Author(s): Ann M. Stuursma, Tara L. Velting

Can a Friend of Court Lien Reach a Settlement in a 3rd Party Automobile Negligence Suit or Compensation Under a Worker’s Compensation Order or Settlement?

YES! The Support and Parenting Time Enforcement Act of 1982 provides collection authority for title IV-D agencies to levy against various items to collect past due child support if an arrearage has accrued 2 times the monthly amount due under the order. A title IV-D agency is a state agency that runs a child support program under title IV-D of the Social Security Act of 1975. In Michigan, the Friend of the Court is a title IV-D agency.

MCL 552.625c provides that a title IV-D agency (Friend of Court) may levy against certain things to which the payer of support is entitled, some of which include:

(b) Money to be paid by an insurer as the result of a claim for negligence, personal injury, or death, under an arbitration award, or under a settlement of or judgment issued in a civil action.

(c) Compensation under a worker’s compensation order, settlement, redemption order, or voluntary payment. MCL 552.625c(2)(b), (c).

To levy against these types of assets, the Friend of the Court must serve the financial institution, insurer, or carrier with a notice of the lien and levy, and direct that financial institution, insurer, or carrier to freeze the financial assets, money, or compensation of the payer of support. MCL 552.625c(3).

The Friend of Court may then give a notice of a withdrawal of a levy. If the Friend of Court gives a notice of a withdrawal of a levy:

“Upon receiving notice of a withdrawal of a levy, the financial institution, insurer, or carrier shall release the payer’s financial assets, money to be paid, or compensation by the close of business on 1 of the following days: (a) If the notice is received before noon, the first business day after the business day on which the notice is received. (b) If the notice is received at noon or later, the second business day after the business day on which the notice is received.” MCL 552.625c(4).

In either event, the money is due one or two days after the notice is received, which is a very quick turn around!


For the insurer or carrier which is wondering what its liability is to its claimant for failure to pay on the settlement agreement:

“A financial institution, insurer, or carrier incurs no obligation or liability for blocking, freezing, placing a hold upon, forwarding, or otherwise dealing with a person’s financial assets, money to be paid, or compensation in response to a lien or levy imposed or information provided under sections 25c to 25i.” MCL 552.625d(3).

In fact, failure to comply with the Friend of Court’s notices might result in a claim being made by the Friend of the Court against the insurer or carrier, despite the fact that the insurer or carrier has already paid the claimant/payer of child support.

In the end, the short answer is: Yes, a Friend of Court lien can reach almost anything. A Friend of Court lien can certainly reach a settlement in a 3rd party automobile negligence suit or compensation under a worker’s compensation order or settlement. Insurance companies and carriers should always comply with Friend of Court notices and orders. You should never make out a check to both the Plaintiff and the Friend of the Court with the intention that both must sign before it is cashed. If the Friend of Court has directed that the assets be frozen, the assets must

be frozen. If the Friend of the Court has served you with a Notice of Withdrawal, you must comply within the appropriate time frame. Our laws protect the right of children to receive support from their parents.


Perhaps the more significant question is whether the insurer or carrier has an affirmative duty to find out if there are arrearages prior to settling with a claimant. As of the date of this writing, the authors can find no case law or anything to suggest that there is an affirmative duty to find out if there are arrearages prior to settling with a claimant. That said, all staff should be knowledgeable of the Friend of Court’s authority to freeze and withdraw assets. Staff should be on the lookout for any correspondence or notices from the Friend of the Court and highlight those for immediate review.

Merely “Having use of” a vehicle for a period greater than 30 days is not sufficient to determine whether a person is an “owner” of a vehicle under MCL 500.3101 (2)(h)(i)

In a new unpublished opinion, the Michigan Court of Appeals ruled that in order for a person to be considered an “owner” under MCL 500.3101 (2)(h)(i), a person’s use of a vehicle must comport with concepts of ownership for a period greater than 30 days.

In Auxier v Nationwide Property & Casualty Ins Co, decided January 27, 2009, (Docket No. 281793), the Court was faced with a no-fault coverage dispute between Nationwide Property & Casualty Ins. Co. and the Plaintiff regarding whether Nationwide was responsible for the payment of no-fault benefits to the Plaintiff who was injured while driving an uninsured vehicle.

On February 16, 2006, Plaintiff sustained injuries while driving an uninsured van that was titled solely in the name of his live-in girlfriend. A policy of insurance with Nationwide was in effect on the subject van until 3 weeks before the accident; however, this policy was canceled by Nationwide when the requisite spousal information was not provided3. At the time of the accident, Plaintiff was the titled owner of another vehicle that was also insured by Defendant Nationwide. Plaintiff filed a claim a claim for no-fault insurance benefits with Nationwide and in March of 2006, a claims adjuster for Nationwide contacted Plaintiff and took his recorded statement. Plaintiff admitted that his live-in girlfriend permitted him to use the vehicle “any time that I want” and that he does not need to ask her for permission. Plaintiff stated that this arrangement resulted in his use of the vehicle once a week for about a year.

On the basis of Plaintiff’s statement, Nationwide denied Plaintiff’s request for benefits because Plaintiff was an “owner” of the van and, therefore, he was disqualified from recovering benefits pursuant to MCL 500.3113(b), which precludes a person from recovering benefits when that person is the owner of an uninsured vehicle involved in the accident. After Plaintiff sued, the parties filed cross-motions for summary disposition on the issue of whether Plaintiff could be deemed an owner of the vehicle as MCL 500.3101(2)(h)(i) defines the term.

The trial court found that the evidence was insufficient to find that Plaintiff had a regular pattern of unsupervised usage so as to establish a proprietary or possessory interest in the vehicle or that he had a right to use the vehicle for more than 30 days. As Plaintiff was not found

to be the “owner” of the van, the trial court ruled that Plaintiff was not barred from collecting benefits under MCL 500.3113(b).

In analyzing whether Plaintiff qualified as an “owner” under 3101(2)(h)(i), the Court stated that “having the use” of a motor vehicle means using the vehicle in ways that comport with concepts of ownership and that the focus must be on the nature of the person’s right to use the vehicle. Additionally, the court stated that ownership follows from proprietary or possessory usage, as opposed to merely incidental usage under the direction or with permission of another. It is a regular pattern of unsupervised usage rather than spotty and exceptional usage that will support a finding of ownership.

While examining these factors, the Court noted that although Plaintiff had stated that he could use the van whenever he wanted and that he did not have to ask for permission, the deposition testimony of Plaintiff and his girlfriend provided significant clarification of those statement. Specifically, Plaintiff began using the van one to two times per month for six to eight months and then increased his usage when his vehicle “broke down.” Plaintiff’s girlfriend stated that Plaintiff would pay for the gas he used and that she would pay for necessary maintenance on the vehicle, with the exception of Plaintiff paying for the repairs related to the accident. Additionally, Plaintiff’s girlfriend testified that the van had child seats for her children and that she would also use the van to perform errands and get to and from work. On occasion, Plaintiff’s girlfriend would take Plaintiff to work instead of allowing him to use the vehicle. Although Plaintiff told the claims adjuster that he did not need to ask for permission, he testified that he would ask for permission “most of the time.” Moreover, Plaintiff testified that he did, in fact, ask for permission on the day of the accident.

However, the facts the Court found most compelling on the question of whether Plaintiff’s use of the vehicle was permissive or possessory were that Plaintiff did not have his own set of keys, that he was denied use of the vehicle on several occasions, and that Plaintiff’s girlfriend paid for the maintenance on the vehicle. Also, Plaintiff had his own vehicle and his use of the van was merely incidental to the status of his vehicle as being “broken down” or out of gas.

Accordingly, the Court concluded that Plaintiff was not an “owner” of the van as defined by MCL 500.3101(2)(h)(i) and thus was not precluded from recovering benefits under MCL 500.3113(b). Thus, this case illustrates that the term “owner,” as defined by MCL 500.3101(2)(h)(i), goes beyond mere use of a vehicle for a period greater than 30 days. Rather, the use of the vehicle must demonstrate a clear possessory interest in the vehicle as opposed to incidental or permissive use that exceeds 30 days.