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Wilson v. Citizens Insurance Company of America

United States District Court, M.D. North Carolina

February 13, 2015



CATHERINE C. EAGLES, District Judge.

This matter is before the Court on the defendants' motions to dismiss and motions for summary judgment. The plaintiff, Josephine Wilson, has sued two Michigan insurance companies, alleging that they underpaid benefits owed under Michigan's no-fault insurance law to her daughter and ward, Gloria Wilson; Ms. Wilson also alleges negligence and violations of the Michigan Consumer Protection Act ("MCPA"). Ms. Wilson's negligence claim fails because she has not presented sufficient evidence of a breach of any duty, and her MCPA claim fails because there was no predicate consumer transaction with either defendant. The Court concludes that the defendants have waived the defense that Gloria Wilson was never eligible for no-fault benefits under Michigan law, but agrees that Ms. Wilson's right to recover is limited to underpayments since June 11, 2013. Therefore, the Court grants in part and denies in part the defendants' motions for summary judgment and dismisses their motions to dismiss as moot.


In 1974, Hosea Hammon purchased a car for his daughter, Gloria Wilson ("Gloria"). (Doc. 42-4 at ¶ 2.) Other than after immediately purchasing it, Mr. Hammon never drove the car. (Doc. 42-4 at ¶¶ 2, 5.) In 1976, Gloria moved out of Mr. Hammon's home to live with her mother, the plaintiff, Josephine Wilson ("Ms. Wilson"). (Doc. 42-4 at ¶ 4.) Gloria continued to use the car every day and only she drove it. (Doc. 42-5 at 4.)

On December 4, 1977, Gloria was involved in an accident while driving the car in Michigan. (Doc. 42-2 at 2.) The car was still titled and registered in Mr. Hammon's name. (Doc. 42-3 at 3; Doc. 42-6 at 5.) The accident caused severe injuries, leaving Gloria in a coma until March 1978. ( See Doc. 58-5; Doc. 58-4 at 1.) At the time of the accident, Gloria's car had no insurance. (Doc. 42-12 at 2; Doc. 58-26 at 2.)

After the accident, Ms. Wilson became Gloria's guardian. (Doc. 42-12 at 3.) Because Gloria's car did not have insurance, Ms. Wilson, with an attorney's assistance, applied for Personal Injury Protection ("PIP") benefits under Michigan's No-Fault Insurance Act ("NFA") to pay for Gloria's medical care. (Doc. 42-12 at 2, 6-8.) The Michigan Department of State Assigned Claims Facility, (the Facility), which administers the no-fault insurance program, ( see Mich. Comp. Laws § 500.3171; see also Botsford Gen. Hosp. v. Citizens Ins. Co., 489 N.W.2d 137, 140 (Mich. Ct. App. 1992)), approved Ms. Wilson's request for benefits on behalf of Gloria. (Doc. 42-12 at 9-10.)

In April 1978, the Facility assigned Gloria's claim to Auto-Owners Insurance Company for servicing. (Doc. 42-12 at 9.) Before making payments, Auto-Owners began investigating Gloria's eligibility and hired an investigator to collect information on the presence, if any, of insurance for the car or Gloria and the relationship between Gloria, the car, and Mr. Hammon. ( See Doc. 42-12 at 11-12; Doc. 42-14 at 2, 4; Doc. 58-26.) The investigator sent its findings to Auto-Owners in September 1978 and reported that the car stayed at Ms. Wilson's home, Ms. Wilson had no cars titled in her name, and Gloria drove the car "on a regular basis." (Doc. 58-26 at 1, 6-7.) Auto-Owners had doubts about Gloria's eligibility for benefits, ( see Doc. 42-14 at 2-3), but never communicated those doubts to Ms. Wilson or Gloria.[1] While the exact date is not clear from the record, Auto-Owners began making payments at some point between September 1978 and February 1979. ( See Doc. 42-12 at 12; Doc. 58-2 at 1.) Once it began payments, Auto-Owners never reopened Gloria's claim for investigation and never stopped paying benefits.

In 1980, Auto-Owners sued Mr. Hammon for reimbursement of PIP benefits paid to Gloria, alleging that Mr. Hammon "was the owner" of the car and did not have insurance. (Doc. 58-20 at 1-2); see also Mich. Comp. Laws § 500.3177(1) (allowing "insurer[s] obligated to pay [NFA] benefits" to "recover such benefits...from the owner or registrant of the uninsured motor vehicle"). The parties stipulated and agreed to a money judgment against Mr. Hammon. (Doc. 58-22 at 1.) Auto-Owners serviced Gloria's claim from 1978 to 1998. ( See Doc. 42-12 at 10; Doc. 40-6; Doc. 42-24 at 2.)

Gloria is confined to a wheelchair. (Doc. 58-11 at 1-4, 4; Doc. 58-15 at 5.) Ms. Wilson performs and has performed most, if not all, of Gloria's care, including assisting with many activities of daily living. ( See, e.g., Doc. 58-2 at 1, 7; Doc. 58-4 at 39-40; Doc. 58-15 at 1-2, 8.) Auto-Owners paid Ms. Wilson approximately $20 per day for Gloria's care, (Doc. 58-15 at 3, 5-8), the "maximum amount" according to Auto-Owners. (Doc. 58-15 at 6.) It is not clear from the record how Auto-Owners determined this payment amount. Ms. Wilson did not request or agree to the $20-per-day rate, and Auto-Owners' representative, Sue Kael, could not remember why Ms. Wilson received $20 per day for attendant care or whether Auto-Owners explained to Ms. Wilson that she could receive more.[2] (Doc. 58-16 at 16-17.) Auto-Owners did not receive any complaints about payments. (Doc. 58-15 at 3.)

In August 1998, the Facility reassigned Gloria's claim to Citizens Insurance Company of America ("Citizens"). (Doc. 40-6; see also Doc. 1.) Citizens initially continued the $20-per-day rate set by Auto-Owners, (Doc. 59-1 at 1-2), but, between 2000 and 2002, Citizens increased the rate several times to $30, $38, and $44 per day. (Doc. 59-1 at 8-10.) Ms. Wilson and Gloria moved to North Carolina in 2010, (Doc. 40-2 at 7-8), and Gloria continues to receive benefits from Citizens today. ( See Doc. 40-2 at 9-15; Doc. 59-1 at 42-44.)


The NFA regulates the insurance of motor vehicles and the payment of benefits resulting from motor vehicle accidents in Michigan. Cruz v. State Farm Mut. Auto. Ins. Co., 648 N.W.2d 591, 594-95 (Mich. 2002). The NFA requires every Michigan motorist to purchase "no-fault insurance" in order to legally operate a vehicle. See Mich. Comp. Laws § 500.3101(1); see also Shavers v. Kelley, 267 N.W.2d 72, 77 (Mich. 1978). Under the NFA system, if an insured motorist has an accident, no-fault insurance pays for certain expenses and services regardless of who caused the accident. See Mich. Comp. Laws § 500.3105(2); see also Auto-Owners Ins. Co. v. Biddis, 309 N.W.2d 192, 193 (Mich. Ct. App. 1981). PIP benefits are the part of a no-fault policy that pays for medical expenses and caregiver services. See Mich. Comp. Laws § 500.3107(1); see also Cruz, 648 N.W.2d at 592.

Under the NFA, if a person was the "owner" of a car involved in an accident and did not have no-fault insurance at the time of the accident, that person may not receive PIP benefits or any other benefits payable under the NFA.[3] See Mich. Comp. Laws §§ 500.3101(1), .3113(b), .3173; see also Botsford, 489 N.W.2d at 140. On the flip side, a person involved in an accident while driving an uninsured car may recover PIP benefits so long as that person is not the "owner" of the uninsured car. See id. at 141. If an eligible injured motorist does not have insurance, the Facility assigns the claim to an insurance company that acts as a "servicing insurer" and pays PIP benefits. See Mich. Comp. Laws § 500.3172; see also Allstate Ins. Co. v. Great Lakes Ins. Co., No. 285883, 2010 WL 1814517, at *2 (Mich. Ct. App. May 6, 2010) (per curiam).

Servicing insurers must pay PIP benefits for "all reasonable charges" for "care, recovery, or rehabilitation." Mich. Comp. Laws § 500.3107(1)(a). The NFA pays for attendant care, nursing, and other similar medical services, including feeding, bathing, exercising, medicating, and assisting the injured person, performed by family members at reasonable market costs. See Van Marter v. Am. Fid. Fire Ins. Co., 318 N.W.2d 679, 683 (Mich. Ct. App. 1982). The NFA offers "unlimited lifetime benefits" for these "allowable expenses." See Douglas v. Allstate Ins. Co., 821 N.W.2d 472, 482 (Mich. 2012); Mich. Comp. Laws § 500.3107(1)(a). Injured persons can also receive payments for lost wages for up to three years, see Mich. Comp. Laws § 500.3107(1)(b), and up to $20 per day for "replacement services, " which are ordinary and necessary services the injured person would have performed but for the accident, such as lawn care, cooking, housekeeping, and household repairs. See id. § 500.3107(1)(c); Smith v. State Farm Auto. Ins. Co., 30 F.Supp. 3d 657, 662 (E.D. Mich. 2014).


In June 2013, Ms. Wilson instituted this action, bringing three claims against Citizens and Auto-Owners and one additional claim against Citizens only. (Doc. 1 at ¶¶ 25-59.) First, Ms. Wilson alleges that both defendants violated the NFA by failing to pay all available PIP benefits. (Doc. 1 at ¶¶ 25-31.) Second, Ms. Wilson alleges that both defendants breached certain duties she contends servicing insurers owe, including duties to pay and explain all available benefits, respond truthfully to inquiries, and conduct prompt investigations of claims, by failing to inform her of additional services payable under the NFA. (Doc. 1 at ¶¶ 17-24, 32-38.) Third, Ms. Wilson alleges that both defendants engaged in unfair or deceptive conduct in violation of the Michigan Consumer Protection Act by failing to pay all benefits owed and by failing to respond fully and truthfully to inquiries regarding benefits. (Doc. 1 at ¶¶ 45-59.) Fourth, Ms. Wilson brings a claim for "insurance bad faith" against Citizens, alleging that Citizens decreased benefits paid, delayed payments, and failed to fully disclose available benefits, and that these practices constitute unfair and deceptive practices.[4] (Doc. 1 at ¶¶ 39-44.)

Citizens and Auto-Owners contend that Ms. Wilson is not entitled to additional PIP benefits because Gloria was the "owner" of an uninsured vehicle at the time of her accident and was, therefore, never eligible for PIP benefits. (Doc. 40 at 11-13; Doc. 42 at 13-14.) The defendants assert that Ms. Wilson's claims fail because she cannot sue for additional benefits to which Gloria was never entitled in the first place. (Doc. 40 at 14-15; Doc. 42 at 14-16.) The defendants also assert statute of limitations defenses, (Doc. 40 at 15-18; Doc. 42 at 17, 22-25), and ...

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