State Farm loses PIP victory on appeal; must defend alleged breach of mediation agreement
HealthCall of Detroit filed suit against State Farm to collect unpaid nursing services provided to accident victims. After a prolonged mediation, the parties signed a concluding agreement with an ambiguous term. When HealthCall's attorney immediately perceived that State Farm was intending to breach the agreement, he asked the Court to intervene: the judge declined, telling HealthCall to file a separate contract action to enforce the Mediation Agreement. When it filed that suit, State Farm persuaded another judge to dismiss the claim on the basis of res judicata (essentially on the basis that it had already been determined in the prior suit) and to award sanctions against HealthCall.
On appeal, the Court overturned the lower court's decision and allowed the suit to go forward. It noted that HealthCall had the right to sue in contract to enforce the terms of the Mediation Agreement, and it confirmed that the terms of that agreement were patently ambiguous. It also dismissed the sanctions that the lower court had awarded.