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Abraham v State Farm Mut Auto Ins Co, et al (COA – PUB 7/28/2022; RB #4453)

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Michigan Court of Appeals; Docket #356748; Published
Judges Jansen, O’Brien, and Hood; Authored
Official Michigan Reporter Citation: Forthcoming; Link to Opinion


STATUTORY INDEXING:
Definition of Owner [§3101(2)(h)]
Exception for Employer Provided Vehicles [§3114(3)]

TOPICAL INDEXING:
Not Applicable


SUMMARY:
In this unanimous, published decision authored by Judge Hood, the Court of Appeals reversed the trial court’s order granting summary disposition to Defendant Enterprise Leasing Company of Detroit, LLC (“Enterprise”) in a priority dispute between Enterprise and Defendant State Farm Mutual Automobile Insurance Company (“State Farm”). State Farm’s insured, Plaintiff Amber Abraham, was injured in a car accident while driving a vehicle in the course and scope of her employment with Nexen Corporation (“Nexen”). Enterprise held legal title to the vehicle but leased it to Nexen over a continuous period of six months, through a series of successive 28-day lease agreements. The Court of Appeals held that based on these specific facts, Enterprise was first in priority for payment of Abraham’s no-fault PIP benefits, because Nexen did not have no-fault insurance of its own, and because Enterprise was an “insurer” of the vehicle for purposes of MCL 500.3114(3), based on the definition of “insurer” set forth in Turner v Farmers Ins Exch, 507 Mich 858 (2021): “one who provides no-fault insurance to an owner or registrant of the vehicle.”

Amber Abraham was working as a delivery driver of Amazon packages for Nexen, a company which contracted with Amazon to furnish delivery drivers, when she was injured in a car accident. At the time of the accident, Abraham was driving a Ford Transit which Enterprise held legal title to, but which Nexen physically held for a continuous period of six months through a series of 28-day lease agreements. At the end of every 28-day period, Nexen would keep the Transit as opposed to returning it to Enterprise, and Enterprise would write a new lease agreement. Enterprise self-insured some of its vehicles with no-fault insurance coverage but did not issue an insurance policy for the Transit, and Nexen did not have a no-fault insurer at all. After the accident, Abraham sought payment of her no-fault PIP benefits from State Farm—her personal insurer—Enterprise, and Nexen. All three denied responsibility for her benefits, prompting Abraham to file the underlying first-party action against them, and both Enterprise and State Farm moved for summary disposition. State Farm argued that Enterprise and Nexen were both owners of the Transit for purposes of the no-fault act, and since Enterprise was a self-insured entity, it was first in priority for payment of Abraham’s no-fault benefits under MCL 500.3114(3). Conversely, Enterprise argued that MCL 500.3114(3) was inapplicable to this case because Abraham was not driving a vehicle owned or registered by her employer (Nexen) at the time of the accident, and thus State Farm was the highest priority insurer pursuant to the general rules of priority under MCL 500.3114. The trial court agreed with Enterprise, granting summary disposition in its favor.

The Court of Appeals reversed the trial court’s summary disposition order, holding, first, that Nexen was a statutory “owner” of the Transit at the time of the accident. The Court noted that while the lease agreements between Enterprise and Nexen were all for 28-day periods, Nexen actually maintained possession and the right to use the vehicle for a continuous period of six months—far more than the 30-day requirement set forth in MCL 500.3101(3)(l)(i).

“It is undisputed that Nexen had a rental agreement, which applied at the time of the accident, providing for the use of the Transit for 28 days. Before that agreement, Nexen had several other rental agreements with Enterprise, each for 28 days, related to the Transit. Specifically, the record indicates that Nexen rented the Transit from Enterprise beginning in June 2018, and kept the Transit until January 16, 2019. The record also indicates that Nexen did not return the Transit to Enterprise at the end of each rental agreement. Instead, Nexen kept possession of the Transit and Enterprise simply rewrote the rental agreement. Thus, the arrangement between Nexen and Enterprise gave Nexen use of the vehicle for approximately six months before the accident, a period significantly longer than the 30 days required by MCL 500.3101(3)(l)(i). Consistent with Twichel, and despite the 28-day period established by the individual rental agreements, because Nexen had use of the Transit for more than 30 days before the accident, Nexen qualifies as an “owner” of the Transit under MCL 500.3101(3)(l)(i). Twichel, 469 Mich at 530-531. Accordingly, the trial court erred in finding that Nexen was not an owner of the Transit.”

The Court of Appeals held, second, that Enterprise was also an owner of the Transit at the time of the subject accident. Enterprise attempted to argue that if Nexen was a statutory owner under MCL 500.3101(3)(l)(i), Enterprise could not be an owner under MCL 500.3101(3)(l)(iii), which “excludes from the definition of ‘owner’ ‘a person engaged in the business of leasing motor vehicles’ if they are ‘the lessor of a motor vehicle . . . under a lease that provides for the use of the motor vehicle . . . by the lessee that is greater than 30 days.’ ” The Court of Appeals rejected this argument, because although Nexen maintained possession and the right to use the vehicle for greater than 30 days, the leases between Enterprise and Nexen were all only for 28 days, and the statute only contemplates the explicit length of the lease.

“Unlike MCL 500.3101(3)(l)(i), subsection (l)(iii) only precludes a lessor from being an ‘owner’ of a vehicle when a lease provides for the lessee’s use of the vehicle for more than 30 days. MCL 500.3101(3)(l)(iii) does not include the phrase ‘or otherwise’ that is present in subsection (3)(l)(i). It also lacks language requiring an individual to ‘have use’ of the vehicle for a certain amount of time, other than the use provided by a lease. Compare MCL 500.3101(3)(l)(i) with MCL 500.3101(3)(l)(iii). This Court ‘reads subsections of cohesive statutory provisions together.’ Grand Rapids v Brookstone Capital, LLC, 334 Mich App 452, 458; 965 NW2d 232 (2020) (citation and quotation marks omitted). So, when reading MCL 500.3101(3)(l)(i) and (3)(l)(iii) as a whole, there must be a single lease providing the requisite use (30 days or more) of the Transit to Nexen for Enterprise to be excluded from the definition of ‘owner’ of the Transit. Because the lease at issue provides for Nexen’s use of the Transit for 28 days, not 30, Enterprise is also considered an ‘owner’ of the Transit. Accordingly, the trial court erred in granting Enterprise’s summary disposition motion and denying State Farm’s countermotion.”

Lastly, the Court of Appeals held that Enterprise was first in priority for payment of Abraham’s PIP benefits because Nexen did not have a no-fault insurer of its own, and thus Enterprise, as a self-insured entity, was the only “insurer of the furnished vehicle” for purposes of MCL 500.3114(3). In so holding, the Court relied on Turner v Farmers Ins Exch, 507 Mich 858 (2021), in which the Supreme Court held that an ‘insurer,’ for purposes of MCL 500.3114(3), is “one who provides no-fault insurance to an owner or registrant of the vehicle.” Enterprise was self-insured, and thus was the only entity that “provide[d] no-fault insurance to an owner of the [Transit].”

“Turner also held that the ‘insurer’ contemplated by MCL 500.3114(3) is one who provides no-fault insurance to an owner or registrant of the vehicle. The word ‘an,’ as opposed to ‘the,’ supports the conclusion that there can be more than one owner of an employer-furnished vehicle. That is the case here; the Transit is owned, for purposes of the no-fault act, by both Nexen and Enterprise. Enterprise is self-insured, and therefore, is an insurer contemplated by MCL 500.3114(3). Because Nexen does not have a no-fault insurer of its own, Enterprise is the other insurer at issue, and Enterprise is self-insured and owns the Transit, it is an insurer of the furnished vehicle. Accordingly, Enterprise is higher priority than State Farm and is liable for paying Abraham’s no-fault benefits under MCL 500.3114(3).”


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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