Mecosta County Medical Center v. Metropolitan Group Property ( 2022 )

Michigan Supreme Court
Lansing, Michigan
Syllabus
Chief Justice: Justices:
Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader. Kathryn L. Loomis
MECOSTA COUNTY MEDICAL CENTER v METROPOLITAN GROUP PROPERTY AND
CASUALTY INSURANCE COMPANY
Docket Nos. 161628 and 161650. Argued on application for leave to appeal November 10,
2021. Decided June 10, 2022.
Mecosta County Medical Center, doing business as Spectrum Health Big Rapids, and
others sued Metropolitan Group Property and Casualty Insurance Company and State Farm Mutual
Automobile Insurance Company in the Kent Circuit Court, seeking personal protection insurance
(PIP) benefits related to a single-car crash involving Jacob Myers. Myers co-owned the vehicle
involved in the crash with his girlfriend; his girlfriend’s grandmother had purchased a no-fault
insurance policy on the vehicle through Metropolitan Group. Myers was injured in the crash and
was treated for his injuries by plaintiffs. Myers assigned plaintiffs his right to collect PIP benefits
in the amount of his treatment bills. After the assignment, Myers sued Metropolitan Group and
State Farm in the Wayne Circuit Court for PIP benefits related to other costs arising from the crash.
Plaintiffs sued defendants in the Kent Circuit Court to recover on the assigned claim. Defendants
moved for summary disposition against Myers in the Wayne Circuit Court. State Farm argued that
because Myers did not live with the State Farm policyholders he was not covered by their policy.
Metropolitan Group asserted that Myers was not entitled to coverage because he did not personally
maintain coverage on the vehicle, contrary to MCL 500.3113(b). The Wayne Circuit Court granted
both motions and dismissed Myers’s PIP claim with prejudice. Myers did not appeal. While the
defendants’ motions were pending in the Wayne Circuit Court, Metropolitan Group also moved
for summary disposition in the Kent Circuit Court on the same basis as its motion in the Wayne
Circuit Court. However, the Wayne Circuit Court granted defendants’ motions before the Kent
Circuit Court considered Metropolitan Group’s motion. After the Wayne Circuit Court granted
summary disposition for defendants, defendants filed additional motions for summary disposition
under MCR 2.116(C)(7) and (C)(10) in the Kent Circuit Court, arguing that plaintiffs’ claims were
barred under the doctrines of res judicata and collateral estoppel because the Wayne Circuit Court
had concluded that Myers was ineligible for PIP benefits. The Kent Circuit Court, Dennis B.
Leiber, J., granted summary disposition, holding that plaintiffs’ claims were barred by res judicata
and collateral estoppel. Plaintiffs appealed in the Court of Appeals, and the Court of Appeals,
METER and K. F. KELLY, JJ., (MURRAY, C.J., dissenting), reversed in a split, unpublished opinion,
issued March 24, 2020. The Court of Appeals majority held that an assignee was not bound by a
judgment against an assignor in an action commenced after the assignment occurred. Defendants
applied for leave to appeal in the Supreme Court, and the Supreme Court ordered and heard oral
argument on whether to grant defendants’ applications for leave to appeal or take other action.
507 Mich 865 (2021).
In a unanimous opinion by Justice VIVIANO, the Supreme Court, in lieu of granting leave
to appeal, held:
Res judicata bars a second action on the same claim if (1) the prior action was decided on
the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second
case was, or could have been, resolved in the first. Similarly, collateral estoppel bars the
relitigation of a specific issue within an action when (1) a question of fact essential to the judgment
was litigated and determined by a valid and final judgment, (2) the parties or privies had a full and
fair opportunity to litigate the issue, and (3) there is mutuality of estoppel. Thus, both res judicata
and collateral estoppel apply only when the parties in the subsequent action were parties or privies
of parties to the original action. Given that plaintiffs were not parties to the action filed by Myers,
the question in this case was whether plaintiffs were privies of Myers with respect to the judgment
entered by the Wayne Circuit Court after the assignment. A party is in privity with another party
when the later litigant represents the same legal rights as the first litigant asserted, i.e., when the
first and later litigants have mutual or successive relationships to the same interest and right of
property or when there is such an identification of interests as to represent the same legal right.
Generally, a relationship based on an assignment of rights is deemed to be one of privity. An
assignment occurs when the assignor transfers his or her rights or interest to the assignee, and the
assignee succeeds to the rights of the assignor. But the mere succession of rights to the same
property or interest does not, by itself, give rise to privity with regard to subsequent actions by and
against the assignor. Rather, the binding effect of adjudication flows from the fact that when the
successor acquires an interest in the right it is then affected by the adjudication in the hands of the
former owner. That is, the assignee succeeds to the rights assigned by the assignor subject to any
earlier adjudication involving the assignor that defined those rights. Therefore, a judgment entered
after the assignment does not bind the assignee because the assignee was not in privity with the
assignor with respect to that judgment. The dissenting opinion in the Court of Appeals relied on
TBCI, PC v State Farm Mut Auto Ins Co, 289 Mich App 39 (2010). However, the medical
provider’s claim in TBCI was not obtained by assignment, but rather was based on caselaw, which
was subsequently overturned, holding that medical providers had an independent claim in no-fault
cases that was completely derivative of and dependent on the insured’s having a valid claim of no-
fault benefits against the insurer. TBCI did not address assignments and was not applicable here
or to the traditional rule being applied in the instant case. In this case, plaintiffs were not in privity
with Myers with respect to the judgment entered subsequently to the assignment, and therefore,
plaintiffs could not be bound by that judgment under the doctrines of res judicata and collateral
estoppel.
Judgment affirmed and case remanded for further proceedings.
Michigan Supreme Court
Lansing, Michigan
OPINION
Chief Justice: Justices:
Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
FILED June 10, 2022
STATE OF MICHIGAN
SUPREME COURT
MECOSTA COUNTY MEDICAL
CENTER, doing business as SPECTRUM
HEALTH BIG RAPIDS, SPECTRUM
HEALTH HOSPITALS, SPECTRUM
HEALTH PRIMARY CARE PARTNERS,
doing business as SPECTRUM HEALTH
MEDICAL GROUP, MARY FREE BED
REHABILITATION HOSPITAL, and
MARY FREE BED MEDICAL GROUP,
Plaintiffs-Appellees,
v No. 161628
METROPOLITAN GROUP PROPERTY
AND CASUALTY INSURANCE
COMPANY,
Defendant-Appellant,
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellee.
MECOSTA COUNTY MEDICAL
CENTER, doing business as SPECTRUM
HEALTH BIG RAPIDS, SPECTRUM
HEALTH HOSPITALS, SPECTRUM
HEALTH PRIMARY CARE PARTNERS,
doing business as SPECTRUM HEALTH
MEDICAL GROUP, MARY FREE BED
REHABILITATION HOSPITAL, and
MARY FREE BED MEDICAL GROUP,
Plaintiffs-Appellees,
v No. 161650
METROPOLITAN GROUP PROPERTY
AND CASUALTY INSURANCE
COMPANY,
Defendant-Appellee,
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellant.
BEFORE THE ENTIRE BENCH
VIVIANO, J.
Jacob Myers was injured in a car crash and received medical treatment from
plaintiffs Mecosta County Medical Center and Mary Free Bed Rehabilitation Hospital. As
compensation for this treatment, Myers assigned them his right to seek no-fault personal
protection insurance (PIP) benefits from the insurer responsible for making those
payments. After the assignment, Myers filed suit seeking PIP benefits for separate services
he received arising from the crash. In that lawsuit, to which plaintiffs here were not party,
2
the trial court held that Myers had not properly insured the vehicle and was therefore not
entitled to any benefits. The question in the present case is whether that holding applies to
plaintiffs and precludes them, under the doctrines of res judicata or collateral estoppel,
from succeeding on the present assigned claim against the defendant insurers. Because
plaintiffs were not parties to the earlier suit, they are bound by the judgment only if they
were in privity with Myers when the earlier judgment against him was entered. The Court
of Appeals properly determined that plaintiffs were not bound by the earlier judgment
because it was entered after they were assigned the claim. Accordingly, because plaintiffs
were neither parties to the earlier suit nor privies with respect to the subsequently entered
judgment, the doctrines of res judicata and collateral estoppel are inapplicable here.
I. FACTS AND PROCEDURAL HISTORY
Plaintiffs Mecosta County Medical Center and Mary Free Bed treated Myers for
injuries he sustained in a single-car crash. Instead of paying the medical bills and seeking
reimbursement from the vehicle’s insurer, Myers assigned plaintiffs his right to collect PIP
benefits in the amount of his treatment bills. Myers owned the vehicle with his girlfriend,
whose grandmother had purchased the no-fault insurance policy on the vehicle through
defendant Metropolitan Group Property and Casualty Insurance Company.
Myers then sued Metropolitan Group and defendant State Farm Mutual Automobile
Insurance Company—who was also allegedly liable to provide coverage—for PIP benefits
relating to other costs arising from the crash. As that suit was pending in the Wayne Circuit
Court, plaintiffs here sued the same defendants in the Kent Circuit Court to recover on the
3
assigned claim. Metropolitan moved to change venue to the Wayne Circuit Court, but
plaintiffs opposed the motion, and the trial court ultimately denied it.
In Myers’s action, defendants moved for summary disposition under MCR
2.116(C)(10). State Farm argued that Myers did not live with the State Farm policyholders
and, therefore, was not covered. Metropolitan claimed Myers was not entitled to coverage
because he personally did not maintain insurance coverage on the vehicle—rather, his
girlfriend’s grandmother did—and thus he violated MCL 500.3113(b), which required him,
as the co-owner of the vehicle, to maintain insurance coverage. The Wayne Circuit Court
granted both motions, dismissing Myers’s PIP claim with prejudice. Myers did not appeal. 1
While the motions were pending in Myers’s suit, defendant Metropolitan filed an
identical motion in the instant suit in the Kent Circuit Court. However, the Wayne Circuit
Court granted summary disposition before the Kent Circuit Court could consider the
motion. After that judgment entered, both defendants in the present case filed an additional
motion for summary disposition under MCR 2.116(C)(7) and (C)(10), arguing that
plaintiffs’ claims were barred by res judicata and collateral estoppel due to the decision of
the Wayne Circuit Court holding that Myers was ineligible for PIP benefits. The Kent
Circuit Court granted summary disposition, holding that plaintiffs’ claims were barred by
res judicata and collateral estoppel.
1
After the trial court’s decision in that case, we held in Dye v Esurance Prop & Cas Ins
Co, 504 Mich 167, 172-173; 934 NW2d 674 (2019), “that an owner or registrant of a motor
vehicle is not required to personally purchase no-fault insurance for his or her vehicle in
order to avoid the statutory bar to PIP benefits.” We do not here decide whether and how
Dye would apply in the present case.
4
Plaintiffs appealed in the Court of Appeals, which reversed in a split, unpublished
decision. The majority held that an assignee is not bound by a judgment against an assignor
in an action commenced after the assignment occurred. Mecosta Co Med Ctr v Metro
Group Prop & Cas Ins Co, unpublished per curiam opinion of the Court of Appeals, issued
March 24, 2020 (Docket No. 345868), p 5. To hold otherwise, it reasoned, would be to
allow an assignor to cut off an assignee’s rights without the latter having any notice or
opportunity to be heard. Id. Judge MURRAY dissented, expressing his belief that Court of
Appeals caselaw mandated the conclusion that plaintiffs were privies of Myers and
therefore bound by the judgment against him. See generally id. (MURRAY, C.J.,
dissenting).
Defendants sought leave to appeal the majority’s decision in this Court. We ordered
argument on the application, requesting briefing on whether plaintiffs’ “claims for no-fault
personal protection insurance benefits are barred by (1) res judicata or (2) collateral
estoppel.” Mecosta Co Med Ctr v Metro Group Prop & Cas Ins Co, 507 Mich 865 (2021).
II. STANDARD OF REVIEW
“We review de novo a trial court’s decision on a motion for summary disposition.”
Meemic Ins Co v Fortson, 506 Mich 287, 296; 954 NW2d 115 (2020). Likewise, “[w]e
review de novo the interpretation of a common-law doctrine.” Bertin v Mann, 502 Mich
603, 608; 918 NW2d 707 (2018).
III. ANALYSIS
The issue in this case is whether plaintiffs’ action is precluded by the judgment
against Myers under the doctrines of res judicata or collateral estoppel. Res judicata bars
5
a second action on the same claim if “ ‘(1) the prior action was decided on the merits, (2)
both actions involve the same parties or their privies, and (3) the matter in the second case
was, or could have been, resolved in the first.’ ” Foster v Foster, 509 Mich ___, ___; ___
NW2d ___ (2022) (Docket No. 161892); slip op at 8, quoting Adair v Michigan, 470 Mich
105, 121; 680 NW2d 386 (2004). Whereas res judicata involves preclusion of entire
claims, collateral estoppel focuses on specific issues within an action. See generally Migra
v Warren City Sch Dist Bd of Ed, 465 US 75, 77 n 1; 104 S Ct 892; 79 L Ed 2d 56 (1984).
The elements of collateral estoppel are similar: (1) “a question of fact essential to the
judgment must have been actually litigated and determined by a valid and final judgment,”
(2) the parties or privies “ ‘must have had a full [and fair] opportunity to litigate the issue,’ ”
and (3) “ ‘there must be mutuality of estoppel.’ ” Monat v State Farm Ins Co, 469 Mich
679, 682-684; 677 NW2d 843 (2004) (alteration in original), quoting Storey v Meijer, Inc,
431 Mich 368, 373 n 3; 429 NW2d 169 (1988). 2 “[O]ne of the critical factors in
applying . . . collateral estoppel involves the determination of whether the respective
litigants were parties or privy to a party to an action in which a valid judgment has been
rendered.” Howell v Vito’s Trucking & Excavating Co, 386 Mich 37, 42; 191 NW2d 313
(1971).
Thus, both res judicata and collateral estoppel apply only when the parties in the
subsequent action were parties or privies of parties to the original action. Plaintiffs in the
present case were not parties to Myers’s action. Consequently, this case turns upon
2
The mutuality requirement has been dispensed with in certain scenarios. See id. at 687-
688. No mutuality concerns have been raised in the present case and we have no occasion
to opine on this requirement.
6
whether they were privies of Myers with respect to the judgment that was entered against
him after the assignment.
“To be in privity is to be so identified in interest with another party that the first
litigant represents the same legal right that the later litigant is trying to assert.” Adair, 470
Mich at 122. “In its broadest sense, privity has been defined as ‘mutual or successive
relationships to the same right of property, or such an identification of interest of one person
with another as to represent the same legal right.’ ” Sloan v Madison Hts, 425 Mich 288,
295; 389 NW2d 418 (1986) (citation omitted). 3
Generally, a relationship based on an assignment of rights is deemed to be one of
privity. See Taylor v Sturgell, 553 US 880, 894; 128 S Ct 2161; 171 L Ed 2d 155 (2008)
(discussing nonparty preclusion under res judicata and collateral estoppel). An assignment
of rights occurs when the assignor transfers his or her rights or interests to the assignee.
See State Treasurer v Abbott, 468 Mich 143, 150 n 8; 660 NW2d 714 (2003) (“ ‘This court
has defined the word “assignment” in the language of Webster as meaning “to transfer or
make over to another;” and in the language of Burrill’s Law Dictionary as “to make over
or set over to another; to transfer.” ’ ”) (emphasis and citation omitted), quoting Allardyce
v Dart, 291 Mich 642, 644-645; 289 NW 281 (1939). In these circumstances, the assignee
succeeds to the rights of the assignor, thus meeting the general definition of privity. See
Casad & Clermont, Res Judicata: A Handbook on its Theory, Doctrine, and Practice
(Durham: Carolina Academic Press, 2001), p 151.
3
See also Casad & Clermont, Res Judicata: A Handbook on its Theory, Doctrine, and
Practice (Durham: Carolina Academic Press, 2001), p 151 (noting the “classic definition
of privity as a ‘mutual or successive relationship to the same rights of property’ ”), quoting
2 Black, A Treatise on the Law of Judgments (2d ed, 1902), p 830.
7
But the mere succession of rights to the same property or interest does not, by itself,
give rise to privity with regard to subsequent actions by and against the assignor. Cf. Sodak
Distrib Co v Wayne, 77 SD 496, 502; 93 NW2d 791 (1958) (“Privity does not arise from
the mere fact that persons as litigants are interested in the same question or in proving or
disproving the same state of facts.”). Rather, “[t]he binding effect of the adjudication flows
from the fact that when the successor acquires an interest in the right it is then affected by
the adjudication in the hands of the former owner.” Id. at 502-503. In other words, the
assignee succeeds to those rights subject to any earlier adjudication involving the assignor
that defined those rights. When the litigation involving the assignor occurs after the
assignment, the rights could not yet have been affected by the litigation at the time they
were transferred to the assignee.
It is therefore well established that a judgment entered after the assignment does not
bind the assignee because the assignee is not in privity with the assignor with respect to
that judgment. As early as 1898, the United States Supreme Court was able to express this
rule as black-letter law:
We remark again that while a judgment or decree binds not merely the
party or parties subject to the jurisdiction of the court but also those in privity
with them, yet that rule does not avail the plaintiffs in error, for [the
defendant’s assignee] acquired his rights prior to the institution of the suit in
New York and was therefore not privy to that judgment.
“It is well understood, though not usually stated in
express terms in works upon the subject, that no one is privy to
a judgment whose succession to the rights of property thereby
affected, occurred previously to the institution of the suit. A
tenant in possession prior to the commencement of an action
of ejectment cannot therefore be lawfully dispossessed by the
judgment unless made a party to the suit. . . . No grantee can
be bound by any judgment in an action commenced against his
8
grantor subsequent to the grant, otherwise a man having no
interest in property could defeat the estate of the true owner.
The foreclosure of a mortgage, or of any other lien, is wholly
inoperative upon the rights of any person not a party to the suit,
whether such person is a grantee, judgment creditor,
attachment creditor, or other lienholder.” Freeman on
Judgments (1st ed.), § 162.
[Dull v Blackman, 169 US 243, 248; 18 S Ct 333; 42 L Ed 733 (1898).]
See also Freeman, A Treatise on the Law of Judgments (1886), § 162, p 177 (“The assignee
of a note is not affected by any litigation in reference to it, beginning after the
assignment.”). Courts have continued to abide by this rule, 4 and it remains a bedrock in
the literature on the subject. 5
4
See, e.g., Northern Oil & Gas, Inc v EOG Resources, Inc, 970 F3d 889, 891 (CA 8, 2020)
(“Under principles of res judicata, litigants in privity are bound by a prior judgment
controlling an issue in subsequent litigation. In North Dakota, ‘the privity doctrine cannot
be applied if the rights to property were acquired by the person sought to be bound before
the adjudication.’ ”) (emphasis added), quoting Gerrity Bakken, LLC v Oasis Petroleum
North America, LLC, 915 NW2d 677, 684 (ND, 2018); Indus Credit Co v Berg, 388 F2d
835, 841 (CA 8, 1968) (“Ordinarily, a person in privity with a party to a lawsuit, . . . under
principles of res judicata or collateral estoppel, must acquire his interest in the transaction
after commencement of the action or rendition of the judgment.”); Wight v Chandler, 264
F2d 249, 253 (CA 10, 1959) (“Having acquired the interest now in controversy prior to the
institution of the action and having owned it ever since, he was not in privity with the
defendant [assignor] respecting it at the time of the institution of the action or at any time
later.”); Laster v American Nat’l Fire Ins Co, 775 F Supp 985, 989 (ND Tex, 1991) (“There
is no preclusion if the assignment takes place before the litigation that is urged as a basis
for preclusion.”); Gramatan Home Investors Corp v Lopez, 46 NY2d 481, 486-487; 386
NE2d 1328 (1979) (“In the assignor-assignee relationship, privity must have arisen after
the event out of which the estoppel arises. Hence, an assignee is deemed to be in privity
with the assignor where the action against the assignor is commenced before there has been
an assignment. . . . Conversely, an assignee is not privy to a judgment where the
succession to the rights affected thereby has taken place prior to the institution of the suit
against the assignor.”).
5
See Restatement Judgments, 2d, § 55, p 68 (“The determination of issues in an action by
or against either assignee or assignor is not preclusive against the other of them in a
9
This rule is reflected in this Court’s caselaw. In its decision below, the Court of
Appeals appropriately relied upon Aultman, Miller & Co v Sloan, 115 Mich 151, 154; 73
NW 123 (1897). In that case, after the mortgagee assigned his interest in the property, he
sued the mortgagors, who argued that an assignment had occurred. Id. at 152-153. The
mortgagee obtained a judgment, and the question in the second suit, brought by the
assignee, was whether that judgment precluded the assignee’s action. Id. at 153. In finding
that there was no privity, we observed that the assignee and assignor disputed whether an
assignment had occurred. Id. at 154. Nonetheless, we did not rely upon this disagreement
alone and instead pronounced that allowing the assignor’s subsequent case to preclude the
assignee’s case would “cut off the rights of [the assignee], without giving him an
opportunity to be heard.” Id. Therefore, the judgment obtained after the assignment should
not be given preclusive effect. Id. Aultman has long been cited for the rule that judgments
rendered after an assignment do not bind the assignee. See, e.g., 24 Garland & McGehee,
subsequent action, except” when the action was “brought by the assignor before the
assignment” and the assignee then brings an action or when “there is a further relationship
between the assignee and assignor from which preclusion may arise”); 50 CJS, Judgments,
§ 1106, p 530 (“The assignee of a right of property or chose in action is concluded by a
judgment for or against the assignor in a suit begun before the assignment, but not where
the assignee’s rights vested prior to the commencement of the action, except as the rule
may have been altered by statute, or where the assignee has been notified to defend the
action and failed to do so.”); 46 Am Jur 2d, Judgments, § 570, p 937 (“A judgment against
an assignor binds the assignee, where the assignee acquiesced to the assignor’s prior
litigation, there was a substantial legal relationship between the assignee and the assignor,
the assignee’s interests were aligned with the assignor in the prior litigation, and the
assignee had control over the prior litigation and could have terminated it at any time.”)
(emphasis added); cf. Res Judicata, p 154 (stating that the transferee of property is not in
privity with the transferor if the interest was acquired “before the commencement of the
action involving the transferor”).
10
eds, The American & English Encyclopedia of Law (1903), p 749 (citing Aultman, among
other cases, for the rule that an assignee is not bound by the results of postassignment
lawsuits to which it was not a party).
We expressed the same general rule even more directly in Howell, 386 Mich 37.
We stated that “ ‘[a] privy is one who, after rendition of the judgment, has acquired an
interest in the subject matter affected by the judgment through or under one of the
parties . . . .’ ” Id. at 43, quoting Bernhard v Bank of America Nat’l Trust & Savings Ass’n,
19 Cal 2d 807, 811; 122 P2d 892 (1942). This rule has been cited and relied upon by
numerous courts. 6 We have also indicated elsewhere, in an analogous context, that the
postassignment actions of an assignor cannot provide a basis to bind the assignee. See
Saginaw Fin Corp v Detroit Lubricator Co, 256 Mich 441, 443; 240 NW 44 (1932) (“After
assignment, the assignor loses all control over the chose [in action] and cannot bind the
assignee, by estoppel or otherwise.”).
In advocating for a different result, the Court of Appeals dissent here relied on TBCI,
PC v State Farm Mut Auto Ins Co, 289 Mich App 39; 795 NW2d 229 (2010). That case
also formed the basis for the holding in The Medical Team, Inc v Auto-Owners Ins Co,
unpublished per curiam opinion of the Court of Appeals, issued February 25, 2020 (Docket
No. 345449), which reached a conclusion in direct conflict with the one we reach in the
present case. The medical provider’s claim in TBCI was not obtained by assignment,
6
See, e.g., Metzler v United States, 832 F Supp 204, 208 (ED Mich, 1993) (citing and
applying this rule from Howell); Rohe Scientific Corp v Nat’l Bank of Detroit, 133 Mich
App 462, 467; 350 NW2d 280 (1984) (citing Howell and holding that because a party’s
interest in the property was obtained “long before judgment” in the first action, there was
no privity).
11
however. Rather, the basis for the medical provider’s claim was Court of Appeals caselaw
(that was subsequently overturned) holding that medical providers had an independent claim
that was nonetheless “completely derivative of and dependent on [the insured’s] having a
valid claim of no-fault benefits against” the insurer. Moody v Home Owners Ins Co, 304
Mich App 415, 440; 849 NW2d 31 (2014); see also Mich Head & Spine Institute, PC v State
Farm Mut Auto Ins Co, 299 Mich App 442, 448 n 1; 830 NW2d 781 (2013), citing Lakeland
Neurocare Ctrs v State Farm Mut Auto Ins Co, 250 Mich App 35, 39; 645 NW2d 59 (2002). 7
Neither the dissent below, The Medical Team, nor TBCI itself explain why TBCI’s
reasoning should prevail over the traditional approach discussed above. Indeed, none of
these opinions mentions the traditional rule or our caselaw reflecting that rule. TBCI did not
address assignments, which have long been governed by the rule discussed above. It
therefore is not applicable here. 8
7
That caselaw was overturned in Covenant Med Ctr, Inc v State Farm Mut Auto Ins Co,
500 Mich 191; 895 NW2d 490 (2017). After Covenant, the Legislature expressly provided
a direct cause of action for medical providers. MCL 500.3112. Those statutory causes of
action are not before the Court, and we therefore do not decide whether a medical provider
bringing such an action would be in privity with an insured for purposes of res judicata or
collateral estoppel.
8
The Medical Team also relied upon Jones v Chambers, 353 Mich 674; 91 NW2d 889
(1958). In that case, the owner of an oil truck involved in a collision assigned part of the
claim to its insurer. The owner and insurer of the truck sued the owner of the other vehicle
involved in the collision. Id. at 675-676. About two weeks later, the owner of the other
vehicle and his insurer sued the truck owner (and an unrelated party) in a different court.
That second case was decided first, and the owner of the other vehicle prevailed as plaintiff.
Id. at 676. The trial court in the first suit then held that the truck owner and its insurer were
barred from suit. We agreed, quoting the trial court’s opinion that even though the
assignee-insurer was not a party to the second-filed suit, the insurer obtained only the rights
of the truck owner and no more. Id. at 681-682.
12
In light of this analysis, we conclude that the plaintiff assignees here were not in
privity with their assignor, Myers, with respect to the subsequently entered judgment.
Therefore, the plaintiff assignees cannot be bound by that judgment under the doctrines of
res judicata or collateral estoppel.
IV. CONCLUSION
In this case, we hold that plaintiff assignees were not in privity with Myers with
respect to the judgment that was rendered against him after he had assigned the present PIP
claim to plaintiffs. We therefore affirm the judgment of the Court of Appeals and remand to
the trial court for further proceedings consistent with this opinion.
David F. Viviano
Bridget M. McCormack
Brian K. Zahra
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
The Court in Jones did not, however, address privity at all. In fact, our recitation of
the law of res judicata was incomplete, as it did not discuss the need for the two lawsuits
to contain the same parties or their privies. Moreover, under the unique facts in Jones, the
parties arguably were in privity. They had, together, initiated the first suit. And they
proceeded with that suit as the second one was filed and pending. Under these facts, it is
arguable that they continued to have “a further relationship” such that the general rule
against preclusion would not apply. See Restatement Judgments, 2d, § 55, p 68 (noting
that the rule against application of res judicata is inapplicable where the assignee and
assignor have “a further relationship”). These facts might also fall within the “outer limit
of the doctrine” of privity as we defined it in Adair, 470 Mich at 122: “[T]he doctrine
traditionally requires both a ‘substantial identity of interests’ and a ‘working functional
relationship’ in which the interests of the nonparty are presented and protected by the party
in the litigation.” (Citation omitted.) Being coplaintiffs might qualify as a “working
functional relationship.” In any event, as noted, Jones simply did not address privity at all,
much less the rule we are examining in this case. Therefore, it is inapplicable to the issue
before the Court.
13