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Allstate Insurance Company and Snyder v Clarendon National Insurance Company; (COA-UNP, 3/16/2006, RB #2688)

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Michigan Court of Appeals; Docket #258665; Unpublished
Judges Davis, Cavanagh, and Talbot; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion courthouse graphic


STATUTORY INDEXING:
Compulsory Insurance Requirements for Owners or Registrants of Motor Vehicles Required to Be Registered [3101(1)]
Obligation of Non-Resident Owner / Registrant to Insure a Vehicle [3102(1)]
Obligation of Admitted Insurers to Pay PIP Benefits on Behalf of Nonresidents Injured in Michigan [3163(1)]

TOPICAL INDEXING:
Leased / Rented Vehicles


CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals affirmed summary disposition for plaintiff in part, finding that although the out-of-state rental agency that owned the vehicle involved in the accident had a $2,000,000 residual liability insurance policy with defendant, the policy was not primary because the out-of-state owner was not required to provide insurance under MCL 500.3101(1). Instead, plaintiff, the renter’s Michigan no-fault insurer, is primarily liable to defend and indemnify its insured, while defendant is secondarily liable up to its policy limit.

The plaintiff’s insured, Lakeyta Boatner, rented a truck and a tow dolly from a Ryder Rental Truck company in Virginia in order to move her belongings to Michigan. When she arrived in Michigan, her car came loose from the tow dolly and stuck Jeffery Snyder’s vehicle. Plaintiff sought a declaratory judgment regarding which insurer was liable to defend and indemnify its insured, Boatner. The trial court determined that defendant was liable under its residual liability insurance up to the $2,000,000 policy limit.

On appeal, defendant first argued that an endorsement to the policy unambiguously excluded coverage for personal non-business use by renters such as plaintiff’s insured. Section II(A) of the policy and its accompanying endorsement provided:

We will pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered ‘auto.’ . . . The following are ‘insureds.’ a. The insurance with respect to any ‘auto rented to others’ applies only to: (1) you [i.e., Ryder]; (2) the ‘rentee,’ a relative of the ‘rentee’ who is of the same household and, while used for business purposes of the ‘rentee,’ any employer or employee of the rentee.”

In rejecting defendant’s argument, the Court of Appeals reasoned the endorsement did not exclude coverage for personal non-business use by renters, but, to the contrary, extended coverage to business use by the renter and to the renter’s employees. In this regard, the Court stated:

Contrary to what defendant argues, the . . . endorsement does not narrow the definition of an insured, excluding all renters except business users. Rather, the . . . endorsement unambiguously broadens the definition of an insured to include a rentee’s employer and employees if the truck is used for a business purpose.”

Defendant next argued the trial court improperly determined the residual liability coverage is primary because it was not required to provide residual liability coverage under Michigan law. Plaintiff countered that if the court finds that defendant was not required to provide liability coverage under Michigan law, it should still be found to be primarily liable because defendant’s predecessor voluntarily assumed liability when it filed a certificate of compliance under MCL 500.3163. The Court of Appeals reversed, reasoning that because the truck which plaintiff’s insured rented was not operated in Michigan for more than 30 days and was not required to be registered in Michigan, then Ryder was not required to obtain residual liability insurance coverage under MCL 500.3101. Moreover, even though defendant’s predecessor filed a certificate of compliance, the certificate did not refer to residual liability coverage. Therefore, the certificate did not obligate defendant to provide primary residual liability coverage.

Nevertheless, an endorsement regarding “other insurance” provided that the policy was primary with respect to the “rentee.” Although this endorsement clearly stated that defendant’s policy is primary, plaintiff’s insured signed a rental agreement providing that defendant’s coverage was excess. In determining the endorsement was not void, the court noted that such agreements are allowed in Michigan as long as the agreement does not undermine the no-fault law. In this regard, the Court of Appeals stated:

Here, if coverage existed because it was required under §§3101(1) and 3102(1), which require that an owner provide primary coverage, the rental agreement would be ineffective in modifying the policy’s . . . endorsement to provide for only ‘excess’ coverage. But because we have concluded that residual liability coverage exists under section II(A) of the Frontier policy (because Boatner is an insured), not because state law requires Ryder to provide coverage, we conclude that the modification in the rental agreement does not offend state law and, therefore, the rental agreement effectively modifies the policy’s . . . endorsement. Therefore, as modified by the rental agreement, the residual liability coverage provided to Boatner under section II(A) of the Frontier policy is ‘excess’ to other insurance.”

Defendant also argued that coverage was unavailable under a policy endorsement providing that coverage is unavailable to an “auto with less than four wheels.” Defendant asserts that because the tow dolly had two wheels, it was not an auto. The Court of Appeals also rejected this argument reasoning the operation of the truck caused the car to bounce off the tow dolly. In this regard, the court declared:

[B]ut for the fact that the tow dolly was attached to and being moved (and jostled) by the truck, the accident would not have occurred. Therefore, as the trial court found, residual liability coverage for this accident existed by virtue of the rental truck’s involvement in the accident.”

Finally, defendant argued that it was not liable up to its $2,000,000 policy limit because a limitation that appeared in a pamphlet referred to in plaintiff’s insured’s rental contract which limited liability to $10,000 per person and $20,000 per accident or whatever minimum coverage is required by law. Because Michigan requires minimum coverage of $20,000 per person and $40,000 per accident, defendant asserted that is its residual liability exposure. The court again disagreed, finding there was no evidence the pamphlet to which the defendant referred was provided to the insured with the rental agreement. Moreover, the pamphlet was undated and unsigned. In this regard, the court stated:

[T]here is no evidence that the undated, unsigned pamphlet produced by defendant is the ‘terms and conditions of the Rental Agreement, which appear in the Rental Information Folder,’ referenced in the rental agreement. Further, defendant did not submit any documents, affidavits, or deposition testimony in support of its position that the pamphlet it submitted is the document referred to in the rental agreement, much less that Boatner was given a copy of it. Therefore, defendant failed to create a question of material fact concerning whether Boatner agreed to limit the residual liability insurance coverage to the minimum required by Michigan law.”


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 SinasDramis.com.

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