Michigan Court of Appeals; Docket #355326; Published
Judges Gleicher, Kelly, and Patel; Per Curiam
Official Michigan Reporter Citation: Forthcoming; Link to Opinion
In this unanimous, published, per curiam decision, the Court of Appeals reversed the trial court’s summary disposition order dismissing Plaintiff MemberSelect Insurance Company’s (“MemberSelect”) first-party action for reimbursement against Defendant Hartford Accident & Indemnity Company’s (“Hartford”). The Court of Appeals held that Michael McGilligan, who was insured under a commercial auto insurance policy he purchased from Hartford, was entitled to no-fault PIP benefits from Hartford even though the policy purported to exclude PIP coverage for accidents not involving a “covered auto.” Hartford could not, to quote the Court, “limit its extension of PIP coverage in a manner inconsistent with [MCL 500.3114(1)].”
Michael McGilligan was severely injured as a result of a vehicle he was servicing falling on top of him. After the accident, McGilligan sought no-fault PIP benefits from Hartford under a commercial auto policy which named ‘Michael McGilligan DBA McGilligan Plumbing and Heating’ as the ‘insured.’ Hartford denied McGilligan’s claim, arguing that the policy’s PIP endorsement only applied to accidents involving a ‘covered auto’—which the vehicle he was servicing was not. McGilligan then sought PIP benefits from MemberSelect, the insurer of the owner of the vehicle that fell on top of him. MemberSelect paid McGilligans’ claims at first, but then sought reimbursement from Hartford. When Hartford again denied coverage, MemberSelect filed the underlying actions for reimbursement, and both parties moved for summary disposition. The trial court ultimately agreed with Hartford that the commercial auto policy was tailored so as to deny PIP coverage for any accident not involving a ‘covered auto,’ and granted summary disposition in Hartford’s favor.
The Court of Appeals reversed the trial court’s summary disposition order, holding that the provision at issue—purporting to limit PIP coverage to only those accidents in which a ‘covered auto’ was involved—conflicted with the no-fault act and was therefore unenforceable. The plain language of MCL 500.3114(1) provides that “a personal protection insurance policy . . . applies to accidental bodily injury to the person named in the policy,” and Hartford could not limit McGilligan’s entitlement under MCL 500.3114(1) with an extra-statutory ‘covered auto’ requirement.
“Because McGilligan is ‘the person named in the [Hartford] policy,’ under MCL 500.3114(1), Hartford is responsible for payment of his PIP benefits. Hartford makes much of the fact that it sold McGilligan a ‘commercial’ policy that included a designation (‘07’) indicating that PIP coverage applied only to ‘specifically described ‘autos’ ’ in the policy—the autos owned or insured by McGilligan. This policy language does not overcome the statutory requirement that Hartford must pay PIP benefits to ‘the person named in the policy.’ Hartford cannot opt out of the statutory PIP requirement by designating autos instead of people for PIP coverage; doing so would contravene the cardinal rule under the no-fault act that persons, not motor vehicles, are insured against PIP loss. And, we note, the Legislature has not created a ‘commercial policy’ exception to MCL 500.3114(1).”
Notably, the Court of Appeals reached this holding despite a prior panel’s having held the opposite in a factually similar case back in 2008, Sisk-Rathburn v Farm Bureau Gen Ins Co of Mich, 279 Mich App 425. The plaintiff in Sisk-Rathburn was injured while operating a rental vehicle, seeking PIP benefits thereafter under a ‘business auto’ policy which listed her husband as the named insured. The Court concluded that the plaintiff’s entitlement under the policy flowed from MCL 500.3114(3) and that, because the policy contained a similar ‘covered auto’ exclusion to the one at issue in this case, the plaintiff was barred from PIP benefits thereunder. The Court, in this case, distinguished its holding from Sisk-Rathburn because of Sisk-Rathburn’s focus on MCL 500.3114(3), but indicated that Sisk-Rathburn was incorrectly decided.
“Sisk-Rathburn is distinguishable because MCL 500.3114(3) does not apply here. Further, this Court did not consider the effect of the statutes mandating PIP coverage in Sisk-Rathburn; MCL 500.3101 and MCL 500.3105 were not mentioned in the Court’s opinion. It is impossible to know whether the parties’ arguments in that case included discussion of these mandatory PIP provisions of the no-fault act. MemberSelect’s argument focuses on those statutes. Possibly due to the framing of the arguments in Sisk-Rathburn, this Court accepted without discussion that a commercial auto policy could limit its extension of PIP coverage in a manner inconsistent with the no-fault act. The parties in this case were more careful. Because Sisk-Rathburn did not consider or decide the question presented here, our resolution is not limited by Sisk-Rathburn.”