Michigan Court of Appeals; Docket #348436; Unpublished
Judges Swartzle, Jansen, and Borrello; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Reimbursement Based on a Mistake
In this unanimous, unpublished, per curiam decision, the Court of Appeals, on remand from the Supreme Court, affirmed the trial court’s summary disposition order in favor of Plaintiff NGM Insurance Company (“NGM”), in NGM’s equitable subrogation action against Defendant Auto Club Insurance Association (“ACIA”). In its earlier opinion, the Court of Appeals held that NGM acted as a “mere volunteer” when it mistakenly paid PIP benefits to Oliver Ravenell based on its initial belief that it was the highest priority insurer, and that its claim against ACIA for equitable subrogation failed as a result. The Supreme Court vacated the Court of Appeals’ opinion and remanded the case back to the Court of Appeals for reconsideration in light of Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, ___ Mich ___ (2021). The Court of Appeals applied Esurance on remand and held that NGM was not acting as a “mere volunteer” when it mistakenly paid Ravenell’s benefits and was, therefore, entitled to reimbursement from ACIA.
Oliver Ravenell was injured as a result of being struck by a vehicle driven by Thaddeus Stec. After the collision, Ravenell sought no-fault PIP benefits from NGM: the insurer of three vehicles listed on a policy issued to Omega Appraisals, LLC, a company for which Ravenell's wife served as resident agent. NGM proceeded to pay in excess of $331,000 in PIP benefits to Ravenell before contesting its status as a priority insurer. NGM asserted that it was not in the order of priority for Ravenell’s benefits at all, because neither Ravenell nor his wife were named insureds under the subject policy. Instead, NGM argued, Stec’s no-fault insurer, ACIA, was highest in priority for payment of Ravenell’s benefits. Thus, NGM filed an equitable subrogation action against ACIA, and the trial court granted summary disposition in NGM’s favor. The Court of Appeals then reversed the trial court’s order, holding that NGM’s equitable subrogation claim failed because NGM was acting as a “mere volunteer” in paying Ravenell’s benefits.
In lieu of granting leave, the Supreme Court vacated the Court of Appeals’ decision and remanded back to the Court of Appeals for reconsideration in light of Esurance Prop & Cas Ins co v Mich Assigned Claims Plan. The salient facts and procedural history of Esurance are as follows:
“In that case, Esurance paid PIP benefits to a claimant ‘pursuant to a no-fault automobile insurance policy, issued to another person, that was later declared void ab initio.’ Esurance, ___ Mich at ___; slip op at 1-2. Esurance then filed suit against the Michigan Assigned Claims Plan and the Michigan Automobile Insurance Placement Facility seeking reimbursement under the theory of equitable subrogation.”
The Supreme Court in Esurance held that Esurance was not acting as a mere volunteer when it mistakenly paid PIP benefits that it believed it had a legal obligation to pay. The takeaway from Esurance, then, is that, when an insurer pays PIP benefits to a claimant under the mistaken belief that it has a legal obligation to do so, it is simply “ ‘protecting its own interests,’ ” not acting as a “mere volunteer.”
In this case, the Court of Appeals held on remand that NGM was simply protecting its own interests when it paid PIP benefits to Ravenell, based on its mistaken belief that it was the highest priority insurer. Thus, the Court of Appeals affirmed the trial court’s original summary disposition order in NGM’s favor.
“In Esurance, Esurance paid PIP benefits to the claimant because it thought a valid insurance contract existed and, therefore, that it had a legal obligation to pay those PIP benefits. Id. at ___; slip op at 3. As explained by the Esurance Court, in such a situation an insurer is not acting as a ‘mere volunteer’ despite the lack of any actual duty to pay because the insurer is “protecting its own interests” by complying with its perceived obligations under the no-fault act. Id. at ___; slip op at 9-10, 16-18.
Such is the case here. NGM paid PIP benefits to Ravenell because NGM thought Ravenell’s injuries were covered by one of its insurance policies. NGM later learned that this was not the case and stopped paying PIP benefits to Ravenell. Accordingly, NGM was in the same type of situation as Esurance: it paid PIP benefits based on a mistaken belief that it was required to do so by an insurance policy. In doing so, NGM was protecting its interests because failure to pay PIP benefits could result in litigation and violation of the no-fault act. See id. at ___; slip op at 14-18. Thus, NGM was not acting as a ‘mere volunteer’ when it paid PIP benefits to Ravenell. The parties do not dispute that ACIA is higher in priority than NGM. Consequently, NGM is entitled to reimbursement under the theory of equitable subrogation because it paid PIP benefits to Ravenell to protect its own interests and it is not the highest-priority insurer. See id. at ___; slip op at 2.”