Supreme Court Holds Noneconomic Damages Recoverable Against Governmental Entity

In a recent opinion addressing two cases, Hannay v Dept. of Transportation and Hunter v Sisco, the Michigan Supreme Court held that wage loss and pain and suffering qualify as “bodily injury” under the motor vehicle exception to governmental immunity, MCL 691.1405, of the state's Governmental Tort Liability Act (GTLA).

The plaintiff in Hannay brought an action in the Michigan Court of Claims for damages suffered when a salt truck driven by a Michigan Department of Transportation (MDOT) employee struck her vehicle.

The trial court found in favor of the plaintiff and awarded $474,904 in noneconomic damages, $767,076 for work-loss benefits, and $153,872 in expenses for ordinary and necessary services. On appeal, the Michigan Court of Appeals affirmed the trial court. MDOT appealed to the Michigan Supreme Court, which granted leave.

The plaintiff in Hunter filed suit in Genesee County Circuit Court for damages suffered when his motor vehicle was side-swiped by a dump truck owned by the City of Flint. The trial court denied Flint’s motion for summary disposition and the city appealed. The Michigan Court of Appeals reversed in part, holding that the plaintiff could not recover non-economic damages for pain, suffering, shock or emotional damages. Upon reconsideration, the Michigan Supreme Court granted leave to appeal.

The Supreme Court began its analysis of the motor vehicle exception to governmental immunity by examining two phrases from the statute: “liable for” and “bodily injury.” First, the Supreme Court looked to its recent decision in In re Bradley Estate, 494 Mich 367; 835 NW2d 545 (2013) for the proper interpretation of “liable for.” The Supreme Court in Bradley Estate, interpreting the GTLA, held that liable meant “legally responsible.” Therefore, the Supreme Court concluded that “liable for bodily injury” meant “legally responsible for bodily injury.” 

Next, the Supreme Court interpreted “bodily injury.” In Wesche v Mecosta Co Rd Comm, 480 Mich 75; 746 NW2d 847 (2008), the Supreme Court had turned to dictionary definitions, because the GTLA does not define “bodily injury.” The Supreme Court, finding no reason to deviate from its prior decision, determined “bodily injury” to mean “physical or corporeal injury” and thus the phrase “liable for bodily injury” to mean “legally responsible for a physical or corporeal injury to the body.”

The Supreme Court then turned its analysis to the entire phrase “liable for bodily injury” to determine the scope of governmental liability under the motor vehicle exception. The Supreme Court noted that “[e]ssential to this inquiry is the fundamental difference between an injury and the damages that arise from that injury” and that “damages flow from the injury.” The Supreme Court then stated that “liable for bodily injury in the present case means legally responsible for damages flowing from a physical or corporeal injury to the body” or “[s]tated differently, ‘bodily injury’ is simply the category of harm (i.e., the type of injury) for which the government waives immunity under MCL 691.1405 and, thus, for which damages that naturally flow are compensable.”  

The Supreme Court concluded the legal responsibility that arises from “bodily injury” is responsibility for tort damages that flow from that injury, which may include damages for loss of the ability to work and earn money, as well as pain and suffering and mental and emotional distress damages.

The Supreme Court then held that recovery under the motor vehicle exception of the GTLA is limited to those damages allowed under the Michigan No-Fault Act, which generally abrogates tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle. The Supreme Court noted that relevant to the present cases, MCL 500.3135(1), (2), and (3b) allow third-party tort actions for noneconomic damages if the threshold is met of death, serious impairment of a bodily function or permanent serious disfigurement. Certain types of economic damages, such as allowable expenses, work loss, and survivor’s loss are allowed under MCL 500.3135(3)(c). 

Therefore, the Supreme Court held that “a plaintiff may bring a third-party tort action for economic damages, such as work-loss damages, and noneconomic damages, such as pain and suffering or emotional distress damages, against a governmental entity if the requirements under MCL 500.3135 have been met.”

The Supreme Court then turned to the facts of the Hannay case to determine the damages to be awarded. The Supreme Court held that the trial court erred in its award of work loss damages based upon the plaintiff’s earning potential as a dental hygienist, because the plaintiff had not yet been admitted to a dental hygienist program and the damages were, therefore, contingent and speculative.

As a result, the Supreme Court has opened the gates to additional damages related to bodily injury, including wage loss and pain and suffering.

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Nick Roumel
How might this affect taxability of emotional distress damages in non-personal injury cases? For example, wage loss and emotional distress in an employment case?

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