Esurance Prop & Casualty Ins Co v. Michigan Assigned Claims Plan

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Syllabus Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader. Kathryn L. Loomis
ESURANCE PROPERTY & CASUALTY INSURANCE COMPANY v MICHIGAN
ASSIGNED CLAIMS PLAN
Docket No. 160592. Argued on application for leave to appeal April 8, 2021. Decided
July 26, 2021.
Esurance Property & Casualty Insurance Company filed an action in the Wayne Circuit
Court against the Michigan Assigned Claims Plan (MACP) and the Michigan Automobile
Insurance Placement Facility (MAIPF), seeking reimbursement from defendants for the personal
protection insurance (PIP) benefits Esurance had paid to Roshaun Edwards for the injuries he
sustained in a motor vehicle crash; there were no other vehicles involved in the crash. Edwards
did not have no-fault insurance at the time of the accident, and he did not live with a resident
relative who had no-fault insurance. At the time of the accident, the vehicle Edwards was driving
was registered in Michigan and titled to Anthony Robert White II (Anthony), who also did not
have no-fault insurance of his own. The vehicle was insured by Esurance under a Colorado
automobile insurance policy issued to Anthony’s mother, Luana Edwards White (Luana). When
Luana obtained the policy, she falsely represented that she owned the vehicle, that she lived in
Colorado, and that the vehicle would be garaged in that state. Edwards sought PIP benefits from
Esurance, and Esurance began paying those benefits. Edwards also applied for benefits from the
MACP (as administered by the MAIPF), but the MAIPF did not assign a servicing insurer to
Edwards’s claim under MCL 500.3175 because Esurance had already taken responsibility for
paying PIP benefits to Edwards. When Esurance eventually discovered that Luana had obtained
the Colorado policy through her fraudulent misrepresentations, it obtained in the Macomb Circuit
Court a default judgment against Edwards, Anthony, and Luana that rescinded the policy,
declaring it void ab initio. Esurance then filed this equitable-subrogation claim, requesting an
order requiring defendants to reimburse it for the PIP benefits it had paid to Edwards. Defendants
moved for summary disposition under MCR 2.116(C)(8), arguing that there was no legal basis for
the claim because the no-fault act, MCL 500.3101 et seq., did not contemplate reimbursement and
indemnification rights in these circumstances. Esurance argued that it could stand in Edwards’s
place and pursue a claim against defendants through the doctrine of equitable subrogation because
Edwards could seek recovery from defendants given that Edwards had timely filed for benefits
from the MACP and was not covered by a no-fault policy. The court, David J. Allen, J., granted
summary disposition for defendants. Relying on the doctrine expressio unius est exclusio alterius,
the trial court concluded that equitable subrogation was unavailable to Esurance because while the
no-fault act contained some provisions that contemplated reimbursement and indemnification,
none of those provisions allowed Esurance to seek reimbursement from defendants in these
circumstances. Esurance appealed. In a published opinion, the Court of Appeals (METER, P.J.,
and O’BRIEN and SWARTZLE, JJ.), affirmed the trial court’s dismissal of Esurance’s complaint but
on different grounds. The Court concluded that Esurance’s equitable-subrogation claim failed as
a matter of law for either of two reasons: (1) if the policy existed when Esurance paid the PIP
benefits, Esurance’s equitable-subrogation claim failed because Edwards could not have pursued
benefits from defendants under MCL 500.3172(1); and (2) if the policy was void ab initio, then
Esurance was a volunteer when it paid the benefits and could not recover its payment of them to
Edwards from defendants. In so holding, the Court also rejected the trial court’s application of the
doctrine expressio unius est exclusio alterius, reasoning that the trial court had misapplied the
canon when analyzing reimbursement provisions in the no-fault act and from there concluding that
Esurance could not make out a claim for equitable subrogation. 330 Mich App 584 (2019).
Esurance sought leave to appeal.
In an opinion by Justice ZAHRA, joined by Chief Justice MCCORMACK and Justices
BERNSTEIN, CAVANAGH, and WELCH, the Supreme Court, in lieu of granting leave to appeal, held:
When a paying insurer has at least an arguable duty to pay benefits under the no-fault act,
the insurer is simply protecting its own interests and not acting as a volunteer, and it may invoke
the doctrine of equitable subrogation to recover any benefits paid erroneously. The mere existence
of an insurance policy that ostensibly covers a claimant does not ipso facto render it a policy
“applicable to the injury” for purposes of MCL 500.3172(1)(a). Instead, to determine whether
there is an “applicable” policy, courts must perform an order-of-priority analysis under MCL
500.3114(1) and (4)(a) through (b).
1. Equitable subrogation is a flexible, elastic doctrine of equity that is analyzed on the
case-by-case basis characteristic of equity jurisprudence. Equitable subrogation is the method by
which equity compels the ultimate payment of a debt by one who in justice, equity, and good
conscience ought to pay it. It is a legal fiction through which a person who pays a debt for which
another is primarily responsible is substituted or subrogated to all the rights and remedies of the
other. Under the doctrine, the subrogee acquires no greater rights than those possessed by the
subrogor, and to recover, the subrogee may not be a mere volunteer. For purposes of equitable
subrogation, a “volunteer” is one who intrudes into a matter that does not concern the person, or
one who pays the debt of another without request when the person is not legally or morally bound
to do so and has no interest to protect in making the payment. A person paying the debt is not a
volunteer when the person has an interest to protect. In addition, a payment is not voluntary when
made under compulsion, in ignorance of the real state of facts, or under an erroneous impression
of one’s legal duty. To that end, an insurance company is not a volunteer when it pays expenses
on behalf of its insured pursuant to an insurance contract. Similarly, when an insurer pays a claim
that another insurer may be liable for, the paying insurer is protecting its own interests and is not
acting as a volunteer; under those circumstances, the paying insurer is entitled to invoke the
doctrine of equitable subrogation because an insurer who has at least an arguable duty to pay is
not a volunteer.
2. MCL 500.3114(1), as amended by 2002 PA 38, provided that a person who sustains an
accidental bodily injury in a motor vehicle accident must look first to no-fault insurance policies
in their own household for PIP benefits—i.e., to the person named in the policy, the person’s
spouse, and a relative of either domiciled in the same household—before looking to other insurers
for benefits. If a person injured in a motor vehicle accident is not covered by a no-fault policy in
their own household, MCL 500.3114(4)(a) and (b) provided that the injured person may next claim
PIP benefits from first, the insurer of the owner or registrant of the vehicle occupied and then
second, from the insurer of the operator of the vehicle occupied. If the person is unable to collect
benefits applicable to the injury through that order of priority, MCL 500.3172(1)(a) provides that
the person may claim PIP benefits through the MACP. The mere existence of an insurance policy
that ostensibly covers a claimant does not ipso facto render it a policy “applicable to the injury”
for purposes of MCL 500.3172(1)(a). Instead, to determine whether there is an “applicable”
policy, courts must perform an order-of-priority analysis under MCL 500.3114(1) and (4)(a)
through (b).
3. MCL 500.3142, MCL 500.3148, and MCL 600.6013 incentivize insurers to pay benefits
promptly and to sort out priority and reimbursement later by the potential imposition of steep
penalties if an insurer does not pay promptly. To achieve that aim, the no-fault act is designed to
provide sure and speedy recovery of certain economic losses that occur from motor vehicle
accidents. Therefore, when there is a dispute between two insurers regarding responsibility to pay,
it is preferred that one of the insurers pay the claim and sue the other in an action for equitable
subrogation. Accordingly, an insurer that pays the claim for which another may be liable has an
arguable duty to pay. For that reason, when an insurer does pay under those circumstances, it is
simply protecting its own interests and not acting as a volunteer, and it may invoke the doctrine of
equitable subrogation to recover the benefits paid erroneously; to hold otherwise would be contrary
to the purpose, logic, and incentive structure of Michigan’s no-fault act.
4. In this case, the Esurance policy was declared void ab initio after the accident. However,
at the time of the accident, Edwards did not have no-fault insurance, and he was not a resident
relative of someone who had a no-fault policy. As a result, Edwards was not covered by the policy
issued by Esurance under MCL 500.3114(1). Esurance was also not in the order of priority under
MCL 500.3114(4)(a) through (b) because the vehicle was owned by another person not insured by
Esurance and the operator of the vehicle, Edwards, did not have a no-fault policy and did not live
with a resident relative who had no-fault insurance. Because there was no policy “applicable to
the injury” under the order-of priority analysis, the facts as alleged in Esurance’s complaint
supported that Edwards had a viable claim for PIP benefits against defendants under MCL
500.3172(1)(a). Furthermore, although Esurance was not in the order of priority before the policy
was rescinded, it believed it was because of Luana’s misrepresentations in her insurance
application. As a result, Edwards was not a volunteer when it paid the benefits because it did so
under an erroneous impression of both the facts and its legal duty; to hold otherwise would frustrate
the purpose, logic, and incentive structure of the no-fault act. In light of that conclusion,
Esurance’s equitable-subrogation claim was not precluded as a matter of law. The Court of
Appeals erred by concluding that Esurance’s equitable-subrogation claim failed as a matter of law
because there either was a policy applicable to the injury under MCL 500.3172(1) or because
Esurance’s payments to Edwards were voluntary. But the Court of Appeals correctly rejected the
trial court’s application of the expressio unius est exclusio alterius canon of statutory interpretation
to the no-fault act’s reimbursement provisions. Finally, given that the Court of Appeals did not
address whether defendants could be sued under MCL 500.3174, remand for it to address that issue
was necessary.
Reversed and remanded.
Justice CLEMENT, joined by Justice VIVIANO, dissenting, agreed with the majority that the
lower courts erroneously resolved the issues presented but disagreed that it was necessary to
resolve more than whether those courts correctly resolved the issues. The trial court incorrectly
applied the expressio unius canon to conclude that Esurance could not pursue an equitable-
subrogation claim because it was not one of the listed mechanisms in the no-fault act by which a
no-fault insurer could recover benefits paid; the reimbursement options in the no-fault act do not
exclude other theories of reimbursement. The Court of Appeals should have recognized that
whether Esurance had a valid claim for equitable subrogation turned on whether Edwards would
have had a claim against defendants if the policy issued by Esurance to Luana had been rescinded
before Edwards’s accident. Further contrary to the Court of Appeals’ conclusion, the fact that the
insurance policy was rescinded did not turn Esurance into an after-the-fact volunteer such as to
defeat its subrogation claim. Justice CLEMENT would have corrected the lower courts’ errors and
remanded to the trial court to resume its consideration of the case in view of the corrections.
Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
OPINION Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
FILED July 26, 2021
STATE OF MICHIGAN
SUPREME COURT
ESURANCE PROPERTY & CASUALTY
INSURANCE COMPANY,
Plaintiff-Appellant,
v No. 160592
MICHIGAN ASSIGNED CLAIMS PLAN
and MICHIGAN AUTOMOBILE
INSURANCE PLACEMENT FACILITY,
Defendants-Appellees.
BEFORE THE ENTIRE BENCH
ZAHRA, J.
Plaintiff Esurance Property & Casualty Insurance Company (Esurance) paid
personal injury protection (PIP) benefits 1 to the claimant, Roshaun Edwards (Edwards),
1
“What are commonly called ‘PIP benefits’ are actually personal protection insurance
(PPI) benefits by statute. MCL 500.3142. However, lawyers and others call these benefits
pursuant to a no-fault automobile insurance policy, issued to another person, that was later
declared void ab initio. 2 Thereafter, Esurance filed this suit against defendants, the
Michigan Assigned Claims Plan (MACP) and the Michigan Automobile Insurance
Placement Facility (MAIPF), seeking reimbursement from them under a theory of
equitable subrogation for the PIP benefits that Esurance had paid to Edwards under
Michigan’s no-fault act, MCL 500.3101 et seq., before the policy was rescinded. We hold
that an insurer who erroneously pays PIP benefits may be reimbursed under a theory of
equitable subrogation when the insurer is not in the order of priority and the payments are
made pursuant to its arguable duty to pay to protect its own interests. On the facts alleged
in this case, Esurance can stand in Edwards’s shoes and pursue a claim for equitable
subrogation because it was not in the order of priority and also was not a “mere volunteer” 3
under Michigan law when it paid Edwards’s PIP benefits. Accordingly, we reverse the
decision of the Court of Appeals and remand this case to that court for further proceedings
consistent with this opinion.
PIP benefits to distinguish them from property protection insurance benefits.” Roberts v
Farmers Ins Exch, 275 Mich App 58, 66 n 4; 737 NW2d 332 (2007).
2
“Null from the beginning, as from the first moment when a contract is entered into.”
Black’s Law Dictionary (11th ed), p 1885. The circuit court found that the policy was
obtained through fraud and by default judgment adjudged it void ab initio.
3
The term “mere volunteer” comes from the law of equitable subrogation. As will be
explained more fully later in this opinion, a party cannot seek equitable subrogation for a
voluntary action, where voluntary means without an interest to protect. See DAIIE v
Detroit Mut Auto Ins Co, 337 Mich 50, 53-54; 59 NW2d 80 (1953) (quotation marks and
citation omitted; emphasis added).
2
I. BASIC FACTS AND PROCEDURAL HISTORY
On January 10, 2016, Edwards was seriously injured when he crashed a red 2015
Dodge Challenger into a telephone pole in the city of Detroit. At the time, Edwards did
not have no-fault insurance of his own, and he did not live with a resident relative who had
no-fault insurance. When the accident occurred, the vehicle was registered in Michigan
and titled to Anthony Robert White II (Anthony). Anthony likewise did not have no-fault
insurance of his own; however, his mother, Luana Edwards-White (Luana), had procured
a Colorado automobile insurance policy from Esurance on the basis of her representations
that she owned the vehicle, that she lived in Colorado, and that the vehicle would be
garaged there.
Esurance began paying PIP benefits in response to Edwards’s claims. 4 Edwards
also applied for benefits from defendants, 5 but a servicing insurer was not assigned to his
claim under MCL 500.3175 because Esurance had already taken responsibility for paying
Edwards’s PIP benefits.
Esurance eventually discovered that Luana had obtained the Colorado policy
through her fraudulent misrepresentations. In reality, Luana was neither the registrant nor
owner of the vehicle, which had been garaged in Michigan and not Colorado. Esurance
subsequently filed an action in the Macomb Circuit Court to rescind the policy, naming
Edwards, Luana, and Anthony as defendants. In a March 20, 2017 order, the circuit court
entered a default judgment that rescinded the policy, voiding it ab initio.
4
At the time Esurance paid these PIP benefits, it believed that it was the highest-priority
insurer.
5
Specifically from the MACP, as administered by the MAIPF. See MCL 500.3171(2).
3
Esurance subsequently filed the instant suit in the Wayne Circuit Court, asserting a
claim of equitable subrogation and requesting an order that would require defendants to
reimburse it for the PIP benefits that it had paid to Edwards. Defendants moved for
summary disposition under MCR 2.116(C)(8) (failure to state claim on which relief can be
granted), arguing that there was no legal basis for an equitable-subrogation claim against
them. 6 Defendants argued that the no-fault act contemplates rights of reimbursement and
indemnification in a variety of circumstances, but not in this one. In response, Esurance
argued that the lack of statutory authority for its claim was not dispositive given that
Edwards could have sought recovery from defendants because he had timely applied for
benefits from defendants and had no applicable no-fault policy; moreover, because
Esurance had paid Edwards’s medical bills, it could pursue, standing in Edwards’s shoes,
a claim against defendants for reimbursement under the doctrine of equitable subrogation. 7
The circuit court, relying on the statutory canon of interpretation expressio unius est
exclusio alterius, 8 ruled that equitable subrogation was unavailable to Esurance because
6
Given that this case comes to us on appeal from a (C)(8) motion, whether the MACP is a
proper party is not obvious, see Mich Head & Spine Institute, PC v Mich Assigned Claims
Plan, 331 Mich App 262, 265 n 1; 951 NW2d 731 (2019), but we need not decide this
question to resolve this case.
7
See Atlanta Int’l Ins Co v Bell, 438 Mich 512, 521-522; 475 NW2d 294 (1991)
(“Equitable subrogation has been described as a ‘legal fiction’ that permits one party to
stand in the shoes of another.”) (opinion by BRICKLEY, J.) (citation omitted).
8
Dave’s Place, Inc v Liquor Control Comm, 277 Mich 551, 555; 269 NW 594 (1936)
(describing the canon as the “general principle of interpretation that the mention of one
thing implies the exclusion of another thing”) (opinion by BUSHNELL, J.) (quotation marks
and citation omitted).
4
the no-fault act contains some provisions that explicitly contemplate reimbursement and
indemnification 9 but none that contemplates Esurance’s requested reimbursement from
defendants in these circumstances.
Esurance appealed as of right in the Court of Appeals, which affirmed the circuit
court’s grant of summary disposition to defendants, albeit on the alternate ground that
Esurance could not make out a claim of equitable subrogation. 10 The Court of Appeals
succinctly summarized its holding:
9
See, e.g., MCL 500.3114(8) (allowing a no-fault insurer to receive partial recoupment
from other no-fault insurers standing in equal priority); MCL 500.3116 (providing rights
of reimbursement and indemnity to no-fault insurers for cases in which a claimant recovers
on a tort claim); MCL 500.3146 (setting a limitations period for claims for reimbursement
or indemnity brought under MCL 500.3116); MCL 500.3175(2) (allowing insurers to
whom a claim is assigned by the MAIPF to seek reimbursement and indemnity from third
parties); MCL 500.3177(1) (creating a right for a no-fault insurer to seek reimbursement
from an owner of an uninsured vehicle involved in an accident).
10
Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 330 Mich App 584, 589;
950 NW2d 528 (2019) (Esurance). The Court of Appeals very briefly addressed, and
disagreed with, the circuit court’s application of the expressio unius est exclusio alterius
canon of statutory interpretation, holding that it had misapplied the canon to conclude that
Esurance could not make out a claim for equitable subrogation. Id. at 590-591. “The
maxim ‘has force only when the items expressed are members of an associated group or
series, justifying the inference that items not mentioned were excluded by deliberate
choice, not inadvertence.’ ” Id. at 591, quoting Barnhart v Peabody Coal Co, 537 US 149,
168; 123 S Ct 748; 154 L Ed 2d 653 (2003). And because various reimbursement
provisions are scattered throughout the no-fault act and involve distinct factual scenarios,
the Court of Appeals reasoned that it could not “presume that those statutes are necessarily
exclusive of any and all other similar remedies in all factual scenarios. Doing so would
presume that the Legislature deliberately chose not to include a right to equitable
subrogation by a no-fault insurer against defendants, which is unwarranted from the text of
the [no-fault act].” Esurance, 330 Mich App at 591. The Court of Appeals’ analysis on
that issue was correct. See Bronner v Detroit, 507 Mich ___, ___; ___ NW2d ___ (2021)
(Docket No. 160242); slip op at 11-15 (holding that the Court of Appeals misapplied the
expressio unius canon in construing provisions of the Insurance Code that permit no-fault
5
In the end, there are two ways to look at the problem. Either the
equitable-subrogation claim must be analyzed under the circumstances that
existed when benefits were paid, which was before the policy was rescinded,
or it must be looked at through the lens that the policy never existed in the
first place. If the policy exists, [Esurance’s] claim of equitable subrogation
fails as a matter of law because Edwards could not have pursued benefits
from defendants under MCL 500.3172(1). If the policy never existed, then
[Esurance] was a mere volunteer when it paid $571,000 in PIP benefits. In
either case, [Esurance’s] equitable-subrogation claim fails as a matter of
law.[11]
In other words, according to the Court of Appeals, Esurance’s equitable-subrogation claim
fails regardless of the status of the insurance policy’s existence.
Esurance sought leave to appeal in this Court, and in lieu of granting leave, we
ordered oral argument on the application. 12
II. STANDARD OF REVIEW
The trial court granted defendants summary disposition under MCR 2.116(C)(8).
As this Court recently explained:
A motion under MCR 2.116(C)(8) tests the legal sufficiency of a
claim based on the factual allegations in the complaint. When considering
such a motion, a trial court must accept all factual allegations as true,
deciding the motion on the pleadings alone. A motion under MCR
2.116(C)(8) may only be granted when a claim is so clearly unenforceable
that no factual development could possibly justify recovery.[13]
insurers to seek reimbursement for payment of some benefits as implicitly excluding any
other reimbursement mechanism).
11
Esurance, 330 Mich App at 595.
12
Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 506 Mich 913 (2020).
13
El-Khalil v Oakwood Healthcare, Inc, 504 Mich 152, 159-160; 934 NW2d 685 (2019)
(citations and emphasis omitted).
6
We review de novo a trial court’s decision on a motion for summary disposition.14
A question of statutory interpretation is a question of law that this Court also reviews de
novo. 15 “[C]ourts must interpret statutes in a way that gives effect to every word, phrase,
and clause in a statute and avoid an interpretation that would render any part of the statute
surplusage or nugatory.” 16 “A statute is rendered nugatory when an interpretation fails to
give it meaning or effect.” 17 Finally, this Court reviews de novo the application of a
remedial, equitable doctrine such as equitable subrogation. 18
III. ANALYSIS
Our analysis proceeds in four parts. First, we state the principles that underpin a
claim for equitable subrogation. Second, we lay out the relevant provisions of the no-fault
act. Third, we establish that Esurance is not asserting greater rights than Edwards
possesses; that is, there is a legal basis upon which Esurance can press its claim for
equitable relief, grounded in an order-of-priority analysis. Fourth and finally, we analyze
the interplay among rescission, Esurance’s alleged volunteer status, and its claim for
14
Kendzierski v Macomb Co, 503 Mich 296, 302; 931 NW2d 604 (2019).
15
Wigfall v Detroit, 504 Mich 330, 337; 934 NW2d 760 (2019).
16
O’Connell v Dir of Elections, 316 Mich App 91, 98; 891 NW2d 240 (2016) (quotation
marks and citation omitted).
17
Apsey v Mem Hosp, 477 Mich 120, 131; 730 NW2d 695 (2007).
18
See Knight v Northpointe Bank, 300 Mich App 109, 113; 832 NW2d 439 (2013)
(applying this principle to the equitable doctrine of laches).
7
equitable subrogation—namely, whether rescission of the policy renders Esurance a
volunteer and prevents Esurance from pursuing its equitable-subrogation claim.
A. PRINCIPLES THAT UNDERPIN AN EQUITABLE-SUBROGATION CLAIM
“Equitable subrogation is a flexible, elastic doctrine of equity.” 19 Thus, “[i]ts
application ‘should and must proceed on the case-by-case analysis characteristic of equity
jurisprudence.’ ” 20 Equitable subrogation is the “mode which equity adopts to compel the
ultimate payment of a debt by one who in justice, equity, and good conscience ought to
pay it.” 21 Equitable subrogation has been invoked successfully in a variety of
circumstances, 22 but “the mere fact that [it] has not been previously invoked in a particular
situation is not a prima facie bar to its applicability.” 23 This Court has explained that
equitable subrogation “is a legal fiction through which a person who pays a debt for which
another is primarily responsible is substituted or subrogated to all the rights and remedies
19
Hartford Accident & Indemnity Co v Used Car Factory, Inc, 461 Mich 210, 215; 600
NW2d 630 (1999), citing Atlanta Int’l Ins Co v Bell, 438 Mich at 521 (opinion by
BRICKLEY, J.).
20
Hartford Accident & Indemnity Co, 461 Mich at 215, quoting Atlanta Int’l Ins Co, 438
Mich at 516 n 1 (opinion by BRICKLEY, J.).
21
Smith v Sprague, 244 Mich 577, 580; 222 NW 207 (1928) (quotation marks and citations
omitted).
22
Esurance, 330 Mich App at 590 (collecting cases).
23
Hartford, 461 Mich at 216 (quotation marks and citation omitted).
8
of the other.” 24 The doctrine has two prongs: “the subrogee acquires no greater rights than
those possessed by the subrogor, and . . . the subrogee may not be a ‘mere volunteer.’ ” 25
This Court has defined a “volunteer” as “one who intrudes himself into a matter
which does not concern him, or one who pays the debt of another without request, when
he is not legally or morally bound to do so, and when he has no interest to protect in making
such payment.” 26 But “[w]here the person paying the debt has an interest to protect, he is
not a stranger. . . . A payment is not voluntary when made under compulsion, . . . in
ignorance of the real state of facts, or under an erroneous impression of one’s legal
duty.” 27 When an insurer pays expenses on behalf of its insured pursuant to an insurance
contract, it is not doing so as a volunteer. 28 And when an insurer pays a claim that another
insurer may be liable for, it is “protecting its own interests and not acting as a volunteer,”
and in that instance, the insurer is “entitled to invoke the doctrine of equitable
24
Auto-Owners Ins Co v Amoco Prod Co, 468 Mich 53, 59; 658 NW2d 460 (2003), quoting
Commercial Union Ins Co v Med Protective Co, 426 Mich 109, 117; 393 NW2d 479 (1986)
(opinion by WILLIAMS, C.J.). See also Machined Parts Corp v Schneider, 289 Mich 567,
574; 286 NW 831 (1939) (“The doctrine of subrogation rests upon the equitable principle
that one who, in order to protect a security held by him, is compelled to pay a debt for
which another is primarily liable, is entitled to be substituted in the place of and to be vested
with the rights of the person to whom such payment is made, without agreement to that
effect.”) (quotation marks and citations omitted).
25
Auto-Owners Ins Co, 468 Mich at 59, quoting Commercial Union Ins Co, 426 Mich at
117 (opinion by WILLIAMS, C.J.).
26
DAIIE, 337 Mich at 53-54 (quotation marks and citations omitted).
27
Id. at 54 (quotation marks, citation, and paragraph structure omitted; emphasis added).
28
Auto-Owners Ins Co, 468 Mich at 59, citing Auto Club Ins Ass’n v New York Life Ins Co,
440 Mich 126, 132; 485 NW2d 695 (1992). See also DAIIE, 337 Mich at 54-55.
9
subrogation.” 29 Logically, then, an insurer who has “at least an arguable duty to pay” is
“clearly not a volunteer.” 30
B. RELEVANT PROVISIONS OF THE NO-FAULT ACT
At the time of the accident, MCL 500.3114 provided, in relevant part:
(1) . . . [A] personal protection insurance policy described in section
3101(1) applies to accidental bodily injury to the person named in the policy,
the person’s spouse, and a relative of either domiciled in the same household,
if the injury arises from a motor vehicle accident. . . .
* * *
(4) Except as provided in subsections (1) to (3), a person suffering
accidental bodily injury arising from a motor vehicle accident while an
occupant of a motor vehicle shall claim personal protection insurance
benefits from insurers in the following order of priority:
(a) The insurer of the owner or registrant of the vehicle occupied.
(b) The insurer of the operator of the vehicle occupied.[31]
MCL 500.3172(1) provides, in relevant part:
29
Auto-Owners Ins Co, 468 Mich at 60; see also Auto Club Ins Ass’n, 440 Mich at 132-
133.
30
See Maryland Cas Co v Transamerica Ins Corp of America, 199 Mich App 561, 565;
502 NW2d 749 (1993). See also Fed Ins Co, an Indiana Corp v Hartford Steam Boiler
Inspection & Ins Co, 415 F3d 487, 494-495 (CA 6, 2005) (applying Michigan law and
holding that the plaintiff was “not a volunteer, and its claim for equitable subrogation may
proceed” because, at the time each payment was made, the plaintiff was “ignorant of the
‘real state of facts’ ” and “ ‘under an erroneous impression’ that it had a legal duty to
compensate” another party under an insurance policy provision).
31
MCL 500.3114(1) and (4)(a) through (b), as amended by 2002 PA 38, effective March 7,
2002.
10
A person entitled to claim because of accidental bodily injury arising
out of the ownership, operation, maintenance, or use of a motor vehicle as a
motor vehicle in this state may claim personal protection insurance benefits
through the assigned claims plan if any of the following apply:
(a) No personal protection insurance is applicable to the injury.[32]
C. BECAUSE ESURANCE WAS NOT IN THE ORDER OF PRIORITY, IT HAD NO
ACTUAL DUTY TO PAY PIP BENEFITS
The Court of Appeals erred when it determined that MCL 500.3172(1)(a) prevents
Esurance from pursuing an equitable-subrogation claim against defendants. In an action
sounding in equitable subrogation, Esurance, as the subrogee, possesses no greater rights
than those possessed by Edwards, the subrogor. 33 Accordingly, we determine whether, on
the facts alleged, Edwards could have claimed benefits from defendants; if he could have,
then Esurance has a viable equitable-subrogation claim. In light of our order-of-priority
analysis under MCL 500.3114, we conclude that Edwards did have a claim for those
benefits from defendants, so Esurance’s equitable-subrogation claim does not fail as a
matter of law.
32
MCL 500.3172(1)(a). The version of this statute in effect at the time of the accident was
MCL 500.3172(1)(a), as amended by 2012 PA 204, effective September, 1, 2012. The
former version of the statute was substantively the same as the current version, and any
minor differences between the 2012 version and the current version are neither material
nor relevant to this case. All references to MCL 500.3172 in this opinion are to the current
version of the statute. See 2019 PA 21.
33
“Equity follows the law.” See 1 Callaghan’s Michigan Pleading & Practice (2d ed),
§ 8:35, p 496.
11
MCL 500.3172(1)(a) provides that a claimant “may claim [PIP] benefits through
the [MACP] if . . . [n]o personal protection insurance is applicable to the injury.” 34 The
Court of Appeals reasoned that Esurance was claiming greater rights in its action for
equitable subrogation than Edwards could himself have claimed because “when Edwards
applied for benefits from the MAIPF, there was an applicable no-fault insurer:
[Esurance].” 35 Thus, “because Edwards had no claim against defendants, there is no claim
for [Esurance] to enforce against defendants through equitable subrogation.” 36 But this
reasoning is flawed. The mere existence of an insurance policy that ostensibly covers a
claimant does not ipso facto render it a policy “applicable to the injury” under MCL
500.3172(1)(a). To know if there is such an “applicable” policy, courts must perform an
order-of-priority analysis under MCL 500.3114(1) and (4)(a) through (b).
Based on the allegations in its complaint, Esurance’s policy was not “applicable to
the injury” for purposes of MCL 500.3172(1)(a) because Esurance, whose policy was
34
MCL 500.3172(1)(a) (paragraph structure omitted). Esurance alleged in its complaint
that “Edwards, at the time of the accident, did not have insurance of his own and did not
live with a resident relative who had insurance”; that “at the time of the accident, the 2015
Dodge Challenger was solely owned and registered to [Anthony]”; that “there is no
applicable automobile insurance for [Edwards’s] bodily injuries as a result of” the car
accident; and that “[u]pon information and belief, there are no other priority insurers other
than MACP/MAIPF.” These assertions—which must be accepted as true for the purposes
of a motion for summary disposition under MCR 2.116(C)(8)—are sufficient to allege that
Edwards, and thus Esurance, had a claim against defendants under MCR 500.3172(1)(a).
35
Esurance, 330 Mich App at 592.
36
Id. at 593.
12
declared void ab initio after the accident, 37 was not in the order of priority stated in MCL
500.3114(1) and (4)(a) through (b). MCL 500.3114(1) establishes a general rule that a
person who sustains an accidental bodily injury in a motor vehicle accident must look first
to no-fault insurance policies in his or her own household for no-fault benefits before
looking to other insurers for benefits.38 Moreover, it is persons who are insured against
loss, not vehicles; that is, no-fault coverage is tied to persons, not vehicles. 39 At the time
of the accident, Edwards did not have no-fault insurance, and he also was not a resident
relative of someone who did, which means that he was not covered by the policy issued by
Esurance under MCL 500.3114(1). We next turn to MCL 500.3114(4)(a), which provides
that Edwards could recover from “[t]he insurer of the owner or registrant of the vehicle
37
Bazzi v Sentinel Ins Co, 502 Mich 390, 409; 919 NW2d 20 (2018). See also id.(“[R]escission abrogates a contract and restores the parties to the relative positions that
they would have occupied if the contract had never been made.”), citing Wall v Zynda, 283
Mich 260, 264-265; 278 NW 66 (1938); and id. at 409 n 10 (“[R]escission abrogates a
contract completely. All former contract rights are annulled, and it is as if no contract had
been made. Thus, to rescind a contract is not merely to terminate it, but to undo it from the
beginning, and the effect of rescission is not merely to release the parties from further
obligation to each other in respect to the subject of the contract, but to annul the contract
and restore the parties to the relative positions which they would have occupied if no such
contract had ever been made. Rescission involves a restoration of the status quo.”), quoting
5A Michigan Civil Jurisprudence, Contracts, § 215, pp 439-440.
38
Mich Mut Ins Co v Farm Bureau Ins Group, 183 Mich App 626, 630; 455 NW2d 352
(1990). Accord Underhill v Safeco Ins Co, 407 Mich 175, 191; 284 NW2d 463 (1979) (“It
is our understanding of the legislative purpose that it was intended that injured persons who
are insured or whose family member is insured for no-fault benefits would have primary
resort to their own insurer.”).
39
Lee v DAIIE, 412 Mich 505, 509; 315 NW2d 413 (1982) (“[I]t is the policy of the no-
fault act that persons, not motor vehicles, are insured against loss.”).
13
occupied” in the accident. 40 In this case, the vehicle was in fact owned by Anthony,
regardless of the policy’s rescission, and Esurance was not his insurer, which means
Esurance again was not in the order of priority. Finally, we turn to MCL 500.3114(4)(b),
which provides that Edwards could recover from “[t]he insurer of the operator of the
vehicle occupied” in the accident. 41 Again, the operator of the vehicle was Edwards, who,
at the time, did not have no-fault insurance of his own and did not live with a resident
relative who had no-fault insurance. Thus, Esurance’s complaint supports the conclusion
that Edwards had a viable claim against defendants under MCL 500.3172(1)(a) because
there was no policy “applicable to the injury” under the foregoing order-of-priority
analysis. As a result, Esurance’s equitable-subrogation claim, as pled by Esurance, can
proceed.
D. BECAUSE ESURANCE WAS NOT A VOLUNTEER, IT CAN PURSUE A CLAIM
FOR EQUITABLE SUBROGATION
The Court of Appeals correctly recognized that when an insurance policy has been
rescinded, it is void ab initio, which means it is as though the policy never existed;
consequently, the parties are “restore[d] . . . to the relative positions that they would have
occupied if the contract had never been made.” 42 Based on the allegations in the pleadings,
Esurance was not in the order of priority before the policy was rescinded, but it believed
that is was because of Luana’s misrepresentations in her insurance application. Therefore,
40
MCL 500.3114(4)(a) (emphasis added).
41
MCL 500.3114(4)(b) (emphasis added).
42
Bazzi, 502 Mich at 409. See also note 37 of this opinion.
14
Esurance paid PIP benefits to Edwards “under an erroneous impression of [its] legal
duty.” 43 Accordingly, the issue here is simply whether Esurance’s claim for equitable
subrogation is precluded as a matter of law given that it promptly, albeit erroneously, paid
PIP benefits to Edwards as the no-fault act requires. Esurance is not so precluded; that
holding would defeat the purpose of equitable subrogation, 44 and it would frustrate the no-
fault act’s purpose vis-à-vis the timing of payments for benefits and the expedited handling
of disputes.
It is helpful to contextualize this dispute in light of both the purpose of the no-fault
act and the incentive structure that it puts in place for insurers like Esurance to pay a
claimant’s PIP benefits in a timely fashion. The no-fault act is “a comprehensive scheme
of compensation designed to provide sure and speedy recovery of certain economic losses
resulting from motor vehicle accidents.” 45 For that reason, “whenever a priority question
43
DAIIE, 337 Mich at 54; Maryland Cas Co, 199 Mich App at 564-565; Fed Ins Co, an
Indiana Corp, 415 F3d at 494. In addition, a similar rule has been stated with approval in
16 Couch, Insurance, 3d, § 223:27, pp 58-59 (“For purposes of determining insurer’s
subrogation rights, insurance payment is not voluntary if it is made with reasonable or
good-faith belief in obligation or personal interest in making that payment. This standard
is met when an insurer has acted in good faith to discharge a disputed obligation, even if it
is ultimately determined that its insurance policy did not apply.”).
44
Equitable subrogation is the “mode which equity adopts to compel the ultimate payment
of a debt by one who in justice, equity, and good conscience ought to pay it.” Smith, 244
Mich at 580 (quotation marks and citations omitted).
45
Belcher v Aetna Cas & Surety Co, 409 Mich 231, 240; 293 NW2d 594 (1980). Accord
Perez v State Farm Mut Auto Ins Co, 418 Mich 634, 647; 344 NW2d 773 (1984) (LEVIN,
J., for reversal) (explaining that the no-fault act “provid[es] assured, adequate and prompt
recovery for certain economic losses arising from motor vehicle accidents”) (quotation
marks and citation omitted).
15
arises between two insurers, the preferred method of resolution is for one of the insurers to
pay the claim and sue the other in an action of [equitable] subrogation.” 46 Accordingly, an
insurer that pays a claim for which another may be liable has “an arguable duty” to pay. 47
Therefore, when an insurer does pay under those circumstances, it is merely “protecting its
own interests and not acting as a volunteer,” which “entitle[s] [it] to invoke the doctrine of
equitable subrogation . . . .” 48 The notion that an insurer with an arguable duty to pay PIP
benefits must do so promptly to protect its own interests, and that its doing so does not
make it a volunteer, stems largely from the operation of three specific statutes, two of which
are part of the no-fault act. 49 These statutes strongly incentivize insurers like Esurance to
adhere to the no-fault act’s “pay promptly, litigate later” logic.
MCL 500.3142 50 specifies that PIP benefits “are payable as loss accrues” and “are
overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and
46
Allstate Ins Co v Citizens Ins Co of America, 118 Mich App 594, 603-604; 325 NW2d
505 (1982), citing Farmers Ins Group v Progressive Cas Ins Co, 84 Mich App 474, 484;
269 NW2d 647 (1978).
47
Maryland Cas Co, 199 Mich App at 564-565.
48
Auto-Owners Ins Co, 468 Mich at 60; see also Auto Club Ins Ass’n, 440 Mich at 132-
133.
49
MCL 500.3142 and MCL 500.3148 are part of the no-fault act, and the third, MCL
600.6013, is part of the Revised Judicature Act, MCL 600.101 et seq.
50
MCL 500.3142 was amended by 2019 PA 21, effective June 11, 2019. The amendment
did not substantively change the relevant subsections, and all references in this opinion to
MCL 500.3142 are to the current version of the statute.
16
of the amount of loss sustained.” 51 The 30-day window also applies to parts of claims
supported by reasonable proof, and in addition, an insurer has 30 days to pay PIP benefits
on “any part of the remainder of the claim that is later supported by reasonable
proof . . . .” 52 “An overdue payment bears simple interest at the rate of 12% per annum.” 53
Further, MCL 600.6013 authorizes levying statutory interest on judgments “rendered on a
written instrument evidencing indebtedness with a specified interest rate[.]” 54 That rate
“shall not exceed 13% per year compounded annually.” 55 Finally, MCL 500.3148 provides
for the assessment of attorney fees “if the court finds that a no-fault insurer has
unreasonably delayed in making benefit payments.” 56 “[W]hen the only question is which
of two insurers will pay, it is unreasonable for an insurer to refuse payment of benefits.”57
“A dispute of priority among insurers will not excuse the delay in making timely
payment.” 58
51
MCL 500.3142(1) and (2). See also Auto Club Ins Ass’n, 440 Mich at 133.
52
MCL 500.3142(2).
53
MCL 500.3142(4).
54
MCL 600.6013(7). See also Auto Club Ins Ass’n, 440 Mich at 133.
55
MCL 600.6013(7).
56
Auto Club Ins Ass’n, 440 Mich at 133; MCL 500.3148(1).
57
Univ of Mich Regents v State Farm Mut Ins Co, 250 Mich App 719, 737; 650 NW2d 129
(2002), overruled on other grounds by Covenant Med Ctr, Inc v State Farm Mut Auto Ins
Co, 500 Mich 191 (2017).
58
Bloemsma v Auto Club Ins Co, 174 Mich App 692, 697; 436 NW2d 442 (1989).
17
What emerges from these statutes is an axiom of both no-fault insurance law and
practice: insurers like Esurance must pay PIP benefits to claimants promptly and sort out
priority and reimbursement issues later. That axiom is actualized by the very real
possibility that steep penalties will be assessed against an insurer that drags its feet in
paying PIP benefits to claimants. 59 Thus, the purpose, logic, and incentive structure of
Michigan’s no-fault regime all run contrary to the conclusion that Esurance was acting as
a volunteer when it promptly complied with the no-fault act’s various payment-
incentivizing provisions while at the same time doing so “in ignorance of the real state of
facts” and while laboring “under an erroneous impression of [its] legal duty.” 60 Under
these circumstances, Esurance had “an arguable duty” to pay Edwards’s claim because
Luana had represented that she owned the crashed vehicle, which, if true, would have
rendered Esurance the highest-priority insurer under MCL 500.3114. 61 But because
Esurance was not in the order of priority, and it was operating under a mistaken
understanding of both the facts and its legal duties, Esurance’s payments to Edwards were
properly understood to be nonvoluntary, and equitable subrogation is thus available to it as
a remedy.
59
See Univ of Mich Regents, 250 Mich App at 737; Bloemsma, 174 Mich App at 697.
60
DAIIE, 337 Mich at 54 (quotation marks and citation omitted).
61
Maryland Cas Co, 199 Mich App at 564-565.
18
IV. CONCLUSION
The Court of Appeals observed that the question of whether defendants can be sued
under MCL 500.3174 “is not relevant if there is no possible claim to bring against them in
the first place.” 62 And since the Court of Appeals held that Esurance could not pursue its
equitable-subrogation claim against defendants, it concluded that MCL 500.3174 was
ultimately not relevant and that it did not need “to address the question of who, exactly,
may be sued under that statute.” 63 But because we have determined that Esurance does
have a viable claim against defendants, the question of who may be sued under MCL
500.3174 is relevant.
Accordingly, we reverse the Court of Appeals, and on remand, the Court of Appeals
shall consider—in addition to any other issues it deems relevant in light of this opinion—
whether defendants can be sued under MCL 500.3174. If necessary to the proper resolution
of this case, the Court of Appeals may remand to the trial court. We do not retain
jurisdiction.
Brian K. Zahra
Bridget M. McCormack
Richard H. Bernstein
Megan K. Cavanagh
Elizabeth M. Welch
62
Esurance, 330 Mich App at 593 n 4.
63
Id.
19
STATE OF MICHIGAN
SUPREME COURT
ESURANCE PROPERTY & CASUALTY
INSURANCE COMPANY,
Plaintiff-Appellant,
v No. 160592
MICHIGAN ASSIGNED CLAIMS PLAN
and MICHIGAN AUTOMOBILE
INSURANCE PLACEMENT FACILITY,
Defendants-Appellees.
CLEMENT, J. (dissenting).
Esurance Property & Casualty Insurance Company issued a no-fault insurance
policy to Luana Edwards-White. Later, Roshaun Edwards was injured while operating the
insured vehicle, and Esurance paid personal protection insurance (PIP) benefits to
Roshaun. Eventually, Esurance filed a successful rescission action against Luana,
rescinding the no-fault policy it had issued to her. Seeking to recover the PIP benefits it
had paid, Esurance then sued the Michigan Assigned Claims Plan (MACP), theorizing that
it was equitably subrogated to the claim Roshaun would have had against the MACP if the
policy issued to Luana had been rescinded before Roshaun’s accident. The trial court
disagreed, and the Court of Appeals affirmed. 1 In my view, this Court need not do more
1
Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 330 Mich App 584; 950
NW2d 528 (2019).
than resolve whether those courts correctly resolved the issues presented. I agree with the
rest of the Court that the lower courts did not correctly resolve the issues presented, but I
believe the majority reaches issues we need not address. I would simply hold that the
rationales the lower courts adopted for dismissing Esurance’s subrogation claim were
incorrect and remand to the trial court to resume its consideration of the case from the point
it left off when it (erroneously) granted summary disposition to the MACP.
The trial court’s rationale for granting summary disposition to the MACP was the
negative-implication canon expressio unius est exclusio alterius—the expression of one
thing is the exclusion of another. The court held that Michigan’s no-fault laws provide
mechanisms by which a no-fault insurer can recover PIP benefits paid and, by negative
implication, that these are the exclusive mechanisms for no-fault insurers to recover PIP
benefits paid. Because an equitable-subrogation action is not one of the listed mechanisms
in the no-fault act, 2 the trial court concluded that Esurance could not maintain this action.
The Court of Appeals correctly rejected this argument, stating, “[I]t is a misapplication of
the expressio unius maxim to conclude that the Legislature must have intended to exclude
the type of suit brought by plaintiff because such action is not specified in the no-fault act.”
Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 330 Mich App 584, 591; 950
NW2d 528 (2019). This Court recently agreed, holding that “we do not believe these
[reimbursement] options can be construed as ‘an expression of all that shares in the grant’
of avenues for reimbursement” allowed by the no-fault law. Bronner v Detroit, 507 Mich
___, ___; NW2d (2021).
2
MCL 500.3101 et seq.
2
However, the Court of Appeals affirmed the trial court, holding that it had reached
the right result for the wrong reasons. The Court of Appeals reasoned that, at the time
Esurance was paying PIP benefits to Edwards, Edwards had no claim against the MACP,
precisely because the insurance policy Esurance had issued to Luana existed. “[W]hen
Edwards applied for [an assigned claim], there was an applicable no-fault insurer: plaintiff.
Thus, Edwards had no right to [an assigned claim] because none of the four avenues for
making a[n assigned claim] under MCL 500.3172 was open to him.” Esurance, 330 Mich
App at 592 (emphasis omitted). On this theory, Edwards had no claim against the MACP
to which Esurance could be subrogated.
This reasoning denies the equitable nature of both rescission and subrogation. As
the majority notes, subrogation is a “flexible and elastic equitable doctrine” “that permits
one party to stand in the shoes of another.” Atlanta Int’l Ins Co v Bell, 438 Mich 512, 521-
522; 475 NW2d 294 (1991) (opinion by BRICKLEY, J.). But rescission itself is also an
equitable remedy. Lenawee Co Bd of Health v Messerly, 417 Mich 17, 31; 331 NW2d 203
(1982). It imposes some degree of revisionist history—a legal fiction—in the name of
fairness:
To rescind a contract is not merely to terminate it, but to abrogate and
undo it from the beginning ; that is, not merely to release the parties from
further obligation to each other in respect to the subject of the contract, but
to annul the contract and restore the parties to the relative positions which
they would have occupied if no such contract had ever been made.
Rescission necessarily involves a repudiation of the contract and a refusal of
the moving party to be further bound by it. But this by itself would constitute
no more than a breach of the contract or a refusal of performance, while the
idea of rescission involves the additional and distinguishing element of a
restoration of the status quo. [Wall v Zynda, 283 Mich 260, 264; 278 NW
66 (1938) (quotation marks and citation omitted; emphasis added).]
3
The inquiry does not ask what Roshaun’s options were on the day he filed a claim for PIP
benefits. To “restore the parties to the relative positions which they would have occupied
if no . . . contract had ever been made,” id., we ask what Roshaun’s options should have
been on the day he filed a claim for PIP benefits—what he could have done if the policy
Esurance issued to Luana had been rescinded before Roshaun’s accident. If Roshaun
should have had a claim against the MACP for PIP benefits had Esurance never issued any
policy to Luana, then Esurance could potentially be subrogated to that claim. 3
The Court of Appeals held in the alternative that Esurance’s successful rescission
of the policy it had issued to Luana turned it into a volunteer—precluding subrogation
relief. Because Esurance successfully rescinded the policy it had issued to Luana, the PIP
payments it made to Roshaun as a result of the policy were to be construed, ex post facto,
as voluntary payments made to someone with whom Esurance had no contractual
relationship and to whom it owed no legal responsibilities.
[I]f the claim for equitable subrogation proceeds under the premise that the
policy never existed, then plaintiff had no obligation to pay PIP benefits on
[Roshaun’s] behalf. Without a policy, plaintiff would have paid benefits not
to its insured, but to an individual with whom it had no relationship. Without
any legal or equitable duty to pay PIP benefits, plaintiff is a mere volunteer—
one who accidentally paid nearly $600,000 in PIP benefits. [Esurance, 330
Mich App at 595.]
3
As noted by the majority, Roshaun “also applied for benefits from defendants,” satisfying
MCL 500.3174. If he had not, this analysis might well be different—I do not mean to
suggest that the equitable nature of rescission can construct, via a legal fiction, notice owed
to a third party which was not as a matter of historical fact actually provided.
4
This reasoning once again frustrates the equitable character of both rescission and
subrogation. As noted, rescission is revisionist history in the name of fairness—a legal
fiction. The fact that Esurance successfully rescinded the policy it issued to Luana does
not turn it into a volunteer such that subrogation relief is precluded. To retroactively
construe Esurance’s PIP payments as “voluntary” because the parties are being treated as
though the policy never existed would be unjust—at the time the PIP payments were made,
Esurance did not yet know the policy did not exist and therefore may have made the
payment under a reasonable but erroneous impression of its legal duty. “A payment is not
voluntary when made . . . in ignorance of the real state of facts, or under an erroneous
impression of one’s legal duty.” Detroit Auto Inter-Ins Exch v Detroit Mut Auto Ins Co,
337 Mich 50, 54; 59 NW2d 80 (1953) (quotation marks and citation omitted). 4 When “the
real state of facts” is a legally constructed one—i.e., that the policy is rescinded and thus
the parties are to be treated as though the policy had never existed—a payment made in
ignorance of that subsequent rescission cannot be held against the subrogor to turn it into
a volunteer.
In short, then, I would hold that: (1) the trial court’s expressio unius holding was
erroneous, (2) whether Roshaun had a claim against defendants to which Esurance can be
subrogated turns on whether Roshaun would have had a claim against defendants if the
policy Esurance issued to Luana had been rescinded before Roshaun’s accident, and (3)
4
Of course, neither ignorance of the true facts nor an erroneous impression of one’s legal
duty is automatic insulation against being a volunteer. A party who happens to have been
ignorant of the true facts could, presumably, render itself a volunteer for some other reason,
and in similar fashion, a party whose erroneous impression of its legal duties is
unreasonable could still be a volunteer.
5
rescission of the policy Esurance issued to Luana does not turn Esurance into an after-the-
fact “volunteer” such as to defeat this subrogation action. Having made these corrections,
I would remand the case to the trial court for it to resume its consideration of the matter
from the point the proceedings ended there in light of these corrections.
Elizabeth T. Clement
David F. Viviano
6