Defendants appeal as of right the trial court’s order denying their motion for summary disposition under MCR 2.116(C)(8). Defendants also seek an award of costs under MCR 2.625 and MCL *275 600.2591; MSA 27A.2591. We reverse the denial of defendants’ summary disposition motion, but affirm the denial of sanctions.
I
NATURE OF CASE
In this appeal, we are asked to reconcile the seemingly contradictory mandates of two statutory schemes: the owner’s liability act, MCL 257.401; MSA 9.2101, and the tort liability provision of the no-fault insurance act, MCL 500.3135; MSA 24.13135. The former, enacted in 1949 and amended several times, provides a cause of action against owners of motor vehicles arising from the negligent operation of those vehicles by authorized users. The no-fault act, which became effective in October 1973, abrogates tort liability arising from the use, ownership, or maintenance of motor vehicles except under specified circumstances. Here, plaintiff asserts that the owner’s liability act preserves its right to sue defendants in tort for property damage caused by the individual who operated their rental truck. In response, defendants argue that such liability has been abrogated by the no-fault act. Oddly, although the no-fault act became effective more than a quarter of a century ago, there is no published opinion addressing the viability of tort claims for property damages in the no-fault era.
Considering the plain language of both statutes, and the policies behind them, we conclude that the no-fault act’s abrogation of most tort liability arising from motor vehicle incidents limits the availability of relief under the owner’s liability statute. Actions under the owner’s liability statute are permissible *276 only if not barred by the no-fault act. We apply this same restriction to actions under the common-law theory of negligent entrustment. To conclude otherwise would substantially undermine the no-fault act and its comprehensive scheme of compensation for accident victims.
II
FACTS AND PROCEEDINGS
On June 13, 1993, defendant Ben P. Nouri rented a box truck from defendant U-Haul of Michigan, Inc., a Michigan franchisee of defendant U-Haul International, Inc. 1 The truck was insured by Republic Western Insurance Company. Nouri drove the truck to the Pine Knob Wine Shop in Clarkston. While Nouri was maneuvering the truck in the shop’s parking lot, the front passenger-side comer of the truck hit and damaged the shop’s awning. Plaintiff, the wine shop’s insurer, adjusted the loss and paid $10,112 for the property damage.
Plaintiff filed this action as subrogee of the wine shop on May 18, 1995. 2 The complaint listed five counts: a negligence count against Nouri and counts of negligence and negligent entrustment against each U-Haul defendant. Plaintiff alleged that Nouri’s negligent operation of the U-Haul tmck was the proximate *277 cause of the damage to the wine shop. The negligence counts against the two U-Haul defendants alleged that they were negligent in renting a truck with obstructed visibility. The two common-law negligent entrustment claims were based on allegations that U-Haul was negligent in renting the truck to Nouri, who had been involved in a prior accident with a vehicle he had rented from U-Haul.
In a summary disposition motion under MCR 2.116(C)(8) (failure to state a claim on which relief can be granted), the U-Haul defendants argued that plaintiff’s action was barred by Michigan’s no-fault automobile insurance act, MCL 500.3101 et seq.) MSA 24.13101 et seq. Defendants also claimed that plaintiff’s complaint was frivolous and sought costs and attorney’s fees under MCR 2.625 and MCL 600.2591; MSA 27A.2591. 3 In response, plaintiff argued that under the owners liability provision of Michigan’s civil liability act, MCL 257.401; MSA 9.2101, the U-Haul defendants could be held liable as owners of the motor vehicle for Nouri’s negligent operation. Plaintiff also argued that negligent entrustment remained a viable cause of action.
At the motion hearing, the trial court agreed with plaintiff that under MCL 257.401; MSA 9.2101, negligent entrustment continues to be a viable cause of action and denied defendants’ motion. Defendants noted that the court’s ruling did not differentiate between negligence in general and negligent entrustment. In response, the court stated that defendants’ motion sounded only in negligent entrustment and failed to specifically address the owner’s liability act *278 or the ordinary negligence counts. The Court denied defendants’ motion for summary disposition.
On March 23, 1996, the court entered an order based on the parties’ stipulation to dismiss with prejudice defendant Ben P. Norni. That same day, the court entered a consent judgment against defendants, jointly and severally, in the amount of $10,112. The consent judgment provided that the parties accepted as true the factual allegations in plaintiff’s complaint, and reserved defendants’ right to appeal the denial of the summary disposition motion. 4 We now consider that appeal.
III
ANALYSIS
A
DEFENDANTS’ APPEAL OF THE ORDER DENYING THEIR MOTION FOR SUMMARY DISPOSITION
Defendants moved for summary disposition under MCR 2.116(C)(8), which tests the legal sufficiency of a claim on the basis of the pleadings alone.
LaRose Market, Inc v Sylvan Center, Inc,
1
THE NO-FAULT AND OWNER’S LIABILITY ACTS
The interpretation and application of court rules and statutes presents a question of law that is reviewed de novo.
McAuley v General Motors Corp,
As a rule of statutory construction, statutes that relate to the same subject or that share a common purpose are in pari materia and must be read together as one, even if they contain no reference to one another and were enacted on different dates.
In re
*280
Parole of Glover,
Now, we apply these rules of interpretation to the owner’s liability act and the no-fault act. Before its most recent amendment, the owner’s liability act, MCL 257.401; MSA 9.2101, 5 provided:
(1) Nothing herein contained shall be construed to abridge the right of any person to prosecute a civil action for damages for injuries to either person or property resulting from a violation of any of the provisions of this act by the owner or operator of a motor vehicle, his or her agent or servant. The owner of a motor vehicle shall be liable for any injury occasioned by the negligent operation of the motor vehicle whether the negligence consists of a violation of the provisions of the statutes of the state or in the failure *281 to observe such ordinary care in the operation of the motor vehicle as the rules of the common law requires.
The provision further states that the owner is liable only for the consensual use of the vehicle, and it creates a rebuttable presumption of consent when the vehicle is operated by certain family members. The Supreme Court has stated that, “by statute, the owner of a motor vehicle is hable for its negligent operation if it is being driven with the owner’s permission, MCL 257.401(1); MSA 9.2101(1).”
Clevenger v Allstate Ins Co,
At the time of the accident, the no-fault act, MCL 500.3135; MSA 24.13135, read, in part, as fohows:
(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. . . .
*282 (b) Damages for noneconomic loss as provided and limited in subsection (1). [Emphasis added.] 6
Under this statute, a no-fault insured, like defendant Nouri, who causes economic damages is not personally liable to the injured party.
7
Matti Awdish, Inc v Williams,
The in pari materia rule discussed above does not apply here because these statutes do not share a common purpose. The purpose of the owner’s liability act is “to place the risk of damage or injury on the
owner,
the person who has ultimate control of the vehicle, as well as on the person who is in immediate control.”
Haberl v Rose,
As we have already observed, there is no published case addressing owner’s liability act claims for property damage since the enactment of the no-fault act. However, in
Smith v Sutherland,
From the language of the [no-fault] statute we can only conclude that the standard of liability is the same for drivers and owners. The civil liability act still provides a basis for imposing liability, where none would exist in the absence of the statute, Wieczorek v Merskin,308 Mich 145 , 148;13 NW2d 239 (1944), but the standard under which liability is imposed is furnished by § 3135 of the no-fault act. There was no error in instructing that the same standard of liability applied to both defendants. [Id., 29-30 (emphasis added).]
Following Smith to its logical conclusion, we find that the no-fault act’s abrogation ofnegligent property *284 damage claims also abrogates such actions under the owner’s liability act. Analysis of the statutes and relevant case authority supports this finding.
Whereas the owner’s liability act provides for the owner’s liability for injury to person or property without restriction (as long as the plaintiff shows consent and negligence), the no-fault act clearly and unambiguously abrogates tort liability arising from ownership of a motor vehicle, except for noneconomic damages satisfying the threshold requirements. Consequently, we find that the statutes conflict to the extent that liability under the owner’s statute is broader than the residual tort liability left by the no-fault act. There is simply no way to countenance the full extent of liability contemplated by the owner’s statute without leaving a gaping hole in the no-fault act’s scheme of replacing tort-based compensation with no-fault insurance. See Shavers, supra, 579.
The no-fault act is more recent than the owner’s liability act, and thus takes precedence. Malcolm, supra, 139; Nat'l Center for Mfg Sciences, supra, 549. Furthermore, the no-fault act has a more specific application. Whereas the owner’s liability act filled a gap in the common law by allowing recovery against the owners of motor vehicles, Wieczorek, supra, 148; the no-fault act replaced, to a large extent, a tort-based system of compensation with a no-fault insurance scheme. Haberl, supra, 259-260; Shavers, supra, 579. Under our rules of statutory construction, we conclude that the no-fault act “trumps” the owner’s liabil *285 ity act, and that actions under the latter are permissible only where allowed under § 3135. 8
Moreover, rules of statutory construction require that we avoid inteipretations that render the statute, or any part of it, surplusage or nugatory. Western Michigan Univ, supra, 541-542. If we were to hold that the owner’s liability act preserved all actions against owners for the negligent operation of their vehicles without regard to the no-fault act’s restrictions, then the no-fault act’s abolition of tort liability arising from “ownership” would have little or no meaning. We would be left with the unjustified anomaly of restricting tort liability arising from the use and maintenance of a motor vehicle, but not ownership, despite the fact that all three are included in the statute.
We recognize the presumption that “if the Legislature had intended to repeal a statute or statutory provision, it would have done so explicitly.”
Wayne Co Prosecutor v Dep’t of Corrections,
In closing, we note that Justice Williams apparently anticipated this controversy — and our result — in his concurring opinion in
Advisory Opinion re Constitutionality of
It is quite clear that the no-fault act does not purport to “supersede” or “repeal” all acts related to it. In fact, § 3135 attempts to preserve certain parts of prior acts or actions. For example, § 3135(1) and § 3135(2)(a) refer necessarily to the wrongful death and civil liability acts in case of “[d]amages for noneconomic loss” where the “injured person has suffered death.” [Id., 512 (emphasis added).]
Clearly, Justice Williams recognized that while the no-fault act did not completely abrogate the owner’s liability act, it preserved it only to the extent of the residual tort liability not abolished by the no-fault act.
Nonetheless, plaintiff contends, incorrectly, that this Court and the Supreme Court have approved liability under § 401 even after the no-fault legislation became effective. Plaintiff cites
Goins v Greenfield Jeep Eagle, Inc,
In sum, the no-fault act prevails over the owner’s liability act to the extent that the latter would allow *288 causes of action barred by the former. We therefore conclude that the no-fault act barred plaintiff’s tort claims for property damage under the owner’s liability act.
2
NEGLIGENT ENTRUSTMENT
Defendants also argue that plaintiff’s common-law negligent entrustment claim was barred by the no-fault act. We agree.
Michigan courts have adopted the following definition of the theory of negligent entrustment from 2 Restatement Torts, 2d, § 390:
“One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience, or otherwise, to use it in a maimer involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them. Moning v Alfono,400 Mich 425 , 443-444;254 NW2d 759 (1977).” [CNA Ins Co v Cooley,164 Mich App 1 , 5;416 NW2d 355 (1987), quoting Muscat v Khalil,150 Mich App 114 , 121;388 NW2d 267 (1986).]
“A claim for negligent entrustment may be based on the use of a motor vehicle.”
Roberts v Vaughn,
Clearly, an action based on allegations that the defendant negligently entrusted an automobile to an unfit operator is an action arising from the use of a motor vehicle. Such an action is barred by the no-fault act unless the asserted liability falls under the residual liability allowed by the no-fault act. Plaintiff *289 argues vigorously that the no-fault act is not relevant because negligent entrustment claims do not arise from “ownership” of a motor vehicle, but rather from the act of “entrusting.” Nonetheless, such actions arise from use of a motor vehicle and are therefore precluded.
As with the owner’s liability act, we are unable to find any cases allowing an action for negligent entrustment where the alleged damages would not have been permissible under § 3135. 10
The trial court erred in denying defendants’ motion for summary disposition. 11 We therefore vacate the consent order and remand for entry of judgment for defendants.
B
SANCTIONS
Defendants also claim that they are entitled to costs under MCR 2.625(A)(2), because plaintiff’s action is frivolous. MCR 2.625(A)(2) provides that if the court finds that an action or defense is frivolous, it shall award costs as provided by MCL 600.2591; *290 MSA 27A.2591. Under this statute, “costs” includes “all reasonable costs actually incurred by the prevailing party and any costs allowed by law or by court rule, including court costs and reasonable attorney fees.” MCL 600.2591(2); MSA 27A.2591(2). An action is frivolous if it satisfies any one of the three conditions set forth in the statute, including “[t]he party’s legal position was devoid of arguable legal merit.” MCL 600.2591(3)(iii); MSA 27A.2591(3)(iii). Defendants argue, not without some justification, that plaintiff, itself a no-fault insurance carrier, should have known that its legal position was devoid of arguable legal merit.
Although we have determined that plaintiff’s position is erroneous, we cannot conclude that it was “devoid of arguable legal merit.” The no-fault act and owner’s liability act have coexisted for more than twenty-five years, yet there is no published authority stating that the no-fault act has precluded actions for property damage under the owner’s act. Though a close question, given the unsettled state of the law, plaintiff’s attempt to proceed under the owner’s act was not entirely unreasonable. We therefore deny defendants their costs.
CONCLUSION
Because plaintiff’s negligence actions against defendants were barred by the no-fault act, the trial court erroneously denied defendants’ motion for summary disposition. We reverse and remand for entry of judgment for defendants, but deny costs under MCR 2.625(A)(2). We do not retain jurisdiction.
Notes
All facts alleged in plaintiff’s complaint are to be taken as true pursuant to the consent judgment entered by the court.
As the insured wine shop’s subrogee, plaintiff stands in the insured’s shoes and assumes all legal rights of the insured.
Allstate Ins Co v Snarski,
On appeal, defendants seek an award of costs only.
This appeal is before us on remand by the Michigan Supreme Court. Initially, defendants’ claim of appeal was dismissed for lack of jurisdiction on the finding that the consent judgment was not appealable as of right. The Supreme Court, acting on defendants’ application for leave to appeal, remanded the case to this Court with instruction to allow defendants to file a claim of appeal. The Supreme Court noted that this Court “has previously recognized that an appeal of right is available from a consent judgment in which a party has reserved the right to appeal a trial court ruling” in
Vanderveen’s Importing Co v Keramische Industries M deWit,
Michigan statutory law has imposed liability on motor vehicle owners for the negligent operation of their vehicles since 1929. 1929 CL 4648. Section 401 of the owner’s liability act has been in existence since 1949.
Mull v Equitable Life Assurance Society,
None of the 1995 amendments of § 3135 have any bearing on the outcome of this case, aside from renumbering fonmer subsection 2 to subsection 3.
In its appellate brief, plaintiff alleges that defendants did not submit to the trial court proof that they are covered by no-fault insurance. Contrarily, defendants supplied this documentation in a supplemental brief.
See also
Buckeye Union Ins Co v
Johnson,
All of the following cases involved actions for personal injury under the owner’s liability act. None of these cases reached the issue whether a plaintiff who did not satisfy the statutory threshold would be permitted to proceed with the action:
Bieszck v Avis Rent-A-Car System, Inc,
For example, in
Roberts v Vaughn,
Although the trial court mistakenly believed that the no-fault act did not circumscribe owner’s liability or negligent entrustment actions, it should still have recognized that plaintiff’s common-law negligence claims against the U-Haul defendants (based on allegations that they negligently rented out an unsafe vehicle) were barred under no-fault. However, the trial court did not grant defendants even partial summary disposition with regard to these claims.