812 N.W.2d 789
Mich. Ct. App.2011Background
- Defendant Farmers Insurance Exchange insured a vehicle owned by Orlander Meadows, Jr. involved in an accident with plaintiff as a passenger seeking underinsured-motorist benefits.
- The policy excludes bodily injury to a person while occupying the insured car when used to carry persons or property for a charge, with an exception for shared-expense car pools.
- Meadows drove plaintiff and a colleague to work in exchange for about $20 weekly; Meadows claimed no hire or contract existed and that he was in a carpool, with money only covering gas.
- Defendant argued plaintiff hired Meadows to drive her, creating a carry-for-charge scenario; the circuit court held the arrangement could be a carpool and denied partial summary disposition.
- The issue on appeal is whether the arrangement constitutes a shared-expense car pool, thus foregoing the exclusion and allowing underinsured-motorist benefits.
- The court deems the contract interpretation a question of law and reviews de novo; it affirms the circuit court’s ruling that the arrangement fits a shared-expense car pool.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arrangement qualifies as a shared-expense car pool | Meadows and plaintiff shared expenses; not a profit motive. | Plaintiff was carried for a charge; a carpool requires turn-taking or hire. | Yes; it qualifies as a shared-expense car pool. |
| Whether car-for-hire exclusion applies to exclude underinsured-motorist coverage | Payments were for shared costs, not a fixed hire; exclusion doesn’t apply. | Payment equates to carrying for a charge, triggering exclusion. | The exclusion does not apply; UM coverage is available. |
Key Cases Cited
- Morinelli v Provident Life & Accident Ins Co, 242 Mich App 255 (2000) (consult dictionary to interpret undefined policy terms)
- Gen Accident Ins Co of America v Gonzales, 86 F.3d 673 (CA 7 1996) (share-the-expense car pool may exist even with regular daily charging)
- Aetna Cas & Surety Co v Mevorah, 149 Misc. 2d 1011 (1991) (share-the-expense car pool can include non-turn-taking arrangements)
- Perlmutter v Whitney, 60 Mich App 268 (1975) (payment by passenger alone not determinative of passenger-for-hire)
- Dutcher v Rees, 331 Mich 215 (1951) (tender of ride does not automatically create commercial transaction)
- Burgess v Holder, 362 Mich 53 (1960) (policy exclusions guided by narrow construction in insured's favor)
- Thomas v Tomczyk, 142 Mich App 237 (1985) (carpool concepts may include varied destinations within same general area)