 106 days had already
passed during which the statute was not tolled. If the statute again began to run again on October
14, 2003, there only remained 259 days in which to file suit. Thus, even under the majority’s
reasoning, plaintiffs would still have had to file by June 25, 2004—259 days from October 14—
2003, in order to be timely. Plaintiffs, however, ultimately filed suit in October 2004.
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limitations period. Litigants can simply create “questions of fact” by continually initiating
further discussions and submitting the same or additional documentation regarding the claim to
insurers even after the claim is formally denied. Our Supreme Court has explicitly rejected these
sorts of judicially created tolling mechanisms that are contrary to the plain language of a statute
or contract. Devillers v Auto Club Ins Ass’n, 473 Mich 562; 702 NW2d 539 (2005); McDonald v
Farm Bureau Ins, 480 Mich 191; 747 NW3d 811 (2008). In doing so, the Court noted,
“Statutory . . . language must be enforced according to its plain meaning, and cannot be
judicially revised or amended to harmonize with the prevailing policy whims of members of this
Court.” Devillers, 473 Mich at 582. To do so is to “legislate[] from the bench” and to act
outside the constitutional authority imbued to the courts of this state. Id. at 582-583. However,
despite the Legislature’s clear directive and obvious intent that a claimant must bring his claim
within one year of a formal denial, the majority’s contrary decision amends the statute,
eviscerates the Legislature’s intent, and fails to honor preexisting law.
IV. THE MAJORITY IMPLICITLY APPLIES EQUITABLE ESTOPPEL
Finally, although it is unclear from the majority’s analysis, it appears that it may also be
invoking the doctrine of equitable estoppel to justify its desire to toll the limitations period. By
doing so, the majority is simply interpreting plaintiffs’ actions subsequent to the June 26, 2003
denial letter in a way that alleviates the effect of the formal denial of liability. “Equitable
estoppel is a judicially created exception to the general rule that statutes of limitation run without
interruption. It is essentially a doctrine of waiver that extends the applicable period for filing a
lawsuit by precluding the defendant from raising the statute of limitations as a bar.” Cincinnati
Ins Co v Citizens Ins Co, 454 Mich 263, 270; 562 NW2d 648 (1997). “Equitable estoppel arises
where one party has knowingly concealed or falsely represented a material fact, while inducing
another’s reasonable reliance on that misapprehension, under circumstances where the relying
party would suffer prejudice if the representing or concealing party were subsequently to assume
a contrary position.” Adams v Detroit, 232 Mich App 701, 708; 591 NW2d 67 (1998). It
requires proof of “conduct clearly designed to induce ‘the plaintiff to refrain from bringing
action within the period fixed by statute.’” Lothian v Detroit, 414 Mich 160, 177; 324 NW2d 9
(1982), quoting Renackowsky v Bd of Water Comm’rs of Detroit, 122 Mich 613, 616; 81 NW
581 (1900). To invoke the doctrine, the plaintiff must establish three elements: “(1) a false
representation or concealment of a material fact, (2) an expectation that the other party will rely
on the misconduct, and (3) knowledge of the actual facts on the part of the representing or
concealing party.” Cincinnati Ins Co, 454 Mich at 270. Thus, in the context of insurance claims,
the plaintiff must show that the defendant concealed a cause of action, misrepresented the time in
which an action must be brought, or induced the plaintiff to refrain from bringing an action.
Compton v Mich Millers Mut Ins Co, 150 Mich App 454, 458; 389 NW2d 111 (1986). None of
these necessary elements are present here and, thus, the doctrine of estoppel is inapplicable.
V. CONCLUSION
To conclude, there is and was no question of material fact that defendant formally denied
plaintiffs’ claim on June 26, 2003. There is and was no question that defendant did not intend to
pay on plaintiffs’ claim. Under the plain and unambiguous language of MCL 500.2833(1)(q), an
insured must bring his or her claim within one year after the insurer formally denies liability.
The trial court erred by denying defendant’s motion for summary disposition when there was no
dispute on the record that plaintiffs’ claim had been formally denied in June 2003 and plaintiffs
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had not filed their complaint until well after June 2004. The majority’s decision compounds this
error by reinvigorating the doctrine of judicial tolling that our Supreme Court has explicitly
rejected and that will now only serve to invite uncertainty for future litigants.
For these reasons, I dissent and would reverse the trial court.
/s/ Kirsten Frank Kelly
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