State Farm Mutual Automobile Insurance Company v. Precious Physical Therapy, Inc. et al

Filing 133

OPINION AND ORDER Granting 99 Motion for Summary Judgment. Signed by District Judge Sean F. Cox. (JMcC)

Case 2:19-cv-10835-SFC-CI ECF No. 133, PageID.7682 Filed 09/07/21 Page 1 of 6

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
State Farm Mutual Automobile
Insurance Company,
Plaintiff,
v.

Case No. 19-10835

Precious Physical Therapy, Inc., et al.,

Sean F. Cox
United States District Court Judge

Defendants.
________________________________/

OPINION AND ORDER
GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
Plaintiff, State Farm Mutual Automobile Insurance Company (“State Farm”) sued two
physical therapists, the clinics through which they provided services, and the owners of those
clinics. (ECF No. 1). Currently before the Court is Defendant Hansee Sesi (“Sesi”)’s motion for
summary judgment pursuant to FED. R. CIV. P. 56. (ECF No. 99). The parties have briefed the
issues and the Court concludes that oral argument is not necessary. Thus, the Court orders that the
motion will be decided without a hearing. See E.D. Mich. LR 7.1(f).
For the following reasons, the Court GRANTS Sesi’s motion for summary judgment.
BACKGROUND
On March 21, 2019, State Farm initiated this action alleging three counts of common law
fraud, three counts of unjust enrichment, and two counts seeking declaratory judgment. (ECF No.
1). In their Complaint, State Farm alleges the Defendants engaged in a fraudulent scheme to obtain
money from State Farm by submitting bills and documentation for services purportedly provided
to individuals who were in automobile accidents and were eligible for personal injury protection
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benefits under State Farm policies. (ECF No. 1) The Defendants allegedly treated patients pursuant
to a “predetermined treatment protocol” designed to enrich the Defendants rather than treat the
patients’ individual medical needs. (ECF No. 1 at PageID 2). Relevant to this motion, State Farm
has only brought a single claim of unjust enrichment against Sesi (Count V). (ECF No. 1, at PageID
57).
With respect to summary judgment motions, this Court’s practice guidelines, included in
the Scheduling Order and provide, consistent with FED. R. CIV. P. 56 (c) that:
a. The moving party’s papers shall include a separate document entitled Statement
of Material Facts Not in Dispute. The statement shall list in separately numbered
paragraphs concise statements of each undisputed material fact, supported by
appropriate citations to the record. . .
b. In response, the opposing party shall file a separate document entitled CounterStatement of Disputed Facts. The counter-statement shall list in separately
numbered paragraphs following the order or the movant’s statement, whether each
of the facts asserted by the moving party is admitted or denied and shall also be
supported by appropriate citations to the record. The Counter-Statement shall also
include, in a separate section, a list of each issue of material fact as to which it is
contended there is a genuine issue for trial.
c. All material facts as set forth in the Statement of Material Facts Not in Dispute
shall be deemed admitted unless controverted in the Counter-Statement of Disputed
Facts.
(Scheduling Order at 3).
The parties complied with the Court’s practice guidelines for summary judgment motions
such that Sesi filed a “Statement of Material Facts Not In Dispute” (“Def’s “Stmt.”) (ECF No.
100) and Plaintiff filed “Counter-Statement of Disputed Facts” (“Pl.’ s Stmt.”) (ECF No. 109).
Relevant to this motion, Sesi was the majority shareholder of one of the physical therapy
clinics at issue in this case, Defendant Sterling Physical Therapy Provider Corp. (“Sterling”). (Pl’s
Stmt. at 2). Sterling’s tax return for the year 2016 reflects that Sesi owned 64.21799% of Sterling’s
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shares and earned $899,145 in ordinary business income from his shares in Sterling. (ECF No.
131-1, at PageID 7633).
STANDARD OF REVIEW
Summary judgment will be granted where there exists no genuine issue of material fact.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking summary judgment
carries the initial burden of “demonstrat[ing] the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). No genuine issue of material fact exists where
“the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.”
Matsushita Elect. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “The mere
existence of a scintilla of evidence in support of the [non-moving party]’s position will be
insufficient; there must be evidence on which the jury could reasonably find for the [non-moving
party].” Anderson, 477 U.S. at 252. The Court “must view the evidence, all facts, and any
inferences that may be drawn from the facts in the light most favorable to the non-moving party.”
Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002).
Further, “[i]t is an error for the district court to resolve credibility issues against the
nonmovant . . . .” CenTra, Inc. v. Estrin, 538 F.3d 402, 412 (6th Cir. 2008). “In effect, any direct
evidence offered by the plaintiff in response to a summary judgment motion must be accepted as
true . . . .” Id. (quoting Ctr. for Bio–Ethical Reform, Inc. v. City of Springboro, 477 F.3d 807, 820
(6th Cir. 2007)).
ANALYSIS
Because this Court sits in diversity, the substantive law of Michigan governs the claims of
in this case. Armisted v. State Farm Mut. Auto. Ins. Co., 675 F.3d 989, 995 (6th Cir. 2012).
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In the Complaint, State Farm only alleges unjust enrichment against Sesi (Count V). (ECF
No. 1, at PageID 57). The essential elements of an unjust enrichment claim are: “(1) receipt of a
benefit by the defendant from the plaintiff, and (2) which benefit it is inequitable that the defendant
retain.” B&M Die Co. v. Ford Motor Co., 167 Mich.App. 176, 181 (1988); see also Dumas v.
Autoclub Ins. Ass’n, 473 N.W.2d, 562, 663 (Mich. 1991).
Sesi argues that he is entitled to summary judgment because: (1) he is not liable for the
actions and obligations of Sterling and there is no basis to pierce the corporate veil; (2) he did not
receive any benefit from State Farm; and (3) he was not unjustly enriched and did not cause or
contribute to any alleged losses or damages suffered by State Farm. (ECF No. 99, at PageID 42884289).
1. Piercing the Corporate Veil
As to Sesi’s first argument, Sesi has not cited any controlling authority to support his
assertion that piercing the corporate veil is a necessary requirement for holding a shareholder liable
under an unjust enrichment claim. In his brief, Sesi even admits that Michigan courts have not
addressed this issue. (Def’s Br., at PageID 4292). This Court declines to extend this requirement
to an unjust enrichment claim, as courts in this District have declined to do so previously. In Whited
v. Motorists Mut. Ins. Co., No. 08-10653, 2010 WL 3862717 (E.D. Mich., Sept. 28, 2010), the
court rejected an insurer’s attempts to pierce the corporate veil and hold a shareholder personally
liable for the corporation’s misconduct, but the court also held that there were triable issues of fact
as to whether the same shareholder was unjustly enriched. Id. at 37- 39. Therefore, Sesi does not
prevail on his first argument.
2. Benefit Requirement
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Similar to Core Defendants’ motion for summary judgment in this case (ECF No. 96), Sesi
argues that he did not receive any benefit – directly or indirectly – from State Farm. (Def’s Br., at
PageID 4293-4295). State Farm maintains the same position as it did in the briefing for Core
Defendants’ motion for summary judgment: that State Farm is not required to show a direct benefit
for an unjust enrichment claim. (Pl’s Br., at PageID 4999-5008). State Farm primarily relies on
Franklin Banks, N.A. v. Zero Plus Advantage, No. 212712, 2001 WL 682228, (Mich. Ct. App.,
Apr. 20, 2001) and other cases that cite the Franklin Bank opinion. (Pl’s Br., at PageID 49995008). Franklin Bank held that an indirect benefit was sufficient to satisfy the elements of unjust
enrichment. Id. at *7. However, Franklin Bank is an unpublished Michigan Court of Appeals
opinion from 2001, and State Farm ignores caselaw refining Michigan’s doctrine of unjust
enrichment in the twenty years that have passed since that case has been decided.
Sesi is correct that “[c]ustomarily, Michigan courts only employ the doctrine of unjust
enrichment in cases where the defendant directly receives a benefit from the plaintiff.” Schechner
v. Whirlpool Corp., 237 F.Supp.3d 601, 618 (E.D. Mich. 2017). However, as this Court explained
in the Opinion and Order for Core Defendants’ motion for summary judgment (State Farm Mut.
Auto. Ins. Co. v. Precious Physical Therapy, Inc. et al., Case No. 19-10835, 2021 WL 3489702
(E.D. Mich., Aug. 9, 2021)), in Kammer Asphalt Paving Co. v. E. China Twp. Sch., 443 Mich. 176
(1993), the Michigan Supreme Court held that an indirect benefit may fulfill the first requirement
of an unjust enrichment claim when “the defendant and plaintiff had some sort of direct
interaction.” Schechner, 237 F.Supp.3d at 618 (citing Storey v. Attends Healthcare Products, Inc.,
No. 15-cv-13577, 2016 WL 3125210 (E.D. Mich, June 3, 2016)). Therefore, “to state a claim for

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unjust enrichment, Michigan law requires a direct benefit or some sort of direct interaction”
between State Farm and Sesi. Id. (emphasis added).
State Farm did not argue or provide evidence that Sesi received a direct benefit from State
Farm. Neither did State Farm argue or provide evidence that a direct interaction existed between
Sesi and State Farm. Therefore, the Court GRANTS Sesi’s motion on this ground.
3. Contribution to State Farm’s Losses
As State Farm has not shown a genuine issue of material fact as to the first element of
unjust enrichment as discussed above, the Court does not need to address Sesi’s final argument.
CONCLUSION
For the reasons explained above, the Court GRANTS Sesi’s motion for summary judgment
and DISMISSES Sesi from the case as Count V is the only claim State Farm has brought against
him.
IT IS SO ORDERED.
s/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: September 7, 2021
I hereby certify that a copy of the foregoing document was served upon counsel of record on
September 7, 2021, by electronic and/or ordinary mail.
s/Jennifer McCoy
Case Manager

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