Michigan Court of Appeals; Docket #354664; Unpublished
Judges Shapiro, Borrello, and O’Brien; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order in favor of Plaintiff Auto Club Group Insurance Company (“Auto Club”), in Auto Club’s priority dispute with Defendant Government Employees Insurance Company’s (“GEICO”). The Court of Appeals held that GEICO, a certified insurer under the former MCL 500.3163, was first in priority for payment of out-of-state resident Donald Ray Layman’s PIP benefits, despite the fact that Layman’s California automobile insurance policy, issued by GEICO, contained a clause which otherwise would have excluded him from coverage for the subject crash. In reaching its holding, the Court of Appeals relied on its prior decision in Transp Ins Co v Home Ins Co, 134 Mich App 645 (1984), in which it held “that, when an insurance company has filed a certification under [the former] MCL 500.3163, the insurance company cannot rely on policy exclusions to avoid its obligation to pay its out-of-state insured’s benefits.”
Layman flew from his home state of California to Michigan to help his mother care for his terminally ill father (who was also named Donald Ray Layman). Layman was in Michigan for a couple months when his father passed away. He then proceeded to stay in Michigan for another eight months, during which time he was injured in a car crash. At the time of the crash, Layman had a California driver’s license and his personal vehicle—which remained in California during his trip to Michigan—was insured under a policy issued by GEICO, a certified insurer under MCL 500.3163. The accident itself occurred while Layman was driving his parents’ 2009 Volkswagen, which was insured by Auto Club.
After his father’s death, Layman would drive the Volkswagen occasionally, but only to take his mother wherever she needed to go, and never for his own personal business. Approximately one month after Layman’s father died, Layman’s mother called Auto club to remove Layman’s father from the policy. Then one month after that, a different Auto Club sales agent, Debra Little, spoke with Layman’s mother about renewing her policy, but was never made aware of the fact that Layman’s father had died. Around the same time, someone—perhaps Layman’s mother—renewed the Volkswagen’s registration, which listed the owner as Donald Ray Layman. Little then renewed the policy approximately one week later, but, according to her testimony, did not realize that Layman’s father had died and thus listed the principle named insured as “Donald R. Layman,” an individual “65 years of age or older” with an income level of “retired.” Notably, Layman, the son, was 59 years old at the time and receiving disability payments from the Social Security Administration.
After Layman was injured in the crash, he filed a claim for no-fault PIP benefits with GEICO, which GEICO refused to pay. Auto Club proceeded to pay Layman $44,420.23 in allowable expenses, after which it sought reimbursement from GEICO. When GEICO refused to reimburse Auto Club, Auto Club filed the underlying lawsuit seeking a declaratory judgment that GEICO was the highest priority insurer for Layman’s no-fault PIP benefits pursuant to (the former) MCL 500.3163. GEICO moved for summary disposition, arguing that Layman’s policy contained an exclusionary clause which “provided coverage to Layman only if he were injured while occupying a [designated vehicle],” which the Volkswagen was not. Therefore, with respect to this crash, GEICO argued, Layman was not insured under the policy.
Auto Club moved for summary disposition in its own right, arguing that GEICO was the highest priority insurer under (the former) 500.3163 and that GEICO could not rely on an exclusion in Layman’s policy to avoid its statutory obligations. In other words, it did not matter that the exclusionary clause purported to bar Layman from coverage for the subject crash—all that mattered under MCL 500.3163 was that “GEICO was a certified insurance carrier in Michigan, Layman was a named insured under a GEICO policy, and Layman’s injuries arose from the operation of a motor vehicle.”
GEICO raised a new argument in its reply to Auto Club’s motion: that Layman, and not his father, was actually the named insured on the renewed Auto Club policy. In support of its argument, it adduced records from Auto Club, one of which provided, “[s]on, Donald Layman[,] was to take over policy, [he] resides in California,” and another which provided, “[p]olicy was rewritten due to Donald Layman passing away on 7/12/2017.” Ultimately, the trial court granted Auto Club’s motion, rejecting GEICO’s argument that Layman, the son, was the named insured on the renewed policy, and also rejecting GEICO’s argument that (the former) MCL 500.3163 was inapplicable because, given the aforementioned policy exclusion, Layman was not insured under the GEICO policy for purposes of the subject crash. With regard to the latter rejection, the trial court relied on the Court of Appeals’ holding in Transp Ins Co, “that, when an insurance company has filed a certification under [the former] MCL 500.3163, the insurance company cannot rely on policy exclusions to avoid its obligation to pay its out-of-state insured’s benefits.”
The Court of Appeals affirmed the trial court’s summary disposition order in favor of Auto Club, noting that, in Goldstein v Progressive Cas Ins Co, 218 Mich App 105 (1996), a prior Court of Appeals panel held that, “[a]n insurer becomes liable under § 3163 when (1) it is certified in Michigan, (2) there exists an automobile liability policy between the nonresident and the certified carrier, and (3) there is a sufficient causal relationship between the nonresident’s injuries and the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle.” Whether or not the GEICO policy contained an exclusion which otherwise would have applied to the subject crash, therefore, was immaterial; the operative question was merely whether a policy between Layman and GEICO existed.
“Even if GEICO’s interpretation of its policy is correct, GEICO is still liable under MCL 500.3163. For an out-of-state resident to be considered ‘insured’ under an automobile liability policy, MCL 500.3163 requires only that automobile insurance liability exist between the out-of-state resident and the insurer. See Goldstein, 218 Mich App at 109 (emphasis added). MCL 500.3163 does not require the vehicle used by the out-of-state resident be one that is covered by the foreign insurance policy. Transp Ins Co, 134 Mich App at 651.5 We illustrated this point in Transp Ins Co, which involved an out-of-state resident insured under an automobile liability policy issued in another state. See id. at 648-649. The policy covered the out-of-state resident’s semitruck, but the policy ‘expressly excluded coverage under the policy if the [semitruck] were used for business purposes.’ Id. at 648. Although the out-of-state resident was using the semitruck for business purposes when he got into an accident in Michigan, this Court held that MCL 500.3163 applied. Id. at 650. This Court reasoned that the plain language of MCL 500.3163 required only that an automobile insurance liability policy between the out-of-state resident and insurer exist. Id. at 651. Nothing in MCL 500.3163 suggested the vehicle used by the out-of-state resident must be covered by the out-of-state resident’s insurance policy. Id. at 651, 653 (emphasis added).”
The Court of Appeals further held that Transp Ins Co was not distinguishable from the case at bar in any appreciable legal way, and that Transp Ins Co was not inconsistent with the plain meaning of the former MCL 500.3163.
“GEICO argues that Transp Ins Co is distinguishable from the case at bar because its insurance policy excluded Layman himself. However, we discern no appreciable legal difference. In both Transp Ins Co and here, the out-of-state insured was a named insured in an automobile liability policy issued by the out-of-state insurance company. In both Transp Ins Co and here, that automobile liability policy excluded coverage under certain conditions: in Transp Ins Co, if the out-of-state insured was using the semitruck for business purposes; here, if Layman were using an owned vehicle not listed in his policy. In brief, like the policy in Transp Ins Co, the policy here excluded Layman only because it excluded the vehicle he was driving at the time of the accident. As in Transp Ins Co, the GEICO policy excluded acts or actions undertaken by Layman. Accordingly, and contrary to GEICO’s argument, the GEICO policy did not actually exclude Layman.
. . .
As previously noted, although Transp Ins Co was decided before November 1, 1990, its holding is still precedentially binding because this Court reaffirmed it in Goldstein. See Goldstein, 218 Mich App at 109 Perhaps equally important, Transp Ins Co’s was decided based on the plain language of MCL 500.3163. See Transp Ins Co, 134 Mich App at 651. As this Court held in Transp Ins Co, and later reaffirmed in Goldstein, 218 Mich App at 109, the plain language of MCL 500.3163 requires only that the out-of-state insurer be certified to sell insurance in Michigan, that the out-of-state resident be insured under an automobile liability policy issued by that out-of-state insurer, and that the out-of-state insured by injured through his or her ownership, operation, maintenance, or use of a motor vehicle. There is nothing in the language of MCL 500.3163 that suggests the motor vehicle the insured used must be one covered under the terms of the out-of-state policy. As this Court in Transp Ins Co indicated, to hold otherwise would require this Court to add the word ‘covered’ before “motor vehicle.” Transp Ins Co, 134 Mich App at 651, 653. Doing so would not only be at odds with the plain meaning of MCL 500.3163, it would also be at odds with the statute’s purpose: to ensure that nonresidents injured in Michigan are protected to the same extent as Michigan residents. See Goldstein, 218 Mich App at 110 (noting that apparent intent of MCL 500.3163 ‘is to guarantee that insured nonresidents injured in Michigan are protected against economic losses to the same extent as Michigan residents’), citing Jones v State Farm Mut Auto Ins Co, 202 Mich App 393, 407; 509 NW2d 829 (1993). Accordingly, we decline GEICO’s invitation to abandon prior precedent."
The Court of Appeals next held that Layman was not the named insured on the renewed Auto Club policy, which would have resulted in Auto Club being the highest priority insurer under MCL 500.3114 even if GEICO was liable under the former 500.3163. The records which GEICO adduced in support of its argument that Layman, the son, assumed principled named insured status at renewal after his father’s death were not actually authored by Little, who wrote the renewed policy. Moreover, Little testified that she was referring to Layman’s father when she wrote the name “Donald R. Layman” on the renewed policy, evidenced by the fact that she described him as a person over the age of 65 and with an income level of “ ‘retired.’ ”
“ . . . the evidence shows the name ‘Donald R Layman’ on the Auto Club policy declaration page refers to Layman’s father. While an internal record from Auto Club states, ‘[s]on, Donald Layman was to take over policy, resides in California,’ and another internal record acknowledges that JoAnne informed Auto Club of Layman’s father’s death, these do not create a genuine issue of material fact as to whether Layman was the named insured on the Auto Club policy. Neither of these records were created by the Auto Club agent, Little, who actually renewed the subject policy. Little testified when renewing the policy at the request of JoAnne, that she had no idea Layman’s father had passed away. When she wrote ‘Donald R Layman,’ she explained, she was referring to Layman’s father, as she would not have renewed a policy for a deceased person. Corroborating Little’s testimony is the information Little listed on the policy’s declaration page. The declaration page describes ‘Donald R Layman’ as a person ‘65 years of age or older’ with an income level of “retired.” At the time the declaration page was created, Layman was 59 years old and on disability. Also, Little testified that to add a new person to a policy, Auto Club’s system required the person to be added have a valid Michigan driver’s license—which Layman did not have. Hence, Layman was not insurable Auto Club’s system.”
Lastly, the Court of Appeals held that Auto Club was not a mere volunteer when it paid Layman’s PIP benefits and, therefore, was entitled to recover from GEICO under a theory of subrogation. Under the former no-fault priority scheme, if the GEICO policy had not existed, Auto Club would have been liable for Layman’s PIP benefits as the insurer of the vehicle occupied. Therefore, “by paying Layman’s benefits, Auto Club was protecting its own interests and not acting as a volunteer.”