Michigan Supreme Court; Docket No. 111854; Published
4-3 Opinion (with Justices Cavanagh and Kelly concurring in result only); Per Curiam
Official Michigan Reporter Citation: 461 Mich 210; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Uninsured Motorist Benefits
Motor Vehicle Code (Civil Liability of Owner) (MCL 257.401)
CASE SUMMARY:
In this per curiam Opinion (with Justices Cavanagh and Kelly concurring in result only), the Supreme Court held that an insurance company who pays uninsured motorist benefits pursuant to an arbitration award in favor of its insured, is entitled, under the doctrine of equitable subrogation, to seek recoupment of those benefits from an insured third party who the UM carrier alleged was an owner of the vehicle causing the accident.
Eugene Bunt was injured when the car he was driving was struck by a vehicle driven by Michael Klecha, which Mr. Klecha had recently purchased from The Used Car Factory. Initially, it was thought that Mr. Klecha was the sole owner of the vehicle. In light of the fact Mr. Klecha had no insurance, Mr. Bunt filed a claim for uninsured motorist benefits under the insurance policy issued by Hartford covering the vehicle Mr. Bunt was driving at the time of the accident. However, during the pendency of the arbitration matter, it appeared that title to the vehicle may not have passed from The Used Car Factory to Mr. Klecha and, therefore, The Used Car Factory (which was insured) might also be an "owner" for purposes of the owner liability statute (MCLA 257.401). If this were true, uninsured motorist benefits would not be due. At the arbitration hearing, the arbitrators rejected Hartford's argument that The Used Car Factory remained the titleholder of the vehicle, and consequently, the arbitrators awarded Eugene Bunt uninsured motorist benefits in the amount of $680,000.
Subsequently, Hartford sued The Used Car Factory in circuit court, asserting a right of subrogation for uninsured motorist benefits paid to Bunt. In this action, Hartford claimed that The Used Car Factory retained legal title to the vehicle and thus, was liable for negligent operation of the vehicle under the owner liability statute (MCLA 257.401). The trial court agreed with Hartford and ruled that title had not passed from The Used Car Factory to Klecha. Therefore, The Used Car Factory remained the owner of the Datsun for purposes of the owner's civil liability statute. However, the trial court ruled that Hartford was not entitled to reimbursement under the doctrine of equitable subrogation.
The Supreme Court reversed the trial court in part, and held that Hartford did indeed have the right to pursue reimbursement from The Used Car Factory and its insurer under the doctrine of equitable subrogation. The court quoted earlier law characterizing equitable subrogation as a
"legal fiction through which a person who pays a debt for which another is primarily responsible is substituted or subrogated to all the rights and remedies of the other. It is well-established that the subrogee acquires no greater rights than those possessed by the subrogor, and that the subrogee may not be a 'mere volunteer’..."
The court held that for Hartford to establish a cause of action against The Used Car Factory for equitable subrogation, Hartford:
"must show a basis for liability and... must show connections between Mr. Bunt and them and between Mr. Klecha and The Used Car Factory." The Supreme Court went on to note that Awhile The Used Car Factory continues to contest its ownership status, it is presently sufficient to note that Hartford... adequately alleged a theory under which The Used Car Factory was the owner. On that basis, The Used Car Factory would have been liable to Mr. Bunt.... At this point, the doctrine of equitable subrogation becomes applicable.... In this instance, Hartford... [has] been called upon to pay significant sums to Mr. Bunt on the basis that Mr. Klecha was an uninsured motorist. This was an understandable conclusion, particularly in light of The Used Car Factory's insistence that title did pass to Mr. Klecha.... Accordingly, Hartford fisj entitled to pursue a claim of equitable subrogation."
