Michigan Court of Appeals; Docket #356734, 356815; Unpublished
Judges Kelly, Shapiro, and Patel; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion, Link to Concurrence
STATUTORY INDEXING:
Exception for Occupants [§3114(4)]
Named Insured [§3114]
TOPICAL INDEXING:
Mend the Hold
Interpretation of Insurance Contracts
SUMMARY:
In this unanimous, unpublished, per curiam decision (Shapiro, concurring), the Court of Appeals affirmed the trial court’s summary disposition order dismissing Plaintiff Zachary Ridenour’s action for No-Fault PIP benefits against Defendant Progressive Marathon Insurance Company (“Progressive”). The Court of Appeals held, first, that although Ridenour was listed as an “additional driver” on his friend, Floyd Layport’s policy with Progressive, Progressive was neither Ridenour’s insurer, nor in the order of priority for payment of Ridenour’s PIP benefits related to the accident. The Court of Appeals held, second, that Progressive was not precluded from raising its priority defense by the “mend-the-hold” doctrine, which Ridenour argued applied because Progressive originally denied his claim based on fraud. The Court of Appeals held, third, that the trial court did not err in denying Ridenour’s motion to amend his complaint to add a claim for promissory estoppel, because Ridenour failed to identify any promise Progressive made to him regarding PIP coverage when it added him as an “additional driver” to Layport’s policy.
Zachary Ridenour was injured in a single-vehicle accident while driving a vehicle he owned and which was registered in his name. The vehicle was insured under a Progressive policy issued to Ridenour’s friend, Floyd Layport, who Ridenour claimed he was living with at the time of the accident. Ridenour was listed as an “additional driver” on the policy, but only Layport was listed as a named insured.
After the accident, Ridenour sought PIP benefits from Progressive, but Progressive denied his claim on the basis of fraud, claiming that Ridenour did not actually live with Layport and only added the vehicle to Layport’s policy because he could not afford the premiums on his own policy. Ridenour then filed suit, after which Progressive—in its affirmative defenses—asserted for the first time that it was not in the order of priority for payment of Ridenour’s benefits. The parties agreed that the priority scheme in effect prior to the 2019 amendments to the No-Fault Act applied to this case, and Progressive moved for summary disposition, arguing that it was not in the order of priority under either the former MCL 500.3114(1) (because Ridenour was not a named insured or a “domiciled relative” of Layport) or the former MCL 500.3114(4) (because although Ridenour was listed as an “additional driver” on Layport’s policy, Progressive was not his “insurer” for purposes of MCL 500.3114(4)). Ridenour opposed the motion, arguing, first, that although he was not a named insured, Progressive was still his insurer based on the policy’s language. Ridenour argued, second, that Progressive should be barred from raising its priority defense by the mend-the-hold doctrine, because its original basis for denying his claim was fraud. The trial court ultimately agreed with Progressive, granting its motion for summary disposition, and also denying Ridenour’s motion to amend his complaint to add a claim for promissory estoppel.
The Court of Appeals affirmed the trial court’s summary disposition order, holding, first, that Progressive was not Ridenour’s “insurer” for purposes of the former MCL 500.3114(4). The Court noted that the policy’s provisions governing bodily injury liability coverage and uninsured motorist coverage had language which extended coverage to “additional drivers,” but that the policy’s provision governing PIP coverage did not. The provision governing PIP coverage provided as follows:
“If you pay the premium for this coverage, we will pay [PIP] benefits required by the [no-fault act] for accidental bodily injury to an eligible injured person arising out of the ownership, operation, maintenance, or use of a motor vehicle, subject to the exceptions, exclusions and limitations specified herein as additionally provided by the law of the State of Michigan.”
“Eligible insured person” was defined as:
a. you or any relative who sustains accidental bodily injury in an accident involving a motor vehicle;
b. any other person who meets the statutory requirements of [the no-fault act].
c. any person who, while not occupying a motor vehicle, sustains accidental bodily injury as a result of an accident . . . .”
The Court held that Ridenour did not qualify as an insured under (a) because he was neither the named insured nor a resident relative of Layport. The Court held that Ridenour did not qualify as an insured under (b) because Progressive was not in the order of statutory priority. And lastly, the Court held that Ridenour did not qualify as an insured under (c) because he was an occupant of a vehicle at the time of the accident. In sum, Progressive was not Ridenour’s No-Fault insurer at the time of the accident.
Although the term “insured person” is defined elsewhere in the policy for different coverages and expands the definition to include ‘rated drivers,’ the provisions concerning PIP coverage do not.
Under the facts of this case, it is clear that Ridenour is not an eligible injured person under Subsection (2)(a) because he is not the named insured or a relative of the named insured. Nor is he an eligible injured person under subsection (2)(c) because he was an occupant of a motor vehicle when he was injured.
Subsection (2)(b) defines ‘eligible injured person’ as ‘any other person who meets the statutory requirements of [the no-fault act],’ but does not define what the policy means by ‘the statutory requirements of the [no-fault act].’ Ridenour argues that he met the statutory requirements of the no-fault act because he sustained accidental bodily injury arising out of a motor-vehicle accident, MCL 500.3105, and that none of the statutory exclusions of MCL 500.3113 would apply to the facts of this case. Yet, in Dye by Siporin & Assoc, Inc v Esurance Prop & Cas Ins Co, 504 Mich 167, 200; 934 NW2d 674 (2019) (CLEMENT, J., dissenting), Justice Clement explained that ‘the no-fault scheme aims to assure (insofar as possible) a liable insurer for every victim. To meet that goal, the Legislature required two things: (1) that every owner (or registrant) ‘maintain security,’ MCL 500.3101(1), and (2) that certain injured persons submit their claims according to a priority scheme.’ Thus, in order to be eligible for benefits under the no-fault act, Ridenour must have—at a minimum—maintained security and submitted his claim under the priority scheme stated in the no-fault act. Although he maintained security, he cannot show that Progressive is in the order of priority for his claim for PIP benefits.
In order to show that he is an eligible injured person under subsection (2)(b) of the policy, Ridenour would have to prove that Progressive is in the order of priority under MCL 500.3114, among all other requirements of the no-fault act. Ridenour cannot do so because any statutory analysis of priority under MCL 500.3114(4) defaults back to whether the policy definition of ‘eligible injured person’ provides coverage to Ridenour by being the insurer of the owner or operator of the motor vehicle involved. Again, as previously discussed, under the language of the policy, Ridenour is not the named insured and Progressive is not Ridenour’s insurer. The policy does not include any language in Part II extending coverage to Ridenour by his status as the owner of a motor vehicle listed on the declarations.
Given the absence of any indication in the policy language that Progressive intended for Ridenour to be an insured for purposes of PIP coverage, Progressive is not Ridenour’s insurer for purposes of determining priority for payment of his PIP benefits under MCL 500.3114(4). The trial court properly granted summary disposition in favor of Progressive because Progressive is not the insurer of the owner, registrant, or operator of the vehicle involved in the accident.
Ridenour nonetheless argued that Progressive should be precluded from raising its priority defense by of the mend-the-hold doctrine, because its original basis for denying his claim was fraud. The Court of Appeals disagreed with Ridenour, observing that the mend-the-hold doctrine “cannot be used to broaden policy coverage to cover risks not included in the policy.”
“The application of the mend-the-hold doctrine is limited, however. [E]xcept under limited circumstances not applicable here, the mend-the-hold doctrine cannot be used to broaden policy coverage to cover risks not included in the policy. As explained above, Progressive is not in the order of priority to pay no-fault benefits on Ridenour’s claim because, under the terms of the no-fault policy, Ridenour is not an individual eligible for benefits, nor is Progressive the insurer of Ridenour, i.e., the owner, registrant, and operator of the motor vehicle involved in the crash. Application of the mend-the-hold doctrine would, therefore, broaden the coverage of the no-fault policy to protect against a risk that was not included in the policy. As a result, the priority defense falls within the exception to the mend-the-hold doctrine and is permissible in this case.”
Lastly, the Court of Appeals affirmed the trial court’s denial of Ridenour’s motion to amend his complaint to add a claim of promissory estoppel against Progressive, because Ridenour failed to identify any promise made to him by Progressive regarding PIP coverage
“Ridenour does not identify on appeal what alleged promise Progressive made to him. Instead, his deposition testimony indicates that he had no communication with Progressive before the accident. Nor did Ridenour point to any evidence to suggest that Progressive made any promises to him. Instead, on this record, it is clear that Progressive made a promise to Layport, as the named insured to add the Ridenour’s vehicle as a covered vehicle and to add Ridenour as an additional driver. There is no dispute that Progressive did, in fact, add the Ridenour’s vehicle as a covered vehicle and added Ridenour as an additional driver to the policy. On this record, the trial court correctly concluded that the proposed amendment was futile, and did not abuse its discretion by denying the motion for leave to amend the complaint to add a claim of promissory estoppel.”
Judge Shapiro “reluctantly” concurred with the majority, but wrote separately to urge the Supreme Court to square this result with Dye v Esurance Prop & Cas Ins Co, 504 Mich 167 (2019).
“Thus, under Dye, the vehicle’s owner is entitled to PIP benefits in the event of a motor vehicle accident so long as someone maintains no-fault insurance for the vehicle. In this case, although MCL 500.3114(4)(a) refers to ‘the insurer of the owner or registrant of the motor vehicle involved in the accident,’ a Court following Dye’s approach would interpret this to mean “the insurer of the motor vehicle involved in the accident.”
Our decision leaves the law in the confounding, if not absurd, situation in which a vehicle’s owner who has ‘maintained the security’ required by MCL 500.3101, albeit through the purchase of insurance by a third party, is entitled to PIP benefits but may not seek those benefits from the insurer of the vehicle that he owns, was driving and for which he has paid the charged premiums.”
