Michigan Court of Appeals; Docket # 343556; Unpublished
Judges Cavanagh, Beckering, and Gadola; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
General Rule of Priority (§3114(1))
TOPICAL INDEXING:
Not Applicable
SUMMARY:
In this unanimous unpublished per curiam decision arising out of a priority dispute between Progressive Michigan Insurance Company and Pioneer State Mutual Insurance Company, the Court of Appeals reversed the trial court’s summary disposition order in favor of Pioneer—in which it determined that Progressive was the no-fault insurer of higher priority—and the trial court’s order imposing sanctions against Progressive for filing a third-party complaint against Pioneer. The vehicle that the plaintiff, Mark Howard, was traveling in at the time of the subject motor vehicle collision was insured under Howard’s wife’s automobile insurance policy with Progressive, but Howard, himself, was listed only as a driver and a household resident, not a named insured. Howard’s stepdaughter, meanwhile, with whom Howard and his wife lived at the time of the subject motor vehicle collision, had her own automobile insurance policy with Pioneer. The Court of Appeals held that Howard was not a “person named in [his wife’s] policy” for purposes of MCL 500.3114, and that Progressive and Pioneer were thus in the same order of priority, pursuant to the Supreme Court’s decision in Mich. Mut. Ins. Co. v. Allstate Ins. Co., 426 Mich. 346 (1986) (“an insurer of an injured person’s spouse and the insurer of a relative domiciled in the same household are in the same order of priority”).
After the subject motor vehicle collision, Howard filed the instant first-party action to recover no-fault PIP benefits, and named both Progressive and Pioneer as defendants. Pioneer filed a motion for summary disposition, arguing that Howard was a named insured in his wife’s policy with Progressive, and Progressive argued, in response, that Howard was not a named insured in its policy, and that, as a result, the insurers were in the same order of priority. The trial court concluded that Progressive was higher in priority, and granted Pioneer’s motion. Progressive subsequently moved for leave to file a third-party complaint against Pioneer, seeking recoupment of half the no-fault benefits that Progressive had paid to Howard. The trial court granted Progressive’s motion, and Pioneer again moved for summary disposition, arguing that the trial court had already resolved the priority issue, and sought sanctions against Progressive for filing a frivolous claim against it. Progressive again asserted its view that the two insurers were in the same order of priority, and the trial court again granted summary disposition in Pioneer’s favor. Moreover, it ordered Progressive to pay costs and attorney fees to Pioneer.
On appeal, the Court of Appeals first reversed the trial court’s summary disposition order in favor of Pioneer on the issue of priority. The Court ruled that Howard was not a named insured in his wife’s policy, because “merely being designated as a driver on a no-fault policy does not make someone a named insured.” Progressive and Pioneer were, in fact, in the same order of priority.
The Supreme Court has held that “an insurer of an injured person’s spouse and the insurer of a relative domiciled in the same household are in the same order of priority.” Mich Mut Ins Co v Allstate Ins Co, 426 Mich 346, 352; 395 NW2d 192 (1986).
Pioneer concedes on appeal that, if plaintiff is not the person named in the Progressive policy, then Pioneer and Progressive are in the same order of priority. The question is thus whether plaintiff is the person named in the Progressive policy.
We have held that “the ‘person named in the policy’ under MCL 500.3114(1) is synonymous with the ‘named insured[.]’ ” Stone v Auto-Owners Ins Co, 307 Mich App 169, 175; 858 NW2d 765 (2014). Plaintiff is not listed as a named insured on the declaration page of the Progressive policy issued to his wife, Eula. Only Eula is listed as a named insured. Plaintiff was listed as a driver and household resident. Merely being designated as a driver on a no-fault policy does not make someone a named insured. Stone, 307 Mich App at 175; Cvengros v Farm Bureau Ins, 216 Mich App 261, 264; 548 NW2d 698 (1996).
Pioneer argues that plaintiff is a named insured in the Progressive policy because of that policy’s definition of the word “you.” We disagree. The policy defines “you” as including “a person shown as a named insured on the declarations page[]” and “the spouse of a named insured if residing in the same household at the time of the loss.” This definition of “you” makes clear that plaintiff is covered under the policy as the spouse of the named insured, but it does not make him a named insured for purposes of MCL 500.3114(1). The definition of “you” encompasses two individuals, the named insured (Eula) and the named insured’s spouse (plaintiff). Therefore, the definition of “you” does not turn plaintiff into a named insured.
The Court similarly rejected an alternative argument proposed by Pioneer, that Howard was barred from recovering no-fault PIP benefits because his wife, and not he, insured the subject motor vehicle, which he, and not his wife, owned. The Supreme Court weighed in on this issue in Dye by Siporin & Assoc., Inc., v Esurance Prop. & Cas. Ins. Co., Docket No. 155784 (2019):
an owner or registrant of a motor vehicle involved in an accident is not excluded from receiving no-fault benefits when someone other than that owner or registrant purchased no-fault insurance for that vehicle because the owner or registrant of the vehicle may “maintain” the insurance coverage required under the no-fault act even if he or she did not purchase the insurance. [Id. at ___; slip op at 4.]
Lastly, the Court of Appeals agreed with Progressive that the trial court erred in imposing sanctions against it, primarily because Pioneer was no longer the prevailing party after appeal.
Because we are reversing the trial court’s grant of summary disposition to Pioneer on the priority issue, Pioneer is no longer the prevailing party. Moreover, Progressive’s third-party complaint was not frivolous. There is no evidence that Progressive’s primary purpose was to harass, embarrass, or injure Pioneer, nor is there any indication that Progressive lacked a reasonable basis to believe that the facts underlying Progressive’s legal position were true. Progressive’s legal position was not devoid of arguable legal merit. As discussed earlier, Progressive’s argument on the priority issue is legally correct. And when seeking leave to file the third-party complaint, Progressive disclosed to the trial court, both in the written motion and again at the motion hearing, that the court had previously granted summary disposition to Pioneer, but Progressive explained that it adhered to its position that Progressive and Pioneer were in the same order of priority and that Progressive wished to file a third-party complaint seeking partial recoupment of benefits from Pioneer in order to preserve Progressive’s position that it was entitled to seek such recoupment. The trial court granted Progressive permission to file the third-party complaint after having been twice reminded of the trial court’s earlier grant of summary disposition to Pioneer. Given all of these circumstances, the trial court clearly erred in subsequently finding that Progressive’s third-party complaint was frivolous.
