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Baum v Auto-Owners Ins Co, et al, (COA – UNP 5/20/2021; RB #4262)


Michigan Court of Appeals; Docket #352763; Unpublished
Judges Murray, Kelly, and Stephens;  Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion

Work Loss Benefits: Mitigation Requirement [§3107(1)(b)]


In this unanimous unpublished  per curiam  decision, the Court of Appeals affirmed the trial court’s summary disposition order  dismissing Plaintiff James Baum’s first-party action against Defendant Home-Owners Insurance Company (“Home-Owners”).  After the subject motor vehicle collision, Baum sought work-loss benefits from Home-Owners, testifying that he was temporarily laid off at the time of the collision.  Home-Owners argued that Baum’s testimony constituted fraud and justified voidance of the subject policy, highlighting an affidavit from Baum’s supervisor in which his supervisor averred that Baum had been permanently laid off at the time of the crash.  The Court of Appeals  held, however, that a question of fact existed as to whether Baum was ever actually notified of his being permanently laid off, and therefore whether his misrepresentation was made knowingly.  The Court affirmed the trial court’s summary disposition order in favor of Home-Owners anyways, however, holding that Baum failed to mitigate his damages and seek out new employment despite being cleared to do so.

James Baum was injured in a motor vehicle crash while operating his mother’s vehicle, which was insured by Home-Owners.   Thereafter, Baum sought PIP benefits from Home-Owners, including work-loss benefits, and in so doing, allegedly indicated to a Home-Owners’ adjuster that he was between construction jobs at the time of the collision At his subsequent deposition, Baum testified that he was employed at the time of the collision, but was temporarily laid off  during the week of the collision.  Home-Owners  eventually issued Baum a check for $9,215.50, calculated using three paystubs from Baum’s employer before the collision, as payment for Baum’s work-loss for the period spanning from the date of the collision to the date his physician cleared him to return to work. Baum then filed the instant action to recover additional work-loss benefitsand Home-Owners filed a motion for summary dispositionarguing first that Baum committed fraud by testifying at his deposition that was employed at the time of the collision, and second that Baum failed to mitigate his damages and seek new employment despite being cleared by his physician to return to work.  Home-Owners introduced an affidavit from Baum’s supervisor, Eric Mersino, in which Mersino averred that Baum walked off the job site one day and was thereafter terminated.  Baum submitted his own affidavit, in response, in which he averred that he did not know that he had been permanently laid off, and that a question of fact existed as to whether any representations he made regarding his employment status were, in fact, false.  As for the issue of mitigation, Home-Owners offered the following exchange in Baum’s deposition as evidence of his failure to seek out new employment:

"Defendant’s Counsel. Have you looked for work at any point since the accident?  

Plaintiff. I haven’t. 

Defendant’s Counsel. Not light duty, not anything, just no work? 

Plaintiff. I’m more of a hands-on person as far as, like, working physically. When it comes to, like, computers or anything like that, I’m not no good at how to use my phone. 

Defendant’s Counsel. So your position is, you want to be doing the labor intensive type work that you did before the accident? 

Plaintiff. I don’t really want to, but that’s all I know how to do. 

Defendant’s Counsel. Okay. So in terms of, you know, a desk job, that’s not something that you’ve applied for? Plaintiff. No. 

Defendant’s Counsel. Would you agree with me that, according to Dr. Wiater, that is something that you would be capable of doing though? 

Plaintiff. Yes."

The trial court ultimately granted Home-Owners’ motion, finding that there was no genuine issue of material fact that Baum’s employment was terminateat the time of the collision and that his statements therefore constituted fraud sufficient to justify voidance of his policy.

On appeal, the Court of Appeals held that the trial court erred in finding that there was no question of fact as to whether Baum committed fraud.  The Court noted that Home-Owners could only void Baum’s policy on the basis of fraud if it demonstrated that Baum knew his misrepresentation was false at the time it was made.  Baum indicated in his affidavit that he had never been made aware that he was being more than temporarily laid off, and Mersino did not state in his affidavit whether he or anyone else every communicated to Baum that his layoff was more than temporary.  

"Plaintiff represented to defendant that he was temporarily unemployed from Michels.… It was not until the discovery of Mersino’s affidavit that defendant learned that plaintiff was permanently, and not temporarily, unemployed from Michels.… The affidavit indicated that plaintiff was disciplined and terminated on that same date but did not state that either action was communicated verbally or in writing to plaintiff. Subsequent to Mersino’s affidavit the plaintiff provided his own affidavit in which he explicitly stated that he was unaware of any termination. Since an element of fraud is that the misrepresentation must have been known to be false when it was made this record contains competent evidence that the plaintiff did not have knowledge of the falsity of the assertion. Thus, there remained a question of fact as to fraud."

The Court of Appeals ultimately affirmed the trial court’s  summary disposition order anyway, however, holding that Baum failed to mitigate his damages and seek new employment despite being cleared to do so by his physician.  The Court noted that Baum’s decision not to seek out new employment “was not because of a physical inability to do so, but over a belief that a sedentary job confined him to work with computers that he rendered himself unqualified for.”  Furthermore, the Court noted that “[Baum’s] untested belief concerning the positions available to him prevented [him] from looking for any work at all,” and that the trial court properly concluded, therefore, that Baum failed to mitigate his damages.

"The record is clear that plaintiff’s reason for failing to seek employment was not because of a physical inability to do so, but over a belief that a sedentary job confined him to work with computers that he rendered himself unqualified for. Plaintiff was 'only required to make efforts that are reasonable under the circumstances to find employment.' Morris, 459 Mich at 264. Further, he was not required to look for like employment. Id. at 267. Plaintiff’s untested belief concerning the positions available to him prevented plaintiff from looking for any work at all. The lack of any effort on plaintiff’s part supported the trial court’s finding that plaintiff failed to mitigate his damages."

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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