In the Court of Appeals’ recent “approved for publication” decision, Carlonda Naishe Swoope v Citizens Insurance Company of the Midwest, Plaintiff Swoope was involved in an automobile accident that occurred on October 27, 2020. Plaintiff was driving a car owned by a friend and at the time of the accident, Plaintiff did not have a valid driver’s license. Neither Plaintiff nor the car’s owner maintained an automobile insurance policy. Thus, Plaintiff sought personal protection insurance (PIP) benefits through the Michigan Assigned Claims Plan (MACP) who assigned Plaintiff’s claim to Defendant Citizens.
Defendant Citizens denied coverage and Plaintiff filed suit seeking payment for PIP benefits. Defendant Citizens filed for summary disposition, arguing that there was no genuine issue of material fact that Plaintiff was unlawfully operating the vehicle. The trial court denied the motion. This appeal followed.
Defendant Citizens argued that the trial court erred in denying its motion for summary disposition under MCR 2.116(C)(10) because there was no genuine issue of material fact that Plaintiff was unlawfully operating the car and therefore was not entitled to PIP benefits under the no-fault act. The no-fault act permits an insurer to avoid coverage of PIP benefits if, at the time of the accident, the person was willingly operating or willingly using a motor vehicle or motorcycle that was taken unlawfully, and the person knew or should have known that the motor vehicle or motorcycle was taken unlawfully. MCL 500.3113(a).
In the case of Ahmed v Tokio Marine America Ins Co, 337 Mich App 1, 10; 972 NW2d 860 (2021), the Court set forth a three-prong test to evaluate an insurer’s disqualification of an ‘unlawful taking’ claim under MCL 500.3113(a). The Ahmed case held that “the disqualification applies to any person (1) willingly operating or willingly using a motor vehicle or motorcycle that (2) was unlawfully taken by someone, and (3) the person seeking benefits knew or should have known that the motor vehicle was taken unlawfully.” Id. The Ahmed Court clarified that the “should have known” standard under the test requires a person to determine whether they have permission to take a vehicle “because a person may not simply take what he knows to be another’s property without taking any steps to determine if the owner authorized the taking.” Id at 27. Assumption and speculation are not sufficient to satisfy this standard. The Ahmed case confirmed that “any violation of the criminal law that leads to the taking of a motor vehicle will constitute an ‘unlawful taking’ for the purposes of MCL 500.3113(a).” Id at 11 n 5.
Pertinent to the case at hand, MCL 257.301 concerns the legality of operating a vehicle without a valid driver’s license and states, in part, that an individual shall not drive a motor vehicle on a highway in this state unless that individual has a valid operator’s or chauffeur’s license with the appropriate group designation and endorsements for the type or class of vehicle being driven or towed.
Defendant Citizen’s motion for summary disposition focused on the second and third prong of the Ahmed test, relying upon Plaintiff’s admission that she did not have a valid driver’s license at the time of the accident, thus violating the statutes. This testimony also satisfied the third prong because Plaintiff knew that her license was suspended when she took the vehicle and she understood that driving the vehicle without a valid license was unlawful. Plaintiff further admitted that the vehicle’s owner did not give her permission to drive the vehicle. The Court of Appeals found that summary disposition should have been granted in favor of Defendant Citizens and that the trial court erred when it concluded otherwise.
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Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com