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Auto-Club Insurance Association v Hill; (MSC-PUB, 10/7/1988; RB #1171)


Michigan Supreme Court; Docket No. 80966; Published  
Opinion by Justice Archer; 5-2 (with Justices Cavanagh and Levin Dissenting)    
Official Michigan Reporter Citation:  431 Mich 449; Link to Opinion alt   

Noneconomic Loss Liability of Uninsured Tortfeasors [§3135(1), (3)]  
Liability for Economic Loss Caused by Uninsured Tortfeasors [§3135(3)(b)]

Uninsured Motorist Benefits: Uninsured Motorist Coverage in General    
Uninsured Motorist Benefits: Exclusions from Uninsured Motorist Benefits    
Uniform Motor Vehicle Accident Reparations Act (UMVARA)    

In this Opinion by Justice Archer, joined by Chief Justice Riley and Justices Brickley, Boyle and Griffin, the Supreme Court held that the threshold requirements of §3135(1) must be satisfied when a motorist seeks benefits for non-economic loss under the uninsured motorist providing of his/her no-fault insurance policy. This holding reverses the Court of Appeals decision summarized in Item No. 1011. Pursuant to the Court's holding, a claimant in an uninsured motorist arbitration must have suffered death, serious impairment of body function, or permanent serious disfigurement in order to recover uninsured motorist benefits for non-economic damages. The Court based its decision on the grammatical structure of §3135(1) and (2). The Court stated that subsection (1) unambiguously governs liability for non-economic loss and "clearly specifies to whom its terms apply." This subsection does not create any distinction between the liability of persons who are insured with no-fault and those who are uninsured. Both categories have immunity for non-economic loss arising out of sub-threshold injuries. Furthermore, there is no qualification in the language of §3135(1) which refers to §3135(2). The Court said, "the reference in §3135(2)(b) to §3135(1) does not change the meaning of §3135(1) itself. That reference limits the subsection (2)(b) exception from the abolition of tort liability for non-economic loss to above the threshold non-economic loss."

Referring to its earlier decision in Citizens Insurance Company v Tuttle, 411 Mich 536 (1981), the Court drew a distinction between economic and non-economic loss and held that an uninsured motorist enjoys no tort immunity for economic losses. In this regard, the Court stated, "this basis for withholding tort immunity for economic damages does not apply to non-economic damages because recoveries for non-economic damages are not provided by the basic no-fault system for allocating the cost of accidents. There is no logical basis for imposing greater liability for non-economic damages upon a person because of his failure to fund the basic no-fault system which pays for only economic damages."

Justice Cavanagh filed a dissenting opinion joined by Justice Levin. Justice Cavanagh stated, "the No-Fault Act, as this Court has observed, is modeled on the Uniform Motor Vehicle Accident Reparations Act which expressly, and on examination of the commentary clearly, provides — more clearly we agree man the Michigan act — that the provision of the act abolishing tort liability does not apply to the owner of an uninsured motor vehicle involved in an accident."

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