August 31, 2012
In Spectrum Health Hospitals v Farm Bureau Mut Ins Co of Michigan, ___ Mich ___ (2012), released for publication on July 31, 2012, the Michigan Supreme Court examined two lower court cases and held that any person who takes a motor vehicle or motorcycle contrary to a provision of the Michigan Penal Code – including MCL 750.413 and MCL 750.414, informally known as the “joyriding” statutes – has taken the vehicle unlawfully for the purposes of MCL 500.3113(a). The Supreme Court overruled Bronson Methodist Hospital v Forshee, 198 Mich App 617 (1993) and the plurality opinion in Priesman v Meridian Mutual Ins Co, 441 Mich 60 (1992) and its progeny.
In Spectrum Health Hospitals v Farm Bureau (Docket No. 142874), Craig Smith, Jr. was injured in a single-car accident that occurred while he was driving a vehicle owned by his father, Craig Smith, Sr., and insured by Farm Bureau. Craig Sr. had expressly forbidden Craig Jr. to operate the vehicle because he did not have a valid driver’s license. Craig Jr. knew he was forbidden to drive the vehicle. Craig Sr., however, had entrusted the vehicle to Craig Jr.’s girlfriend to enable the two of them to perform landscaping services. Craig Jr.’s girlfriend then turned around and gave the keys to him while he was drunk. He later crashed the vehicle into a tree. Craig Jr. pleaded no contest to operating a vehicle while intoxicated causing serious injury, and was sentenced to a minimum of 2.5 years in prison. Spectrum Health Hospitals, which rendered medical care to Craig Jr., brought suit against Farm Bureau for PIP medical benefits.
Spectrum Health argued that an “unlawful taking” did not occur because the vehicle’s owner had authorized the vehicle’s use by another person (an intermediate user), who in turn authorized a third person (end user) to use the vehicle. The appellate court had held that, for the purposes of MCL 500.3113(a), a vehicle owner is presumed to have allowed the end user to take the vehicle due to the actions of the intermediate user, regardless of whether the owner had expressly forbidden the end user from taking the car.
However, the Michigan Supreme Court stated that the “chain of permissive use” theory was inconsistent with the statutory language of MCL 500.3113(a). The Court further stated that in examining whether a taking was unlawful within the meaning of MCL 500.3113(a), it was irrelevant whether the taking would have subjected the vehicle’s owner to vicarious liability under the Owner’s Liability Statute, MCL 257.401, but instead, the courts must examine whether the taking was “without authority” as established in the Michigan Penal Code.
Therefore, since there was no factual dispute that Craig Jr. was not allowed to take and use the vehicle and that he had express knowledge that Craig Sr. had not given him consent to take and use the vehicle, he had taken his father’s vehicle without the necessary authority contrary to MCL 750.414 and, therefore, took it unlawfully within the meaning of MCL 500.3113(a).
In Progressive Marathon Ins Co v DeYoung (Docket No. 143330), Ryan DeYoung had accumulated three drunk driving convictions by age 26 and did not have a valid driver’s license. Ryan’s wife, Nicole, owned and insured the family’s four vehicles with Progressive. Ryan was specifically named as an excluded driver on the Progressive policy and Nicole had expressly prohibited Ryan from driving the vehicles. One night, Ryan came home in an intoxicated state, took the key to the motor vehicle out of Nicole’s purse, and took the vehicle, contrary to Nicole’s standing instructions and without her permission. Within 20 minutes, Ryan was badly injured in a single car accident. He incurred more than $53,000 in medical bills at Spectrum Health Hospitals and another $232,000 at Mary Free Bed Rehabilitation Hospital. Progressive denied PIP benefits pursuant to MCL 500.3113(a) and commenced a declaratory action.
In this case, the circuit court found in favor of the no-fault insurer, ruling that the joyriding exception did not extend to a family member who was specifically named as an excluded driver on the auto policy. The trial court concluded that “to further extend the joyriding exception so as to overturn excluded driver provisions was to increase the risk in all such policies and may result in good drivers with uninsurable family members (due to excessive risk associated with poor driving records) becoming uninsurable themselves.” However, the appellate court reversed, concluding that it had no alternative but to follow the binding precedent established and apply the family joyriding exception.
The Michigan Supreme Court noted that the family joyriding exception was nowhere in the plain language of the statute and expressly disapproved of any analysis wherein the courts examined a model act to interpret existing statutes, rather than examining the clear language of the actual statutes at issue. The Michigan Penal Code, including MCL 750.413 and MCL 750.414, does not make a distinction as to whether the driver intended to steal the car or not. If the act of taking the vehicle was unlawful, the injured person who did the taking is not entitled to PIP benefits, unless he or she reasonably believed that he or she was entitled to take and use the vehicle.
In summary, any person, including family members, who takes a vehicle in violation of the Michigan Penal Code, without reasonably believing he or she is entitled to take the vehicle, may be precluded from personal protection insurance (PIP) benefits pursuant to MCL 500.3113(a).