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Marougi v Auto Club Ins Ass’n; (COA-UNP, 10/22/2015; RB #3466)


Michigan Court of Appeals; Docket #322120; Unpublished  
Judges Fort Hood, Cavanagh, and K.F. Kelly; Unanimous; Per Curiam  
Official Michigan Reporter Citation: Not Applicable; Link to Opinion   

General Rule of Priority [§3114(1)]
Exception for Employer Provided Vehicles [§3114(3)]

Not Applicable  

In this unanimous unpublished per curiam Opinion, the Court of Appeals held the trial court improperly granted Auto Club Insurance summary disposition on the issue of plaintiff’s employment status for purposes of no-fault coverage, because material questions of fact remained about whether plaintiff was an employee or independent contractor.

Plaintiff in this case was a truck driver who was injured in an accident. Plaintiff worked with a company called Express-1, the same company that leased him the truck and held title to the truck. Plaintiff had use of the truck pursuant to the lease for more than 30 days. Plaintiff did not have no-fault insurance on the truck, but Express-1 had a policy through Great West Casualty Company. Defendant Auto Club issued a policy for plaintiff’s personal vehicles. After the accident, plaintiff sought PIP benefits through his personal policy with Auto Club, but Auto Club denied benefits. Plaintiff brought this action seeking coverage. Auto Club’s argument that it was not liable for benefits was based on the allegation that plaintiff was an employee of Exprees-1. Auto Club sought summary disposition on the issue of priority, and the trial court granted the motion.

The Court of Appeals disagreed, finding that Auto Club was improperly granted summary disposition because a question of fact existed about whether plaintiff was an employee of Express-1 or an independent contractor. In this regard, the court said:

“[P]laintiff’s status as an employee of Express-1, an independent contractor, or a self-employed sole proprietor was a crucial issue because that status determined from which company he was entitled to claim PIP benefits. If plaintiff was an employee, he was entitled to claim benefits from Express-1, his employer. … The same result would occur if he was a self-employed sole proprietor, because Great West was the truck’s no-fault insurer. … If, instead, he was an independent contractor, he was entitled to claim PIP benefits from defendant, his personal no-fault insurer, under the no-fault act’s general priority rule.”

In finding that a question of fact remained about plaintiff’s employment status, the Court of Appeals held the trial court erred in several ways: 1) it failed to apply the “economic reality test”; 2) it incorrectly ruled that plaintiff’s employment status was “irrelevant”; and 3) it improperly ruled that Auto Club was entitled to summary disposition. In this regard, the court said:

“For the purposes of MCL 500.3114(3), whether an injured party was an ‘employee’ is determined by applying the ‘economic reality test.’ … By this test, factors to be considered include: (a) control of the worker’s duties, (b) payment of wages, (c) right to hire, fire and discipline, and (d) the performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.’ … The list of factors in the economic reality test is nonexclusive, and no one factor is dispositive. … ‘The test takes into account the totality of the circumstances around the work performed[.]’ … Contrary to the trial court’s reasoning, plaintiff’s employment status — very nearly on its own — would resolve the issue of which insurer was liable for his PIP benefits. Accordingly, the trial court erred in granting defendant’s motion for summary disposition because a genuine issue of fact existed regarding plaintiff’s status, resolution of that issue was material to the case, and defendant was not entitled to judgment as a matter of law.”

Based on the foregoing, the Court of Appeals concluded:
“[A]pplication of the economic reality test fails to establish plaintiff’s status as a matter of law. … Instead, particularly when viewed in a light most favorable to plaintiff, sufficient evidence existed to create a genuine issue of material fact and preclude summary disposition in favor of defendant. … Reversed and remanded for further proceedings consistent with this opinion.”

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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