FULLER v GEICO INDEMNITY CO
Docket No. 319665
Michigan Court of Appeals
March 5, 2015
309 MICH APP 495 | 495 FULLER V GEICO
GLEICHER, P.J., and CAVANAGH and FORT HOOD, JJ.
Submitted March 3, 2015, at Detroit. Decided March 5, 2015, at 9:15 a.m.
The Court of Appeals held:
- The trial court properly held that Lakeside remained the owner and insurer of the rental vehicle even though House had signed a short-term rental agreement purporting to make GEICO, the insurer of House‘s personal vehicle, the primary insurer for any liabilities arising from an accident involving the rental vehicle.
- Lakeside was prohibited from shifting to a short-term car renter the burden of maintaining mandatory no-fault insurance on a rented vehicle. Unless a car rental agreement extends beyond 30 days, the rental agency remains the owner of the rental car for no-fault insurance purposes, and the rental agency‘s no-fault insurer is first in priority for payment of no-fault claims arising from an accident involving the rental car.
- An individual who rents a car from a rental car agency becomes the car‘s owner for purposes of the no-fault act when that individual rents the vehicle for a period in excess of 30 days.
MCL 500.3101(2)(h) , as amended by 2008 PA 241.
Affirmed.
Drew W. Broaddus and Sarah L. Walburn for GEICO Indemnity Company.
Before: GLEICHER, P.J., and CAVANAGH and FORT HOOD, JJ.
GLEICHER, P.J. Nonparty Saundra House rented a vehicle from Lakeside Car Rental while her own vehicle was undergoing routine repairs. She allowed a family friend, plaintiff Gregory Fuller, to drive the rented car, and he was involved in an accident. Gregory and his passenger, plaintiff Patrice Fuller, were both injured and believed they were entitled to first-party personal protection insurance (PIP) benefits. As neither owned a vehicle or was covered under a relative‘s policy, the Fullers sought PIP benefits from the GEICO insurance policy that House had purchased to cover her personal vehicle. Defendant GEICO Indemnity Company determined that Lakeside owned the rental car, and therefore, that Lakeside‘s insurer was responsible for coverage.
The circuit court agreed with GEICO‘s position and dismissed the Fullers’ first-party no-fault action.
I. BACKGROUND
As noted, while House‘s GEICO-covered personal vehicle was in the shop for repairs, she entered a
GEICO sought summary dismissal of the Fullers’ claims. The circuit court, based on the incorrect assumption that House had entered a long-term rental contract, initially determined that House was required to insure the rental vehicle and that the Fullers were eligible for coverage under the GEICO policy. After further clarification by the parties, however, the court determined that Lakeside remained liable to insure the Impala and its policy was the proper source of PIP benefits for the injured Fullers. The court therefore dismissed the Fullers’ action and they filed this appeal.
II. STANDARD OF REVIEW
We review de novo a trial court‘s decision on a motion for summary disposition. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). A motion for summary disposition pursuant to MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681 NW2d 342 (2004). We must review a “motion brought under MCR 2.116(C)(10) by considering the pleadings, admissions, and other evidence submitted by the parties in the light most favorable to the nonmoving party.” Latham v Barton Malow Co, 480 Mich 105, 111; 746 NW2d 868 (2008). “There is a genuine issue of material fact when reasonable minds could differ on an issue after viewing the record in the light most favorable
We also review de novo matters of statutory interpretation. Stanton v Battle Creek, 466 Mich 611, 614; 647 NW2d 508 (2002). The goal of statutory interpretation is to discern and give effect to the intent of the Legislature. Odom v Wayne Co, 482 Mich 459, 467; 760 NW2d 217 (2008). To that end, the first step in determining legislative intent is the language of the statute. Id. If the statutory language is unambiguous, then the Legislature‘s intent is clear and judicial construction is neither necessary nor permitted. Id. [Barclae v Zarb, 300 Mich App 455, 466-467; 834 NW2d 100 (2013).]
We review de novo questions of contract interpretation and considerations regarding the legal effect of a contractual provision. Alpha Capital Mgt, Inc v Rentenbach, 287 Mich App 589, 611; 792 NW2d 344 (2010). Because a no-fault insurance policy is a contract, the general rules of contract interpretation apply. Rory v Continental Ins Co, 473 Mich 457, 461; 703 NW2d 23 (2005). When considering the meaning of policy terms, we must read the whole instrument with the goal of enforcing the parties’ intent. Fresard v Mich Millers Mut Ins Co, 414 Mich 686, 694; 327 NW2d 286 (1982) (opinion by FITZGERALD, C.J.). Clear and unambiguous provisions of an insurance policy must be enforced according to their plain meanings. Henderson v State Farm Fire & Cas Co, 460 Mich 348, 354; 596 NW2d 190 (1999).
III. ANALYSIS
Pursuant to
The Fullers based their claims for PIP benefits on Section I of House‘s GEICO policy. Section I of the policy pertains to “Liability Coverages,” and protects the insured against tort claims raised by third parties. It does not govern entitlement to PIP benefits.1 Section II of the GEICO policy applies to PIP coverage and provides different coverage and definitions than Section I. Section II starts with a general statement of coverage:
We will pay for personal injury protection benefits to or on behalf of each eligible injured person for allowable expenses, work loss and survivors’ benefits incurred as a result of bodily injury caused by an accident arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle.
“Eligible injured person” includes “[a]ny other person who suffers bodily injury while occupying an insured auto[.]” The definition of an “insured auto” in Section II is different from the definition of an “owned auto” in Section I and is key to the resolution of this matter:
Insured auto means an auto with respect to which you are required to maintain security under Chapter 31 of the Michigan Insurance Code and to which the Bodily Injury liability coverage of this policy applies and for which a specific premium is charged.
As correctly noted by GEICO, Section I of the policy, upon which the Fullers rely, applies only to liability, not PIP, coverage. Had Gregory Fuller been sued by a person in the other car involved in the accident, coverage would be determined by an analysis of Section I.2 This case involves only a claim for first-party PIP benefits. Eligibility for PIP coverage is governed by Section II.
When analyzing coverage under Section II, two things are important: (1) the Fullers were not the named insureds—House was, and (2) the Fullers were not in the vehicle covered by the GEICO policy—that vehicle was in the shop.
Part 1 of Section II of the GEICO policy begins by declaring that GEICO will pay PIP benefits to “each eligible injured person.” An injured person is deemed eligible if he or she “suffers bodily injury while occupying an insured auto.” The Fullers want to apply the definition of “owned auto” from Section I of the policy. However, GEICO gave “insured auto” a particular definition for purposes of Section II. It is an auto (1) “with respect to which you are required to maintain” no-fault coverage, and (2) “to which the Bodily Injury liability coverage policy applies,” and (3) “for which a specific premium is charged.” (Bold added.) “You” is defined in the policy as only the named insured—House—and, under specific circumstances, her spouse, if any.
At the time of the Fullers’ accident,
(h) “Owner” means any of the following:
(i) A person renting a motor vehicle or having the use thereof, under a lease or otherwise, for a period that is greater than 30 days.
(ii) A person who holds the legal title to a vehicle, other than a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle pursuant to a lease providing for the use of the motor vehicle by the lessee for a period that is greater than 30 days.
(iii) A person who has the immediate right of possession of a motor vehicle under an installment sale contract. [
MCL 500.3101(2)(h) , as amended by 2008 PA 241.]
“Registrant,” at the time of the accident, was defined as follows:
(i) “Registrant” does not include a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle pursuant to a lease providing for the use of the motor vehicle by the lessee for a period that is greater than 30 days. [
MCL 500.3101(2)(i) , as amended by 2008 PA 241.]
In its rental agreement, Lakeside attempted to shift the burden of paying PIP benefits onto its renters’ insurance providers. This is not permitted under Michigan law. In State Farm, 452 Mich 25, the Supreme Court considered whether a car rental agency could shift the burden of providing residual liability insurance, which is also mandated by
State Farm involved three consolidated appeals. The rental agreements underlying all three cases included provisions placing the renter‘s insurance policy in the position of highest priority in relation to residual liability. Id. at 28-30. The Court first analyzed its earlier decision in Citizens Ins Co v Federated Mut Ins Co, 448 Mich 225; 531 NW2d 138 (1995). In Citizens, a car dealership provided the driver a “loaner vehicle” while the driver‘s personally owned vehicle was being repaired. State Farm, 452 Mich at 31. The driver was involved in an accident while using the loaner vehicle and a third party successfully sought compensation against the driver for his or her damages. Id. Relying on
The State Farm Court noted that it was “no longer convinced that a distinction between a ‘loaner’ car and a rental car can be sustained[.]” Id. at 32-33.
In Citizens, Federated attempted to deny coverage, thus forcing the driver‘s insurers to provide coverage. The car rental companies in this case similarly force a choice. A driver can either sign an agreement stating that the driver‘s insurance will be primary, or the driver can agree to pay an extra fee to the car rental company for insurance coverage. The driver is not informed that the car rental company, as the owner, is required by law to carry insurance on the vehicle that covers any permissive user. The owner cannot shift that responsibility to another party. Just as Federated was required to provide insurance coverage for permissive users in Citizens, we now hold that a car rental company, like any other car owner, must obtain insurance coverage for permissive users of its vehicles. [State Farm, 452 Mich at 33-34.]
“The gravamen” of this holding, the State Farm Court emphasized, “is that the no-fault act requires car owners to be primarily responsible for insurance coverage on their vehicles.” Id. at 34. And a rental driver “cannot defeat the provisions of the no-fault act” by excusing the vehicle‘s actual owner (the rental company) from providing insurance. Id. at 35.
The Fullers sued the wrong insurance company, without providing written notice to Lakeside‘s insurer, and it is now too late for them to seek PIP benefits from any other provider. See
For equitable estoppel to apply, plaintiff must establish that (1) defendant‘s acts or representations induced plaintiff to believe that the limitations period clause would not be enforced, (2) plaintiff justifiably relied on this belief, and (3) she was prejudiced as a result of her reliance on her belief that the clause would not be enforced. [McDonald v Farm Bureau Ins Co, 480 Mich 191, 204-205; 747 NW2d 811 (2008).]
Courts are to apply equitable estoppel sparingly and only in the most extreme cases, for example, when a defendant intentionally or negligently deceives a plaintiff. See Klass v Detroit, 129 Mich 35, 39-40; 88 NW 204 (1901).
The letter cited by the Fullers in no way represents a deception. In the letter, a GEICO claims adjuster posits, “We previously advised that we have now re-
Moreover, as aptly noted by GEICO, the accident occurred on November 11, 2011. The Fullers had until November 11, 2012, to notify the correct insurance provider of their injuries. They obviously realized by October 24, 2012, that GEICO would not voluntarily pay the claim given that they filed suit on that date. The next rational choice in selecting an insurer would be the company that insured the rental company‘s vehicles. Nothing prevented the Fullers from notifying that insurance provider of the accident and beginning the process of requesting PIP benefits. This could have been done contemporaneously with the Fullers’ suit against GEICO. The Fullers did not justifiably forgo their other remedies in response to GEICO‘s letter.
Ultimately, the circuit court properly dismissed the Fullers’ claims against GEICO. Lakeside, as the statutorily defined owner and registrant of the subject vehicle, was required by statute to maintain PIP coverage on the car. Lakeside was precluded by caselaw from shifting the burden of coverage onto the renter of the vehicle. Accordingly, GEICO, the company insuring the renter‘s personal vehicle, was not respon-
We affirm.
CAVANAGH and FORT HOOD, JJ., concurred with GLEICHER, P.J.