Michigan Court of Appeals; Docket Nos. 184788 and 184812; Published
Judges Doctoroff, Corrigan, and Danhof; 2-1 (with Judge Corrigan Dissenting in Part and Concurring in Part); Opinion by Judge Doctoroff
Official Michigan Reporter Citation: 223 Mich App 205; Link to Opinion 
STATUTORY INDEXING:
Obligation of the Assigned Claims Insurer to Preserve and Enforce Indemnity or Reimbursement Rights Against Third Parties [§3175(2)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this 2-1 published Opinion, the Court of Appeals held that under the provisions of §3175(2), a no-fault insurer who processes a claim on behalf of the Michigan Assigned Claims Facility, is entitled to pursue a cause of action for indemnity against an insurance agent who negligently failed to obtain insurance for a customer and, as a result of said failure, innocent third parties were required to obtain no-fault benefits from the Assigned Claims Facility. Section 3175(2) authorizes insurers to whom claims have been assigned, to "enforce rights to indemnity or reimbursement against third parties.. .and shall assign such rights to the assigned claims facility upon reimbursement by the assigned claims facility." In this particular case, plaintiff Auto-Owners was assigned a claim that should have been paid by the insurance company of a limousine service when passengers of the limousine sustained injury in a motor vehicle accident. Unfortunately, however, the agent for the limousine company failed to collect an appropriate premium and thus, the coverage was never placed. In holding that the assigned claims insurer had a right to pursue the insurance agent for negligently failing to obtain coverage, the court noted as follows:
"Pursuant to the plain language of the statute, plaintiff has both the authority and duty to enforce any available rights to indemnity or reimbursement which could have been pursued by claimants against third parties. This court has noted that the term 'third parties' as used in MCLA 500.3175 is not limited to tortfeasors.... Since the claimants became plaintiff's insured by operation of the assigned claims statute, plaintiff acquired all the rights and claims of its insured under the doctrine of equitable subrogation.... The central question for this court to decide is whether [the agent]... owed a duty to [the limousine service] passengers, which would give rise to a negligence claim against [the agent]. This is an issue of first impression in Michigan.... In attempting to establish that claimants had standing to sue [the agent], plaintiff pursued a third party beneficiary theory and a negligence theory.... When [limousine service] attempted to purchase insurance... intended beneficiaries of the alleged insurance contract included unspecified passengers in the car such as claimants. Accordingly, plaintiff, as the subrogee of claimants, had standing to sue [the agent] under a third party beneficiary theory. We also find that plaintiff has standing to sue under a negligence theory. [The agent] argues that a negligent theory is inapplicable because it had no duty to protect claimants. However, those foreseeably injured by the negligent performance of a contractual undertaking are owed a duty of care. Thus [the agent] owed a duty to those who would foreseeably benefit from the insurance contract or who would be injured by the negligent failure to procure insurance. It was foreseeable that third parties such as claimants who were paying customers of [the] limousine service, could be injured while riding in [limousine vehicle]. Claimants clearly would have benefited had the automobile been insured. The fact that claimants were not in privity of contract with [the agent] does not bar claimants (or plaintiff as claimants' subrogee) from recovering in tort. If, at trial, plaintiff could establish that a contract to procure insurance was made between [the agent and the limousine service], it would be established that [the agent] owed a duty to claimants. Whether a contract was formed, whether [the agent] performed the contract properly, and whether claimants were injured as a result of negligent performance are questions of fact for a jury."
Judge Corrigan dissented and would not find that the plaintiff assigned claims insurer had a cause of action against the agent for the reason that the injured claimants were made whole by the payment of PIP benefits from the Assigned Claims Facility and therefore, those claimants no longer have rights to indemnity or reimbursement from the agent. Because the claimants do not have rights to recover damages against the insurance agent, the assigned claims insurer does not acquire any such rights.
