Michigan Court of Appeals; Docket #350942; Unpublished
Judges Kelly, Servitto, and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Procedures Applicable to Disputes Between Two or More Insurers [§3172(3)]
In this unanimous, unpublished, per curiam decision, the Court of Appeals (on remand from the Supreme Court) reversed the trial court’s summary disposition order dismissing Plaintiff Syrja Lekli’s action against the Michigan Automobile Insurance Placement Facility (“MAIPF”). The Court of Appeals held that the MAIPF was required by MCL 500.3172(1) to assign Lekli's claim because, at the time of Lekli's application, there was a dispute between Farm Bureau and Great American over which was higher in priority with respect to said claim. Ultimately, it turned out that a different insurer altogether—Hudson Insurance Company (“Hudson”)—was highest in priority, but the Court held that the MAIPF should have assigned Lekli’s claim nonetheless.
Syria Lekli was injured in a motor vehicle accident while driving a truck for his employer. The truck was insured under separate policies issued by Great American and Hudson, and Lekli was personally insured at the time of the accident through Farm Bureau. Lekli initially believed that either Farm Bureau or Great American was highest in priority for his claim for no-fault PIP benefits related to the accident, and a priority dispute ensued between the two insurers. While the issue of priority awaited resolution, Lekli applied for assignment of his claim with the MAIPF, which refused to assign his claim because ‘[t]here was higher identifiable coverage at the time of the accident.’ Lekli proceeded to file suit against Farm Bureau, Great American, and the MAIPF, but agreed to dismiss the MAIPF as soon as the issue of priority was resolved. Ultimately, it was determined that Hudson was the highest priority insurer—by which point Lekli could no longer pursue benefits from Hudson pursuant to MCL 500.3145(1)—and thus the trial court granted summary disposition in the MAIPF’s favor because the issue of priority had been resolved. On appeal, the Court of Appeals affirmed the trial court’s summary disposition order as to the MAIPF, holding that, since Lekli took the position in the trial court that once the priority dispute was resolved—which is precisely what happened when the trial court determined Hudson was the highest priority insurer—the MAIPF could be dismissed from the case, he waived his ability to appeal that ruling. The Supreme Court then vacated the Court of Appeals’ holding and remanded for a determination of whether the trial court’s summary disposition order in favor of the MAIPF comported with MCL 500.3172(1).
On remand, the Court of Appeals reversed the trial court’s summary disposition order in favor of the MAIPF, and held that the MAIPF was required to assign Lekli’s claim under MCL 500.3172(1) because there was “a dispute between 2 or more automobile insurers concerning their obligation to provide coverage.” It did not matter, therefore, that the dispute featured two insurers who were ultimately deemed to not be the highest in priority for Lekli’s claim. Moreover, the Court rejected the MAIPF’s argument that it was allowed to deny Lekli’s claim because he didn’t produce “requested documentation exhibiting the dispute [between Farm Bureau and Great American].” Nothing in the statute permits the MAIPF to deny a claim because an applicant does not provide proof of a dispute as requested; moreover, the facts showed that the MAIPF had sufficient proof in the form of Farm Bureau and Great American’s answers to Lekli’s complaint, in which they both denied responsibility for his claim.
“This statement is contrary to MCL 500.3172(1) because the fact that there may be ‘applicable and identifiable coverage’ is not relevant under the third scenario in which the MAIPF is required to assign a claim when ‘the personal protection insurance applicable to the injury cannot be ascertained because of a dispute between 2 or more automobile insurers concerning their obligation to provide coverage or the equitable distribution of the loss.’ [citation omitted]
Thus, on its face, it appears that summary disposition in favor of the MAIPF was not proper. However, if plaintiff’s claim was “obviously ineligible,” then the MAIPF would have been permitted to deny the claim. [citation omitted] However, in our view, plaintiff’s claim for PIP benefits was not “obviously ineligible” because the application clearly stated that the reason for the assignment was that there was a dispute between Great American and Farm Bureau, and plaintiff provided the claim numbers for each of those insurers.
The MAIPF asserts that because plaintiff never provided the requested documentation exhibiting the dispute, it could deny the claim. We disagree. First, the MAIPF does not cite any authority that would allow it to deny a claim on the sole basis that an applicant did not provide ‘proof’ of a dispute. [citation omitted] Second, assuming ‘proof’ was required, before the MAIPF issued its denial letters dated January 18 and January 22, 2018, it had already been served in the present lawsuit and had received Farm Bureau’s answer to the complaint, denying any responsibility. Less than a month after the MAIPF requested ‘proof’ of the dispute, it also received Great American’s answer, denying any responsibility. As a result, within 25 days after its January 22 request for proof, the MAIPF had received documentation that neither Farm Bureau nor Great American was going to provide any PIP benefits. The MAIPF fails to address this fact. In Spectrum Health, 330 Mich App at 36, this Court held that the mere filing of a complaint can provide timely notice to the MAIPF. In this instance, the MAIPF had plaintiff’s complaint, as well as the answers from Farm Bureau and Great American denying liability. Therefore, at a minimum, plaintiff’s claim to the MAIPF, which was made on the basis of a dispute between two or more insurers, could not be considered ‘obviously ineligible’ once the MAIPF received Farm Bureau’s and Great American’s denials of responsibility. Accordingly, the MAIPF was obligated to assign the claim.”