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Westfield Insurance Company v League General Insurance Company; (COA-UNP, 7/21/1998; RB #2008)


Michigan Court of Appeals; Docket No. 202387; Unpublished 
Judges White, Hood, and Gage; Unanimous; Per Curiam 
Official Michigan Reporter Citation:  Not Applicable; Link to Opinion alt   

General Rule of Priority [§3114(1)]  
Exception for Commercial Vehicles [§3114(2)]  
Exception for Employer Provided Vehicles [§3114(3)]

Not Applicable  

This unanimous unpublished per curiam Opinion involves a priority dispute between two no-fault insurers and the interplay between §3114(1) and §3114(3), when a sole proprietor and a family member are injured in an accident involving the proprietor's vehicle.

In the case at bar, Robin and David Babcock were married. They were driving Robin Babcock's Pontiac to be repaired when it ran out of gas. They used David Babcock's Ford pickup truck to get gas and return to the Pontiac to put the gas into the Pontiac. The Ford pickup was parked facing the Pontiac. Robin Babcock sat in the pickup truck and David Babcock was standing outside of the Pontiac, putting gas into the Pontiac. While the refueling process was occurring, another automobile struck the rear of the Pontiac, causing the Pontiac to strike David Babcock and injure him. The vehicle also struck the pickup, injuring Robin Babcock who was inside. The Ford pickup was owned by "David Babcock, d/b/a David Babcock Construction" and insured under a commercial automobile policy. The named insured on this policy was "David Babcock, d/b/a Babcock Construction."  This commercial policy was issued by plaintiff Westfield Insurance Company. The Pontiac was titled in the name of Robin Babcock and was insured by defendant League General under a family automobile policy in which the named insured was "Robin M. Babcock......" David Babcock was not mentioned as a named insured on the League General policy.

The parties agreed that plaintiff Westfield Insurance Company was obligated to pay no-fault benefits to Robin Babcock under the provisions of §3114(3) as she was occupying a motor vehicle owned or registered by her husband's employer, and therefore, priority liability rested with the employer's insurer. However, plaintiff Westfield argued that defendant League General should pay no-fault benefits to David Babcock, because David Babcock was clearly not occupying the employer's vehicle (the Ford pickup truck), and that the policy issued by Westfield Insurance Company to "David Babcock d/b/a David Babcock Construction" did not cover David Babcock as an individual for the reason that a sole proprietorship is a distinct entity from the proprietor himself. Westfield based its argument upon the Supreme Court's opinion in Celina Mutual v Lake States Insurance Company (Item No. 1851).

The Court of Appeals rejected Westfield's argument, and held that under the rationale of Celina Mutual, a sole proprietorship can clearly be the same entity as the individual who owns it. This was demonstrated in the Celina Mutual case where the court held that the sole proprietor was both employer and employee, thereby allowing the individual to recover as an employee under §3114(3). Therefore, since Westfield's contention that a sole proprietorship is a distinct entity from the proprietor himself is without merit under the Celina Mutual rationale, the court held that David Babcock was considered a named insured under the policy issued by Westfield Insurance Company, and thus entitled to draw PIP benefits through that policy under the general priority provisions of §3114(1). The Court of Appeals also rejected the argument that David Babcock should be considered to be a named insured under his wife's insurance policy issued by League General covering the Pontiac. The Court of Appeals noted that Robin Babcock was the only named insured on this policy, and David Babcock was not mentioned. The court refused to hold that the named insured of an insurance policy encompasses not only those persons listed specifically in the policy, but any person with a marital relationship to the specifically listed individuals. Therefore, David Babcock was not considered to be a "named insured" under the League General policy simply because he happened to be married to Robin Babcock. Accordingly, Westfield was responsible to pay no-fault benefits to both David and Robin Babcock without any recoupment from League General.

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