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Allstate Ins Co v. Larsen; (USD-UNP, 9/11/2014; RB #3371)


United States District Court, Western District of Michigan; Case #1:12-cv-01351  
Hon. Ellen S. Carmody  
Official Michigan Reporter Citation: Not Applicable; Opinion Not Available alt  

Definition of Motorcycle [§3101(2)(c)]
Specific Exclusions from Motor Vehicle Definition [§3101(2)(e)]
Definition of Owner [§3101(2)(h)]
Obligation of Motorcycle Owner/Registrant to Insure Motorcycles [§3103(1)]
Priority Rules for Payment of Benefits [§3113]
Resident Relatives [§3114(1)]
Exception for Motorcycle Injuries [§3114(5)]

Not Applicable  

In this written Opinion involving whether Allstate Insurance had to pay no-fault benefits to an injured motorcycle passenger under two separate policies — an automobile policy that Allstate issued the driver and owner of the motorcycle and a motorcycle policy that Allstate issued the driver’s father — Federal Judge Ellen S. Carmody handed down various rulings:
1) the automobile policy issued to the driver and owner of the motorcycle did not provide coverage to the injured passenger because (a) the policy did not provide liability coverage for events “arising out of the use of” a motorcycle, and (b) the motorcycle did not satisfy the definition of “motor vehicle” in the policy itself or in the No-Fault Act;
2) the motorcycle policy issued to the non-owner of the motorcycle (the driver’s father) did not provide coverage to the injured passenger because the driver, as the owner of the motorcycle, was not living with the non-owner (his father) at the time of the accident; and
3) Allstate’s reliance on allegedly being told that the deceased driver’s father had an insurable interest in the motorcycle at the time the motorcycle policy was obtained was not a material misrepresentation that entitled Allstate to void the motorcycle policy from its inception.

Kenneth Larsen was driving a motorcycle with his brother, defendant Ronald Larsen, as passenger when the motorcycle crashed, killing Kenneth and injuring Ronald. Kenneth owned the motorcycle, but had not purchased insurance coverage for it. Kenneth did, however, have an automobile policy with plaintiff Allstate Insurance. Meanwhile, Jim Larsen (the father of Kenneth and Ronald) had purchased a policy with Allstate that he believed insured the motorcycle, although Kenneth did not live with his father at the time of the accident. After the accident, Ronald filed a state-court action against Kenneth’s estate, seeking no-fault benefits. Allstate filed this declaratory judgment action in federal court, claiming it was not liable for paying benefits or for defending the state-court action. Ronald argued that his father, Jim, had insured the motorcycle through Allstate and that Allstate’s agent, Steven J. McKinley, failed to obtain a policy that would have covered the accident. Ronald asked for a declaratory judgment that either the automobile or motorcycle policy provided coverage and obligated Allstate to indemnify decedent’s estate.

In granting declaratory judgment for Allstate, Judge Carmody held that Kenneth Larsen’s automobile policy did not provide coverage to the injured passenger. The judge said the policy “explicitly and clearly” excluded motorcycles from the definition of “automobile.” The judge also noted that the definition of motor vehicle in the No-Fault Act “expressly excludes motorcycles.”

Next, Judge Carmody said the motorcycle policy issued to Jim Larsen did not provide benefits. The judge explained:

“As Allstate argues, Jim Larsen acknowledged at his deposition that at the time he purchased the motorcycle policy (and through the date of Kenneth Larsen’s death), neither Kenneth Larsen nor Ronald Larsen resided with him. As Allstate argues, the definition of ‘insured cycle,’ ‘non-owned cycle,’ and ‘resident,’ … preclude coverage for the motorcycle accident that resulted in Kenneth Larsen’s death.”

Judge Carmody further rejected the claim that the insurance agent issued the policy knowing that Jim Larsen did not own the motorcycle and that Kenneth Larsen did not live with his father. The judge stated:

“Jim Larsen’s deposition testimony … is more equivocal than Ronald Larsen’s position. Specifically, Jim Larsen testified that he was not certain that he spoke directly with the … agent before the policy was issued. … While some of [the agent’s] … testimony could reasonably be interpreted as supporting the theory that [the agents] knew or should have known that Jim Larsen was, in fact, purchasing the insurance for Kenneth Larsen and that rather than attempt to determine the relevant facts chose instead to willfully remain ignorant, Jim Larsen’s testimony on point as to whether he ever had any direct contact of any nature with [the agent] is equivocal. However, it also clearly excludes any deliberate misrepresentation on Jim Larsen’s part.”

According to Judge Carmody, there was no coverage under the motorcycle policy because Jim, who purchased the policy, did not own the motorcycle.

Judge Carmody then rejected Allstate’s claim that it was entitled to void the motorcycle policy due to a material misrepresentation made by Jim Larsen. The judge said:

“… Allstate is correct that there is no coverage of Ronald Larsen under either Kenneth Larsen’s automobile policy or the motorcycle policy purchased by Jim Larsen. But the undersigned flatly rejects that Jim Larsen ever made any misrepresentation to anyone because there is no evidence that Jim Larsen ever made any representation to [the agent] or anyone else.”

Judge Carmody further held that the Allstate insurance agent did not owe a duty to the injured passenger under a negligence theory. The judge stated:

“To conclude on these convoluted facts that the Steven J. McKinley Agency and/or Allstate had a duty to Ronald Larsen, who was simply a passenger on a motorcycle driven by Kenneth Larsen for which Kenneth Larsen had no valid insurance, is beyond any comment sense interpretation of the undisputed facts.”

In conclusion, Judge Carmody also denied the passenger’s fraud and estoppel claims.

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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