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Spectrum Health Hospitals v Auto-Owners Ins Co (COA - UNP; 2/23/2017; RB # 3616)  

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Michigan Court of Appeals; Docket # 330914; Unpublished
Judges Borrello, Markey and M.J. Kelly; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:

Determination of Domicile [§3114(1)]
Resident Relatives [§3114(1)]
Exception for Occupants [§3114(4)]
Disqualification for Uninsured Owners or Registrants of Involved Motor Vehicles or Motorcycles [§3113(b)]
Definition of Owner [§3101(2)(k)]

TOPICAL INDEXING:

Reformation of Insurance Contracts


CASE SUMMARY:

In this unanimous unpublished per curiam Opinion, the Court of Appeals denied plaintiff-medical providers’ request to reform the no-fault insurance contract between the injured individual’s mother-in-law and defendant-Auto-Owners. Finding that the trial court properly granted summary disposition for defendant-Auto-Owners, the Court held:

  1. the injured individual was not entitled to benefits under the Auto-Owners policy because she was not a named insured and was not a relative domiciled in the household of the named insured, Vera Herington, as required by MCL 500.3114(1);
  2. the injured individual was not entitled to benefits under Vera Herington’s policy with Auto-Owners because Auto-Owners was not the insurer of either Arthur Grant, the owner of the vehicle involved in the accident, or Angela Grant, the vehicle’s operator, pursuant to MCL 500.3114(4); and
  3. MCL 500.3113(b) excluded coverage because the injured individual was the vehicle’s “owner” within the meaning of MCL 500.3101(2)(k)(i), as she had “use” of the vehicle “for a period that is greater than 30 days,” and neither she nor a co-owner of the vehicle maintained PIP coverage on the involved vehicle.

Vera Herington was the mother of Arthur Grant, the registered owner of a 1994 Buick. Arthur’s wife, Angela Grant, was driving the Buick in March 2014 when she was injured in an accident. In late 2013, prior the accident, Arthur and Angela were having marital problems and Arthur had begun living with Vera in her home. While Arthur lived with Vera, the Buick remained at the marital home, but Arthur had the keys. Also, Vera had a no-fault policy with defendant Auto-Owners and, while Arthur lived with her, she added him as a driver to her Auto-Owners policy. She also added the Buick as an insured vehicle on January 4, 2014, with the policy term running through July 4, 2014. Arthur returned to the marital home in February 2014, just prior to Angela’s accident. Neither Arthur nor Angela maintained insurance on the Buick, nor did they have any other no-fault insurance, including at the time of Angela’s March 2014 motor vehicle accident.

Auto-Owners subsequently denied Angela’s claim for no-fault coverage, asserting it did not have priority to pay benefits. Plaintiffs in this case were the medical providers that had treated Angela’s injuries after the March 2014 accident. When plaintiffs submitted billing forms, statements and medical records to Auto-Owners, no payments were made. Subsequently, the Michigan Assigned Claims Plan (MACP) also denied plaintiffs’ claim, reasoning that the “owner, co-owner or constructive owner of an uninsured vehicle … involved in an accident is not entitled to PIP benefits.” Plaintiff-medical providers filed this action seeking payment from Auto-Owners. Auto-Owners moved for summary disposition claiming it was not the priority insurer because: 1) neither Angela nor Arthur was a named insured under its policy with Vera; 2) at the time of the accident neither Angela or Arthur was a resident relative of Vera; and 3) Vera was not an “owner” of the Buick, but rather the Buick was registered to and owned by Arthur. Plaintiffs opposed the motion and requested equitable relief, asking the trial court to reform Vera’s Auto-Owners policy to include Arthur as a named insured and, except as to the issue of damages, to grant summary disposition in plaintiffs’ favor. The trial court rejected this argument and granted summary disposition for Auto-Owners.

The Court of Appeals affirmed summary disposition for Auto-Owners, for several reasons.

The Court first examined whether Angela was entitled to benefits through the Auto-Owners policy because, if she was not, then plaintiff-medical providers were also not eligible to claim benefits.

Looking at the record presented in the case, the Court of Appeals said Angela was not eligible for benefits under Vera’s Auto-Owners policy because: 1) Angela was not a “named insured”; 2) Angela was not “a relative domiciled in the household of” the named insured, Vera; and 3) Auto-Owners was not the insurer of Angela’s husband, Arthur (the owner of the vehicle), and was not the insurer of Angela, the vehicle’s operator at the time of the accident. The Court further found that Angela was not entitled to benefits under §3113(b) because she was the vehicle’s “owner” under §3101(2)(k)(i) as “’having the use’ of the vehicle ‘for a period that is greater than 30 days.’” In light of the foregoing, the Court of Appeals said that, because Angela was not entitled to benefits, plaintiff-medical providers could not claim benefits under the Auto-Owners policy.Furthermore, the Court rejected plaintiffs’ attempt to reform the policy to include Arthur, the vehicle owner, as a named insured. The Court stated:  

“[P]laintiffs have neither alleged nor developed a factual record that supports granting the equitable relief of contract reformation. … Plaintiffs were not parties to the contract between Auto-Owners and [Vera]; consequently, they lack standing to seek its reformation. Additionally, neither Arthur Grant nor Angela Grant is a party to the contract. … In sum, plaintiffs lack standing to request reformation of the insurance contract between Auto-Owners and Herington, and the circumstances show at best a unilateral or mutual mistake between the contracting parties as to the legal effect of the contract. These circumstances will not support reformation of the contract.”

The Court of Appeals continued by rejecting plaintiffs’ public policy argument. The Court stated:

“[H]ad Arthur been injured while still residing with [Vera], he could have claimed PIP benefits under [the] policy because he did not have insurance of his own. … So the trial court correctly observed that [Vera] arguably had an insurable interest concerning PIP coverage regarding the Buick, to which Arthur retained the key while he was living with her. But even if [Vera] lacked an insurable interest to support her adding the 1994 Buick to her insurance policy, the remedy would not be to reform the policy to add Arthur as a named insured. Rather, the remedy would be to void that part of the Auto-Owners policy. … [B]oth Arthur Grant and Angela Grant were fully aware that the Buick was uninsured, and neither … maintained no-fault insurance. And, there is nothing about the Auto-Owners policy that permitted Auto-Owners to shift their priority liability for PIP benefits on behalf of [Vera], the policy’s named insured, if she were injured in an automobile accident. Thus, nothing in the Auto-Owners policy is contrary to the no-fault act.”

Based on the foregoing, the Court of Appeals concluded:

“It would frustrate the intent of the no-fault act to grant plaintiffs request to reform the Auto-Owners policy to add Arthur Grant as a named insured under these circumstances where the Grants are not parties to the contract, no facts justify reformation under long-standing case law, and where the Grants knowingly failed to maintain security required by the no-fault act. … Consequently, … the trial court properly denied plaintiffs request to reform the insurance contract between Herington and Auto-Owners.”

 


Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit SinasDramis.com.

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