Michigan Court of Appeals; Docket #352716; Unpublished
Judges Letica, Servitto, and Kelly; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Exception for Employer Provided Vehicles [§3114(3)]
TOPICAL INDEXING:
Not Applicable
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order in favor of Defendant Progressive Michigan Insurance Company (“Progressive”), in which the trial court ruled that Defendant Cherokee Insurance Company (“Cherokee”) was the highest priority insurer with respect to Plaintiff Florin Toduti’s claim for no-fault PIP benefits. The Court of Appeals held that, based on the “economic reality test,” Toduti was actually an employee, not an independent contractor, of Universal, Mason & Dixon Intermodal (“Universal), the company which leased and insured the semi-truck Toduti owned and was driving in the course and scope of his duties under his contract with Universal at the time of the subject collision. The Court of Appeals further held that, because of the terms of its long-term lease agreement regarding the truck, Universal was an “owner” of the semi-truck pursuant to MCL 500.3101(2)(h), and, therefore, under MCL 500.3114(3), Univeral’s insurer, Cherokee, was highest in priority for payment of Toduti's benefits.
Toduti was injured while driving a semi-trick that he owned, and while carrying a load under an “independent contractor agreement” he had entered into with Universal, whereby Universal leased the truck and insured it through Cherokee. At the time of the collision, Toduti insured his three personal, non-commercial vehicles through Progressive, but Progressive did not also insure the semi-truck. After the collision, Plaintiff filed the underlying first-party action against both Progressive and Cherokee, with Progressive moving for summary disposition, arguing that Cherokee was the highest priority insurer pursuant to MCL 500.3114(3). Cherokee argued, in response, that MCL 500.3114(3) did not apply because Toduti was not an employee of Universal, but rather an independent contractor, and thus not injured “while an occupant of a motor vehicle owned or registered by the employer.” The trial court ultimately determined that Toduti was self-employed at the time of the collision, and therefore both an employer and employee for purposes of MCL 500.3114(3). Accordingly, the trial court ruled that MCL 500.3114(3) did apply, and established Cherokee as the insurer of highest priority, as it was the sole “insurer of the furnished vehicle.”
The Court of Appeals affirmed the trial court’s priority determination, holding first that MCL 500.3114(3) did apply because (1) Universal was a statutory owner of the semi-truck, pursuant to MCL 500.3101(2)(h), by virtue of the fact that it leased the semi-truck for more than 30 days, and (2) under the “economic reality test,” Toduti was an employee of Universal, not an independent contractor. In making the latter determination, the Court of Appeals observed that (1) Universal had considerable control over Toduti’s duties, (2) Universal paid Toduti’s wages, (3) Universal hired Toduti and had the right to fire him, and (4) performance of Toduti’s duties was an integral part of Universal’s business.
"In sum, application of the economic realities factors favors finding that plaintiff was an employee and that defendant was therefore first in priority for payment of plaintiff’s PIP benefits. Another factor we consider (we may consider other factors as each individual case requires, Rakowski, 269 Mich App at 625), is that Universal charged Toduti 4 LLC and/or plaintiff for the insurance it procured on the semi-truck through defendant. Ultimately, then, plaintiff paid for the insurance coverage, including PIP benefits, that defendant now argues does not apply."
The Court of Appeals further held that, even if Toduti was deemed to be a self-employed independent contractor, MCL 500.3114(3) would still apply pursuant to the Court’s prior holding in Miclea v Cherokee Ins Co, ___ Mich App ___ (2020). The Court noted that Miclea featured “facts and circumstances almost identical with those” presented in this case, not least of which was the fact that the subject truck in Miclea was, like in this case, owned by the plaintiff, leased (and co-owned pursuant to MCL 500.3101(2)(h)) by Universal (presumably under an identical contract to that at issue in this case), and insured by Cherokee. In Miclea, the Court held that, “ ‘if a person is self-employed, that person is necessarily both employer and employee for purposes of MCL 500.3114(3). Therefore, if [plaintiff] is an independent contractor of [Universal], then [plaintiff] is necessarily an employee of himself.’ ” In other words, “ ‘being an independent contractor of one entity does not preclude a person from simultaneously being an employee of another entity, which can include one’s self.’ ” Thus, given the language of MCL 500.3114(3), even if Toduti were held to be an independent contractor with respect to Universal, that would necessarily also mean that he was simultaneously both an employer and an employee of himself. So, he would still be “an employee . . . who suffer[ed] accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer,” and would therefore receive PIP benefits from the “the insurer of the furnished vehicle,” Cherokee.
"Plaintiff was self-employed by Toduti 4, LLC as its sole employee and Universal had an agreement to use the semi-truck and Toduti 4 LLC’s trucking services. Plaintiff could be seen as being an employee of both Toduti 4, LLC and Universal, by virtue of the agreement between Toduti 4 LLC and Universal and considering that plaintiff was the sole proprietor of Toduti 4 LLC and its only employee. Even if plaintiff was deemed an independent contractor, in Besic, supra, and Miclea, supra, this Court concluded that MCL 500.3114(3) applied to the situation of an injured person who owned the vehicle involved and who worked as a self-employed independent contractor. Thus, the trial court properly found that defendant is first in priority for purposes of plaintiff’s no-fault benefits."