COURT OF APPEALS AFFIRMS THAT DECEDENT’S INJURY AFTER BEING LEFT IN A SENIOR ASSISTED LIVING FACILITY’S BUS DID NOT RESULT FROM THE “USE OF THE VEHICLE”

In Employers Insurance Co. of Wausau v. Hearthstone Senior Servs., L.P. et. al. (Docket No. 324776, 3/15/16), the Michigan Court of Appeals, in an unpublished decision, affirmed the trial court’s ruling that the death of an individual at a senior assisted living facility did not result from “the use and ownership” of the facility’s vehicle and, accordingly, plaintiff insurance company was not required to provide residual liability coverage under the circumstances.

Decedent Susanna West was a resident at a senior assisted living facility owned and operated by Defendant Hearthstone Senior Services. L.P. In September 2008, West and other residents of Hearthstone were transported by bus to a Meijer store. The bus used to transport the residents was insured under a business automobile policy issued by Plaintiff. Later that afternoon, the bus returned to Hearthstone and all of the residents exited the bus, except West. The bus was then parked in a parking lot behind the facility with West still inside. She was finally discovered in the bus by Hearthstone employees approximately 12 hours later, where she was “hypothermic, dehydrated and in severe distress.” She was transported to the hospital and died 10 weeks later.

Lashanda Snell, the personal representative of West’s estate, brought suit against Hearthstone, but Hearthstone did not have any general liability insurance and was going out of business. Snell then discovered that Plaintiff insured the bus. After receiving notice of Snell’s intent to file a claim, Plaintiff filed a complaint for declaratory judgment, requesting that the trial court declare that it had no duty to indemnify or defend Hearthstone because West’s injuries did not arise out of the “ownership, maintenance, or use of a covered vehicle.” The trial court agreed and Plaintiff was granted summary disposition.

On appeal, the Court of Appeals found the residual liability coverage language of Plaintiff’s insurance policy was consistent with the applicable portions of the no-fault act, and as such, the injury must “arise out of the use of an automobile” in order for PIP coverage or residual liability coverage to apply. The Court then applied the three-part test set forth in Century Mut. Ins. Co v League General Ins. Co., 213 Mich App 114, 117-121 (1995) to determine whether the insurer is liable for providing residual automobile liability coverage:

1. The accident must have arisen out of the inherent nature of the automobile, as such;

2. The accident must have arisen within the natural territorial limits of an automobile, and the actual use, loading, or unloading must not have terminated;

3. The automobile must not merely contribute to cause the condition which produces the injury, but must, itself, produce the injury.

In applying each prong, the Court found West’s injuries occurred as a result of the prolonged period of time that she was left inside the bus after it was no longer being used in a motoring fashion. As such, the Court found the accident did not arise out of the inherent nature of the automobile (i.e. its transportational or motoring function), the actual use of the bus had already been terminated, and the bus merely contributed to cause the condition which produced injury which is not enough to establish a causal connection that triggers liability coverage. The Court concluded that West’s injuries did not arise out of the use of the bus and were not foreseeably identified with the normal use, maintenance and operation of the vehicle, and therefore Plaintiff was not required to provide residual liability coverage.

The Court further held the subject case is distinguishable from “school bus cases,” where it has been found that the “use” of a school bus includes the specific purpose of ensuring that students are transported securely between predetermined bus stops, such that automobile liability coverage will apply even when students get off the bus. See, Pacific Employers Ins. Co. v Mich. Mut. Ins. Co, 452 Mich 218 (1996); Indiana Ins. Co v Auto-Owners Ins. Co., 260 Mich App 662 (2004). Unlike those cases, the bus at issue in this case was distinguishable because the driver was not tasked with ensuring that the residents were properly disembarked at a particular stop along a route of multiple stops. As such, the principles held in the “school bus cases” are not binding or instructive on the case at hand.

Under Employers Insurance Co. of Wausau v. Hearthstone Senior Servs., L.P. et. al., supra, courts should apply the three-prong test to determine whether or not an insurer is liable for providing residual liability coverage. The case is also significant in that it declined to apply the “school bus cases” to residents at a senior assisted living facility, finding that
the purpose and use of a school bus in ensuring students are transported safely and securely between pre-determined bus stops is distinct from the purpose of the assisted living facility bus at issue.

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