Randal Krueger v. Bristol West Preferred Insurance Co ( 2024 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
RANDAL KRUEGER, UNPUBLISHED
February 22, 2024
Plaintiff-Appellant,
v No. 363863
Wayne Circuit Court
BRISTOL WEST PREFERRED INSURANCE LC No. 17-009744-NF
COMPANY, and BRISTOL WEST INSURANCE
COMPANY,
Defendants,
and
SPECTRUM REHABILITATION,
Appellee.
Before: PATEL, P.J., and K. F. KELLY and RIORDAN, JJ.
PER CURIAM.
Plaintiff appeals by leave granted1 from the trial court’s order granting appellee Spectrum
Rehabilitation’s (“Spectrum”) motion for release of funds that was granted after plaintiff attempted
to resolve Spectrum’s claims against him through accord and satisfaction. Because the trial court
erred when it granted Spectrum’s motion, we vacate the trial court’s order and remand for further
proceedings.
I. BASIC FACTS AND PROCEDURAL HISTORY
In July 2016, plaintiff was involved in a motor vehicle accident and sustained injuries as a
result. Plaintiff was insured by defendants, Bristol West Preferred Insurance Company and Bristol
West Insurance Company (collectively, “Bristol West”). In June 2017, plaintiff filed suit against
1
Krueger v Bristol West Preferred Ins Co, unpublished order of the Court of Appeals, entered
April 25, 2023 (Docket No. 363863).
-1-
Bristol West claiming it breached its contractual and statutory duties under the no-fault act, MCL
500.3101 et seq., to pay him personal injury protection (“PIP”) benefits. In March 2018, the trial
court entered a stipulated order directing the parties to arbitration. Although the order closed the
case, the trial court retained jurisdiction to enforce the parties’ arbitration agreement and to enter
a judgment on any arbitration award.
In September 2021, plaintiff’s attorney moved to reopen the case and withdraw
representation of plaintiff under MCR 2.117(B)(3)(a) and (C)(2), claiming there was a breakdown
in the attorney-client relationship after attempting to negotiate payment of plaintiff’s outstanding
medical bills. Plaintiff’s attorney explained that plaintiff was awarded $235,000 in arbitration,
leading the attorney to negotiate payment of the outstanding medical bills with plaintiff’s medical
providers. Because certain medical providers refused the offers from plaintiff’s attorney, the funds
were retained in an IOLTA account. Having exhausted all reasonable efforts to satisfy plaintiff
but unable to finalize distribution of the remaining proceeds, plaintiff’s attorney requested the trial
court permit withdrawal and permit deposit of the remaining proceeds into an account with the
trial court.
The trial court granted the motion to withdraw and directed counsel to “submit provider
negotiated bills within 7 days and deposit funds for $41,005.54 with the court.” In May 2022, the
trial court entered a stipulated order removing plaintiff’s case from case evaluation finding the
“only remaining issue being Plaintiff resolving claims with his medical providers and to which
settlement funds have already been placed with the Court[.]” In August 2022, plaintiff moved for
summary disposition under MCR 2.116(C)(7) and (C)(10), and requested the trial court enter an
order releasing all escrowed money. In the motion, plaintiff claimed he entered into an accord and
satisfaction with each of his medical providers and sought the return of the balance of all monies
on deposit with the Court.
In September 2022, Spectrum, a nonparty, moved for release of funds. According to
Spectrum, it provided medical services to plaintiff totaling $19,934 under an agreement in which
plaintiff agreed to provide Spectrum with a lien plaintiff’s benefits. Plaintiff responded, claiming
Spectrum did not have standing to assert its claims because it was not a party to the proceedings
under MCR 2.201. Plaintiff also argued Spectrum was not entitled to payment because he entered
into a valid accord and satisfaction with Spectrum. For its part, Spectrum admitted plaintiff mailed
it a money order; however, because it never cashed the money order and because it rejected
plaintiff’s offer, Spectrum claimed there was no accord and satisfaction.
During the motion hearing, the trial court granted Spectrum’s motion, concluding there
was “no agreement that [Spectrum] would accept that amount of money for their bills.” Plaintiff
moved for reconsideration under MCR 2.119(F), which the trial court denied. This appeal
followed.
II. STANDING AND JURISDICTION
Plaintiff first argues the trial court erred by granting Spectrum’s motion for release of funds
because Spectrum was not a party and lacked standing to file its motion. We disagree.
A. STANDARDS OF REVIEW
-2-
Whether a party has legal standing to assert a claim constitutes a question of law we review
de novo. Sterling Heights Pain Mgt, PLC v Farm Bureau Gen Ins Co of Mich, 335 Mich App 245,
249 n 1; 966 NW2d 456 (2020). “[Q]uestions of statutory interpretation and the construction and
application of court rules” is also reviewed de novo. Dextrom v Wexford County, 287 Mich App
406, 416; 789 NW2d 211 (2010).
B. ANALYSIS
In Rottenberg v Lipsitz, 300 Mich App 339, 355-356; 833 NW2d 384 (2013) (quotation
marks and citations omitted), we explained:
The principle of statutory standing is jurisdictional; if a party lacks statutory
standing, then the court generally lacks jurisdiction to entertain the proceeding or
reach the merits. In contrast, the real-party-in-interest rule is essentially a
prudential limitation on a litigant’s ability to raise the legal rights of another.
A real party in interest is one who is vested with the right of action on a
given claim, although the beneficial interest may be in another. The real-party-in-
interest rule requir[es] that the claim be prosecuted by the party who by the
substantive law in question owns the claim asserted[.]
When an assignment occurs, the “assignee of a cause of action becomes the real party in interest
with respect to that cause of action, inasmuch as the assignment vests in the assignee all rights
previously held by the assignor.” Cannon Twp v Rockford Pub Sch, 311 Mich App 403, 412; 875
NW2d 242 (2015).
In this case, Spectrum had standing to assert its right to recover the funds as both the
assignee of plaintiff through its own cause of action or through a motion to intervene, see MCR
2.101(B); MCR 2.209(A), and as an “interested person” under the no-fault act. See MCL
500.3112. There is no dispute that Spectrum did not file a separate claim or file a motion to
intervene. Accordingly, Spectrum’s participation in the lawsuit was as an “interested person.”
Under MCL 500.3112, Spectrum was entitled to seek payment by filing a motion for
release of funds, even though it was not a party to the lawsuit. That statute states, in relevant part:
“If there is doubt about the proper person to receive the benefits or the proper apportionment
among the persons entitled to the benefits, the insurer, the claimant, or any other interested person
may apply to the circuit court for an appropriate order.” MCL 500.3112 (emphasis added).
Spectrum, as one of plaintiff’s medical providers, is an “interested person” entitled to seek
apportionment of plaintiff’s arbitration award. See Miller v Citizens Ins Co, 288 Mich App 424,
443-444; 794 NW2d 622 (2010), aff’d in part, rev’d in part on other grounds 490 Mich 904 (2011)
(concluding that a medical provider seeking payment for services rendered was an interested
person under MCL 500.3112).
While it is true that Spectrum did not specifically cite MCL 500.3112 in its motion for
release of funds, the motion did set forth, with factual support, its entitlement to the funds as a
medical provider that provided plaintiff with treatment under an assignment of rights to plaintiff’s
no-fault benefits. Although Spectrum may have been missing the proper “label” on its motion, the
substance was plainly for recovery of funds under MCL 500.3112. See Jawad A Shah, MD v State
-3-
Farm Mut Auto Ins Co, 324 Mich App 182, 204; 920 NW2d 148 (2018) (noting that this Court
need not accept a party’s choice of label for a motion because doing so would elevate form over
substance). Accordingly, Spectrum had standing under MCL 500.3112 to file its motion for
release of funds, and the trial court did not err by exercising its jurisdiction to enter the order
granting Spectrum’s motion.
III. ACCORD AND SATISFACTION
Plaintiff also argues the trial court erred by granting Spectrum’s motion for release of funds
because plaintiff and Spectrum entered into an accord and satisfaction, barring Spectrum from
seeking further payment. We agree with plaintiff that the trial court erred when it granted
Spectrum’s motion and therefore remand the case for reconsideration of the issue.
A. STANDARDS OF REVIEW
“The existence of an accord and satisfaction may be decided as a question of law if the
facts of the case are undisputed and not open to opposing inferences.” Hoerstman Gen Contr, Inc,
v Hahn, 474 Mich 66, 70; 711 NW2d 340 (2006). However, “if it is doubtful if an accord—an
agreement—is established, the question is for the jury.” Fritz v Marantette, 404 Mich 329, 333;
273 NW2d 425 (1978).
B. ANALYSIS
“Accord and satisfaction is based on contract principles and is generally contractual in
nature.” Nationwide Mut Ins Co v Quality Builders, Inc, 192 Mich App 643, 646; 482 NW2d 474(1992). When determining whether an accord and satisfaction has been established, MCL
440.3311, not the common law, applies to transactions involving a negotiable instrument, such as
a money order. Hoerstman, 474 Mich at 75-76; see also MCL 440.3104.
MCL 440.3311 states:
(1) If a person against whom a claim is asserted proves that (i) that person
in good faith tendered an instrument to the claimant as full satisfaction of the claim,
(ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and
(iii) the claimant obtained payment of the instrument, the following subsections
apply.
(2) Unless subsection (3) applies, the claim is discharged if the person
against whom the claim is asserted proves that the instrument or an accompanying
written communication contained a conspicuous statement to the effect that the
instrument was tendered as full satisfaction of the claim.
(3) Subject to subsection (4), a claim is not discharged under subsection (2)
if either of the following applies:
(a) The claimant, if an organization, proves that (i) within a reasonable time
before the tender, the claimant sent a conspicuous statement to the person against
whom the claim is asserted that communications concerning disputed debts,
-4-
including an instrument tendered as full satisfaction of a debt, are to be sent to a
designated person, office, or place, and (ii) the instrument or accompanying
communication was not received by that designated person, office, or place.
(b) The claimant, whether or not an organization, proves that within 90 days
after payment of the instrument, the claimant tendered repayment of the amount of
the instrument to the person against whom the claim is asserted. This subdivision
does not apply if the claimant is an organization that sent a statement complying
with subdivision (a)(i).
(4) A claim is discharged if the person against whom the claim is asserted
proves that within a reasonable time before collection of the instrument was
initiated, the claimant, or an agent of the claimant having direct responsibility with
respect to the disputed obligation, knew that the instrument was tendered in full
satisfaction of the claim. [MCL 440.3311 (emphasis added).]
Plaintiff disputed the amount he owed to his medical providers, including Spectrum. In
the memo section of the money order plaintiff sent to Spectrum, plaintiff wrote: “Account
101627[,] payment as accord & satisfaction paid as agreed 3-31.” Included with the money order
was a letter from plaintiff stating: “Please except [sic] my payment as accord and satisfaction for
account 101627 pays [sic] as agreed.” Spectrum admitted it received plaintiff’s money order, but
it never informed plaintiff it rejected the offer or returned the money order.
In the trial court, plaintiff presented evidence that: (1) plaintiff tendered an instrument,
i.e., the money order, to Spectrum as full satisfaction of the claims, MCL 440.3311(1)(i); (2)
Spectrum’s claim for payment was subject to a bona fide dispute, MCL 440.3311(1)(ii); (3) and
Spectrum obtained the money order as payment, MCL 440.3311(1)(iii). The money order and the
accompanying letter both contained a “conspicuous” statement indicating “the instrument was
tendered as full satisfaction of the claim.” See MCL 440.3311(2); Nationwide Mut Ins Co, 192
Mich App at 650.
Although Spectrum argued it did not cash plaintiff’s money order, it offered no evidence
to prove this assertion or determine what, exactly, happened to it. Similarly, Spectrum claims it
rejected plaintiff’s offer, but offered no evidence, such as a letter or other communication, to show
how this rejection occurred. By contrast, plaintiff, in an affidavit, stated Spectrum never informed
him it rejected his offer or returned the money order to him within 90 days. See MCL
440.3311(3)(b). The trial court, for its part, did not address Spectrum’s disposition, if any, of the
money order. Instead, the trial court concluded that plaintiff failed to show that there was an
agreement—or accord—between the parties.
This conclusion by the trial court was error because the “agreement,” for purposes of MCL
440.3311, was the receipt and purported retention of the negotiable instrument. Plaintiff presented
evidence that he tendered the money order with a conspicuous statement indicating he was
tendering it in full satisfaction of the debt. And although Spectrum claimed it rejected the offer, it
presented no evidence supporting that assertion. Thus, on remand, the trial court shall address in
the first instance the factual dispute between the parties regarding the disposition of plaintiff’s
money order and what effect that has on the resolution of the case.
-5-
In addition, there was no argument or evidence presented by either party showing plaintiff
tendered the instrument in good faith. See MCL 440.3311(1). Good faith is defined as “honesty
in fact and the observance of reasonable commercial standards of fair dealing.” Hoerstman, 474
Mich at 76. Plaintiff tendered a money order to Spectrum for less than $300 for services Spectrum
billed more than $19,000 for. The gross disparity between the amounts billed and tendered raises
a genuine question whether plaintiff’s tender was made in good faith. Accordingly, on remand,
the parties and the trial court shall address this issue as well.
In sum, because pertinent facts underlying the case are disputed and open to opposing
inferences, and because the trial court’s cursory treatment of plaintiff’s argument render it
impossible for this Court to engage in any meaningful analysis of the trial court’s decision, we
must vacate the trial court’s order. Therefore, the trial court’s order granting Spectrum’s motion
for release of funds is vacated, and the case is remanded to the trial court for further proceedings
consistent with this opinion. We do not retain jurisdiction. Neither party having prevailed in full,
no costs are awarded. See MCR 7.219(A).
/s/ Sima G. Patel
/s/ Kirsten Frank Kelly
/s/ Michael J. Riordan
-6-