Mecosta Cnty. Med. Ctr. v. Metro. Grp. Prop. & Cas. Ins. Co., 161628

• Court: Supreme Court of Michigan
• Parties: MECOSTA COUNTY MEDICAL CENTER, doing business as SPECTRUM HEALTH BIG RAPIDS, SPECTRUM HEALTH HOSPITALS, SPECTRUM HEALTH PRIMARY CARE PARTNERS, doing business as SPECTRUM HEALTH MEDICAL GROUP, MARY FREE BED REHABILITATION HOSPITAL, and MARY FREE BED MEDICAL GROUP, Plaintiffs-Appellees, v. METROPOLITAN GROUP PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellant, and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.MECOSTA COUNTY MEDICAL CENTER, doing business as SPECTRUM HEALTH BIG RAPIDS, SPECTRUM HEALTH HOSPITALS, SPECTRUM HEALTH PRIMARY CARE PARTNERS, doing business as SPECTRUM HEALTH MEDICAL GROUP, MARY FREE BED REHABILITATION HOSPITAL, and MARY FREE BED MEDICAL GROUP, Plaintiffs-Appellees, v. METROPOLITAN GROUP PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellee, and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.
• Docket Number: 161650,161628
• Decision Date: 10 June 2022

MECOSTA COUNTY MEDICAL CENTER, doing business as SPECTRUM HEALTH BIG RAPIDS, SPECTRUM HEALTH HOSPITALS, SPECTRUM HEALTH PRIMARY CARE PARTNERS, doing business as SPECTRUM HEALTH MEDICAL GROUP, MARY FREE BED REHABILITATION HOSPITAL, and MARY FREE BED MEDICAL GROUP, Plaintiffs-Appellees,
v.
METROPOLITAN GROUP PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellant, and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.MECOSTA COUNTY MEDICAL CENTER, doing business as SPECTRUM HEALTH BIG RAPIDS, SPECTRUM HEALTH HOSPITALS, SPECTRUM HEALTH PRIMARY CARE PARTNERS, doing business as SPECTRUM HEALTH MEDICAL GROUP, MARY FREE BED REHABILITATION HOSPITAL, and MARY FREE BED MEDICAL GROUP, Plaintiffs-Appellees,
v.
METROPOLITAN GROUP PROPERTY AND CASUALTY INSURANCE COMPANY, Defendant-Appellee, and STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

Nos. 161628, 161650

Supreme Court of Michigan

June 10, 2022

Argued on application for leave to appeal November 10, 2021.

Chief Justice: Justices: Bridget M. McCormack Brian K. Zahra David F. Viviano Richard H. Bernstein Elizabeth T. Clement Megan K. Cavanagh Elizabeth M. Welch

Syllabus

Mecosta County Medical Center, doing business as Spectrum Health Big Rapids, and others sued Metropolitan Group Property and Casualty Insurance Company and State Farm Mutual Automobile Insurance Company in the Kent Circuit Court, seeking personal protection insurance (PIP) benefits related to a single-car crash involving Jacob Myers. Myers co-owned the vehicle involved in the crash with his girlfriend; his girlfriend's grandmother had purchased a no-fault insurance policy on the vehicle through Metropolitan Group. Myers was injured in the crash and was treated for his injuries by plaintiffs. Myers assigned plaintiffs his right to collect PIP benefits in the amount of his treatment bills. After the assignment, Myers sued Metropolitan Group and State Farm in the Wayne Circuit Court for PIP benefits related to other costs arising from the crash. Plaintiffs sued defendants in the Kent Circuit Court to recover on the assigned claim. Defendants moved for summary disposition against Myers in the Wayne Circuit Court. State Farm argued that because Myers did not live with the State Farm policyholders he was not covered by their policy. Metropolitan Group asserted that Myers was not entitled to coverage because he did not personally maintain coverage on the vehicle, contrary to MCL 500.3113(b). The Wayne Circuit Court granted both motions and dismissed Myers's PIP claim with prejudice. Myers did not appeal. While the defendants' motions were pending in the Wayne Circuit Court, Metropolitan Group also moved for summary disposition in the Kent Circuit Court on the same basis as its motion in the Wayne Circuit Court. However, the Wayne Circuit Court granted defendants' motions before the Kent Circuit Court considered Metropolitan Group's motion. After the Wayne Circuit Court granted summary disposition for defendants, defendants filed additional motions for summary disposition under MCR 2.116(C)(7) and (C)(10) in the Kent Circuit Court, arguing that plaintiffs' claims were barred under the doctrines of res judicata and collateral estoppel because the Wayne Circuit Court had concluded that Myers was ineligible for PIP benefits. The Kent Circuit Court, Dennis B. Leiber, J., granted summary disposition, holding that plaintiffs' claims were barred by res judicata and collateral estoppel. Plaintiffs appealed in the Court of Appeals, and the Court of Appeals, Meter and K. F. Kelly, JJ., (Murray, C.J., dissenting), reversed in a split, unpublished opinion, issued March 24, 2020. The Court of Appeals majority held that an assignee was not bound by a judgment against an assignor in an action commenced after the assignment occurred. Defendants applied for leave to appeal in the Supreme Court, and the Supreme Court ordered and heard oral

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argument on whether to grant defendants' applications for leave to appeal or take other action. 507 Mich. 865 (2021).

In a unanimous opinion by Justice Viviano, the Supreme Court, in lieu of granting leave to appeal, held:

Res judicata bars a second action on the same claim if (1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first. Similarly, collateral estoppel bars the relitigation of a specific issue within an action when (1) a question of fact essential to the judgment was litigated and determined by a valid and final judgment, (2) the parties or privies had a full and fair opportunity to litigate the issue, and (3) there is mutuality of estoppel. Thus, both res judicata and collateral estoppel apply only when the parties in the subsequent action were parties or privies of parties to the original action. Given that plaintiffs were not parties to the action filed by Myers, the question in this case was whether plaintiffs were privies of Myers with respect to the judgment entered by the Wayne Circuit Court after the assignment. A party is in privity with another party when the later litigant represents the same legal rights as the first litigant asserted, i.e., when the first and later litigants have mutual or successive relationships to the same interest and right of property or when there is such an identification of interests as to represent the same legal right. Generally a relationship based on an assignment of rights is deemed to be one of privity. An assignment occurs when the assignor transfers his or her rights or interest to the assignee, and the assignee succeeds to the rights of the assignor. But the mere succession of rights to the same property or interest does not, by itself, give rise to privity with regard to subsequent actions by and against the assignor. Rather, the binding effect of adjudication flows from the fact that when the successor acquires an interest in the right it is then affected by the adjudication in the hands of the former owner. That is, the assignee succeeds to the rights assigned by the assignor subject to any earlier adjudication involving the assignor that defined those rights. Therefore, a judgment entered after the assignment does not bind the assignee because the assignee was not in privity with the assignor with respect to that judgment. The dissenting opinion in the Court of Appeals relied on TBCI, PC v State Farm Mut Auto Ins Co, 289 Mich.App. 39 (2010). However, the medical provider's claim in TBCI was not obtained by assignment, but rather was based on caselaw, which was subsequently overturned, holding that medical providers had an independent claim in no-fault cases that was completely derivative of and dependent on the insured's having a valid claim of no-fault benefits against the insurer TBCI did not address assignments and was not applicable here or to the traditional rule being applied in the instant case. In this case, plaintiffs were not in privity with Myers with respect to the judgment entered subsequently to the assignment, and therefore, plaintiffs could not be bound by that judgment under the doctrines of res judicata and collateral estoppel

Judgment affirmed and case remanded for further proceedings.

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BEFORE THE ENTIRE BENCH

OPINION

Viviano, J.

Jacob Myers was injured in a car crash and received medical treatment from plaintiffs Mecosta County Medical Center and Mary Free Bed Rehabilitation Hospital. As compensation for this treatment, Myers assigned them his right to seek no-fault personal protection insurance (PIP) benefits from the insurer responsible for making those payments. After the assignment, Myers filed suit seeking PIP benefits for separate services he received arising from the crash. In that lawsuit, to which plaintiffs here were not party,

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the trial court held that Myers had not properly insured the vehicle and was therefore not entitled to any benefits. The question in the present case is whether that holding applies to plaintiffs and precludes them, under the doctrines of res judicata or collateral estoppel, from succeeding on the present assigned claim against the defendant insurers. Because plaintiffs were not parties to the earlier suit, they are bound by the judgment only if they were in privity with Myers when the earlier judgment against him was entered. The Court of Appeals properly determined that plaintiffs were not bound by the earlier judgment because it was entered after they were assigned the claim. Accordingly, because plaintiffs were neither parties to the earlier suit nor privies with respect to the subsequently entered judgment, the doctrines of res judicata and collateral estoppel are inapplicable here.

I. FACTS AND PROCEDURAL HISTORY

Plaintiffs Mecosta County Medical Center and Mary Free Bed treated Myers for injuries he sustained in a single-car crash. Instead of paying the medical bills and seeking reimbursement from the vehicle's insurer, Myers assigned plaintiffs his right to collect PIP benefits in the amount of his treatment bills. Myers owned the vehicle with his girlfriend, whose grandmother had purchased the no-fault insurance policy on the vehicle through defendant Metropolitan Group Property and Casualty Insurance Company.

Myers then sued Metropolitan Group and defendant State Farm Mutual Automobile Insurance Company-who was also allegedly liable to provide coverage-for PIP benefits relating to other costs arising from the crash. As that suit was pending in the Wayne Circuit Court, plaintiffs here sued the same defendants in the Kent Circuit Court to recover on the

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assigned claim. Metropolitan moved to change venue to the Wayne Circuit Court, but plaintiffs opposed the motion, and the trial court ultimately denied it.

In Myers's action, defendants moved for summary...