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Gagnon, et al v Citizens Insurance Company, et al; (COA-UNP, 01/29/13; RB #3313)


Michigan Court of Appeals; Docket #301188; Unpublished
Judges Hoekstra, K. F. Kelly, and Beckering; Unanimous; Per Curiam;
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt  

Compulsory Insurance  Requirements for Owners or Registrants of Motor Vehicles Required to Be  Registered [§3101(1)] 
General /  Miscellaneous [§3101]  
Disqualification  for Uninsured Owners or Registrants of Involved Motor Vehicles or Motorcycles [§3113(b)]  
Misrepresentation  / Fraud as a Basis to Rescind Coverage[§3113]
General /  Miscellaneous[§3113]
Exception for Occupants [§3114(4)]
General / Miscellaneous[§3114] 
Named Insured [§3114]
12% Interest Penalty on Overdue Benefits – Nature and Scope [§3142(2) (3)] 
One-Year Notice Rule Limitation [§3145(1)]  
One-Year Back Rule Limitation [§3145(1)]  
Tolling of Limitations for Minors [§3145(1)] 
Tolling of Limitations Upon Death [§3145]
Applicability of Limitations to Assigned Claims Cases[§3145]
Requirement That Benefits Were  Unreasonably Delayed or Denied [§3148(1)] 
Conduct Establishing  Unreasonable Delay or Denial[§3148]
Obligation of Assigned Insurer to Pay Claim Promptly  [§3175(1)]

Not Applicable               

In this lengthy, unanimous, unpublished per curiam Opinion dealing with a claim for PIP benefits arising out of a fatal accident, the Michigan Court of Appeals rendered several significant holdings.

First, citing the previous decision in Iqbal v Bristol West Ins Group, 278 Mich App 31 (2008), the Court held that the sole owner of a motor vehicle involved in an accident cannot be denied PIP benefits under the uninsured motorist disqualification provisions of § 3113(b) where there was at least one auto no-fault insurance policy covering the accident vehicle.  In so holding, the Court rejected the argument of Defendant Citizens Insurance Company that Iqbal should only apply to situations involving multiple vehicle owners, not in situations such as the case at bar where the PIP claimant was the sole owner of the vehicle and had not personally purchased insurance coverage for that vehicle.  In the case at bar, the vehicle that was owned and driven by the PIP claimant was insured under a policy purchased from Citizens Insurance Company by the father of the owner’s boyfriend.  The father had no ownership interest in the vehicle.  In holding that the Iqbal rule precluded disqualification of the owner/driver from PIP benefits, the Court stated:

While PIP coverage itself applies to the injured person, and not the motor vehicle, Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 254-255; 819 NW2d 68 (2012); Amerisure Ins Co v Auto-Dlvners Ins Co, 262 Mich App 10, 17; 684 NW2d 391 (2004), this Court has construed the security or insurance requirement in the no-fault statute as being linked to the vehicle.  Iqbal, 278 Mich App at 39. . . . One could see that if the statute required that every owner maintain the requisite insurance, an absurd result could follow, such as when there is more than one registered owner and not all owners obtain the requisite insurance.  It would follow that the individual owner that did procure  insurance would nevertheless be excluded from coverage because "that would be an owner of a vehicle with respect to which the insurance required by MCL 500.3101 was not in effect, as all the owners had not procured coverage for the vehicle." Id. at 40 n 2 (emphasis in original).

The Iqbal Court looked to the section of the no-fault statute making it a misdemeanor for failing to carry the requisite security on a vehicle.  MCL 500.3102(2) provides: "An owner or registrant of a motor vehicle . . . with respect to which security is required, who operates the motor vehicle  . . . or permits it to be operated upon a public highway in this state, without having in full force and effect security complying with this section or section 3101  . . . is guilty of a misdemeanor."  The language of § 3102(2) does not require that each and every owner or registrant carry a separate policy covering the vehicle; only that there be a policy covering the vehicle. . . . Iqbal does not limit its application to those instances in which there are multiple owners of a vehicle.  On the contrary, Iqbal concluded that ownership was entirely irrelevant in a determination as to whether a vehicle has the requisite no-fault security.  The language from the case is broad: "The statutory language links the required security or insurance solely to the vehicle.  Thus, the question becomes whether the BMW, and not plaintiff, had the coverage or security required by MCL 500.3101. . . .

Therefore, we conclude that, although there was only one clear owner in this case and the factual underpinnings are dissimilar from Iqbal, the trial court properly determined that the Cavalier had security at the time of the accident because the security requirement in the no-fault statute is linked to the vehicle and not the individual.” 

Second, the Court held that whether or not the person who bought the insurance policy had an “insurable interest” in the accident vehicle, did not entitle the insurer of that vehicle to deny benefits to the owner/driver under the “innocent third party” rule.  In this regard, the Court stated:

“Even if we were to conclude that Hinson had no insurable interest in the Cavalier, the "innocent third party" rule prohibits Citizens from rescinding the policy.  An insurer may not rescind a policy of insurance because of a material misrepresentation made in an application for no-fault insurance where there is a claim involving an innocent third party. . . . The record  is  void  of  any  evidence  that  Hinson  engaged  in  fraudulent  behavior  in procuring the insurance policy and no facts exist that would warrant allowing Citizens to void the policy.  Accordingly, there is no reason to rescind the insurance policy for lack of insurable interest.”

Third, the Court held that even though the claimant/owner/driver could not be disqualified pursuant to the terms of § 3113(b) under the Iqbal doctrine, the claimant was not entitled to recover no-fault benefits under the Citizens insurance policy insuring the accident vehicle because, under the specific language of that policy, Citizens Insurance Company could not properly be construed as the “insurer of the operator of the vehicle” occupied, within the meaning of the occupant priority provisions of § 3114(4) of the act.  The Court reasoned that under the policy, Citizens was not properly construed as the insurer of the driver/owner because the named insured on that policy (the father of the owner’s boyfriend) was not required to purchase mandatory no-fault coverage under § 3101 of the no-fault act because he was not the owner or registrant of that vehicle.  Therefore, the Citizens insurance policy precludes the claimant/owner/driver from being considered to be “insured” within the meaning of that policy.  In this regard, the Court stated:

“Plaintiffs concede that Arold was the sole owner and registrant of the 1992 Chevrolet Cavalier.  The insurance policy, in clear and unambiguous terms, does not entitle Arold, as an occupant of the vehicle, to PIP benefits.  Because Arold is not a family member as defined in the policy, Arold would qualify as an "insured" only if she was injured while occupying "your covered auto."

We find no support for plaintiffs' argument that Citizens admitted that the 1992 Chevrolet Cavalier falls with this definition of "your covered auto."  MCL 500.3101(1) only requires that the owner or registrant provide security for the payment of PIP benefits.  Neither Hinson nor his spouse was the owner or registrant of the Cavalier.  It follows that they were not required by law to maintain security under the no-fault statute.  Accordingly, Arold does not qualify as an "insured" under the insuring agreement for PIP benefits.  "[T]here is simply no authority for the proposition that the insurer of a vehicle involved in an accident must pay PIP benefits under the circumstances present in the instant case, when no named insureds were involved in the accident."  Amerisure Ins Co v Auto-Owners Ins Co, 262 Mich App 10, 16; 684 NW2d 391 (2004); see also Dobbelaere v Auto-Owners Ins Co, 275 Mich App 527, 534; 740 NW2d 503 (2007).”

In light of this holding, the claimant/owner/driver would only be entitled to recover PIP benefits through the provisions of the Michigan Assigned Claims Facility. 

Fourth, the Court held that even though the claimant/owner/driver had not submitted written notice of her claim to the Michigan Assigned Claims Facility within one year of the accident as required by § 3145(1), the claim was not barred because the one-year notice rule in that section is a statute of limitations which is subject to the tolling provisions of the Revised Judicature Act – specifically, the minority tolling provisions of MCL 600.5851(1) and the death savings provisions of MCL 600.5852.  However, the “one-year back rule” provision of § 3145 is not a statute of limitation provision and, therefore, is not subject to either of these RJA tolling provisions under the Supreme Court’s recent decision in Joseph v ACIA, 491 Mich 200 (2012).  In this regard, the Court held:

“Titan argues that plaintiffs' action was barred by the one-year notice provisions in MCL 500.3101 and MCL 500.3174, because the accident occurred on October 30, 2007, and plaintiffs did not file a notice of the claim with the MACF until October 13, 2009. . . . The time period for filing an action for PIP benefits, where identifiable coverage is in effect, is set forth in MCL 500.3145(1). . . . [T]his statutory provision contains separate and distinct limitations periods that relate both to the timing in which an action may be brought and the damages that may be recovered."  Joseph v Auto Club Ins Ass 'n, 491 Mich 200, 207; 815 NW2d 412 (2012).  Plaintiffs alleged in their amended complaint that the accident occurred on October 30, 2007.  The evidence established that the MACF received notice of the injury, at the earliest, after plaintiffs filed an amended complaint against it on August 12, 2009.  A formal notice of claim, using the MACF's "application for bodily injury-benefits" form, is dated October 13, 2009.  Because the one-year period for providing notice to the MACF elapsed in 2008, long before any form of notice was given to the MACF in 2009, the dispositive question is whether some tolling or saving provision existed that would allow plaintiffs to proceed against the MACF. . . . This Court has found the provision applicable to the one-year period for bringing an action against an insurer for payment of PIP benefits under MCL 500.3145(1).  Attorney General v State Farm Mut Auto Ins Co, 160 Mich App 57; 408 NW2d 103 (1987). . . . Considering the distinction made in Joseph  between when an action may be brought by a plaintiff and the damages that may be recovered in the action, we conclude that the trial court did not err in determining that the action in this case was timely, as it pertains to any damages sought for decedent Arold's estate.  As a matter of law, the requisite notice of injury was timely because the death savings provision in MCL 600.5852 would be applicable to toll the one-year period for Tonie, as personal representative of the estate, to give notice of the injury to the MACF under MCL 500.3145(1) and MCL 500.3174. . . . Under the death-savings provision in MCL 600.5852 and the minority tolling provision in MCL 600.5851, plaintiffs' claims against Titan were not time-barred.”

Fifth, in light of the fact that the Assigned Claims Facility insurer in this case, Titan Insurance Company, did not promptly pay this assigned claim as required by § 3175(1), the insurer violated the provisions of § 3142 and § 3148 and was thus liable for penalty interest and attorney fee sanctions.  In so holding, the Court rejected the argument of Titan that is was an “entitlement case” rather than a priority case, thereby excusing its failure to promptly pay benefits.  In rejecting this argument, the Court stated:

Titan seeks to avoid its statutory obligation by arguing that this was a "entitlement case" as opposed to a "priority case."  We disagree. . . . The issue in this case was purely a priority issue, and not a coverage issue. . . .  As such, Titan, the assignee of the MACF, was required to immediately pay PIP benefits.  It failed to do so and is now liable to pay attorney fees and penalties.”    

In accordance with the foregoing, the Court of Appeals affirmed in part and reversed in part and remanded for further proceedings.

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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