Michigan Court of Appeals; Docket # 341837; Unpublished
Judges Letica, Kelly, and Boonstra; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion; Link to Dissent
STATUTORY INDEXING:
Named Insured (§500.3114)
Exception to General Priority for Non-Occupants (§3115(1))
TOPICAL INDEXING:
Not Applicable
SUMMARY:
In this majority unpublished per curiam decision (Boonstra, dissenting) involving a priority dispute in a first-party action for no-fault PIP benefits, the Court of Appeals reversed the trial court’s summary disposition order in favor of defendant Famers Insurance Exchange (“Farmers”), and remanded for entry of an order granting summary disposition in favor of GEICO. Farmers was initially assigned the plaintiff’s claim for no-fault PIP benefits, but GEICO was later added as a defendant after it was discovered that the at-fault driver’s son maintained an auto insurance policy that covered the vehicle involved in the accident, and that the at-fault driver was identified as an additional driver in the policy. The Court of Appeals determined, however, that (1) the at-fault driver was not an “insured” under her son’s policy with GEICO, and (2) even if the at-fault driver was an “insured” under her son’s policy, her son did not have an insurable interest in the involved vehicle, and the policy was therefore void with respect to that vehicle.
Beth Bracy sustained severe injuries when she was struck by a motor vehicle being operated by Yolanda Yvette Nichols. At the time of the collision, Bracy owned no vehicles, had no insurance, and lived alone. She therefore filed a claim for no-fault PIP benefits under the Michigan Assigned Claims Plan, who in turn assigned her claim to Farmers. Bracy later discovered that Nichols’s son had an automobile insurance policy with GEICO, and that the vehicle Nichols was operating at the time of the collision was covered under the policy. Nichols, herself, was listed as an additional driver under the policy, but did not reside with her son. Thus, Bracy amended her complaint to add GEICO as a defendant, and a priority dispute between Farmers and GEICO ensued.
Farmers and GEICO filed competing motions for summary disposition—Farmers argued that because the involved vehicle was owned by Nichols and insured by GEICO, that GEICO was responsible for Bracy’s PIP benefits; GEICO argued, conversely, (1) that Nichols’s son had made material misrepresentations when he added the involved vehicle to his policy, thereby rendering the policy void, and (2) that Yolanda, the owner of the vehicle, did not have a no-fault insurance policy in place at the time of the collision and that Marcus lacked an insurable interest in the vehicle. Ultimately, the trial court granted summary disposition in favor of Farmers, and directed GEICO to take over Bracy’s claim and reimburse Farmers for the amounts it had thus far paid.
The Court of Appeals reversed the trial court’s summary disposition order in favor of Farmers, relying on the following order of priority laid out in MCL 500.3115(1):
(a) Insurers of owners or registrants of motor vehicles involved in the accident.
(b) Insurers of operators of motor vehicles involved in the accident. [MCL 500.3115(1).]
Nichols was the sole owner and registrant of the involved vehicle, as well as its operator at the time of the collision. However, the Court of Appeals determined that although she was listed as an “additional driver” under her son’s policy with GEICO, she, herself, was not actually insured with GEICO.
When the no-fault endorsement of an insurance contract fails to define who is an “insured,” and nothing in the plain language of the policy’s declarations or general verbiage suggests an intent by the contracting parties to make others contractual insureds, this Court has refused to declare the named insured’s family members as contractual insureds under the policy. Id. at 534. But cf. Clevenger v Allstate Ins Co, 443 Mich 646, 652-653; 505 NW2d 553 (1993) (holding that policyholder’s wife was an insured under policy defining “named insured” to include “ ‘the individual named in the declarations, and his spouse if a resident of the same household’ ”). This is true even when the potential insured person is identified as an additional driver in the policy declarations. Dobbelaere, 275 Mich App at 534 n 3 (stating that such a designation is “insufficient to support that these individuals were contractually intended to be insureds under the policy for purposes of no-fault benefit coverage”). Given the absence of any indication in the policy language that Marcus and GEICO intended for Yolanda to be an insured, we conclude that GEICO is not Yolanda’s insurer for purposes of determining priority for payment of Bracy’s PIP benefits under MCL 500.3115(1). The trial court erred by granting summary disposition in favor of Farmers because GEICO is not the insurer of the owner, registrant, or operator of the vehicle involved in the accident. To the contrary, summary disposition should have been granted in favor of GEICO because it has no liability for Bracy’s PIP benefits under MCL 500.3115(1).
The Court next determined that, even if GEICO was Nichols’s insurer for purposes of MCL 500.3115(1), the policy would be still be void with respect to the subject vehicle because the policyholder, Nichols’s son, did not have an insurable interest in the vehicle. As the Court noted, “[t]his Court has previously held that the named insured ‘must have an ‘insurable interest’ to support the existence of a valid automobile policy.’” Nichols’s son had no such interest:
Here, GEICO offered undisputed evidence showing that Yolanda was the sole titled owner and registrant of the Lumina when Marcus added it to his GEICO insurance policy in 2013. There is no evidence that Marcus had use of the vehicle in a manner that might have afforded him the status of an owner under MCL 500.3101(3)(l). Nor did he undertake a contractual obligation to obtain insurance or have any intention of acquiring the vehicle as was the case in Universal Underwriters Group, 246 Mich App at 730. In addition, Marcus had his own insurance and was not a member of Yolanda’s household who could potentially turn to her insurance as resident relative under MCL 500.3114(1), so his interest in protecting his own health and well-being could not form the basis of an insurable interest in the Lumina. There is simply no evidence that Marcus had a recognized insurable interest, and Farmers has offered no argument as to what type of alternative interest Marcus may have had that would support the issuance of an insurance policy covering the Lumina. Because Marcus had no insurable interest, the policy was void with respect to the Lumina, Morrison, 286 Mich App at 572; Corwin, 296 Mich App at 258, 260, and the trial court erred by granting summary disposition in favor of Farmers because GEICO did not issue a valid policy from which Bracy could receive PIP benefits under MCL 500.3115(1).
Justice Boonstra dissented, arguing not that the majority necessarily reached the wrong conclusion, but that the Court of Appeals should not have “cut to the chase” and decided the aforementioned issues “with finality [before they had] been fleshed out on the trial court.”
