Michigan Court of Appeals; Docket #353842; Unpublished
Judges Gadola, Jansen, and O’Brien; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Private Contract (Meaning and Intent)
In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s denial of Defendant Meemic Insurance Company’s (“Meemic”) motion for summary disposition in which Meemic sought dismissal of Plaintiff Greater Lakes Ambulatory Surgical Center, LLC’s (“Greater Lakes”) first-party action against Meemic and remanded for entry of an order granting summary disposition to Meemic. The Court of Appeals held that Greater Lakes could not proceed with its first-party action against Meemic—which it filed after obtaining an assignment from its patient/Meemic’s insured—because Greater Lakes sold the patient’s account receivable to a servicing agency while the action was still pending. As a result, Greater Lakes was no longer the real party in interest in the case, and no longer had standing to pursue its first-party claim against Meemic.
Latonya Steen was injured in a motor vehicle collision and subsequently received treatment from Greater Lakes. Steen was insured under an automobile insurance policy with Meemic at the time of the collision, and after receiving treatment from Greater Lakes, she assigned her right to pursue no-fault PIP benefits for her treatment to Greater Lakes. After Meemic failed to tender full payment of Greater Lakes’ charges, Greater Lakes filed the underlying first-party action. While its action was pending, Greater Lakes sold its accounts receivable—including Steen’s—to MedFinance Servicing, LLC (“MedFinance”) and Well States Healthcare, LLC (“Well States”). Meemic then moved for summary disposition, arguing that Greater Lakes lost its standing when it sold the account receivables because it was no longer the real party in interest. The trial court denied Meemic’s motion.
The Court of Appeals reversed the trial court’s denial of Meemic’s motion for summary disposition, holding that, under the plain language of the sales agreement between Greater Lakes, MedFinance, and Well States, Greater Lakes sold and assigned any and all ownership interest in the accounts receivable to MedFinance and Well States. Therefore, Greater Lakes was no longer the real party in interest in its first-party action.
‘[A]n 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 Schs, 311 Mich App 403, 412; 875 NW2d 242 (2015). ‘[A]n assignment divests the assignor of any interest in the subject matter of the assignment.’ 6A CJS, Assignments, § 88.
Under the plain and unambiguous language of the sales agreement, it is clear that plaintiff assigned all of its rights in the accounts receivable to the servicing companies. The assignments divested plaintiff of any ownership interest in the accounts. Therefore, the trial court erred when it denied defendant’s motion for summary disposition because there is no genuine issue of material fact that plaintiff lacked standing and was not the real party in interest related to the account receivable for Steen because plaintiff had assigned its rights to such to the servicing companies before it filed suit against defendant. MCR 2.116(C)(10).
The Court of Appeals further rejected Greater Lakes’ argument that a section of the sales agreement, titled “Power of Attorney,” “afforded [the servicing companies] the right to initiate legal proceedings on its own behalf or in the name of [Greater Lakes],” or that this section evinced an intent by Greater Lakes and the servicing companies “to] include the right of [the servicing companies] to name [plaintiff] as plaintiff.” The section in question provided, in pertinent part:
In order to support [the servicing companies’] collection efforts with regard to the Accounts Receivable, [plaintiff] hereby makes, constitutes, and appoints [the servicing companies], with full power of substitution, its true and lawful attorney in fact, for it and its name, place and stead, to make, execute, sign, acknowledge, swear to, deliver, record, and file any document or instrument which may be considered necessary or desirable by [the servicing companies] to carry out the provisions of this Agreement, including, but not limited to, enforcement of any Medical Lien or Letter of Protection in the name of [plaintiff] with respect to an Account Receivable and issuing payment instructions with respect to any proceeds paid or payable of such Account Receivable (‘Power of Attorney’). . . .
The Court of Appeals held that no such intent could be discerned from the plain language of this section, but rather that the plain language merely gave the servicing companies power of attorney over Greater Lakes. Furthermore, when the sales agreement was read as a whole, it became clear that Greater Lakes “did not retain any interest in the action under the power-of-attorney provision,” and that “the servicing companies took over all of the accounts ‘without limitation.’”
Lastly, the Court of Appeals held that the exception to the real party in interest requirement in MCR 2.201(B)(1) did not apply in this case. That exception provides:
[a] personal representative, guardian, conservator, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a person authorized by statute may sue in his or her own name without joining the party for whose benefit the action is brought. [MCR 2.201(B)(1).]
In this case, the contract was not made “for the benefit of another.” Rather, it was made “for the sole benefit of the parties [t]hereto.”