Michigan Court of Appeals; Docket # 341072; Unpublished
Judges Gleicher, Kelly, and Letica; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Exception for Commercial Vehicles [§500.3114(2)]
TOPICAL INDEXING:
Not applicable
SUMMARY:
In this majority unpublished per curiam decision, the Court of Appeals reversed the trial court’s grant of summary disposition in favor of defendant Auto-Owners Insurance Company on the issue of priority rules. Co-defendant City of Novi was not in the business of transporting passengers, and therefore US Specialty Insurance Company (City of Novi’s insurer) was not the insurer of highest priority for purposes of paying no-fault benefits to an injured passenger using a city transportation service.
This case arises out of injuries sustained by plaintiff William Ahee while traveling as a passenger on the City of Novi’s Older Adult Services Transportation Program (OASTP). Ahee named both his no-fault insurer, Auto-Owners, and the City of Novi’s Insurer, US Specialty, in a subsequent action to recover no-fault benefits. A dispute arose between the two insurers as to who was the insurer of highest priority, and both moved for summary disposition.
At issue in this case is an exception to the general rule that an injured person turn to his or her own insurer for no-fault benefits in the event of an accident. MCL 500.3114(2) provides in pertinent part, “A person suffering accidental bodily injury while an operator or a passenger of a motor vehicle operated in the business of transporting passengers shall receive the personal protection insurance benefits to which the person is entitled from the insurer of the motor vehicle.” In order to determine whether or not the OASTP vehicle in question was in the business of transporting passengers, the court established two relevant inquiries: “(1) whether the transportation of passengers is the primary purpose for which the vehicle is used and (2) whether the transportation of passengers is a primary, as opposed to incidental, component of the overall business or activity of the operator.”
The Court found that no genuine issue of material fact existed as to the first inquiry of the primary purpose/incidental nature test—the sole use of the vehicle was in fact for transporting passengers. As for the second inquiry, however, the Court found that the operation of the vehicle was not a primary component of the business or activity of the operator. Rather, the OASTP program was “incidental to the City’s main function of operating as a government entity.”
In light of the foregoing, we agree with US Specialty’s contention that the City’s primary function is to provide for the health, safety, and welfare of the municipality and its residents. While the OASTP may fit within the large scope of that function, it serves only a fraction of the City’s residents and accounts for an insignificant portion of the City’s activities.
Accordingly, because transportation of passengers was incidental to the City’s primary function, we conclude that the City is not in the business of transporting passengers for purposes of MCL 500.3114(2).5 Having so concluded, we need not address US Specialty’s remaining argument regarding the applicability of exceptions to MCL 500.3114(2).
The Court thus reversed the trial court’s order and “remand[ed] for an entry of an order granting summary disposition in favor of US Specialty on the issue of priority.”
Justice Gleicher, concurring, suggested that Court forego the primary purpose/incidental benefit test, and opt for a contextual reading of the statute instead, which he argued would lead to the same conclusion. Buses, Justice Cleicher reasoned, ought to qualify as an exception MCL.3114(2), which he describes as a “priority shifting provision positioning transportation businesses first in line for payment of PIP benefits.” Buses, after all, “may be in ‘the business’ of transportation, but should not be primarily responsible for coverage due to the public interests they serve.”
