Michigan Court of Appeals; Docket #320674; Published
Judges Ronayne Krause, Murphy, and Servitto; Unanimous; Per Curiam
Official Michigan Reporter Citation: 311 Mich App 442 (2015); Link to Opinion
In this unanimous published per curiam Opinion, the Court of Appeals held that Frankenmuth Insurance was not entitled to subrogation from a no-fault insurer for amounts it paid under a residential homeowners’ policy for severe property damage caused to a house after an automobile was driven into it by the homeowner’s son — who was an excluded driver under the no-fault policy.
Plaintiff-Frankenmuth insured a home owned by Bonnie Gabbert (not a party to this case). Defendants-Citizens Insurance and Hanover Insurance (Citizens/Hanover) insured a Lincoln automobile owned by defendant Ruth Heubel. The no-fault policy included a named-driver exclusion pursuant to MCL 500.3009(2), which specifically named Heubel’s son, defendant Leonard Poll, as an excluded driver and warned that all liability coverage would be void if Poll operated the Lincoln. While Poll was driving the Lincoln, he lost control and crashed into Gabbert’s home, causing extensive damage. Frankenmuth paid more than $108,000 for the damage and then filed this subrogation action to recover these costs from Citizens/Hanover, as the primary insurer of the Lincoln, and from Heubel and Poll individually. Citizens/Hanover moved for summary disposition, asserting it was not obligated to pay anything due to the named-driver exclusion. The trial court granted Citizens/Hanover’s motion and denied Frankenmuth’s motion for reconsideration.
The Court of Appeals held the no-fault policy’s named-driver exclusion negated any liability on behalf of Citizens/Hanover. In this regard, the court said:
“The operative effect of such a named-driver exclusion is that when a named excluded driver operates the insured vehicle, ‘coverage is void — no one is insured.’ … Here, the named-driver exclusion in Heubel’s car insurance policy contained verbatim the warning set forth in MCL 500.3009(2). We must enforce as written both the plain and unambiguous language of the statute, as well as the clear and unambiguous terms of the insurance policy not in conflict with that statute. … Applying the plain language of both the insurance policy’s named-driver exclusion and the statute, while Poll drove Heubel’s vehicle, the insurance policy was void, and therefore the security required by MCL 500.3101 was not in effect at the time of the accident (i.e., no one was insured). …
Because Citizens/Hanover was not the insurer of the vehicle ‘involved in the accident,’ … at the time the accident occurred, it was not liable for the damages incurred.”
The Court of Appeals further rejected Frankenmuth’s claim that Bronson Methodist Hosp v Mich Assigned Claims Facility, 298 Mich App 192 (2012), applied to this case. The court pointed out that Bronson dealt with §3009(2)’s effect on an insurer’s obligation to pay PIP benefits, not property damage benefits, and said:
“[N]either Bronson nor MCL 500.3009(2) are applicable solely to personal injury protection benefits. Indeed, subsection (1) of that statute specifically refers to liability for both property damage and bodily injury. As Frankenmuth acknowledges, the Legislature has seen fit in the past to make certain exceptions applicable to only personal injury benefits and not property damage benefits. …The Legislature did not do the same here, indicating its intent to make MCL 500.3009(2) equally applicable to both personal injury protection benefits and property damage benefits.”
In conclusion, the Court of Appeals also rejected Frankenmuth’s claim that the named-driver exclusion was void as against public policy.