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Ahmed v Tokio Marine American Ins Co, et al (COA - PUB 4/22/2021; RB #4253)


Michigan Court of Appeals; Docket # 352418; For Publication
Judges Tukel, Jansen, and Cameron; authored
Official Michigan Reporter Citation: ___ Mich App ___; Link to Opinion

§500.3113: DISQUALIFICATION FROM PIP BENEFIT ENTITLEMENT [Disqualification for Unlawful Taking and Use of a Vehicle [§3113(a)]]

Not Applicable

In this unanimous published opinion by Judge Tukel, the Court of Appeals reversed the trial court’s denial of defendant’s motion for summary disposition on the issue of whether plaintiff was barred by MCL 500.3113(a) from PIP benefits. The Court held that under the facts of the case, under the “knew or should have known” language of MCL 500.3113(a),  the injured person was disqualified from benefits.  Specifically, the Court held that plaintiff’s taking of the rental car was unlawful under MCL 750.414 because the rental agreement did not authorize plaintiff to drive the vehicle.  Furthermore, the Court held that because plaintiff knew the car was rented, he should have known the terms of the rental agreement that prohibited him from using the vehicle.  

This case arose from an automobile accident in which plaintiff Mohamed Ahmed was driving a rental car owned by Meade Lexus of Lakeside. The car had been rented by plaintiff Ahmed’s wife shortly before the accident. When plaintiff’s wife rented the vehicle, the terms of the rental agreement were explained to her, including that only “Authorized Drivers” were permitted to operate the vehicle, and that an individual needed to be a validly licensed driver in order to be an “Authorized Driver.” Plaintiff did not have a driver’s license at the time of the accident as it had been revoked four years prior but testified that he had believed it was merely restricted and was driving within the terms of the restriction at the time of the accident. Plaintiff accompanied his wife while she rented the vehicle but was not a party to the agreement and testified to never having read the rental agreement. After defendant Tokio Marine American Insurance Company (Tokio) denied plaintiff’s claim for PIP benefits, plaintiff filed a complaint. Defendant Tokio responded by moving for summary disposition, contending that MCL 500.3113(a) disqualified plaintiff from receiving PIP benefits because he unlawfully took the vehicle by driving it without a driver’s license. In response, plaintiff argued that defendant “could not demonstrate that plaintiff knew he was an unlicensed driver when the accident occurred or that he was expressly prohibited from taking the vehicle.”

On appeal, the Court noted several key components necessary to analyze this claim. First, the Court noted that, as used in 500.3113(a), the words “unlawful” and “taken,” when considered together, plainly “embraces a situation in which an individual gains possession of a vehicle contrary to Michigan law,” and that “a taking does not  have  to  be  larcenous  to  be  unlawful,  the  phrase  ‘taken unlawfully’ in MCL 500.3113(a) applies to anyone who takes a vehicle without the authority of the owner, regardless of whether that person intended to steal it.” The Court consequently noted that “any person who takes a vehicle contrary to a provision of the Michigan Penal Code—including MCL 750.413 and MCL 750.414, informally known as the ‘joyriding’ statutes—has taken the vehicle unlawfully within the meaning of MCL 500.3113(a).” Therefore, the Court determined that “for purposes of MCL 500.3113(a), a vehicle is ‘unlawfully taken’ if it is taken without the authority of its owner . . . [t]hus, MCL 500.3113(a) “examines the legality of a taking from the perspective of the driver.”

The Court next examined MCL 750.414, noting that “it properly requires a showing of knowingly taking without authority or knowingly using without authority,” and that “[f]or a person to take personal property without the authority of the actual owner, there must be some evidence to support the proposition that the person from whom he or she received the property did not have the right to control or command the property.” In applying these principles, the Court noted that there was no question that plaintiff was “willingly using” and willingly operating” the car, and “no question that plaintiff’s use and operation of the car was without the authority of Meade Lexus, the owner, as the rental agreement prohibited an unlicensed person from driving it.” Thus, the Court determined it was necessary to determine “whether these facts amounted to an unlawful ‘taking.’” In analyzing this issue, the Court considered that plaintiff knew the car was rented by his wife and that there was a written rental agreement. The Court also considered plaintiff’s testimony that he had driven the car on the day of the accident and was driving the car when the accident occurred.

The Court ultimately found these facts “more than sufficient to demonstrate that plaintiff was in possession of the car at the time of the accident . . . and . . . also clearly was “operating” the car at the time of the accident.” The Court clarified that “[w]hile the requirements under MCL 500.3113(a) that a person ‘take’ and ‘operate’ a vehicle are separate, meaning that each must be established, there is no requirement in the statute that different facts establish each of the elements.  For example, while it is possible to possess or ‘take’ a car without ‘operating’ or driving it, such as by placing it on a flatbed truck and moving it, or by using a tow truck, it is not possible to drive it without also taking it; the act of driving a car can only be accomplished by someone who is in possession of it and operating the controls.” The Court further noted that “Meade Lexus, as owner, placed restrictions in the rental agreement, under which only a  licensed driver was authorized to use,  operate or drive the car and that Plaintiff’s acts of driving the car to work and driving it again after work until his involvement in the accident constituted use, operation and driving of the car,  and thus were outside the authorization of the owner.  Accordingly, the Court of Appeals held that such acts constituted an ‘unlawful taking’ of the car because they constituted possession of it contrary to the owner’s authorization.”

The Court next addressed defendant’s argument that plaintiff’s taking of the car was unlawful because it was unlawful for plaintiff to drive due to the fact that he did not have a valid driver’s license. In analyzing this claim, the Court noted that 2014 PA 489 made substantive changes to MCL 500.3113(a), eliminating the Safe Harbor provision and imposing a scienter requirement. Following the amendment, “a person who willingly operates or willingly uses a motor vehicle which someone took unlawfully is disqualified from eligibility for benefits if the person "knew or should have known" that the taking of the motor vehicle was unlawful.” The Court further stated:

"As we have noted, Rambin [ v Allstate Insurance Co, 492 Mich 503;821 N.W.2d 117 (2014)] explored the “unlawful taking” language at issue in MCL 500.3113(a), in the context of unlawfulness provided by a violation of MCL 750.414, concluding that MCL 750.414 itself had a mens rea requirement . . . .We conclude that the amendment of MCL 500.3113(a) through 2014 PA 489 modified the scienter requirement under that statute if a violation of MCL 750.414is at issue. As interpreted by our Supreme Court in Spectrum Health and Rambin, MCL 500.3113(a) and 750.414 relate to the same subject matter, and thus are in pari materia . . . [and] . . . “[s]tatutes that relate to the same subject or that share a common purpose are in pari materia and must be read together as one law, even if they contain no reference to one another and were enacted on different dates.”  Consequently,  MCL 500.3113(a) and 750.414 must be read together as one law. 

Following Rambin, the Legislature added the “knew or should have known” language to MCL 500.3113(a).  In construing a statute, we assume that when the Legislature crafts legislation it knows what the existing law is, and takes it into consideration. If we simply treated the current version of MCL 500.3113(a) in exactly the same manner as in Rambin, i.e., that a violation “requires a showing of knowingly taking without authority or knowingly using without authority,” it would be as if 2014 PA 489 had worked no change in the Safe Harbor provision or the scienter requirement.  Rambin permitted disqualification from eligibility for benefits only if the plaintiff knew that the taking was contrary to the owner’s direction; the “knew or should have known” standard makes it easier for an insurance company to establish that a plaintiff is disqualified from eligibility for benefits,  because actual knowledge is no longer necessary so long as a plaintiff should have known that he or she was taking a motor vehicle contrary to the owner’s directives.

In other words,  if we were to conclude that 2014  PA  489  did not change the mens rea requirement which Rambin held applies in the context of  MCL  750.414, the  Legislature’s enactment of the words “knew or should have known” would be surplusage and nugatory, contrary to our customary rules of construction.  We are constrained to reject such an interpretation.  We, therefore, conclude,  applying the plain language of  2014  PA  489, that the Legislature amended Rambin’s scienter standard involving  MCL  750.414  in  cases in which disqualification from eligibility for benefits under MCL 500.6113(a) is at issue.  Thus, we hold, when disqualification for  PIP  benefits is at issue, a  person acts unlawfully under  MCL  750.414  if the person takes a motor vehicle knowing the owner has prohibited the taking,  or if the person takes a motor vehicle or motorcycle and “should have known” that the owner prohibited the taking, MCL 500.3113(a)."

Taking these principles into account, the Court noted that this case illustrated the differences between the mens rea requirement upheld in Rambin and the new standard imposed by 2014 PA 489. In analyzing this distinction, the Court noted that plaintiff was unaware of the terms of the rental agreement and thus lacked actual knowledge that an unlicensed driver was not permitted to take the car and that, under the previous version of the statute as interpreted in Rambin, this would not have constituted an unlawful taking because plaintiff did not knowingly take the car without the owner’s authority. However, in this case, the Court concluded that the   “should have known” standard applied to this case involving a rental car in such a way that barred plaintiff from benefits under MCL 500.3113(a). The Court specifically stated in pertinent part:

“...plaintiff knew that his wife . . . was not the owner of the car, and that any authority to use the car could only be based on the terms set by the owner.  Thus, before simply driving off, plaintiff was obligated to learn the terms of the rental agreement; he ‘should have known’ the terms because a  person  may  not  simply  take what  he knows to be another’s property without taking any steps to determine if the owner authorized the taking.”

Thus, the Court held that defendant had fully satisfied the standards of MCL 500.3113(a) and that plaintiff was  consequently  disqualified from benefits.

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