Michigan Court of Appeals; Docket # 352059; Unpublished
Judges Jansen, Servitto, and Riordan; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Exception for Employer Provided Vehicles [§3114(3)]
Mend the Hold
In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed the trial court’s grant of summary disposition to defendant on the issue of insurer priority, finding that the policy exclusions that excluded coverage to an insured driving an employer owned vehicle in the scope of employment were a valid defense, that the mend the hold doctrine may not be used to broaden policy coverage to protect an insured against risks expressly excluded from the policy, and that equitable estoppel was inapplicable because plaintiffs failed to establish that defendant had misrepresented the terms of the policy.
This case arose from plaintiffs’ attempts to obtain personal protection insurance (PIP) and underinsured motorist (UIM) benefits following a motor vehicle accident involving plaintiff Matigian. At the time of the accident, the vehicle driven by plaintiff Matigian was a company car insured by Zurich Insurance. However, Matigian also had an insurance policy with defendant Member Select Insurance Company that contained provisions related to no-fault coverage and uninsured (UM) and underinsured (UIM) motorist coverage. Also included in these policies were “exclusions for situations when an insured is occupying an employer-owned vehicle or operating an employer-owned vehicle in the course of his employment.” Plaintiffs filed an initial complaint against defendant Members Select Insurance Company alleging benefits due to Matigian and direct right of payment by assignment to plaintiff Michigan Spine and Brain Surgeons, PLLC (MSBS). Defendant moved for summary disposition, arguing that because Matigian was driving his employer-owned and insured vehicle and was in the scope of his employment at the time of the accident, he was required to obtain PIP benefits from the insurer of the employer owned vehicle pursuant to MCL 500.3114(3). Defendant further contended that its policy with Matigian included exclusions that precluded him from receiving benefits from the defendant. In response, plaintiffs argued that while Matigian was in the course and scope of his employment and operating an employer-owned vehicle at the time of the accident, defendant had waived the policy exclusions as affirmative defenses because “it failed to inform Matigian that the exclusions existed and did not plead them as affirmative defenses.” Consequently, defendant amended its affirmative defenses to include defenses that plaintiffs’ claims were barred by the policy exclusions, and the trial court granted summary disposition in defendant’s favor.
On appeal, the Michigan Court of Appeals first considered the language of MCL 500.3114(3) which contains mandatory language stating that an employee who suffers injury “while an occupant of a motor vehicle owned” by the employee’s employer “shall receive [PIP] benefits to which the employee is entitled from the insurer of the furnished vehicle.” Thus, the court held that because Matigian was driving a semitractor trailer owned by his employer and insured with Zurich insurance when the accident occurred, Matigian must obtain any PIP benefits he was entitled to from Zurich Insurance.
Next, the Court considered whether the defendant failed to assert its policy exclusions as affirmative defenses. In doing so, the Court noted that “plaintiffs failed to plead factual allegations sufficient to reasonably inform defendant that Matigian was involved in an accident while he was operating an employer-owned vehicle in the course of his employment and that its policy exclusions in this regard may be applicable. As a result, defendant was excused from raising the employer-owned-vehicle exclusion as an affirmative defense.” The Court was further unconvinced by plaintiffs’ argument that “defendant did not advise them of the existence of the policy exclusion until its motion for summary disposition, thereby prejudicing them and depriving them of the opportunity to take different actions during the course of litigation.” The Court clarified that “an insured is obligated to read his insurance policy [and] [is] . . . charged with knowledge of the terms and conditions of that policy [and]. . . MSBS, as Matigian’s assignee, was charged with the same knowledge.”
The Court next considered the plaintiffs’ next argument that “[defendant] could not assert that policy exclusions applied to preclude plaintiffs’ claim for benefits by virtue of the ‘mend-the-hold’ doctrine.” However, the Court was unconvinced by this argument, stating that the mend the hold doctrine cannot be “used to broaden policy coverage to protect an insured against risks . . . expressly excluded from the policy.” Finally, the Court considered plaintiffs’ argument that “equitable estoppel should apply to impose coverage because defendant misrepresented the terms of the policy to Matigian and failed to raise the defenses earlier in the litigation.” Again, the Court was unconvinced by the argument, finding that plaintiffs “failed to establish defendant misrepresented the terms of the policy to Matigian,” and that defendant’s answer to interrogatories in which it stated that no policy exclusions applied was premised on plaintiffs’ failure to include facts of Matigian’s status at the time of the accident. Thus, the Court found estoppel inapplicable in this instance. Accordingly, the holding of the trial court was affirmed.