Michigan Supreme Court Holds that Owner or Registrant Need Not Personally Maintain Insurance Under No-Fault Act

On July 11, 2019, the Michigan Supreme Court issued an important decision regarding the requirement of the No-Fault Act for the “owner or registrant” of a motor vehicle to “maintain” no-fault insurance on a motor vehicle.

In Dye v. Esurance, Docket No. 155784, the Michigan Supreme Court clarifies that the No-Fault Act does not require the “owner or registrant” of a motor vehicle to personally purchase the no-fault insurance for his or her motor vehicle. The mandate is only that the no-fault insurance be “maintained” for the vehicle. The “owner or registrant” can have someone else purchase the insurance, and even have that other person identified on the policy as the named insured rather than the owner or registrant, with the “owner or registrant” still being deemed to have “maintained” the required insurance.

Notably, at footnote 1, the Michigan Supreme Court recognized that the “legislature recently made substantial amendments to the no-fault act” and that these “opinions do not address those amendments, and all references in the opinions and this syllabus are to the preamendment version of the act.”

In this case, the plaintiff brought a PIP claim against Esurance Property and Casualty Insurance Company and GEICO Indemnity Company in the Washtenaw Circuit Court. At the plaintiff’s request, his father registered the vehicle in the plaintiff’s name at the Secretary of State’s office and obtained an insurance policy from Esurance for which the declarations page listed the father as the named insured. At the time of the subject accident, the plaintiff lived with his wife, who owned a vehicle insured by GEICO. Both Esurance and GEICO denied the plaintiff’s PIP claim, but Esurance paid more than $388,000 in PIP benefits while maintaining that GEICO was the responsible insurer. Eventually, GEICO acknowledged being the primary insurer and entered settlement negotiations with the plaintiff and Esurance.

In November 2014, the Michigan Court of Appeals decided Barnes v. Farmers Ins Exch, 308 Mich App 1 (2014), holding that under MCL 500.3113(b), when none of the owners of a vehicle maintains the requisite coverage, no owner may recover PIP benefits. GEICO then reevaluated its position and ceased settlement discussions. Esurance filed a cross-claim against GEICO, arguing that GEICO had reached a settlement agreement. GEICO moved for summary disposition of the plaintiff’s claim, arguing that the plaintiff was not entitled to PIP benefits under Barnes. The plaintiff also moved for summary disposition, arguing that Barnes was wrongly decided and, moreover, that his father was an owner and registrant for purposes of the No-Fault Act. The trial court granted summary disposition in favor of Esurance on its cross-claim, ruling that GEICO and Esurance had entered into a valid settlement agreement and that GEICO had priority over the plaintiff’s claim. The trial court denied GEICO’s dispositive motion and granted plaintiff’s dispositive motion, determining that GEICO was required to provide PIP benefits to the plaintiff. In granting plaintiff’s motion against GEICO regarding No-Fault coverage and priority, the Court stated that it did not need to address Barnes because the plaintiff’s father was an owner and registrant of the vehicle, thus the only remaining issue between the plaintiff and GEICO was damages.

The Court of Appeals granted GEICO an interlocutory appeal. In an unpublished per curiam opinion issued April 4, 2017, the Court of Appeals held that the trial court erred by granting summary disposition to Esurance because the parties had not yet reached a meeting of the minds on all essential terms of the settlement agreement. The majority agreed with the Barnes Court’s interpretation of MCL 500.3101(1), holding that the trial court erred by finding that the plaintiff’s father was a “registrant” of the vehicle for purposes of MCL 500.3101(1). However, the majority also held that there were genuine issues of material fact as to whether the plaintiff’s father was an “owner” of the vehicle and remanded the case to the trial court for further proceedings. Esurance applied for leave to the Supreme Court with both the plaintiff and GEICO filing cross-appeals. The Supreme Court granted the Plaintiff’s cross-application for leave to appeal and denied Esurance’s application and GEICO’s cross-application.

Expressly overruling Barnes and other cases suggesting to the contrary, the Michigan Supreme Court held 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 PIP benefits. The Court reasoned that MCL 500.3101(1) does not prescribe any particular manner by which no-fault insurance must be maintained, and it contains no requirement that the insurance must be purchased or obtained by a vehicle’s owner or registrant. The Court emphasized that determining whether PIP benefits are available does not depend on who purchased, obtained or otherwise procured no-fault insurance, the only relevant inquiry is whether the injured person can establish an accidental bodily injury arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle.

In regard to MCL 500.3113(b), which provides that a person is not entitled to PIP 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,” utilizing the last-antecedent rule, the Court determined that the phrase “with respect to which the security required by section 3101 or 3103 was not in effect” refers to the vehicle, not the person. Accordingly, the Court decided that the conclusion in Barnes that “when none of the owners maintains the requisite coverage, no owner may recover PIP benefits” was contrary to the plain language of the No-Fault Act.

The Court of Appeals judgment regarding the settlement agreement between Esurance and GEICO was left undisturbed.

Joel Ashton is a partner in our Livonia office where he focuses his practice on insurance defense, including Michigan No-Fault claims (PIP, automobile negligence, uninsured/ underinsured motorist), as well as premises liability and general negligence. His practice also includes the defense of contract and liability claims, contract interpretation issues, subrogation claims involving automobile, fire and casualty, commercial and related coverage. He maintains an AV Preeminent Rating from Martindale-Hubbell, which is the highest possible rating an attorney can achieve for both ethical standards and legal ability. He may be reached at (734) 261-2400 or jashton@cmda-law.com.