Michigan Court of Appeals; Docket # 324776; Unpublished
Judges Meter, Boonstra, and Riordan; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Scope of Mandated Coverages [§3131(1)]
TOPICAL INDEXING:
Not Applicable
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving a resident of a senior living facility who died after being trapped inside the facility’s bus, the Court of Appeals held the facility’s no-fault insurer was not responsible for residual liability coverage because the resident’s injuries: 1) did not “arise out of the use of” the bus as a motor vehicle, and 2) were not foreseeably identified with the “normal use, maintenance, and operation of the vehicle.”
Defendant Lashanda Snell was the personal representative of the estate of Susanna West, who was a resident at defendant Hearthstone Senior Services. When the Hearthstone bus returned from a trip with the residents, West remained on the bus, locked inside for 12 hours on a frigid night. West later died. Snell filed a negligence suit obtained a $1.65 million default judgment against Hearthstone. However, Snell was unable to collect on the judgment because Hearthstone did not have a general liability policy that covered such incidents. Upon learning that Hearthstone’s buses were insured by plaintiff Employers Insurance Company of Wausau, Snell sought coverage under the no-fault policy. Plaintiff filed a declaratory judgment action, asserting that Snell’s claim was not covered because West’s injuries did not arise out of the ownership, maintenance or use of the motor vehicle as a motor vehicle. Plaintiff later filed a summary disposition motion. Snell also filed a summary disposition motion, arguing West’s injuries and death were related to the transportational function of the bus. The trial court granted summary disposition for plaintiff.
On appeal, Snell argued the no-fault policy provided residual liability coverage because West’s injuries and death directly resulted from the use and ownership of the bus. The Court of Appeals disagreed, finding that summary disposition was properly granted for plaintiff.
In so holding, the Court of Appeals first found meritless Snell’s claim that plaintiff improperly cited case precedent involving PIP benefits. The Court noted the residual liability portion of the policy was consistent with the provisions of the No-Fault Act and the same causation standard applies to both types of coverage. The Court said that:
“an injury must ‘arise out of the use of an automobile’ in order for PIP coverage or residual liability coverage to apply. … Under this causation standard, defendant Snell must demonstrate that ‘the injury [was] foreseeably identified with the normal use, maintenance, and operation of the vehicle.’ … As such, ‘the causal connection with the automobile must be more than incidental, fortuitous, or but for.’”
The Court of Appeals continued by applying a three-part test to determine whether an insurer is liable for residual liability coverage:
1) the accident must have arisen out of the inherent nature of the vehicle, as such;
2) the accident must have arisen within the natural territorial limits of a vehicle, and the actual use, loading, or unloading must not have terminated; and
3) the vehicle must not merely contribute to cause the condition which produces the injury, but must, itself, produce the injury.
Applying this test to the case at hand, the Court of Appeals said plaintiff was not responsible for residual liability coverage because:
1) West’s injuries did not arise out of the inherent nature of the bus – i.e., its transportational or motoring function. Rather, the bus was no longer being used for a transportation-related purpose during the period of time that West was trapped on it, and her injuries and damages arose from the failure of Hearthstone’s staff to ensure that she left the bus and to account for her absence;
2) the underlying complaint against Hearthstone did not assert liability based on the use of an automobile;
3) when West sustained her injuries, the actual use of the bus had ended; and
4) no aspect of the bus itself produced West’s injuries and, instead, the bus “merely contribute[d] to cause the condition which produce[d] the injury.”
The Court of Appeals further declined to apply school-bus case precedent that was cited by the parties, finding the trial court properly distinguished between school-bus cases and other cases involving standard no-fault policies. The Court said it found no reason to extend the principles set forth in school-bus cases to a situation involving a bus that transports residents of a senior living facility. The Court concluded:
“West’s injuries did not arise out of the operation or use of a vehicle for purposes of the residual liability coverage provided by the insurance policy. As a result, plaintiff has no duty to defend or indemnify any insured in regard to the incident involving West and Hearthstone’s negligence.”
