AUTO CLUB INSURANCE ASSOCIATION v HILL
Docket No. 80966
Supreme Court of Michigan
Decided October 7, 1988
431 Mich 449 | 430 N.W.2d 636
Argued March 9, 1988 (Calendar No. 7).
In an opinion by Justice ARCHER, joined by Chief Justice RILEY and Justices BRICKLEY, BOYLE, and GRIFFIN, the Supreme Court held:
Under the no-fault act, uninsured motorists are subject to tort liability for noneconomic loss only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement. In this case, on the basis of the terms of the policy, the defendant is not entitled to compensation for noneconomic loss unless the loss meets the threshold requirements.
1. The no-fault act unambiguously provides that a person is subject to tort liability for noneconomic loss caused by the ownership, maintenance, or use of a motor vehicle, without regard to whether the person is insured, only where the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement. Immunity for noneconomic loss below this threshold is not qualified by the possession of no-fault insurance. Recovery of noneconomic damages is not provided under the basic no-fault system for allocating the cost
2. In this case, the agreement provided that in the event of a collision with an uninsured motorist the defendant would be entitled to damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. Because an uninsured motorist is not liable for noneconomic loss unless the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement, the defendant is entitled to damages for noneconomic loss only if the injuries meet the threshold requirements. Thus, reversal of the judgment of the Court of Appeals and remand to the trial court for further proceedings is required.
Reversed and remanded.
Justice CAVANAGH, joined by Justice LEVIN, dissenting, stated that tort liability for noneconomic loss less than the statutory threshold caused by the negligent use of an uninsured vehicle was not abolished. The provision of the no-fault act abolishing tort liability except for noneconomic loss greater than the statutory threshold does not apply to the owner of an uninsured motor vehicle involved in an accident. The no-fault act provides for abolition of tort liability only with respect to owners of insured vehicles; the exception continuing liability for noneconomic loss that exceeds the statutory threshold did not relieve an uninsured motorist of tort liability for noneconomic loss above or below the threshold.
INSURANCE — NO-FAULT — UNINSURED MOTORISTS — NONECONOMIC LOSS.
Uninsured motorists are subject to tort liability for noneconomic loss only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement (
Zimostrad & Zimostrad, P.C. (by Stanley Zimostrad), and MacArthur, Cheatham, Acker & Smith, P.C. (by James G. Gross and Dwight R. Robinson, of counsel), for the plaintiff.
John C. Leaming and van Benschoten, Hurlburt & Tsiros, P.C. (by Harvey E. van Benschoten and Mandel I. Allweil), for the defendant.
REFERENCES
Am Jur 2d, Automobile Insurance §§ 293 et seq., 340 et seq.
Rights and liabilities under “uninsured motorists” coverage. 79 ALR2d 1252.
We hold that uninsured motorists are subject to tort liability for noneconomic loss only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.
I
On April 9, 1981, the vehicle of defendant-appellee Gregory J. Hill was struck from the rear by an uninsured motorist. Mr. Hill filed a claim with his automobile insurance provider, plaintiff-appellant Auto Club Insurance Association (ACIA), for damages for noneconomic loss suffered as a result of the collision. This claim was pursuant to the fol
Uninsured Motorists Coverage.
We will pay damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle. Bodily injury must be caused by accident and arise out of the ownership, operation, maintenance or use of the uninsured motor vehicle.
Mr. Hill‘s claim was denied. Pursuant to a clause in the insurance policy, the dispute was submitted for arbitration. The arbitration panel awarded defendant $11,000, inclusive of damages for noneconomic loss.
The ACIA petitioned the Circuit Court of the Eighteenth Judicial Circuit to vacate the award of the arbitration panel. The petition asserted that the defendant had not alleged that he sustained injuries that met the threshold requirements as set forth in
Plaintiff sought relief in the Court of Appeals. The Court of Appeals affirmed the finding of the circuit court.3 Plaintiff-appellant‘s subsequent motion for rehearing was denied.
The ACIA now seeks relief in this Court. We granted leave to appeal limited to the issue whether the threshold requirements of
In order to give proper effect to
A basic rule of statutory construction is that where the Legislature uses certain and unambiguous language, the plain meaning of the statute must be followed. [Citations omitted.]
This Court may not impose its view of the best
A
Section 3135(1) of the no-fault act provides:
A person remains subject to tort liability for noneconomic loss . . . only if the injured person has suffered . . . serious impairment of body function . . . . [
MCL 500.3135(1) ;MSA 24.13135(1) .]
This section unambiguously governs liability for noneconomic loss, as distinguished from damages for economic loss which the no-fault insurer is liable to pay under §§ 3107 to 3110 of the act.6 Bradley v Mid-Century Ins Co, 409 Mich 1, 62; 294 NW2d 141 (1980). The section also clearly specifies to whom its terms apply. The Legislature did not qualify the term “person” with any distinction
In contrast,
Defendant-appellee Hill contends that the exception to the abolition of tort liability in
B
There is no qualification in the language of
The reference in
If the Legislature had intended to qualify the tort immunity granted in
Our construction of
The basic goal of the personal injury provisions of the no-fault insurance act is to provide individuals injured in motor vehicle accidents assured, adequate and prompt reparation for certain economic losses. Babbitt v Employers Ins of Wausau, 136 Mich App 198; 355 NW2d 635 (1984). This Court has held, however, that the Legislature‘s purpose in establishing the alternative criteria of death, permanent serious disfigurement or serious impairment of body function as prerequisites for collection of noneconomic damages, “was simply to weed out from the tort system claims for injuries less severe than the criteria.” Byer v Smith, 419 Mich 541, 546; 357 NW2d 644 (1984). The Legislature intended to bar “any recovery whatsoever for noneconomic loss unless the injury is serious and [to relieve] the courts of the burden of litigation where the injury is not serious.” Id. at 545.
III
In addition to its consistency with this Court‘s interpretation of legislative policy, we find direct support in case law for our construction of
In Bradley v Mid-Century Ins Co, supra, the Court resolved a series of companion cases involving certain contractual limitations in uninsured motorist endorsements of automobile insurance policies. In parts II and III of the Bradley opinion, the Court discussed the relationship between uninsured motorist coverage and first-party benefits under the no-fault act.
In part II of Bradley, the Court discussed and decided whether uninsured motorist coverage under more than one policy could be stacked to provide recovery for damages sustained in an accident which occurred after the enactment of the no-fault act and the simultaneous repeal of the uninsured motorist amendment of the Insurance Code,
In discussing the purposes and policy involved in promulgation by the Legislature of the no-fault insurance act, the Court made several observations relevant to resolution of the issue at bar. The Court analyzed the purpose of uninsured motorist coverage before and after the passage of the no-fault act. Prior to promulgation of the act, uninsured motorist coverage was designed to protect the integrity of the Motor Vehicle Accident Claims Fund. Id. at 52. Under the no-fault system, however, uninsured motorist coverage is a substitute for residual liability insurance. The Court stated:
[U]ninsured motorist coverage . . . provides some compensation in cases where the victim has suffered severe (above-the-threshold) injuries and there is no residual liability coverage to provide compensation for pain and suffering and excess economic loss.
* * *
We are persuaded that the Legislature repealed the uninsured motorist amendment not because it assumed there would be no uninsured motorists, but because after the passage of no-fault a person
* * *
True, no-fault benefits may be insufficient to fully compensate one injured by a negligent uninsured motorist. But no accident victim is permitted, under the no-fault act, to recover for below threshold pain and suffering . . . . [Id. at 52-54.]
Thus, in part II of Bradley, this Court distinguished between loss compensable by the basic no-fault benefits, i.e., economic loss, and damages for pain and suffering and excess economic loss, compensable in cases of “severe (above-the-threshold) injuries.”
B
In part III of its opinion, the Bradley Court addressed the question whether an insurer could offset first-party benefits paid under the no-fault act from the policy limits of uninsured motorist protection without regard to the total damages that would be payable by the uninsured motorist or the nature of those damages, i.e., economic or noneconomic. This Court reiterated its view that uninsured motorist coverage under the no-fault act is a substitute for residual liability insurance:
Under the no-fault motor vehicle liability act an insured may collect from his insurer for work loss and medical expenses without regard to fault. He may sue the negligent tortfeasor for excess economic loss and, if the threshold of injury is met, for noneconomic loss. The statute requires that motorists carry residual liability insurance in addition to no-fault insurance to provide a source of recovery to persons severely injured as a result of driver negligence. If a motorist is uninsured he
A purpose of the no-fault act is to provide a contractual right of action against one‘s own insurer for wage loss and medical expenses arising from a motor vehicle accident. A tort action for non-economic and excess economic loss was preserved in cases of severe loss. The Legislature has thus divided an injured person‘s loss into two categories — loss for which the no-fault insurer is liable and loss for which the tortfeasor is liable. No-fault insurance provides security for the first type; uninsured motorist coverage, which presupposes that the insured is entitled to recovery under the tort system, provides security for the second type — it is offered to protect against being left with a worthless claim against an uninsured motorist. [Id. at 61-62. Emphasis added.]
Because of this distinction between economic losses compensable under basic no-fault coverage and those losses compensable pursuant to an uninsured motorist endorsement, the Court held that the set-off clause could not be enforced in the manner that the insurer sought:
In providing insurance against the uninsured motorist, the insurer promises the insured that his right of action for greater than threshold injuries will not be worthless if the tortfeasor turns out to be uninsured.
If the tortfeasor is insured or otherwise collectible, the insurer paying no-fault benefits has a statutory right to reimbursement for benefits theretofore paid by it only out of a recovery for those economic losses. So, too, if the insurer contracts to make good for an uninsured motorist — coverage complementary and supplementary to the basic no-fault policy and standing in the place of third-party residual liability insurance — the insurer and the insured should have corresponding rights relative to amounts recoverable under an
The insured is entitled to payment under the “all sums recoverable” language of the uninsured motorist endorsement for all economic and above the threshold non-economic loss for which an uninsured motorist would be liable. [Id. at 63-64. Emphasis added.]
Because the set-off clause failed to note the distinction between types of damages, the Court found the clause to be either defectively ambiguous or inconsistent with the reasonable expectations of the insured. Id. at 60-61.
Defendant-appellee argues that the Bradley Court‘s description of the nature and scope of uninsured motorist coverage is mere dicta. We disagree. This Court‘s conclusion that the set-off clause was unenforceable was squarely on the basis of the differences between first-party no-fault benefits and compensation for noneconomic losses pursuant to uninsured motorist coverage. We found that the insurer‘s interpretation of the policy would nullify the effect of uninsured motorist coverage in precisely those situations in which it was intended to apply:
Unless voluntarily purchased uninsured motorist coverage provides meaningful protection for severe, above-threshold, injuries without regard to what the insurer is required to pay under the mandatory no-fault coverage, it serves no apparent purpose in the context of a no-fault statute mandating the payment of benefits. If the set-off were enforced in the manner the insurers seek, no-fault benefits paid would reduce uninsured motorist coverage dollar for dollar. As soon as the insurer has paid out $20,000 in no-fault benefits, there would be no recovery whatsoever under the uninsured motorist endorsement. [Id. at 64.]
C
Defendant-appellee asserts that in Citizens Ins Co v Tuttle, 411 Mich 536; 309 NW2d 174 (1981), the Court defined the scope of tort liability for noneconomic damages to include compensation for below-threshold injuries. In that case, Mr. Tuttle‘s cow, which was running loose on the highway, was involved in a collision with a tractor and trailer. Citizens Insurance Company brought an action in tort against Donald Tuttle to recover the cost of repairs paid to its insured for damages resulting from the collision. This Court was faced with the question whether tort liability arising out of conduct other than the ownership, maintenance or use of a motor vehicle was abolished by the no-fault act. We held that the tort liability abolished by the no-fault act is only such liability as arises out of the tortfeasor‘s ownership, maintenance or use of a motor vehicle. This does not include tort liability which arises out of other conduct, such as the negligent keeping of cattle. Id. at 546-547.
Defendant-appellee supports his argument on the basis of the following language in Tuttle:
Moreover, subsection (2) abolishes tort liability arising from the ownership, maintenance or use only of vehicles for which the required no-fault insurance or other security has been obtained. The policy apparently expressed in so conditioning the abolition of tort liability upon the obtaining of no-fault coverage is that a person is to be relieved of tort liability only upon participating, through the
. . . The non-motorist tortfeasor is the equivalent of the uninsured motorist and should be treated similarly. Both are outside the basic no-fault system of allocating the costs of accidents and both remain subject to tort liability. [Id. at 546-547. Emphasis added.]
Defendant-appellee asserts that the uninsured motorist in this case has paid no premium and has not supported the underlying no-fault act. He argues that the ACIA, standing in the shoes of the uninsured motorist, is therefore outside the basic no-fault system and should remain subject to liability for damages without regard to the threshold requirements of
We find this argument to be unpersuasive. The question before the Court in Tuttle involved the liability of a nonmotorist tortfeasor. The Court analogized the nonmotorist tortfeasor to an uninsured motorist who enjoys no tort immunity for economic damages because he has not contributed to the insurance premium pool which funds first-party economic benefits. Id. at 546-547. We find this rationale to be limited to liability for economic damages.
The analogy in Tuttle was on the basis that “[b]oth [the nonmotorist tortfeasor and the unin
Indeed, in
IV
The insurance agreement between the parties at bar provided that in the event of a collision with an uninsured motorist the defendant would be entitled to “damages for bodily injury which an insured person is legally entitled to recover from
CONCLUSION
We hold that, pursuant to
RILEY, C.J., and BRICKLEY, BOYLE, and GRIFFIN, JJ., concurred with ARCHER, J.
CAVANAGH, J. (dissenting). The no-fault automobile liability act abolishes tort liability respecting an insured vehicle except for noneconomic loss greater than the statutory threshold: death, serious impairment of body function, or permanent serious disfigurement.1
The question presented is whether a person who suffers noneconomic loss less than the statutory threshold caused by the negligent use of an uninsured vehicle may recover under the uninsured motorist coverage of an automobile insurance policy.
The majority holds that the act abolishes tort liability for noneconomic loss below the statutory threshold without regard to whether the vehicle is insured. We would hold that tort liability is not abolished as to an uninsured vehicle and that the defendant may recover from his insurer under the uninsured motorist coverage.
Subsection (2) of
Only those — insureds — whose tort liability has been abolished under subsection (2) could have liability for noneconomic loss that “remains” under subsection (1). Persons whose tort liability has not been abolished — uninsureds — could not have liability that “remains.” A person not within the intendment or scope of subsection (2) (abolishing tort liability) is not within the intendment or scope of subsection (1) (liability for noneconomic loss that remains); an uninsured is not within the intendment or scope of subsection (2) and hence is not within the intendment or scope of subsection (1).
The no-fault act, as this Court has observed,3 is modeled on the Uniform Motor Vehicle Accident Reparations Act which expressly,4 and on examination of the commentary5 clearly, provides — more
clearly we agree than the Michigan act — that the provision of the act abolishing tort liability does not apply to the owner of an uninsured motor vehicle involved in an accident.
It may seem incongruous that an injured person who has uninsured motorist coverage may recover for below the threshold noneconomic loss when the driver of the other vehicle was at fault and the vehicle was uninsured, while no recovery below the threshold may be obtained if the other vehicle was insured. Such incongruity is the result of the language of the uninsured motorist rider to the injured person‘s automobile insurance and does not justify the majority‘s construction of the no-fault act to correct this possible incongruity in the underwriting of uninsured motorist coverage.6
Our attention has been directed by the parties to statements in Bradley v Mid-Century Ins, 409 Mich 1, 62; 294 NW2d 141 (1980), and Citizens Ins Co v Tuttle, 411 Mich 536, 546-547; 309 NW2d 174 (1981). Neither the statement in Bradley (tending to support the insurer) nor those in Citizens (tending to support the insured) were necessary to decision in those cases,7 and did not decide the issue in the instant case, an issue of sufficient difficulty to have justified plenary consideration in the instant case by this Court.
We would affirm the decision of the Court of Appeals.
LEVIN, J., concurred with CAVANAGH, J.
Notes
(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle with respect to which the security required by section 3101(3) and (4) was in effect is abolished except as to:
* * *
(b) Damages for noneconomic loss as provided and limited in subsection (1). [
See n 5 of the majority opinion for the complete text.In determining whether the impairment was serious, several factors should be considered: the extent of the impairment, the particular body function impaired, the length of time the impairment lasted, the treatment required to correct the impairment, and any other relevant factors. An impairment need not be permanent to be serious. [Id. at 39-40.]
There were two separate rationales. The per curiam opinion held that the limitations on liability contained in the no-fault act “are available only to those who have obtained the required no-fault insurance or other security.” Id. at slip op, p 4. The Court reasoned that the insurer had stepped into the shoes of the uninsured motorist, thereby losing the protections of the act‘s limitations of liability. In a separate opinion, Judge DANHOF concurred in the judgment on the basis of the absence of clear error in the arbitration panel‘s decision. Judge DANHOF stated:
[B]ecause there is a split of authority in our Court, I cannot say that the arbitrator made an error of law in following Jones v DAIIE, 124 Mich App 363; 335 NW2d 39 (1983), lv den 418 Mich 878 (1983) [holding that the threshold does not apply to uninsured motorists]. [Id. at slip op, p 5.]
In an apparent reconciliation of the two rationales for upholding the judgment of the court below, the per curiam opinion stated:
See Citizens Ins Co v Tuttle, 411 Mich 536, 546; 309 NW2d 174 (1981).Further, in so holding, we cannot find that the arbitrators made an error of law in following Jones. [Id. at slip op, p 4.]
(1) liability of the owner of a motor vehicle involved in an accident if security covering the vehicle was not provided at the time of the accident;
* * *
(7) damages for noneconomic detriment in excess of [$5,000], but only if the accident causes death, significant permanent injury, serious permanent disfigurement, or more than 6 months of complete inability of the injured person to work in an occupation. “Complete inability of an injured person to work in an occupation” means inability to perform, even on a part-time basis, even some of the duties required by his occupation or, if unemployed at the time of injury, by any occupation for which the injured person was qualified. [Uniform Motor Vehicle Accident Reparations Act, 14 ULA 63, § 5.]
The rationale for denying the tort exemption to persons(1) A person remains subject to tort liability for noneconomic loss caused by his or her ownership, maintenance, or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.
(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within this state of a motor vehicle with respect to which the security required by section 3101(3) and (4) was in effect is abolished except as to:
(a) Intentionally caused harm to persons or property. Even though a person knows that harm to persons or property is substantially certain to be caused by his or her act or omission, the person does not cause or suffer such harm intentionally if he or she acts or refrains from acting for the purpose of averting injury to any person, including himself or herself, or for the purpose of averting damage to tangible property.
(b) Damages for noneconomic loss as provided and limited in subsection (1).
(c) Damages for allowable expenses, work loss, and survivor‘s loss as defined in sections 3107 to 3110 in excess of the daily, monthly, and 3-year limitations contained in those sections. The party liable for damages is entitled to an exemption reducing his or her liability by the amount of taxes that would have been payable on account of income the injured person would have received if he or she had not been injured.
(d) Damages up to $400.00 to motor vehicles, to the extent that the damages are not covered by insurance. An action for damages pursuant to this subdivision shall be conducted in compliance with subsection (3). [
MCL 500.3135 ;MSA 24.13135 . Emphasis added.]
The Supreme Court of North Dakota faced the same issue in Steenson v General Casualty Co, 397 NW2d 461, 462 (ND, 1986). The statute provided:
Secured person exemption.—
1. In any action against a secured person to recover damages because of accidental bodily injury arising out of the ownership or operation of a secured motor vehicle in this state, the secured person shall be exempt from liability to pay damages for:
a. Noneconomic loss unless the injury is a serious injury.
The court concluded:
There is nothing expressed in these statutes to suggest that recovery on the uninsured motorist coverage is limited by the threshold requirements of the separate no-fault statute. [Id., p 463.]
Only those insureds — whose tort liability has been abolished under subsection (2) — could have liability for noneconomic loss that “remains” under subsection (1). Persons whose tort liability has not been abolished — uninsureds — could not have liability that “remains.” [Post, p 468.]
We disagree for several reasons. First, as stated in the text, the Legislature did not qualify its use of the term “person” when it designated those who would receive the benefit of the tort immunity granted in subsection (1). Second, the Legislature clearly stated that such a “person” remains subject to tort liability for noneconomic loss only if the injured person [meets the threshold]. Third, Justice CAVANAGH adopts an overly restrictive meaning of the term “remains.” It is doubtful that the Legislature would use such a circuitous means of distinguishing between insured and uninsured motorists in subsection (1) when it could have easily and more clearly made this distinction by using a term or phrase other than “person,” which is the broadest legal term of art possible for reference to those legal entities subject to damage suits for noneconomic loss caused by ownership, maintenance, or use of a motor vehicle. Fourth, subsection (1) precedes subsection (2) and is separate from the enumerated exceptions to the abolition of tort liability found in the latter provision. This indicates that subsection (1) is independent of subsection (2).
Wisdom too often never comes, and so one ought not to reject it merely because it comes late. [Henslee v Union Planters Nat‘l Bank, 335 US 595, 600; 69 S Ct 290; 93 L Ed 259 (1949) (dissent of Frankfurter, J.).]