Stanley Jackson v. Suburban Mobility Authority for Regional Trans, 331253

Background

On March 29, 2013 Stanley Jackson was injured when a SMART bus door closed on his arm and the driver braked while he was boarding. SMART is self-insured.
At the time Jackson lived with his mother, whose car was insured by American Fellowship Mutual Insurance Company (American). American was later placed in liquidation under Chapter 81.
Jackson gave notice of his injury to SMART under the no-fault notice statute but never gave notice to American or filed a claim in American’s liquidation.
American’s liquidation set a claims deadline of December 12, 2013 and closed before the one-year no-fault notice/filing period under MCL 500.3145(1) expired. Jackson sued only SMART on December 22, 2014.
SMART moved for summary disposition under MCR 2.116(C)(10), arguing Jackson’s claim was untimely or otherwise barred because he failed to present a claim against the insolvent higher-priority insurer (American) or the MPCGA. The trial court granted SMART’s motion.
The Court of Appeals reversed, holding that Jackson was not required to file a claim against American (or MPCGA) after American’s liquidation closed and before the no-fault limitations period expired.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Jackson’s suit against SMART was barred because he never filed a claim or gave notice to the higher-priority insurer (American) before suing SMART	Jackson argued he was not required to pursue American after American was liquidated and the liquidation closed before the no-fault filing/notice deadline ran	SMART argued Jackson should have filed against American (or at least presented a claim in the liquidation) and that failure made his claim untimely or non-covered	Reversed: Jackson need not have filed against American after the liquidation closed; he could timely proceed against SMART under the no-fault scheme
Whether the MPCGA should have been treated as a substitute highest-priority insurer, obligating Jackson to sue it	Jackson argued MPCGA is last-resort insurer and not a substitute for SMART or a reason to delay suing SMART	SMART contended MPCGA coverage rules meant Jackson’s failure to file against the liquidation/MPCGA defeated his claim against SMART	Held that the MPCGA is insurer of last resort and cannot replace a solvent insurer; SMART remained a viable insurer at some priority level, so MPCGA was not a substitute
Whether an insurer (SMART) can refuse or delay payment because a potentially higher-priority insurer (American) might exist or have existed	Jackson argued that once American ceased to exist before the no-fault deadline, SMART could not use the prior existence of American to deny/toll benefits	SMART argued the prior existence of American required plaintiff to pursue liquidation remedies first	Held that insurers may not refuse payment merely because a potentially higher-priority insurer existed; priority disputes do not excuse timely payment when no higher-priority solvent insurer exists at the time the no-fault deadline runs
Whether a claim is not a "covered claim" under the liquidation statute if not presented to the receiver, thereby avoiding MPCGA liability and permitting SMART to escape liability	Jackson argued he was pursuing no-fault benefits under the no-fault act, not asserting a covered claim in the liquidation, and the no-fault deadlines controlled	SMART argued Jackson’s failure to present a covered claim to the receiver prevented triggering MPCGA/MCL 500.7931(3) obligations, defeating his action against SMART	Held that the no-fault limitations scheme controlled and Jackson was not required to present a covered claim in the liquidation to proceed against SMART once American was no longer available

Key Cases Cited

Maiden v. Rozwood, 461 Mich. 109 (1999) (standard of review for summary disposition)
Gladych v. New Family Homes, Inc., 468 Mich. 594 (2003) (statutory interpretation, give effect to Legislature’s intent)
Corwin v. DaimlerChrysler Ins. Co., 296 Mich. App. 242 (2012) (priority: insurer of a relative with whom plaintiff resides)
Auto Club Ins. Ass'n v. Meridian Mut. Ins. Co., 207 Mich. App. 37 (1994) (MPCGA is insurer of last resort)
Regents of Univ. of Mich. v. State Farm Mut. Ins. Co., 250 Mich. App. 719 (2002) (insurer should not refuse payment when priority is only question)
Bloemsma v. Auto Club Ins. Co., 174 Mich. App. 692 (1989) (priority disputes do not excuse delay in payment)
Grange Ins. Co. of Mich. v. Lawrence, 494 Mich. 475 (2013) (subrogation/right of insurer to sue higher-priority insurer)
Rambin v. Allstate Ins. Co., 297 Mich. App. 679 (2012) (practice of adding higher-priority insurers to suits)