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State Farm Mutual Automobile Insurance Company v Roe; (COA-PUB, 10/31/1997; RB #1975)


Michigan Court of Appeals; Docket No. 186031; Published  
Judges Corrigan, Michael J. Kelly, and Hoekstra; 2-1 (with Judge Kelly Dissenting); Opinion by Judge Hoekstra  
Official Michigan Reporter Citation:  226 Mich App 258; Link to Opinion alt   

Exception for Employer Provided Vehicles [§3114(3)]   
General / Miscellaneous [§3131]

Workers Disability Compensation Act (MCL 418.1, et seq.)  
Motor Vehicle Code (Financial Responsibility Act) (MCL 257.501, et seq.)  
Reformation of Insurance Contracts   

In this 2-1 published Opinion by Judge Hoekstra, Judge Kelly dissenting, the Court of Appeals held that an exclusion in the bodily injury portion of State Farm's insurance policy issued to plaintiffs employer which excluded coverage for bodily injury to "any employee of an insured arising out of his or her employment" precluded residual liability coverage for injuries sustained by the plaintiff while being transported to work by his employer.  

The plaintiff, Michael Roe, worked for his father, Wilbur Roe, who operated a sole proprietorship lumber company. It was Wilbur Roe's custom to provide transportation to and from job sites for his employees who wanted to ride with him. On the day of the accident, Wilbur was providing such optional transportation to the job site for Michael and other employees. The vehicle being used to provide the transportation was titled in the name of Wilbur and his wife, Maureen, who was not an employee of the lumber company. The vehicle was insured by State Farm, and was primarily used by Maureen.  

After the injury, State Farm paid PIP benefits under §3114(3), which establishes that an employee receives no-fault benefits from his employer's PIP insurer if injured while an occupant of a motor vehicle owned or registered by the employer.  

Michael subsequently brought a claim for bodily injury damages against his father as operator of the vehicle, and his mother as owner. State Farm filed a declaratory judgment action claiming that an exclusion in the liability portion of the policy precluded coverage. The exclusion provided that there was no coverage for any bodily injury to "any employee of an insured arising out of his or her employment."  

In reversing the trial court finding of coverage, the majority held that under the circumstances, Michael's injuries did arise out of his employment. In so holding, the Court of Appeals relied upon the workers' compensation case of Konopka v Jackson County Road Commission, 270 Mich 174 (1935), which held that if an accident arises out of transportation provided by the employer, it is an accident arising "in the course of the employment." The Court of Appeals majority herein felt that the exclusionary language "arising out of his or her employment"  should be construed in a manner consistent with the workers' compensation act and Konopka. The court held that the exclusionary language at issue is "identical to that used in §301 of the workers' compensation act." The court felt it apparent that the exclusion was crafted in consideration of workers' compensation law. Further, construing the exclusionary language in accordance with workers' compensation law supports the policy considerations underlying the workers' compensation act. The right to recover benefits for personal injury or occupational disease under the workers' compensation act is the exclusive remedy of an employee against an employer who has complied with the act. MCLA 418.131(1). As with Konopka, it was "customary" for Wilbur to furnish employee transportation to and from the job site. The transportation arrangement was for the "mutual advantage" of employer and employees. The transportation was provided in a vehicle owned and operated by the employer, and not merely another employee. This provided transportation had become "an essential incident of the employment as to be apart of it."  

The Court of Appeals also rejected the argument that the exclusion was contrary to public policy because it was broader than that permitted by the financial responsibility act, MCLA 257.520(b)(2). Finally, the court rejected the argument that it was bound by the finding of the workers' disability compensation magistrate denying Michael's claim for compensation on the basis that his injuries did not arise out of and in the course of his employment under the workers' compensation act.  

In his dissent, Judge Kelly would find coverage, on the basis that the workers' compensation act covers injuries "arising out of and in the course of employment," not just injuries "arising out of employment" as referred to in the policy exclusion. By adding the phrase "and in the course of employment" into the exclusionary clause contained in the contract, Judge Kelly felt that the majority had reformed the contract, and ignores case law which has treated the phrase "arising out of employment" differently from the phrase "in the course of employment." Judge Kelly would rule that by purposely omitting the phrase "in the course of employment," State Farm intended only to disclaim liability for injuries arising "directly from the circumstances and conditions of employment," i.e., when the injury occurs while the workman is doing the duty which he is employed to perform. Judge Kelly states that the majority has rewarded the insurer's ineptitude in the drafting of his exclusion at the expense of the blue collar logger who paid for coverage.  

Lansing car accident lawyer 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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