Esurance Prop. & Cas. Ins. Co. v. Mich. Assigned Claims Plan

Citation968 N.W.2d 482,507 Mich. 498
Decision Date26 July 2021
Docket NumberDocket No. 160592
Parties ESURANCE PROPERTY & CASUALTY INSURANCE COMPANY, Plaintiff-Appellant, v. MICHIGAN ASSIGNED CLAIMS PLAN and Michigan Automobile Insurance Placement Facility, Defendants-Appellees.
CourtSupreme Court of Michigan

Secrest Wardle (by Nathan J. Edmonds, Troy, and Drew W. Broaddus, Grand Rapids) for plaintiff.

Dykema Gossett PLLC, Lansing (by Lori McAllister and Erin A. Sedmak) and Anselmi Mierzejewski Ruth & Sowle, PC (by Michael Phillips ) for defendants.


Zahra, J.

Plaintiff Esurance Property & Casualty Insurance Company (Esurance) paid personal injury protection (PIP) benefits1 to the claimant, Roshaun Edwards (Edwards), pursuant to a no-fault automobile insurance policy, issued to another person, that was later declared void ab initio.2 Thereafter, Esurance filed this suit against defendants, the Michigan Assigned Claims Plan (MACP) and the Michigan Automobile Insurance Placement Facility (MAIPF), seeking reimbursement from them under a theory of equitable subrogation for the PIP benefits that Esurance had paid to Edwards under Michigan's no-fault act, MCL 500.3101 et seq. , before the policy was rescinded. We hold that an insurer who erroneously pays PIP benefits may be reimbursed under a theory of equitable subrogation when the insurer is not in the order of priority and the payments are made pursuant to its arguable duty to pay to protect its own interests. On the facts alleged in this case, Esurance can stand in Edwards's shoes and pursue a claim for equitable subrogation because it was not in the order of priority and also was not a "mere volunteer"3 under Michigan law when it paid Edwards's PIP benefits. Accordingly, we reverse the decision of the Court of Appeals and remand this case to that court for further proceedings consistent with this opinion.


On January 10, 2016, Edwards was seriously injured when he crashed a red 2015 Dodge Challenger into a telephone pole in the city of Detroit. At the time, Edwards did not have no-fault insurance of his own, and he did not live with a resident relative who had no-fault insurance. When the accident occurred, the vehicle was registered in Michigan and titled to Anthony Robert White II (Anthony). Anthony likewise did not have no-fault insurance of his own; however, his mother, Luana Edwards-White (Luana), had procured a Colorado automobile insurance policy from Esurance on the basis of her representations that she owned the vehicle, that she lived in Colorado, and that the vehicle would be garaged there.

Esurance began paying PIP benefits in response to Edwards's claims.4 Edwards also applied for benefits from defendants,5 but a servicing insurer was not assigned to his claim under MCL 500.3175 because Esurance had already taken responsibility for paying Edwards's PIP benefits.

Esurance eventually discovered that Luana had obtained the Colorado policy through her fraudulent misrepresentations. In reality, Luana was neither the registrant nor owner of the vehicle, which had been garaged in Michigan and not Colorado. Esurance subsequently filed an action in the Macomb Circuit Court to rescind the policy, naming Edwards, Luana, and Anthony as defendants. In a March 20, 2017 order, the circuit court entered a default judgment that rescinded the policy, voiding it ab initio.

Esurance subsequently filed the instant suit in the Wayne Circuit Court, asserting a claim of equitable subrogation and requesting an order that would require defendants to reimburse it for the PIP benefits that it had paid to Edwards. Defendants moved for summary disposition under MCR 2.116(C)(8) (failure to state claim on which relief can be granted), arguing that there was no legal basis for an equitable-subrogation claim against them.6 Defendants argued that the no-fault act contemplates rights of reimbursement and indemnification in a variety of circumstances, but not in this one. In response, Esurance argued that the lack of statutory authority for its claim was not dispositive given that Edwards could have sought recovery from defendants because he had timely applied for benefits from defendants and had no applicable no-fault policy; moreover, because Esurance had paid Edwards's medical bills, it could pursue, standing in Edwards's shoes, a claim against defendants for reimbursement under the doctrine of equitable subrogation.7 The circuit court, relying on the statutory canon of interpretation expressio unius est exclusio alterius ,8 ruled that equitable subrogation was unavailable to Esurance because the no-fault act contains some provisions that explicitly contemplate reimbursement and indemnification9 but none that contemplates Esurance's requested reimbursement from defendants in these circumstances.

Esurance appealed as of right in the Court of Appeals, which affirmed the circuit court's grant of summary disposition to defendants, albeit on the alternate ground that Esurance could not make out a claim of equitable subrogation.10 The Court of Appeals succinctly summarized its holding:

In the end, there are two ways to look at the problem. Either the equitable-subrogation claim must be analyzed under the circumstances that existed when benefits were paid, which was before the policy was rescinded, or it must be looked at through the lens that the policy never existed in the first place. If the policy exists, [Esurance's] claim of equitable subrogation fails as a matter of law because Edwards could not have pursued benefits from defendants under MCL 500.3172(1). If the policy never existed, then [Esurance] was a mere volunteer when it paid $571,000 in PIP benefits. In either case, [Esurance's] equitable-subrogation claim fails as a matter of law.[11 ]

In other words, according to the Court of Appeals, Esurance's equitable-subrogation claim fails regardless of the status of the insurance policy's existence.

Esurance sought leave to appeal in this Court, and in lieu of granting leave, we ordered oral argument on the application.12


The trial court granted defendants summary disposition under MCR 2.116(C)(8). As this Court recently explained:

A motion under MCR 2.116(C)(8) tests the legal sufficiency of a claim based on the factual allegations in the complaint. When considering such a motion, a trial court must accept all factual allegations as true, deciding the motion on the pleadings alone. A motion under MCR 2.116(C)(8) may only be granted when a claim is so clearly unenforceable that no factual development could possibly justify recovery.[13 ]

We review de novo a trial court's decision on a motion for summary disposition.14 A question of statutory interpretation is a question of law that this Court also reviews de novo.15 "[C]ourts must interpret statutes in a way that gives effect to every word, phrase, and clause in a statute and avoid an interpretation that would render any part of the statute surplusage or nugatory."16 "A statute is rendered nugatory when an interpretation fails to give it meaning or effect."17 Finally, this Court reviews de novo the application of a remedial, equitable doctrine such as equitable subrogation.18


Our analysis proceeds in four parts. First, we state the principles that underpin a claim for equitable subrogation. Second, we lay out the relevant provisions of the no-fault act. Third, we establish that Esurance is not asserting greater rights than Edwards possesses; that is, there is a legal basis upon which Esurance can press its claim for equitable relief, grounded in an order-of-priority analysis. Fourth and finally, we analyze the interplay among rescission, Esurance's alleged volunteer status, and its claim for equitable subrogation—namely, whether rescission of the policy renders Esurance a volunteer and prevents Esurance from pursuing its equitable-subrogation claim.


"Equitable subrogation is a flexible, elastic doctrine of equity."19 Thus, "[i]ts application ‘should and must proceed on the case-by-case analysis characteristic of equity jurisprudence.’ "20 Equitable subrogation is the "mode which equity adopts to compel the ultimate payment of a debt by one who in justice, equity, and good conscience ought to pay it."21 Equitable subrogation has been invoked successfully in a variety of circumstances,22 but "the mere fact that [it] has not been previously invoked in a particular situation is not a prima facie bar to its applicability."23 This Court has explained that equitable subrogation "is 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."24 The doctrine has two prongs: "the subrogee acquires no greater rights than those possessed by the subrogor, and ... the subrogee may not be a ‘mere volunteer.’ "25

This Court has defined a "volunteer" as "one who intrudes himself into a matter which does not concern him, or one who pays the debt of another without request, when he is not legally or morally bound to do so, and when he has no interest to protect in making such payment."26 But "[w]here the person paying the debt has an interest to protect, he is not a stranger.... A payment is not voluntary when made under compulsion, ... in ignorance of the real state of facts, or under an erroneous impression of one's legal duty. "27 When an insurer pays expenses on behalf of its insured pursuant to an insurance contract, it is not doing so as a volunteer.28 And when an insurer pays a claim that another insurer may be liable for, it is "protecting its own interests and not acting as a volunteer," and in that instance, the insurer is "entitled to invoke the doctrine of equitable subrogation."29 Logically, then, an insurer who has "at least an arguable duty to pay" is ...

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