Michigan Court of Appeals; Docket No. 291051; Published
Judges Murray, Donofrio, and Gleicher, unanimous; per curiam
Official Michigan Reporter Citation: 290 Mich. App. 19; Link to Opinion
The Michigan Supreme Court DENIED Leave to Appeal on 4/25/2011; Link to Order
In this unanimous, published per curiam opinion, the Court of Appeals dealt with a PIP priority dispute involving three insurance companies that arose out of injuries sustained in an Ohio accident by a Michigan resident who was driving a commercial tractor-trailer rig hauling freight from Illinois to New York. The three insurance companies involved in this dispute were Citizens Insurance Company, who was the truck driver’s personal automobile insurer; Lincoln General Insurance Company, who was the liability insurer of the lessee (MRG) of the truck; and Clearwater Insurance Company who was the “bobtail” insurer under a policy that excluded coverage when the insured suffers injury while under motor dispatch, which was the situation in this case. The Clearwater policy also contained an endorsement that provided Michigan no-fault PIP coverage. Clearwater contended, however, that it was not obligated to provide Michigan no-fault PIP coverage under this endorsement, because the main policy itself excluded coverage. The Court of Appeals rejected this argument based upon black-letter insurance law principles recognizing that “when a conflict arises between the terms of an endorsement and the form provisions of an insurance contract, the terms of the endorsement prevail.” Therefore, because the Clearwater PIP endorsement clearly extended PIP coverage, that endorsement trumped the exclusion in the body of the Clearwater policy.
The court went on to hold that the insurer of lessee MRG (Lincoln General) had no obligation to pay Michigan PIP benefits because that policy did not contain a PIP endorsement and the accident did not occur in Michigan, which would be necessary in order to trigger the provisions of Section 3163. Therefore, because the accident occurred in Ohio, Section 3163 was not applicable and, accordingly, Lincoln General had no responsibility to pay PIP benefits.
The remaining priority issue was whether plaintiff’s personal automobile insurer (Citizens) was responsible to pay Michigan PIP benefits under the general priority provisions of Section 3114(1). Citizens argued that even though the truck was legally titled in the personal name of the plaintiff who was a self-employed trucker, the “employer provided vehicle” priority provisions of Section 3114(3) should apply, which supersede the general priority provisions of Section3114(1). The Court of Appeals agreed with Citizens based on the prior Michigan appellate decisions in Celina Mut Ins Co v Lake States Ins Co, 452 Mich 84 (1996) and State Farm Mut Automobile Ins Co v Sentry Ins, 91 Mich App 109 (1979). In holding that Celina was controlling, the Court of Appeals held:
“Consistent with the Michigan Supreme Court’s analysis in Celina Mut Ins Co, the priority language in MCL 500.3114(3) extends to the self-employment situation of [plaintiff] Besic. With respect to the additional language comprising MCL 500.3114(3), Besic suffered ‘accidental bodily injury while an occupant of a motor vehicle owned or registered by [his] employer,’ given that MRG had leased Besic’s truck. MCL 500.3101(h) (defining ‘owner’ as ‘[a] person renting a motor vehicle or having the use thereof, under a lease or otherwise for a period that is greater than 30 days.’). Because MCL 500.3114(3) applies to the undisputed facts of this case, subsection (3) dictates that Besic ‘shall receive personal protection insurance benefits to which . . . [he] is entitled from the insurer of the furnished vehicle.’ In light of the fact that only Clearwater extended personal protection insurance benefits to the truck involved in Besic’s accident, it has first priority to pay Besic’s first-party benefits.”
Therefore, the Citizens policy was secondary to the policy covering the truck that was titled in plaintiff’s name because that truck was also “owned” by MRG who was, in reality, plaintiff’s employer. Accordingly, Clearwater as the bobtail insurer of the “furnished vehicle” was obligated to pay Michigan PIP benefits under its endorsement without any contribution from Citizens or Lincoln General.