Michigan Court of Appeals; Docket # 341563; Published
Judges O’Brien, Tukel, and Letica per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
In this unanimous unpublished per curiam opinion, the Court of Appeals reversed the trial court’s grant of summary disposition for Defendant Everest National Insurance Company (“Everest”) regarding the enforcement of an anti-assignment provision in the auto insurance policy. The Court of Appeals reversed the trial court because it found that anti-assignment provisions in auto insurance contracts are against public policy and unenforceable in Jawad A Shah, MD, PC v State Farm Mut Auto Ins Co, ___ Mich App ___; ___ NW2d ___ (2018) (Docket No. 340370). Further, the Court rejected Everest’s argument that the assignment was improper because the full claim was not assigned to Plaintiff Henry Ford Health System (“Henry Ford”). The Court distinguished Schwartz v Tuchman, 232 Mich 345; 205 NW 140 (1925), and found that there was an implicit right to assign past and present benefits under the No-Fault Act.
On July 30, 2016 Jennifer Quinn (“Quinn”) was involved in a motor vehicle accident. At the time of the accident, Quinn was insured by Everest. Quinn received treatment for her injuries from Henry Ford. On July 31, 2017 Quinn assigned her rights under her auto insurance contract to Henry Ford. Henry Ford requested that Everest pay it under the assignment for medical services rendered to Quinn related to the accident. Everest refused to do so arguing that the anti-assignment clause forbid Quinn from assigning her rights under the auto insurance policy without first making a request to Everest. Henry Ford brought an action to enforce the assignment. The trial court found that Henry Ford was barred from enforcing the auto insurance policy under the terms of the policy. Henry Ford appealed.
The Court of Appeals found the auto insurance policy between Quinn and Everest was subject to ordinary contract principles. The plain language of the auto insurance policy stated: “Interest in this Policy may not be assigned without our [Everest’s] written consent.” The Court of Appeals found this language to be unambiguous and the Court defined the language as an anti-assignment clause. Because the language was unambiguous, the anti-assignment clause would be enforced unless it was contrary to law. The Court cited to its previous opinion in Shah which held that anti-assignment clauses were unenforceable. Because Shah dictated that anti-assignment clauses not be enforced, the Court refused to enforce the anti-assignment clause in the Quinn-Everest non-fault contract.
“The relevant circumstances presented in this case are identical to those at issue in Shah. That is, like the insured party in Shah, Quinn was injured in an automobile accident and received treatment that was alleged to fall within the scope of allowable expenses for which she could seek PIP benefits under the no-fault act. See id. at ___; slip op at 1. After the services were rendered, Quinn assigned her right to payment for those services to her healthcare provider, despite an unambiguous anti-assignment clause contained in the insurance policy. See [Shah]. at ___; slip op at 2-3. Given the clear parallels between these cases, we are bound by the resolution of this very issue in Shah.”
The Court of Appeals then addressed Everest’s contention that Quinn improperly assigned her rights to Henry Ford. Everest relied upon Schwartz v Tuchman, 232 Mich 345; 205 NW 140 (1925) to argue that partial assignment of a claim is improper under Michigan law. In Schwartz, the Michigan Supreme Court held that a plaintiff who was assigned the right to receive one-third of a commission from a real estate transaction, was not able to enforce that right against the party responsible for payment. The Court of Appeals distinguished Schwartz from this case because the defendant in Schwartz was required to make a single commission payment to a third party. The multiple payments were something that the defendant did not bargain for in Schwartz. Here, the Michigan No-Fault Act requires insurers to make multiple payments as they accrue. Insurers understand the requirement for multiple payments when entering into auto insurance contracts with individuals. Therefore, auto insurance contracts are distinguishable from the contracts in Schwartz because the bargaining process contemplates multiple payments unlike the bargaining process in Schwartz. Further, the procedural distinctions in Schwartz between law and equity have been abolished by Michigan with the adoption of MCR 2.205 and other laws. The Court briefly mentioned that modern joinder rules would also distinguish Schwartz in this case.
“This case is readily distinguishable from the circumstances presented in Schwartz, where the defendant was obligated to make a single commission payment to a third party, and the plaintiff sought to enforce an assignment of a fraction of that payment. Schwartz, 232 Mich at 347-348. As the Court explained in Schwartz, the partial assignment imposed the burden of multiple creditors and performances upon the defendant—a burden that he did not bargain for when he entered the contract. Id. at 349-350. . .. In other words, the act contemplates and requires a multitude of performances (i.e., payments) by the insurer, such that the rationale for the limitation set forth in Schwartz has no application in the context of PIP benefits required by the no-fault act.”
Finally, the Court of Appeals addressed Everest’s contention that Quinn’s assignment to Henry Ford was improper because she failed to assign her entire claim to Henry Ford. Everest argued that all of Quinn’s PIP benefits were one claim and Quinn could not assign a portion of that entire claim. The Court disagreed with Everest’s assessment of the claim. It found that PIP benefits were not one single claim and accordingly Everest’s argument was flawed. The Court also found the No-Fault Act contemplated the assignment of past benefits. Because the language of the act included a prohibition on future assignments, the Court argued that there was an implicit allowance of past assignments under expressio unius est exclusio alterius. Thus, the Court found that Everest’s argument was inconsistent with the Michigan No-Fault Act.
“Once again, defendant’s argument rests on the mistaken presumption that Quinn’s claim can only be viewed as one for all PIP benefits that she may be entitled to recover as a result of her motor vehicle accident, which is inconsistent with MCL 500.3142’s requirement of prompt payment of claims as they accrue. . .. MCL 500.3143 provides that “[a]n agreement for assignment of a right to benefits payable in the future is void.” This provision is unambiguous and prohibits only assignments of benefits payable in the future, as opposed to a right to payment of past or presently due benefits.”
Thus, the Court of Appeals reversed the trial court and found the assignment was appropriate.