Michigan Court of Appeals; Docket # 337199; Unpublished
Judges Murray, Meter, and Gleicher per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Private Contract (Meaning and Intent)
In this unanimous unpublished per curiam opinion, the Court of Appeals upheld the trial court’s grant of summary disposition for defendant/third-party plaintiff Farm Bureau Mutual Insurance Company (“Farm Bureau”) regarding the priority of coverage. The Court upheld the grant of summary disposition because it found that the policy issued by defendant/third-party-defendant Farmers Insurance Exchange (“Farmers”) provided no-fault insurance coverage for a class of third-party individuals that included Plaintiff and was a higher priority than Farm Bureau.
Plaintiff was a pedestrian who was struck by a motor vehicle operated by Demita Hill (“Hill”). Plaintiff did not have automobile insurance available to her under her own policy, as a spouse, or as a resident relative. Hill’s vehicle was listed on an auto insurance policy provided by Farmers. The Farmers’ auto insurance policy was issued to Hill’s employer Progress Transitional and identified only Progress Transitional. The Farmers policy was a commercial automobile policy that listed Hill’s vehicle as a covered vehicle.
After the accident, Farm Bureau was assigned through the Michigan Assigned Claims Plan as the insurer responsible for paying Plaintiff’s personal protection insurance (PIP) benefits. Farm Bureau then filed a third-party complaint against Farmers alleging that Farmers was a higher priority insurer to pay Plaintiff’s PIP benefits. Farm Bureau then moved for summary disposition and the trial court granted it. The trial court found that Farmers’ insurance policy was broader than the mandated no-fault coverage and was of a higher priority.
The Court of Appeals explained that no-fault insurance policies are contracts that are subject to contract principles. A third-party may sue to enforce a contract if the third-party was an intended beneficiary of the contract. Brunsell v City of Zeeland, 467 Mich 293, 296; 651 NW2d 388 (2002). A class of people can be an intended beneficiary under a contract, but the class must be sufficiently defined in the contract. Id. at 297. Thus, in the proper circumstances, a third-party can enforce an auto insurance policy that was not issued to it directly.
The Court then found that the language of Farmers’ auto insurance policy identified Plaintiff as a third-party beneficiary. The Court looked to the form and meaning of the auto insurance policy. The plain language stated: “We will pay personal injury protection benefits to or for an ‘insured’ who sustains ‘bodily injury’ caused by an ‘accident’ and resulting from the ownership, maintenance or use of an ‘auto’ as an ‘auto.’” The Farmers’ policy then defined an insured as “[a]nyone else who sustains ‘bodily injury’ . . . [w]hile not ‘occupying’ any ‘auto’ as a result of an ‘accident’ involving a covered ‘auto.’” The Court found that this language narrowly defined the third-parties who could be beneficiaries. The narrow language of the third-party beneficiaries included Plaintiff because she sustained bodily injury from the covered motor vehicle while not occupying an auto. Therefore, Farmers was obligated to provide no-fault coverage for Plaintiff as a matter of law.
“In looking “no further than the ‘form and meaning’ of the contract itself,” Schmalfeldt, 469 Mich at 428, we conclude that Farmers and Progress Transitional contracted to provide a benefit directly to or for a sufficiently described and identifiable class of people to which plaintiff belonged, see Brunsell, 467 Mich at 296-297, because the policy stated that it would provide medical benefits to “[a]nyone else who sustains ‘bodily injury’[w]hile not ‘occupying’ any ‘auto’ as a result of an ‘accident’ involving a covered ‘auto.’ . . . Therefore, responsibility for paying plaintiff’s PIP benefits rested with Farmers as a matter of law. Accordingly, we hold that the trial court did not err in granting Farm Bureau’s motion for summary disposition.”
Thus, the Court of Appeals upheld the trial court’s grant of summary disposition and found that Farmers was the insurance provider of highest priority.