Michigan Court of Appeals; Docket #358849; Published
Judges Kelly, Murray, and Riordan; Authored by Judge Murray
Official Michigan Reporter Citation: Forthcoming; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Casualty Insurance Policies – Minimum Coverages and Required Provisions (MCL 500.3009)
Legislative Purpose and Intent
SUMMARY:
In this unanimous, published decision authored by Judge Murray, the Court of Appeals reversed the trial court’s order denying Plaintiff Progressive Marathon Insurance Company’s (“Progressive”) motion for summary disposition. The Court of Appeals held that automobile insurance policy, issued prior to July 2, 2020 and providing bodily injury liability coverage up to $20,000 per person/$40,000 per occurrence, were not automatically converted into a policy with bodily injury liability coverage of at least $250,000 per person/$500,000 per occurrence on July 2, 2020, under the amended version of MCL 500.3009. The Court of Appeals reasoned that such automatic conversion did not occur, , just as the various subsections of the No-Fault Act which also provided for coverage changes effective July 1, 2020 (MCL 500.3107c, MCL 500.3107d, MCL 500.3109a, and MCL 500.3135) did not affect policies issued prior to July 1, 2020.
On March 11, 2020, Brittney Giddings purchased an automobile insurance policy from Progressive, which provided the minimum amount of bodily injury liability coverage—$20,000 per person/$40,000 per occurrence—required under the version of MCL 500.3009 then in effect. The policy term was March 11, 2020 to September 11, 2020, in the middle of which, on August 5, 2020, Giddings caused a motor vehicle accident in which a motorcyclist, Michael Pena, and his passenger, Krystle Sewell, were injured. Pena and Sewell eventually filed an automobile negligence action against Giddings, and Progressive filed a separate action for declaratory judgment, asking the trial court to declare that the Giddings’s policy’s bodily injury liability coverage limits were not changed by 2019 PA 21 and 22, which amended MCL 500.3009 to increase the minimum required amount of bodily injury liability coverage to $250,000 per person/$500,000 per occurrence. Progressive moved for summary disposition in this regard, but the trial court denied its motion, and instead granted summary disposition in favor of Pena, Sewell, and Giddings, ruling that on July 2, 2020, the bodily injury liability coverage limits in Giddings’s policy were automatically converted to $250,000 per person/$500,000 per occurrence.
The Court of Appeals reversed the trial court’s denial of Progressive’s motion for summary disposition, holding that Giddings’s policy’s bodily injury liability coverage limits were not changed by the amendments to MCL 500.3009. The Court reasoned that the amended language of MCL 500.3009 made it clear that policies issued before July 2, 2020 were subject to bodily injury liability coverage limits of $20,000 per person/$40,000 per occurrence; whereas policies issued after July 1, 2020 were subject to bodily injury liability coverage limits of $250,000 per person/$500,000 per occurrence. In this regard, the Court stated that“[t]o hold that coverage limitations in preexisting policies automatically increased on July 2, 2020 would ignore the statute’s plain language distinguishing coverage between dates.”
The Court went on to note that the amended versions MCL 500.3107c, MCL 500.3107d, MCL 500.3109a, and MCL 500.3135 also included coverage changes set to take effect on July 1, 2020, and for each of those subsections, the Court’s held the same: coverage was determined by the date on which the policy was ‘delivered or issued for delivery’ (read: sold or purchased), and there were no automatic coverage changes on July 1, 2020.
“Pursuant to these definitions, we hold that the phrase ‘delivered or issued for delivery’ under MCL 500.3009(1) can encompass both a policy that was previously delivered and left in the insured’s possession and a policy that was sent out or distributed to an insured for delivery.
Reading this language in harmony with subsections (1)(a) and (b)—which regulate the minimum liability limits according to a calendar date—leads us to conclude that policies ‘delivered or issued for delivery’ before July 2, 2020, were subject to coverage limits of $20,000/$40,000, and those after July 1, 2020, were subject to limits of $250,000/$500,000. When the statute is read in its grammatical context, no ambiguity exists. Under subsections (1)(a) and (b), the minimum liability limits are fixed by the July 1, 2020, and July 2, 2020, dates. These subsections are clearly conditioned on when a policy was ‘delivered or issued for delivery’ under subsection (1). The fact that the statute distinguishes the liability limitations by the policy’s delivery date indicates that coverage options were intended to be allocated differently. The Legislature also contemplated policies being delivered before July 2, 2020, when heightened liability coverage would take effect, and explicitly set coverage limits of $20,000/$40,000 to apply in that case. To hold that the coverage limitations in preexisting policies automatically increased on July 2, 2020, would ignore the statute’s plain language distinguishing coverage between dates.
. . .
Subsection (5) was not the only reform within 2019 PA 22 that provided for changed coverage effective July 1, 2020. Indeed, MCL 500.3107c, 500.3107d, 500.3109a, and 500.3135 all contain provisions addressing modified benefits with an effective date of July 1, 2020. Because these statutes address the same subject as MCL 500.3009, they should be considered harmoniously to give reasonable effect to each of them. People v Webb, 458 Mich 265, 274; 580 NW2d 884 (1998) (stating that ‘when this Court construes two statutes that arguably relate to the same subject or share a common purpose, the statutes are in pari materia and must be read together as one law’). Specifically, MCL 500.3107c(1) permits applicants or named insureds to choose their PIP coverage amount, but only for policies issued or renewed after July 1, 2020. When an option for PIP coverage is selected under MCL 500.3107c(1)(b), MCL 500.3109a(2) instructs the insurer to offer an exclusion related to qualified health coverage but only for policies issued or renewed after July 1, 2020. Similarly, MCL 500.3107d(1) permits the denial of PIP benefits for policies issued or renewed after July 1, 2020, so long as certain conditions are met. These legislative amendments to MCL 500.3107c, 3107d, and 3109a, in relevant part, discuss additional coverage options solely for policies that are ‘issued or renewed after July 1, 2020.’ These amendments are similar to the heightened policy limit increases contained in the amended MCL 500.3009, which likewise apply only to policies ‘delivered or issued for delivery’ after July 1, 2020.
The legislative reforms concerning tort liability under the no-fault act likewise impact only policies issued or renewed after July 1, 2020. Specifically, MCL 500.3135(3)(c) now subjects tortfeasors to liability for allowable expense damages exceeding any applicable limits selected under MCL 500.3107c, or without limit for allowable expenses for those who excluded PIP entirely under MCL 500.3107d. Because applicants or named insureds were only permitted to limit or exclude PIP coverage under MCL 500.3107c and 3107d in policies issued or renewed after July 1, 2020, their direct reference in MCL 500.3135 indicates that the changes in tort liability cannot affect policies issued prior to July 2, 2020. The Legislature made across the board reforms to the no-fault act explicitly for policies issued or renewed after July 1, 2020. A consideration of the act as a whole confirms the Legislature’s intent that heightened liability limits under MCL 500.3009 are exclusively for policies delivered or issued for delivery after July 1, 2020. For these reasons, we conclude that the trial court erred in denying plaintiff’s motion for summary disposition because MCL 500.3009 did not automatically increase liability coverage for preexisting policies whose term surpassed July 1, 2020. . . . ”
