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Post-Taylor court rejects third-party "fault" without duty

Part of the history of tort "reform" legislation was a movement to eliminate joint and several [or "deep-pocket"] liability.  The Michigan Legislature adopted a statute that achieved that end by allowing victims to recover from a particular defendant only those damages attributable to that defendant's fault.   (In this way, the innocent victim bears the weight of the "third-party's" uninsured or uncollectible share of fault.  The reform legislation also allowed the defendant in a lawsuit to blame others who are "at fault" in causing the victim's injuries, without actually suing them.  Insurers had argued that they should be able to place blame on third parties, and avoid responsibility for their "share" of responsibility, even if the third party wasn't included in the lawsuit.  They went an additional step, next, and argued that they should be able to deduct damages for the "fault" of a third-party who owed no duty to the victim.

The Court of Appeals rejected this defense argument, initially, pointing out that if the third-party owed no duty to the victim, legally he or she could not be "at fault" in causing the injuries:  therefore the Defendant could not invoke the third party's inappropriate behavior to insulate the Defendant from the stranger's share of the victim's damages.  A second panel of the Court of Appeals, composed of more insurance-friendly judges, refused to follow the initial decision in the Court of Appeals, and allowed a defendant to ask the jury to reduce the victim's recovery by the "fault" of a third party who owed no duty to the victim.

On the appeal of a third case, the Supreme Court rejected the latter court's analysis and turned down the insurance argument.  In Romain v. Frankenmuth Mutual Insurance Company, the four-member majority of the Supreme Court pointed out that under the existing appellate rules, the latter Court of Appeals panel should have considered itself bound by the first opinion issued in that court.  Regardless of procedure, however, the majority rejected the substantive argument that a third-party who owed no duty could legally be at fault for a victim's injuries. 

In the Romain case, the victims had sued their insurer, Frankenmuth, and IAQ, a home inspection company, alleging a tort responsibility for the victims' home damage claims.  The trial court ruled that IAQ's only duty was a contract obligation to Frankenmuth, which had hired it to test the home, and dismissed the victims' claims against IAQ.  Frankenmuth then filed a "third-party" notice, attempting to reduce any recovery against it by the "fault" of IAQ (rather than filing a cross-claim against IAQ).  Frankenmuth was hoping to reduce its damage responsibility without meeting the normal procedural requirements of proving a claim against a party-litigant represented by counsel.

In a brief opinion, the Supreme Court dismissed this illogical and unfair argument and grounded its analysis on forty years of Michigan precedent.  The dissenters (i.e., the remnants of the pro-insurance "Engler majority") wrote for 12 pages in an attempt to justify their argument that one who owed no duty could be "at fault."  They would have been completely comfortable with a holding that precluded the victims from suing IAQ, while still allowing the jury to reduce the victims' recovery by the fault the defendant suggested for IAQ.  Thank goodness for consumers and victims, the dominance of the insurance-rubber-stamping-"Engler majority" has ended.

Thompson O’Neil, P.C.
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Traverse City, Michigan 49684
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