Michigan Court of Appeals; Docket No. 313827; Unpublished
Judges Borello, Whitbeck, and Kelly; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not applicable; Link to Opinion 
STATUTORY INDEXING:
Reimbursement to Servicing Insurer or ACF [§3172(3)]
TOPICAL INDEXING:
Collateral Estoppel and Res Judicata
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion, the Court of Appeals affirmed summary disposition for defendant on its claim that it was not responsible for the reimbursement of no-fault benefits that had been paid by plaintiff, holding that plaintiff’s claim was barred by res judicata.
Plaintiff’s insured, Ruth Russell, had been injured in an automobile accident on September 10, 1983, and subsequently filed a complaint seeking no-fault PIP benefits from American Motors Corporation, National Union, and the Insurance Company of North America. Those companies entered into a consent judgment in 1987, whereby American Motors agreed to pay Russell’s benefits; National Union and Insurance Company of North America were dismissed with prejudice. The consent judgment was renewed for additional ten year terms in 1997 and 2007. American Motors was eventually acquired by Chrysler Motors. When Chrysler Motors filed for bankruptcy, Russell’s claim was assigned by the Assigned Claims Facility to plaintiff Citizens Insurance Company. In March 2012, plaintiff filed suit against defendant National Union, claiming that because National Union was a higher priority insurer, it should reimburse Citizens for benefits it had paid to Russell.
National Union argued that Citizens’ claim was barred by res judicata. The trial court agreed, claiming that Citizens stood in Chrysler’s shoes, and was thus bound by the terms of the consent judgment. Because the judgment removed the responsibility of payment of no-fault benefits from National Union by dismissing it outright, National Union was no longer “financially responsible” for the payment of those benefits and thus could not be liable for reimbursement.
In upholding the trial court’s decision, the Court of Appeals held that Citizens was in privity with Chrysler for a number of reasons. Citizens received Russell’s claim because Chrysler Motors filed for bankruptcy. Once it received the claim, it stood in Chrysler’s shoes and was thus responsible for paying Russell’s no-fault PIP benefits. In this regard, the Court of Appeals stated:
“[t]here [was] a substantial identity of interests between Chrysler Motors and Citizens Insurance because Citizens Insurance is the direct descendant of the original insurer in this case, effectively ‘standing in the shoes’ of Chrysler Motors and, in turn, American Motors. There is no indication in the complaint or the record that American Motors failed to sufficiently present and protect the insurer’s interests in the original litigation between Russell and the insurance companies.”
After determining that Citizens Insurance was in privity with Chrysler Motors – and thus a privy to the original consent judgment—the Court of Appeals then considered Citizens’ contention that it had an independent right to recover as the assigned claims insurer. While recognizing that under MCL 500.3172 “an assigned claims insurer can bring several claims against defaulting insurers that the original insurer could not have because the assigned claims plan is, by definition, a lower priority insurer than the original insurer,” it noted that claims could only be brought against insurers in default “‘to the extent of their financial responsibility.’” Stated another way, the insurer from which the assigned claims insurer seeks reimbursement must be one that is still financially responsible for the payment of no-fault PIP benefits. The Court of Appeals concluded that National Union was no longer financially responsible, for it had been dismissed with prejudice by the consent judgment entered into in 1987. Because the extent of National Union’s involvement was already addressed and resolved by the consent judgment, Citizens’ challenge of National Union’s status was barred by res judicata.
Accordingly, the grant of summary disposition in favor of defendant National Union was affirmed.
