June 02, 2017
In the published decision of Hastings Mut. Ins. Co. v. Grange Ins. Co., the Court of Appeals determined that vehicle repairs performed by a salaried employee of a business whose primary purpose is farming, do not qualify under the course-of-business exception in MCL 500.3121(1).
Plaintiff, Hastings Mutual, insured the real and personal property of Williams Farms, LLC. On April 15, 2014 a fire occurred in a barn owed by Williams Farms while Ryan Keath, a salaried employee of Williams Farms, was repairing his sister’s motor vehicle. Ryan Keath regularly used the barn and its equipment to provide repairs and maintenance to the Farms’ vehicles, as well as to the vehicles of his family members. Plaintiff Hastings paid $699,134.00 in insurance benefits to cover the loss of the barn and all its contents, and thereafter filed a claim as subrogee for property protection benefits against Grange, the No Fault insurer of the vehicle involved in the fire.
Both Plaintiff and Defendant filed Motions for Summary Disposition and the Trial Court granted Plaintiff Hastings’ Motion for Summary Disposition, finding that the No Fault Act, MCL 500.3101, rendered Grange liable for the property damage, given that Williams Farms was a farm and was not in the business of repairing, servicing, or maintaining motor vehicles under MCL 500.3121(1). Defendant Grange appealed.
The Court of Appeals applied the established rules of statutory construction by discerning the intent of the Legislature by examining the language of the statutes at issue. Whitman v. City of Burton, 493 Mich 303, 311-312; 831 NW2d 233 (2013). The Hastings Court noted first that MCL 500.3101(1) provides that the owner or registrant of a motor vehicle required to be registered in this state shall maintain security for payment of benefits under personal protection insurance, property protection insurance, and residual liability insurance. The Court then looked to MCL 500.3121(1), which provides:
“Under property protection insurance an insurer is liable to pay benefits for accidental damage to tangible property arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle subject to the provisions of this section and sections 3123, 3125, and 3127. However, accidental damage to tangible property does not include accidental damage to tangible property, other than the insured motor vehicle, that occurs within the course of a business of repairing, servicing, or otherwise maintaining motor vehicles. [Emphasis added.]“
Applying these definitions, the Hastings Court found it was clear that MCL 500.3121(1)’s exception was meant to exclude property damage where the purpose of the business in question is to provide maintenance and repair services for motor vehicles – and not meant to cover just any business that peripherally participates in these activities or any person that performs these activities. The Court noted that Williams Farms’ business – its enterprise for gain, advantage, and livelihood – was focused on farming, not the repair, maintenance, and servicing of vehicles. See Terrien v Zwit, 467 Mich 56, 64; 648 NW2d 602 (2002). This was true even though Williams Farms benefitted from having vehicle repairs done in-house.
In sum, the Court of Appeals held that MCL 500.3121(1)’s exception applies only to vehicle- repair businesses and found that Williams Farms was not such a business. As such, MCL 500.3121(1) did not exclude Defendant Grange from liability for the damage and the trial court properly granted Plaintiff Hastings’ Motion for Summary Disposition.
Next, the Court of Appeals reviewed Hastings’ appeal from the trial court’s denial of its motion for attorney fees, pursuant to MCL 500.3148(1). In its motion, Hastings argued that Grange’s denial of property protection benefits was unreasonable, thus entitling Hastings to reasonable attorneys fees. The trial court denied the Motion, holding that Grange had reasonably believed that it was relieved of liability under MCL 500.3121(1).
MCL 500.3148(1) provides that “an attorney is entitled to a reasonable fee for advising and representing a claimant in an action for personal or property insurance benefits which are overdue. The attorney’s fee shall be a charge against the insurer in addition to the benefits recovered, if the court finds that the insurer unreasonably refused to pay the claim or unreasonably delayed in making proper payment.” However, a No Fault insurer may have reasonably delayed or refused to pay a claim even where it is later determined that the insurer is required to pay the benefits. Moore v. Secura Ins, 482 Mich 507, 525; 759 NW2d 833 (2008). In this case, the Court of Appeals affirmed that Grange reasonably believed it was excluded from liability under MCL 500.3121(1), given the dearth of pertinent case law construing MCL 500.3121(1) and the factual circumstances of the case.
******************************
This complimentary Deposition Boot Camp would be presented to a group of 10 or more in your office, as a half-day session.
This is an ideal presentation for new claim representatives. Based upon decades of experience, each Boot Camp addresses the Plaintiff’s reasons and motivations for deposing claims professionals, what needs to be done to prepare for the deposition, how to conduct oneself during a deposition, and practical “do’s and don’t’s” for claims professionals before and during the deposition. Practical demonstrations and participation in role-play scenarios complement and complete the presentation.
Please contact Eileen Carty at ecarty@garanlucow.com or (248) 641-7600 to schedule a complimentary in-house presentation.