United States District Court, Western District of Michigan; Docket No. 1:02-CV-326; Written
Honorable David W. McKeague
Official Michigan Reporter Citation: Not Applicable
STATUTORY INDEXING:
General Rule of Priority [3114(1)]
Recoupment Between Equal Priority Insurers [3115(2)]
TOPICAL INDEXING:
Not applicable
CASE SUMMARY:
In this written Opinion by Judge David W. McKeague, the Federal Court resolved a priority dispute between the no-fault insurance company who insured the injured person’s private automobiles (including the one involved in the accident) and the no-fault insurer of the injured person’s sole proprietor business vehicle. In resolving this dispute, the court held that the injured person’s private automobile insurer was responsible for payment of benefits under section 3114(1) without contribution or partial recoupment under section 3115(2) from the insurer of the sole proprietorship. In so holding, Judge McKeague distinguished earlier opinions of the Court of Appeals in Stoddard v Citizens Insurance Company [Item No. 2271] and Westfield Insurance Company v League General Insurance Company [Item No. 2008]. In this regard, Judge McKeague held:
“While both Stoddard and Westfield would seem to indicate that a sole proprietor should be deemed to be a named insured on a policy issued in the name of his sole proprietorship, both cases are factually distinct from the instant case. Unlike the present case, Stoddard involved a claim for uninsured motorist benefits. . . .
In Westfield, the court determined that [the injured person] was not a named insured under the . . . policy issued to his wife. . . . In addition, in Westfield the accident leading to the claim actually involved the vehicle covered under the commercial policy at issue.
Beyond these factual distinctions, the broad policies underlying the no-fault act counsel against a finding that Lewis is a named insured under the Hastings policy. . . .Indeed, finding Lewis to be a named insured under the Hastings policy would achieve a result directly contradictory to these policies, as it would require two insurers to adjust the same claim, resulting in duplicative administration costs.
Furthermore, such a result would likely result in higher insurance costs for sole proprietors, as the risks undertaken by a commercial insurer on their behalf would greatly increase. Generally, commercial insurers face liability risks for the use of business vehicles under the employer-furnished vehicle exception. This scheme ‘allows for predictability,’ since a commercial insurer ‘will know in advance the scope of the risk it is insuring.’ . . . Reaching the result urged by plaintiff here would undermine this predictability and expand the scope of risks from solely business vehicles to any vehicle operated by the insured being used for business or pleasure.”
