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Lawyers can stop State Farm & Allstate when they sandbag on affirmative defenses in auto accident cases

November 22, 2014 by Steven M. Gursten

Attorneys can stop games with  MCR 2.111(F)(3) to bar so-called ‘affirmative defense’ for failure to state ‘facts constituting’ the defense


First, a little background. The “Delay, Deny and Defend” playbook used by State Farm and Allstate was created by McKinsey & Co. to frustrate auto accident attorneys from taking on “whiplash” and soft-tissue neck and back injury cases. The idea was to make these cases too costly and too difficult for personal injury lawyers to litigate. The scheme has now been exposed in bad faith litigation, on news exposes such as CNN, and in civil settlements made with states’ attorneys generals.

And the plan has worked, saving the giant auto insurers enormous amounts of money that they should have paid on meritorious but smaller car accident claims.

Today, I want to write about another tactic from the “Delay, Deny, Defend” bag of dirty tricks: Sandbagging.

Sandbagging auto accident victims and their lawyers by refusing to identify and “state the facts constituting” affirmative defenses, and any other defenses that, “if not raised in the pleading, would be likely to take [an] adverse party by surprise.”

A recent Michigan appellate case shows how lawyers can stop this practice (see below).  And while I will focus on Michigan law for this blog, every state has similar court rules to stop this practice. Michigan’s Court Rules require  defendants to disclose the facts that supposedly support their affirmative defenses. Of course, this is ignored by house legal counsel for Allstate and State Farm. And the problem is that too many plaintiff attorneys are not aggressively stopping this when auto insurers like State Farm and Allstate lawyers routinely attempt to dodge their legal responsibility under the court rules.

The dodge is part of a much bigger strategy to game the legal system so they don’t have to pay out on claims filed by their premium-paying insured customers. And to frustrate auto accident plaintiff attorneys from taking and pursuing these cases.

Instead of “showing their hand” up front, as the court rules require them to do, auto insurers like State Farm and Allstate essentially try to sandbag by holding back on the facts of their so-called affirmative defenses so they’re not committed to one version of events.

This way, if it later looks like their “defense” is in trouble, i.e., it looks like they might be required to actually pay the No Fault benefits they  owe (and for which they – without objection – accepted premium payment after premium payment), they want to have the flexibility to concoct a new set of “facts” to support whatever new defenses and “affirmative defense” to defeat a claim.

But lawyers representing people who are hurt in auto accidents should not sit idly by and allow this to happen, while giant auto insurers like State Farm and Allstate abuse the legal process and play games.

How lawyers can stop the sandbagging

Instead, lawyers should turn to Michigan Court Rule 2.111(F)(3) and file motions to bar the auto insurers from asserting their so-called “affirmative defenses.”  Attorneys need to go to court and have so-called “affirmative defenses” that weren’t properly pled be deemed waived.

Under MCR 2.111(F)(3), an auto insurance company like State Farm and Allstate must identify its “affirmative defenses” and group them under “a separate and distinct heading” in their responsive pleading.

Here’s the part most of my brothers and sisters in the plaintiff’s bar miss: Defendants must also “state the facts constituting” their “affirmative defenses.”

Significantly, the “state the facts” pleading requirement for affirmative defenses under Michigan law also applies to defenses that fall into either of the following categories:

  • “[A] defense that by reason of other affirmative matter seeks to avoid the legal effect of or defeat the claim of the opposing party, in whole or in part”:
  • “[A] ground of defense that, if not raised in the pleading, would be likely to take the adverse party by surprise.” (MCR 2.111(F)(3)(a)(b)(c))

Recently, the Michigan Court of Appeals in Woodruff v. State Farm Mutual Automobile Insurance Company, blasted State Farm for its violation of the court rule’s “state the facts” requirement. To learn more about the Woodruff v. State Farm ruling, check out our blog post, “State Farm gets slammed for stonewalling, deceiving auto accident victim.”

The court barred State Farm from asserting the affirmative defenses of non-compliance (with the shortened period of limitation in State Farm’s “uninsured” motorist policy) because the auto insurer failed “to plead the specific facts constituting the defense” and, thus, failed to “give proper notice of the defense.”

As the court pointed out, a “defendant must identify [its] affirmative defense under a separate heading and must plead specific facts that — if left unrebutted — would establish the defense.”

Specifically, the Court of Appeals detailed State Farm’s insufficient pleading of its so-called “affirmative defense” as follows:

  • It gave “generic answer[s] to the [plaintiff’s] specific allegations”
  • “State Farm did not plead the noncompliance defense under its own separate and distinct heading and did not plead facts, which—if left unrebutted—would establish the validity of the defense.”
  • “Indeed, State Farm did not even identify, let alone attach to its answer, the specific contractual provisions with which Woodruff purportedly failed to comply.”

The Court of Appeals concluded:

  • “[I]t is clear on the face of State Farm’s pleadings that it failed to give [the plaintiff] fair notice that it intended to raise [the] defense.”
  • “Under these facts, the trial court should have … concluded that State Farm waived its right to assert noncompliance and the shortened period of limitations.”

Related information:

State Farm denies benefits to man who didn’t insure his wheelchair

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