Auto-Owners Insurance v. All Star Lawn Specialists Plus, Inc.
497 Mich. 13
Mich.2014Background
- Joseph Derry was injured while using a leaf-vacuum on a fall clean-up job for All Star Lawn Specialists Plus, Inc. and sued All Star and its owner for negligence and Auto-Owners for no-fault benefits.
- All Star had three policies with Auto-Owners: commercial general liability, commercial auto (no-fault), and workers’ compensation; the liability and no-fault policies excluded coverage for obligations or expenses payable under workers’ compensation laws.
- Auto-Owners filed a declaratory-judgment action seeking a ruling that Derry was an employee under the WDCA, making workers’ compensation the exclusive remedy and precluding coverage under the other policies.
- The trial court found Derry an independent contractor because he held himself out to the public; the Court of Appeals initially affirmed based on precedent in Amerisure but later convened a special panel.
- A Court of Appeals special panel (4–3) overruled Amerisure, holding that all three prongs of MCL 418.161(1)(n) must be met to divest employee status; it found Derry met only two prongs and thus remained an employee.
- The Michigan Supreme Court reversed the special panel, holding Amerisure’s interpretation was correct: failure to satisfy any one of the three statutory criteria excludes a person from employee status.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper interpretation of “employee” under MCL 418.161(1)(n) (pre-2011): whether all three negative criteria must be satisfied to divest employee status | Auto-Owners: Amerisure interpretation — each criterion must be satisfied for person to be an employee; conversely, failure of any one criterion excludes employee status | Derry / special panel majority: all three statutory criteria must be met before a person is divested of employee status (i.e., exclusion requires satisfying all three) | Court: Reversed special panel; adopted Amerisure — each criterion is a separate negative test and failing any one excludes employee status (Amerisure reaffirmed) |
Key Cases Cited
- Amerisure Ins Cos v. Time Auto Transp., 196 Mich. App. 569 (Mich. Ct. App. 1992) (interpreting MCL 418.161(1)(n) to require each prong be satisfied to qualify as an employee)
- Auto-Owners Ins Co v. All Star Lawn Specialists Plus, Inc., 301 Mich. App. 515 (Mich. Ct. App. 2013) (Court of Appeals panel opinion in the underlying appeal)
- Auto-Owners Ins Co v. All Star Lawn Specialists Plus, Inc., 303 Mich. App. 288 (Mich. Ct. App. 2013) (special-panel published opinion addressing conflict with Amerisure)
- Reed v. Yackell, 473 Mich. 520 (Mich. 2005) (plurality discussion of §161(1)(n) language; paraphrase noted but not binding)
- Hoste v. Shanty Creek Mgmt., Inc., 459 Mich. 561 (Mich. 1999) (describing WDCA’s exclusive remedy structure and §161’s role in defining employees)