Mark Howard v. Progressive Michigan Insurance Co ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
MARK HOWARD, UNPUBLISHED
October 15, 2019
Plaintiff,
and
MICHIGAN CRNAS STAFFING, LLC,
DETROIT ANESTHESIA GROUP, PLLC, and
CLEARPATH DIAGNOSTICS, LLC,
Intervening Plaintiffs,
v No. 343556
Wayne Circuit Court
PROGRESSIVE MICHIGAN INSURANCE LC No. 16-010232-NI
COMPANY,
Defendant/Third-Party Plaintiff-
Appellant,
and
PIONEER STATE MUTUAL INSURANCE
COMPANY,
Defendant/Third-Party Defendant-
Appellee.
Before: FORT HOOD, P.J., and SAWYER and SHAPIRO, JJ.
PER CURIAM.
Defendant/third-party plaintiff, Progressive Michigan Insurance Company (Progressive),
appeals from a final judgment entered in this first-party no-fault case. On appeal, Progressive
challenges the trial court’s order granting defendant/third-party defendant, Pioneer State Mutual
Insurance Company (Pioneer) summary disposition on the basis that Progressive is higher in
-1-
priority as a no-fault insurer in this case. Progressive also challenges the trial court’s order
imposing sanctions against Progressive for filing a third-party complaint against Pioneer.
Because we agree with Progressive’s arguments, we reverse the trial court’s rulings on the no-
fault priority and sanctions issues and remand for further proceedings consistent with this
opinion.
Plaintiff was injured in a motor vehicle accident on December 14, 2015, when his vehicle
was struck from behind by a vehicle that fled the scene. Plaintiff owned the vehicle that he was
operating, and that vehicle was insured by Progressive under a policy issued to plaintiff’s wife,
Eula Howard (Eula). The declaration page of the policy listed only Eula as the named insured.
Plaintiff was listed as a driver and household resident.
At the time of the accident, plaintiff and Eula were living with plaintiff’s stepdaughter,
Antoinette McKinney. McKinney was covered by a no-fault policy issued by Pioneer; the
declaration page of that policy identified McKinney as the named insured and listed her address
as being the same address as plaintiff and Eula’s address.1
Plaintiff commenced this action seeking first-party no-fault benefits as well as uninsured
motorist benefits. Because of the possible priority dispute, plaintiff named both Progressive and
Pioneer in the action.
Pioneer filed a motion for summary disposition pursuant to MCR 2.116(C)(10), arguing
that it was not responsible for the payment of no-fault benefits because Progressive was highest
in priority. Pioneer reasoned that, because the Progressive policy defined the word “you” to
include both the named insured and the spouse of the named insured, plaintiff was a named
insured under the Progressive policy, such that Progressive was highest in priority. Pioneer
argued in the alternative that, if plaintiff was not an insured under the Progressive policy, then he
was uninsured and barred from receiving no-fault benefits.
In response to Pioneer’s motion, Progressive argued that plaintiff was not a named
insured under the Progressive policy but rather was the spouse of the named insured.
Progressive contended that it and Pioneer were in the same order of priority such that they were
each responsible for a pro rata share of plaintiff’s no-fault benefits.
The trial court concluded that Progressive was higher in priority than Pioneer, granted
Pioneer’s motion for summary disposition, and dismissed Pioneer from the case with prejudice.
Progressive later moved for leave to file a third-party complaint against Pioneer, seeking
recoupment of 50% of the no-fault benefits that Progressive had paid to plaintiff. The trial court
granted Progressive’s motion, and Progressive filed its third-party complaint against Pioneer.
Pioneer again moved for summary disposition, this time pursuant to MCR 2.116(C)(8)
and (10), arguing that the trial court had already resolved the priority issue when the court
1
Pioneer does not contest on appeal that McKinney lived with plaintiff and Eula at the time of
the accident.
-2-
granted summary disposition to Pioneer and dismissed Pioneer from the case. Pioneer sought
sanctions against Progressive for filing a frivolous third-party complaint against Pioneer.
In response, Progressive acknowledged that the trial court had previously concluded that
Progressive was highest in priority and had granted Pioneer’s earlier motion for summary
disposition. But Progressive again asserted its view that Progressive and Pioneer were in the
same order of priority and that Progressive was entitled to seek partial recoupment from Pioneer.
Progressive argued that there was no basis to impose sanctions against Progressive given that the
trial court had granted Progressive’s motion for leave to file a third-party complaint against
Pioneer, such that Progressive’s third-party complaint should not be deemed frivolous.
The trial court granted summary disposition to Pioneer and dismissed Progressive’s third-
party complaint. The trial court ordered Progressive to pay Pioneer $3,750 in costs and attorney
fees as sanctions for filing a frivolous third-party complaint. Following the entry of a final
judgment, this appeal ensued.
Progressive first argues on appeal that the trial court erred in granting summary
disposition to Pioneer. Progressive contends that it and Pioneer are in the same order of priority
for payment of no-fault benefits to plaintiff. We agree with Progressive’s argument.2
MCL 500.3114(1) provides, in relevant part:
Except as provided in subsections (2), (3), and (5), a personal protection insurance
policy described in section 3101(1) [MCL 500.3101(1)] applies to accidental
bodily injury to the person named in the policy, the person’s spouse, and a relative
of either domiciled in the same household, if the injury arises from a motor
vehicle accident.
The Supreme Court has held that “an insurer of an injured person’s spouse and the insurer of a
relative domiciled in the same household are in the same order of priority.” Mich Mut Ins Co v
Allstate Ins Co, 426 Mich. 346, 352; 395 NW2d 192 (1986).
Pioneer concedes on appeal that, if plaintiff is not the person named in the Progressive
policy, then Pioneer and Progressive are in the same order of priority. The question is thus
whether plaintiff is the person named in the Progressive policy.
We have held that “the ‘person named in the policy’ under MCL 500.3114(1) is
synonymous with the ‘named insured[.]’ ” Stone v Auto-Owners Ins Co, 307 Mich. App. 169,
175; 858 NW2d 765 (2014). Plaintiff is not listed as a named insured on the declaration page of
the Progressive policy issued to his wife, Eula. Only Eula is listed as a named insured. Plaintiff
2
We review de novo a trial court’s decision on a motion for summary disposition. See Pace v
Edel-Harrelson, 499 Mich. 1, 5; 878 NW2d 784 (2016). Questions of statutory interpretation
also are reviewed de novo. Farmers Ins Exch v AAA of Mich, 256 Mich. App. 691, 694; 671
NW2d 89 (2003).
-3-
was listed as a driver and household resident. Merely being designated as a driver on a no-fault
policy does not make someone a named insured. Stone, 307 Mich. App. at 175; Cvengros v Farm
Bureau Ins, 216 Mich. App. 261, 264; 548 NW2d 698 (1996).
Pioneer argues that plaintiff is a named insured in the Progressive policy because of that
policy’s definition of the word “you.” We disagree. The policy defines “you” as including “a
person shown as a named insured on the declarations page[]” and “the spouse of a named insured
if residing in the same household at the time of the loss.” This definition of “you” makes clear
that plaintiff is covered under the policy as the spouse of the named insured, but it does not make
him a named insured for purposes of MCL 500.3114(1). The definition of “you” encompasses
two individuals, the named insured (Eula) and the named insured’s spouse (plaintiff). Therefore,
the definition of “you” does not turn plaintiff into a named insured.
Pioneer asserts a proposed alternative ground to affirm the trial court’s grant of summary
disposition to Pioneer. Specifically, Pioneer argues that no-fault coverage is barred because
plaintiff failed to procure no-fault insurance for his motor vehicle, which was involved in the
accident. Pioneer’s argument is unavailing.3
MCL 500.3101(1) provides, in relevant part, that “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 . . . .” MCL 500.3113(b) precludes a person from obtaining
no-fault benefits if, at the time of the accident, “[t]he person was the owner or registrant of a
motor vehicle or motorcycle involved in the accident with respect to which the security required
by section 3101 or 3103 was not in effect.”
Pioneer argues that plaintiff is precluded under MCL 500.3113(b) from receiving no-fault
benefits because Eula obtained the no-fault policy for the vehicle rather than plaintiff, the
vehicle’s owner. Pioneer’s argument fails in light of a recent decision by our Supreme Court.
In Dye by Siporin & Assoc, Inc v Esurance Prop & Cas Ins Co, ___ Mich ___, ___; ___
NW2d ___ (2019) (Docket No. 155784); slip op at 3, the Supreme Court concluded that
an owner or registrant of a motor vehicle is not required to personally purchase
no-fault insurance for his or her vehicle in order to avoid the statutory bar to [no-
fault] benefits. Rather, MCL 500.3101(1) only requires that the owner or
registrant “maintain” no-fault insurance, and the term “maintain,” as commonly
understood, means to keep in an existing state. Because MCL 500.3101(1) does
not prescribe any particular manner by which no-fault insurance must be
maintained, we will not read into the statute a requirement that the insurance be
purchased or obtained by a vehicle’s owner or registrant.
3
Pioneer raised this issue below, but the trial court did not rule on it. Given that Pioneer raised
the issue below and pursues it on appeal, we will review the issue. See Peterman v Dep’t of
Natural Resources, 446 Mich. 177, 183; 521 NW2d 499 (1994).
-4-
In other words,
an owner or registrant of a motor vehicle involved in an accident is not excluded
from receiving no-fault benefits when someone other than that owner or registrant
purchased no-fault insurance for that vehicle because the owner or registrant of
the vehicle may “maintain” the insurance coverage required under the no-fault act
even if he or she did not purchase the insurance. [Id. at ___; slip op at 4.]
Moreover, “there is no statutory basis to conclude that the owner of an insured vehicle who is not
a ‘named insured’ in the policy is ineligible for [no-fault] benefits.” Id. at ___; slip op 21 n 61.
The Court overruled caselaw of this Court that had suggested a view contrary to our Supreme
Court’s holding in Dye. Id. at ___; slip op at 4.
In light of the holding and analysis in Dye, there is no merit in Pioneer’s contention that
plaintiff is barred from receiving no-fault benefits merely because his wife, Eula, purchased the
no-fault policy. Accordingly, Pioneer’s proposed alternative ground for affirmance fails.
Finally, Progressive argues that the trial court clearly erred in imposing sanctions against
Progressive. We agree.4
If a trial court finds that an action or defense was frivolous, the court may impose
sanctions by awarding to the prevailing party the reasonable costs and reasonable attorney fees
incurred by that party. MCL 600.2591(1), (2).5 “ ‘Prevailing party’ means a party who wins on
the entire record.” MCL 600.2591(3)(b). An action or defense is frivolous if at least one of the
following conditions is met:
(i) The party’s primary purpose in initiating the action or asserting the
defense was to harass, embarrass, or injure the prevailing party.
(ii) The party had no reasonable basis to believe that the facts underlying
that party’s legal position were in fact true.
(iii) The party’s legal position was devoid of arguable legal merit. [MCL
600.2591(3)(a).]
4
We review “for clear error the circuit court’s decision to impose sanctions on the ground that an
action was frivolous within the meaning of . . . MCL 600.2591.” Ladd v Motor City Plastics Co,
303 Mich. App. 83, 103; 842 NW2d 388 (2013). “A decision is clearly erroneous when, although
there may be evidence to support it, we are left with a definite and firm conviction that a mistake
has been made.” Guerrero v Smith, 280 Mich. App. 647, 677; 761 NW2d 723 (2008).
5
The court rules also contain sanctions provisions. See MCR 1.109(E)(6) and (7); MCR
2.625(A)(2).
-5-
“The purpose of imposing sanctions for asserting a frivolous action or defense is to deter parties
and their attorneys from filing documents or asserting claims or defenses that have not been
sufficiently investigated and researched or that are intended to serve an improper purpose.”
Meisner Law Group, PC v Weston Downs Condo Ass’n, 321 Mich. App. 702, 731-732; 909
NW2d 890 (2017). “A court must determine whether a claim or defense is frivolous on the basis
of the circumstances at the time it was asserted.” Id. at 732.
Because we are reversing the trial court’s grant of summary disposition to Pioneer on the
priority issue, Pioneer is no longer the prevailing party. Moreover, Progressive’s third-party
complaint was not frivolous. There is no evidence that Progressive’s primary purpose was to
harass, embarrass, or injure Pioneer, nor is there any indication that Progressive lacked a
reasonable basis to believe that the facts underlying Progressive’s legal position were true.
Progressive’s legal position was not devoid of arguable legal merit. As discussed earlier,
Progressive’s argument on the priority issue is legally correct. And when seeking leave to file
the third-party complaint, Progressive disclosed to the trial court, both in the written motion and
again at the motion hearing, that the court had previously granted summary disposition to
Pioneer, but Progressive explained that it adhered to its position that Progressive and Pioneer
were in the same order of priority and that Progressive wished to file a third-party complaint
seeking partial recoupment of benefits from Pioneer in order to preserve Progressive’s position
that it was entitled to seek such recoupment. The trial court granted Progressive permission to
file the third-party complaint after having been twice reminded of the trial court’s earlier grant of
summary disposition to Pioneer. Given all of these circumstances, the trial court clearly erred in
subsequently finding that Progressive’s third-party complaint was frivolous.
We reverse the trial court’s rulings on the no-fault priority and sanctions issues and
remand for further proceedings consistent with this opinion. We do not retain jurisdiction.
/s/ Karen M. Fort Hood
/s/ David H. Sawyer
/s/ Douglas B. Shapiro
-6-