Michigan Court of Appeals; Docket # 345854; Unpublished
Judges Meter, Fort Hood, and Redford; Per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Disqualification for Uninsured Owners or Registrants of Involved Motor Vehicles or Motorcycles [§3113(b)]
TOPICAL INDEXING:
Interpretation of Insurance Contracts
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals reversed the trial court’s denial of the defendant’s summary disposition order seeking dismissal of the plaintiff’s first-party action to recover no-fault PIP benefits under her grandfather’s insurance policy. The vehicle the plaintiff, Rahannie Tackoor, was driving at the time of the subject motor vehicle collision was gifted to her by her grandfather less than a month before the collision. The vehicle remained insured under Tackoor’s grandfather’s policy with the defendant, Esurance Property and Casualty Insurance Company, but the policy allowed for Esurance to automatically terminate it in the event that the vehicle was “sold, assigned, gifted, or transferred to anyone [who is not a resident of the policyholder’s household].” As a result, the Court of Appeals ruled that Tackoor was not entitled to PIP benefits under her grandfather’s policy.
Tackoor was injured in a motor vehicle collision on November 17, 2017 while driving a vehicle that her grandfather, Ted Williams, had given her on October 31, 2017. Tackoor filed an application for title with the Michigan Secretary of State and transferred the license plate on the day she received the vehicle, but she never sought to insure the vehicle on her own. Rather, the vehicle remained insured, ostensibly, under Williams’s policy with Esurance. The Esurance policy provided, however:
If a “covered auto” is sold, assigned, gifted or transferred to anyone other than a “family member”, the insurance “we” provide for that “auto” shall automatically terminate at the time it is sold, assigned, gifted or transferred.
Importantly, the term “family member” was defined in the policy as any relative who was also a resident of the policyholder’s household. Tackoor never lived with Williams, so she did not qualify. In her subsequent lawsuit to recover PIP benefits from Esurance under Williams’s policy, Esurance moved for summary disposition, arguing that Williams’s policy was automatically terminated upon his gifting it to Tackoor. Tackoor argued in response “that she was not an uninsured motorist because Williams insured the vehicle through his policy, and even though he lacked an insurable interest in the vehicle, Esurance could not cancel the policy on that basis.” The trial court rejected Esurance’s motion.
The Court of Appeals reversed the trial court’s denial of Esurance’s motion, finding firstly that the automatic termination provision was not precluded by statute. Moreover, the provision unambiguously provided for automatic termination upon the exact scenario at issue in Tackoor’s lawsuit.
In this case, the policy provision on which Esurance relies unambiguously provided for automatic termination upon the insured’s sale, assignment, gifting, or transfer of a vehicle covered under the policy. That provision did not require Esurance to do anything. Rather, upon the occurrence of any of the specified events by the insured, the policy automatically terminated. The specified events that could trigger automatic termination were acts which Williams alone controlled and in which he alone could engage. When Williams contracted with Esurance, he agreed to the unambiguous contract terms that specified the automatic consequence of termination of the coverage for the vehicle covered under the policy if he chose to sell, assign, gift, or transfer a covered vehicle. Automatic termination under the terms of the subject policy is not the same as cancellation by the insured or the insurer. Consequently, neither MCL 500.3020 nor MCL 500.3224 applied in this case because Williams chose to gift the car to plaintiff and he transferred title and registration of the covered vehicle to her which triggered the automatic termination. Plaintiff lacked family member and household member status as unambiguously defined by the policy. The insurance coverage on plaintiff’s car under the Esurance policy issued to Williams terminated upon Williams’s gift of it to her. Esurance cannot be held liable for a risk that it did not assume, i.e., insuring a vehicle that its insured sold, assigned, gifted, or transferred. Moreover, Esurance had no obligation to provide notice of the automatic termination.
