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Turner v. Farmers Ins. Exch. (COA – PUB 4/16/2019; RB #3881)

Michigan Court of Appeals; Docket #s 339624; 339815; Published
Judges Cavanagh, Borrello, and Redford
Official Michigan Reporter Citation: Not Applicable; Link to Opinion


STATUTORY INDEXING:
Exception for Employer Provided Vehicles §[3114(3)]
Exception for Occupants [§3114(4)]

TOPICAL INDEXING:
Not Applicable


SUMMARY:

In this majority published decision (Justice Redford, dissenting) regarding a priority dispute, the Court of Appeals held that an insurer’s priority status under MCL 500.3114(4)(a) hinges on whether it insured the vehicle’s owner or registrant, not whether it insured the furnished vehicle.  Additionally, the Court held that a self-insurer can be treated as an “insurer” under 3114(4)(a), even though the Supreme Court has held that self-insurers will not be treated as “insurer[s] authorized to transact automobile insurance and personal and property protection insurance in this state” under 3163(1).  This is because “the context of 3114(4)(a) permits treating a self-insurer as an ‘insurer’ under that statutory provision based on the self-insurer’s obligation to provide ‘security equivalent to that afforded by a policy of insurance’ under MCL 500.3101(4).” Accordingly, with respect to the crashes at issue in this case, the Court determined that Enterprise Leasing Corporation of Detroit, which was self-insured, had highest priority under MCL 500.3114(4)(e), and was therefore obligated to provide coverage to the injured persons, Maegan Turner and Jonte Everson, and that Farmers was entitled to summary disposition in its favor.

Maegan Turner and Jonte Everson were involved in separate motor vehicle accidents while traveling in vehicles that had been rented from Enterprise.  Both Turner and Everson had their claims assigned to Farmers Insurance Exchange, who then sought to have Enterprise declared the highest priority insurer in both cases.  Farmers based its argument on the priority provision in 500.3114(4)(a).  Enterprise moved for summary disposition in both cases, arguing that:

[t]he car in which Turner had been riding was not required to have been registered in Michigan and therefore Enterprise did not have to maintain the security for payment of PIP benefits that is otherwise required by MCL 500.3101(1). Enterprise further argued that, as a nonresident corporation, it also was not required to maintain security on the car under MCL 500.3102(1) because the car was not registered in Michigan and had not been operated in Michigan for an aggregate of more than 30 days within the relevant calendar year.

Enterprise based its argument on the Supreme Court’s decision in Parks v. Detroit Auto. Inter-Ins. Exch., 426 Mich. 191 (1986), which, Enterprise argued, stands for “the proposition that ‘an out-of-state vehicle not required to be registered in Michigan and not operated in this state for more than thirty days is not subject to the security provisions’ of the no-fault act.”  Both trial courts granted summary disposition in favor of Enterprise, and the two cases were then consolidated on appeal.

The Court of Appeals reversed the trial courts’ grants of summary disposition, finding that Parks is not controlling in these cases.  Parks was primarily concerned with 3114(3), which “explicitly ties the insurer’s priority status to whether it insured ‘the furnished vehicle,” whereas 3114(4)(a)—at issue in this case—“ties the insurer’s priority status to whether it insured the vehicle’s ‘owner or registrant’ . . . without regard for whether no-fault security was actually maintained on the particular vehicle itself.”  Thus, any analysis as to whether the vehicles at issue needed to be registered in Michigan or were covered by no-fault security is irrelevant.

Enterprise further argued that it could not be considered first in priority “for the independent reason that it is not an ‘insurer’ as that term is used in 3114(4)(a).”  The Court again disagreed, stating:

The statutory rule is that a self-insurer will be treated as an insurer under the no-fault act wherever the context permits. See MCL 500.3101(4). Thus, the fact that our Supreme Court has held that a self-insurer will not be treated as an “insurer authorized to transact automobile liability insurance and personal and property protection insurance in this state” under § 3163(1) does not equate to a finding that a self-insurer cannot be treated as an “insurer” under § 3114(4)(a). We have already explained why the context of § 3114(4)(a) permits treating a selfinsurer as an “insurer” under that statutory provision based on the self-insurer’s obligation to provide “security equivalent to that afforded by a policy of insurance” under MCL 500.3101(4).8 We therefore reject Enterprise’s argument that it is not an “insurer” in this context.

Finding that Enterprise was, therefore, higher in priority than Farmers, the Court reversed and remanded for further proceedings.

Justice Redford, dissenting, argued that Parks and Covington v. Interstate Sys., 88 Mich. App. 492 (1979) should control in these cases:

Both this Court’s and our Supreme Court’s decisions to establish that the no-fault insurance sections that require coverage, MCL 500.3101(1) and MCL 500.3102(1), do not apply to either vehicle in the two matters at bar because they were out-of-state vehicles, not required to be registered in Michigan, that were not operated in Michigan for more than 30 days in any given year.  Consequently, MCL 500.3114(4) does not require that Enterprise, as the self-insured owner of the vehicles, provide the no-fault benefits in this case.


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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