September 30, 2015
In the recently published opinion, Titan Ins Co v American Country Ins Co, et al, COA No. 319342 (9/15/15), the Court of Appeals addressed two consolidated cases arising out of two motor vehicle accidents involving uninsured vans engaged in the business of transporting passengers. In both cases, the Assigned Claims Plan assigned the claims to Titan Insurance Company. And in both cases, American Country Insurance Company (“American Country”) insured other vehicles registered to the vans’ owners but did not insure the vans.
The rules set forth in MCL 500.3114 address the order of priority in which various insurers will be liable to cover a claim for benefits. It provides, in relevant part:
(1) Except as provided in subsections (2), (3), and (5), a personal protection insurance policy described in section 3101(1) applies to accidental bodily injury to the person named in the policy, the person’s spouse, and a relative of either domiciled in the same household, if the injury arises from a motor vehicle accident…
(2) A person suffering accidental bodily injury while an operator or a passenger of a motor vehicle operated in the business of transporting passengers shall receive the personal protection insurance benefits to which the person is entitled from the insurer of the motor vehicle…
(4) Except as provided in subsections (1) to (3), a person suffering accidental bodily injury arising from a motor vehicle accident while an occupant of a motor vehicle shall claim personal protection insurance benefits from insurers in the following order of priority:
(a) The insurer of the owner or registrant of the vehicle occupied.
(b) The insurer of the operator of the vehicle occupied.
At first glance, it appears that Subsection (2) would apply to the facts of these cases where it applies to operators or passengers of a motor vehicle operated in the business of transporting passengers. However, that Subsection does not apply in these cases where the vehicles at issue were uninsured. The question presented in both appeals, then, was whether a party must progress through the other Subsections of MCL 500.3114 before the claim would be assigned to an insurer through the Assigned Claim Plan.
In both cases, Titan argued that because insurance was not available under Subsection (1), Subsection (4) should apply. In that scenario, American Country would be liable under MCL 500.3114(4)(a) because American Country insured other vehicles owned by the owners of the vans. American Country argued there was no indication in the statute that once it was determined insurance was unavailable pursuant to Subsection (2), Subsection (4) applies, so Titan would be the responsible insurer having been designated so by the Assigned Claims Plan. The two Circuit Court’s reached opposite conclusions, demonstrating the need for the Court of Appeal’s guidance on this issue.
Relying upon its previous decisions, such as Michigan Mut Ins Co v Farm Bureau Ins Group, 183 Mich App 626 (1990), the Court of Appeals held that subsections (1) and (4) together establish “the general order of priority.” Thus, if an exception provided in subsections (2), (3), or (5) would apply but insurance is not available, subsections (1) and (4) apply in tandem. The Court noted the “[e]xcept as provided in subsection (1) to (3)” at the beginning of subsection (4) and interpreted it to mean “if insurance is not available under subsections (1) to (3).” Therefore, Subsection (4) plainly governs which insurance applies when insurance is unavailable under subsection (1). As applied in the present case, under subsection (4), because American Country insured other vehicles owned by Safe Arrival and Bronco Express, it is responsible for the PIP claims in these cases.
Concurring, but writing separately, Judge Gleicher noted that the majority’s interpretation of §3114 is one of two possible interpretations of that provision, and leads to a seemingly unfair result. In essence, the majority’s interpretation means American Country is responsible for the PIP claims at issue, despite the fact American Country never agreed to insure the commercial vehicles involved in the accidents and never received a single dollar in premium payments for coverage of those vehicles. As a result, the law has created a contract that did not exist, and holds American Country liable for risks it never assumed.
Judge Gleicher went on to submit that an alternate interpretation is equally valid, i.e. that Subsection (2) operates as a stand-alone provision because it deals with operators or passengers of motor vehicles operating in the business of transporting passengers. She noted it was “equally plausible that the legislature envisioned that if a transportation service owner failed to obtain PIP coverage for some vehicles in his or her fleet, the risk would be spread to all insurers subject to assigned claims obligations, rather than being borne solely by the innocent insurer for the remaining vehicles.” She went on to suggest that the text of this statute merits consideration by the Supreme Court. In the meantime, when encountering a similar scenario, insurers would do well to note that the Court of Appeals will find coverage with an insurer that insures other vehicles owned by the same owner, even if the involved vehicle is not specifically covered.
The 2nd Annual Rivalry Seminar will take place on Friday, October 16, 2015, at Weber’s Inn, in Ann Arbor. Please note, this is a complimentary seminar for our clients. Contact Eileen Carty to register: firstname.lastname@example.org or (800) 875-7600.
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The Buckeye Seminar will take place on Thursday, October 22nd, 2015, at the Greater Columbus Convention Center. Please note, this is a complimentary, full-day seminar for our clients. In the morning, we will present No-Fault Updates and other topics. Lunch will then be provided, followed by John Whitman’s Deposition Boot Camp in the afternoon.
Contact Eileen Carty to register: email@example.com or (800) 875-7600
Click here for the seminar agenda.
TOP LAWYERS IN METRO DETROIT
Congratulations to GLM attorneys Rosalind Rochkind, John Gillooly, Daniel Saylor, and Thomas Misuraca, who have been selected as Top Lawyers in Metro Detroit by DBusiness/Hour magazine. They will be featured in the November/December, special edition of that publication