Author(s): David Campos

Volume XX, No. 5 February 5, 2008

FROM THE LAW OFFICES OF GARAN LUCOW MILLER, P.C.

UNDER THE MICHIGAN MOTOR CARRIER SAFETY ACT, A MOTORIST MAY HAVE EXPOSURE BEYOND $1,000,000 UNDER THE PROPERTY PROTECTION PROVISION OF THE MICHIGAN NO FAULT ACT

In the published non-unanimous decision in Michigan Dept of Transportation v North Central Cooperative LLC, ___ Mich App ___ (January 24, 2008), two of the Appellate Court Judges held that a motorist may not enjoy tort immunity for property damages occasioned above the $1,000,000 cap under MCLA 500.3121.

This case stems from damage sustained by a petroleum gas tanker truck which crashed over a barrier on a freeway causing $2,000,000 in damage repairs. The insurer of the petroleum gas tanker maintained that it had liability only for $1,000,000 worth of repairs under MCLA 500.3121. However, the Michigan Department of Transportation maintained that as a consequence of Michigan’s adoption of the Federal Motor Carrier Safety Act, the tort immunity afforded under MCLA 500.3135 for property protection damage was excepted. The plaintiff maintained, and the Court of Appeals in a split decision held, that the Michigan Motor Carrier Safety Act created an exception to the No Fault Act’s general abolition of tort liability for owners of motor vehicles who maintain $1,000,000 in security for payment of benefits as required by MCLA 500.3101 and specifically MCLA 500.3121(5).

In citing yet another non-unanimous decision, Michigan Dept of Transportation v Initial Transport, 276 Mich App 318 (2007), two of the Court of Appeals Judges reasoned that because the Michigan Motor Carrier Safety Act requires motor carriers to maintain minimum levels of financial responsibility in the amount of $5,000,000 for the transportation of hazardous materials, the Court was “bound to presume that these insurance policies must be recoverable by parties injured by those motor carriers”. Therefore, in the instant case, the Court reasoned that North Central Cooperative was not tort immune for damages above $1,000,000 occasioned by the transportation of hazardous materials.

In essence, the Court created an “implied cause of action” where the statutes themselves, i.e., the Federal Transportation Safety Act and the Michigan Motor Carrier Safety Act, did not so create such a cause of action.

This author subscribes to the better reasoned opinion of the dissenting Judge, Judge Zahra as well as Judge Whitbeck in the Initial Transport decision referenced above. Both judges point out that the Federal Transportation Safety Act and the Michigan Motor Carrier Safety Act do not expressly provide for property protection benefits over and above the $1,000,000 maximum nor do they create a cause of action.

Further, both Judges point out that the Michigan Motor Carrier Safety Act is not contrary to nor inconsistent with the Michigan No Fault Act insofar as the Michigan Motor Carrier Safety Act is a regulatory act that does not create a private right of action against an insured. It should have no bearing on either extending $1,000,000 property protection benefits to $5,000,000, nor should it create an exception to the abolition of tort liability for damages above $1,000,000. Further, the provision which abolishes tort liability, MCLA 500.3135(3) states: “Notwithstanding any other provision of law . . .”, which is an instruction by the Legislature to apply the abolition of tort liability over “any other provision of law”. Consequently, tort liability cannot be created out of the Michigan Motor Carrier Safety Act if, as in the instant case, the defendant maintained a general insurance policy for $1,000,000 in property protection benefits, as required by MCLA 500.3101.

While perhaps not well reasoned in the opinion of Court of Appeals Judges Zahra and Whitbeck and this author, it would appear that these two opinions stand for the proposition that a hazardous materials transporter is not immune from tort liability for property protection benefits in excess of $1,000,000 afforded as property protection benefits under MCLA 500.3121.

THE RETURN OF FAULT

The Motor Carrier Safety Act requires $5,000,000 in insurance coverage for transporters of hazardous materials. The Michigan Court of Appeals previously ruled that that limit superceded the no fault statutory limit of $1,000,000 for property damage. Dept of Transportation v Initial Transport, 276 Mich App 318 (2007). In another reported decision, the Court recently explored how the Motor Carrier Safety Act interacts with the no fault abolition of tort liability in Section 3135. It turns out that abolition is not quite as absolute as it appears.

Dept of Transportation v North Central Cooperative, LLC, (released on January 24, 2008) also involved, as did Initial Transport, fire damage to a highway overpass from an overturned tanker. In North Central Cooperative, the Court ruled that the trucking company, rather than the insurer, is the proper defendant under the Motor Carrier Safety Act. Under no fault, the insurer is the only proper defendant. Awdish v Williams, 117 Mich App 270 (1982).

In North Central Cooperative, the plaintiff had already sued defendant’s insurer for no fault property protection benefits. In that case, the trial court had ruled that no fault damages were limited to $1,000,000. The plaintiff then sued North Central Cooperative for bridge repair damages beyond the no fault limit. The Court held that claim was not barred by the earlier lawsuit.

In addition, under the Motor Carrier Safety Act, negligence must be proven against the truck operator. This, of course, is contrary to Section 3121(2) of the no fault statute which provides: “Property protection insurance benefits are due under the conditions stated in this chapter without regard to fault”.

North Central Cooperative did not specifically address the interaction between the no fault statue and the Motor Carrier Safety Act. Fault is an issue under the latter statute. This presumably allows notice of non-party fault against other vehicles or possibly highway designers. The first $1,000,000 in damages may be recoverable without regard to fault. There will be issues as to how that will be set off against a fault based verdict. The net result is different if the set off is before or after any reduction for fault. A fault allocation against an automobile not covered by the Motor Carrier Safety Act is presumably not recoverable beyond the $1,000,000 no fault limit. A fault based claim against the truck operator is likely not subject to the no fault one year statute of limitations. Residual liability beyond the $5,000,000 limit is another potential concern.

Vehicles subject to the Motor Carrier Safety Act may find themselves in a strange new world somewhere between the no fault statute and traditional fault based liability. The dissenting opinion in North Central Cooperative urged the Michigan Supreme Court to review some of these issues. Law Fax will follow this issue in the coming year.