Michigan Supreme Court; Docket No. 93890; Published
Opinion by Justice Boyle; 5-1 (with Justice Brickley not participating and Justice Riley dissenting)
Official Michigan Reporter Citation: 443 Mich 646; Link to Opinion
Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [§3101(1)]
Definition of Owner [§3101(2)(h)]
Definition of Registrant [§3101(2)(i)]
In this 5-1 decision (Brickley not participating and Riley dissenting), the Supreme Court interpreted §3101(1) of the no-fault statute and construed the language of the particular insurance policy as requiring continued coverage for a permissive operator of the insured vehicle, even though the named insured had sold the car, signed, endorsed and delivered the title, and accepted payment for the car, prior to the automobile accident, when the named insured continued to be the registrant of the vehicle.
On Saturday, August 1, 1987, Williams offered to sell her Pontiac automobile to her nephew, Preece, who accepted the offer and paid his aunt $100 for the car. Williams signed her name to the certificate of title and gave it to Preece. Preece planned to register the car, get a new registration plate and his own insurance on the following Monday. Preece testified that Williams told him that he could drive the car with her license plate, registration and insurance until he could acquire his own on the following Monday. He then left Williams' home in the car with Williams' license plate affixed to the car, and her certificate of registration and insurance remaining in the glove compartment. On the way home, Preece was involved in a head-on collision which occurred in the early morning hours of Sunday, August 2, 1987. Plaintiff Clevenger was severely injured in the collision.
Clevenger filed a third-party tort claim under §3135(1) against Preece and Williams for residual liability. Preece was without applicable insurance coverage. Williams had insured the accident vehicle transferred to Preece with Allstate and this coverage was not canceled by Williams until several days after the accident. Allstate denied any duty to defend or indemnify Williams or Preece under the terms of the no-fault policy on the grounds that the accident vehicle had been transferred and was no longer owned by its insured, Williams. The Court of Appeals in a 2-1 opinion (Item No. 1533) ruled in favor of Allstate on the grounds that a bona fide sale had occurred and that since the vehicle was no longer owned by Williams after she endorsed and delivered title, the policy did not provide coverage to either Williams or Preece.
The Supreme Court reversed and held that Allstate was obligated to provide coverage pursuant to the express terms of its policy and under the operation of §3101(1) of the no-fault act.
First, the court noted that the language of the Allstate policy extended residual liability coverage to the named insured and those persons operating an "owned vehicle" with the permission of the "named insured." Here, Williams was a "named insured" and it was undisputed that Preece was driving the accident vehicle with her permission. Allstate claimed that the accident vehicle was not an "owned vehicle" because the named insured had transferred her ownership of the insured car to Preece. However, the policy defined the term "owned vehicle" as the vehicle listed on the declaration page without regard to who held legal title and here, the accident vehicle was indeed the one listed on the declaration sheet The court held that at best, the policy was ambiguous as to whether the accident car was an "owned vehicle" and under established rules of insurance contract interpretation, it construed the policy in favor of coverage. As the court found that the accident car was an "owned vehicle," coverage was therefore extended to Preece.
The Supreme Court also found that §3101(1) of the Michigan no-fault act requires that either the owner or the registrant of a vehicle must maintain no-fault automobile insurance. The court had concluded in previous decisions that the terms "owner" and "registrant," as used in this section, are not synonymous and represent separate categories of individuals. In this case, Williams remained the registrant of the automobile by allowing Preece to operate the car with her license plate and registration certificate. As registrant, Williams remained a proper party to maintain no-fault insurance on the vehicle. The Allstate coverage, obtained by Williams as the registrant, extended to permissive users of the vehicle. Because of the obligations imposed upon either the owner or registrant of the vehicle by §3101(1), the court rejected Allstate's argument that Williams had no insurable interest after transferring ownership of the car. The court noted that criminal penalties could have been imposed upon Williams had she failed to maintain no-fault insurance on the accident vehicle, and therefore, a sufficient insurable interest in the car existed.