Triplett v. St Amour

507 N.W.2d 194, 444 Mich. 170
CourtMichigan Supreme Court
DecidedSeptember 28, 1993
Docket94059, (Calendar No. 4 April)
StatusPublished
Cited by10 cases

This text of 507 N.W.2d 194 (Triplett v. St Amour) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Triplett v. St Amour, 507 N.W.2d 194, 444 Mich. 170 (Mich. 1993).

Opinions

Boyle, J.

The plaintiffs, composed of the alleged tortfeasor1 in a previous action, his employer, and its insurer, have brought an independent action at law for fraud seeking money damages issuing from a fraudulently induced settlement agreement. The circuit court granted summary disposition for the defendant, which the Court of Appeals reversed. We believe the summary disposition was appropriate, and we therefore reverse the judgment of the Court of Appeals and reinstate the judgment of the circuit court.

i

Following a two-car collision that occurred in [173]*173February 1986, Patricia St. Amour, the driver of one automobile, and her husband2 brought a personal injury action in Cheboygan Circuit Court against the driver of the other automobile, Victor Bruce Triplett, and against his employer, Trinity Chemical Company, which owned the other car. Mrs. St. Amour claimed that as a result of the accident she suffered a traumatic shoulder dislocation. As insurer of the vehicle driven by Triplett, Federated Mutual Insurance Company assumed the defense of that action. Following discovery, which included extensive inquiries concerning Mrs. St. Amour’s alleged shoulder injury, the parties entered into a settlement agreement pursuant to which Mrs. St. Amour and her husband were paid $20,000, and an order dismissing the action with prejudice was entered by the circuit court on May 3, 1988.

Thereafter, Mrs. St. Amour brought another action against her own no-fault carrier, State Farm Insurance Company, claiming entitlement to benefits relating to the same automobile accident that it had refused to pay. During the course of that lawsuit, it was ascertained that less than thirty days before the accident involving Triplett, Mrs. St. Amour had been treated by Dr. John M. Thiel, a bone and joint specialist, for a serious injury to her shoulder. The St. Amours then filed a third lawsuit against Dr. Thiel alleging a breach of the physician-patient privilege for disclosing a prior treatment of her shoulder condition.

After learning through that litigation of Dr. Thiel’s prior treatment, the present action was filed March 17, 1989, in Kalkaska Circuit Court by Triplett, Trinity Chemical Company, and Federated Mutual Insurance Company, as plaintiffs. They allege that during the course of discovery in [174]*174the original action, the St. Amours fraudulently concealed Mrs. St. Amour’s preaccident physical condition. Plaintiffs allege that defendants made misrepresentations via sworn deposition testimony, sworn answers to interrogatories, and counsel’s statements and pleadings signed as the. agent of the defendants. In this action, plaintiffs do not request rescission of the settlement agreement or of the order of dismissal entered by the Cheboygan Circuit Court. Rather, the complaint alleges an action at law for fraud and seeks monetary damages resulting from execution of the fraudulently induced settlement agreement, as well as costs associated with defending the original case.

The St. Amours moved for summary disposition pursuant to MCR 2.116(C)(8), contending that plaintiffs had failed to state a claim upon which relief could be granted. They also moved for a change of venue and requested the imposition of sanctions for improper venue.

In an opinion dated April 25, 1990, the Kal-kaska Circuit Court granted defendants’ motion for summary disposition. Relying on Rogoski v Muskegon, 107 Mich App 730; 309 NW2d 718 (1981), it concluded that an independent action at law for fraud could not be maintained because the prior action was a bar under either res judicata or collateral estoppel principles. The court indicated that plaintiffs were limited to seeking relief from judgment in accordance with MCR 2.612(C)(1). The court opined that an action in equity for relief would not be available under MCR 2.612(C)(3) because this case does not involve extrinsic fraud. In view of its grant of defendants’ motion for summary disposition, the court declined to rule on [175]*175the issue of venue or the request for costs or sanctions under MCR 2.223.3

Plaintiffs appealed the order granting summary disposition in favor of defendants, and defendants appealed from the denial of sanctions for improper venue.

The Court of Appeals reversed and remanded for further proceedings. 194 Mich App 335; 486 NW2d 146 (1992). Citing Courtney v Feldstein, 147 Mich App 70; 382 NW2d 734 (1985), the Court ruled that a judgment entered pursuant to an allegedly fraudulently induced settlement agreement does not bar a separate action for damages resulting from the fraud. It did not address the issue of venue and declined to award sanctions.

Both sides then applied for leave to appeal in this Court, which we granted. 441 Mich 902 (1992).

n

The narrow issue presented in the instant case is whether this Court should recognize an independent action at law to recover damages for a fraudulently induced judgment when the instant plaintiff was the defendant in the original tort action and the instant defendant was the releasor of the [176]*176previous tort claim.4 The instant plaintiffs stress that such an independent action is necessary to restore them to their prefraud position. They also advance the goal of deterring fraud. MCR 2.612(C),5 the court rule allowing relief from judgment, is, according to the plaintiffs, incapable of accomplishing this end. However, because the balance between the worthwhile goals advanced by the plaintiffs and the equally significant concern for the finality of judgments is appropriately addressed by the court rules, we see no need to adopt the new cause of action requested by the plaintiffs.

Although the plaintiffs have failed to direct the Court to any cases that allows a fraud action [177]*177under the present circumstances, and our independent research has likewise failed to find cases directly on point that might offer guidance, it is not difficult to imagine that under the reasoning of the plaintiff, it would be a rare case in which a tortfeasor in the first action, upon finding that the plaintiff had acted fraudulently during settlement negotiations, would move to rescind the settlement under MCR 2.612(C). The tortfeasor would generally be better off ratifying the settlement and suing for fraud, thereby guaranteeing that the maximum exposure of liability would be the amount previously paid to the plaintiff. Such action by the tortfeasor would completely protect it from a trial in which the jury might award a judgment considerably larger than the settlement figure. This protection would also serve to greatly strengthen the tortfeasor’s hand in negotiating a settlement of the second suit. The predictable outcome is that the price of final settlement would be substantially reduced.

The cases involving the releasers of tort claims in the first action are inapposite. While there appears to be a national split of authority regarding whether a "releasor of a tort claim may stand upon a fraudulently induced release and maintain a separate fraud action,” DiSabatino v United States Fidelity & Guaranty Co, 635 F Supp 350, 352 (D Del, 1986); see also Kordis v Auto Owners Ins Co, 311 Mich 247; 18 NW2d 811 (1945),6 or is limited to rescinding the settlement agreement and pursuing the original suit,

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507 N.W.2d 194, 444 Mich. 170, Counsel Stack Legal Research, https://law.counselstack.com/opinion/triplett-v-st-amour-mich-1993.