Michigan Supreme Court; Docket #161628, 161650; Published
Before the Entire Bench; Authored
Official Michigan Reporter Citation: Forthcoming; Link to Opinion; Link to Court of Appeals Opinion
Assignments of Benefits – Validity and Enforceability
Collateral Estoppel and Res Judicata
In this unanimous decision authored by Justice Viviano, the Supreme Court affirmed the judgment of the Court of Appeals, which held that Plaintiff Mecosta County Medical Center’s (“Mecosta”) first-party action seeking no-fault PIP benefits from Defendant Metropolitan Group Property and Casualty Insurance Company (“Metropolitan”) was not barred by either res judicata or collateral estoppel. The Supreme Court held that Mecosta, Jacob Myers’s assignee, was not bound by the judgment in Myers’s separate first-party action against Metropolitan, because Mecosta obtained its assignment before the judgment in that action was entered. Thus, an assignee cannot be bound by a subsequent adjudication involving the assignor.
Jacob Myers received medical treatment for injuries he sustained in a car crash from Mecosta, thereafter assigning his right to pursue no-fault PIP benefits related to said treatment to Mecosta. After executing the assignment, Myers filed a first-party action against Metropolitan in Wayne County Circuit Court, seeking PIP benefits related to other medical treatment he received for his injuries. As his suit was pending, Mecosta filed a separate first-party action against Metropolitan in Kent County Circuit Court. Ultimately, Myers’s action was dismissed by the Wayne County Circuit Court after it found that Myers violated MCL 500.3113(b), and Metropolitan proceeded to move for summary disposition in Mecosta’s Kent County Circuit Court action, arguing that that action was now barred by res judicata and collateral estoppel. The Kent County Circuit Court granted Metropolitan’s motion, but the Court of Appeals reversed, holding that Mecosta was not bound by the Wayne County Circuit Court judgment because it was neither a party to that proceeding nor in privity with Myers at the time it was filed.
The Supreme Court affirmed the judgment of the Court of Appeals, noting preliminarily that, generally, an assignee succeeds to the rights of the assignor and is therefore in privity with the assignor. The Court also noted, however, that the assignee succeeds only to the rights of the assignor in existence at the time of the assignment. Thus, “[w]hen the litigation involving the assignor occurs after the assignment, the rights could not yet have been affected by the litigation at the time they were transferred to the assignee.” In this case, that meant that Mecosta would be bound by any pre-assignment adjudication involving Myers, but not by any post-assignment adjudication involving Myers, e.g., the Wayne County Circuit Court Judgment.
“But the mere succession of rights to the same property or interest does not, by itself, give rise to privity with regard to subsequent actions by and against the assignor. Cf. Sodak Distrib Co v Wayne, 77 SD 496, 502; 93 NW2d 791 (1958) (“Privity does not arise from the mere fact that persons as litigants are interested in the same question or in proving or disproving the same state of facts.”). Rather, ‘[t]he binding effect of the adjudication flows from the fact that when the successor acquires an interest in the right it is then affected by the adjudication in the hands of the former owner.’ Id. at 502-503. In other words, the assignee succeeds to those rights subject to any earlier adjudication involving the assignor that defined those rights. When the litigation involving the assignor occurs after the assignment, the rights could not yet have been affected by the litigation at the time they were transferred to the assignee.
It is therefore well established that a judgment entered after the assignment does not bind the assignee because the assignee is not in privity with the assignor with respect to that judgment. . . .
In light of this analysis, we conclude that the plaintiff assignees here were not in privity with their assignor, Myers, with respect to the subsequently entered judgment. Therefore, the plaintiff assignees cannot be bound by that judgment under the doctrines of res judicata or collateral estoppel.”