CALL V. L & KJ Enterprises (MI COA - April 20, 2026)
Michigan Court of Appeals Overrules Pezzani: No-Fault Insurers Regain Subrogation Rights Against Nonmotorist Tortfeasors
The Michigan Court of Appeals, sitting as a special panel under MCR 7.215(J)(3), recently revisited the scope of MCL 500.3116(2) in Call v L & KJ Enterprises, LLC, ___ Mich App ___ (2026). The Court overruled Citizens Ins Co v Pezzani & Reid Equip Co, Inc (On Remand), 202 Mich App 278; 507 NW2d 833 (1993), which had stood for over thirty years for the proposition that a no-fault insurer's right to reimbursement was limited to three enumerated circumstances: out-of-state accidents, accidents involving uninsured vehicles, and intentional torts.
The underlying facts are straightforward. A motorist's vehicle was serviced by a tire shop. Approximately one mile after leaving the shop, the rear tire separated from the vehicle and struck the plaintiffs' car, causing injury. The plaintiffs' no-fault carrier, Frankenmuth Insurance Company, paid $381,760.17 in PIP benefits and intervened as the plaintiffs' subrogee, seeking recovery against the tire shop on a negligence theory. Relying on Pezzani, the trial court granted summary disposition, reasoning that none of the three statutory circumstances was present.
On appeal, the special panel held that Pezzani misread the statute. Examining the language of MCL 500.3116 as a whole, and reading it in conjunction with MCL 500.3146, the Court concluded that the provision governs only a no-fault insurer's right to recoup benefits from its own claimant out of the claimant's tort recovery. It does not restrict a carrier's separate right, as subrogee, to pursue a nonmotorist tortfeasor directly.
The Court found support in Citizens Ins Co of America v Tuttle, 411 Mich 536; 309 NW2d 174 (1981), which held that the no-fault act abolished tort liability only as to motorist tortfeasors, leaving nonmotorist tortfeasors fully exposed under traditional tort principles. The panel also relied on Great Lakes American Life Ins Co v Citizens Ins Co, 191 Mich App 589 (1991), and Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 507 Mich 498 (2021), both of which framed MCL 500.3116 as addressing the carrier-claimant relationship.
In sum, Call clarifies that MCL 500.3116(2) does not bar a no-fault insurer from pursuing a subrogation claim against a nonmotorist tortfeasor whose negligence caused the underlying motor vehicle accident. The carrier's right of recovery in such circumstances arises from common law equitable subrogation, although a one-year statute of limitations may apply from the final payment. A statute of limitations for such claims can run as short as one year under MCL 500.3145 in inter-insurer recoupment scenarios.
For insurers, the decision restores a meaningful avenue of recovery in cases involving negligent third-party conduct, including defective products, negligent vehicle service, and premises defects that precipitate motor vehicle accidents. For defense counsel representing such third parties, the Pezzani defense is no longer available, and litigation strategy must now focus on traditional tort defenses.
Michigan Court of Appeals Overrules Pezzani: No-Fault Insurers Regain Subrogation Rights Against Nonmotorist Tortfeasors
The Michigan Court of Appeals, sitting as a special panel under MCR 7.215(J)(3), recently revisited the scope of MCL 500.3116(2) in Call v L & KJ Enterprises, LLC, ___ Mich App ___ (2026). The Court overruled Citizens Ins Co v Pezzani & Reid Equip Co, Inc (On Remand), 202 Mich App 278; 507 NW2d 833 (1993), which had stood for over thirty years for the proposition that a no-fault insurer's right to reimbursement was limited to three enumerated circumstances: out-of-state accidents, accidents involving uninsured vehicles, and intentional torts.
The underlying facts are straightforward. A motorist's vehicle was serviced by a tire shop. Approximately one mile after leaving the shop, the rear tire separated from the vehicle and struck the plaintiffs' car, causing injury. The plaintiffs' no-fault carrier, Frankenmuth Insurance Company, paid $381,760.17 in PIP benefits and intervened as the plaintiffs' subrogee, seeking recovery against the tire shop on a negligence theory. Relying on Pezzani, the trial court granted summary disposition, reasoning that none of the three statutory circumstances was present.
On appeal, the special panel held that Pezzani misread the statute. Examining the language of MCL 500.3116 as a whole, and reading it in conjunction with MCL 500.3146, the Court concluded that the provision governs only a no-fault insurer's right to recoup benefits from its own claimant out of the claimant's tort recovery. It does not restrict a carrier's separate right, as subrogee, to pursue a nonmotorist tortfeasor directly.
The Court found support in Citizens Ins Co of America v Tuttle, 411 Mich 536; 309 NW2d 174 (1981), which held that the no-fault act abolished tort liability only as to motorist tortfeasors, leaving nonmotorist tortfeasors fully exposed under traditional tort principles. The panel also relied on Great Lakes American Life Ins Co v Citizens Ins Co, 191 Mich App 589 (1991), and Esurance Prop & Cas Ins Co v Mich Assigned Claims Plan, 507 Mich 498 (2021), both of which framed MCL 500.3116 as addressing the carrier-claimant relationship.
In sum, Call clarifies that MCL 500.3116(2) does not bar a no-fault insurer from pursuing a subrogation claim against a nonmotorist tortfeasor whose negligence caused the underlying motor vehicle accident. The carrier's right of recovery in such circumstances arises from common law equitable subrogation, although a one-year statute of limitations may apply from the final payment. A statute of limitations for such claims can run as short as one year under MCL 500.3145 in inter-insurer recoupment scenarios.
For insurers, the decision restores a meaningful avenue of recovery in cases involving negligent third-party conduct, including defective products, negligent vehicle service, and premises defects that precipitate motor vehicle accidents. For defense counsel representing such third parties, the Pezzani defense is no longer available, and litigation strategy must now focus on traditional tort defenses.
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