September 17, 2021
In Toduti v Progressive Michigan Insurance Company, et al, (Unpub, COA No. 352716, 9/2/21), Plaintiff Florin Toduti was driving a semi-truck that he owned, carrying a commercial load under an agreement with Universal, Mason & Dixon Intermodal (“Universal”), when he was involved in a motor vehicle accident and sustained injury. On the date of the accident, Plaintiff owned three non-commercial vehicles that he insured through Defendant Progressive Michigan Insurance Company (“Progressive”), but Progressive did not insure the semi-truck. In fact, Universal leased the truck from Plaintiff under an “independent contractor agreement” and had insurance on the semi-truck through Defendant Cherokee Insurance Company (“Cherokee”).
Plaintiff sought personal protection insurance (PIP) benefits from both Progressive and Cherokee, and both denied benefits. Plaintiff filed suit against both insurance companies as well as the Michigan Automobile Insurance Placement Facility.
Progressive filed a motion for summary disposition arguing that Plaintiff was injured while operating a commercial vehicle owned by his employer in the course of his employment at the time of the accident, therefore MCL 500.3114(3) controlled and Cherokee is first in the order of priority to pay PIP benefits. Cherokee made the argument that Plaintiff was an independent contractor instead of an employee and therefore his personal insurer, Progressive, was first in the order of priority. The Court agreed with Progressive and granted the motion for summary disposition stating that a person can be a self-employed independent contractor and retain the status of both employer and employee for purposes of MCL 500.3114(3). Cherokee was found to be first in priority for Plaintiff’s PIP benefits. Furthermore, the Court noted that even if Plaintiff was an independent contractor, he was still an employee of himself for purposes of MCL 500.3114(3)’s employer-employee exception.
On appeal, the Court of Appeals found Universal “owned” the semi-truck, and Plaintiff was operating the semi-truck when he was injured so he was entitled to PIP pursuant to MCL 500.3101. To determine priority between Cherokee and Progressive, the Court focused on MCL 500.3114(3) which provides that an employee who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer is to receive PIP benefits from the insurer of the furnished vehicle. The Court noted this exception also applies when an injured person is self-employed and operating an insured vehicle. Celina Mut Ins Co v Lake States Ins Co, 452 Mich 84, 85-86; 549 NW2d 834 (1996).
Applying the economic reality test, the Court of Appeals determined that Plaintiff was an employee of Universal. While Plaintiff and Universal had an “independent contractor agreement,” other evidence established that Plaintiff operated under the control of Universal. Universal paid Plaintiff weekly, depositing funds onto a Comdata card directly linked to Universal, and Universal issued a 1099 to Plaintiff’s business, Toduti 4, but Plaintiff reported his income on his personal taxes. Universal retained the right to disqualify any drivers hired by Toduti 4, and ultimately had the right to “hire” drivers for Toduti 4. Finally, Plaintiff’s duties as a truck driver for Universal appeared to be an integral part of the accomplishment of common goals, namely providing trucking services for income.
Applying these factors, as well as the relevant, controlling case law, the Court found Plaintiff was an employee of Universal and therefore, Cherokee was first in priority for payment of PIP benefits to Plaintiff. The Court further noted that Universal charged Toduti 4 and/or Plaintiff, for the insurance it procured through Cherokee such that, ultimately, Plaintiff paid for the insurance coverage that Cherokee now argues does not apply. Finding similarities with the Court of Appeals decision in Miclea v Cherokee Ins Co, ___ Mich App ___ (2020), the Toduti Court found Plaintiff was self-employed by Toduti 4 as its sole employee, and Plaintiff could be seen as an employee of both Toduti 4 and Universal by virtue of the agreement between the two. Therefore, Cherokee was the insurer of highest priority pursuant to MCL 500.3114(3). Even if Plaintiff was an independent contractor, however, MCL 500.3114(3) applies to the situation of an injured person who owned the vehicle involved and who worked as a self-employed independent contractor.