Title: Jesperson v. Auto Club Insurance Association (Opinion - Leave Granted)
Citation: N/A
Docket Number: 150332
State: Michigan
Issuer: Michigan Supreme Court
Date: March 21, 2016

JESPERSON v AUTO CLUB INSURANCE ASSOCIATION 
 
Docket No. 150332.  Argued December 9, 2015 (Calendar No. 2).  Decided March 21, 
2016. 
 
Alan Jesperson was injured in a motor vehicle accident on May 12, 2009, when his 
motorcycle was struck from behind by a vehicle owned by Mary Basha and driven by Matthew 
Badelalla while Badelalla was making deliveries for Jet’s Pizza.  Auto Club Insurance 
Association (ACIA) was notified of Jesperson’s injuries and that it was the highest-priority no-
fault insurer on June 2, 2010, and it began making payments to Jesperson on July 23, 2010.  
Jesperson brought an action against Basha, Badelalla, and Jet’s in the Macomb Circuit Court on 
December 1, 2010, seeking damages for the injuries he had sustained.  He later moved to amend 
his complaint to add a claim against ACIA after it stopped paying him no-fault benefits.  The 
court, Mark S. Switalski, J., entered a default judgment against Badelalla and Basha, entered an 
order allowing Jesperson to amend the complaint, and entered an order severing Jesperson’s 
claims for trial.  A jury returned a verdict of no cause of action with regard to Jesperson’s claims 
against Jet’s.  Before trial on the remaining claim, ACIA moved for summary disposition, 
arguing that Jesperson’s claim against it was barred by the statute of limitations in 
MCL 500.3145(1).  The court agreed that the statute of limitations barred Jesperson’s claim and 
granted ACIA’s motion for summary disposition.  On appeal, the Court of Appeals, BOONSTRA, 
P.J., and METER, J. (SERVITTO, J., dissenting), affirmed, holding that the exception in MCL 
500.3145(1) to the one-year limitations period when the insurer has previously made a payment 
applies only if the insurer has made a payment within one year after the date of the accident.  306 
Mich App 632 (2014).   
 
In a unanimous opinion by Justice MCCORMACK, the Supreme Court held: 
 
 
The first sentence of MCL 500.3145(1) allows for an action for no-fault benefits to be 
filed more than one year after the date of the accident causing the injury if the insurer has made a 
payment of no-fault benefits for the injury at any time before the action is commenced.  Because 
such a payment was made in this case, the exception applied, and the question whether the 
defendant waived the statute of limitations by failing to properly plead it was moot. 
 
 
1.  MCL 500.3145(1) provides that an action for recovery of personal protection 
insurance benefits payable under this chapter for accidental bodily injury may not be commenced 
later than one year after the date of the accident causing the injury unless written notice of injury 
 
Michigan Supreme Court 
Lansing, Michigan 
Syllabus 
 
Chief Justice: 
Robert P. Young, Jr. 
 
Justices: 
Stephen J. Markman 
Brian K. Zahra 
Bridget M. McCormack 
David F. Viviano 
Richard H. Bernstein 
Joan L. Larsen 
This syllabus constitutes no part of the opinion of the Court but has been  
prepared by the Reporter of Decisions for the convenience of the reader. 
Reporter of Decisions: 
Corbin R. Davis 
as provided herein has been given to the insurer within one year after the accident or unless the 
insurer has previously made a payment of personal protection insurance benefits for the injury.  
This sentence establishes a one-year statute of limitations with two exceptions.  The “notice” 
exception allows the filing of an action for no-fault benefits more than one year after the date of 
the accident if written notice of injury has been given to the insurer within one year after the 
accident.  The “payment” exception allows the filing of an action for no-fault benefits more than 
one year after the date of the accident if the insurer has previously made a payment of personal 
protection insurance benefits for the injury.  The statute’s plain language supports the position 
that “previously” means prior to the commencement of the action, rather than before the 
expiration of one year after the date of the accident.  First, the Legislature used the word “or” to 
separate the notice exception and the payment exception, which indicates that the notice and 
payment exceptions should be treated as independent alternatives.  Second, the Legislature chose 
to use the phrase “within 1 year after the accident” in the notice exception and the word 
“previously” in the payment exception, which indicates that “previously” must mean something 
different from “within 1 year after the accident.”  Third, the Legislature’s word choice in the 
second sentence of MCL 500.3145(1) indicates that the exception is satisfied by any prior 
payment.  The second sentence provides that if the notice has been given or a payment has been 
made, the action may be commenced at any time within one year after the most recent allowable 
expense, work loss or survivor’s loss has been incurred.  While the second sentence of § 3145(1) 
refers to “the notice,” it also refers to “a payment,” suggesting that while the Legislature was 
referring to a specific notice—the notice given to the insurer within 1 year after the accident—it 
was not referring to a specific payment made at any particular time but rather to any payment 
previously made.  Reading the word “previously” to mean “prior to the commencement of the 
action” does not leave it completely surplusage or devoid of meaning, while interpreting 
“previously” to mean “within 1 year after the accident” would considerably undermine the 
significance of the payment exception. 
 
 
2.  Interpreting the payment exception to apply whenever an insurer has made a payment 
does not produce an absurd result.  Even when a plaintiff may bring an action for payment of no-
fault benefits more than one year after the date of an accident because the insurer has made a 
payment outside that window, MCL 500.3145(1) still applies a statute of limitations that limits 
when a plaintiff can bring a cause of action and a one-year-back rule that limits how much a 
plaintiff can recover.  Furthermore, it is only by virtue of an action by the defendant—the 
payment of no-fault benefits—that this exception to the statute of limitations is applicable.   
 
Court of Appeals judgment reversed; trial court order vacated; case remanded to the trial 
court for further proceedings. 
 
 
 
 
 
 
 
 
©2016 State of Michigan 
 
FILED  March 21, 2016 
 
 
S T A T E  O F  M I C H I G A N 
 
SUPREME COURT 
 
 
ALAN JESPERSON, 
 
 
Plaintiff-Appellant, 
 
 
v 
No. 150332 
 
AUTO CLUB INSURANCE 
ASSOCIATION, 
 
 
 
Defendant-Appellee. 
 
 
 
BEFORE THE ENTIRE BENCH  
 
MCCORMACK, J.  
Among the questions before us is whether an insurer’s payment of no-fault 
benefits to a plaintiff more than one year after the date of the plaintiff’s motor vehicle 
accident satisfies the second exception to the one-year statute of limitations established in 
the first sentence of MCL 500.3145(1) of the no-fault act.1  We conclude that such a 
                                              
1 We granted leave to appeal and directed the parties to address: 
(1) whether the defendant adequately raised the affirmative defense of the 
one-year statute of limitations stated in MCL 500.3145(1) without 
 
 
Michigan Supreme Court 
Lansing, Michigan 
OPINION 
 
Chief Justice: 
Robert P. Young, Jr. 
 
 
Justices: 
Stephen J. Markman 
Brian K. Zahra 
Bridget M. McCormack 
David F. Viviano 
Richard H. Bernstein 
Joan L. Larsen 
 
 
 
2 
payment does satisfy this exception.  Accordingly, we reverse the judgment of the Court 
of Appeals, vacate the trial court’s order granting summary disposition in favor of the 
defendant, and remand this case to the trial court for further proceedings consistent with 
this opinion. 
I.  FACTS AND PROCEDURAL HISTORY 
Plaintiff Alan Jesperson was involved in a motor vehicle accident on May 12, 
2009.  The accident was reported to defendant Auto Club Insurance Association (ACIA) 
on June 2, 2010, more than one year after the accident.  On July 23, 2010, ACIA began 
paying personal protection insurance benefits, or no-fault benefits, to Jesperson.  When 
ACIA subsequently notified Jesperson that it was terminating payment of his benefits, 
Jesperson amended his existing lawsuit against the driver of the other vehicle involved in 
the accident to add ACIA as a defendant, claiming that ACIA was wrongfully refusing to 
pay no-fault benefits.  
The trial was scheduled to begin on February 19, 2013.  On January 22, 2013, the 
defendant filed a motion for summary disposition in which it argued for the first time that 
                                              
explicitly describing it in its answer to the plaintiff’s amended complaint; 
(2) if not, whether the Court of Appeals erred in rejecting the plaintiff’s 
argument that the defendant waived the affirmative defense by pointing to 
the trial court’s authority to exercise its discretion to allow the defendant to 
amend its answer; and (3) if the defendant did not waive the statute of 
limitations defense, whether its payment of benefits to the plaintiff more 
than one year after the date of the accident satisfied the second exception to 
the one-year statute of limitations established in the first sentence of 
§ 3145(1).  [Jesperson v Auto Club Ins Ass’n, 497 Mich 987 (2015).] 
In light of our disposition of issue (3), we decline to address issues (1) and (2).  
 
3 
the plaintiff’s claim was barred by the one-year statute of limitations provided in 
MCL 500.3145(1).  The trial court agreed with the defendant that the plaintiff’s claim 
was barred by the one-year statute of limitations and dismissed the plaintiff’s claim.  
In a split, published decision, the Court of Appeals affirmed the trial court, holding 
that the exception in MCL 500.3145(1) to the one-year limitations period when the 
insurer has previously made a payment applies only if the insurer has made a payment 
within one year after the date of the accident.  Thus, the exception did not apply in this 
case because the defendant’s payments to the plaintiff did not begin until more than one 
year after the accident.2  Judge SERVITTO dissented, concluding that the defendant had 
waived the statute of limitations affirmative defense by failing to properly plead it and 
stating that, accordingly, she would not have reached the statutory interpretation 
question.3 
We granted the plaintiff’s application for leave to appeal. 
II.  ANALYSIS 
The first sentence of MCL 500.3145(1) of the no-fault act establishes a one-year 
statute of limitations with two exceptions: 
An action for recovery of personal protection insurance benefits 
payable under this chapter for accidental bodily injury may not be 
commenced later than 1 year after the date of the accident causing the 
injury unless written notice of injury as provided herein has been given to 
the insurer within 1 year after the accident or unless the insurer has 
                                              
2 Jesperson v Auto Club Ins Ass’n, 306 Mich App 632; 858 NW2d 105 (2014). 
3 Jesperson, 306 Mich App 653 (SERVITTO, J., dissenting). 
 
4 
previously made a payment of personal protection insurance benefits for the 
injury.  
The first exception—the “notice” exception—allows the filing of an action for no-
fault benefits more than one year after the date of the accident if “written notice of 
injury . . . has been given to the insurer within 1 year after the accident[.]”  
MCL 500.3145(1).  The second exception—the “payment” exception—allows the filing 
of an action for no-fault benefits more than one year after the date of the accident if “the 
insurer has previously made a payment of personal protection insurance benefits for the 
injury.”  Id. 
The critical issue here is the meaning of the word “previously” in the payment 
exception.  The plaintiff contends that “previously” means prior to the commencement of 
the action; the defendant argues that “previously” means before the expiration of one year 
after the date of the accident.  This Court reviews de novo questions of statutory 
interpretation, Joseph v Auto Club Ins Ass’n, 491 Mich 200, 205; 815 NW2d 412 (2012), 
as well as a trial court’s decision whether to grant a motion for summary disposition.  Id.  
When interpreting statutory language, we begin with the plain language of the 
statute.  Driver v Naini, 490 Mich 239, 246-247; 802 NW2d 311 (2011).  “We must give 
effect to the Legislature’s intent, and the best indicator of the Legislature’s intent is the 
words used.”  Johnson v Pastoriza, 491 Mich 417, 436; 818 NW2d 279 (2012).  
Additionally, when determining this intent we “must give effect to every word, phrase, 
and clause in a statute and avoid an interpretation that renders nugatory or surplusage any 
part of a statute.”  Hannay v Dep’t of Transp, 497 Mich 45, 57; 860 NW2d 67 (2014) 
 
5 
(quotation marks and citation omitted).  We conclude that the statute’s plain language 
supports the plaintiff’s reading of the statute.  
First, the Legislature used the word “or” to separate the notice exception and the 
payment exception.  “ ‘Or’ is . . . a disjunctive [term], used to indicate a disunion, a 
separation, an alternative.”  People v Kowalski, 489 Mich 488, 499 n 11; 803 NW2d 200 
(2011), quoting Mich Pub Serv Co v City of Cheboygan, 324 Mich 309, 341; 37 NW2d 
116 (1949) (alteration in original).  See also Badeen v PAR, Inc, 496 Mich 75, 84 n 17; 
853 NW2d 303 (2014) (noting that, because the phrases in the statute defining a 
collection agency are separated by the disjunctive “or,” “a person need only engage in 
one of the enumerated actions to satisfy the statutory definition”).  Thus, the word “or” 
here indicates that the notice and payment exceptions should be treated as independent 
alternatives. 
Second, the Legislature chose to use the phrase “within 1 year after the accident” 
in the notice exception and the word “previously” in the payment exception.  Courts have 
a duty to give meaning to the Legislature’s choice of one word over another.  Robinson v 
Detroit, 462 Mich 439, 459, 461; 613 NW2d 307 (2000).  “This Court will not assume 
that the Legislature inadvertently made use of one word or phrase instead of another.”  
People v Williams, 491 Mich 164, 175; 814 NW2d 270 (2012).  “Previous” means 
“coming or occurring before something else; prior[.]”  Random House Webster’s College 
Dictionary (2d ed, 2001).  We conclude that “previously” must mean something different 
from “within 1 year after the accident.”  
 
6 
Third, the Legislature’s word choice in the second sentence of § 3145(1) supports 
the plaintiff’s reading of the payment exception that the exception is satisfied by any 
prior payment.  The second sentence provides:  
If the notice has been given or a payment has been made, the action may be 
commenced at any time within 1 year after the most recent allowable 
expense, work loss or survivor’s loss has been incurred.  [MCL 
500.3145(1).] 
As this Court has explained: 
“The” and “a” have different meanings.  “The” is defined as “definite 
article. 1. (used, [especially] before a noun, with a specifying or 
particularizing effect, as opposed to the indefinite or generalizing force of 
the indefinite article a or an) . . . .”  Random House Webster’s College 
Dictionary, p 1382.  [Robinson v City of Lansing, 486 Mich 1, 14 (2010) 
(explaining that the phrase “the highway” must refer to a specific or 
particular highway, while the phrase “a highway” would refer to highways 
in general) (quotation marks and citation omitted; alteration in original).] 
While the second sentence of § 3145(1) refers to “the notice,” it also refers to “a 
payment,” suggesting that while the Legislature was referring to a specific notice—the 
notice given to the insurer within 1 year after the accident—it was not referring to a 
specific payment made at any particular time but rather to any payment previously made.  
See also Robinson, 462 Mich at 461 (discussing that the phrase “a proximate cause” 
should not be interpreted in the same way as the phrase “the proximate cause” because 
“[o]ur duty is to give meaning to the Legislature’s choice of one word over the other”) 
(emphasis added).  
The defendant argues that the plaintiff’s reading of the statute renders the word 
“previously” surplusage.  While this argument is not without merit,  reading the word 
“previously” to mean “prior to the commencement of the action” does not leave it 
 
7 
completely “surplusage,” or devoid of meaning.  At the same time, the defendant’s 
proposed reading of the statute, i.e., interpreting “previously” to mean “within 1 year 
after the accident,” would considerably undermine the significance of the payment 
exception.  The notice exception applies if the required notice has been provided to the 
insurer within one year after the accident.  MCL 500.3145(1).  For an insurer to make a 
benefits payment for an injury from an accident, the insurer must have received notice 
that the accident occurred.  That is, if an insurer makes a payment within one year after 
an accident, the insurer would in all likelihood have already received the required notice 
of the accident.  In other words, if the payment exception only operates if payment has 
been made within one year after an accident, this exception operates only if the notice 
exception would also in all likelihood apply.  To give full effect to the Legislature’s 
intention, we must avoid an interpretation that renders the payment exception all but 
surplusage.4  See Hannay, 497 Mich at 57.   
Finally, contrary to the conclusion of the Court of Appeals majority, interpreting 
the payment exception to apply whenever an insurer has made a payment does not 
produce an absurd result.  Even when a plaintiff may bring an action for payment of no-
                                              
4 We recognize that MCL 500.3145(1) requires the notice to be in writing and that it 
contain “the name and address of the claimant and indicate in ordinary language the name 
of the person injured and the time, place and nature of his injury.”  Therefore, if the 
insured, for example, provided the insurer with only oral notice of the injury within one 
year of the accident and the insurer made a payment of benefits within that same period, 
the notice exception would not apply because written notice had not been provided, but 
the payment exception would apply because a payment had been made.  In other words, 
the defendant’s reading of the statute would not render the payment exception completely 
surplusage.  It would, however, undermine the significance of a much larger portion of 
the statute than the plaintiff’s reading. 
 
8 
fault benefits more than one year after the date of an accident because the insurer has 
made a payment outside that window, MCL 500.3145(1) still applies a statute of 
limitations that limits when a plaintiff can bring a cause of action5 and a one-year-back 
rule that limits how much a plaintiff can recover.6  Accordingly, the Court of Appeals 
majority was wrong to conclude that the plaintiff’s interpretation of this exception would 
“essentially eliminate the limitations period of MCL 500.3145(1) in cases in which an 
insurer has ever paid anything on a claim[.]”  Jesperson, 306 Mich App at 644.  
Furthermore, it is only by virtue of an action by the defendant—the payment of no-fault 
benefits—that this exception to the statute of limitations is applicable.  A plain-language 
reading of this statute does not produce an absurd result.  
Therefore, we conclude that the payment exception to the one-year statute of 
limitations in § 3145(1) applies when the insurer makes a payment prior to the 
commencement of an action for no-fault benefits.  Because such a payment was made in 
                                              
5 The second sentence of MCL 500.3145(1) provides: 
If the notice has been given or a payment has been made, the action may be 
commenced at any time within 1 year after the most recent allowable 
expense, work loss or survivor’s loss has been incurred.  [Emphasis added.] 
See also Devillers v Auto Club Ins Ass’n, 473 Mich 562, 574; 702 NW2d 539 (2005) 
(“[MCL 500.]3145(1) contains two limitations on the time for filing suit . . . .”). 
6 The third sentence of MCL 500.3145(1) provides that “the claimant may not recover 
benefits for any portion of the loss incurred more than 1 year before the date on which the 
action was commenced.”  See also Devillers, 473 Mich at 574 (“Thus, although a no-fault 
action to recover PIP benefits may be filed more than one year after the accident and 
more than one year after a particular loss has been incurred (provided that notice of injury 
has been given to the insurer or the insurer has previously paid PIP benefits for the 
injury), § 3145(1) nevertheless limits recovery in that action to those losses incurred 
within the one year preceding the filing of the action.”). 
 
9 
this case, the exception applies and the question of whether the defendant waived the 
statute of limitations by failing to properly plead it is moot; thus, we decline to address it.  
People v Richmond, 486 Mich 29, 34; 782 NW2d 187 (2010) (explaining that this Court 
generally will not decide moot issues).  
III.  CONCLUSION 
We hold that the first sentence of MCL 500.3145(1) allows for an action for no-
fault benefits to be filed more than one year after the date of the accident causing the 
injury if the insurer has either received notice of the injury within one year of the accident 
or has made a payment of no-fault benefits for the injury at any time before the action is 
commenced.  Accordingly, we reverse the Court of Appeals judgment, vacate the trial 
court’s grant of summary disposition for the defendant, and remand to the trial court for 
further proceedings consistent with this opinion.  
 
 
Bridget M. McCormack  
 
Robert P. Young, Jr. 
 
Stephen J. Markman 
 
Brian K. Zahra 
 
David F. Viviano 
 
 
Richard H. Bernstein 
 
Joan L. Larsen