Citizens Ins. Co. of America v. Buck

• Decision Date: 05 April 1996
• Docket Number: Docket No. 174510
• Citation: 216 Mich.App. 217,548 N.W.2d 680
• Parties: CITIZENS INSURANCE COMPANY OF AMERICA, as subrogee of Ray and Kathy Bryant, Plaintiff-Appellant, v. Cynthia A. BUCK, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 680

548 N.W.2d 680

216 Mich.App. 217

CITIZENS INSURANCE COMPANY OF AMERICA, as subrogee of Ray and Kathy Bryant, Plaintiff-Appellant, v. Cynthia A. BUCK, Defendant-Appellee.

Docket No. 174510.

Court of Appeals of Michigan.

Submitted August 1, 1995, at Detroit.

Decided April 5, 1996, at 9:15 a.m.

Released for Publication June 11, 1996.

Morrison, Mahoney & Miller by Jeffrey R. Learned, Southfield, for Citizens Insurance Company of America.

Nearpass & Hudson by Leslie J. Nearpass, Temperance, for defendant.

Before: MARKMAN, P.J., and WAHLS and MESTER, ^* JJ.

MARKMAN, Presiding Judge.

Plaintiff appeals a Monroe Circuit Court order dated March 30, 1994, granting defendant's motion for summary disposition. We reverse and remand.

On December 15, 1990, Darrin Bryant, while riding his bicycle, died after being struck by an uninsured car owned and driven by defendant. At the time of the accident, Darrin was a minor, lived with his parents, Ray and Kathy Bryant, and did not own an insured vehicle. However, this incident was covered under his parents' no-fault insurance policy with plaintiff Citizens Insurance Company of America, which policy contained an uninsured motorist clause. Plaintiff paid $1,750 in funeral expenses to the estate of Darrin Bryant on October 21, 1992.

On December 14, 1993, plaintiff, as subrogee of Ray and Kathy Bryant, filed a complaint against defendant alleging that it had paid $101,750 to Ray and Kathy Bryant under the terms of the insurance policy. On February 16, 1994, defendant filed a motion for summary disposition pursuant to MCR 2.116(C)(5), (8), and (10). Among other things, defendant pointed out that plaintiff had not paid $101,750.

Plaintiff filed a response to defendant's motion for summary disposition on March 15, 1994. In its response, plaintiff stated that, in addition to the $1,750 already paid, it "will pay" $97,000 to the estate of Darrin Bryant. Subsequently, on March 18, 1994, plaintiff apparently paid the additional $97,000 to the estate of Darrin Bryant. ¹

Following oral arguments, the trial court granted defendant's motion. The trial court found that this action was governed by the wrongful death statute, M.C.L. § 600.2922(2); M.S.A. § 27A.2922(2), pursuant to which actions "shall be brought by, and in the name of, the personal representative of the estate of the deceased person." Thus, plaintiff, even as subrogee of Ray and Kathy Bryant, could not bring this action. The court further found that no right of subrogation was created upon payment of the $1,750 in funeral expenses. The court appeared to adopt the reasoning of defendant that, under M.C.L. § 500.3177(1); M.S.A. § 24.13177(1), plaintiff had a right of reimbursement, not subrogation. The court further based its decision on the lack of payment before the expiration of the three-year period of limitation.

Plaintiff argues that the trial court erred in holding that plaintiff had no right, via subrogation, to recover from defendant insurance benefits paid to its insureds. Plaintiff claims that the trial court's decision was incorrect for two reasons. First, M.C.L. § 500.3177(1); M.S.A. § 24.13177(1) does not abrogate an insurer's right to contractual subrogation. Second, plaintiff's contractual right to subrogation is not barred by M.C.L. § 600.2922(2); M.S.A. § 27A.2922(2).

Appellate review of a motion for summary disposition is de novo. Kentwood Public Schools v. Kent Co. Ed. Ass'n., 206 Mich.App. 161, 164, 520 N.W.2d 682 (1994).

Plaintiff first claims that, pursuant to the terms of its insurance policy with Ray and Kathy Bryant, it was contractually subrogated to the Bryants' right to recover against defendant. Plaintiff relies on the following language contained in the insurance policy:

If we make a payment under this policy and the person to or for whom payment was made has a right to recover damages from another we shall be subrogated to that right.

However, despite this contractual provision, defendant argues that M.C.L. § 500.3177(1); M.S.A. § 24.13177(1) applies in this action and does not permit plaintiff to recover as subrogee of Ray and Kathy Bryant.

M.C.L. § 500.3177(1); M.S.A. § 24.13177(1) provides, in pertinent part:

An insurer obligated to pay personal protection insurance benefits for accidental bodily injury to a person arising out of the ownership, maintenance, or use of an uninsured motor vehicle as a motor vehicle may recover such benefits paid and appropriate loss adjustment costs incurred from the owner or registrant of the uninsured motor vehicle or from his or her estate.

Under personal protection insurance, an insurer is liable to pay benefits for accidental bodily injury, including death, arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle. M.C.L. § 500.3105(1), (3); M.S.A. § 24.13105(1), (3). Personal protection insurance benefits include benefits for funeral expenses. M.C.L. § 500.3107; M.S.A. § 24.13107. Thus, under the no-fault act, plaintiff was obligated to pay for the funeral expenses.

If defendant had been properly insured, plaintiff would not have been able to recover this expense from defendant because the no-fault act abolishes certain tort liability when no-fault insurance is in effect. M.C.L. § 500.3135; M.S.A. § 24.13135. However, an uninsured motorist does not share in this immunity and may be sued under the no-fault act for recovery of personal protection insurance benefits that an insurer is obligated to pay. M.C.L. § 500.3177; M.S.A. § 24.13177. See Auto-Owners Ins. Co. v. Biddis, 107 Mich.App. 173, 309 N.W.2d 192 (1981); Auto-Owners Ins. Co. v. Lombardi Food Service, Inc., 137 Mich.App. 695, 358 N.W.2d 923 (1984). Thus, under this statutory section, plaintiff was entitled to recover from defendant the personal protection insurance benefits that it was contractually obligated to pay.

Defendant is therefore correct in her contention that M.C.L. § 500.3177; M.S.A. § 24.13177 applies in this action to the extent plaintiff seeks to recover benefits paid for the funeral expenses. The no-fault act provides a comprehensive scheme for payment, as well as recovery, of certain "no-fault" benefits, including personal protection insurance benefits. While the act prohibits recovery of such benefits by insurers in most instances, M.C.L. § 500.3135; M.S.A. § 24.13135, it specifically permits recovery of such benefits from an uninsured motorist. M.C.L. § 500.3177; M.S.A. § 24.13177 was one of the measures enacted by the Legislature to ensure that owners and registrants of motor vehicles required to be registered in Michigan obtain the requisite security. Belcher v. Aetna Casualty & Surety Co., 409 Mich. 231, 240-241, 293 N.W.2d 594 (1980). Thus, given that plaintiff seeks to recover for a no-fault benefit it was obligated to pay, its claim is properly brought under M.C.L. § 500.3177; M.S.A. § 24.13177.

Under M.C.L. § 500.3177; M.S.A. § 24.13177, plaintiff was entitled to bring a direct action. However, the fact that plaintiff did not bring this as an indemnification action is not fatal to its claim, because the facts pleaded in the complaint are sufficient to state a cause of action for subrogation. Federal Kemper Ins. Co. v. Western Ins. Cos., 97 Mich.App. 204, 208-209, 293 N.W.2d 765 (1980). In fact, M.C.L. § 500.3177; M.S.A. § 24.13177 has been referred to as a "subrogation provision." See Belcher, supra at 260, n. 33, 293 N.W.2d 594, and Federal Kemper, supra at 208, n. 1, 293 N.W.2d 765.

MCR 2.118(A)(2) provides for amendment of a pleading "when justice so requires." We find that plaintiff should be entitled to amend its complaint to reflect Citizens Insurance Company of America as the party plaintiff in its correct capacity and that its claim, with respect to reimbursement of personal protection insurance or other no-fault benefits paid, is being brought under M.C.L. § 500.3177; M.S.A. § 24.13177. Generally, an amendment relates back to the date of the original pleading if the claim asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth, or attempted to be set forth, in the original pleading. MCR 2.118(D). Given that plaintiff, in its own capacity, has an interest in this action and that the claim under M.C.L. § 500.3177; M.S.A. § 24.13177 arose out of the "conduct, transaction, or occurrence" set forth in the complaint, we find that plaintiff is entitled to amend its complaint as described and that such amendment should relate back to the original filing date. Doan v. Chesapeake & O. Ry. Co., 18 Mich.App. 271, 171 N.W.2d 27 (1969).

Up to this point, we have addressed plaintiff's claim to recover for the funeral expenses paid to the estate of Darrin Bryant. However, plaintiff further seeks recovery of the $97,000 paid in uninsured motorist benefits. Uninsured motorist benefits are distinct from personal protection insurance benefits. Uninsured motorist coverage is not required by statute but may be purchased to provide the insured with a source of recovery for excess economic loss and noneconomic loss if the tortfeasor is uninsured. Auto-Owners Ins. Co. v. Lydon, 149 Mich.App. 643, 648, 386 N.W.2d 628 (1986); Rohlman v. Hawkeye-Security Ins. Co., 442 Mich. 520, 524-525, 502 N.W.2d 310 (1993). Unlike the situation with respect to personal protection insurance benefits, M.C.L. § 500.3177; M.S.A. § 24.13177 does not specifically provide for recovery of uninsured motorist benefits paid by an insurer.

Plaintiff asserts a right of subrogation for the uninsured motorist benefits it eventually paid. Defendant argues, and the trial court agreed, that any such right of subrogation implicates a transfer to plaintiff by the decedent's parents or estate of a cause of action for wrongful death. M.C.L. § 600.2922; M.S.A. § 27A.2922. Defendant argues further that, by virtue of the express terms of the statute creating such a cause of action in derogation of the common law,...