The Voluntary Payment Defense was addressed in yesterday's post on Insurance Claims and Bad Faith Law Blog. Today, a very recent example of how that affirmative defense is (not) applied comes in the case of Rapp v. Green Tree Servicing, LLC, 2013 WL 3992442 (D. Minn. August 5, 2013), a case previously posted for another ruling here on Monday, August 12, 2013, "'Common sense' reason for dismissal of FPI claims is neither." When a case offers many good opportunities for discussion, take the opportunities.
GTIA is Green Tree Insurance Agency, Inc. It is the captive insurance agency of Green Tree Servicing, LLC which serviced the mortgage on Jared Rapp's condominium in Michigan. Rapp v. Green Tree Servicing, LLC, 2013 WL 3992442 *1 (D. Minn. August 5, 2013). Green Tree force placed insurance on Rapp. In the process, GTIA received what it labeled a "commission" from the insurance company, American Bankers Insurance Company ("ABIC"). Rapp v. Green Tree Servicing, LLC, 2013 WL 3992442 *5 (D. Minn. August 5, 2013).
Mr. Rapp sued GTIA and others as a result of the FPI, the force-placed insurance. Unjust enrichment was one of several claims he alleged against GTIA. In turn, GTIA requested dismissal of the unjust enrichment claim, in part on the basis of the so-called voluntary payment doctrine. Rapp v. Green Tree Servicing, LLC, 2013 WL 3992442 *8 (D. Minn. August 5, 2013). GTIA contended that Mr. Rapp was notified of the FPI, that he was notified that Green Tree had used GTIA to purchase the insurance, that Rapp was also notified that ABIC paid GTIA a commission, and that "Rapp permitted Green Tree to withdraw the premium payments from his bank account for several months." Rapp v. Green Tree Servicing, LLC, 2013 WL 3992442 *8 (D. Minn. August 5, 2013).
The Minnesota Federal District Court, applying Michigan law, held that the doctrine of voluntary payment was simply inapplicable here as a matter of law. Accepting Mr. Rapp's allegations in his amended complaint as true in deciding GTIA's motion to dismiss, Mr. Rapp did not have full knowledge of the facts of the transaction as required in order for voluntary payment to be a recognized defense under Michigan (and generally applicable) law:
According to Rapp, the money taken from his bank account was used to pay not only for insurance, but for a kickback. Obviously, no one ever informed Rapp that his money was being used to finance a kickback scheme involving Green Tree, GTIA, and ABIC. [Citation to Michigan law omitted.] The voluntary-payment doctrine therefore does not bar Rapp from pursuing his unjust-enrichment claim against GTIA.
Rapp v. Green Tree Servicing, LLC, 2013 WL 3992442 *9 (D. Minn. August 5, 2013).
The voluntary payment 'doctrine,' such as it is, requires that payment be voluntary. If payment is not made voluntarily, payment is not a defense. No good will come of making the idea more complicated than that.
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