Tommie McMullen v. Citizens Insurance Company ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
TOMMIE MCMULLEN, UNPUBLISHED
June 13, 2017
Plaintiff-Appellee,
v No. 332373
Washtenaw Circuit Court
CITIZENS INSURANCE COMPANY and LC No. 14-000708-NF
TRAVELERS INSURANCE COMPANY,
Defendants,
and
FARMERS INSURANCE EXCHANGE,
Defendant/Cross-Plaintiff-
Appellant,
and
MARKEL INSURANCE COMPANY,
Defendant/Cross-Defendant-
Appellee.
Before: JANSEN, P.J., and MURPHY and BORRELLO, JJ.
PER CURIAM.
Defendant/cross-plaintiff-appellant, Farmers Insurance Exchange (Farmers), appeals as
of right the order denying the relief requested in Farmers’ motion for reconsideration of the trial
court’s earlier order granting summary disposition in favor of defendant/cross-defendant-
appellee, Markel Insurance Company (Markel), and denying Farmers’ motion for summary
disposition with regard to its cross-claim against Markel. We reverse and remand.
This case arises from a motor vehicle accident in which plaintiff suffered substantial
injuries. Plaintiff was the passenger in a stolen Mercury Sable when the Mercury was involved
in a single vehicle accident. A woman named Sara Soenen donated the Mercury to Purple Heart
before the accident. KBS Auto Sales (KBS), LLC, an automobile dealership, purchased the
Mercury, but did not obtain a new registration for the vehicle. At the time of the accident, KBS
maintained a no-fault insurance policy through Markel. Following the accident, Farmers was
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assigned as the insurer of last resort through the Michigan Assigned Claims Plan. It is
undisputed that plaintiff was not a named beneficiary under a no-fault policy, and he did not live
with any family members who were named beneficiaries under a no-fault insurance policy.
Plaintiff filed the instant action against multiple no-fault insurers, including Markel and
Farmers, for personal protection insurance (PIP) benefits. Plaintiff requested that the trial court
determine which insurer is responsible for payment of the PIP benefits. Farmers filed a cross-
claim against Markel, contending that Markel is the insurer of highest priority. The trial court
granted summary disposition in favor of defendants Citizens Insurance Company and Travelers
Insurance Company, and the court’s decision with regard to these defendants is not challenged
on appeal. The court also granted summary disposition in favor of Markel with regard to
plaintiff’s complaint. Farmers filed a motion for reconsideration, as well as a motion for
summary disposition with regard to Farmers’ cross-claim. The court denied the relief requested
in Farmers’ motion for reconsideration and denied Farmers’ motion for summary disposition on
its cross-claim.
Farmers argues that the trial court erred by granting summary disposition in favor of
Markel because Markel was the insurer of higher priority. We agree.
We review for an abuse of discretion the trial court’s decision to grant or deny a motion
for reconsideration. D’Alessandro Contracting Group, LLC v Wright, 308 Mich. App. 71, 76; 862
NW2d 466 (2014). “A trial court abuses its discretion when its decision falls outside the range
of reasonable and principled outcomes.” Id. MCR 2.119(F)(3) provides:
Generally, and without restricting the discretion of the court, a motion for
rehearing or reconsideration which merely presents the same issues ruled on by
the court, either expressly or by reasonable implication, will not be granted. The
moving party must demonstrate a palpable error by which the court and the
parties have been misled and show that a different disposition of the motion must
result from correction of the error.
“[We review] the grant or denial of summary disposition de novo.” Farm Bureau Gen Ins Co v
Blue Cross Blue Shield of Mich, 314 Mich. App. 12, 19; 884 NW2d 853 (2015). “ ‘A motion
under MCR 2.116(C)(10) tests the factual sufficiency of the complaint.’ ” Id. (citation omitted).
A court properly grants a motion for summary disposition under MCR 2.116(C)(10) when there
is no genuine issue of material fact. Id. “ ‘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 to
the nonmoving party.’ ” Id. (citation omitted).
Finally, to the extent that resolution of this issue involves the proper interpretation of a
statute, we review de novo issues of statutory interpretation. Dell v Citizens Ins Co of America,
312 Mich. App. 734, 739; 880 NW2d 280 (2015).
The primary goal of statutory interpretation is to ascertain the legislative intent
that may reasonably be inferred from the statutory language. The first step in that
determination is to review the language of the statute itself. Unless statutorily
defined, every word or phrase of a statute should be accorded its plain and
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ordinary meaning, taking into account the context in which the words are used.
[This Court] may consult dictionary definitions to give words their common and
ordinary meaning. When given their common and ordinary meaning, [t]he words
of a statute provide the most reliable evidence of its intent . . . . [Spectrum Health
Hosps v Farm Bureau Mut Ins Co of Mich, 492 Mich. 503, 515; 821 NW2d 117
(2012) (citation and quotation marks omitted; second alteration in original).]
The issue in this case is whether Markel had priority over Farmers, the insurer of last
resort, to pay plaintiff’s PIP benefits under the no-fault act, MCL 500.3101 et seq. The no-fault
act was enacted in order to provide “ ‘assured, adequate, and prompt recovery for economic loss
arising from motor vehicle accidents.’ ” Adanalic v Harco Nat’l Ins Co, 309 Mich. App. 173,
187; 870 NW2d 731 (2015) (citation omitted). MCL 500.3101 provides, in relevant part, “The
owner or registrant of a motor vehicle required to be registered in this state shall maintain
security for payment of benefits under personal protection insurance, property protection
insurance, and residual liability insurance.” The relevant priority statute, MCL 500.3114,
provides the priority order for payment of PIP benefits. The relevant priority section states:
Except as provided in subsections (1) to (3), a person suffering accidental
bodily injury arising from a motor vehicle accident while an occupant of a motor
vehicle shall claim personal protection insurance benefits from insurers in the
following order of priority:
(a) The insurer of the owner or registrant of the vehicle occupied.
(b) The insurer of the operator of the vehicle occupied. [MCL
500.3114(4).]
Farmers was assigned to plaintiff’s claim through the Michigan Assigned Claims Plan and is
required to provide PIP benefits to plaintiff if Markel is not obligated to provide PIP benefits to
plaintiff. See MCL 500.3172(1). Therefore, the sole question presented in this case is whether
Markel is the insurer of highest priority pursuant to MCL 500.3114(4) because Markel insured
the owner of the Mercury at the time of the accident.
Farmers argues that Markel is required to provide PIP benefits to plaintiff pursuant to
MCL 500.3114(4) because Markel insured the owner of the Mercury. In contrast, Markel argues
that the no-fault policy provides that a “covered auto” is one that was “required to have No-Fault
benefits in the state where [it is] licensed or principally garaged,” and that the Mercury was not
“required to be registered” in Michigan because KBS is an automobile dealer. Therefore,
according to Markel, KBS was not required to obtain no-fault coverage for the Mercury, and the
no-fault policy in place at the time of the accident did not apply to the vehicle.
Farmers relies on Farmers Ins Exch v Farm Bureau Gen Ins Co of Mich, 272 Mich. App.
106; 724 NW2d 485 (2006), in support of its position. In Farmers, a motorcyclist was injured
when his motorcycle was hit by a van. Id. at 108. The van was uninsured at the time of the
accident. Id. However, one of the two owners of the van maintained a policy of no-fault
insurance through the defendant with regard to another vehicle. Id. The insurance policy did not
list the van as an insured vehicle, and it did not list the other owner of the van as a named
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insured. Id. The motorcyclist filed a claim for PIP benefits through the Michigan Assigned
Claims Plan, formerly known as the Michigan Assigned Claims Facility, which assigned the
claim to the plaintiff. Id. The plaintiff filed an action for declaratory relief regarding which no-
fault insurer was required to pay the PIP benefits. Id. The issue in the case was whether the
language in MCL 500.3114(5)(a) requires an insurer to pay PIP benefits when that insurer did
not issue a policy covering a vehicle involved in the accident. Id. at 110.
Although the accident in Farmers involved a motorcycle, MCL 500.3114(5)(a), the
priority statute at issue in the case, contains relevant language that is identical to the priority
statute at issue in this case. MCL 500.3114(5)(a) provides:
A person suffering accidental bodily injury arising from a motor vehicle
accident that shows evidence of the involvement of a motor vehicle while an
operator or passenger of a motorcycle shall claim personal protection insurance
benefits from insurers in the following order of priority:
(a) The insurer of the owner or registrant of the motor vehicle involved in
the accident.
(b) The insurer of the operator of the motor vehicle involved in the
accident.
(c) The motor vehicle insurer of the operator of the motorcycle involved in
the accident.
(d) The motor vehicle insurer of the owner or registrant of the motorcycle
involved in the accident. [Emphasis added.]
This Court concluded that the plain language of the statute provided that “the insurer need not
insure the vehicle in the accident, but must insure the owner or registrant.” Farmers, 272 Mich
App at 113. Therefore, because the defendant insured one of the owners of the van, the
defendant was the first in priority to provide PIP benefits. Id. This Court further explained:
Had the Legislature intended MCL 500.3114(5)(a) only to require an insurer to
provide no-fault benefits if the insurer actually insured the motor vehicle involved
in the accident, it could have chosen the following language for MCL 500.3114(5)
(a): “The insurer of the motor vehicle involved in the accident,” deleting the first
prepositional phrase, “of the owner or registrant.” Clearly, the Legislature did not
choose that language, and for us to adopt defendant’s position would be to render
the phrase “of the owner or registrant” in the statute nugatory. [Id. at 113-114.]
This Court further explained that its holding was consistent with a legislative intent to insure
persons, rather than vehicles, from loss. Id. at 114. This Court quoted an earlier decision of this
Court interpreting materially identical language, in which this Court stated, “ ‘[T]he statute does
not state that the injured person must seek these benefits from the insurer of the motor vehicle.’ ”
Id. at 115 (emphasis added; alteration in original), quoting Pioneer State Mut Ins Co v Titan Ins
Co, 252 Mich. App. 330, 336; 652 NW2d 469 (2002).
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Additionally, Farmers relies, in large part, on this Court’s recent decision in Titan Ins Co
v American Country Ins Co, 312 Mich. App. 291; 876 NW2d 853 (2015). The Titan decision
concerned two consolidated cases stemming from motor vehicle accidents involving uninsured
drivers. Id. at 294-295. In both cases, the vehicles in issue were uninsured, and the operators of
the vehicles were not insured under a no-fault policy. Id. at 295. However, in both cases, the
owners of the vehicles involved in the accidents, Safe Arrival Transportation and Bronco
Express Company, maintained policies of no-fault insurance with the defendant covering other
vehicles. Id. In both cases, the plaintiff was assigned as the insurer of last resort. Id. This Court
held that because the defendant insured other vehicles owned by Safe Arrival and Bronco
Express, the defendant was responsible for the claims under MCL 500.3114(4). Id. at 302.
We conclude that Farmers and Titan stand for the proposition that the no-fault insurer of
the owner of the vehicle involved in the accident is the insurer of highest priority under MCL
500.3114(4), regardless of whether the vehicle involved in the accident was covered under the
insurance policy. Both opinions reach the conclusion that the insurer of the owner of the vehicle
involved in the accident has priority over an assigned insurer, regardless of whether the vehicle
was insured under the no-fault policy. As this Court indicated in Farmers, had the Legislature
intended for the focus of the priority language in issue to be on the vehicle, the Legislature would
have worded the statute to indicate that the insurer insures the motor vehicle, rather than the
owner of the vehicle. Farmers, 272 Mich. App. at 113-114. The parties do not dispute that
Markel issued a no-fault insurance policy to KBS that was effective at the time of the accident.
Therefore, it is irrelevant whether the Mercury was a “covered auto” as defined in Markel’s
insurance policy because Markel provided no-fault insurance to KBS at the time of the accident.
Markel contends that the Mercury was required to be registered in Michigan in order for
the Markel insurance policy to apply in this case. Markel cites Parks v Detroit Auto Inter-Ins
Exch, 426 Mich. 191; 393 NW2d 833 (1986), in support of its position. In Parks, the plaintiff
was injured while working inside a trailer owned by his employer. Id. at 196. The priority
provision at issue in the case stated that “an employee ‘who suffers accidental bodily injury
while an occupant of a motor vehicle owned or registered by the employer, shall receive personal
protection insurance benefits to which the employee is entitled from the insurer of the furnished
vehicle.’ ” Id., quoting MCL 500.3114(3). The Court concluded that the trailer was not required
to be registered in Michigan under MCL 500.3101(1). Id. at 200. Therefore, the Court
concluded that
an out-of-state vehicle not required to be registered in Michigan and not operated
in this state for more than thirty days is not subject to the security provisions or
[MCL 500.3114(3)] of the no-fault act and that when an employee is injured
while an occupant of such a vehicle, the employee’s personal insurer, if there is
one, must pay the employee’s personal protection benefits under [MCL
500.3101(1)]. [Id.]
Parks can be distinguished from this case for several reasons. First, the statutory
provision at issue in Parks differs from the provision at issue in this case. The priority provision
at issue in Parks involved an injury suffered by an employee occupying a motor vehicle owned
or registered by the employer. Id. at 196. Importantly, the language of the statute at issue in
Parks referred to the insurer of the vehicle, rather than the insurer of the owner of the vehicle.
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Id. Additionally, the plaintiff in Parks maintained a policy of no-fault insurance, and a plaintiff’s
own insurer is generally the no-fault insurer of highest priority. Id. at 197, 202-203. Therefore,
Parks differs from the instant case in several key respects.
Importantly, however, our Supreme Court stated in a footnote:
[W]e assume [MCL 500.3114(4)] does not apply because we read the phrase
“owner or registrant of the vehicle occupied” within [MCL 500.3114(4)] to be
part of the more complete requirement as stated in [MCL 500.3101(1)]: “The
owner or registrant of a motor vehicle required to be registered in this state[.]”
[Id. at 203 n 3.]
We conclude that our Supreme Court’s statement in the footnote constituted obiter dictum and
did not constitute binding precedent. See Auto-Owners Ins Co v Seils, 310 Mich. App. 132, 160 n
7; 871 NW2d 530 (2015) (“Obiter dicta are not binding precedent. Instead, they are statements
that are unnecessary to determine the case at hand and, thus, lack the force of an adjudication.”)
(Citation and quotation marks omitted.) The Court’s discussion in the footnote in Parks
constituted obiter dictum because it was not necessary to determine the case at hand. The
priority rule outlined in MCL 500.3114(4) was not at issue in Parks, and the Court stated that it
“assumed” that MCL 500.3114(4) did not apply in the case without directly deciding whether
that priority rule had any effect on the case. Parks, 426 Mich. at 203 n 3. Therefore, the Court’s
statements regarding MCL 500.3114(4) were not necessary to determine the case at hand and,
therefore, lacked the force of an adjudication. See Seils, 310 Mich. App. at 160 n 7.
Markel also cites MEEMIC Ins Co v Mich Millers Mut Ins, 313 Mich. App. 94; 880 NW2d
327 (2015), for the proposition that MCL 500.3114(4) does not apply when the vehicle is exempt
from no-fault coverage under MCL 500.3101(1). In MEEMIC, a man named John Putvin owned
a 1966 Corvette, which was stored in a commercial storage facility. Id. at 95. Putvin did not
drive the Corvette in the year preceding the incident, but he purchased comprehensive insurance
coverage that covered the Corvette. Id. at 96-97. Two men performed work on the Corvette in
the storage facility and caused a fire. Id. The fire caused damage to the personal property of two
other individuals that was stored at the facility. Id. at 97. The plaintiff, the insurer of two
individuals whose property was damaged, sued a variety of insurers to recover its losses. Id.
Ultimately, the plaintiff added Home-Owners Insurance Company (Home-Owners) to the
complaint, alleging that Home-Owners issued a no-fault policy to Putvin that covered the
automobiles that he continued to drive. Id.
This Court concluded that Putvin was not required to maintain no-fault coverage for the
Corvette during the period at issue because he did not drive the Corvette during that time. Id. at
99-100. The relevant priority provision at issue in the case provides that “a person who suffers
accidental property damage ‘shall claim property protection insurance benefits’ first from
‘insurers of owners or registrants of vehicles involved in the accident . . . .’ ” Id. at 100, quoting
MCL 500.3125. This Court concluded:
Thus, construing MCL 500.3125 in harmony with MCL 500.3101(1), we
conclude that an insurer of an owner of a motor vehicle involved in an accident is
not statutorily required to pay property protection insurance benefits to a person
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suffering accidental property damage if the motor vehicle involved in the accident
was not driven or moved upon a highway and the owner or registrant elected to
forgo that coverage in favor of comprehensive coverage, as permitted under MCL
500.3101(1). Because the coverage is optional in such cases, whether the policy
provides coverage must be determined from the policy itself. [Id. at 102 (citation
omitted).]
This Court held that because the Corvette was not driven on a highway during the relevant
period, Putvin was not required to maintain security for no-fault benefits under MCL
500.3101(1), and that, because Putvin maintained a comprehensive insurance policy, Home-
Owners was able to exclude the Corvette from coverage under its no-fault policy. Id. at 103.
Therefore, Home-Owners was not liable to pay property protection benefits. Id. Importantly,
however, this Court stated, “Because this case only involves property protection insurance, we
express no opinion as to whether the same would be true for claims involving personal protection
insurance or residual liability insurance.” Id. at 102 n 2.
We conclude that MEEMIC is distinguishable from the instant case. First, MEEMIC
involved property protection insurance benefits, and this Court expressly stated that its opinion
did not address claims involving PIP benefits. Id. at 102 n 2. In addition, the MEEMIC case
centered around the fact that the Corvette had not been driven or moved on a highway, and the
owner of the Corvette had purchased a comprehensive coverage policy covering the vehicle. Id.
at 102. In this case, the parties do no contest that the Mercury was driven on the street, and
neither party asserts that KBS maintained a separate policy covering the vehicle.
However, even assuming that Markel is correct that the Mercury must be registered or
required to be registered in Michigan in order for Markel’s no-fault policy to apply, we conclude
that the Mercury was required to be registered at the time of the accident because it was driven
on a street or highway without conforming to the provisions of the Michigan Vehicle Code,
MCL 257.1 et seq., relating to dealers. 1 Markel points to several registration statutes in support
of its position that the vehicle was not required to be registered in Michigan. MCL 257.216
provides, in relevant part:
Every motor vehicle, recreational vehicle, trailer, semitrailer, and pole
trailer, when driven or moved on a street or highway, is subject to the registration
and certificate of title provisions of this act except the following:
1
We agree with Markel’s contention that the Secretary of State Dealer Manual indicating that a
dealer must obtain no-fault insurance lacks the force and effect of law. Our Supreme Court has
held that the Dealer Manual is not entitled to the force and effect of law because it was not
properly promulgated as a rule. Goins v Greenfield Jeep Eagle, Inc, 449 Mich. 1, 7-10; 534
NW2d 467 (1995). Accordingly, the Dealer Manual is not entitled to deference on the issue
whether KBS was required to obtain no-fault coverage for the Mercury. For the same reason, we
also agree with Markel that the Secretary of State Dealer Application lacked the force of law.
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(a) A vehicle driven or moved on a street or highway in conformance with
the provisions of this act relating to manufacturers, transporters, dealers, or
nonresidents. [Emphasis added.]
Thus, under MCL 257.216, if a vehicle is driven on a street or highway in compliance with the
provisions of the Michigan Vehicle Code relating to automobile dealers, then the vehicle does
not need to be registered. Markel also points to MCL 257.235, which indicates, in relevant part:
If the transferee of a vehicle is a new motor vehicle dealer or a used or
secondhand vehicle dealer that acquires the vehicle for resale, the dealer is not
required to obtain a new registration of the vehicle or forward the certificate of
title to the secretary of state, but shall retain and have in the dealer’s immediate
possession the assigned certificate of title with the odometer information properly
completed, except as otherwise provided in [MCL 257.235b]. A dealer shall
obtain a certificate of title for a vehicle having a salvage certificate of title before
the dealer may operate the vehicle under dealer’s license plates. Upon
transferring title or interest to another person that is not a dealer, the dealer shall
complete an assignment and warranty of title upon the certificate of title, salvage
certificate of title, or dealer reassignment of title form and make an application for
registration and a new title as provided in [MCL 257.217(4)]. [Emphasis added.]
Further, MCL 257.244(4) provides:
A dealer owning a vehicle of a type otherwise required to be registered
under this act may operate or move the vehicle upon a street or highway without
registering the vehicle if the vehicle displays, in the manner prescribed in section
225, 1 special plate issued to the owner by the secretary of state. As used in this
subsection, “dealer” includes an employee, servant, or agent of the dealer.
[Emphasis added.]
Reading the above statutes in pari materia, a dealer does not need to obtain a new registration for
a vehicle, but the dealer must display a special dealer plate in order to operate or move the
vehicle on the street without a registration. See Titan Ins Co v State Farm Mut Auto Ins Co, 296
Mich. App. 75, 84; 817 NW2d 621 (2012) (“Statutes that relate to the same subject or share a
common purpose are in pari materia and must be read together as one law, even if they contain
no reference to one another and were enacted on different dates.”)
In this case, the parties do not dispute that KBS is a dealer under the Michigan Vehicle
Code. MCL 257.216 clarifies that a motor vehicle operated on a street by a dealer does not need
to be registered under the no-fault act, but only if the vehicle is driven in compliance with the
other provisions of the act. The Michigan Vehicle Code also states that a dealer does not need to
obtain a new registration for a vehicle. See MCL 257.235. However, MCL 257.244(4) clarifies
that a dealer may only operate the vehicle on the street if that vehicle displays a special plate. In
this case, the parties do not dispute that the Mercury would have to be registered if KBS did not
own the vehicle. Additionally, it is undisputed that the Mercury did not display a special plate at
the time of the accident. Therefore, because the dealer was not operating the vehicle on the road
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while displaying a special plate, the Mercury was required to be registered at the time of the
accident.
Therefore, we conclude that the Mercury constituted a “covered auto” under Markel’s
insurance policy. Even assuming that Markel is correct that the definition of “covered auto”
states that an automobile must be “required to have No-Fault benefits in the state where [it is]
licensed or principally garaged,” for the reasons discussed, the Mercury was required to have no-
fault benefits in Michigan at the time of the accident. Therefore, the Mercury was covered under
the no-fault policy. For the reasons discussed, Markel is the insurer of highest priority to provide
PIP benefits to plaintiff. We reverse and remand for entry of an order granting summary
disposition in favor of Farmers.
Reversed and remanded. We do not retain jurisdiction.
/s/ Kathleen Jansen
/s/ William B. Murphy
/s/ Stephen L. Borrello
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