ROBERTS v TITAN INSURANCE COMPANY (ON RECONSIDERATION)
Docket No. 280776
Court of Appeals of Michigan
February 5, 2009
Submitted November 12, 2008, at Grand Rapids. Decided February 5, 2009, at 9:00 a.m. Leave to appeal sought.
282 Mich. App. 339
On reconsideration, the Court of Appeals held:
- MCR 7.215(J)(1) constrains this panel to follow Butterworth, which held that
MCL 500.3113(a) does not apply to any person who takes a family member‘s vehicle for joyriding purposes and only operates to exclude coverage if the person had an actual intent to steal the vehicle. - There is no reasonable dispute that Vandenberg gave the Explorer to Irwin to use because her vehicle broke down right after she moved into his house and thereafter she had exclusive use of the Explorer. Under the facts of this case, Irwin‘s use of the Explorer qualifies her as an “owner” of the vehicle under
MCL 500.3101(2)(h) because she had possessory use of the vehicle for more than 30 days. - There is no evidence that Roberts intended to steal the vehicle. Because he was a member of the owner‘s family joyriding rathеr than attempting to steal the vehicle, under the holding of Butterworth, Roberts did not “unlawfully” take the vehicle for purposes of the exclusion from coverage in
MCL 500.3113(a) . - Were this panel not compelled to follow Butterworth, it would, instead, hold that there is no family member joyriding exception to
MCL 500.3113(a) . A conflict between this case and Butterworth must be declared pursuant to MCR 7.215(J)(2). - The provision in the insurance contract excluding coverage for injuries sustained by any person using an automobile taken unlawfully must be construed to not apply to a joyriding family member in order for the provision to be compatible with existing public policy.
- Although the Titan policy was procured through Irwin‘s intentional misrepresentation of a material fact in the application, the “innocent third party” doctrine applies here because Roberts was not involved in the misrepresentation. Titan may not deny Roberts coverage on the basis of Irwin‘s improper actions.
- There is no requirement that an insured actually own or be the registrant of the vehicle in order to have an insurable interest adequate to support PIP coverage. The fact that Irwin did not have an insurable interest in the Escort does not preclude recovery of PIP benefits.
Reversed and remanded.
HOEKSTRA, P.J., concurred in the result only.
- INSURANCE — NO-FAULT — WORDS AND PHRASES — OWNERS OF MOTOR VEHICLES.
There may be more than one “owner” of a vehicle for purposes of applying the no-fault automobile insurance act‘s definition of “owner” (
MCL 500.3101[2][h] ). - INSURANCE — NO-FAULT — WORDS AND PHRASES — OWNERS OF MOTOR VEHICLES — USE OF A MOTOR VEHICLE.
The phrase “having the use” of a motor vehicle for purposes of defining “owner” under the no-fault automobile insurance act means using the vehicle in ways that comport with concepts of ownershiр; the focus is on the nature of the person‘s right to use the vehicle; ownership follows from proprietary or possessory usage, as opposed to merely incidental usage under the direction or with the permission of another; it is a regular pattern of unsupervised usage (
MCL 500.3101[2][h] ). - INSURANCE — FRAUD — THIRD PARTIES — INNOCENT THIRD PARTIES.
An intentional misrepresentation by an insured in procuring an insurance policy may bar a claim by the insured who made the misrepresentation, but does not bar the claim of any insured under the policy who is innocent with regard to such misrepresentation.
Jonathan W. Willoughby, PLC (by Jonathan W. Willoughby), for the plaintiff.
James, Dark & Brill (by John C. Fish) for the defendant.
ON RECONSIDERATION
Before: HOEKSTRA, P.J., and WHITBECK and TALBOT, JJ.
PER CURIAM. In this first-party no-fault automobile insurance action, plaintiff Kyle Roberts, by his next friend and mother, Lillian Irwin, appealed as of right the trial court‘s order granting defendant Titan Insurance Company (Titan) summary disposition under MCR 2.116(C)(10). In our opinion issued December 4, 2008, we reversed but stated that, were it not for the
I. BASIC FACTS AND PROCEDURAL HISTORY
In June 2005, Roberts, at age 12, was seriously injured when he crashed a Ford Explorer into a tree. Roberts was intoxicated at the time of the accident. Following the accident, Roberts spent three weeks in the hospital and required follow-up care for months.
Steven Vandenberg, Roberts and Irwin‘s landlord and housemate, was the title owner of the Explorer that Roberts was driving at the time of the accident. Irwin and Roberts moved into Vandenberg‘s home on or about May
During his deposition, Vandenberg explained that when Irwin moved in he noticed that there was water spilling out from underneath Irwin‘s Jeep. According to Vandenberg, it turned out that the water pump was in need of repair. At that time, Vandenberg had three vehicles: the Explorer, a Ford Expedition, and a Jaguar. Because he drove the Expedition “all the time” and did not need to use the Explorer, he offered to let Irwin use the Explorer. Irwin thanked him, and he gave her the keys to the Explorer.
Vandenberg stated, to the best of his knowledge, that from May 2005 until the accident in June 2005, Irwin used the Explorer for all her daily needs. According to Vandenberg, Irwin did not pay him anything for the use of the Explorer, and they had no arrangement for the sale of the Explorer to Irwin. Vandenberg and Irwin also had no agreement regarding how long Irwin would be allowed to use the Explorer, but Vandenberg did not intend that Irwin have “permanent” use of the vehicle. Vandenberg agreed that, during the times that Irwin was not using it, he probably could have used the Explorer anytime that he wanted, but he explained that he would probably have asked Irwin for permission first “because [he] gave it to her to use.” However, he also agreed that Irwin was using the vehicle with his permission and that he could have told her anytime that he did not want her to use thе vehicle anymore. Vandenberg admitted that he did not tell his insurance carrier that Irwin was driving the Explorer.
During her deposition, Irwin testified that when Vandenberg gave her the Explorer to use, she felt that she owned it because she drove it all the time, she was the only person who used it, and all her stuff was in it. Irwin explained, “I just took it that it was mine and I could use it. I could go wherever I wanted. If I wanted to go to Georgia, I could go thеre. I could do anything in the vehicle.” Despite her belief that she owned the Explorer, Irwin later admitted that she did not believe that she had the right to sell the vehicle because she knew she was not the title owner. Irwin confirmed that she did not pay Vandenberg for her use of the Explorer, nor was there any agreement that she pay him for her use. Irwin also admitted that Vandenberg never told her that she owned the Explorer. But, despite confirming that the Explorer was titled in Vandenberg‘s name and that he paid the insurance for it, Irwin stated that she did not believe Vandenberg had the right to tell her she could no longer use the vehicle because he “gave it to” her. Irwin stated that she paid all the general maintenance costs for the Explorer, including gas, oil, transmission fluid, and windshield washer fluid. Irwin also stated that if the Explorer had broken down, she would have paid for the repairs.
On further questioning, Irwin admitted that she lied to a Titan agent who interviewed her after the accident. When the agent asked her who had use of the Explorer before the accident, Irwin told him that Vandenberg
Roberts testified that when he took the Explorer on the night of the accident, he believed that it belonged to Irwin because “[s]he was always driving it around, had everything in it.” Roberts stated that he had never driven any vehicle before, and he admitted that neither Irwin nor Vandenberg gave him permission to drive the Explorer on the night in question. Roberts also admitted that, after Irwin and Vandenberg had gone to bed on the night of the accident, he drank some tequila that he found in the kitchen cupboard. Roberts explained that after drinking the tequila he sat down to watch television and then noticed the car keys in the mesh pocket of Irwin‘s backpack, whiсh was on the kitchen counter. Roberts could not explain exactly why he took the car. He stated that he just felt like going for a drive. Roberts stated that the next thing he remembered after pulling out of the driveway was waking up in the hospital.
Vandenberg testified that he did not know how Roberts obtained the keys to the Explorer on the night of the accident. Vandenberg stated that he had a spare set of keys for the Explorer that he kept “locked up” and that he did not know where Irwin kept the set of keys that he had given to her. Vandenberg also denied knowing where Roberts obtained the alcohol that he consumed that night, but he admitted that he noticed that some alcohol was missing from his home after the accident.
At the time of the accident, Irwin was covered by a no-fault automobile insurance policy that Titan issued to her in March 2005. Irwin had initially purchased the policy to cover a Jeep Grand Cherokee, but in April 2005, she changed the policy to instead cover a Ford Escort. When she applied for the Escort coverage, Irwin provided Titan with a copy of the previous owner‘s title without any of the buyer information filled in. During her deposition, Irwin first claimed that the title to the Escort was in her name. However, Irwin later revealed that she did not own it and had never even driven the Escort at the time she sought the insurance coverage. Irwin also confirmed that the Escort was never stored at her house. Irwin explained that the Escort was for her son, Vernon Austin, III. Irwin admitted during her deposition that she did not tell the Titan agent that she would not be using the Escort, or that Austin would be using it. However, she clarified that the agent did not ask her who would be using the car. A title search later revealed that the Escort was in fact titled in Austin‘s name. Irwin stated that she insured the Escort in her name because Austin needed insurance and he was not responsible enough to obtain it for himself.
Citing
After hearing oral arguments on the motion, the trial court issued its written opinion and order in which it concluded that, as a matter of law, the family member joyriding exception to
Without question [Roberts] unlawfully took the Explorer. [Roberts] did not have a reasonable belief that he was entitled to take and use the vehicle. The family joyriding exception to
MCL 500.3113(a) as stated by the Priesman court is not binding on this court or case. Recovery is barred pursuant toMCL 500.3113(a) and the language contained in [Titan‘s] policy. As such, it is not necessary for this court to address [Titan‘s] misrepresentation argument, whether Irwin qualified as an owner, whether Irwin had an insurable interest, whether the innocent third party doctrine applies, or whether [Titan‘s] policy bars recovery.
II. SUMMARY DISPOSITION
A. STANDARD OF REVIEW
Under MCR 2.116(C)(10), a рarty may move for dismissal of a claim on the ground that there is no genuine issue with respect to any material fact and the moving party is, therefore, entitled to judgment as a matter of law. The moving party must specifically identify the undisputed factual issues and support its position with documentary evidence.5 The trial court must consider all the documentary evidence in the light most favorable to the nonmoving party.6 We review de novo the trial court‘s ruling on a motion for summary disposition.7 Construction of unambiguous contract language and interpretation of statutes are questions of law that this Court also reviews de novo.8
B. PRIESMAN AND MCL 500.3113(a)
1. MCL 500.3113
Section 3113 of the no-fault insurance act9 provides, in pertinent part, as follows:
A person is not entitled to be paid personal protection insurance benefits for accidental bodily injury if at the time of the aсcident any of the following circumstances existed:
(a) The person was using a motor vehicle or motorcycle which he or she had taken unlawfully, unless the person reasonably believed that he or she was entitled to take and use the vehicle.10
Thus, under the plain language of the statute, if a person is injured while using a vehicle that he or she took unlawfully, that person is not entitled to PIP benefits. And, under the plain language of the statute, the only exception to this exclusion is where the person had a reasonable belief that he or she was entitled to take and use the vehicle.
2. PRIESMAN
In Priesman v Meridian Mut Ins Co,11 the Michigan Supreme Court considered whether “an underage, unlicensed driver injured while driving his mother‘s automobile without her knowledge or cоnsent may recover medical benefits from the no-fault insurer of her automobile.” Similar to the facts in the present case, in Priesman a 14-year-old boy sustained serious bodily injuries from an automobile accident after he took his mother‘s car without her permission during the night while she was asleep.12 Citing
After recognizing that the no-fault act does not define the term “taken unlawfully,” three members of the Court stated in the lead opinion that
Despite the fact that a majority of the Priesman Court did not agree on the existence of this joyriding exception, Roberts argues that the trial court erred by ruling as a matter of law that the exception was not binding in this case. Roberts acknowledges that Priesman itself is not precedentially binding.21 However, Roberts argues that the rationale of the lead opinion in Priesman is binding because it has been adopted in subsequent decisions of this Court.
In Butterworth Hosp v Farm Bureau Ins Co,22 this Court recognized that Priesman was not binding precedent and even commented that “any joyriding exception seems to be in derogation of the clear language of the statutes.” Nonetheless, this Court felt “compellеd” to follow the reasoning of the lead opinion in Priesman and extended the exception to adult family members from another household who take a relative‘s vehicle joyriding.23 In doing so, this Court clarified that
In Mester v State Farm Mut Ins Co,25 three girls were skipping school together and took a stranger‘s truck that they eventually crashed during a police chase. The plaintiff argued that the joyriding exception should be extended to anyone who merely joyrides without intent to steal.26 This Court rejected the plaintiff‘s argument, noting that, by statute,27 “[a]n unlаwful taking does not require an intent to permanently deprive the owner of the vehicle,” and reasoning that “[h]ad the Legislature intended to exempt from subsection 3113(a) all joyriding incidents, it would have chosen a different term than ‘unlawfully taking,’ such as ‘steal’ or ‘permanently deprive.’ ”28 This Court then explained that the lead opinion in Priesman “recognized a joyriding exception . . . not because joyriding does not involve an unlawful taking, but only because of special considerations attendant to the joyriding use of a family vehicle by a family member.”29 This Court then concluded that those “special considerations” did not “warrant expansion of the exception beyond the family context.”30
Although we are persuaded by Titan‘s position, we cannot render decisions based on speculation regarding what the current membership of the Supreme Court may decide. As stated, this Court in Butterworth Hosp specifically adopted the reasoning stated in the lead opinion in Priesman, and we are now bound by court rule to follow that decision.34 However, were we not so bound to follow the Butterworth decision, we would
3. APPLYING THE FAMILY MEMBER JOYRIDING EXCEPTION
(a) FAMILY MEMBER‘S VEHICLE
Having concluded that the family member joyriding exception is binding on this Court, we now turn to application of that exception to the present case. Therefore, we must determine whether Roberts‘s conduct falls within that scope of that exception; that is, whether Roberts was joyriding in a family member‘s vehicle.
Roberts concedes that the vehicle was titled to and owned by Vandenberg аnd that, therefore, the joyriding exception would seem to not apply.37 However, Roberts argues that Irwin‘s use of the vehicle qualified her as an “owner” of the vehicle sufficient to fall within the scope of the exception.
The no-fault insurance act defines the term “owner” as:
(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 motоr vehicle under an installment sale contract.38
Here, there is no dispute that Irwin did not hold legal title to the Explorer; Vandenberg was the title owner. Therefore, subsection (ii) does not apply. Further, there is no dispute that Irwin was not purchasing the vehicle under an installment sale contract. Therefore, subsection (iii) does not apply. Accordingly, we must determine if Irwin‘s use of the Explorer for a period greater than 30 days, as referred to in subsection (i), operated to classify her as an “owner” of the vehicle.
We first note that in applying the no-fault act‘s definition of “owner,” this Court has recognized that there may be more than one “owner” of a vehicle.39 For example, this Court has held that both a lessee and thе legal titleholder could be owners under the no-fault act‘s definition of “owner,” thereby requiring them both to maintain security for payment of benefits under PIP insurance.40
Where there is no lease agreement, ” ‘having the use’ of a motor vehicle for purposes of defining ‘owner’ . . . means using the vehicle in ways that comport with concepts of ownership.”41 The focus must be on the
Here, given Vandenberg‘s and Irwin‘s testimonies, there can be no reasonable dispute that Vandenberg gave the Explorer to Irwin to use bеcause her Jeep broke down right after she moved into his house and that thereafter she had exclusive use of that vehicle.45 As stated, there was no dispute in the record that Irwin used the vehicle for all her daily needs, and Vandenberg testified that if he had wanted to use the Explorer, he probably would have asked Irwin for permission first “because [he] gave it to her to use.” Therefore, we conclude that Irwin‘s use of the car comports with the concepts of ownership. Further, the record indicates that Irwin had possessory use of the Explorer from approximately May 1, 2005,46 until June 14, 2005. Therefore, the record establishes that Irwin had use of the vehicle for a period greater than 30 days. Accordingly, viewing the evidence in the light most favorable to Roberts, we conclude that there was no question of fact concerning Irwin‘s ownership.47
In Butterworth, this Court explained that
Therefore, because Roberts was a family member joyriding rather than attempting to steal the car, under the precedent that Butterworth set by adopting the reasoning of the lead opinion in Priesman, he did not “unlawfully” take the car for purposes of
C. THE POLICY LANGUAGE
When presented with a contractual dispute, a court must reаd the contract as a whole with a view to ascertaining the intention of the parties, determining what the parties’ agreement is, and enforcing it.49
It is a cardinal principle of construction that a contract is to be construed as a whole; that all its parts are to be harmonized so far as reasonably possible; that every word in it is to be given effect, if possible; and that no part is to be taken as eliminated or stricken by some other part unless such a result is fairly inescapable.
. . . Every word in the agreement must be taken to have been used for a purpose, and no word should be rejected as mere surplusage if the сourt can discover any reasonable purpose thereof which can be gathered from the whole instrument.52
“[C]lear and specific exclusions in an insurance policy should be given effect.”53
1. UNLAWFULLY TAKEN VEHICLE
Under the terms of Irwin‘s Titan insurance policy, “coverage does not apply to bodily injury sustained by: 1. Any person using an auto taken unlawfully.” (Emphasis in original.) Relying on this provision, Titan argues that the insurance policy alone clearly precludes coverage for Roberts‘s claims. However, “[t]o the degree that the contract is in conflict with the statute, it is
2. MISREPRESENTATION
Although the trial court did not rule on the issue, Roberts argues that Titan was not entitled to void the insurance policy and therefore deny Roberts benefits on the basis of Irwin‘s alleged misrepresentations. Titan argues that Irwin fraudulently obtained insurance coverage by misrepresenting that she owned the Escort and, therefore, the insurance contract was void ab initio.
Irwin‘s insurancе policy excludes coverage when the policy is obtained by fraud. Specifically, the policy states as follows:
We do not provide coverage for any insured who has made fraudulent statements or engaged in fraudulent conduct in obtaining or maintaining this policy or concerning any accident or loss for which coverage is sought under this policy.
Further, it is a well-established rule that “[w]here a policy of insurance is procured through the insured‘s intentional misrepresentation of a material fact in the
Here, there is no dispute that Irwin lied to Titan when she said that she owned the Escort, which was actually owned and used by her son Vernon. And Irwin‘s misrepresentation was material to the risk insured because Titan would have increased the premium had it known the truth about the vehicle‘s ownership and usage. Karen Gines, an employee in Titan‘s underwriting department, attested that
[t]he risk Titan assumed by issuing the policy to Lillian Irwin for the 1995 Ford Escort was substantially less than the actual risk assumed due to the car being owned by, in the possession of, and driven by Ms. Irwin‘s 19-year-old son, Vernon Austin, III. The risk of insuring a 19-year-old male is significantly greater than the risk of insuring a 36-year-old female.
Therefore, the Titan policy was procured through Irwin‘s intentional misrepresentation of a material fact in the application for insurance.
However, an insurer may not void a policy of insurance ab initio where an innocent third party is affected.58 Therefore, ” ‘only the claim of an insured who has committed the fraud’ will be barred, leaving unaffected ‘the claim of any insured under the policy who is innocent of fraud.’ ”59 Titan argues that this innocent
However, caselaw demonstrates that the innocent third party doctrine ensures coverage for any person who is innocent of participation in the alleged fraud. For example in Darnell v Auto-Owners Ins Co, this Court held that the plaintiff wаs entitled to recover benefits where his wife, not the plaintiff, made the alleged misrepresentations.60 In contrast, in Hammoud v Metro Prop & Cas Ins Co, this Court held that the plaintiff was not entitled to recover benefits because he was actively involved in defrauding the insurer by allowing his older brother to obtain the insurance policy by misrepresenting the plaintiff‘s status as a driver of the vehicle.61 Therefore, the relevant inquiry is whether the injured third party was innocent with respect to the misrepresentation made to the insurance company or was actively involved in defrauding the insurer.
Here, it was Irwin, not Roberts, who is alleged to have misrepresented facts on the application for insurance. Consequently, while we certainly do not condone Irwin‘s actions, the fact remains that Roberts made no misrepresentation and coverage may not be denied to him on the basis of his mother‘s improper actions.
3. INSURABLE INTEREST
Titan also argues that Irwin did not have an insurable interest in the Escort; thus, the policy should be void. However, “there is no requirement that an insured
[T]here is no requirement that there be an insurable interest in a specific automobile since an insurer is liable for personal protection benefits to its insured regardless of whether or not the vehicle named in the policy is involved in the accident. A person obviously has an insurable interest in his own health аnd well-being. This is the insurable interest which entitles persons to personal protection benefits regardless of whether a covered vehicle is involved.63
Therefore, the fact that Irwin may not have had an insurable interest in the Escort does not preclude recovery of PIP benefits.
III. CONCLUSION
Despite our disagreement with Butterworth‘s adoption of the Priesman lead opinion‘s reasoning regarding a family joyriding exception, it is controlling, and we must follow it as binding precedent.64 We therefore reverse the trial court‘s grant of summary disposition in favor of Titan. In the absence of Butterworth, we would follow Justice GRIFFIN‘s dissent in Priesman, and we therefore declare a conflict between the present case and Butterworth.65
We reverse and remand for further proceedings consistent with this opinion. We do not retain jurisdiction.
HOEKSTRA, P.J. (concurring). I concur in the result only.