Smart v. Auto Club Insurance Association

STATE OF MICHIGAN
COURT OF APPEALS
SUBURBAN MOBILITY AUTHORITY FOR UNPUBLISHED
REGIONAL TRANSPORTATION, January 14, 2016
Plaintiff-Appellant,
v No. 324132
Wayne Circuit Court
AUTO CLUB INSURANCE ASSOCIATION, LC No. 13-015647-NF
Defendant-Appellee.
Before: SAAD, P.J., and WILDER and MURRAY, JJ.
PER CURIAM.
In this action for the recoupment of no-fault benefits, plaintiff appeals the trial court’s
order that granted summary disposition in favor of defendant. Because plaintiff’s claim was
time-barred, we affirm.
I. BASIC FACTS
The underlying facts in this case are not in dispute. On April 18, 2011, Willie Clay, Jr.
(Clay Jr.), was riding on a bus that was operated by plaintiff. When the bus pulled away from
the bus stop, Clay Jr. slipped and fell on the floor, suffering injuries to his left knee. On July 5,
2011, plaintiff received an application for no-fault benefits from Clay Jr. In the application, Clay
Jr. indicated that he did not own a motor vehicle or reside with any spouse or relative who owned
a motor vehicle. Thereafter, plaintiff paid the no-fault benefits, which totaled $127,415.48 for
medical expenses and other services incurred between April 18, 2011, and December 7, 2012.
In March 2013, Clay Jr. filed a complaint in Macomb Circuit Court against plaintiff,
where he alleged motor vehicle negligence. During the course of discovery, plaintiff learned that
Clay Jr. resided with his father, Willie Clay, Sr., and that Clay Sr. owned a vehicle that was
insured through defendant.
After learning that Clay Jr. lived with his father at the time of the April 2011 accident,
plaintiff sought reimbursement from defendant for the no-fault benefits it paid on behalf of Clay
Jr. Plaintiff reasoned that under MCL 500.3114, defendant had the highest priority related to
Clay Jr.’s claim for no-fault benefits and therefore was the proper source of those funds.
Defendant refused to reimburse plaintiff because it relied on MCL 500.3145, which requires that
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an action for recovery of no-fault benefits must commence within one year of the date of the
accident, and over a year had elapsed.
Plaintiff then filed its complaint against defendant, seeking reimbursement and
recoupment for the no-fault benefits that it paid for Clay Jr. Both parties moved for summary
disposition, and the trial court granted defendant’s motion. The trial court found that plaintiff’s
claim to recover benefits was untimely. The court reasoned that plaintiff was an insurer under
the no-fault act and was not excused from complying with MCL 300.5145’s one-year
requirement.
II. STANDARD OF REVIEW
We review a trial court’s decision on a motion for summary disposition de novo. Smith v
Globe Life Ins Co, 460 Mich. 446, 454; 597 NW2d 28 (1999). If a cause of action is time-barred,
then summary disposition is appropriate under MCR 2.116(C)(7). See Novak v Nationwide Mut
Ins Co, 235 Mich. App. 675, 681; 599 NW2d 546 (1999). “When reviewing a motion under MCR
2.116(C)(7), this Court must accept all well-pleaded factual allegations as true and construe them
in favor of the plaintiff, unless other evidence contradicts them.” Dextrom v Wexford Co, 287
Mich. App. 406, 428; 789 NW2d 211 (2010). The motion may be supported or opposed by
affidavits, depositions, admissions, or other documentary evidence, and we view such evidence
in a light most favorable to the plaintiff. Moraccini v Sterling Heights, 296 Mich. App. 387, 391;
822 NW2d 799 (2012).
III. ANALYSIS
Plaintiff claims that the general six-year period of limitations in MCL 600.5813 governs
in the instant case.1 However, our Court has held that when a plaintiff insurance company
mistakenly pays no-fault benefits, while another defendant insurance company had the obligation
to pay the benefits in the first place because of it having a higher priority in the no-fault statutory
scheme, the plaintiff’s claim for reimbursement from the defendant is one of subrogation, and the
limitations period in MCL 500.3145(1) applies. Titan Ins v North Pointe Ins, 270 Mich. App.
339, 343-344, 347; 715 NW2d 324 (2006). Further, in instances of subrogation, “the subrogee,
upon paying an obligation owed to the subrogor as the primary responsibility of a third party, is
substituted in the place of the subrogor, thereby attaining the same (and no greater) rights to
recover against the third party.” Morrow v Shah, 181 Mich. App. 742, 749; 450 NW2d 96 (1989);
see also Yerkovich v AAA, 461 Mich. 732, 737; 610 NW2d 542 (2000). Thus, plaintiff, as the
subrogee, possessed the same rights as Clay Jr, the subrogor.
MCL 500.3145(1) provides, in relevant part:
1
MCL 600.5813 provides that “[a]ll other personal actions shall be commenced within the
period of 6 years after the claims accrue and not afterwards unless a different period is stated in
the statutes.”
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An action for recovery of personal protection insurance benefits payable
under this chapter for accidental bodily injury may not be commenced later than 1
year after the date of the accident causing the injury unless written notice of injury
as provided herein has been given to the insurer within 1 year after the accident or
unless the insurer has previously made a payment of personal protection insurance
benefits for the injury.
Here, there is no dispute that plaintiff sought reimbursement of no-fault benefits later
than one year after the accident. It also is not disputed that before that year lapsed, defendant
had no notice of any claim and never paid any no-fault benefits associated with this accident.
Thus, it is clear that none of the exceptions to the one-year limitations period applies, and
because Clay Jr. could not have recovered no-fault benefits from defendant after this period,
plaintiff’s claim against defendant was time-barred as well.
Plaintiff relies on Allen v Farm Bureau Ins Co, 210 Mich. App. 591; 534 NW2d 177
(1995), and asserts that applying the one-year limitations period from MCL 500.3145(1) would
produce an absurd and unjust result. However, any reliance on Allen is misplaced. The Allen
Court held that MCL 500.3145(1) is inapplicable when an assignee of the Assigned Claims
Facility brings a claim for reimbursement under its statutory right under MCL 500.3172(1).2 Id.
at 597. Thus, the Court ruled that the two-year limitations period in MCL 500.3175(3) applied.
Id. Allen is distinguishable because it involved the statutory right of an assignee of the Assigned
Claims Facility to reimbursement, and here, the claim involves one of subrogation between
different priority insurers. Thus, Allen is inapposite. Notably, plaintiff, here tacitly admits that
Allen is distinguishable when it relies on the general six-year statute of limitations of MCL
600.5813 instead of the specific two-year statute of limitations for assigned claims
reimbursement under MCL 500.3175(3).
Plaintiff also relies on Madden v Employers Ins of Wausau, 168 Mich. App. 33; 424
NW2d 21 (1988). While Madden does support plaintiff’s view that the request for the recovery
of no-fault benefits paid by mistake is not an action for subrogation (and therefore does not
implicate MCL 500.3145), id. at 40, Madden was issued before November 1, 1990, and is not
binding, MCR 7.215(J)(1). In fact, the North Pointe Court recognized Madden, but nonetheless
determined that this Court already had rejected Madden’s holding in Amerisure Cos v State Farm
2
MCL 500.3172(1), at the time Allen was decided, provided:
“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 obtain personal protection insurance benefits through an assigned
claims plan if . . . no personal protection insurance applicable to the injury can be
identified . . . . In that case, unpaid benefits due or coming due are subject to
being collected under the assigned claims plan, and the insurer to which the claim
is assigned . . . is entitled to reimbursement from the defaulting insurers to the
extent of their financial responsibility.” [Allen, 210 Mich. App. at 596-597,
quoting MCL 500.3172(1) (emphasis added).]
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Mut Auto Ins Co, 222 Mich. App. 97; 564 NW2d 65 (1997). North Pointe, 270 Mich. App. at 347.
The North Pointe Court further noted that “[a]lthough Amerisure Cos . . . ha[s] been called into
question by Devillers [v Auto Club Ins Ass’n, 473 Mich. 562; 702 NW2d 539 (2005),] to the
extent [it] recognized the applicability of judicial tolling, [its] conclusion[] on the issue of
subrogation claims remain valid and correct.” North Pointe, 270 Mich. App. at 347 n 1.
Although plaintiff gives brief treatment to Titan Ins Co v Farmers Ins Exch, 241 Mich
App 258; 615 NW2d 774 (2000), we note that any reliance is again misplaced. In Farmers Ins
Exch, the Court was faced with determining the proper statute of limitations to apply when the
plaintiff was seeking partial recoupment of benefits paid from the defendant, when both the
plaintiff and the defendant had equal priority to pay the benefits under Michigan’s statutory
scheme. Id. at 260, 262-263. The Court held that, similar to the claim in Allen, the claim was
not one of subrogation because MCL 500.3115(2)3 creates a statutory right for a party to seek
partial recoupment from another party of the same priority level. However, unlike the situation
in Allen, where MCL 500.3175(3) provided a limitations period for an assignee’s statutory right
for reimbursement, Allen, 210 Mich. App. at 597, there is no express statute of limitations for
when an insurer seeks recoupment under this statutory right from a different insurer of equal
priority, Farmers Ins Exch, 241 Mich. App. at 263. Thus, because in the instant case, the parties
are not of the same priority level, Farmers Ins Exch is not applicable. In fact, Farmers Ins Exch
supports our holding, as it expressly recognizes that a lower priority insurer’s right to recovery
from a higher priority insurer is a claim of subrogation and subject to MCL 500.3145(1)’s one-
year limitations period. Id. at 262.
Lastly, plaintiff contends that, as a government-sponsored transportation program, it is
“exempt” from the payment of no-fault benefits if the injured claimant has available no-fault
coverage and that this “exempt” status takes its claim out of the realm of subrogation. We
disagree.
MCL 500.3114(2) provides that, in general, “[a] person suffering accidental bodily injury
while an operator or passenger of a motor vehicle operated in the business of transporting
passengers shall receive the personal protection insurance benefits to which the person is entitled
from the insurer of the motor vehicle.” As a result, normally, a passenger who was injured on a
bus used in the business of transporting passengers would recover benefits from the insurer of
the bus. However, this subsection does not allow a passenger of “[a] bus operated under a
government sponsored transportation program” to recover from the insurer of the bus unless the
“passenger is not entitled to personal protection insurance benefits under any other policy.”
MCL 500.3114(2)(c). Here, there is no doubt that Clay Jr. was entitled to personal protection
insurance benefits from another policy, namely Clay Sr.’s policy with defendant. But just
because Clay Jr. was not entitled to no-fault benefits from plaintiff, plaintiff’s subsequent
3
MCL 500.3115(2) provides that “[w]hen 2 or more insurers are in the same order of priority to
provide personal protection insurance benefits[,] an insurer paying benefits due is entitled to
partial recoupment from the other insurers in the same order of priority . . . in order to
accomplish equitable distribution of the loss among such insurers.”
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payment of benefits and its attempt to recoup those expenses from defendant do not transform its
claim into something other than subrogation.
Whether plaintiff was “exempt” or not is immaterial. Plaintiff uses the term “exempt” to
somehow imply that it has some kind of special status in the no-fault scheme. First, the statute
does not use the term “exempt.” Instead, it simply provides that a party such as plaintiff will not
have to pay any no-fault benefits to a claimant unless that claimant is not entitled to benefits
under any other policy. Second, this is not materially different from the typical subrogation
claim, where one insurance company paid benefits when another company actually was
responsible for the entirety of the payments. See, e.g., North Pointe, 270 Mich. App. at 340-341,
343-344. In other words, whether described as being “exempt” from paying benefits or simply
“not being responsible” for the payments are distinctions with no material difference. Plaintiff
has provided no authority showing otherwise. In both cases, someone other than the one who
paid the benefits was actually responsible for the payment.
In sum, under North Pointe, plaintiff is seeking the recovery of no-fault benefits through
the doctrine of subrogation. And under that doctrine, as the subrogee, plaintiff stands in the
shoes of the subrogor, Clay Jr., and acquires no greater rights than those possessed by the
subrogor. Yerkovich, 461 Mich. at 737. Accordingly, just as Clay Jr. could not ignore the one-
year rule of MCL 500.3145(1) to recover from defendant, neither could plaintiff. Because it
sought recovery against defendant over a year after the April 2011 accident, and none of the
statutory exceptions of MCL 500.3145(1) apply, plaintiff’s claim was barred, and defendant’s
motion for summary disposition under MCR 2.116(C)(7) was appropriately granted.
Affirmed. Defendant, as the prevailing party, may tax costs pursuant to MCR 7.219.
/s/ Henry William Saad
/s/ Kurtis T. Wilder
/s/ Christopher M. Murray
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