Michigan Court of Appeals; Docket #361266, 361956; Published
Judges Cameron, Jansen, and Borrello; Per Curiam
Official Michigan Reporter Citation: Forthcoming; Link to Opinion
One-Year Back Rule Limitation [§3145(1)]
Applicability of Limitations to Assigned Claims Cases [§3145]
When Claimants Can Receive PIP Benefits Through the Assigned Claims Plan [§3172(1)]
Reimbursement to Servicing Insurer or ACF [§3172(3)]
In this unanimous, published, per curiam decision, the Court of Appeals reversed the trial court’s orders denying both Defendant National Interstate Insurance Company of Hawaii’s (“National”) and Defendant Executive Car Rental, Inc.’s (“Executive”) motions for summary disposition, in which they sought dismissal of Sheronda Stanley’s no-fault claims against them. The Court of Appeals held, first, that because Executive was a rental car company and not an insurer, it could not be liable for Stanley’s PIP benefits even if it failed to disclose information to Stanley regarding the availability of insurance coverage until more than one-year after the subject motor vehicle accident involving its rental car. The Court of Appeals held, second, that Stanley could not obtain PIP benefits from either National—Executive’s insurer and the highest priority insurer with respect to Stanley’s claim—or Farmers Insurance Exchange (“Farmers”)—the lower priority insurer which was assigned Stanley’s claim by the Michigan Automobile Insurance Placement Facility (“MAIPF”). With respect to National, the Court held that Stanley’s claims were barred by the one-year-notice and one-year-back rules in MCL 500.3145(1); with respect to Farmers, the Court held that the only way in which Stanley would be entitled to PIP benefits from an assigned claims insurer would be if the highest priority insurer (National) could not be “identified” for purposes of MCL 500.3172(1). In this case, the Court determined that National could have been identified by Stanley had she exercised the due diligence required of her under Griffin v Trumbull Ins Co, 334 Mich App 1 (2020).
In May of 2019, Sheronda Stanley was involved in a motor vehicle accident while traveling as a passenger in an Executive rental car being driven by her sister, an insured of USAA Casualty Insurance Company (“USAA”). After the accident, Stanley’s lawyer tried to contact and make a claim for PIP benefits with Executive, but a representative from Executive informed a paralegal for Stanley’s lawyer’s office that Executive’s insurance usually did not cover rental car drivers or passengers, who were instead usually covered by their own insurance. The Executive representative then provided Stanley’s lawyer’s paralegal with an email address to make a claim, but three subsequent attempts by Stanley’s lawyer to reach out to Executive were ignored.
Eventually, Stanley filed suit against USAA and Executive and an application for PIP benefits with the MAIPF. The MAIPF assigned Stanley’s claim to Farmers, and Farmers was later added to Stanley’s lawsuit as a defendant. Farmers proceeded to serve Executive with a subpoena to produce its insurance policy after which it was discovered that Executive had a policy with National that covered the vehicle involved in the accident. Although this discovery came more than one year after the accident, the trial court allowed Stanley to file an amended complaint adding a count against National. In her amended complaint, however, Stanley continued to assert a claim for PIP benefits against Executive, and thus Executive moved for summary disposition, arguing that because it was not an insurer, it could not be liable for Stanley’s PIP benefits.
After Executive filed its motion, the other defendants moved for summary disposition as well. At the hearing on all the motions, the trial court first denied Executive’s motion, “reasoning that a question of fact existed whether Executive misrepresented the availability of coverage to plaintiff, which caused a delay of presentation of the claim to National.” The trial court then ruled that
“Farmers, as the assigned-claims carrier, was obligated to pay plaintiff’s benefits. Because National may not have been timely notified, liability would shift to USAA or Farmers, who could seek reimbursement from National [under MCL 500.3172(3)]. It concluded that USAA was in the order of priority, but it was not first, and should not have paid plaintiff any benefits.”
The Court of Appeals reversed the trial court’s denial of Executive’s motion, holding that Stanley could not maintain a claim against Executive for PIP benefits because Executive was a rental car company, not an insurer. The Court reached this holding despite expressing its concern “that this result may incentivize rental car companies to delay notice to their insurance providers past the applicable time period in order to defer liability.”
“The trial court, however, denied Executive summary disposition under MCR 2.116(C)(10), reasoning that a question of fact existed whether Executive misrepresented the availability of coverage to plaintiff, which caused a delay of presentation of the claim to National. Indeed, Moffat told Churchill in e-mail correspondence that Executive’s insurance did not cover drivers or passengers. The court reasoned that Executive was in the business of renting cars, and had the obligation to provide information on the availability of coverage to plaintiff so she could have pursued no-fault benefits in the proper order of priority in effect at the time of the accident. To the extent that Executive intentionally or negligently misrepresented the presence of coverage, the priority dispute arose. The trial court determined that Executive could be held responsible for some of the losses, questions of fact existed, and therefore summary disposition in favor of Executive was premature.
The trial court erred in denying Executive summary disposition under MCR 2.116(C)(10). Executive also moved for summary disposition under MCR 2.116(C)(8) and, as explained above, it is undisputed that Executive is not an insurer. Plaintiff concedes this fact. We note our concern, and that of the insurer-parties, that this result may incentivize rental car companies to delay notice to their insurance providers past the applicable time period in order to defer liability. However, plaintiff was given the opportunity to amend the complaint after National was identified as Executive’s insurer, and still asserted a no-fault claim against Executive. But because Executive is not an insurer, it cannot be liable for no-fault benefits and plaintiff’s complaint, even as amended, was facially defective. Under these circumstances, the trial court erred in denying Executive summary disposition, and Executive is entitled to summary disposition under MCR 2.116(C)(8).”
The Court of Appeals then reversed the trial court’s denial of National’s and Farmers’ motions for summary disposition, holding that National was the highest-priority insurer and that Stanley’s claims were barred by MCL 500.3145(1). The Court acknowledged that Farmers, as the lower-priority insurer, would only have been liable for Stanley’s PIP benefits if, under MCL 500.3172(1) and Griffin, National could not have been identified by Stanley within one-year of the accident, even if she exercised due diligence. The Court then held that National was identifiable to Stanley and that the reason she failed to identify it was because she failed to exercise due diligence.
“Applying Griffin to the facts at hand, we conclude that plaintiff failed to act with due diligence in trying to identify Executive’s insurer. The accident occurred on May 24, 2019. Notes from plaintiff’s attorney’s office indicate that plaintiff’s counsel left voicemails for Executive trying to open a claim on November 27, 2019. Churchill reached out to the claims department of Executive on December 3, 2019. Moffat responded that day, indicating that Executive’s insurance usually does not cover passengers or drivers—that is usually covered by their own insurance. Moffat provided Churchill with an e-mail address to contact to make the claim. But three notes from January 2020 indicate that plaintiff’s counsel reached out to Executive and was unable to reach anyone. Plaintiff filed suit on January 28, 2020. The default was entered against Executive on March 3, 2020. Then, in April 2020, Moffat emailed Churchill to see if anything else was needed, and Moffat responded, ‘We need you guys to answer the complaint.’ Moffat asked for a copy, saying she ‘saw it in their paperwork,’ but her scanner was not working, so Churchill sent her a courtesy copy she could forward to Executive’s attorney. It was not until April 2021, after MAIPF assigned plaintiff’s claim to Farmers, and Farmers served Executive with a subpoena to produce its insurance policy, that it was discovered that Executive had an insurance policy issued by National that covered the Dodge Journey on the date of the accident. The top two insurers in the order of priority were therefore identified (USAA) and identifiable (National), and plaintiff’s actions do not meet the due-diligence standard articulated under Griffin.”