Author(s): James L. Borin, Simeon R. Orlowski, Daniel S. Saylor

Mr. Saylor is a Partner in the Firm’s Detroit Office and can be reached at (313)446-1530 or dsaylor@garanlucow.com

GARAN LUCOW MILLER, P.C. ANN ARBOR • DETROIT • GRAND BLANC • GRAND RAPIDS • LANSING • MARQUETTE • PORT HURON • TRAVERSE CITY • TROY MERRILLVILLE, INDIANA FROM THE LAW OFFICES OF GARAN LUCOW MILLER, P.C.

Volume XXII, No. 22 August 6, 2010

LAW FAX MICHIGAN LAW – BLUE | INDIANA LAW – RED www.garanlucow.com Garan Lucow Miller, P.C. 1111 West Long Lake Road, Suite 300 Troy, Michigan 48098 248.641.7600

From the Co-Editors James L. Borin & Simeon R. Orlowski KREINER OVERRULED Supreme Court Decides McCormick v Carrier

Establishes Much Lower “Serious Impairment” Tort Threshold

CONTRIBUTOR – DANIEL S. SAYLOR1

Among the slate of highly controversial end-of-term opinions issued by the Supreme Court over the past weekend was perhaps the most controversial of all — McCormick v Carrier, __ Mich __ (No. 136738, July 31, 2010), a case taken by the Court’s new majority for the express purpose of overruling Kreiner v Fischer, 471 Mich 109 (2004). In an opinion authored by Justice Michael F. Cavanagh (author of the dissenting opinion in Kreiner), joined by Chief Justice Marilyn Kelly and Justices Elizabeth Weaver and Diane Hathaway, the new majority made good on its mission.

In so doing, the Court has substantially lowered the tort threshold of “serious impairment of body function” under which motor vehicle accident victims can sue for recovery of non-economic damages. This new, more plaintiff-favorable threshold probably will apply retroactively to all existing injury claims and cases (but not to prior cases already having reached final resolution in the court system), since retroactivity is the general rule, and not even the dissenting opinion (authored by Justice Stephen Markman, and joined by Justices Maura Corrigan and Robert Young, Jr.), despite strenuous disagreement with the majority’s holding otherwise, calls for limited, prospective application.

A. Facts and Holding

Rodney McCormick was forty-nine years old in January of 2006, when he sustained an ankle fracture while working on the premises of a General Motors plant. A truck driven by another worker knocked McCormick down and ran over his left ankle. He was evaluated and treated at a hospital emergency room, released the same day, then underwent outpatient surgery two days later in which the fracture was stabilized with metal hardware. The hardware was surgically removed nine months later.

McCormick’s injury required that he use crutches to ambulate for the first month. He remained restricted in his activities to some degree for at least the next twelve months, but was released by his own surgeon to return to work without restrictions in January 2006, one year postaccident. Residual limitations persisted, despite the surgeon’s release, which kept McCormick from returning to work (the employer could not accommodate his request for light duty), until August of 2006, when he did return to work without restrictions. The opinion is unclear as to the extent, if any, to which McCormick was curtailed in his golfing and fishing during the injury period. The majority and dissenting opinions agreed that the facts were not materially in dispute. Both the trial court and the Court of Appeals (with one judge dissenting) concluded that McCormick’s injury did not result in a “serious impairment of body function” — under Kreiner v Fischer, 471 Mich 204 (2004). The new majority of the Supreme Court granted review, however, and reversed the lower courts’ decisions. The Court held that McCormick’s ankle fracture produced an objectively manifested impairment that sufficiently impacted his ability to lead his normal life as to qualify, as a matter of law, as a serious impairment of body function. The ultimate holding of the case, that McCormick’s injury met the serious impairment threshold, is perhaps the least controversial aspect of the Court’s decision. McCormick’s injury and its resulting 12 to 19 months of disability arguably would qualify as a serious impairment of body function even under Kreiner (notwithstanding that the three dissenting justices concluded otherwise). The Court, in other words, easily could have reversed the decisions of the lower courts by applying, rather than overruling, Kreiner.

B. What is the new SIBF standard under McCormick? Much of the majority opinion in McCormick is presented more as a negative critique of the Kreiner opinion rather than an affirmative explication of the substance and proper application of

the serious impairment of body function statute. A new “McCormick” test, nevertheless, emerges from the new majority’s opinion.

On motion presented by either party, when faced with the question of whether the plaintiff has sustained a serious impairment of body function (thus qualifying to recover noneconomic damages in an auto-negligence case), the court must first decide whether there is a material factual dispute regarding the nature and extent of the person’s injuries. This was true under Kreiner, as well. If there is such a factual dispute, the court’s analysis ends, and the case goes to the jury to decide not only issues of negligence, comparative negligence, proximate cause and damages, but also whether the plaintiff has suffered a serious impairment of body function. When the injury facts are not materially in dispute, however, the judge makes the

determination of whether the “serious impairment of body function” threshold has been crossed. To meet the threshold, the plaintiff must have sustained – (1) an objectively manifested impairment (i.e., one observable or perceivable from actual symptoms or conditions)

(2) of an important body function (i.e., a body function of value, significance, or consequence to the injured person) that

(3) affects the person’s general ability to lead his or her normal life (i.e., influences some of the plaintiff’s capacity to live in his or her normal manner of living).

This is the “test” McCormick articulates (slip opinion, p. 34), yet the majority provides precious little guidance on how to apply these three elements.

(1) What is an “objectively manifested” impairment? To determine when an impairment would qualify as “objectively manifested,” the Court quotes a variety of dictionary definitions of “objectively” and “objective,” from which it derives a “common meaning” of “objectively manifested” to be “an impairment that is evidenced by actual symptoms or conditions that someone other than the injured person would observe or perceive as impairing a body function.” One seemingly would add to this test, to make it truly objective, “… without influence or control of the injured person” — indeed, the dictionary definitions quoted by the Court suggests as much, yet no such phrase is included in the Court’s articulation of the “objectively manifested” requirement. The degree of subjectivity seemingly permitted within this element of the majority’s SIBF test, therefore, will be an issue in future cases.

The Court also emphasized that under the statute’s “objective manifestation” requirement, the proper inquiry is whether the impairment is objectively manifested, not the injury or its symptoms. While easy enough to articulate, this distinction may prove to be difficult to apply in actual practice. It is conceivable that, in a given case, a plaintiff will be able to provide objective proof of his or her injury much more easily than providing objective proof of an functional impairment.

(2) What is an “important” body function? The statute requires that the impairment be to an “important” body function. As was the case under Kreiner, an impairment to “an unimportant body function” is insufficient. Whether the particular “body function” in question qualifies as an “important” one, the Court makes clear, “is an inherently subjective inquiry.” It is a case-by-case inquiry — “what may seem to be a trivial body function for most people may be subjectively important to some, depending on the relationship of that function to the person’s life.” This also was true under Kreiner.

(3) When does an impairment “affect the person’s general ability to lead his or her normal life”? This is the aspect of the SIBF test that was the focus of the Kreiner decision, and that now has been so dramatically altered by McCormick. Under Kreiner, this life impact element required a court to “engage in a multifaceted inquiry, [1] comparing the plaintiff’s life before and after the accident [2] as well as the significance of any affected aspects on the course of the plaintiff’s overall life” with [3] consideration of a non-exhaustive list of “certain factors, such as the duration of the impairment” to evaluate whether the plaintiff’s general ability to lead his normal life has been affected. Kreiner, 471 Mich at 132-133.

Of these three aspects of the Kreiner approach, the new majority in McCormick preserves only the first: determining the effect of an impairment still “necessarily requires a comparison of the plaintiff’s life before and after the incident.” The whole-life, big picture perspective mandated under Kreiner, however, in which courts would examine whether there has been an effect on the “course and trajectory” of the person’s overall life, has been soundly rejected (slip opinion, p. 23). Likewise, use of the “nonexhaustive list of factors” (the nature and extent of the impairment, type and length of treatment required, duration of the impairment, extent of any residual impairment, prognosis, etc.), also is soundly rejected, particularly since these factors “expressly or impliedly include a temporal component.” (Slip opinion, pp. 26-27) (“[W]e hold that the majority [in Kreiner] erred by adopting them”).

The relative importance of an impairment’s “duration,” in particular, remains unclear under the McCormick decision. As the preceding quote indicates, the majority strongly suggests that a “temporal component” is not part of the inquiry. (Accord, p. 21 — “the statute does not create an express temporal requirement as to how long an impairment must last.”) Based on these passages, in fact, the dissenting justices conclude that the majority’s test renders “temporal considerations” entirely irrelevant. Yet the majority denies this assertion — “[W]e are not holding that temporal considerations are irrelevant” (slip opinion, p. 41, n. 39). In this regard, we should take the majority at its word, even though the opinion provides no guidance whatsoever as to how the duration of an impairment should be factored into the inquiry. At a minimum, the defense can point to plaintiff McCormick’s 12 to 19 months of disability as a potential benchmark for arguing that an impairment of a lesser duration might not be “serious.” Yet, even with a strong argument based on the relatively brief duration of the impairment, a defendant still will have difficulty defeating a claim on the new life-impact test. The McCormick

majority requires only that a plaintiff establish that the impairment affected or influenced “some” of the injured person’s capacity to lead his normal life (slip opinion, p. 19); it does not appear to be a difficult showing. Indeed, given the virtual elimination of any temporal requirement, and the adoption of a life-impact requirement that is satisfied merely by the impairment having “some” effect on the person’s ability to live his normal life, the net result is a significant lowering of the tort threshold, according to the dissenting justices:

I am not sure that the majority’s new threshold can even be called a “threshold” when it can be satisfied in virtually every automobile accident case that results in injury.29 _________________________ 29 It certainly is a “threshold” bearing no resemblance to the other two thresholds — “permanent serious disfigurement” and “death.” See MCL 500.3135(1).

(Dissenting opinion of J. Markman, p. 32).

C. Will the new standard apply retroactively? As a general rule, decisions rendered by the Supreme Court are given full retroactive effect — the holding in a case applies not only to the parties at hand, but also to any pending cases or accrued claims. As an exception to the general rule, where a new holding overrules settled precedent, it may be deemed only to apply prospectively to claims accruing or cases filed after the new decision was rendered. Pohutski v City of Allen Park, 465 Mich 675, 695-696 (2002). Where the new SIBF standard announced by the McCormick Court overruled the settled precedent of Kreiner, might its holding fall within the exception to the general rule and thus be deemed to apply only to subsequent cases? Probably not; although one could argue that it does. In Bezeau v Palace Sports & Entertainment, Inc, __ Mich __ (No. 137500, July 31, 2010), the “new majority” provides the basis for making a plausible argument in favor of prospective application. Just as McCormick overrules a rather clear precedent previously set by Kreiner, the Supreme Court in Karaczewski v Farbman Stein & Co, 478 Mich 28 (2007), likewise overruled a clear precedent set in Boyd v W G Wade Shows, 443 Mich 515 (1993). Notwithstanding the fact that its holding diametrically changed the way a statutory provision would be applied, the Karaczewski majority declared that its holding would be fully retroactive, in line with the general rule of retroactivity. A pending case affected by the Karaczewski change in statutory construction was Bezeau v Palace Sports & Entertainment. The plaintiff in that case disagreed, and challenged the result in an appeal to the Michigan Supreme Court. On July 31, 2010 — ironically, the same day McCormick was issued — the “new majority” rejected (overruled) the part of Karaczewski that made its holding retroactive and, instead, declared that Karaczewski’s holding would apply only to claims that accrued subsequent to the Karaczewski decision.

The parallels between Wade/Karaczewski/Bezeau and Kreiner/McCormick are striking enough to question whether McCormick, too, in some currently pending lower court case, should be declared to have limited retroactive effect. Unfortunately, the factors in Karaczewski that supported prospective-only treatment of its holding (a well-established prior rule of law — the Boyd

case arguably was consistent with several decades of prior decisions; and the fact that strong reliance interests on the old rule would be disrupted by the change in statutory interpretation) seem not to be present in the Kreiner/McCormick situation. It is highly doubtful, moreover, that even the dissenting justices in McCormick (who did not call for limited retroactive application in the dissenting opinion), would support limiting the case’s retroactive effect, given the strong position they took against prospectivity in both Karaczewski and Bezeau. Accordingly, any argument that McCormick’s new construction of the “serious impairment of body function” threshold should be limited to prospective-only application would be unlikely to prevail. McCormick probably will be given full retroactive effect.

D. Practical considerations McCormick unquestionably lowers the serious impairment tort threshold. A significant class of injury claims that previously would not have been asserted, let alone put into litigation, now will be viable. Moreover, as compared to the Kreiner years, there likely will be a distinct reversal of roles in pre-trial practice as between the plaintiff and the defense.

Where, under Kreiner, the defense strategy focused mainly on gathering enough facts to support an eventual “Kreiner motion” for a dispositive ruling of “no serious impairment,” and the plaintiff would strive to create any possible “question of fact” just to survive the Kreiner motion and get to a jury to argue the “serious impairment” issue, the very opposite scenario is likely to play out under McCormick. Early and aggressive investigation of claims, with surveillance and a defense IME as early as possible, may be warranted to develop a record capable of surviving a plaintiff’s summary disposition motion on the serious impairment issue. Otherwise courts will be inclined to read McCormick as requiring a finding in favor of the plaintiff, as a matter of law, on the tort threshold issue, such that an ensuing trial will go to the jury only on the issues of negligence, comparative negligence, proximate cause and damages. It will now be the defendant striving to get past summary disposition and allow the jury to decide whether a “serious impairment of body function” has been established.

It is not clear precisely where the “serious impairment of body function” threshold will settle under McCormick; but even if it is assumed that some degree of a threshold remains, it is unquestionably a much lower threshold than any we have seen since the 1995 amendment went into effect. Only after the new majority’s analysis has been considered and applied in several trial and appellate level cases will we begin to see whether any substantial injury “threshold” remains. This case will be discussed in great detail at our Troy Breakfast Seminar at the Troy Marriott on September 23, 2010. If you wish to attend, please see the information below regarding registration.

Ms. Robertson is a Partner in the Firms’ Detroit Office and can be reached at (313)446-1530 or srobertson@garanlucow.com

From Directed Verdict, to New Trial, to Appeal: What is an Objective Manifestation?

CONTRIBUTOR – SARAH ROBERTSON The Court of Appeals recently issued an unpublished decision in Wilfong v Mickalich and Associates, Inc. That decision created more questions than answers regarding what constitutes an abuse of discretion, and what evidence is sufficient to establish an objectively manifested impairment.

In Wilfong, plaintiff filed a third-party automobile negligence lawsuit in November of 2007 setting forth a claim for excess wage loss and a claim that she suffered a serious impairment of body function arising out of a motor vehicle accident that occurred on March 29, 2005. The case proceeded through discovery and case evaluation, and trial was finally set for December 15, 2008. On that date, the assigned had personal matters to attend to and so could not preside over the trial. A visiting judge presided over the trial instead. Neither party objected to this assignment. The two-day jury trial began on December 15, 2008. Following the close of plaintiff’s proofs, defendant made an oral motion for directed verdict on two issues: (1) whether plaintiff had provided sufficient evidence to prove her excess wage loss claim, and (2) whether plaintiff provided evidence that she suffered an objectively manifested injury sufficient to satisfy the statutory threshold of serious impairment. The visiting judge granted defendant’s motion, and entered an order stating same dated December 30, 2008.

Plaintiff then filed a Motion for New Trial, which was decided by the assigned judge. A hearing was scheduled, and rescheduled, for March 4, 2009. However, without benefit of argument, and without reviewing the trial transcripts, which were not prepared until March 18, 2009, the assigned judge issued his opinion and order granting plaintiff’s motion for new trial on February 25, 2009. The assigned judge stated in his opinion that he had denied defendant’s motion for summary disposition regarding threshold injury because he had found that a question of fact existed as to plaintiff’s manifestation of injury and general ability to lead a normal life. “Based on the facts in that motion, the Court finds that an error of fact occurred when the visiting Judge directed verdict in favor of Defendant.” The assigned judge further stated, “. . . as Defendant points out in its response, it is undisputed that Plaintiff testified as to her wages while employed as a Manager at Wendy’s. This testimony is evidence that should have been considered by the trier of fact.”

Defendant filed an Application for Leave to Appeal, which was granted by the Court of Appeals. The appeal then continued as an appeal of right. On July 1, 2010, having decided the

appeal without benefit of oral argument, the Court of Appeals, in a 2-1 decision, affirmed the granting of a new trial as to plaintiff’s non-economic claim, but reversed the granting of new trial as to plaintiff’s economic claim. The two-judge majority found that “it is clear from the assigned judge’s written opinion that his decision granting plaintiff a new trial was based on the evidence presented at trial.” Therefore, the majority reviewed the trial evidence de novo and found that a question of fact existed as to whether plaintiff had suffered a serious impairment of body function. Expanding its analysis, the majority noted that plaintiff’s objective testing (CT scan, EMG) showed no abnormalities but found that plaintiff had increased pain and the appearance of compromised mobility. Plaintiff did have a positive straight-leg raising test, which the majority acknowledged was a partially objective/partially subjective test. The majority found that plaintiff’s serious impairment in her back was therefore objectively manifested in the form of limited mobility and so the circuit court correctly granted a new trial on plaintiff’s claim for non-economic damages. As to plaintiff’s economic claim, the majority found that plaintiff’s statements at trial regarding her pre-accident and post-accident incomes were both vague and ambiguous. Therefore, plaintiff failed to establish her economic damages with reasonable certainty and a new trial was not warranted on that issue.

The dissent agreed with the majority’s decision regarding plaintiff’s economic claim but disagreed with the majority’s decision regarding plaintiff’s non-economic claim. The dissent, in a thorough and detailed analysis, addressed the majority’s handling of the “objectively manifested” element of the threshold statute. The dissent noted that a positive straight-leg test is not an objective manifestation of injury because, as plaintiff’s doctor testified, a doctor must rely on the patient’s subjective experience of the test and so can control the test results based on her subjective experience. In light of the fact that all of plaintiff’s other objective tests were normal, the dissent believed plaintiff failed to demonstrate an objective manifestation of injury. The dissent expanded her discussion of this issue by pointing to the Netter v Bowman decision which addressed a “visually apparent” impairment. The dissent believed that Netter required visually existing injuries, not visually apparent symptoms. In this case, the dissent believed plaintiff’s injury was not readily apparent to her doctors, rather, only plaintiff’s subjective complaints were apparent to the doctors.

**It should be noted that the Michigan Supreme Court just issues its decision in McCormick v Carrier overruling Kreiner, and changing the analysis to be used when determining whether an injury is objectively manifested for purposes of the No Fault Act. Defendant in Wilfong has filed a Motion for Reconsideration in the Michigan Court of Appeals, and has yet to determine whether it will file an Application for Leave to Appeal in the Michigan Supreme Court, in light of the McCormick decision. We will keep you posted as to the appellate posture of this matter in the coming months

Upcoming Seminars ANNUAL TROY BREAKFAST SEMINAR Thursday, September 23, 2010 at the Troy Marriott. This seminar will be held at the hotel and also will be broadcast live via Webinar. To register please contact Eileen Carty at ecarty@garanlucow.com and indicate your preference for attendance. BUCKEYE SEMINAR

Wednesday, October 13, 2010 at the Greater Columbus Convention Center in Columbus, Ohio. Agenda to follow at a later date. WINDY CITY SEMINAR

Thursday, November 4, 2010 at the DoubleTree Hotel in Arlington Heights, Illinois. Agenda to follow at a later date.

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BASICS OF NO-FAULT Mr. Borin will be teaching the Fundamentals of No-Fault (PIP) from Tuesday September 14 through Tuesday November 16, 2010. The classes will be held at the Offices of Citizens Insurance Company in Howell, Michigan from 5:30 to

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SAVE THE DATE The 3rd Annual Cherry- Roubaix Race, sponsored by Garan Lucow Miller, P.C., will be held on Saturday and Sunday, August 28th and 29th, 2010, through the historic streets in the heart of Traverse City.

Mark your calendars to join us at this exciting event. If you have any questions or would like additional information on this race, please go to www.cherry-roubaix.com or contact Peter Worden, in our Traverse City office at: (231) 941-1611.

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Garan Lucow Miller, P.C., a full-service law firm since 1948, providing quality representation to a national clientele from the Great Lakes Region, is pleased to announce that it has opened an office in Merrillville, Indiana, to further facilitate your claim and litigation needs in Indiana and Illinois.

Garan Lucow Miller, P.C. 8401 Virginia Street Merrillville, Indiana 46410 Phone: 219.756.7901 Fax: 219.756.7902 Toll Free: 877.804.2801