Stephenson v. Associated General Insurance , 148 Mich. App. 1 ( 1985 )

Per Curiam.

While plaintiff Sylvia Stephenson was a driver of a van stopped at an intersection for a red light, she was struck from behind by an uninsured motorist. Mrs. Stephenson suffered and was treated for soft tissue injuries.

Sylvia Stephenson and her husband, William Stephenson, were insured with defendant, Associated General Insurance Company, under a no-fault automobile insurance policy which contained the following language in the uninsured motorist coverage clause:

"to pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury”.

The Stephensons filed a claim under the foregoing clause, which defendant denied. The Stephen-sons then instituted arbitration proceedings in conformity with the terms of the policy.

Pursuant to a hearing, the arbitrator found that plaintiffs had failed to establish a threshold injury to Mrs. Stephenson and were therefore precluded from recovering damages under the uninsured motorist coverage clause. The arbitrator explained that except for the requirement of a "threshold showing” he would have awarded plaintiff Sylvia Stephenson the sum of $8,000 and plaintiff William Stephenson nothing.

Plaintiffs then filed a motion in circuit court to vacate or modify the arbitration award. The plaintiffs did not dispute that they had not established a threshold injury. Rather, their position was that they need not show a threshold injury to Mrs. Stephenson in order to recover under the uninsured motorist provisions of their policy. The trial court affirmed the arbitrator’s award, finding that the arbitrator properly construed the present law in deciding the issue.

Plaintiffs filed a motion for rehearing which was denied. Plaintiffs appeal as of right.

The issue in this case, whether an insured who is injured by an uninsured motorist must establish a threshold injury in order to recover damages for noneconomic loss from his automobile insurer, is not of first impression in this Court. When first addressed in Caplan v DAIIE102 Mich App 354; 301 NW2d 471 (1980), a panel of this Court relied upon the following language in Bradley v Mid-Century Ins Co, 409 Mich 1, 61-62; 294 NW2d 141 (1980), in determining that a plaintiff must show a threshold injury in order to claim noneconomic damages under the uninsured motorist coverage of a no-fault policy:

"Under the no-fault motor vehicle liability act an insured may collect from his insurer for work loss and medical expenses without regard to fault. He may sue the negligent tortfeasor for excess economic loss and, if the threshold of injury is met, for non-economic loss. The statute requires that motorists carry residual liability insurance in addition to no-fault insurance to provide a source of recovery to persons severely injured as a result of driver negligence. If a motorist is uninsured he may be sued for all economic loss as well as above-threshold non-economic loss.” (Footnotes omitted.)

When addressed a second time by a different panel of this Court, no reference was made to either the Bradley or Caplan decisions. Jones v DAIIE, 124 Mich App 363; 335 NW2d 39 (1983), lv den 418 Mich 878 (1983). Rather, the Jones Court focused on the Supreme Court’s decision in Citizen’s Ins Co of America v Tuttle, 411 Mich 536, 546; 309 NW2d 174 (1981), in arriving at a conclusion completely opposite to the conclusion reached in Caplan, supra:

"Under the no-fault system, a person remains subject to tort liability for nonintentional torts causing noneconomic loss only if the injured person has suffered 'death, serious impairment of body function, or permanent serious disfigurement’. MCL 500.3135(1); MSA 24.13135(1). Otherwise, tort liability has been abolished. MCL 500.3135(2); MSA 24.13135(2). This abolition of tort liability, however, does not extend to all individuals using vehicles. Rather, tort liability arising out of the ownership, maintenance, or use of a vehicle is abolished only if the required no-fault insurance or other security has been obtained. Citizens Ins Co of America v Tuttle, 411 Mich 536, 546; 309 NW2d 174 (1981). The uninsured motorist is outside the basic no-fault system of allocating the costs of accidents and remains, therefore, subject to tort liability. Tuttle, supra, p 547.

"Subsection (1) of MCL 500.3135; MSA 24.13135 serves only as an exception to the general abolition of tort liability in subsection (2). Tuttle, supra, p 548. It is not meant to abolish tort liability in whole or in part for those outside of the no-fault act. To recover against an uninsured motorist for noneconomic loss, a plaintiff does not have to meet the 'serious impairment’ threshold of MCL 500.3135(1); MSA 24.13135(1).” 124 Mich App 365-366.

To resolve the issue at bar, this panel must either resolve the conflict presented by Caplan and Jones or choose sides. We find the conflict irreconcilable but conclude that Jones is the better reasoned opinion.

Initially we note that the apparent conflict does not stem from the reliance on two different Supreme Court decisions because those decisions are not incongruous. Both decisions concluded that the Legislature, in promulgating the no-fault insurance act, intended to retain tort liability of uninsured motorists. Compare Tuttle, supra, p 551, and Bradley, supra, p 62. However, neither decision of the Supreme Court directly addressed the present issue. The conflict thus appears to be the result of divergent extrapolations of a single premise under the no-fault insurance act: that tort liability for other than above-threshold injury is abolished only if the required no-fault insurance or other security has been obtained. MCL 500.3135; MSA 24.13135.

Upon reviewing the language of the no-fault insurance act, we find the logic utilized in Jones most persuasive. The threshold requirement serves only as an exception to the general abolition of tort liability under the act. The exception abolishes tort liability neither in whole nor in part for those outside the no-fault insurance act. Because the uninsured motorist is outside the no-fault scheme of allocating the costs of accidents, he or she remains subject to tort liability. The conclusion is thus inescapable that the threshold requirements in MCL 500.3135(1); MSA 24.13135(1) are inapplicable to suits against uninsured motorists for noneconomic loss.

Therefore, we find that the arbitrator erred in precluding plaintiff Sylvia Stephenson from recovering damages under the uninsured motorist clause of her no-fault policy on the basis that she did not meet the threshold requirements of the no-fault act. Moreover, we find that, but for this error, the award would have been substantially otherwise. DAIIE v Gavin, 416 Mich 407; 331 NW2d 418 (1982).

We direct that an order be entered modifying the arbitration award to reflect the sum of $8,000 in favor of plaintiff Sylvia Stephenson against defendant. We retain no further jurisdiction.

Reversed.