STATE OF MICHIGAN IN THE SUPREME COURT DAVID J. McQUEER, Supreme Court No. 153829 Plaintiff-Appellee, Court of Appeals No. 325619 -vs- Grand Traverse Circuit Court No. 14-30287-NO PERFECT FENCE COMPANY, Defendant-Appellant. _________________________________________________/ PLAINTIFF-APPELLEE’S SUPPLEMENTAL BRIEF SUBMITTED PURSUANT TO THE COURT’S JANUARY 12, 2018 ORDER MARK GRANZOTTO, P.C. MARK GRANZOTTO (P31492) Attorney for Plaintiff-Appellee 2684 Eleven Mile Road, Suite 100 Berkley, Michigan 48072 (248) 546-4649 PARSONS LAW FIRM PLC GRANT W. PARSONS Attorney for Plaintiff-Appellee 520 S. Union Street P. O. Box 1710 Traverse City, MI 49685 (231) 929-3113 RECEIVED by MSC 2/28/2018 5:16:53 PM
I. THE COURT SHOULD DENY DEFENDANT’S REQUEST TO REVIEWTHE COURT OF APPEALS DETERMINATION THAT FACTUALISSUES REMAINED TO BE RESOLVED ON THE QUESTION OFWHETHER MR. McQUEER CAN PROCEED ON A CLAIM AGAINSTPERFECT FENCE UNDER THE EXCEPTION TO THE WDCA’SEXCLUSIVE REMEDY PROVISION CONTAINED IN MCL 418.171(4). . . . 16
II. THE CIRCUIT COURT SHOULD DENY DEFENDANT’S REQUEST TOREVIEW THE COURT OF APPEALS DETERMINATION ALLOWINGMR. McQUEER’S REQUEST TO AMEND HIS COMPLAINT . . . . . . . . . . . . 26
I. SHOULD THIS COURT DENY DEFENDANT’S APPLICATION FORLEAVE TO APPEAL SINCE THE COURT OF APPEALS CORRECTLYCONCLUDED THAT DEFENDANT WAS NOT ENTITLED TOSUMMARY DISPOSITION ON THE BASIS OF THE EXCLUSIVEREMEDY PROVISION OF THE WORKERS COMPENSATION ACT,MCL 418.131, SINCE THIS CASE IS EXEMPTED FROM THATPROVISION UNDER MCL 418.171(4)?
Plaintiff-Appellee says “Yes.”
Defendant-Appellant says “No.”
II. SHOULD THIS COURT DENY DEFENDANT’S APPLICATION FORLEAVE TO APPEAL ON THE QUESTION OF WHETHER THE CIRCUITCOURT ERRED IN ALLOWING PLAINTIFF TO AMEND HISCOMPLAINT TO ALLEGE A CAUSE OF ACTION UNDER MCL418.131?
Plaintiff-Appellee says “Yes.”
Defendant-Appellant says “No.”
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STATEMENT OF FACTS
This is a personal injury action arising out of significant injuries that David McQueer
sustained in a work-related accident that occurred on January 14, 2014.
Mr. McQueer became a full time employee of Perfect Fence Company (“Perfect Fence”) in
June 2013. When he was hired, the individuals who ran Perfect Fence advised Mr. McQueer that
the company was going through difficult financial times and, as a result, his employment had to be
kept “off the books.” Deposition of David McQueer, at 52-54; App 468a-469a. Mr. McQueer was
only one of a number of Perfect Fence employees who were paid “off the books” during this time
period. McQueer Dep, at 6-10; App 457a-458a.
Between June 2013 and the date he was injured in January 2014, Mr. McQueer averaged
more than 40 hours of work per week for Perfect Fence. Affidavit of David McQueer, ¶2; App.
211a. He was paid for the work he did either by check or by cash. McQueer Affidavit, ¶3; App.
211a. When he was paid by check, the checks were written on two different accounts. One of these
accounts was labeled “Perfect Fence,” the other was titled “Special Account.” Id. There is no record
of any social security, federal tax or state tax withholdings taken from Mr. McQueer’s pay during
the entire year of 2013. McQueer Dep at 58; App 470a; Affidavit of Julie Courville, ¶8; App. 215a;
Earnings Chart; App. 232a.
In September 2013, Mr. McQueer became interested in purchasing a house. To facilitate that
purchase, he asked Perfect Fence’s accountant/bookkeeper, Barbara McCullen, to write a letter
confirming the amount of money that he was earning. McQueer Deposition, at 95; App. 479a. In
response to Mr. McQueer’s request, McCullen wrote a letter dated September 9, 2013,
approximately three months after Mr. McQueer began working full-time for Perfect Fence.
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McCullen Letter; App 231a. In that letter, McCullen represented that Mr. McQueer “works as a
subcontractor for Perfect Fence in 2012 [sic].” Id. McCullen further indicated in her September 9,
2013 letter that Mr. McQueer had earned $5,255.80 while working as a Perfect Fence subcontractor.
On January 14, 2014, Mr. McQueer was working on a job with a Perfect Fence Supervisor,
Mike Peterson. Peterson was operating a Bobcat that was equipped with a bucket. The job required
the two men to position wooden fence posts in the ground. The usual method for putting the fence
posts into the ground was to use an auger to dig a hole into the ground in which the post would be
placed. McQueer Dep. at 80-81; App. 475a. Peterson preferred what he believed to be an easier
method for getting the fence posts into the ground. He would use the bucket of the Bobcat to force
the fence posts into the ground. Id., at 75-78; App. 474a-475a. Shortly before the January 2014
incident in which Mr. McQueer was injured, one of Perfect Fence’s owners, Bob Krumm, had at one
point witnessed Peterson using the Bobcat’s bucket in this way. Krumm became upset with Peterson
and warned him, “that’s dangerous as hell, you guys better not do that.” Id., at 76-77; App. 474a.
Peterson, the Perfect Fence Supervisor, continued to use his method despite Krumm’s
warnings. On January 14, 2014, Mr. McQueer was kneeling down, holding a fence post in position
while Peterson was using the Bobcat’s bucket to push the post into the ground. As he was using the
bucket in this way, the Bobcat slipped back and when the bucket came down, it came down with too
much force. Id., at 83-84; App. 476a. The post was driven further into the ground and the bottom
of the Bobcat bucket struck Mr. McQueer in the head. Id.
Mr. McQueer was knocked unconscious by the force of the blow. Id., at 88; App. 477a.
Before taking Mr. McQueer to a hospital for treatment of his injuries, Peterson called Bob Krumm,
one of Perfect Fence’s owners. Id., at 59, 107; App. 470a, 482a. After speaking with Krumm,
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Peterson advised Mr. McQueer as they were on their way to the hospital that he was not to tell
anyone at the hospital that he had been working for Perfect Fence at the time of his injury. Id., at
52-53, 56, 107; App. 468a, 469a, 482a. Peterson instructed Mr. McQueer: “Do not say nothing
because you’re not covered on the [workers] comp. You’re not even on the books.” Id., at 53, 56;
App. 468a-469a.
Mr. McQueer was hospitalized for three days at Munson Medical Center following the
accident. He sustained a traumatic brain injury and two herniated cervical discs in the accident.
While he was hospitalized, one of the tests administered to Mr. McQueer revealed the incidental
finding that he had a foreign body in his right eye.
Some time after Mr. McQueer was released from the hospital, Bob Krumm and Barb
McCullen, Perfect Fence’s accountant/bookkeeper, visited Mr. McQueer at his home and reported
to him that there was no workers compensation coverage in effect for his injuries. Id., at 102-103;
App. 481a. Krumm and McCullen explained to Mr. McQueer that “we couldn’t do the work comp
thing on it because [Mr. McQueer] wasn’t on the books.” Id., at 102; App. 481a. Krumm and
McCullen also tried to convince Mr. McQueer to sign some back-dated W-4 employment forms,
which would have classified him as an employee. McQueer Affidavit, ¶5; App. 211a; McQueer
Dep. at 109; App. 482a. Mr. McQueer, however, refused to sign these forms. In the weeks after
the accident, Perfect Fence issued four checks totaling $1,148.00 to cover Mr. McQueer’s expenses.
When Mr. McQueer refused to sign the papers designed to identify him as an employee after-the-
fact, Perfect Fence suspended these payments to Mr. McQueer. McQueer Dep., at 107; App. 482a.
On April 10, 2014, Mr. McQueer filed this personal injury action in the Grand Traverse
Circuit Court against Perfect Fence. Complaint; App. 158a-163a. In his complaint, Mr. McQueer
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acknowledged that he worked exclusively for Perfect Fence from June 2013 through January 14,
2014. Based on what Perfect Fence’s agents had told him after the accident, Mr. McQueer alleged
in his complaint that Perfect Fence breached its statutory duty to secure workers compensation
disability insurance. Complaint, ¶14; App. 160a. As a result of that breach, the complaint asserted
that under MCL 418.641(2), the exclusive remedy provision of the Workers Disability Compensation
Act, MCL 418.131, was not applicable to his case. Id., ¶4; App. 205a.
One week after Mr. McQueer filed suit, he began receiving workers compensation payments
from an insurance company, Accident Fund National Insurance Company (hereinafter: Accident
Fund).
During the discovery period that followed, Perfect Fence produced a copy of a policy of
insurance that it had taken out with Accident Fund. Policy; App. 24a-57a. That policy is divided
into six parts. Part One of that policy pertained to Workers Compensation Insurance. Policy, at 1-2;
App. 24a-25a. Part Two of the policy provided employers liability insurance, which applied to
bodily injury that “must arise out of and in the course of the injured employee’s employment by
you.” Id., at 2; App. 40a.
The Information Page of the policy indicated the premium that Perfect Fence was to pay for
the policy. However, under the terms of the policy, the premium shown on the Information Page was
only an estimate. Id., Part 5, E; App. 43a. The final premium, taking into account fluctuations in
the number of employees that would be covered by the policy, was to be calculated later based on
the actual number of employees that Perfect Fence had. Id.
To calculate the final premium, the policy called for Accident Fund to conduct periodic
audits of Perfect Fence. Id., Part 5, G; App. 43a-44a. The audit provision of the policy specified:
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You will let us examine and audit all your records that relate to this policy. Theserecords include ledgers, journals, registers, vouchers, contracts, tax reports, payrolland disbursement records, and programs for storing and retrieving data. We mayconduct the audits during regular business hours during the policy period and withinthree years after the policy period ends. Information developed by audit will be usedto determine final premium.
Id.
Coincidentally, Accident Fund completed one such audit of Perfect Fence’s records on
January 15, 2014, only one day after Mr. McQueer suffered his work-related injury. During the
course of discovery in this case, Mr. McQueer obtained a copy of the Accident Fund’s January 2014
audit. Accident Fund Audit; App. 220a-223a.
The first page of that audit showed that the Accident Fund employee responsible for
completing the audit was Tom Hayat. Id; App. 220a. The audit further indicated that during the audit
period, December 3, 2012 through December 3, 2013, Perfect Fence reported to Accident Fund that
it had five employees and that it had not employed any sublabor during the entire audit period. Id.
The third and fourth pages of the audit listed by name the employees that Perfect Fence was
claiming worked for it during the audit period. Id.; App. 222a-223a. That list of seven employees
did not include Mr. McQueer despite the fact that he had been a full-time employee of Perfect Fence
beginning in June 2013 through nearly the end of the audit period.
During discovery, plaintiff also subpoenaed the records of The Larkin Group, the insurance
agency that sold the Accident Fund policy to Perfect Fence. The Larkin Group logs recorded the
substance of a conversation between one of its agents and Barbara McCullen, Perfect Fence’s
bookkeeper. Log; App 203a. This conversation took place in April 2014, almost immediately after
Perfect Fence was served with Mr. McQueer’s circuit court complaint.
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The Larkin Group log of this conversation, which referred to Mr. McQueer as “the 1099,"
recorded:
Spoke to Barb. 1099 the employee that was injured regarding his eye. Perfect Fencedid this based on the injured parties [sic] request. The audit was performed and the1099 was not part of the audit and premium was not charged for him, according tobarb, was not a real sub and worked for Perfect Fence. I said that she should give[Accident Fund] that line of logic if they do not see him as a employee. She askedme to back her on what her intent was. I said that the facts are the facts and sheshould go with them as they happened. I do not know if the 1099 situation was howshe said it was. I don’t know anything about the audit and how it was performed. She called me prior asking what she should do on reporting the 1099 to [AccidentFund]. I said what could happen but told her that it was her decision to make. I toldher they could look at him as a sub and not pay a claim or they could charge for hispayroll on that term since he may not have the documentation to support his beingan independent contractor. Only the Accident Fund] could make that determination. She said that because [Accident Fund] denying the claim that person is going afterPerfect Fence in civil court for negligence.
Log; App. 203a (emphasis added).
This conversation memorialized in The Larkin Group logs contained several points pertinent
to the issues raised in this case. First, the conversation confirmed that a claim based on Mr.
McQueer’s injury had previously been submitted to Accident Fund for coverage and that Accident
Fund had denied the claim. Second, McCullen, Perfect Fence’s bookkeeper, acknowledged in this
conversation that Perfect Fence had devised a scheme to deceive its insurer. McCullen admitted in
this conversation recounted in The Larkin Group logs that Mr. McQueer was a full-time employee
of Perfect Fence, but that he had not been reported as such for purposes of Accident Fund’s January
2014 audit. As a result, a “premium was not charged for him.” Id.
During the course of the litigation, Mr. McQueer’s attorney, Grant Parsons, placed a
telephone call to representatives of Accident Fund in an attempt to learn more about that insurer’s
payment of Mr. McQueer’s workers compensation benefits. The substance of the conversations that
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Mr. Parsons had with agents of Accident Fund was contained in an affidavit later signed by Mr.
Parsons. Parsons Affidavit; App. 296a-297a.
As indicated in that affidavit, Mr. Parsons had telephone conversations with two different
Accident Fund representatives, Bruce Nilsson and Tate Latture. Both Nilsson and Latture informed
Mr. Parsons that the benefits that were being paid to Mr. McQueer were not being paid under Part
One of the Accident Fund’s policy with Perfect Fence, the portion of the policy pertaining to
While Perfect Fence’s motion for summary disposition was pending, Mr. McQueer filed a
motion seeking to amend his complaint. Motion to Amend; App. 395a-440a. In this motion Mr.
McQueer sought to add a claim under MCL 418.131(1), the so-called intentional tort exception to
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the WDCA’s exclusive remedy provision. Mr. McQueer further sought to add a claim for the
economic damages that he sustained as a result of Perfect Fence’s decision to pay him “off the
books.”
The initial hearing on Perfect Fence’s motion for summary disposition took place on
November 7, 2014. At that hearing, the circuit court expressed the view that this case differed from
the Court of Appeals decisions on which Mr. McQueer was relying since Perfect Fence had a policy
of insurance for workers compensation benefits in place at the time Mr. McQueer was injured. On
the other hand, the circuit court recognized that Perfect Fence had taken steps to conceal Mr.
McQueer’s employment status from its workers compensation insurer in an effort to reduce its
premiums. This scenario prompted the circuit court to pose the following question to Perfect
Fence’s attorney at the November 7, 2014 hearing:
THE COURT: Are they covered? Is Accident Fund required to cover an actualemployee of an insured who fraudulently in effect fails to disclose that employee tothe carrier so they don’t pay premium on it?
Tr. 11/7/14 at 19; App. 539a.
Perfect Fence’s counsel was unable to answer the question. Id.
After some amount of discussion at the November 7, 2014 hearing, the circuit court offered
its view of the dispositive question presented in the case:
THE COURT: I’m just wondering, why is Accident Fund paying work compbenefits, are they obligated to and inside counsel said we’ve got no choice eventhough you were paid no premium in or did some - is there some other reason, suchas I speculated about? Because I’m cynical as to how this came about.
* * *
It seems to me if Accident Fund is obligated to pay this workers’ comp claim, eventhough they weren’t paid a premium on this employee, if they were obligated to, then
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in effect he’s got coverage that workers’ comp provides.
* * *
And, the exclusive remedy provision makes sense, and there is an issue between theAccident Fund and the employer and maybe their agent, maybe their insured. But,if Accident Fund voluntarily stepped up to pay for whatever reason, then I got a littlemore of a question about this.
Id., at 23-24; App. 541a.
The circuit court, therefore, ended the November 7, 2014 hearing by requesting that the
parties provide further briefing on the question of whether Accident Fund was legally obligated to
pay workers compensation benefits to Mr. McQueer. Id., at 28-29; App. 543a-544a.
Pursuant to the circuit court’s instructions, Mr. McQueer filed a supplemental brief in
December 2014. App. 274a-312a; App. 383a-394a. That supplemental submission included Mr.
Parsons’s affidavit in which he recounted conversations with two different Accident Fund
employees, both of whom confirmed that Accident Fund was not paying workers compensation
benefits to Mr. McQueer under the workers compensation insurance provisions of its policy. Parsons
Affidavit; App. 296a-297a.
Perfect Fence also filed a supplemental brief. App. 314a-322a. In that supplemental
memorandum, Perfect Fence raised for the first time a Michigan statute, MCL 418.621(2), which
it contended mandated that Accident Fund, having issued a policy of workers compensation
insurance to Perfect Fence, was statutorily bound to cover all of Perfect Fence’s employees, even if
Perfect Fence secured that policy through fraud.1
1MCL 418.621 provides:
Sec. 621. (1) Every contract for the insurance of the compensation provided in this act for oragainst liability therefore, shall be subject to the provisions of this act and provisions inconsistent
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A second hearing on Perfect Fence’s motion for summary disposition and Mr. McQueer’s
request to amend his complaint was held on December 19, 2014. In advance of that hearing, plaintiff
subpoenaed two Accident Fund employees for depositions. Plaintiff subpoenaed Bruce Nilsson, the
Accident Fund adjustor who signed the sole affidavit submitted in support of Perfect Fence’s motion
for summary disposition and one of the two Accident Fund agents who advised Mr. McQueer’s
counsel that Accident Fund was not paying workers compensation benefits to Mr. McQueer under
the terms of the workers compensation provisions in its policy. Plaintiff also subpoenaed Tom
Hayat, the Accident Fund employee who prepared the January 2014 audit that did not include Mr.
McQueer. Tr. 12/19/14, at 25; App. 564a. Shortly before the rescheduled hearing on the pending
motions, Perfect Fence’s counsel notified Mr. McQueer’s attorney that neither of these two Accident
Fund employees would be produced for deposition. Id.
During the course of the December 19, 2014 hearing, the circuit court repeatedly observed
that the record supported the conclusion that Perfect Fence had set out to deceive its workers
compensation insurer by underreporting the number of people that it was employing, including Mr.
McQueer. Thus, at various points during the oral argument conducted on December 19, 2014, the
circuit court made the following statements regarding Perfect Fence’s attempt to defraud its workers
compensation insurer: (1) “the defendant avoided or attempted to avoid . . . paying premiums on Mr.
McQueer’s wages for his workers comp coverage,” Tr. 12/19/14 at 4; App. 553a; (2) “the defendant
with this act are void.
(2) The state accident fund and each insurer issuing an insurance policy to coverany employer not permitted to be a self-insurer under section 611 shall insure,cover, and protect in the same insurance policy, all the businesses, employees,enterprises, and activities of the employer.
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hid Mr. McQueer’s employment from the workers comp carrier,” id; (3)“there is certainly some
evidence that . . . defendant, Perfect Fence Company, tried to gyp Accident Fund out of some
premium,” id at 7; App. 555a; (4) “they didn’t pay premium and were trying to avoid paying
premium,” id; (5) “the employer attempted to gyp the insurer . . . out of some premium,” id., at 12;
App. 553a; (6) “I’ll accept that they intend to deceive their insurer,” id at 30; App. 566a; (7) “those
people are scoundrels and they tried to deceive everybody by hiding this man’s compensation and
not paying insurance on it.” Id., at 32; App. 567a.
Despite these observations regarding Perfect Fence’s lack of probity in its treatment of Mr.
McQueer’s employment, the circuit court ruled from the bench at the December 19, 2014 hearing
that Perfect Fence was entitled to summary disposition on the basis of the exclusive remedy
provision of the WDCA. The circuit court ruled first that, despite failing to disclose Mr. McQueer’s
employment status to its workers compensation insurer, Perfect Fence did not violate MCL 418.611,
because workers compensation insurance was in place under MCL 418.621:
And - so taking those versions, the Accident Fund apparently was not even aware ofMr. McQueer. They did, however, pay Mr. McQueer’s workers’ comp claim. Thequestion that came up was, whether they did so because they were required to.
The reason I think that’s important is, if they really didn’t have coverage for Mr.McQueer, then you may trigger these penalty provisions we’re going to go throughin a minute. If they did have coverage for Mr. McQueer, then we have to look at thepenalty provisions with that in mind.
It does appear that the statutes for workers’ compensation require, that when aworkers’ comp policy is issued, that it, in fact, does cover all businesses and allemployees of the employer. And it appears that - I think that happens whether or notthe employees are disclosed to the workers’ comp carrier.
* * *
So I think that based on the language set forth in section 621 of the act, specifically
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subsection (2) and subsection (4)(e), it does appear that the Accident Fund policycovered Mr. McQueer, even though they were not aware of him and his existence andhis compensation, taking the version most favorable to the plaintiff, had been hiddenfrom the Accident Fund.
Tr. 12/19/14, at 35-36; App. 569a.
The circuit court further found that Mr. McQueer could not establish that Perfect Fence had
violated MCL 418.171. Tr. 12/19/14, at 38-40; App. 570a-571a.
After granting summary disposition to the defendant, the circuit court addressed Mr.
McQueer’s request to amend his complaint. The court held that an amendment to state a claim under
the intentional tort exception to the exclusive remedy provision would be futile because Mr.
McQueer could not make out a valid cause of action under MCL 418.131(1). Id., at 63-66; App.
583a-584a.
With respect to Mr. McQueer’s request to amend his complaint to assert a claim for the
damages he sustained due to Perfect Fence’s decision to maintain his employment “off the books,”
the circuit court ruled that this amendment would not be allowed because these damages, standing
alone, would not meet the jurisdictional minimum for a circuit court action. Id., at 68; App. 585a.
The circuit court signed an order granting Perfect Fence summary disposition and denying
Mr. McQueer’s request to amend his complaint on December 29, 2014. Order; App. 588a-589a.
Mr. McQueer appealed from that order to the Court of Appeals.
On appeal, Mr. McQueer raised three issues: (1) whether the exception to the exclusive
remedy provision of the WDCA found in MCL 418.611 applied in this case because questions of fact
remained on whether Perfect Fence had failed to secure workers compensation insurance coverage
applicable to Mr. McQueer; (2) whether the exception to the WDCA’s exclusive remedy provision
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found in MCL 418.171 applied to these facts; and (3) whether the circuit court erred in refusing Mr.
McQueer’s request to amend his complaint.
A panel of the Court of Appeals issued an unpublished decision on April 19, 2016 affirming
the circuit court in part and reversing in part. Opinion; App. 690a-713a. In that opinion, the Court
of Appeals rejected Mr. McQueer’s argument on the basis of MCL 418.611 based on its reading of
the mandatory character of MCL 418.621(2):
In this case, defendant secured worker’s compensation insurance from AccidentFund. Plaintiff nevertheless asserts that defendant did not secure workerscompensation insurance for him because no premium was paid to Accident Fund forhim. However, “[nothing will be read into a clear statute that is not within themanifest intention of the Legislature as derived from the language of the statuteitself.” Thomason v WCAC Contour Fabricators, Inc., 255 Mich App 121, 124-125;662 NW2d 51 (2003). Here, nothing in the plain language of the statute requires thatthe employer pay a premium for each employee in order to satisfy the requirementsof section 611. Moreover, even accepting that no premium was actually paid forplaintiff, nothing in the statutory language permits an insurance company issuing aworker’s compensation policy to avoid paying benefits to an employee on the basisthat the employer failed to pay its premium. Instead, MCL 418.621(2) mandates thatan insurer issuing a policy must cover all of the insured employer’s employees.
Opinion, at 5; App. 695a.
The Court of Appeals found, however, that questions of fact remained on the applicability
of the other statute mentioned in §641(2), MCL 418.171. With respect to this aspect of Ms.
McQueer’s claim, the Court of Appeals ruled:
Given the widely divergent proofs, it is clear that there is a genuine issue of materialfact as to whether defendant used "coercion, intimidation, deceit, or other means toencourage persons who would otherwise be considered employees within themeaning of this act to pose as contractors for the purpose of evading" liability undersections 171 or 611 of the WDCA. Taking the facts as presented by plaintiff,defendant did use deceit, i.e., telling plaintiff that he was not covered by worker'scompensation insurance and encouraging him to withhold his employment statusfrom medical personnel. It can be reasonably inferred that the purpose of the deceitwas to prevent plaintiff from making a claim for worker's compensation benefits,
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which would in turn allow defendant to avoid liability under sections 171 or 611 ofthe WDCA. Because there is a genuine issue of material fact on this issue, the trialcourt erred in granting summary disposition in defendant's favor.
Opinion at 6-7; App. 696a-697a.
The Court of Appeals in its April 19, 2016 opinion also reversed the circuit court’s denial
of Mr. McQueer’s request to amend his complaint to add a claim against Perfect Fence under MCL
418.131. Id., at 7-10; App. 697a-700a. After reviewing the evidence relating to the accident, the
Court of Appeals held that, “[b]ecause the facts as presented by plaintiff are sufficient to support a
finding of intentional tort, the trial court abused its discretion when it concluded such an amendment
to the complaint would be futile.” Id., at 10; App. 700a.
Perfect Fence filed an application for leave to appeal in this Court. On January 12, 2018, the
Court issued an order instructing the Clerk to schedule oral argument on the application for leave.
McQueer v Perfect Fence Co., 501 Mich 954; ___ NW2d ___ (2017). In its January 12, 2018 order,
the Court instructed the parties to address three issues:
(1) whether the statutory employer provision of MCL 418.171 is applicable to theplaintiff's claims; and (2) if so, whether the plaintiff has established a genuine issueof material fact sufficient to avoid summary disposition; and (3) whether the Courtof Appeals erred by reversing the Grand Traverse Circuit Court's order denying, onthe basis of futility, the plaintiff's motion to amend his complaint to add anintentional tort claim.
Id.
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ARGUMENT
I. THE COURT SHOULD DENY DEFENDANT’S REQUEST TOREVIEW THE COURT OF APPEALS DETERMINATION THATFACTUAL ISSUES REMAINED TO BE RESOLVED ON THEQUESTION OF WHETHER MR. McQUEER CAN PROCEED ON ACLAIM AGAINST PERFECT FENCE UNDER THE EXCEPTION TOTHE WDCA’S EXCLUSIVE REMEDY PROVISION CONTAINED INMCL 418.171(4).
There is no dispute that Mr. McQueer was an employee of Perfect Fence at the time of his
January 2014 accident. Normally, an employee is precluded from pursuing a personal injury action
against his/her employer on the basis of the exclusive remedy provision of the WDCA, MCL
418.131. The question presented in this case is whether, under the unique set of facts involved here,
Mr. McQueer may proceed on a civil action against Perfect Fence despite §131.
The Michigan Legislature has carved out a statutory exception to §131's exclusive remedy
provision. That exception is found in MCL 418.641(2), which provides:
The employee of an employer who violates the provisions of section 171 or 611 shallbe entitled to recover damages from the employee in a civil action because of aninjury that arose out of and in the course of employment notwithstanding theprovisions of section 131.
MCL 418.641(2).
MCL 418.641(2) operates “to restore the employee’s common-law right to sue the employer,
a cause of action otherwise eliminated by §131. . .” Smeester v Pub-N-Grub, Inc., 208 Mich App
308, 312; 527 NW2d 5 (1995); see also State Farm Mutual Automobile Ins Co v Roe (On
Rehearing), 226 Mich App 258, 265-266; 573 NW2d 628 (1997); McCaul v Modern Tile and
the exclusive remedy provision of the WDCA does not preclude an employee’s civil suit against
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his/her employer in two circumstances, where the employer is engaged in a violation of MCL
418.611 or where the employer is found to have violated the provisions of MCL 418.171.
One of the statutes mentioned in §641(2) is MCL 418.611, the statute that specifies that an
employer “shall secure the payment of compensation under this act” by either taking the steps to
become a self-insurer or “by insuring against liability with an insurer authorized to transact the
business of worker’s compensation insurance within this state.” MCL 418.611(1)(b). The second
statute referred to in §641(2) is MCL 418.171, what is often referred to as the statutory employer
provision of the WDCA.
Mr. McQueer has contended in this case that both statutory exceptions to the exclusive
remedy provision mentioned in §641(2) are applicable here. In its April 19, 2016 decision, the Court
of Appeals ruled that, despite the fraud that Perfect Fence perpetrated on its workers compensation
insurer, Mr. McQueer could not establish that Perfect Fence violated MCL 418.611. The Court of
Appeals held, however, that factual issues remained on the question of whether Mr. McQueer could
pursue a personal injury action against Perfect Fence on the basis of MCL 418.171. Opinion, at 6-7;
App. 696a-697a.
Subsection 1 of MCL 418.171 states as follows:
If any employer subject to the provisions of this act, in this section referred to as theprincipal, contracts with any other person, in this section referred to as the contractor,who is not subject to this act or who has not complied with the provisions of section611, and who does not become subject to this act or comply with the provisions ofsection 611 prior to the date of the injury or death for which claim is made for theexecution by or under the contractor of the whole or any part of any work undertakenby the principal, the principal shall be liable to pay to any person employed in theexecution of the work any compensation under this act which he or she would havebeen liable to pay if that person had been immediately employed by the principal. Ifcompensation is claimed from or proceedings are taken against the principal, then,in the application of this act, reference to the principal shall be substituted for
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reference to the employer, except that the amount of compensation shall be calculatedwith reference to the earnings of the person under the employer by whom he or sheis immediately employed. A contractor shall be deemed to include subcontractors inall cases where the principal gives permission that the work or any part thereof beperformed under subcontract.
Subsection 4 of MCL 418.171 refers back to §641 and sets out the potential penalty - loss
of the protection of the exclusive remedy provision - for any employer who attempts to circumvent
the requirements of either MCL 418.171 or MCL 418.611. MCL 418.171(4) provides in pertinent
part:
Principals willfully acting to circumvent the provisions of this section or section 611by using coercion, intimidation, deceit, or other means to encourage persons whowould otherwise be considered employees within the meaning of this act to pose ascontractors for the purpose of evading this section or the requirements of section 611shall be liable subject to the provisions of section 641.
What the Court of Appeals ruled in this case is that Perfect Fence was not entitled to
summary disposition in its favor on the basis of the WDCA’s exclusive remedy provision because
factual issues remained to be resolved on the question of whether Perfect Fence used “coercion,
intimidation, deceit or other means to encourage persons who would otherwise be considered
employees within the meaning of this act to pose as contractors for the purpose of evading the
requirements of MCL 418.171 or MCL 418.611.” Opinion, at 6; App. 696a. The Court of Appeals
did not err in reaching this result.
What §171(4) provides is that MCL 418.641's exception to the exclusive remedy provision
of the WDCA will be applicable where an employer “unlawfully act[s] to circumvent” either §171
or §611 by using coercion, deceit or other means to cause a person who would otherwise be an
employee for purposes of the WDCA “to pose as contractors for the purpose of evading” either §171
or §611.
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The evidence in this case demonstrates that between June 2013 and the date he was injured,
January 14, 2014, Mr. McQueer was a full-time employee of Perfect Fence. Despite that fact, he was
never represented as an employee in Perfect Fence’s books. Instead, during this entire time period
he was to be paid “off the books,” and, as indicated in the September 9, 2013 letter written by
Barbara McCullen, Perfect Fence’s accountant/bookkeeper, Mr. McQueer treated during this time
period as a “subcontractor for Perfect Fence.” McCullen Letter; App. 231a.
Mr. McQueer testified that when he was hired full-time by Perfect Fence in June 2013, he
was told that the company was having some financial difficulties and, as a result, it would have to
pay him “off the books,” not as an employee. McQueer Dep. at 52-59; App. 468a-496a.2 Thus,
throughout the course of time that he worked for Perfect Fence, Mr. McQueer was not treated on the
defendant’s books and records as he really was - an employee.
What Perfect Fence did in this case in their treatment of Mr. McQueer’s employment clearly
satisfies one aspect of §171(4) and its exception to the WDCA’s exclusive remedy provision. The
evidence in this case established that Perfect Fence used deceit or other means “to encourage persons
who would otherwise be considered employees” under the WDCA “to pose as contractors.”
There is, however, an additional requirement that must be met before the exclusive remedy
of the WDCA becomes inapplicable under the text of §171(4). An employer must take the steps to
2Plaintiff acknowledges that Mr. McQueer’s testimony that Krumm advised him at theoutset of his employment that Mr. McQueer was to be kept “off the books” has been denoted bythe defense. In deposition testimony provided by Krumm and Barbara McCullen, both testifiedthat it was Mr. McQueer’s desire to be paid “off the books.” Mr. McQueer has denied that thiswas true. McQueer Dep., at 54-55; App. 469a. Since the evidence in conjunction withdefendant’s motion must be construed in the light most favorable to Mr. McQueer, it is histestimony on this issue that must be accepted as true, not the evidence to the contrary provided byKrumm and McCullen.
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encourage employees to pose as contractors for a particular reason - “for the purpose of evading this
section on the requirements of section 611 . . ” As the Court of Appears properly held, there are
material issues of fact to be resolved on this second requirement of §171(4), which preclude the entry
of judgment in Perfect Fence’s favor.
The evidence produced in this case supports the conclusion that at least one of the reasons
that Perfect Fence had one of its full-time employees pose as an independent contractor was to evade
the requirements of §611, the provision in the WDCA that requires Michigan employers to insure
coverage for their employees’ work-related injuries.
The events that occurred in the immediate aftermath of Mr. McQueer’s accident fully
supports the conclusion that Perfect Fence took the steps of treating Mr. McQueer as something other
than what he was - an employee - for the express purpose of evading §611. As part of its scheme
to treat Mr. McQueer as “off-the-books,” Perfect Fence also decided not to identify Mr. McQueer
as an employee when its workers compensation insurer, Accident Fund, conducted an audit to
determine the amount of its premium. In deceiving Accident Fund by failing to report Mr. McQueer
as an employee, Perfect Fence certainly believed that it was circumventing the provisions of §611
and its provision for mandatory insurance coverage for workers compensation benefits.
Immediately after Mr. McQueer was injured on January 14, 2014, his supervisor on the job
site, Mike Petersen, telephoned Bob Krumm, one of Perfect Fence’s owners. After speaking to
Krumm, Peterson told Mr. McQueer as he was driving him to the hospital that Mr. McQueer was
not to tell anybody at the hospital that he had sustained a work-related injury. Peterson told Mr.
McQueer that he was not to divulge this fact, “because you’re not covered on the [workers] comp.”
McQueer Dep., at 53; App. 468a. Thus, the logical inference to be drawn from this evidence is that
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an owner of Perfect Fence had concluded that by (1) maintaining Mr. McQueer’s employment “off-
the-books” and (2) failing to report Mr. McQueer as an employee to its workers compensation
insurer, Perfect Fence was engaged in an effort to circumvent the provisions of §611.
This fact was further confirmed in a meeting that took place in Mr. McQueer’s home while
he was recovering from his injuries. Krumm and Perfect Fence’s bookkeeper/accountant, Barbara
McCullen, came to Mr. McQueer’s home and attempted to convince him to sign papers to
retroactively indicate that he was a Perfect Fence employee, not an independent contractor. During
that meeting, the two Perfect Fence representatives advised Mr. McQueer that “we couldn’t do the
work comp thing . . . because [Mr. McQueer] wasn’t on the books.” McQueer Deposition, at 102;
App 481a.
Once again, this evidence fully supports the conclusion that the scheme that Perfect Fence
had engaged in with respect to hiding Mr. McQueer’s employment status was designed with a
particular purpose in mind - his true status was kept hidden “for the purpose of evading . . . the
requirements of section 611" - a purpose that is specifically prohibited by §171(4).
Finally, an April 2014 conversation that took place between McCullen and a representative
of The Larkin Group, the agency that had acquired the Accident Fund policy on behalf of Perfect
Fence, supports the view that Perfect Fence deceit with respect to Mr. McQueer’s employment status
represented Perfect Fence’s wilful effort to circumvent the provisions of §611. In The Larkin Group
logs, McCullen acknowledges that Mr. McQueer was not reported as an employee to Accident Fund
in its January 2014 audit and that, as a result, a “premium was not charged for him.” Log; App 203a.
Again, McCullen’s statements to The Larkin Group representative support an inference that the
deceit associated with Mr. McQueer’s employment status with Perfect Fence was designed for at
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least one purpose - to avoid the mandatory requirements insuring workers compensation benefits
under §611 of the WDCA.
To summarize, each of §171(4)’s requirements for avoiding the effects of the exclusive
remedy provision are in place in this case. Perfect Fence used coercion, deceit or some other means
to encourage a person who was, in actuality, one of its employees, to pose as an independent
contractor. And, Perfect Fence did so with a particular purpose in mind - “for the purpose of evading
. . . the requirements of section 611 . . .”3
It is important to note in applying the text of §171(4) to the peculiar facts of this case that it
is not relevant to the statute whether the scheme that Perfect Fence devised ultimately resulted in an
actual violation of §611 of the act. Both the circuit court and the Court of Appeals were of the view
that Perfect Fence’s actions in this case did not result in an actual violation of §611 because, under
another statutory provision, MCL 418.621(2), Accident Fund was compelled to provide workers’
3In its Supplemental Brief to this Court, Perfect Fence asserts that §171(4) could not besatisfied in this case because the scheme that it developed with respect to Mr. McQueer’semployment status was not designed for the purpose of circumventing the mandatory insuranceprovisions of the WDCA. Def’s Supplemental Brief, at 5. Instead, citing the circuit court’sruling and the decision of the Court of Appeals, Perfect Fence claims that the purpose behind itsefforts to defraud Accident Fund was “to avoid paying [a] premium” for workers compensationinsurance or “to prevent plaintiff from making a claim for workers compensation benefits.” Id. Thus, Perfect Fence suggests that §171(4) cannot be found applicable here because what reallymotivated it was a desire to keep its workers compensation insurance costs down or todiscourage Mr. McQueer from even claiming workers compensation. Both of these potentialmotivations were simply a by product of not monitoring workers compensation insurance for Mr.McQueer - something Perfect Fence agents thought they were doing when they developed theirscheme to defraud its insurer. The alternative “motivations” offered by Perfect Fence for itsmisleading treatment of Mr. McQueer’s employment, provide another reason why summarydisposition was appropriate here. It is also important to keep in mind in construing the true“purpose” behind Perfect Fence’s fraudulent scheme that “summary disposition is rarelyappropriate where ‘motive and intent play leading roles.’” Opdyke Investment Co v Norris GrainCo, 413 Mich 354, 361; 320 NW2d 837 (1982); cf Foreman v Foreman, 266 Mich App 132,135-136; 701 NW2d 167 (2005).
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compensation insurance to all of Perfect Fence’s employees even in the face of Perfect Fence’s
material misrepresentations during the course of Accident Fund’s audit.
But, the text of §171(4) does not require that an employer actually violate §611. What that
provision requires is proof that an employer took certain steps - treating an employee as an
independent contractor - and that these steps were taken for the purpose of evading section 611. In
one of the very few Michigan appellate decisions that have addressed §171(4), the Court of Appeals
properly noted that “[a]ccording to its plain language, subsection 171(4) provides independent
contractors who would otherwise be considered employees under the WDCA a vehicle for recovery
where their employer has attempted to circumvent the provisions of §171 or §611.” McCaul v
Modern Tile And Carpet, Inc., 248 Mich App 610, 620-621; 640 NW2d 589 (2002).
The McCaul decision was entirely correct in its reading of §171(4). That statute does not
merely penalize an employer for instituting a scheme that actually violates §611; that statute
penalizes an employer for a scheme that is implemented by the employer in an attempt to circumvent
the provisions of §611.4 The evidence in this case, as embodied in the statements made by Perfect
Fence’s owner, Krumm, and its accountant/bookkeeper, McCullen, support the view that Perfect
Fence considered itself involved in an attempt to circumvent the requirements of §611.
For all of these reasons, the Court of Appeals did not err in reaching the conclusion that
4Such an interpretation of §171(4) also saves that subsection’s references to §611 frombeing rendered meaningless. It is clear from §641(2) that an employer who actually violates§611 by not complying with its insurance provisions is precluded from claiming the benefit ofthe WDCA’s exclusive remedy provision. Thus, engrafting onto §171(4) a requirement that theemployer actually be engaged in a violation of §611 would add nothing to the principleabrogating the exclusive remedy provision already found in §641(2). It is axiomatic that courtsare to construe statutes in such a way as to avoid rendering any portion of them nugatory orsurplusage. Hannay v Dep’t of Transportation, 497 Mich 45, 57; 860 NW2d 67 (2014).
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material issues of fact remained on the question of whether this case fell within the exception to the
WDCA’s exclusive remedy provision contained in §171(4). This Court should, therefore, deny
defendant’s request for leave to appeal on this issue.
But, even if this Court were of the view that §171(4) requires an actual violation §611, it
should conclude that factual issues remain in this case. Both the circuit court and the Court of
Appeals took the position that Perfect Fence had to be covered by insurance for all workers
compensation claims on the basis of MCL 418.621(2). That statute specifies that every contract for
insurance shall protect “in the same insurance policy, all the businesses, employees, enterprises and
activities of the employer.” On the basis of this provision, the courts below found that §611 was
complied with simply because Perfect Fence had a workers compensation policy in place.
The reliance of the courts below on MCL 418.621(2) was misplaced. According to the Court
of Appeals, that statute “mandates that an insurer issuing a policy must cover all of the insured
employer’s employees.” Opinion, at 5; App. 695a. But, this Court has recognized that in a claim
for insurance benefits, an insurer may invoke common-law defenses to avoid enforcement of an
insurance policy. Titan Ins Co v Hyten, 491 Mich 547, 554; 817 NW2d 562 (2012). Among these
potential common-law defenses is fraud. Id., at 555. The decisions below based on MCL
418.621(2) fail to take into account that an insurer who issues a policy of insurance covering workers
compensation claims might be able to assert a fraud defense to any attempt to enforce such a policy.
There is little doubt that Accident Fund had a basis for asserting such a fraud defense to the
enforcement of its contract in this case. Perfect Fence obviously materially misrepresented the size
of its work force in the January 2014 audit that Accident Fund conducted. These misrepresentations,
including the failure to divulge Mr. McQueer as a full-time employee, were designed to reduce the
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premium that Perfect Fence would be required to pay for the workers compensation insurance. Cf
Group Ins Co of Michigan v Czopek, 440 Mich 590, 597; 489 NW2d 444 (1999) (“An insurance
company y cannot be found liable for a risk it did not assume.”).
In this case, there are issues that remain unresolved on whether Accident Fund could invoke
a common-law fraud defense to the payment of workers compensation benefits to Mr. McQueer.
More importantly, there are issues that remain unresolved on whether Accident Fund did, in fact,
invoke such a defense.
While this issue was never fully resolved at the time the circuit court granted Perfect Fence’s
motion for summary disposition, there was evidence in the record supporting the view that Accident
Fund had denied Perfect Fence’s request to pay workers compensation benefits under the provisions
in its policy that covered such claims. During an April 2014 conversation with Perfect Fence’s
insurance agent, Ms. McCullen acknowledged that Accident Fund had already denied a request for
the payment of workers compensation benefits to Mr. McQueer. Logs; App. 203a.
Later, Mr. McQueer’s attorney attempted to determine how it came to be that Mr. McQueer
began to receive workers compensation payments after he filed this personal injury action against
Perfect Fence. Mr. McQueer’s counsel learned from two agents of Accident Fund that these
payments were not being made based on the basis of the provisions of the policy pertaining to
workers compensation. Rather, these payments were being voluntarily made based on the provisions
of the Accident Fund policy pertaining to general employer’s liability. Parsons Affidavit, ¶¶3-4;
App. 297a.5
5In advance of the circuit court’s ruling on Perfect Fence’s summary disposition motion,Mr. McQueer’s attorney sought to get to the bottom of the question of how and why workerscompensation benefits were being paid to Mr. McQueer. Counsel subpoenaed two Accident
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Thus, there was some evidence in the record that, despite the language in MCL 418.621(2),
Accident Fund was taking the position that it did not have a contractual obligation to pay workers
compensation benefits under the contract that Perfect Fence signed. In light of this unresolved
factual question, it cannot be said that Perfect Fence had, as a matter of law, complied with §611.
For this reason, even if an actual violation of §611 were a necessary prerequisite for compliance with
§171(4), summary disposition was not appropriate in this case.
II. THE CIRCUIT COURT SHOULD DENY DEFENDANT’S REQUESTTO REVIEW THE COURT OF APPEALS DETERMINATIONALLOWING MR. McQUEER’S REQUEST TO AMEND HISCOMPLAINT.
The final issue on which the Court has requested briefing concerns the Court of Appeals
ruling that Mr. McQueer should have been allowed to amend his complaint.
After Perfect Fence filed its motion for summary disposition, Mr. McQueer moved to amend
his complaint to assert two new theories. First, he sought an amendment to state a claim under MCL
418.131(1), the so-called intentional tort exception to the exclusive remedy provision of the WDCA.
Mr. McQueer further sought to amend his complaint to claim certain damages associated with
Perfect Fence’s treatment of his job-related status as that of an independent contractor.
At the hearing held on December 19, 2014, the circuit court denied Mr. McQueer’s request
to amend. Tr. 12/19/14, at 63-69; App. 583a-587a. The circuit court held that it would be futile to
allow amendment to allege a claim of intentional tort because Mr. McQueer’s did not have sufficient
Fund employees for depositions, including it sagents who had conducted the January 2014 auditand another agent who signed an affidavit in support of Perfect Fence’s motion. Tr. 12/19/14, at25; App. 564a. Counsel for Perfect Fence notified Mr. McQueer’s counsel that these depositionswould not take place before the circuit court decided Perfect Fence’s summary dispositionmotion.
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facts to support such a claim. Id., at 65-66; App. 584a. The circuit court further found that the other
theory he sought to raise by amendment did not, by itself, meet the jurisdictional minimum for a
circuit court action and it refused to allow amendment on that basis. Id., at 68-69.
The Court of Appeals reversed the circuit court’s ruling. Opinion, at 7-10; App. 697a-700a.
The Court of Appeals conclude that “[b]ecause the facts as presented by the plaintiff are sufficient
to support a finding of intentional tort, the trial court abused its discretion when it concluded that
such an amendment to the complaint would be futile.” Id., at 10; App. 700a.
The initial question presented is whether the circuit court, in deciding Mr. McQueer’s request
to amend his complaint, should have been allowed to assess the sufficiency of Mr. McQueer’s
evidence on any claim that he might add on the basis of MCL 418.131. MCR 2.118(A)(2) specifies
that leave to amend is to be freely granted if justice so requires. This Court has on the basis of this
court rule recognized that a motion to amend “ordinarily should be granted” and it should be denied
only for particularized reasons. Weyers v Khera, 454 Mich 639, 658; 563 NW2d 647 (1997).
Among these particularized reasons is the futility of the proposed amendment. Id.
But, futility in the context of a request to amend a pleading is not tied to the actual merits of
the claim that a party seeks to add by amendment. This Court made this point clear in Ben P. Fyke
& Sons v Gunter Company, 390 Mich 649; 213 NW2d 134 (1973). In that case the Court held that
“[o]n a motion to amend, a court should ignore the substantive merits of the claim or defense unless
it is legally insufficient on its face . . .” Id., at 660. An amendment may be deemed futile only if
“ignoring the substantive merits of the claim, it is legally insufficient on its fact.” P.T. Today, Inc.
v Commissioner of Office of Financial Ins Services, 270 Mich 110, 143; 715 NW2d 398 (2006)
(emphasis added); Gonyea v Motor Parts Credit Union, 192 Mich App 74; 480 NW2d 297 (1992).
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Thus, an amendment is futile not where the added claim lacks substantive merit but where the
amendment fails to state a claim. Yudashkin v Holden, 247 Mich App 642, 651; 637 NW2d 257
(2001); Lane v Kinder-Care Learning Centers, Inc., 231 Mich App 689, 697; 588 NW2d 715 (1998).
A plaintiff’s motion to amend, therefore, should not be denied as futile because a trial court
believes on the limited record that might accompany such a motion, that the amended claim would
be subject to dismissal based on the purported insufficiency of the evidence necessary to support the
claim. A trial court should not deny a request to amend because it believes that the amended claim
might be subject to attack in a motion filed under MCR 2.116(C)(10). Rather, where the opposition
to a proposed amendment is predicated on the purported insufficiency of the facts to support the
amended claim, i.e. an attack on “the substantive merits of the claim,” Ben P. Fyke, 390 Mich at 660,
the court should allow the amendment and follow the procedures outlined in MCR 2.116(C)(10) to
determine the merits of the claim.
The circuit court in this case reached the conclusion that Mr. McQueer’s proposed
amendment to include a claim based on §131(1) was futile based on its assessment of the substantive
merits of that claim. As Ben P. Fyke and the various cases from the Court of Appeals cited above
demonstrate, the circuit court should not have denied the amendment on that basis.
Another fact rendering the circuit court’s assessment of the substantive merits of the §131
claim that Mr. McQueer sought to add problematical is that the discovery period set by the circuit
court had yet to close at the time the court refused Mr. McQueer’s request to amend. Discovery in
this case was to be cut-off in January 2015. Order; App. 2b. Since discovery was ongoing, the
circuit court should not have used the motion to amend as a basis for definitively deciding the
substance of Mr. McQueer’s potential §131(1) claim.
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But even if the circuit court had the authority to examine the merits of any claim that Mr.
McQueer might make under §131, the Court of Appeals was correct in concluding that this
amendment was not futile.
The first sentence of §131(1) contains the exclusive remedy provision of the WDCA: “The
right of recovery of benefits as provided in this act shall be the employee’s exclusive remedy against
the employer for a personal injury or occupational decrease.” That sentence is, however, followed
by an exception to this exclusive remedy principle:
The only exception to this exclusive remedy is an intentional tort. An intentional tortshall exist only when an employee is injured as a result of a deliberate act of theemployer and the employer specifically intended an injury. An employer shall bedeemed to have intended to injure if the employer had actual knowledge that aninjury was certain to occur and willfully disregarded that knowledge. The issue ofwhether an act was an intentional tort shall be a question of law for the court.
MCL 418.131(1).
Mr. McQueer sustained a traumatic brain injury and two cervical herniated discs in the
January 14, 2014 job-related accident when his Perfect Fence supervisor, Mike Peterson, used a
bobcat inappropriately to drive fence posts into the ground. Rather, the using an auger to dig a hole
to fix the fence post into the ground, Peterson insisted on using the bucket of the bobcat as a hammer
of sorts, pushing the top of the post into the ground. While using the bobcat bucket in this way,
either because Petersen used too much force or because Peterson and Mr. McQueer were working
in a marshy area, the post was driven too far into the ground, causing the bucket itself to strike Mr.
McQueer on the head as he was holding the post in place.
Petersen was using the bobcat basket as a hammer despite the fact that, shortly before Mr.
McQueer’s accident, Petersen had been told by one of Perfect Fence’s owners, Bob Krumm, not to
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use the machine in this way because it was too dangerous. Mr. McQueer testified that Krumm had
come onto the job site shortly before the accident and witnessed Petersen using the bobcat bucket
to drive in a fence post. Krumm told Petersen, “that’s dangerous as hell, you guys better not do
that.” McQueer Dep. at 76; App. 474a. At his deposition, Krumm provided a dramatic assessment
of the danger that was created by Peterson’s use of the bobcat bucket while Mr. McQueer was
kneeling below the bucket holding a post in place. Krumm testified that driving a fence post into
the ground in this way, it is “guaranteed you’re going to get hurt.” Krumm Deposition, at 26; App.
510a. (emphasis added).
MCL 418.131(1) first requires a “deliberate act.” Travis v Dreis and Krump Mfg Co, 453
Mich 149, 169; 551 NW2d 132 (1996). Here, Peterson’s conscious decision to use the bobcat bucket
in an inappropriate manner satisfies that requirement.
The first sentence of §131(1) also requires proof that the employer “specifically intended an
injury.” But, as this Court recognized in Travis, the second sentence of §131(1) provides a method
by which this intent element of such a claim can be proved inferentially. That second sentence
provides that an employer shall be deemed to have intended to injure an employee “if the employer
had actual knowledge that an injury was certain to occur and wilfully disregarded that knowledge.”
The Court of Appeals has held that “an injury is certain to occur if there is no doubt that it
will occur.” Johnson v Detroit Edison Co, 238 Mich App 688, 697; 795 NW2d 161 (2010).
Krumm’s own deposition testimony provides satisfactory proof of this element. By his assessment,
an injury was certain to occur using the bobcat inappropriately to drive in fence posts; he testified
that this method was guaranteed to produce injury. Krumm Dep., at 26; App. 510a.
Moreover, Krumm communicated the gravity of the danger in somewhat earthy tones when
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he told Peterson to stop using the bobcat in this way because it was “dangerous as hell.” Despite
Krumm’s warnings and his direct instructions to Peterson to stop using the bobcat in this way,
Petersen, who was Perfect Fence’s supervisor on the job, ignored those instructions because it was
“easier” to get the fence posts into the ground using the bobcat as a hammer. McQueer Dep. At 77;
App. 474a. In the case of a corporate employer, “a plaintiff need only show that ‘a supervising or
managerial employee had actual knowledge that an injury would follow from what the employer
deliberately did or did not do.’” Johnson, 288 Mich App at 697; Fries v Mavrick Metal Stamping,
Inc., 285 Mich App 706, 714; 777 NW2d 205 (2009).
The circuit court should not have taken up the substantive merits of Mr. McQueer’s §131(1)
claim in the context of a motion to amend the complaint. The circuit court certainly should not have
denied that amendment as futile based on a purported lack of substantive merit in the claim. But,
even if the circuit court could examine the merits of Mr. McQueer’s potential §131(1) claim in
deciding whether to allow the amendment, the circuit court still erred in reaching the conclusion that
the amendment was futile.
A final point that needs to be stressed concerning the amendment issue on which Perfect
Fence seeks leave to appeal is that there is nothing involved in this issue that should take up the time
of this Court. In its application for leave and its Supplemental Brief, Perfect Fence does its utmost
to inflate the significance of the Court of Appeals ruling on the §131(1) question presented in this
case. But, the Court of Appeals opinion in this case is unpublished and, therefore, has no
precedential value. MCR 7.215(C)(1). Moreover, the Court of Appeals decision, which is addressed
exclusively to the question of whether Mr. McQueer should have been allowed the right to amend
his complaint, is not even addressed to the question of whether his §131 claim would survive a
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motion for summary disposition based on MCR 2.116(C)(10). Rather, the most that can be said of
the Court of Appeals decision in this case is that it represents a conclusion that Mr. McQueer
presented “a legal and factual basis for his claim.” Opinion at 8; App 698a, citing Dagen v Hastings
In addition, even if the Court of Appeals unpublished decision in this case were actually a
determination of the merits of Mr. McQueer’s §131 claim, it is difficult to see how such a
determination presents the Court with a jurisprudentially significant issue of Michigan law, worthy
of this Court’s review. This case, even if it represented a decision on the merits of Mr. McQueer’s
§131(1) claim, offers only the question of whether, under the very particular facts of this case, the
standard of §131(1) has been met.
Thus, what Perfect Fence asks this Court to review is an opinion of the Court of Appeals that
has no precedential value at all, that does not even address the substantive merits of Mr. McQueer’s
claim based on §131(1), and, finally, involves only the highly case-specific facts of this highly
unusual set of circumstances. This is not exactly the stuff of which legal issues of jurisprudential
significance are made. There is no reason for this Court to review this issue.
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RELIEF REQUESTED
Based on the foregoing, plaintiff-appellant, David J. McQueer, respectfully requests that this
Court deny defendant’s application for leave to appeal.
MARK GRANZOTTO, P.C. /s/ Mark Granzotto MARK GRANZOTTO (P31492)Attorney for Plaintiff-Appellee2684 Eleven Mile Road, Suite 100Berkley, Michigan 48072(248) 546-4649
PARSONS LAW FIRM PLC /s/ Grant W. Parsons GRANT W. PARSONSAttorney for Plaintiff-Appellee520 S. Union StreetP. O. Box 1710Traverse City, MI 49685(231) 929-3113
