“‘Don’t touch that hot stove,’ your parents warned you when you were a child.” This was the opening sentence of an Opinion and Order by the Kent County Circuit Court granting the request by the ten individual defendant insurers[1] for dismissal in a declaratory judgment action involving the payment of “Diminished Value Damages” under mini-tort.
One of the topics at the September 6, 2018 Garan Lucow Miller, P.C. fall breakfast seminar, examined efforts by the company Shield Global to obtain a declaratory ruling that diminished value claims are recoverable under MCL 500.3135(3) as mini-tort damages. Unlike routine mini-tort damage claims, the claims for diminished value by Shield Global were not based upon the costs associated with repairing damages which motor vehicles had sustained in accidents, but rather represented alleged decreases in the resale value of those vehicles, even after they had been repaired.
The case before the Kent County Circuit Court was presented by Shield Global as a declaratory judgment action only, and it did not involve claims for damages arising out of any specific automobile accidents. Shield Global demanded that the Court declare that the defendant insurance companies be required to pay for such damages, despite the fact that Shield Global did not have any contractual relationship with the insurers. The defendant insurers involved in this case filed a joint motion for summary disposition addressing jurisdictional defenses, although they had also pleaded numerous defenses “to the merits” of the case.
In its opinion dismissing the case without prejudice, the Court noted the multiple grounds challenging the Court’s jurisdiction cited by the defendants, and that the request by Shield Global represented a “veritable jurisdictional minefield.” The Court further recognized that while under Michigan court rules, the courts possess substantial permissive discretion regarding whether to issue declarative decisions in such cases, such declaratory relief is not mandated. Ultimately, the Circuit Court declined to address the merits of the arguments, concluding that it “need not wade into the jurisdictional swamp that is this case.”
Given the abstract context of the declaratory relief requested in this case, the Court held that Shield Global should instead bring a specific claim about an actual loss of diminished value through the District Court, consistent with MCL 600.8301. While Shield Global has recently filed a Claim of Appeal in this matter, it is recommended that any insurers who receive such lawsuits in the future recognize and be prepared to defend against the current efforts of Shield Global to create a new body of law in support of its claims for “Diminished Value Damages”.
Garan Lucow Miller, P.C. will continue to advise regarding further developments in this very interesting matter.
[1] Including insurers represented by Garan Lucow Miller, P.C. shareholders Daniel S. Saylor and L. Ladd Culbertson.
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Sarah Nadeau, Editor of the Law Fax Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com
