The opinion
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OHIO
WESTERN DIVISION
Lori Miracle, et al., Case No. 3:17-cv-788
Plaintiffs,
v. MEMORANDUM OPINION
AND ORDER
JPVS Import Export, Inc., et al.,
Defendants.
I. INTRODUCTION
On April 12, 2017, Plaintiffs Lori and Marc Miracle, and John Brown filed a Complaint
against Defendants JPVS Import Export, Inc. and Danijel Aramovic asserting negligence in relation
to a motor vehicle accident. (Doc. No. 1). On November 5, 2019, I granted the motion of Citizens
Insurance Company of the Midwest to intervene pursuant to Rule 24. (Doc. No. 38). Subsequently,
Citizens Insurance filed its Intervenor’s Complaint seeking reimbursement from Plaintiffs resulting
from payments it made to Plaintiffs in accordance with Michigan’s No-Fault Act (Mich. Comp.
Laws § 500.3101, et seq.). (Doc. No. 40).
On June 18, 2021, Defendants filed a motion for summary judgment against Citizens
Insurance. (Doc. 47). Defendants also moved to compel Citizens Insurance to make its required
Rule 26(a) disclosures and requested sanctions for the failure pursuant to Rule 37. (Id. at 15).
Plaintiffs concurred with Defendants’ motion for summary judgment, motion to compel, and
motion for sanctions against Citizens Insurance. (Doc. No. 48). Citizens Insurance opposed the
motions, (Doc. No. 49), and Defendants replied. (Doc. No. 50).
II. BACKGROUND
Michigan residents Lori Miracle and John Brown were injured when the vehicle in which
they were riding was hit by a semi-tractor trailer operated by Aramovic in northwest Ohio. At the
time of the accident, Aramovic was an employee of JPVS. Citizens Insurance paid no-fault
insurance benefits to Lori Miracle and Brown pursuant to Section 500.3101 et seq., of the Michigan
Compiled Laws. Citizens Insurance intervened in the litigation to assert its statutory right to
reimbursement. (See Doc. Nos. 1, 7 & 38).
III. ANALYSIS
A. MOTION FOR SUMMARY JUDGMENT
Summary judgment is appropriate where “the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The moving party bears the initial responsibility of “informing the district court of the basis
for its motion, and identifying those portions of ‘the [record] . . . ,’ which it believes demonstrate the
absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Defendants’ motion seeks summary judgment on two grounds: (1) Citizens Insurance is only
entitled to reimbursement from Plaintiff’s economic damages, and since Plaintiff has abandoned
those claims, Citizens Insurance no longer has a valid claim for reimbursement; and (2) any potential
subrogation claim is precluded by the “one-year-back” rule of Michigan’s No-Fault Act. (Doc. 47 at
3).
Citizens Insurance devotes most of its opposition to arguing Ohio law should apply in this
situation. (Doc. No. 49 at 4-5). According to Citizens Insurance: “Defendant is an Ohio resident,
with a vehicle registered in and insured in Ohio. The subject-matter motor vehicle accident took
place in Ohio, as well. The only connection to Michigan is the Plaintiff’s residency.”1 (Id. at 4).
Unfortunately for Citizens Insurance, and unlike in baseball, going one for three on an accurate
statement of the facts is not a good day.
“A federal court exercising diversity jurisdiction must apply the law of the forum state,
including that state’s choice of law principles.” Chase v. Humrichouser, 214 F. Supp. 2d 799, 805 (N.D.
Ohio 2002) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). In Ohio, actions
involving the insured and the insurer typically sound in contract, even if tortious conduct triggers the
applicable contract. See Ohayon v. Safeco Ins. Co. of Illinois, 747 N.E.2d 206, 211 (Ohio 2001). This is
because “the rights created by an insurance contract should be determined ‘by the law of the state
which the parties understood was to be the principal location of the insured risk during the term of
the policy . . . .’” Id. (quoting Restatement (Second) of Conflict of Laws §193).
Here, Citizens Insurance’s sole claim for relief is for reimbursement under the Michigan No-
Fault Act. (See Doc. No. 40 at 4). Although Citizens Insurance is not asking the Court to interpret
its insurance policy to render it relief, the relief requested exists only because Citizens Insurance
issued a policy subject to certain Michigan law requirements. Ohio courts “consistently apply
Michigan’s no-fault laws under similar circumstances.” Willis v. Wallace, 597 F. Supp. 2d 737, 739
(N.D. Ohio 2009) (citing Kurent v. Farmers Ins. of Columbus, 581 N.E.2d 533, syllabus (Ohio 1991)).
Since Citizens Insurance’s only claim for relief asserts a statutory right under Michigan law stemming
from a contract for insurance in Michigan, I find Michigan law governs Citizens Insurance’s claim.
See Ohayon, 747 N.E.2d at 211; (see also Doc. No. 38 at 3).
1 Citizens does not cite the record for the existence of these alleged facts. That is likely because they
do not exist in this case. Defendants JPVS and Aramovic are both residents of Illinois, not Ohio.
(See Doc. No. 1 at 2; Doc. No. 7 at 1; Doc. No. 40 at 2). And the Plaintiffs’ residence is not the sole
connection to Michigan; there is also the insurance policy, written by Citizens Insurance and which
underpins its entry into this litigation, that provides for no-fault coverage as required by Michigan
law. (See Doc. No. 40 at 4).
i. Right to Reimbursement
Under Michigan Compiled Law § 500.3116, an insurer may request reimbursement for
personal protection insurance benefits (“PPI benefits”) paid to an insured, in the event the insured
recovers in a tort action for an accident occurring outside of Michigan. Mich. Comp. Laws §
500.3116(2). In the event the PPI benefits have already been paid, as alleged here, the insured “shall
repay to the insurers out of the recovery an amount equal to the benefits received . . . .” Id. But
reimbursement is not due to the insurer “to the extent [the] recovery is realized for noneconomic
loss[.]” § 500.3116(4).
Defendants seek summary judgment against Citizens Insurance because they argue Plaintiffs
are only seeking recovery for non-economic damages, and thus, reimbursement could not be made
under Michigan law. (See Doc. No. 47 at 10). In support of their argument, Defendants cite to
Plaintiffs’ settlement demands which only reference non-economic damages. (Id.). But even
Defendants acknowledge these settlement demands are not pleadings under Rule 7 and that the
complaint still asserts claims for both economic and non-economic damages. (Id. at 12-13; see also
Doc. No. 1 at 4); Fed. R. Civ. P. 7. Therefore, the record clearly establishes Plaintiffs’ claims for
economic damages are still a part of this litigation. I cannot accept another party’s unsupported
assertion that the Plaintiffs will not seek recovery for economic damages2 as sufficient evidence to
support summary judgment. Accordingly, summary judgment is denied.
ii. Right to Subrogation
Defendants next argue Citizens Insurance’s hypothetical subrogation claim is barred by the
operation of the Michigan “one-year-back” rule found at § 500.3145. (Doc. No. 47 at 11-14).
Pursuant to § 500.3145, when an insurer has already paid the PPI benefits, it must commence suit
2 Over three years have passed since Plaintiffs raised the possibility of amending their complaint to
dismiss their claims for economic damages, and they have not done so. (See Doc. No. 33 at 5).
within one year of its most recent PPI payment. Mich. Comp. Laws § 500.3145(1) & (2). Further,
the recovery available is limited to losses incurred during the one-year preceding the lawsuit’s filing.
Id. at § 500.3145(2).
Defendants’ position is premised upon Citizens Insurance’s right to subrogation, which
exists independent of its right to reimbursement under Michigan law. Hanover Ins. Grp. v. Hernandez,
No. 19-cv-13486, 2020 WL 7043065, at *6 (E.D. Mich. Dec. 1, 2020) (“[T]he no-fault insurer, as
subrogee to its insured – could seek the benefits as subrogee against Defendants who are out-of-
state residents without Michigan no-fault insurance policies, and thus, do not participate in
Michigan’s no-fault insurance system.”); see also State Auto Ins. Cos. v. Velazquez, 703 N.W.2d 223
(Mich. Ct. App. 2005) (holding that, despite insured’s choice not to pursue economic damages and
thus not create a duty to reimburse insurer, the insurer, as subrogee, could assert a right to those
damages on the insured’s behalf.). To be clear, Citizens Insurance has not alleged a subrogation
claim against Defendants. (See Doc. No. 40).
Even if I were inclined to address the hypothetical situation posed by Defendants in their
motion (i.e., that Citizens Insurance moves to amend or supplement its complaint to include a
subrogation claim and that such motion would be granted), Defendants have not presented
sufficient facts to determine whether Michigan’s “one-year-back” rule would preclude Citizens
Insurance’s subrogation claim. Defendants have cited to no evidence that establishes the date or
dates Citizens Insurance made PPI benefit payments to Plaintiffs. Without an indication as to when
the last payment was made, there is no way to calculate the applicable “one-year-back” period.
Thus, because there is no pending subrogation claim, and even if there was, Defendants
have failed to provide sufficient evidence to demonstrate they are entitled to judgment as a matter of
law, I deny summary judgment.
B. MOTION TO COMPEL
Defendants also moved to compel Citizens Insurance to make its Rule 26(a) disclosures.
(Doc. No. 47 at 15). According to Defendants, Citizens Insurance has failed to timely produce the
Rule 26(a) disclosures, as well as, failing to respond to communications from Defendants requesting
these disclosures on May 28, 2021 and June 7, 2021. (Id.). Due to its failure to respond, Defendants
notified Citizens Insurance on June 11, 2021, it would be filing the motion to compel and motion
for sanctions if Citizens Insurance did not provide the disclosures.3 In its response to this motion,
Citizens Insurance does not provide any substantive argument as to why its Rule 26(a) disclosures
were never made nor why it did not respond to Defendants’ multiple communications regarding the
disclosures. (Doc. No. 49 at 3-4).
Rule 26 requires a party to provide certain information or disclosures to the other parties in
the action “without awaiting a discovery request.” Fed. R. Civ. P. 26(a)(1)(A) (emphasis added).
Because Citizens Insurance joined this lawsuit late, it had to make the “initial disclosures within 30
days after being served or joined.” Fed. R. Civ. P. 26(a)(1)(D). Citizens joined the lawsuit on
November 8, 2019, but has still never made the required disclosures. Defendants’ motion to compel
production of the Rule 26(a) disclosures is granted. Citizens Insurance shall produce the required
Rule 26(a) disclosures within 14 days of the date of this opinion.
C. MOTION FOR SANCTIONS
Accompanying Defendants’ motion to compel was a request for sanctions pursuant to Rule
37. (Doc. No. 47 at 16). Under Rule 37(a)(3)(A), “[i]f a party fails to make a disclosure required by
Rule 26(a), any other party may move to compel disclosure and for appropriate sanctions.” Fed. R.
Civ. P. 37(a)(3)(A). Furthermore, when a party fails to make its Rule 26 disclosures, “the party is
3 Counsel for Plaintiffs was copied on the May 28, June 7, and June 11, 2021 correspondence with
Citizens Insurance. (See Doc. Nos. 47-4 through 47-6); see also Fed. R. Civ. P. 37(a).
not allowed to use that information or witness to supply evidence. . . unless the failure was
substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1).
The burden of proving the violation was substantially justified or harmless rests with the
potentially sanctioned party. Roberts ex rel. Johnson v. Galen of Virginia, Inc., 325 F.3d 776, 782 (6th Cir.
2003). “[T]he phrase substantially justified has been generally interpreted to mean justified in
substance or in the main – that is, justified to a degree that could satisfy a reasonable person.”
Consumer Fin. Prot. Bureau v. Borders & Borders, PLC, No. 3:13-CV-1047-CRS, 2016 WL 9460472, at *5
(W.D. Ky. June 29, 2016) (internal quotation omitted). While in the context of Rule 37,
harmlessness involves “an honest mistake on the part of a party coupled with sufficient knowledge
on the part of the other party.” Id. (quoting Sommer v. Davis, 317 F.3d 686, 692 (6th Cir. 2003)).
In determining if the failure is substantially justified or harmless, district courts are to analyze
the following five factors:
(1) the surprise to the party against whom the evidence would be offered; (2) the
ability of that party to cure the surprise; (3) the extent to which allowing the evidence
would disrupt the trial; (4) the importance of the evidence; and (5) the nondisclosing
party's explanation for its failure to disclose the evidence.
Howe v. City of Akron, 801 F.3d 718, 748 (6th Cir. 2015).
But “a word of caution: District courts have broad discretion in applying these [Howe] factors
and need not apply each one rigidly. The factors simply lend themselves to the task at the heart of
Rule 37(c)(1): separating honest, harmless mistakes from the type of underhanded gamesmanship
that warrants the harsh remedy of exclusion.” Bisig v. Time Warner Cable, Inc., 940 F.3d 205, 219 (6th
Cir. 2019) (citation and internal quotation marks omitted).
Citizens Insurance failed to address most of these factors in its opposition. The only
explanation it provided for its failure was that Defendants did not demand the disclosures prior to
May 28, 2021. (See Doc. No. 49 at 3). This is an insufficient justification for its Rule 26 violation
because Citizens Insurance’s duty to disclose existed independent of Defendants’ actions. But even
so, Defendants twice requested Citizens Insurance disclose the required information and yet,
Citizens Insurance never made the disclosures or even responded to the communications. The
failure to comply with Rule 26(a) appears solely attributable to Citizens Insurance’s own negligence.
This blasé attitude towards its mandatory disclosure obligation and absence of argument or
justification for this failure displays a lack of respect for both the resources of this Court and the
other parties.
Further review of the Howe factors is difficult, as the “evidence” at issue has not yet been
disclosed. But considering the facts of this case, it is likely some of this evidence – such as the
amount of reimbursement requested – would be central to Citizens Insurance’s claim and is not
likely to be a surprise to the other parties at this stage in the litigation. In this instance, alternative
sanctions would appear more appropriate. See Fed. R. Civ. P. 37(c)(1); see also Howe, 801 F.3d at 747.
Nevertheless, this Court’s Local Rules state that discovery disputes “shall be referred to a Judicial
Officer” before a party files a formal motion to compel. Loc. R. 37.1(a)(1). Defendants did not do
so, even though if they had, they would have avoided incurring any attorney’s fees with respect to a
motion to compel and a motion for sanctions. Because Defendants failed to comply with the Local
Rules, I conclude they are not entitled to sanctions.
IV. CONCLUSION
For the reasons stated above, I deny Defendants’ Motion for Summary Judgment without
prejudice and I also deny the Motion for Sanctions; but I grant Defendants’ Motion to Compel.
(Doc. No. 47). Citizens Insurance is required to make its Rule 26(a) disclosures to all parties within
14 days of the date of this Opinion and Order.
So Ordered.
s/ Jeffrey J. Helmick
United States District Judge