Collateral Estoppel and Res Judicata
Presently, this decision is pending review before the Michigan Supreme Court. On January 29, 2021, the Supreme Court directed the Clerk to schedule mini oral argument on the application. In doing so, the Court instructed the parties to file a supplemental briefing “addressing whether the appellees’ claims for no-fault personal protection insurance benefits are barred by (1) res judicata or (2) collateral estoppel. See Adair v Michigan, 470 Mich 105, 121 (2004); Monat v State Farm Ins Co, 469 Mich 679, 682-684 & n 2 (2004).”
In this majority unpublished per curiam decision (Murray, dissenting), the Court of Appeals reversed the trial court’s summary disposition order dismissing the plaintiff medical providers’ first-party action to recover no-fault PIP benefits, the rights to which the plaintiffs’ were assigned by their patient, the defendant’s insured. Their patient, Jacob Myers, had his separate lawsuit against the defendant, Metropolitan Group Property & Casualty Company, dismissed because he failed to maintain no-fault coverage on his vehicle. Metropolitan then moved for summary disposition seeking dismissal of the plaintiffs’ lawsuit, arguing that it was barred by collateral estoppel and res judicata. The trial court agreed with Metropolitan, but the Court of Appeals reversed, holding that the plaintiffs were not bound by the judgment rendered against Myers in his separate lawsuit, to which they were not parties.
Jacob Myers purchased a vehicle in March 2016 while living with his grandmother. The vehicle was insured under his grandmother’s policy with Metropolitan, but Myers had moved out of grandmother’s home by the time he was injured in the underlying motor vehicle collision several months later. Myers received treatment for his collision-related injuries from the plaintiffs, Spectrum Health and Mary Free Bed, and assigned to them his rights to no-fault PIP benefits related to the treatment they rendered. At some point thereafter, Myers filed one first-party action against Metropolitan, and the plaintiffs filed their own, separate lawsuit against Metropolitan. Myers’s lawsuit was eventually dismissed after the trial court determined that his claims were barred under MCL 500.3113(b), prompting Metropolitan to move for summary disposition in the plaintiffs separate action, arguing that the plaintiffs’ action was barred by collateral estoppel and res judicata. The trial court granted Metropolitan’s motion, holding that “a medical provider cannot make a claim against an insurance company when the insured’s claims have been dismissed with prejudice in a different action.”
The Court of Appeals reversed, holding that the plaintiffs could not be bound by the judgment against Myers in his separate lawsuit “because they were not in privity with Myers and a decision to the contrary would extinguish their rights without providing an opportunity to be heard.” Furthermore:
[D]efendants could not establish that both actions involved the same parties or their privies. Further, because Myers assigned his rights to pursue the claims involving Spectrum Health and Mary Free Bed, those issues could not be decided in the Wayne County action because Myers had divested himself of the pursuit of those claims through the assignments. Duncan, 300 Mich App at 194. Therefore, defendants could not establish that the claims by Spectrum Health and Mary Free Bed “could have been decided in the prior case.” Id.
Justice Murray dissented, arguing that “the trial court’s rational was correct under the binding decision of TBCI, PC v State Farm Mut Auto Ins Co, 289 Mich App 39; 795 NW2d 229 (2010).” The majority rejected the trial court’s reliance on TBCI, however, holding:
In TBCI, Eric Afful alleged that he was injured in an automobile accident, causing him to receive medical treatment and attendant care services. Defendant State Farm refused to pay, asserting that Afful’s claims were fraudulent. Afful filed suit against State Farm, but the jury found that Afful’s claims for attendant care services were fraudulent, and therefore, coverage was barred. The plaintiff, TBCI, also provided therapeutic and rehabilitative services to Afful, and defendant refused to pay for these services, causing the plaintiff to file suit. After the jury returned its verdict, the trial court granted the defense motion for summary disposition premised on res judicata. On appeal, this Court affirmed, concluding that plaintiff was attempting to relitigate the same issue and was in privity with Afful. TBCI, 289 Mich App at 43-44.
The trial court erred in applying TBCI to the facts of this case. Myers assigned his rights to pursue his claim for the medical services provided by Spectrum Health and Mary Free Bed, and they were never given the opportunity to litigate those rights, and there was no privity. Aultman, Miller & Co, 115 Mich at 154.