STATE AUTO INS CO V JOSE FLORES VELAZQUEZ
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STATE OF MICHIGAN
COURT OF APPEALS
STATE AUTO INSURANCE COMPANIES,
FOR PUBLICATION
June 16, 2005
9:00 a.m.
Plaintiff-Appellant,
v
No. 253886
Kent Circuit Court
LC No. 03-007060-NI
JOSE FLORES VELAZQUEZ and POLYTRUCKING, INC.,
Defendants-Appellees.
Official Reported Version
Before: Hoekstra, P.J., and Jansen and Kelly, JJ.
PER CURIAM.
Plaintiff appeals as of right a circuit court order granting defendants' motion for summary
disposition. Plaintiff State Auto Insurance Companies filed this action against Jose Flores
Velazquez and Poly-Trucking, Inc., a self-insured, out-of-state automobile owner, in an attempt
to recover personal injury protection (PIP) benefits paid to its insured stemming from an
automobile accident. We reverse and remand.
Plaintiff asserts that, while the trial court correctly granted summary disposition to
defendants regarding plaintiff 's direct action for recovery of PIP benefits pursuant to the no-fault
insurance act, the trial court erred in also dismissing plaintiff 's claim as subrogee to its insured
because defendants did not enjoy the immunities of the act. We agree.
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On appeal, a trial court's decision on a motion for summary disposition is reviewed de
novo. Dressel v Ameribank, 468 Mich 557, 561; 664 NW2d 151 (2003). A motion for summary
disposition under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Corley v
Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). In reviewing a decision on a
motion for summary disposition based on the lack of a material factual dispute, an appellate
court considers the affidavits, pleadings, depositions, admissions, and other documentary
evidence submitted in the light most favorable to the party opposing the motion.
MCR
2.116(C)(10), (G)(5); Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817 (1999). Summary
disposition was appropriately granted if there was no genuine issue regarding any material fact
and if the moving party was entitled to judgment as a matter of law. Id.
Plaintiff 's argument is based not on a right stemming from the no-fault act, but on its
right as its insured's subrogee.
The parties agree that defendants, because they are not
participating in Michigan's no-fault insurance system, do not enjoy the rights and immunities
granted by the act. In fact, plaintiff 's insured filed a tort negligence action against defendants
and eventually settled his claim with defendants for $197,500 for noneconomic damages and
economic damages beyond the statutory limits for PIP benefits recovery. Plaintiff 's insured did
not make a claim for any of those expenses or damages already redressed through PIP benefits.
As noted by this Court in Steinmann v Dillon, 258 Mich App 149, 153-154; 670 NW2d
249 (2003):
Black's Law Dictionary (7th ed) defines "subrogation" as "[t]he
substitution of one party for another whose debt the party pays, entitling the
paying party to rights, remedies, or securities that would otherwise belong to the
debtor" and, alternatively, as "[t]he principle under which an insurer that has paid
a loss under an insurance policy is entitled to all the rights and remedies
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belonging to the insured against a third party with respect to any loss covered by
the policy." A subrogee "stands in the shoes of the subrogor and acquires no
greater rights than those possessed by the subrogor." Yerkovich [v AAA, 461 Mich
732, 737; 610 NW2d 542 (2000)].
Plaintiff 's right of subrogation regarding the PIP benefits accrued upon payment of PIP benefits
to its insured. Citizens Ins Co of America v American Community Mut Ins Co, 197 Mich App
707, 709; 495 NW2d 798 (1992) ("[T]he subrogee, upon paying an obligation owed to the
subrogor as the primary responsibility of a third party, is substituted in the place of the subrogor,
thereby attaining the same and no greater rights to recover against the third party.").
Defendants rely, in part, on Parks v Detroit Automobile Inter-Ins Exch, 426 Mich 191;
393 NW2d 833 (1986), for the premise that defendant Poly-Trucking, as an out-of-state, selfinsured vehicle owner, is not liable for statutory PIP benefits. Defendants then argue that,
because they are not liable for such benefits, plaintiff 's insured had no right against defendants
for PIP benefits. However, Parks is distinguishable from the present case. In Parks, our
Supreme Court dealt with whether an out-of-state, self-insured vehicle owner was liable to its
own employee for statutory PIP benefits where the employee was injured while working in its
trailer in Michigan. Id. at 195-197. There was no issue of negligence in Parks, where the
employee injured himself while lifting a carton of brass fittings, as there is in this case. Id. at
196. While an out-of-state, self-insured vehicle owner who has not operated his motor vehicle in
Michigan for more than thirty days in the calendar year is not required to maintain no-fault
insurance and can avoid the statutory obligation of paying PIP benefits by choosing not to
participate in the system, the owner will not enjoy the tort immunity granted in the act.
Therefore, although defendants are not liable under the no-fault act for the payment of
PIP benefits to plaintiff 's insured, this does not automatically mean that they are not liable for
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the same economic damages redressed by PIP benefits based on fault. PIP benefits include
payment for economic losses including "all reasonable charges incurred for reasonably necessary
products, services and accommodations for an injured person's care, recovery, or rehabilitation."
MCL 500.3107(1)(a). Generally, a negligent defendant is liable for all injuries resulting directly
from his or her wrongful act, whether foreseeable or not, if the damages were the legal and
natural consequences of the defendant's conduct and might reasonably have been anticipated.
Ensink v Mecosta Co Gen Hosp, 262 Mich App 518, 524; 687 NW2d 143 (2004). Such damages
would include plaintiff 's insured's medical expenses and lost wages, which are also covered by
PIP benefits. As such, defendants' assertion that plaintiff 's insured had no right against them for
PIP benefits means little where the insured possessed the right to recover the same type of
damages from defendants in his tort negligence suit. While plaintiff 's insured chose not to
request such damages so as to relieve himself of the duty to reimburse plaintiff out of his
recovery pursuant to MCL 500.3116, he still possessed the right to request such damages.
Therefore, plaintiff, as the insured's subrogee, also possessed the right to request such damages.
Plaintiff also requests that this Court consider the validity of a release signed by its
insured for the benefit of defendants after reaching a settlement regarding plaintiff 's insured's
negligence action. While the trial court clearly stated that its references to the release signed by
plaintiff 's insured were dicta, appellate consideration of an issue raised before the trial court, but
not specifically decided by the trial court, is not precluded. Peterman v Dep't of Natural
Resources, 446 Mich 177, 183; 521 NW2d 499 (1994); Pro-Staffers, Inc v Premier Mfg Support
Services, Inc, 252 Mich App 318, 324; 651 NW2d 811 (2002). Therefore, we will consider this
issue.
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As noted above, plaintiff became subrogated to its insured's right against defendants for
the type of damages provided in PIP benefits when plaintiff paid such benefits. Plaintiff paid
PIP benefits to its insured before the signing of the release in question and even before the filing
of the insured's suit against defendants in tort for negligence. Therefore, plaintiff was already
standing in "the shoes of the subrogor" insured with regard to the paid benefits and plaintiff 's
insured no longer had the ability to sign away plaintiff 's rights in this regard. For this reason, the
September 18, 2003, release did not extinguish plaintiff 's subrogation claim.
Reversed and remanded. We do not retain jurisdiction.
/s/ Joel P. Hoekstra
/s/ Kathleen Jansen
/s/ Kirsten Frank Kelly
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