Michigan Supreme Court: Plaintiffs May Cure Real Party in Interest Defects Through Amendments or Rescissions
MSC Opinion Published: July 3, 2025
MSC Docket Nos. 165537, 165538, and 165964
C-Spine Orthopedics – Macomb County Circuit Court
Wallace - Wayne County Circuit Court
Holding: The Michigan Supreme Court held that both C-Spine Orthopedics, PLLC, and Wallace had standing to file their respective lawsuits, but they were not the real parties in interest at the time of filing because they had assigned their claims for personal protection insurance (PIP) benefits to third parties. The Court further held that defects in real party in interest status can be cured after filing a lawsuit, and the one-year-back rule does not affect whether a plaintiff is a real party in interest, though it may bar recovery.
Facts: C-Spine Orthopedics, PLLC, a medical provider, filed two lawsuits against Progressive Michigan Insurance Company to recover personal protection insurance (PIP) benefits for treatments provided to a couple who were injured in a car accident in 2018. The couple assigned their rights to seek PIP benefits to C-Spine.
C-Spine entered into agreements with factoring companies, assigning its accounts receivable, including claims for unpaid benefits, to these companies. Progressive argued that C-Spine lacked standing as it had assigned its rights. C-Spine countered with counter-assignments from the factoring companies, claiming restored rights to sue. The trial court initially denied Progressive's motion but later granted it, concluding C-Spine lacked standing. The Court of Appeals reversed this decision, and the Supreme Court ordered oral arguments on Progressive’s applications for leave to appeal.
Wallace filed a lawsuit against Suburban Mobility Authority for Regional Transportation (SMART), seeking PIP benefits for injuries sustained in a bus collision in 2019. Wallace assigned her rights to PIP benefits to her medical providers. However, she obtained "mutual rescissions" of her assignments from her providers after SMART moved for summary disposition, arguing Wallace was not the real party in interest. The trial court denied SMART's motion, but the Court of Appeals reversed, citing the one-year-back rule as a bar to recovery. The Supreme Court ordered oral arguments on Wallace’s application for leave to appeal.
Key Appellate Ruling:
Assignments are absolute transfers of rights, extinguishing the assignor's rights. However, parties to an assignment may execute “counter-assignments” which will restore a party’s interest in the assigned claim. A party’s real part in interest status may be remedied after the complaint is filed.
The Michigan Supreme Court held that C-Spine Orthopedics, PLLC, had standing to file its lawsuit but was not the real party in interest at the time of filing because it had assigned its claims to factoring companies. However, C-Spine's real party in interest status was restored through counter-assignments. The case was remanded to the trial court for further proceedings to address whether C-Spine can cure the real party in interest defect by amending its complaints to reflect the counter-assignments. The Court also noted that the one-year-back rule does not affect whether a plaintiff is a real party in interest, though it may bar recovery.
Any party who attempts to cure their status as a real party in interest after filing a complaint must take “some action in the litigation” to permit the court to evaluate the effective of the change in parties and their respective status, such as filing an amended complaint.
The Michigan Supreme Court held that real party in interest status may be remedied if not present at the time of the initial filing of the complaint by taking various steps within the litigation to bring in the proper parties. These efforts may include filing an amended complaint joining or substituting the proper party or via intervention. Similarly, an assignment which has been revoked or “counter-assigned” back to the plaintiff should be identified in an amended complaint.
Rescission is an equitable remedy that does not automatically operate by law and requires court discretion. It can potentially restore the assignor's status as the real party in interest if recognized by the court.
The Michigan Supreme Court held that Wallace was not the real party in interest after assigning her claims to medical providers. However, the Court reversed the Court of Appeals' decision and held that Wallace could re-obtain her status as a real party in interest after obtaining mutual rescissions. The Supreme Court vacated the Court of Appeals' holding that Wallace's claims would be barred by the one-year-back rule if the assignments were revoked. The case was remanded to the trial court to consider whether equitable rescission should apply and whether the real party in interest defect could be cured via such equitable rescission.
