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Volume XXIV, No. 11, August 3, 2012      

From the Law Offices of Garan Lucow Miller, P.C.

From the Co-Editors

James L. Borin & Simeon R. Orlowski

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Supreme Court Rules Replacement Services are not Recoverable as Excess Economic Loss

 

CONTRIBUTOR – WILLIAM J. BRICKLEY

 

While the major emphasis in the handling of Third Party Automobile Negligence Claims focuses upon the issue of what constitutes a Serious Impairment of a Body Function and the claims for noneconomic damages that flow from a threshold level injury, there are other ways plaintiffs and their attorneys will seek to build up their claims. The No Fault Act, in addition to allowing a claim for noneconomic damages if the threshold injury requirement has been met, also allows recovery for certain types of economic loss. In a decision released by the Supreme Court on July 30, 2012, in the case of Johnson v Recca, No. 143088, the high court addressed the issue of whether the claims for excess economic loss can include “Replacement Services.”

As we all know, the no fault law provides the payment of many types of benefits to a person injured in an automobile accident. One of these benefits is known as “Replacement Services.” By statute this is defined in MCLA 500.3107. It states:

(c) Expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he or she had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or herself or of his or her dependent.

This is also referred to as household services.

In the normal context of handling a Third Party Automobile Negligence claim, rarely is much thought given to this provision. There are some circumstances though where a claim is brought not only for the noneconomic damages assuming a threshold level injury, but also for “excess economic loss.” In fact this type of claim is allowed by the no fault law. The statute provides:

(c) Damages for allowable expenses, work loss, and survivor’s loss as defined in [MCL 500.3107 to MCL 500.3110] in excess of the daily, monthly, and 3-year limitations contained in those sections.

Most commonly, what will be claimed is excess work loss. Someone claims an injury that causes them a disability that lasts longer than three years. What has been occurring more frequently though is that plaintiff attorneys have been claiming that their clients should also be entitled to excess replacement services as part of their damages. The allegation will be that even after three years the injured party will still need assistance with household chores and they should be compensated.

As can be seen from the language of the statute above, absent is any statement that replacement services could be claimed as an excess economic loss. Through a variety of methods, plaintiff attorneys have argued that they were allowed to make a claim for excess replacement services.

In the case of Johnson v Recca, the Supreme Court addressed the issue for the first time. The Court of Appeals had ruled at 292 Mich App 238, 249 (2011) that replacement services could be claimed as an excess economic loss. The defendant appealed and argued that the Courts were bound to the language of the statute. Since there was nothing in the statute giving the ability to make this type of claim, the Courts could not create this right otherwise. The only claims that were allowed in the statute are for excess “allowable expenses, work loss and survivor’s loss.”

The Supreme Court, in a 4 to 3 decision, reversed the Court of Appeals decision and clearly held that one cannot claim replacement services as an element of damage in a third party auto negligence case.

In a third-party tort action, damages for excess allowable expenses, work loss, and survivor’s loss are recoverable pursuant to MCL 500.3135(3)(c). Because replacement services are not among the categories listed in MCL 500.3135(3)(c), damages for replacement services are not recoverable in such an action.

In the event a claim is made and a plaintiff asserts a claim for excess replacement services, this is clearly now not a compensable loss.

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GARAN LUCOW MILLER ANNOUNCES ROSALIND ROCHKIND SELECTED AS “2012 WOMEN IN THE LAW”

It is with great pleasure that we announce that Rosalind Rochkind of our Appellate Department, has been selected as one of the top 20 outstanding members of Michigan’s legal community, Michigan Lawyers Weekly – 2012 Women in the Law!

The winners were selected by a committee based on their outstanding professional accomplishments, mentoring and community involvement.

Congratulations Roz!

 

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GARAN LUCOW MILLER SPONSOR’S THE 2012 CHERRY ROUBAIX BICYCLE RACE IN TRAVERSE CITY

The 4th Annual Cherry-Roubaix bicycle race, sponsored by Garan Lucow Miller, P.C., will be held from August 10th through the 12th, 2012, on the streets of Traverse City, Michigan and neighboring Leelanau County, and will feature the 2012 State Road Race Championships. There will also be a charity fun ride out Old Mission Peninsula. Please see the event website at www.cherry-roubaix.com for more details.

Please mark your calendars to join us at this exciting event. Garan Lucow Miller will be hosting special events during all three days including a VIP viewing area at Saturday’s race. Please advise Peter Worden, in our Traverse City office at (231) 941-1611 or pworden@garanlucow.com, if you will be available to join in the festivities.

 

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REGISTER NOW!

FOR THE TROY BREAKFAST SEMINAR

 

WHEN: THURSDAY, AUGUST 30, 2012

WHERE: TROY MARRIOTT 200 W. BIG BEAVER, TROY, MI 48084

TIME: CONTINENTAL BREAKFAST/CHECK IN – 8:00 A.M. – 9:00 A.M.

SEMINAR: 9:00 A.M. – 1:30 P.M.

REGISTER: ecarty@garanlucow.com