972 N.W.2d 860
Mich. Ct. App.2021Background
- Plaintiff (Mohamed Ahmed) was driving a rental Lexus owned by Meade Lexus; the rental agreement limited use to “Authorized Drivers” who must be licensed.
- Plaintiff’s operator’s license had been revoked years earlier; he testified he didn’t read the rental agreement and believed his license was merely restricted.
- Plaintiff was injured in an accident while driving the rental; his insurer (Tokio Marine) denied PIP benefits and moved for summary disposition under MCR 2.116(C)(10) citing MCL 500.3113(a).
- The trial court denied summary disposition, concluding a factual dispute existed whether plaintiff knew his license was revoked or that he was barred as an authorized driver.
- On appeal the Court of Appeals examined whether the taking was “unlawful” under MCL 750.414 and whether the 2014 amendment to MCL 500.3113(a) (adding “knew or should have known”) altered the scienter standard.
- The court held plaintiff’s driving violated the rental terms (an unlawful taking) and, under the amended statute, plaintiff at least “should have known” he was prohibited from driving; it reversed and ordered summary disposition for the insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff’s driving was an “unlawful taking” under MCL 750.414 as applied by MCL 500.3113(a) | Plaintiff lacked actual knowledge that his license was revoked or that he was prohibited from driving the rental | Rental agreement expressly limited drivers to licensed persons; driving by an unlicensed person is without owner authority and thus an unlawful taking | Driving the rental after work violated the owner’s authorization and constituted an unlawful taking |
| Whether the 2014 amendment (adding “knew or should have known”) preserved Rambin’s mens rea standard or imposed a broader “should have known” scienter | Plaintiff relied on Rambin to argue disqualification requires actual knowledge (or a reasonable belief) that taking was unlawful | The amendment replaced the Safe Harbor and requires disqualification if the person “knew or should have known” the taking was unlawful (more restrictive) | The Legislature changed the standard; for MCL 500.3113(a) a person is disqualified if they knew or should have known the taking was unlawful (Rambin’s standard modified for insurance context) |
| Whether Monaco v. Home-Owners (distinguishing unlawful taking vs unlawful use) controls | Plaintiff relied on Monaco to argue owner permission or lack of explicit prohibition can preclude an unlawful taking finding | Monaco is limited to cases where the owner gave permission (even if the use later violated law); facts here show an express owner prohibition in the rental contract | Monaco is distinguishable; it governs scenarios where the owner authorized the taking—here the owner’s written restriction defeats that defense |
| Whether summary disposition was appropriate given factual disputes about knowledge | Trial court found a factual dispute whether plaintiff knew his license was revoked | Defendant argued that, as a matter of law, plaintiff should have known his license status and the rental terms, so no material factual dispute prevents summary disposition | Court held no genuine issue of material fact on the statutory elements and instructed the trial court to enter summary disposition for defendant |
Key Cases Cited
- Joseph v. Auto Club Ins. Ass'n, 491 Mich. 200 (standard of review for MCR 2.116(C)(10))
- Spectrum Health Hospitals v. Farm Bureau Mut. Ins. Co., 492 Mich. 503 (defines “taken unlawfully” as possession contrary to owner’s authority/criminal law)
- Rambin v. Allstate Ins. Co., 495 Mich. 323 (discusses mens rea under MCL 750.414 and when a taking is unlawful)
- Meemic Ins. Co. v. Fortson, 506 Mich. 287 (confirms insurers may avoid PIP under enumerated MCL 500.3113 grounds)
- Monaco v. Home-Owners Ins. Co., 317 Mich. App. 738 (distinguishes unlawful taking from unlawful use where owner authorizes taking)
- Allison v. AEW Capital Mgmt., LLP, 481 Mich. 419 (defines genuine issue of material fact standard)