Michigan Court of Appeals; Docket # 330124; Unpublished
Judges Markey, Wilder and Swartzle; Unanimous, Per Curiam (with Judge Swartzle concurring)
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to concurrence
In this unanimous unpublished per curiam Opinion, the Court of Appeals held the trial court improperly denied an insurer’s motion for summary disposition on a medical provider’s claim for PIP benefits because the insurer did not issue the policy that was the subject of the insurance claim and, as a result, did not assume the risk of coverage. Furthermore, the Court held that equitable estoppel did not operate to create a no-fault contract or impose liability on defendant-insurer.
Certain facts were not in dispute. First, the owner-driver of the vehicle in which a passenger was injured was insured by GEICO Casualty Company and not insured by the defendant in the case, GEICO General Insurance Company. Second, GEICO General did not enter into and issue an insurance policy pertaining to the vehicle involved in the crash and, therefore, did not assume any risk associated with the accident. Third, the contract involved was an out-of-state policy that did not include a provision for PIP benefits. Fourth, the insurer that issued the policy, GEICO Casualty Company, was not certified in accordance with MCL 500.3163 and, as such, that policy was not subject to being converted into a Michigan no-fault policy in order to impose liability for PIP benefits. When plaintiff North Shore Injury Center filed this action to recover PIP benefits from GEICO General, the trial court denied GEICO General’s motion for summary disposition. On appeal, GEICO General argued its motion for summary disposition was improperly denied because it did not issue the policy that covered the vehicle involved in the accident and, thus, did not assume the risk of coverage.
The Court of Appeals agreed, finding that summary disposition for GEICO General should have been granted.
In its analysis, the Court noted that GEICO General was somehow erroneously identified as the insurer in the case. As such, the Court rejected plaintiff’s argument that it would be inequitable, given its reliance on the mistaken belief that GEICO General was the proper insurer, to preclude coverage. The Court said:
“What plaintiff fails to comprehend is that granting summary disposition to defendant would not be inequitable: it is, in fact, the only proper resolution. Had the proper insurer, GEICO Casualty Company, been correctly identified from the outset, plaintiff would not have received reimbursement. GEICO Casualty Company is not certified under MCL 500.3163. Hence, the issue is not one of equity; it’s one of simple contract. Plaintiff would be the recipient of an unfair windfall by being permitted to collect benefits it would not have been entitled to receive from the correctly identified insurer. In other words, if the proper insurer had been identified from the outset and named as the defendant, plaintiff would not have been entitled to reimbursement of PIP benefits. There was simply no coverage for Michigan No-Fault PIP benefits under the Geico Casualty Company’s policy.”
The Court of Appeals then examined and applied basic contract principles. Although an insurance contract must be enforced in accordance with its terms, the Court noted that GEICO General did not have a contract with any party or on a vehicle connected to the accident. As a result, the Court said GEICO General could not be held liable for a risk that it did not assume. The Court explained:
“While liability could certainly be imposed upon the breach of an existing contract, it is difficult to ascertain how liability can be imposed in the absence of a contract, under the circumstances of this case. Because an actual contractual obligation is nonexistent, the only potential alternative theory available for the imposition of liability resides in the principles of equity.”
Plaintiff, however, argued that GEICO General was equitably estopped from denying coverage because it failed to correct plaintiff’s misidentification of the insurer of the vehicle in its answers to interrogatories. Addressing this argument, the Court of Appeals noted that the doctrine of equitable estoppel with respect to an insurance policy is limited and that “equitable estoppel cannot create a contract that the parties did not enter into or impose liability contrary to the express terms of the contract to which the parties did agree.”
Applying the foregoing to this case, the Court of Appeals said that, even if plaintiff could establish that GEICO General’s answer to an interrogatory induced plaintiff to believe a misstatement, which plaintiff justifiably relied upon, plaintiff could not demonstrate prejudice – an essential element of equitable estoppel. The Court wrote:
“Had plaintiff identified and sued the correct party, GEICO Casualty Company, it would not have been entitled to compensation because that entity was not certified in accordance with MCL 550.3163. Hence, any error resulting from the incorrect identification of the proper defendant has no financial implication for plaintiff because there is no cognizable difference between the outcome of the lawsuit with the proper insurer and the grant of dismissal in favor of defendant. In other words, granting summary disposition in favor of defendant would not place plaintiff in any worse position than it would have been in had it sued the correct entity. … Because plaintiff cannot establish prejudice, equitable estoppel is unavailable.”
In a concurring opinion, Judge Swartzle agreed with the majority’s conclusion, but wrote separately to “make clear that these proceedings were prolonged by [GEICO General’s] own actions” and that it “compounded the confusion when it simultaneously referred to itself as ‘GEICO General Insurance Company’ in its summary disposition motion and ‘GEICO Casualty Company’ in the attached brief in support.”