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Bauer-Rowley, et al v Humphreys, et al (COA – PUB 10/27/2022; RB #4497)   


Michigan Court of Appeals; Docket #358846; Published  
Judges Shapiro, Gadola, and Yates; Per Curiam 
Official Michigan Reporter Citation: Forthcoming; Link to Opinion

Priority Rules Under PAs 21 and 22 of 2019 [§3114]

Revised Judicature Act – Miscellaneous Provisions

In this unanimous, published decision authored by Judge Shapiro, the Court of Appeals reversed the trial court’s order awarding attorney fees and costs to Defendant Auto-Owners Insurance Company (“Auto-Owners”) as a sanction against Plaintiff Breanne Bauer-Rowley for filing a frivolous lawsuit.  The Court of Appeals held that, given the facts and circumstances of the case—for instance, the fact that Farm Bureau (ultimately determined to be the highest priority insurer with respect to Bauer-Rowley’s claim for no-fault PIP benefits) initially disputed its priority status, as well as the fact that Bauer-Rowley was explicitly told by the Michigan Automobile Insurance Placement Facility (“MAIPF”) to seek no-fault PIP benefits from Auto-Owners—the trial court clearly erred in finding that Bauer-Rowley’s action against Auto-Owners was frivolous.

Breanne Bauer-Rowley was injured in a motor vehicle accident on October 10, 2019, after which she sought no-fault PIP benefits from Auto-Owners, the insurer of the vehicle she was driving at the time of the accident.  Auto-Owners denied her claim, and in September of 2020, Breanne Bauer-Rowley filed suit against it.  She then applied for no-fault PIP benefits through the MAIPF, which wrote her a letter in October of 2020 denying assignment because ‘higher coverage’ was available through Auto-Owners.  At some point, Auto-Owners communicated its position to Bauer-Rowley that the highest priority insurer with respect to her claim was Farm Bureau, who insured Bauer-Rowley’s resident relative, Betty Rowley.  The record shows that Bauer-Rowley did not initially believe that Betty Rowley was domiciled with her at the time of the accident, but after being made aware of Auto-Owners’ position, Bauer-Rowley amended her complaint to add a claim against Farm Bureau, without dismissing her claim against Auto-Owners.  Farm Bureau, in its affirmative defenses, denied that it was the highest priority insurer, and Auto-Owners  moved for summary disposition, arguing that, regardless of whether the pre- or post-2019 PA 21-version of MCL 500.3114 applied in this case, it was not responsible for Bauer-Rowley’s claim: if the pre-amendment version applied, Farm Bureau would be higher in priority; if the amended version applied, Auto-Owners wouldn’t be in the order of priority at all.  

In addition to seeking summary disposition, Auto-Owners also sought attorney fees and costs, arguing that Bauer-Rowley’s action against it was frivolous.  In response, Bauer-Rowley referenced the MAIPF letter—which told her to seek coverage through Auto-Owners—as well as a DIFS bulletin—which stated that the amended version of MCL 500.3114 would not take effect until July 2020, and which she argued made it unclear which insurer she needed to pursue benefits from, especially considering Farm Bureau’s initial stance regarding priority.  In rejoinder, Auto-Owners took the position that the amended version of MCL 500.3114 applied, that the DIFS bulletin had no legal effect, and that the effective date of the new priority rules was the date 2019 PA 21 was enacted, June 11, 2019.  By the date of oral argument on Auto-Owners’ motion, Farm Bureau had conceded that it was the highest priority insurer, and thus the trial court granted summary disposition in Auto-Owners’ favor, and also found that Bauer-Rowley’s decision to name Auto-Owners as a defendant in its amended complaint—even after learning that Farm Bureau insured Betty Rowley—was frivolous, such that it merited an award of attorney fees and costs in Auto-Owners’ favor.

The Court of Appeals reversed the trial court’s award of attorney fees and costs to Auto-Owners, holding that it was not frivolous for Bauer-Rowley to have named Auto-Owners as a defendant in her first amended complaint.  The Court noted that the legal effect of the DIFS bulletin was unclear, and that questions of domicile under MCL 500.3114 are “not always simple”—especially in this case, where Bauer-Rowley’s attorney made clear that Bauer-Rowley did not believe Betty Rowley qualified as a resident relative at the time of the accident.  Moreover, given Farm Bureau’s affirmative defense in which it initially took the position that it was not the highest priority insurer, Bauer-Rowley had no choice but to name Auto-Owners as a defendant in her first amended complaint.  Otherwise, she risked being left without PIP benefits, and her attorney risked a potential malpractice claim.   

“The trial court indicated that plaintiffs’ initial complaint was not necessarily frivolous, but appeared to reason that, once plaintiffs were informed by Auto-Owners that Farm Bureau was higher in priority, there was no legal basis for retaining Auto-Owners as a party defendant in their first amended complaint. But the discovery that plaintiffs might be able to claim PIP benefits through a resident relative insured by Farm Bureau did not resolve the issue. As noted, the MACP had informed plaintiff that Auto-Owners was the responsible carrier and the other potential insurer, Farm Bureau, denied that it was first in priority. Indeed, Farm Bureau’s denial that it was first in priority left plaintiffs’ counsel little choice but to continue to pursue Auto-Owners as well as Farm Bureau. Dismissing one of two possible insurers while the other asserted it was not responsible to provide coverage presented risks not only to plaintiffs—who could be left without PIP benefits—but also to plaintiffs’ counsel. Dismissing Auto-Owners prior to a legal determination that Farm Bureau was the higher-priority insurer would have left counsel at risk of a malpractice suit if the trial court or an appellate court ultimately concluded that Auto-Owners, not Farm Bureau, was in the highest priority. Attorneys should not be placed in the situation of having to choose between a possible malpractice case or possible sanctions. 

We also reject Auto-Owner’s contention that all plaintiffs’ attorneys had to do before filing the complaint was determine who lived with plaintiffs at the time of the accident. As just discussed, until Farm Bureau agreed it was first in priority, plaintiffs’ counsel had to protect their clients from ending up with no PIP benefits at all. Moreover, determining whether a person is “domiciled in the same household” for purposes of MCL 500.3114(1) is not always simple. Having the same address is not necessarily dispositive when determining whether a person is “domiciled in the same household.”4 One of plaintiffs’ attorneys told the court that she asked her client questions on that matter and indicated that Bauer-Rowley did not believe “that Betty Rowley was a resident at the time of the accident.” For all these reasons, the claim against Auto-Owners was not frivolous if determined under the preamendment statute.” 

Notably, the Court of Appeals rejected Auto-Owners claim that MCL 500.3114 should be interpreted “without deference to the DIFS’s interpretation that an insurer could not operate under the new order of priorities until the insurer received departmental approval for its new forms and rates.”  The Court reasoned that “[t]he legal effect of the DIFS order was . . . unclear considering that the MAIPF processed claims for no-fault benefits in compliance with the order.”

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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