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Sappington v Shoemake (COA – UNP 10/25/2018; RB #3805) 

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Michigan Court of Appeals; Docket # 337994; Unpublished
Judges Cameron, Ronayne Krause, and Tukel per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Concurrence


STATUTORY INDEXING:
Exception for Employer Provided Vehicles [§3114(3)]
Definition of Owner [§3101(2)(h)]

TOPICAL INDEXING: 


CASE SUMMARY:
In this unanimous unpublished per curiam Opinion, the Court of Appeals reversed the trial court’s grant of summary disposition for Cherokee Insurance Company (“Cherokee”) and reversed the trial court’s denial of summary disposition for Defendant State Farm Mutual Automobile Insurance Company (“State Farm”) regarding the exception for employer provided vehicles. The Court of Appeals reversed the trial court because it found that the Plaintiff Michael Sappington (“Sappington”) owned the vehicle involved in the accident and he was employed by himself. Therefore, the Sappington qualified for the employer exception to the general rule of priority amongst no-fault providers.

Defendant TST Expedited Services (“TST”) paid Sappington to drive a commercial truck that hauled TST cargo. TST obtained a commercial automobile insurance policy for the truck through Cherokee. Sappington was seriously injured when his co-driver John Shoemake drove the truck off the road. Sappington brought an action against TST, Shoemake, and Cherokee for no-fault benefits. TST and Shoemake were dismissed by stipulation.

Cherokee then asserted that it was not the insurer of highest priority because Sappington had a personal no-fault policy from State Farm. Sappington filed an amended complaint against both Cherokee and State Farm. The two companies both motioned for summary disposition. The lower court found that Sappington was an independent contractor and not eligible for the exemption to the general rule of priority for employer owned vehicles. Thus, the trial court granted summary disposition for Cherokee. State Farm and Sappington settled, subject to State Farm reserving the right to challenge Cherokee’s priority. This appeal therefore only dealt with State Farm and Cherokee.

Central to the Court’s holding was a recognition that the truck involved in the motor vehicle accident was owned by both TST and Sappington pursuant to MCL 500.3101(2)(l)(i). In this regard, the Court observed:  

“An entity called Truck Forward, Inc, which may also go by the name Truck Depot Expedite, is the registered owner of the truck in Ohio. Plaintiffs leased the truck from Truck Forward. The lease was entered into on January 12, 2014, and thus had been in effect for more than 30 days by the time of the accident. Plaintiffs were therefore “owners” of the truck pursuant to MCL 500.3101(2)(l)(i). Plaintiffs then leased the truck to TST. These facts are functionally indistinguishable from a lease described in Besic v Citizens Ins Co, 290 Mich App 19, 21-22; 800 NW2d 93 (2010). In Besic, the injured party was the title owner of the vehicle, but similarly leased it to a shipping company and was deemed to remain an “owner.” Id. at 32. State Farm argues that “it was undisputed that TST and Mr. Sappington were both statutory owners of” the truck here. We find no such stipulation in the record,1 but we agree that pursuant to MCL 500.3101(2)(l)(i) and Besic, Sappington and TST both “owned” the truck for purposes of the no-fault act.”

Next, the Court held that an independent contract can be considered an employee of himself for purposes of the No-Fault Act. In so holding, the Court cited to Celina Mut Ins Co v Lake States Ins Co, 452 Mich 84, 87-90; 549 NW2d 834 (1996), the Michigan Supreme Court unambiguously established that a person can simultaneously be both an employer and an employee under the no-fault act. Specifically, someone who is self-employed is an employee of himself. Id. The Court then cited to its earlier opinion in Besic v Citizens Ins Co, 290 Mich App 19, 21-22; 800 NW2d 93 (2010), where it stated that a person can be a self-employed independent contractor and retain the status of both employer and employee. Here, Sappington was an independent contractor and therefore an employee of himself. Cherokee contended that Sappington was not an employee of TST. However, even if Sappington was not an employee of TST, Sappington was an employee of himself.

The Court then found that the employer exemption under MCL 500.3114(3) was applicable because Sappington was injured in a motor vehicle accident where the employer (Sappington) owned the vehicle. Because the employer exemption under § 3114(3) was applicable, Cherokee was the insurer of highest priority since it insured the truck. The Court noted that regardless of whether Sappington was an employee of TST or himself, § 3114(3) was applicable.

“Pursuant to Celina and Besic, and accepting Cherokee’s assertion at face value that Sappington was an independent contractor of TST, Sappington was employed by himself. Pursuant to MCL 500.3101(2)(l)(i) and Besic, Sappington “owned” the truck in which he was injured pursuant to his employment. As a consequence, Sappington was “employed” by an “owner” of the truck under MCL 500.3114(3). That exception to the default priority of insurers therefore applies. Although we need not resolve the factual issue, we note that in the alternative, if Sappington was an employee of TST, then he would again be an employee of an owner of the truck. In either circumstance, because Cherokee insured the truck, Cherokee was the priority insurer as a matter of law.”

Thus, the Court reversed the trial court’s grant of summary disposition for Cherokee and reversed the trial court’s denial of summary disposition for State Farm.

Concurrence:
Judge Cameron wrote separately to further explain why the trial court did not need to undergo the economic reality test. Judge Cameron explained that “in granting [Cherokee]’s motions for summary disposition, the trial court concluded that Sappington could not be both an independent contractor with TST and a self-employed sole proprietor of his own business.” This analysis did not comport with Celina and thus it must be rejected.


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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