In the recently published decision of Hmeidan v State Farm Mut Auto Ins Co, issued November 27, 2018, the Michigan Court of Appeals determined that State Farm could be held liable for payment of PIP benefits to an injured motorcyclist as the “motor vehicle insurer” of the operator of the motorcycle, pursuant to MCL 500.3114(c).
In Hmeidan, Plaintiff claimed he was “test-driving” a motorcycle for sale by “an associate” when a car failed to stop at a stop sign and turned in front of him. The motorcycle collided into the back of the car which immediately fled the scene. Progressive insured the owner of the motorcycle involved in the accident. Plaintiff did not own a motor vehicle or have insurance at the time of the accident, although his mother owned two vehicles that were insured by State Farm.
Plaintiff filed suit against State Farm and Progressive seeking PIP benefits. State Farm and Progressive disputed which insurer was in higher order of priority, focusing on the meaning of the phrase “motor vehicle insurer” in MCL 500.3114(5)(c) and (d). State Farm argued that the additional descriptor of “motor vehicle” in MCL 500.3114(5)(c) had an additional meaning: that MCL 500.3114(5)(c) only speaks to motor vehicle insurance polices that specifically name the injured party. State Farm argued that because Plaintiff was not a named insured under the State Farm policy, and Plaintiff did not reside with State Farm’s named insured (Plaintiff’s mother) at the time of the accident, State Farm was not Plaintiff’s insurer. Progressive argued that State Farm was the highest-priority insurer under MCL 500.3114(5)(c), maintaining that if a person was entitled to no-fault coverage as a resident relative of a named insured, then that insurer was “the motor vehicle insurer of the operator.”
The trial court agreed with State Farm and concluded that State Farm could not be liable under MCL 500.3114(5)(c). The trial court reasoned that a “motor vehicle insurer” of the operator of the motorcycle did not exist because Plaintiff did not own a vehicle at the time of the accident and was not a named insured on any no-fault insurance policy. The Court of Appeals, however, found the trial court had erroneously interpreted and applied MCL 500.3114(5)(c). The Court discussed the context in which MCL 500.3114(5) comes into play: an accident involving both a motorcycle and a motor vehicle. The Court noted that the Legislature made a policy choice to provide motorcyclists with more expansive PIP coverage when they are injured in an accident involving a motor vehicle, rather than limiting an injured person to the optional medical benefits coverage available to motorcyclists.
With this in mind, the Court concluded that the phrase “motor vehicle insurer” was used by the Legislature to delineate between the injured party’s motorcycle policy and any applicable motor vehicle policies. As such, the Court found that the Legislature included the phrase “motor vehicle” before “insurer” in MCL 500.3114(5)(c) and (d) to make clear that it was speaking of any motor vehicle policies that covered the motorcyclist, such as a resident relative under a policy. The Court further found, however, that a question of fact existed whether Plaintiff was a resident relative of State Farm’s insured and thus remanded the matter back to the Circuit Court for a decision as to Plaintiff’s residency.
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Sarah Nadeau, Editor of the Law Fax Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com
