Michigan Court of Appeals; Docket #350942; Unpublished
Judges Kelly, Servitto, and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
§500.3114 Priority Rules for Payment of PIP Benefits
Michigan Auto Insurance Placement Facility – MCL 500.3301, Et Seq.
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order dismissing Syrja Lekli’s first-party action against Defendants Great American Insurance Company (“Great American”), Farm Bureau Mutual Insurance Company of Michigan (“Farm Bureau”), and the Michigan Automobile Insurance Placement Facility (“MAIPF”). The Court of Appeals held that Farm Bureau, the insurer of Lekli’s personal vehicles, was properly dismissed from the case because Lekli was driving a vehicle owned by his employer, Pergjoni Transport (“Pergjoni”), at the time of the crash, and that the insurer of Pergjoni’s vehicle, therefore, was the highest priority insurer pursuant to MCL 500.3114(1). The Court held that Great American was properly dismissed from the case because, although Great American was one of the insurers of Pergioni’s vehicle, Great American's policy contained an enforceable trucking or business use exclusion. Notably, Lekli did not pursue benefits from or add the other insurer of Pergioni’s vehicle, Hudson Insurance Company (“Hudson”), which presumably would have provided coverage. Furthermore, regarding the MAIPF, the Court of Appeals held that to whatever extent MAIPF should have remained in the case, Lekli’s attorney explicitly waived keeping the MAIPF in the case once an insurer of higher priority could be identified, which occurred when the trial court determined Hudson was such an insurer, even though Lekli had not pursued benefits through Hudson.
In July of 2015, B&W entered into an agreement with Pergjoni Transport (“Pergjoni”), whereby Pergjoni would lease its Peterbilt truck to B&W and provide transportation services to B&W. Pergjoni was explicitly designated as an independent contractor of B&W, and per the terms of the agreement, Pergjoni was to maintain insurance on the Peterbilt truck, which it did. At the time of the subject crash, the truck was insured under two separate policies, one with Great American and one with Hudson. The Great American policy, however, contained an exclusion for any bodily injuries arising out of any motor vehicle crash occurring while the Peterbilt truck was being used in the business of any lessee or while transporting cargo.
In January of 2016, Lekli filled out an application with B&W to be an independent contractor driver for Pergjoni and filled out forms in which he acknowledged that he was an independent contractor with respect to B&W. Almost one year later, Lekli was involved in a crash while driving the Peterbilt truck and sustained injuries that necessitated three different surgeries. Approximately one year after the crash, Lekli applied for PIP benefits through the MAIPF, claiming that there was a dispute between Farm Bureau, the insurer of his personal vehicles, and Great American, the insurer of the Peterbilt truck. The MACP formally denied Lekli’s claim for assignment, asserting that there were identifiable insurers that were higher in priority at the time of the collision and that Lekli needed to produce proof of the dispute between Farm Bureau and Great American. At some point thereafter, Lekli filed the instant suit against Great American (but not Hudson), Farm Bureau, and the MAIPF. All three defendants then moved for summary disposition, and the trial court granted each’s motion. The trial court held that the aforementioned exclusion in the Great American policy was valid, and that since there was no genuine issue of material fact that Lekli was hauling cargo at the time of the crash, summary disposition for Great American was proper. Regarding whether Lekli’s personal insurer, Farm Bureau, should stay in the case, the trial court applied the economic reality test and held that Lekli was an “employee” of Pergjoni at the time of the crash, and that the insurers of the truck—Hudson, specifically, given the exclusion in the Great American policy—were therefore higher in priority than Farm Bureau. The trial court further held that, since Hudson was an identifiable higher priority insurer for purposes of MCL 500.3172, Lekli’s claim against the MAIPF also could not proceed.
The Court of Appeals affirmed the trial court’s summary disposition orders regarding all three defendants, first addressing the MAIPF’s motion. The Court held that, since Lekli took the position in the trial court that once the priority dispute was resolved, the MAIPF could be dismissed from the case, he waived the issue on appeal because that was precisely what happened when the trial court determined that Hudson was the highest priority insurer.
"Hence, plaintiff’s position on appeal—that regardless of the eventual priority determination, summary disposition was not warranted—is contrary to his position in the trial court. 'A party may not take a position in the trial court and subsequently seek redress in an appellate court that is based on a position contrary to that taken in the trial court.' Living Alternatives for the Developmentally Disabled, Inc v Dep’t of Mental Health, 207 Mich App 482, 484; 525 NW2d 466 (1994). Consequently, because plaintiff took the position that summary disposition could be granted in favor of the MAIPF once the priority dispute was resolved, he cannot now complain after the trial court dismissed the MAIPF after resolving the priority dispute. Therefore, we decline to address the underlying merits of plaintiff’s claim on appeal, and instead hold that plaintiff has waived the issue because he expressly agreed that once the priority dispute was resolved, it would then be proper to dismiss the MAIPF from the case. Indeed, this is exactly what the trial court did after it determined that Hudson was the highest priority insurer."
The Court then held, with respect to Farm Bureau’s motion, that the insurers of the Pergjoni’s truck were higher in priority than Farm Bureau, the insurer of Lekli’s personal vehicles, pursuant to the employer-owned vehicle exception set forth in MCL 500.3114(1). The Court then addressed all four factors of the economic reality test and determined that, while Lekli was an independent contractor of B&W, he was an employee of Pergjoni. The first factor—control of the worker’s duties—weighed in favor of an employer-employee relationship because Mr. Pergjoni “exhibited a high amount of control over [Lekli’s] duties,” for example:
"Plaintiff referred to Mr. Pergjoni as his 'boss' or 'supervisor' several times during his deposition and referred to Pergjoni Transport as his 'employer.' Mr. Pergjoni provided plaintiff with a schedule, in which he had to be in Saline by 12:00 every Monday. Plaintiff also had to get the truck’s oil changed whenever Mr. Pergjoni told him to do so and at a location that Mr. Pergjoni specified. When plaintiff would get the truck serviced, it would be paid with Mr. Pergjoni’s credit card. Mr. Pergjoni also provided plaintiff with a Love’s credit card, issued in plaintiff’s name, for refueling the truck. Plaintiff also had no control over what he transported; he never knew what parts he was transporting to Missouri. Plaintiff testified, however, that he could select which particular route to drive to get to his destination. In sum, these facts overall demonstrate the high amount of control Pergjoni Transport exerted over plaintiff, thereby favoring an employee-employer relationship."
The second factor—payment of wages—also weighed in favor of an employer-employee relationship, because Pergjoni, not anyone else, paid all Lekli’s wages and those wages were the entirety of Lekli’s income.
“The second factor involves the payment of wages. In this instance, Pergjoni Transport paid plaintiff $550 for every round-trip plaintiff made from Michigan to Missouri, which equated to $1,100 for two trips each week. Notably, there were no other fringe benefits, and at the end of the year, plaintiff was issued a 1099-MISC form instead of a W-2 form. This factor is a close call. On the one hand, the manner of payment was consistent with an independent-contractor relationship, but the economic reality was that Pergjoni Transport—and not someone else—paid plaintiff’s wages. See Kidder, 455 Mich at 44. Not only did Pergjoni Transport pay plaintiff’s wages, those wages were the entirety of plaintiff’s income. Accordingly, but for the fact that the income was reported on a 1099 form instead of a W-2 form, this factor clearly would favor a finding of an employer-employee relationship.”
The third factor—the right of the boss or supervisor to hire, fire, and discipline—weighed in favor of an employer-employee relationship even though the evidence was “scant” on that issue. However, the Court held that evidence that Pergjoni had rewarded Lekli for doing good work tended to also “show that it had the ability to sanction him,” and that, “[a]s such, this factor weighs in favor of an employee-employer relationship.”
"The third factor speaks to the right to hire, fire, and discipline the worker. The evidence presented was scant on this factor. Although it was undisputed that Mr. Pergjoni hired plaintiff, there was no express evidence addressing the ability to fire and discipline plaintiff. As the one who hired plaintiff, it naturally follows that Pergjoni Transport also could terminate the relationship. Indeed, because there was no contract between the parties indicating otherwise, Pergjoni Transport necessarily maintained the ability to terminate the relationship. Cf. Prysak v RL Polk Co, 193 Mich App 1, 9; 483 NW2d 629 (1992) (‘Generally, at-will employment may be terminated at any time, for any reason.’). Also, it is notable that Pergjoni Transport at one point provided plaintiff with a $50 bonus after plaintiff was pulled over by the police and the ensuing inspection went well. The fact that Pergjoni Transport had the ability to reward plaintiff also tends to show that it had the ability to sanction him as well. As such, this factor weighs in favor of an employee-employer relationship."
The fourth factor—whether performance of the worker’s duties were an integral part of the employer’s business and the accomplishment of a common goal—also weighed in favor of an employer-employee relationship, because Pergjoni had only three trucks and Lekli was assigned specifically, and the only employee given a key to, one of them.
"Finally, the fourth factor is whether plaintiff was responsible for the performance of duties that were an integral part of Pergjoni Transport’s business efforts toward the accomplishment of a common goal. The trial court determined that plaintiff was an integral part of Pergjoni Transport’s business because Pergjoni Transport had only three trucks. Indeed, plaintiff was the only driver assigned to one particular truck, and the only driver with a key to his assigned truck. Plaintiff does not take issue with the facts as described by the trial court. Instead, plaintiff avers that the court 'needed to know more about that business' before rendering a ruling. We disagree. If more evidence was 'needed,' it was incumbent on plaintiff to present it to create a question of fact. See Quinto v Cross & Peters Co, 451 Mich 358, 362-363; 547 NW2d 314 (1996) ('If the opposing party fails to present documentary evidence establishing the existence of a material factual dispute, the motion [for summary disposition] is properly granted.'). Moreover, plaintiff’s comments seem to relate to a lack of evidence pertaining to B&W’s business, as opposed to Pergjoni Transport’s business. How many trucks B&W leased or whether it did business with other companies is not relevant for determining whether plaintiff was an employee of Pergjoni Transport. As the trial court noted, plaintiff was responsible for one-third of Pergjoni Transport’s trucking business, which is a substantial amount. The fact that plaintiff kept the keys to the truck at all times, even when the truck was parked in Taylor, further shows that he was a vital part of Pergjoni Transport’s business. Accordingly, the trial court did not err in its analysis of this factor."
Therefore, given that, under this test, Lekli constituted an employee of Pergjoni, the insurer of Pergjoni’s truck that Lekli was driving at the time of the crash was highest in priority. This was ultimately held to be Hudson, because Great American’s policy included an enforceable endorsement which provided, “With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by endorsement,” and then went on to list 15 situations in which PIP benefits would not be payable. Lekli argued that the endorsement rendered the trucking or business use exclusion in the policy ineffective, but the Court of Appeals disagreed, holding that none of the exclusions in the endorsement conflicted with the business or trucking use exclusion and that the exclusion therefore remained in effect.
"The endorsement states, in pertinent part, 'With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement.' The endorsement then continues to list 15 new situations in which PIP benefits would not be covered.
Importantly, none of the exclusions listed in the endorsement conflicted with the trucking-use exclusion in the general policy (or with any of the other Coverage Form exclusions). It also is important that the endorsement never stated that it was proving an exhaustive list of exclusions. Accordingly, because no conflict existed, we agree with the trial court that the initial exclusion remained in effect."