Michigan Court of Appeals; Docket No. 120223; Unpublished
Judges Griffin, Hood, and McDonald; 2-1 (with Judge Griffin Dissenting); Per Curiam
Official Michigan Reporter Citation: Not Applicable; 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)]
Criminal Penalty for Operating Uninsured Vehicles [§3102(2)]
In this 2-1 per curiam Opinion (Judge Griffin dissenting), the Court of Appeals reversed the entry of declaratory judgment in the trial court which had held Allstate obligated to insure and defend a tort action for noneconomic damages sustained in a motor vehicle accident.
This case addressed the issue of transfer of title of the vehicle prior to the injury causing accident. Just hours before the early morning accident which severely injured the plaintiff, the vehicle causing the accident was purchased by defendant Preece from defendant Williams. Williams signed the certificate of title and gave the certificate and the keys to Preece. Because the transaction took place on Saturday, Preece was unable to obtain a new registration in his own name or proper insurance. Preece drove away in his new car and later struck the plaintiff’s pickup head on. Allstate had issued an automobile insurance policy to Williams and her husband covering the vehicle. The premiums were fully paid and the policy was in effect on the date of the accident Unaware of the accident Williams canceled the policy sometime during the following week.
Plaintiff alleged in his action against Preece and Williams that Williams was liable under the owner liability statute for the injuries caused by Preece's negligent driving. Additionally, it was claimed that Allstate was obligated to insure and defend Williams under its policy with Williams. Plaintiff also claimed that the driver, Preece, was an insured person under Williams policy at the time of the accident The trial court granted declaratory judgment in favor of plaintiff.
On appeal, Allstate contended that the trial court erred in ruling that Preece was an insured under its policy issued to Williams.
In reversing the trial court, the Court of Appeals held that an owner of a motor vehicle is, pursuant to the provisions of MCLA 257.240, not liable to an injured person where the owner has made a bona fide sale of the vehicle by transfer of title" and has delivered possession of the vehicle along with the certificate of title properly endorsed to the transferee. The Court of Appeals held that Williams had made such a bona fide sale in compliance with §240 of the Vehicle Code, thus relieving her from owner liability. Because Williams was no longer the owner of the vehicle insured under Allstate's policy, the court held that Allstate had no duty to indemnify her.
Furthermore, the Court of Appeals denied plaintiff’s argument that Preece was an insured under the terms of the Allstate policy. Since Williams was no longer the owner of the vehicle, she could not give the requisite permission to use the vehicle which would entitle Preece to coverage under the terms of the policy. Consequently, Preece was not an insured person under the policy.
In his dissent, Judge Griffin would hold that §3101(1) of the no-fault act requires a "registrant" of a motor vehicle to maintain security for no-fault benefits and residual liability insurance on that vehicle. Additionally, §3102(2) of the no-fault act, makes it a criminal offense for a registrant of a motor vehicle to not maintain residual liability insurance on the registered vehicle.
Numerous cases have held that the terms "owner" and "registrant" as used in the no-fault act are not synonymous. In Madar v League General Insurance Company, 152 Mich App 734 (1986), the Court of Appeals held that the PIP coverages afforded by an automobile policy were not terminated by the transfer of title to the vehicle. Judge Griffin would hold that the insurance policy between Allstate and defendant Williams remained in fall force and effect at the time of the accident. Accordingly, Judge Griffin would hold that the trial court correctly ruled that Allstate owed a duty to its insured to defend her in the underlying tort action. Judge Griffin would, however, hold in abeyance the issue of whether Allstate must indemnify defendant Williams for any judgment which may be rendered in the underlying tort action, since he is inclined to agree with the majority that it is difficult to conceive of a viable cause of action against a "mere registrant" of an automobile.
As to the claims against the driver, Preece, Judge Griffin agreed with the lower court that the Allstate policy affords coverage both as to defense and indemnification. Any coverage obligated to be provided to defendant Williams must necessarily extend to permissive drivers such as Preece, unless Preece is a named person specifically excluded by the policy. Additionally, the policy by its express terms provides for coverage. There was no dispute that at the time of the accident Preece was operating the vehicle with the permission and consent of the registrant and named insured, Mrs. Williams. Accordingly, Judge Griffin would rule that the trial court was correct in ruling that Allstate owed a duty to Mr. Preece to both defend and indemnify the underlying tort action.