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Orchard Laboratories Corp v Auto Club Ins Assoc (COA – UNP 5/26/2022; RB #4417)   

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Michigan Court of Appeals; Docket #356597; Unpublished  
Judges Gleicher, Kelly, and Patel; Per Curiam 
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Dissent


STATUTORY INDEXING: 
Required Content of Notice / Sufficiency of Notice [§3145(1)]

TOPICAL INDEXING: 
Not Applicable


SUMMARY: 
In this 2-1, unpublished, per curiam decision (Kelly, dissenting), the Court of Appeals affirmed two separate trial court orders denying two separate motions for summary disposition filed by Defendant Auto Club Insurance Association (“Auto Club”) in Plaintiff Orchard Laboratories Corporation (“Orchard Laboratories”) first-party action.  The Court of Appeals held, first, that Auto Club received sufficient notice of Robert Dorey’s back injuries within one year of the subject pedestrian-versus-motor vehicle collision for purposes of MCL 500.3145(1).  The Court held, second, that res judicata and collateral estoppel did not apply to Orchard Laboratories’ first-party action against Auto Clubeven though Dorey’s separate first-party action against Auto Club was dismissed while Orchard Laboratories’ was pendingbecause Orchard Laboratories was not a party to Dorey’s action and because Orchard Laboratories obtained its assignment before Dorey's action was dismissed.

On December 17, 2017, Robert Dorey and David Bean were struck by a motor vehicle while standing outside of a bar, and Dorey injured his back as a result.  Beginning in August of 2018, Dorey began receiving treatment for his injuries from Orchard Laboratories, and in November of 2018, Bean first reported the incident to Auto Club, the insurer of the vehicle that hit Dorey and Bean.  Five days after Bean reported the incident, Auto Club received a copy of the Sherriff’s Office Report, which provided that Dorey received medical treatment at the scene, that Briggs’s truck “ ‘hit [Dorey’s] leg and the tire ran over [Dorey’s] foot,’ ” and that Dorey sustained a  “ ‘[p]ossible internal injury.’ ”  On December 10, 2018, Dorey’s wife also contacted Auto Club to report the claim, after which Auto Club sent Dorey an application for benefits and opened a claim related to the incident, in which it described the nature of Dorey’s injuries as “ ‘back/neck sprain, unknown.’ ”  On January 17, 2019, Dorey filed a first-party action against Auto Club, all the while continuing to receive treatment from Orchard Laboratories.  After receiving treatment from Orchard Laboratories on August 30, 2019, Dorey assigned his right to pursue PIP benefits related his treatment from Orchard Laboratories to Orchard Laboratories, and thus on November 19, 2019, Orchard Laboratories filed a separate first-party action against Auto Club.  Auto Club moved for summary disposition in Dorey’s personal action, arguing that Dorey’s claims were barred because Auto Club did not receive sufficient notice of Dorey’s back injuries within one-year of the incident, as is required by MCL 500.3145(1).  The trial court agreed and dismissed Dorey’s action, after which Auto Club filed two motions for summary disposition in Orchard Laboratories’ separate action, arguing in the first that Orchard Laboratories’ claims were also barred by MCL 500.3145(1), and in the second that Orchard Laboratories’ action was barred by res judicata, in light of the trial court’s dismissal of Dorey’s separate action.  The trial court denied both motions.

The Court of Appeals affirmed the trial court’s denial of both motions, holding, first, that Dorey substantially complied with the notice of injury provision in MCL 500.3145(1) based on the statements in the police report—that Briggs’s vehicle hit Dorey’s leg and that Dorey suffered a “ ‘possible internal injury’ ”—as well as the fact that Auto Club generated a written claim record following its conversation with Dorey’s wife, which provided that Dorey sustained a  
“ ‘back/neck sprain.’ ”  The Court found this evidence to be sufficient for purposes of MCL 500.3145(1).

“Like the plaintiff in Dillon, Dorey’s back injury is traceable to the statements in the police report that the truck hit his leg. His back injury is also traceable to the notation in the police report that he sustained a ‘possible internal injury,’ which could certainly include a back injury. The Dillon decision affords great leeway in describing the nature of an injury since the statute only requires ‘the kind of notice that an ordinary layperson can provide.’ Dillon, 501 Mich at 917. In addition to the injury information that Auto Club had from the written police report, Auto Club generated a written claim record that Dorey sustained a “back/neck sprain” as well as other ‘unknown’ injuries. This was sufficient notice of the nature of Dorey’s injury for purposes of the statute.” 

The Court of Appeals then turned to Auto Club’s argument that Orchard Laboratories’ action was barred by res judicata and collateral estoppel, because Dorey’s separate action was dismissed on statute of limitations grounds.  The Court of Appeals noted, preliminarily, that res judicata only precludes a subsequent action if “ ‘both actions involve the same parties or their privies.’ ”  As to whether Dorey and Orchard Laboraties were in privity, the Court of Appeals noted that the Supreme Court has held that “ ‘an assignee is in privity with the assignor only up to the time of assignment,’ ” and that “an assignee is not bound by a judgment that the assignor obtained after the assignment.’ ”  In this case, Orchard Laboratories obtained its assignment from Dorey before the judgment in Dorey’s action, and thus res judicata did not apply.

“Prior to the commencement of this action, Dorey assigned Orchard Laboratories his right to past and presently due PIP benefits with regard to the services that Orchard Laboratories provided. This assignment permitted Orchard Laboratories to sue Auto Club in an effort to recover its reasonable charges for the services that it provided to Dorey. See Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co, 500 Mich 191, 217 n 40; 895 NW2d 490 (2017). Indeed, Orchard Laboratories, as the assignee, possesses the same rights as Dorey and is subject to the same defenses. Burkhardt v Bailey, 260 Mich App 636, 653; 680 NW2d 453 (2004). However, an assignee is not bound by a judgment that the assignor obtained after the assignment; otherwise, an assignor could get a dismissal on the merits in a tangential case and cut off the rights of an assignee before the assignee had a full and fair opportunity to litigate its own claim. Aultman, Miller & Co v Sloan, 115 Mich 151, 154; 73 NW 123 (1897). Based on this principle, our Supreme Court has concluded that an assignee is in privity with the assignor only up to the time of the assignment. Howell, 386 Mich at 43. 

Dorey’s August 30, 2019 assignment to Orchard Laboratories destroyed their privity. Following the assignment, Dorey could not bring a claim for the services provided by Orchard Laboratories and Orchard Laboratories initiated its own claim in Wayne Circuit Court. Orchard Laboratories is not bound by the Saginaw Circuit Court’s dismissal that did not, and could not, include Orchard Laboratories’ claim. Accordingly, the trial court did not err by denying Auto Club’s motion for summary disposition on res judicata grounds.” 

The Court’s analysis regarding collateral estoppel was even simpler, as “ ‘[c]ollateral estoppel precludes relitigation of an issue in a subsequent, different cause of action between the same parties when the prior proceeding culminated in a valid final judgment . . .’ ”  In this case, Orchard Laboratories was not a party to Dorey’s separate first-party action, and thus collateral estoppel did not apply. 

“ ‘Collateral estoppel precludes relitigation of an issue in a subsequent, different cause of action between the same parties when the prior proceeding culminated in a valid final judgment and the issue was actually and necessarily determined in that prior proceeding.’ Rental Props Owners Ass’n of Kent Co v Kent Co Treasurer, 308 Mich App 498, 528; 866 NW2d 817 (2014) (emphasis added, citations omitted). As discussed above, Orchard Laboratories was not a party to the Saginaw Circuit Court action and its claim was not included in that action. Thus, Orchard Laboratories did not have a full and fair opportunity to litigate its claim in the Saginaw Circuit Court action. Accordingly, the doctrine of collateral estoppel is inapplicable as a matter of law and there was no plain error that would require intervention by this Court.” 

Judge Kelly dissented from Judges Gleicher and Patel, arguing that MCL 500.3145(1) requires written notice of a specific injury, and that in this case, the only notice Auto Club received of Dorey’s back injury within one year of the incident was an oral notice from Dorey’s wife.

“While this Court has held that oral notice of a claim is not sufficient, see Keller v Losinski, 92 Mich App 468, 471-472; 285 NW2d 334 (1979), we have also held that, under certain circumstances, substantial compliance with the statute is sufficient when the notice is written. See Walden v Auto Owners Ins Co, 105 Mich App 528, 534; 307 NW2d 367 (1981). In Perkovic, 500 Mich at 54, the Michigan Supreme Court further explained that ‘[t]he provision does not mandate any particular format for this notice, nor does it require language explicitly indicating a possible claim for benefits.’  

Thus, while I recognize that the written notice need not be in any particular form and that all of the pertinent information need not be transmitted at the same time, I would conclude that Dorey’s description of the nature of his injuries was insufficient to satisfy the statute’s requirement that he provide ‘in ordinary language the . . . nature of his injury.’ In this case, defendant received oral notification of Dorey’s claim from his wife on December 10, 2018, and did not receive written notice of Dorey’s claim until it received a medical bill on February 12, 2019. The only written notice defendant received within one year of the accident was the police report from the accident itself. The report includes Dorey’s name, the time, and the location of the accident, and describes his injuries as having his foot and leg run over. 

In the police report, however, there is mention of the back injury that Dorey claims he sustained. Nor does the report provide symptoms that would be traceable to the back injury. See Dillon v State Farm Mut Auto Ins Co, 501 Mich 915, 915; 902 NW2d 892 (2017) (‘A description of symptoms that are traceable to a diagnosed injury is sufficient to constitute such notice.’). Thus, because Dorey never provided written notice of a back injury within the statute of limitations, I would reverse the trial court’s order denying defendant’s motion for summary disposition.” 


Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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