Author(s): James L. Borin, Simeon R. Orlowski, James L. Borin

Mr. Borin is a Senior Partner in the Firm’s Troy Office and can be reached at (248)641-7600 or jborin@garanlucow.com

GARAN LUCOW MILLER, P.C. ANN ARBOR • DETROIT • GRAND BLANC • GRAND RAPIDS • LANSING • MARQUETTE • PORT HURON • TRAVERSE CITY • TROY MERRILLVILLE, INDIANA FROM THE LAW OFFICES OF GARAN LUCOW MILLER, P.C.

Volume XXII, No. 23 September 20, 2010

LAW FAX MICHIGAN LAW – BLUE | INDIANA LAW – RED www.garanlucow.com Garan Lucow Miller, P.C. 1111 West Long Lake Road, Suite 300 Troy, Michigan 48098 248.641.7600 From the Co-Editors James L. Borin & Simeon R. Orlowski

TRUCKER’S ORDER OF PRIORITIES — OWNER-OPERATORS CONTRIBUTOR – JAMES L. BORIN

The Court of Appeals has issued an important published Opinion, Besic v Citizens, et al, COA #291051 (9/14/10) addressing a long simmering priority dispute for owner-operators. Typically owner-operators have three available policies when hauling under a long term or trip lease: the bob-tail policy, the policy of the trucker for whom the owner-operator is hauling and the owner-operator’s personal auto policy. This case helps to clarify which insurer should afford PIP coverage.

Mohammed Besic, a resident of Michigan, was the owner-operator of a tractor trailer rig which he leased to MGR Express, Inc., under a “Contractor Operating Agreement” (i.e., a long

term lease). MGR was an Illinois corporation insured by Lincoln General Insurance Company. Mr. Besic was the named insured on a non-trucking policy (i.e., bob-tail coverage) with Clearwater Insurance Company. Mr. Besic was also the named insured on a Michigan personal auto policy with Citizens Insurance Company.

In January 2007, Besic was injured while driving his rig in Ohio. At the time of the accident, he was hauling for MGR Express under a long term lease. He sought Michigan PIP benefits from all three insurers, each of which denied his claim.

Lincoln General argued that it had no obligation for Besic’s PIP benefits because it’s policy with MGR Express which was issued under Illinois law. Clearwater argued that its contract was for non-trucking use of Besic’s rig and, therefore, was inapplicable to this loss. Citizens argued that if neither Lincoln General or Clearwater owed PIP, then the vehicle was inadequately insured, thereby excluding PIP coverage under Section 3113. In a unanimous opinion, The Court ruled as follows:

1. An owner-operator is an “employee” of himself for purposes of the order of priorities, specifically MCL 500.3114(3).

2. The personal auto insurer of the owner-operator is not responsible for PIP benefits.

3. The policy of Lincoln General was not responsible to pay PIP benefits if it was not a Michigan policy.

Ultimately, the Court relied upon Clearwater’s own contract to impose sole PIP responsibility on the non-trucking carrier:

For the covered “auto” described in this endorsement, LIABILITY COVERAGE, Michigan Personal Injury and Property Protection coverages are changed as follows: A. LIABILITY COVERAGE does not apply while the covered “auto” is used in the business of anyone to whom it is leased or rented if the lessee has liability insurance sufficient to pay for damages in accordance with Chapter 31 of the Michigan Code.

B. Michigan Personal Injury and Property Protection coverages do not apply to “bodily injury” or “property damages” resulting from the operation, maintenance or use of the covered “auto” in the business of anyone to whom it is leased or rented if the lessee has Michigan Personal Injury and Property Protection coverages on the “auto.” [Emphasis added.]

Since the lessee, MGR Express, did not have Michigan no fault coverage under its policy with Lincoln General, the Court rejected Clearwater’s contention that Citizens should pay the claim.

While this case involves unusual facts, there are several important points to consider:

1. The non-trucking policy is not automatically relieved of PIP exposure merely because the truck is hauling under a lease. You must obtain the non-trucking contract and carefully review its provisions.

2. While unnecessary in this case, the Court suggested during oral argument that the Clearwater policy would have been subject to reformation had it contained a complete exclusion for PIP. The Court pointed out that the Michigan No Fault Act allows for no such exclusion.

3. That an owner-operator is an employee even if the business entity is a DBA. The appellate attorney for Citizens Insurance Company is Caryn Gordon of Garan, Lucow, Miller.

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STATUTORY MAXIMUM THE ANNUAL COLA ADJUSTMENT INCREASES THE STATUTORY MAXIMUM TO $4,929 AS OF OCTOBER 1, 2010. THIS REPRESENTS A 1.05% INCREASE OVER THE 2009 STATUTORY MAXIMUM.

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Upcoming Seminars BUCKEYE SEMINAR Wednesday, October 13, 2010 at the Greater Columbus Convention Center in Columbus, Ohio. Agenda as follows:

8:30 – 9:00 a.m. CONTINENTAL BREAKFAST / REGISTRATION

9:00 – 9:10 a.m. WELCOME AND INTRODUCTION

Speaker: SUSAN M. WILLIAMS 9:10 – 10:00 a.m. 2010 NOTEWORTHY NO-FAULT DECISIONS

Speaker: CARYN GORDON *McCormick v. Carrier *U of M v. Titan *Overview of important Court of Appeals’ decisions 10:00 – 11:00 a.m. MICHIGAN AUTOMOBILE NO-FAULT – PIP UPDATE

Speaker: STACEY KING

*Test of the Employment Relationship

*PIP Causation

*Partial or Total Reimbursement of Incurred Allowable Expenses

*Stolen Vehicle Exclusion – MCLA §500.3113(A)

*Uninsured Motor Vehicle Exclusion – MCLA §500.3113(B)

*Avoiding Attorney Fees – MCLA § 500.3148(1)

11:00 – 11:15 a.m. BREAK

11:15a.m. – 12:00 p.m. CATASTROPHIC INJURIES

Speaker: SUSAN M. WILLIAMS

*Home modifications

*Transportation purchase/agreements

*Attendant Care

12:00 – 1:30 p.m. LUNCH

1:30 – 2:15 p.m.

MEDICAL MARIJUANA AND OTHER NON-STANDARD TREATMENTS UNDER THE NO-FAULT ACT

Speaker: MATTHEW LaBEAU

2:15 – 3:00 p.m. 3RD PARTY AUTO/TORT LIABILITY

Speaker: JOHN WHITMAN

3:00 – 3:30 p.m. QUESTION AND ANSWER SESSION

RETURN EVALUATION FORMS

Comprehensive written materials will be distributed to all program attendees. To register please contact Eileen Carty at Ecarty@garanlucow.com.

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WINDY CITY SEMINAR

Thursday, November 4, 2010 at the DoubleTree Hotel in Arlington Heights, Illinois. Agenda to follow at a later date.