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A Better Partnership
August 01, 2012

MSC Opinion: Replacement services are not recoverable in a third-party tort action

In Johnson v. Recca, the Michigan Supreme Court held that a person injured in an automobile accident may not assert a third-party tort action (a suit against the at-fault driver or the car's owner) for "replacement services," i.e., the services that the accident victim would have been able to perform for himself or herself but for the injuries sustained in the accident. The Court explained that although the Michigan Legislature has allowed a car-accident victim who meets certain threshold criteria to bring a third-party action for "allowable expenses, work loss, and survivor's loss" (quoting MCL 500.3135(3)), the Legislature did not include "replacement services" as a category of damages recoverable in a third-party action. The Court split 4-3, with Justice Hathaway authoring a dissent joined by Justice Mary Beth Kelly. Justice Cavanagh wrote separately to state that he "concur[red] in the result proposed by Justice Hathaway's dissenting opinion."The case arose after Plaintiff Johnson was struck by a car driven by Defendant Recca while walking across a parking lot. Johnson sued, seeking damages for replacement services. The trial court granted summary disposition because it believed that Johnson could not recover damages for replacement services under MCL 500.3135(3)(c).

The Court of Appeals disagreed and reversed, concluding that replacement services are a subset of "allowable expenses" which are recoverable in a third-party action under the No-Fault Act. The Court of Appeals further reasoned that although the statutory subsection authorizing third-party actions references only "allowable expenses, work loss, and survivor's loss," other subsections of the No-Fault Act contain the same language, but are clearly intended to also refer to replacement services as well.

The Michigan Supreme Court disagreed. It noted that there is a tension in the No-Fault Act because replacement services would logically be included in the economic losses recoverable in a third-party action. Nonetheless, the Court analyzed the structure of the No-Fault Act and determined that replacement services are a category of damages that stands alongside wage loss, allowable expenses, and survivor's loss. The Court noted that MCL 550.3135(3) which authorizes third-party tort actions does not provide for the recovery of replacement services while specifically referencing the other categories of economic losses. The Court then concluded that the text of the No-Fault Act did not allow for the recovery of replacement services in third-party tort actions.

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