Opinion
No. 353942
05-13-2021
NANCY DRAKE, Plaintiff-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Macomb Circuit Court
LC No. 2019-000167-NF Before: BOONSTRA, P.J., and CAVANAGH and GADOLA, JJ. PER CURIAM.
Plaintiff appeals by right the trial court's order granting defendant's motion to enforce the parties' settlement agreement and dismissing plaintiff's case. We affirm.
I. PERTINENT FACTS AND PROCEDURAL HISTORY
Plaintiff was injured in a car accident while covered by a no-fault insurance policy issued by defendant. Plaintiff filed suit in 2019, alleging that defendant had not made payments due under the policy, including payment for attendant care services. The parties attended facilitation to explore the possibility of a settlement. The following day, the facilitator issued a written "Facilitator's Recommendation," which recommended a settlement amount of $70,000 for attendant care plaintiff had already received, as well as a proposal that plaintiff receive 8 hours per day of attendant care at fourteen dollars per hour for the next five years:
Regarding the claim of past due attendant claim benefits from July 16, 2018 to present (December 5, 2019), I recommend the sum of Seventy Thousand and 00/100 ($70,000.00) Dollars computed at approximately 500 days at 10 hours per day at $14.00 per hour.
In the event the parties are interested in agreeing to a five year [sic] plan of attendant care benefits provided by family and friends only, my recommendation would be 8 hours per day at the rate of $14.00 per hour.
This agreement could be reviewed by the parties in the event of any material change during the five year period such as, but not limited to a change in the Plaintiff's medical condition as it relates to any injuries sustained in her automobile accident of December 13, 2002, or the inability of any family member, friend or substitute, being able to provide the necessary attendant care.
E-mail discussions followed between plaintiff and her attorney, as well as between her attorney and defense counsel. According to the emails, plaintiff was interested in settling her entire claim for future damages in a lump sum, rather than agreeing to the five-year plan for attendant care services; however, defense counsel represented that defendant was not "anywhere near" what plaintiff considered an acceptable figure for a global settlement. Eventually, plaintiff's attorney e-mailed defense counsel and the facilitator and indicated that plaintiff had accepted the facilitator's recommendation, unless in the alternative defendant was willing to settle plaintiff's claim for all of her future damages for $650,000. Two days later, defense counsel also accepted the facilitator's recommendation.
After defendant's acceptance, plaintiff e-mailed her attorney and told him that she no longer wanted to agree to the five-year prospective attendant care plan. Plaintiff's attorney e-mailed defense counsel and attempted to amend his earlier acceptance of the facilitator's recommendation to only include the lump sum for past attendant care claims. Defense counsel replied that defendant's agreement to settle the past attendant care claims was premised on the parties' agreement to the five-year prospective plan. Defense counsel offered to return to facilitation to convince plaintiff to agree to the original deal. The parties discussed returning to facilitation, but plaintiff eventually refused to do so, stating that if they could not settle the whole case, she would rather go to trial than wait months for another facilitation session. Defendant then moved to enforce the settlement agreement, as described in the Facilitator's Recommendation accepted by both parties. The trial court granted defendant's motion and dismissed the case. This appeal followed.
II. STANDARD OF REVIEW
Settlement agreements are governed by contract law principles, and "[t]he existence and interpretation of a contract are questions of law reviewed de novo." Kloian v Domino's Pizza LLC, 273 Mich App 449, 452; 733 NW2d 766 (2006). The application of certain equitable contract remedies, such as rescission on the basis of mutual mistake, are within "the sound discretion of the trial court." See Dingeman v Reffitt, 152 Mich App 350, 355; 393 NW2d 632 (1986); see also Bazzi v Sentinel Ins Co, 502 Mich 390, 409-412; 919 NW2d 20 (2018).
III. ANALYSIS
Plaintiff admits that both parties accepted the terms of the facilitator's recommendation as the terms of a settlement. However, plaintiff argues that the resulting agreement, or at least the five-year prospective attendant care portion of the agreement, is unenforceable because of illusory promises, mutual mistake, a fraudulent misrepresentation by the facilitator, and unconscionability. We disagree.
Settlement agreements "are favored by the law" and generally " 'cannot be modified.' " Clark v Al-Amin, 309 Mich App 387, 395; 872 NW2d 730 (2015) (citation omitted). A party "is bound by the settlement agreement absent a showing of mistake, fraud, or unconscionable advantage." Plamondon v Plamondon, 230 Mich App 54, 56; 583 NW2d 245 (1998).
A. ILLUSORY PROMISES
Plaintiff argues that two phrases in the facilitator's recommendation render illusory the terms of the settlement agreement relating to the five-year plan for attendant care services. First, the facilitator prefaced the section of the recommendation on the five-year plan with the phrase, "In the event the parties are interested in agreeing to a five year [sic] plan of attendant care benefits," and continued on to give the recommended terms. Second, the recommendation states that the attendant care plan "could be reviewed by the parties in the event of any material change . . . ." We disagree that either phrase or the combination of the two phrases rendered the terms of the settlement agreement illusory.
"[A]n illusory promise is one where the promisor is 'not obligated to do anything in consideration of' the other party's promise or performance." Ile v Foremost Ins Co, 293 Mich App 309, 332; 809 NW2d 617 (2011) (citation omitted), rev'd on other grounds sub nom Ile ex rel Estate of Ile v Foremost Ins Co, 493 Mich 915 (2012). Here, although the facilitator used the phrase "in the event the parties are interested in agreeing to a five year plan of attendant care benefits," an examination of the parties' express words shows that they in fact agreed to the facilitator's proposed five-year plan terms. See Kamalnath v Mercy Mem Hosp Corp, 194 Mich App 543, 548; 487 NW2d 499 (1992) (discussing objective standard for assessing when meeting of the minds has occurred). Plaintiff's attorney's e-mail accepting the recommendation on plaintiff's behalf stated, "We are accepting [the facilitator's] recommendation. I am, however, authorized to demand $650,000 for all futures if that is under consideration . . . ." The most natural interpretation of these words is that plaintiff accepted the terms of the entire recommendation as the terms of settlement. Moreover, by using the word "however," plaintiff's attorney indicated that his offer of "$650,000 for all futures" was an alternative to his acceptance of the terms of the facilitator's recommendation. That plaintiff's attorney later attempted to "correct" his initial acceptance also supports the conclusion that plaintiff had accepted the facilitator's entire recommendation. Defendant then also accepted the "Facilitator's Recommendation," indicating by its use of the document's capitalized title its agreement to the entire recommendation rather than a portion of it, which defendant later confirmed by sending a release reflecting both portions of the recommendation. The parties therefore agreed to a contract including the facilitator's proposed five-year attendant care plan, and were both bound by that agreement.
In any event, the plan to provide payment for future attendant care benefits did not create an illusory promise binding one party while leaving the other party free of obligations. Either both parties agreed to the five-year plan, and both are bound by it, or the parties did not agree to the plan and are not bound by it. In no case would the terms of the five-year plan bind one party while leaving the other party free to perform or not perform, and there thus was no illusory promise. See Ile, 293 Mich App at 332. And with regard to the language stating that the plan "could be reviewed by the parties in the event of any material change," again both parties are equally affected by this language and there is no illusory promise. See Ile, 293 Mich App at 332. Moreover, this statement merely states the unobjectionable fact that the parties may mutually agree to modify the contract at a later date. See Quality Products & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 364; 666 NW2d 251 (2003) (noting that "fundamental principles of contract law" permit parties to a contract to mutually waive or modify their contract).
B. MUTUAL MISTAKE
Plaintiff also argues that enforcement of the settlement agreement is barred because of a mutual mistake of fact. Specifically, plaintiff argues that the parties were both mistaken about whether the terms of the facilitator's recommendation all had to be accepted together or if the provisions on past and future damages could be separated. We disagree.
"A mutual mistake is 'an erroneous belief, which is shared and relied on by both parties, about a material fact that affects the substance of the transaction.' " Clark, 309 Mich App at 395 (citation omitted); see also Ford Motor Co v City of Woodhaven, 475 Mich 425, 441-442; 716 NW2d 247 (2006), discussing Sherwood v Walker, 66 Mich 568; 33 NW 919 (1887), limited to its facts on other grounds by Lenawee Co Bd of Health v Messerly, 417 Mich 17, 28-29; 331 NW2d 203 (1982). For example, a mutual mistake about the nature of a plaintiff's injury has been held to invalidate a settlement relating to that injury. See Gortney v Norfolk & W Ry Co, 216 Mich App 535, 543-544; 549 NW2d 612 (1996) (discussing cases).
Plaintiff's argument appears to be that the parties did not know that they were "allowed" to accept some, but not all, of the terms recommended by the facilitator. But the Facilitator's Recommendation itself referred to the possibility that the parties might choose not to accept the five-year attendant care plan portion of the recommendation. Moreover, the parties' and attorneys' e-mails reflect plaintiff's deliberations about accepting the five-year plan, acceptance of the plan, and subsequent change of heart and desire that the settlement not include the future damages portions of the facilitator's recommendation. The e-mails also reflect plaintiff's attorney's attempt to persuade defendant to agree to settle only the past attendant care benefits. There is no evidence indicating that either party believed the Facilitator's Recommendation was an "all or nothing" proposal.
Further, even if the parties had both mistakenly believed that they were not allowed to settle only the past-due attendant care benefits, that would have been a mistake of law—i.e., a mistaken belief that the parties were not free to settle under mutually agreed terms—rather than a mistake of fact, and would not bar enforcement. See Briggs Tax Serv, LLC v Detroit Pub Sch, 485 Mich 69, 77, 81-84; 780 NW2d 753 (2010) (discussing distinction between mistakes of fact and law in context of statute referencing common-law mutual mistake of fact doctrine). There was no mutual mistake of fact.
C. FRAUDULENT MISREPRESENTATION
Plaintiff also argues that the facilitator fraudulently misrepresented the date on which Michigan's no-fault law would begin to limit family-provided attendant care to eight hours per day in order to induce plaintiff into settling. Plaintiff provides affidavits stating that the facilitator told plaintiff and her husband that amendments to the no-fault act would limit her to eight hours per day of attendant care beginning in July 2020, and that therefore the terms of the recommended five-year attendant care plan were the best she would get. In fact, the eight-hour limit does not go into effect until July 2021. See MCL 500.3157(10), (14), citing MCL 418.315. We disagree that this was a fraudulent misrepresentation requiring that the settlement agreement be voided.
A settlement agreement may be set aside because of fraud. Vittiglio v Vittiglio, 297 Mich App 391, 404-405; 824 NW2d 591 (2012). The elements of a fraudulent misrepresentation are:
(1) the defendant made a material representation; (2) the representation was false; (3) when the defendant made the representation, the defendant knew that it was false, or made it recklessly, without knowledge of its truth as a positive assertion; (4) the defendant made the representation with the intention that the plaintiff would act upon it; (5) the plaintiff acted in reliance upon it; and (6) the plaintiff suffered damage. [Cummins v Robinson Twp, 283 Mich App 677, 695-696; 770 NW2d 421 (2009) (citation omitted).]Additionally, the false statement must relate "to a past or existing fact," and the plaintiff's reliance on that statement must be reasonable. Id. at 696.
Even assuming that the facilitator did misstate the date on which the new no-fault law would come into effect, plaintiff's fraud argument fails. There is no evidence that the facilitator knew his statement to be false or that he made it recklessly. Second, there is no evidence that plaintiff relied upon the statement, let alone that her reliance was reasonable. Plaintiff's affidavit does not state that she relied on the representation in deciding to agree to the five-year attendant care plan. Even if she did rely on it, the text of the statute, MCL 500.3157(10), (14), was readily available, and plaintiff was represented by counsel. "People are presumed to know the law," and are expected to check the law rather than relying on the representations of others. Cummins, 283 Mich App at 698 (discussing misrepresentations concerning a building code).
D. UNCONSCIONABILITY
Finally, plaintiff argues that the five-year attendant care services plan in the settlement agreement is unconscionable because it entitles plaintiff to only eight hours of care per day, rather than the 14 hours she was prescribed. She also notes that the resulting dollar amount will be further reduced because her attorney has placed a lien on the settlement proceeds. Moreover, the agreement limits her to only attendant care provided by friends and family; plaintiff notes that her husband, who currently provides her care, is 76 years old. We disagree that the attendant care provision is unconscionable.
"In order for a contract or contract provision to be considered unconscionable, both procedural and substantive unconscionability must be present. Procedural unconscionability exists where the weaker party had no realistic alternative to acceptance of the term." Clark v DaimlerChrysler Corp, 268 Mich App 138, 143-144; 706 NW2d 471 (2005) (citations omitted). Substantive unconscionability does not exist simply because a provision "is foolish for one party and very advantageous to the other. Instead, a term is substantively unreasonable where the inequity of the term is so extreme as to shock the conscience." Id. at 145 (citations omitted).
Plaintiff has not made any argument, let alone offered any evidence or authority, to establish that she had no alternative but to agree to the five-year attendant care plan. As far as the record shows, nothing prevented plaintiff from pursuing her rights under the insurance policy at trial. "It is not sufficient for a party 'simply to announce a position . . . and then leave it up to this Court to discover and rationalize the basis for his claims, or unravel and elaborate for him his arguments . . . .' " Wilson v Taylor, 457 Mich 232, 243; 577 NW2d 100 (1998) (citation omitted). Plaintiff has not even attempted to show procedural unconscionability. See Clark, 268 Mich App at 143-144; see also Northwest Acceptance Corp v Almont Gravel, Inc, 162 Mich App 294, 302-303; 412 NW2d 719 (1987).
Moreover, regarding plaintiff's argument that eight hours of attendant care per day is unconscionably low, the same hourly limit applies to attendant care provided by family and friends under the Workers' Disability Compensation Act of 1969 and, beginning in July 2021, the no-fault act. MCL 418.315; MCL 500.3157(10), (14). Further, plaintiff does not explain how her standard contingency agreement with her attorney renders her agreement with defendant substantively unconscionable. This Court need not make plaintiff's arguments for her. See Wilson, 457 Mich at 243. Additionally, plaintiff has not even alleged that her 76-year-old husband is the only friend or family member available to provide her with care. The terms of the settlement agreement do not shock the conscience, notwithstanding plaintiff's dissatisfaction with them. Clark, 268 Mich App at 145.
Affirmed.
/s/ Mark T. Boonstra
/s/ Mark J. Cavanagh
/s/ Michael F. Gadola