COA Holds No Res Judicata for Tort/Uninsured Motorist Claims Due to Prior PIP Claims

On August 11, 2015, the Court of Appeals decided in a published opinion Adam v Bell (Docket No 319778), and overturned an order granting summary disposition to State Farm on the grounds that Cynthia Adam’s claims were barred by res judicata. Adam was injured when she was struck by a vehicle driven by Susan Bell. The question was whether an earlier claim for PIP benefits barred a later third-party claim for third-party negligence and uninsured motorist (UM) benefits. Adam and State Farm settled the PIP benefits claim, and the trial court dismissed Adam’s claims for benefits up to October 15, 2012. On January 16, 2013, Adam filed a claim alleging negligence against Bell and breach of contract against State Farm for failure to pay UM benefits. On State Farm’s motion, the trial court dismissed the UM claim because it “clearly could have been filed in the prior matter and was not, therefore, the claim is barred by res judicata.” The Court of Appeals reversed. The Court reasoned that, because PIP benefits do not require proof of fault, and are intended for the immediate relief and care of the injured party, a PIP claim is significantly different from a tort or contract claim, even though they arise from the same accident, injuries, and insurance policy. Notably, PIP claims have a one year statute of limitations. UM claims, however, require proof of fault, and the injured person may need more time to collect the necessary facts. “Thus, while an injured person will likely have all the facts necessary to make a meaningful decision to pursue a PIP claim within a relatively short time after an accident, the same cannot be said for the injured person’s ability to pursue a claim for uninsured motorist benefits.”

In addition, the statute of limitations may run on a PIP claim before a tort/UM claim becomes anything more than a possibility. Finally, UM claims involve “compensation for past and future pain and suffering and other economic and noneconomic losses” rather than PIP claims involving “compensation for immediate expenses related to the injured person’s care and recovery.” Because PIP claims and tort/UM claims are fundamentally different, and “applying res judicata to essentially require mandatory joinder of a mere potential UM claim with a PIP claim would be inconsistent with the very divergent statutory treatment of these two very different types of no-fault claims,” the Court of Appeals reversed the trial court’s grant of summary judgment on the grounds of res judicata, and remanded for further proceedings.