Hide and Seek: A Lower-Priority Insurer’s Liability Turns on Whether a Higher-Priority Insurer is Identifiable, Regardless of the Time or Effort Required to Find It

Hide and Seek: A Lower-Priority Insurer’s Liability Turns on Whether a Higher-Priority Insurer is Identifiable, Regardless of the Time or Effort Required to Find It

02/15/2021

In a recent published decision, Griffin v Trumbull Ins Co (Docket No. 344272), the Michigan Court of Appeals clarified the proper analysis for courts faced with priority issues in no-fault actions. If a higher-priority insurer is “identifiable” under one of the exceptions in MCL 500.3114, the claimant’s own insurer isn’t liable for no-fault benefits under MCL 500.3114(1). The amount of time or effort required to identify the higher-priority insurer is irrelevant. The only question is whether a higher-priority insurer could have been identified.

Background on Griffin

Plaintiff Willie Griffin was injured in an accident involving a semi-truck in May 2016. Griffin crashed his motorcycle in an attempt to avoid the truck, which merged into his lane. The police report listed the truck driver’s name, phone number, and address. But the report didn’t contain the truck driver’s insurance information.

Griffin’s attorney sent a letter to the truck driver five days after the crash. The letter stated that Griffin intended to take legal action and asked the truck driver to forward the letter to his insurance company. However, the message didn’t ask the truck driver to contact Griffin or his attorney.

Griffin also notified his personal no-fault carrier, Trumbull Insurance Company, of the accident. Trumbull refused to pay any no-fault benefits. Instead, it tried to locate the truck driver. Despite multiple attempts, Trumbull was unsuccessful, so it closed its investigation.

In April 2017—eleven months after the collision—Griffin hired a research company to identify the truck driver’s insurer. The research company was unsuccessful. After that, Griffin took no further action to contact the truck driver or identify his insurer. Instead, he filed a lawsuit, seeking to recover no-fault benefits from Trumbull or to require the Michigan Assigned Claims Plan (MACP) to assign his claim to a servicing insurer.

Five or six months later, an investigator hired by Trumbull successfully served the truck driver with a subpoena. A month later, the driver appeared for a deposition. Through the truck driver’s testimony, the parties determined that Harleysville Insurance Company insured the truck at the time of the accident.

Trumbull moved for summary disposition, arguing that it wasn’t required to pay any no-fault benefits because Harleysville was higher in priority. The MACP also filed a motion for summary disposition, arguing that the court should dismiss Griffin’s claim because Trumbull was his insurer at the time of the accident.

The trial court granted Trumbull’s motion, reasoning that Griffin could’ve identified Harleysville within one year of the accident if he had exercised “reasonable diligence.” Consequently, Trumbull wasn’t the highest-priority insurer. The court also granted the MACP’s motion because Trumbull had successfully identified Harleysville as the highest-priority insurer, and there wasn’t a dispute between two or more insurers. Griffin appealed.

The Court of Appeals’ Ruling

In a 2-1 decision, the Court of Appeals affirmed the trial court’s order.

First, the majority held that the trial court properly granted Trumbull’s motion for summary disposition but for the wrong reasons. It began by explaining the applicable legal framework.

The no-fault act governs the order in which insurers are liable for paying no-fault benefits. Under MCL 500.3114(1), the default rule is that an injured person must seek no-fault benefits from their own insurer. But § 3114 includes several exceptions to this rule. Under these provisions, another insurer may be higher in priority to pay no-fault benefits depending on the facts surrounding the accident. The act also limits insurers’ liability through the one-year-back rule under MCL 500.3145(1). Synthesizing these statutes, the Court of Appeals articulated three takeaways:

  • “[A]s a practical matter, a plaintiff has one year from the date of his or her injury to identify the highest-priority insurer as established by MCL 500.3114, because only the highest-priority insurer is liable for a plaintiff’s PIP benefits.” Griffin, slip op at 4.
  • “[I]f the highest-priority insurer is identifiable within one year of the accident, then only that insurer is liable for a claimant’s no-fault benefits.” Id.
  • However, “‘when an insurer that would be liable under one of the exceptions in MCL 500.3114(1) cannot be identified, the general rule applies and the injured party must look to her own insurer for personal protection insurance benefits.’” Id., quoting Frierson v West American Ins Co, 261 Mich App 732, 738; 683 NW2d 695 (2004).

On appeal, Griffin primarily relied on Frierson for the proposition that lower-priority insurers are responsible for paying no-fault benefits when a higher priority insurer can’t be identified. In Frierson, the plaintiff was riding a motorcycle when an unidentified vehicle turned into his lane, causing a crash. Because no one could obtain any information about the unidentified vehicle, the parties agreed that a higher-priority insurer under MCL 500.3114(5) either didn’t exist or couldn’t be identified. So Frierson held that an injured party must seek benefits from their own insurer when a higher-priority insurer “under one of the exceptions under MCL 500.3114(1) cannot be identified . . . .” Frierson, 261 Mich App at 738 (emphasis added).

The Griffin majority emphasized that Frierson only applies to situations where a higher-priority insurer can’t be identified at all. Frierson didn’t hold that an injured party must seek no-fault benefits from their own insurer if a higher-priority insurer can’t be identified within a reasonable time or through reasonable efforts. Rather, “Frierson calls for a binary analysis that asks only whether a higher-priority insurer is identifiable.” Griffin, slip op at 5.

Applying this authority, the Court of Appeals held that the default rule didn’t apply, so Griffin couldn’t collect no-fault benefits from Trumbull. Harleysville was higher in priority than Trumbull, and the undisputed facts established that Harleysville could’ve been—and actually was—identified. Thus, the trial court properly granted summary disposition in favor of Trumbull, even though it incorrectly focused on whether Griffin could have identified Harleysville with “reasonable diligence.”

Next, the Court of Appeals rejected Griffin’s argument that the MACP should’ve assigned an insurer to pay no-fault benefits. Griffin argued that MCL 500.3172(3) required the MACP to assign his claim because there was a priority dispute between Trumbull and Harleysville. The no-fault act doesn’t define “dispute,” so the Court of Appeals looked to its dictionary definitions: “‘to engage in argument: debate,’ ‘to struggle against: oppose,’ and ‘to contend over.’” Griffin, slip op at 6. Harleysville wasn’t a party to the lawsuit. And there was no evidence that Harleysville refused to pay no-fault benefits. Harleysville hadn’t disagreed (and, as a non-party, couldn’t have disagreed) with Trumbull’s argument that Harleysville was the highest-priority insurer and responsible for paying no-fault benefits to Griffin. As a result, there was no “dispute.” So the trial court properly dismissed the MACP because MCL 500.3172(3) didn’t apply under the circumstances.

Judge Amy Ronayne Krause authored a partial dissent. She would’ve reversed the trial court’s dismissal of Trumbull. Judge Krause didn’t believe that Frierson provided any guidance or insight into what it means to be “identifiable.” Rather, the parties in Frierson agreed that a higher priority insurer could not be identified. So, in her view, “the majority craft[ed] an ‘absolute impossibility’ standard out of whole cloth,” which had no foundation in Frierson and which violated the objective of the no-fault act. Griffin, slip op at 2 (Krause, J., dissenting).

Additionally, Judge Krause believed that it was the Legislature’s role—not the Court’s role—to draft a standard for determining whether a higher-priority insurer can’t be identified. But if the Court were to create such a rule, she believed that a due-diligence standard would be most consistent with the purposes the of no-fault act. She defined due diligence as “undertaking reasonable, good-faith measures under the circumstances, not necessarily everything possible.” Griffin, slip op at 2 (Krause, J., dissenting), quoting Ickes v Korte, ___ Mich App ___, ___; ___ NW2d ___ (2020) (Docket No. 346490), slip op at p 4.

Ultimately, Judge Krause believed that the trial court should not have dismissed Griffin’s claims considering the facts of the case and the goals and purposes of the no-fault act. She concluded, “[T]o the extent plaintiff was obligated to search for a higher-priority insurer as a precondition to receiving no-fault benefits from his insurer of default priority, plaintiff exercised the requisite due diligence in carrying out that search.” Id. at 4.

Significance of Griffin

Griffin provides a valuable lesson for injured claimants as well as no-fault insurers. Whether a party is seeking to recover no-fault benefits or to defend against a claim, it’s important to determine the highest priority insurer as soon as possible after an accident. The stakes are high for all parties. Griffin lost the ability to seek no-fault benefits from any source because a higher-priority insurer was identifiable. And Trumbull avoided liability because it identified the higher-priority insurer.

On January 4, 2020, Griffin filed an application for leave to appeal in the Michigan Supreme Court. Time will tell whether the Court will grant leave to appeal. As it stands now, Griffin remains binding precedent.

 


 

If you have questions about priority issues under MCL 500.3114, please feel free to contact the author, Benjamin A. Demsky. More information about Collins Einhorn’s General and Automotive Liability Practice Group is available here.

 


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