Title: STATE FARM FIRE & CASUALTY COMPANY V OLD REPUBLIC INSURANCE CO

State: michigan

Issuer: Michigan Supreme Court

Document:

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Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED MAY 29, 2002  
STATE FARM FIRE AND CASUALTY, 
COMPANY, a Foreign Corporation, 
as Subrogee of IBRAHIM MROUE 
doing business as Family Bakery,  
Plaintiff-Appellee,  
v  
No. 117470  
OLD REPUBLIC INSURANCE COMPANY,  
Defendant-Appellant.  
BEFORE THE ENTIRE BENCH  
CORRIGAN, C.J.  
We granted leave to appeal to consider whether the  
“household exclusion” provision of MCL 500.3123 applies where  
a person owning damaged property is insured under a no-fault  
property protection policy that does not cover the vehicle  
that person was operating at the time of the accident.  We  
 
  
 
hold that the exclusion applies in those circumstances. We  
thus reverse the judgment of the Court of Appeals and remand  
this case to the circuit court for further proceedings.  
I. Underlying Facts and Procedural History  
Ibrahim Mroue drove a rented Ryder truck into a bakery  
that he owned, causing damage to real and personal property.  
The Ryder truck was insured under a no-fault policy issued by  
defendant Old Republic Insurance Company.  Plaintiff State  
Farm Fire and Casualty Company, the insurer of the real  
property, paid Mroue for the damages.  As Mroue’s subrogee,  
State Farm filed this action seeking indemnification from Old  
Republic for the amount that State Farm had paid to Mroue.  
A 
no-fault 
insurer’s 
liability 
to 
pay 
property 
protection  
benefits to its insured is subject to exceptions, including  
MCL 
500.3123(1)(b), 
the 
“household 
exclusion,” 
which 
provides:  
(1)  Damage to the following kinds of property  
is excluded from property protection insurance 
benefits:  
* * *  
(b) 
Property owned by a person named in a  
property protection insurance policy, the person’s 
spouse or a relative of either domiciled in the 
same household, if the person named, the person’s 
spouse, or the relative was the owner, registrant, 
or operator of a vehicle involved in the motor  
vehicle accident out of which the property damage  
arose. [Emphasis added.]  
The circuit court granted summary disposition for Old  
Republic on the ground that Mroue, the owner of the real  
2  
property, was a named insured in the Old Republic policy.  
Thus, since Mroue could not recover, State Farm could not  
recover as his subrogee.  
The Court of Appeals reversed,1 holding that the  
exclusion in MCL 500.3123(1)(b) did not apply because Mroue  
was not a named insured in the Old Republic policy.  Old  
Republic appealed, and we remanded to the Court of Appeals for  
reconsideration.  Our order directed the Court to consider  
whether MCL 500.3123(1)(b) excluded coverage only if a  
property protection insurance policy covered a “vehicle  
involved in the motor vehicle accident out of which the  
property damage arose,” or if the statute precluded coverage  
regardless of whether the vehicle insured under a property  
protection insurance policy was involved in the accident.2  
On remand, the Court of Appeals again reversed.  It  
concluded that the phrase “by a person named in a property  
protection insurance policy” refers to the policy on the  
vehicle or vehicles involved in the accident.  The Court  
stated that the use of the article “a” was not significant and  
that 
the 
grammatical 
construction of the sentence dictated the  
use of the article “a.”3  
1 234 Mich App 465; 595 NW2d 149 (1999).  
2 461 Mich 928 (1999).  
3 242 Mich App 105, 109; 617 NW2d 715 (2000).  
3  
II. Standard of Review  
This case requires us to ascertain the meaning and proper  
application of MCL 500.3123(1)(b).  Issues of statutory  
interpretation are questions of law that we review de novo.  
Oade v Jackson Nat’l Life Ins Co, 465 Mich 244, 250; 632 NW2d  
126 (2001); Donajkowski v Alpena Power Co, 460 Mich 243, 248;  
596 NW2d 574 (1999).  
III. Principles of Statutory Interpretation  
When interpreting statutory language, we must ascertain  
the legislative intent that may reasonably be inferred from  
the words expressed in the statute.  Wickens v Oakwood  
Healthcare System, 465 Mich 53, 60; 631 NW2d 686 (2001).  When  
the Legislature has unambiguously conveyed its intent in a  
statute, the statute speaks for itself, and judicial  
construction is not permitted.  Huggett v Dep’t of Natural  
Resources, 464 Mich 711, 717; 629 NW2d 915 (2001);  
Donajkowski, supra at 248. 
Because the proper role of the  
judiciary is to interpret and not to write the law, courts do  
not have authority to venture beyond the unambiguous text of  
a statute.  
Courts must give effect to every word, phrase, and clause  
in a statute and avoid an interpretation that would render any  
part of the statute surplusage or nugatory.  Wickens, supra at  
60.  Further, we give undefined statutory terms their plain  
4  
 
 
 
and 
ordinary 
meanings.  Donajkowski, supra at 248-249; Oakland  
Co Rd Comm’rs v Michigan Property & Casualty Guaranty Ass’n,  
456 Mich 590, 604; 575 NW2d 751 (1998).  
IV. Analysis  
MCL 
500.3123(1)(b) 
excludes 
property 
damage 
from 
no-fault  
property protection coverage if the property owner, the  
person’s spouse, or a relative of either residing in the same  
household, is “named in a property protection insurance  
policy” and was “the owner, registrant, or operator of a  
vehicle involved” in the accident. Contrary to the Court of  
Appeals decision and the dissent’s contention, the statute  
does not require that the individual be named in a property  
protection insurance policy covering “a vehicle involved in  
the motor vehicle accident out of which the property damage  
arose.” 242 Mich App 109. Rather, the plain meaning of MCL  
500.3123(1)(b) indicates that if Mroue was named in a property  
protection insurance policy and was the “operator of a vehicle  
involved” in the accident, coverage for damage to his property  
would be excluded.  Whether the no-fault policy covered a  
vehicle involved in the accident is not relevant under the  
plain language of the statute.  Therefore, if Mroue was named  
in a no-fault policy covering, for example, a personal  
vehicle, the statute would exclude property protection  
coverage.  Stated another way, MCL 500.3123(1)(b) allows a  
5  
 
 
 
party in Mroue’s circumstances to recover from the rental  
vehicle’s insurer only if he was not named in a no-fault  
policy.  
Like the Court of Appeals, our dissenting colleagues  
would essentially rewrite the statutory phrase “named in a  
property protection insurance policy” to state, “named in the  
property 
protection 
insurance policy.”  Thus, the dissent does  
not give effect to the distinct meanings of the words “a” and  
“the.”  In Robinson v Detroit, 462 Mich 439, 461-462; 613 NW2d  
307 (2000), we overruled Dedes v Asch, 446 Mich 99; 521 NW2d  
488 (1994), an earlier case that had misconstrued “the” to  
mean “a.” We explained in Robinson that  
(1) common English usage,  
(2) the rules of statutory construction enacted by 
our Legislature,4 and  
(3) the assumption of legislator competence and 
comprehension that all courts should apply to acts of the 
Legislature,  
make clear that a difference exists between the indefinite  
article “a” and the definite article “the.”5  We presume that  
4 See, e.g., MCL 8.3a.  
5 
 The following passage from Hagerman v Gencorp  
Automotive, 457 Mich 720, 753-754; 579 NW2d 347 (1998) 
(Taylor, J., dissenting), reflects the heart of the Robinson  
position:  
Traditionally in our law, to say nothing of 
our classrooms, we have recognized the difference 
(continued...)  
6  
 
the Legislature understood the distinct meanings of these  
terms. We are not free to conflate their meanings.  
The Court of Appeals and the dissent’s reasoning that the  
grammatical construction of the sentence in the statute  
mandated the use of “a” instead of “the” is flawed.  The  
Legislature chose the specific construction of the sentence  
and was not bound by any particular language or structure.  If  
the Legislature had intended to use the definite article “the”  
instead of the indefinite article “a,” it could have simply  
changed the construction of the sentence.  It is untenable  
that the Legislature intended a meaning other than that  
plainly expressed because it somehow felt itself confined to  
the particular grammatical construction utilized.  
Our 
dissenting 
colleagues 
further 
contend, 
without 
citing  
any authority, that the phrase “a person named in a . . .  
5 (...continued) 
between “the” and “a.” 
“The” is defined as  
“definite article. 1. (used, esp. before a noun, 
with a specifying or particularizing effect, as  
opposed to the indefinite article or generalizing  
force of the indefinite article a or an). . . .” 
Random House Webster’s College Dictionary, p 1382. 
Further, we must follow these distinctions between 
“a” and “the” as the Legislature has directed that 
“[a]ll words and phrases shall be construed and 
understood according to the common and approved 
usage of the language . . . .”  MCL 8.3a.  
Moreover, there is no indication that the words 
“the” and “a” in common usage meant something 
different at the time this statute was enacted . .  
. . [Emphasis in original.]  
7  
 
policy” is clearly linked to the subsequent phrase “[the]  
operator of a vehicle involved in the motor vehicle accident.”  
They contend that the text would be rendered mere surplusage  
if the above phrases were not linked.  The phrase “involved in  
the motor vehicle accident,” however, follows the term  
“vehicle” and clearly modifies that term.  Nothing in the text  
of the statute suggests that the phrase “involved in the motor  
vehicle accident” modifies the phrase “a property protection  
insurance policy.”  The dissent essentially rewrites the  
statute by reading the language “a property protection  
insurance policy” as stating “a property protection insurance  
policy covering a vehicle involved in the motor vehicle  
accident.”  
It is not the role of the judiciary to second-guess the  
wisdom of a legislative policy choice; our constitutional  
obligation is to interpret—not to rewrite—the law.  The  
Legislature apparently determined that where the household  
exclusion applies, damaged property should be covered, if at  
all, by a form of insurance other than a mandatory no-fault  
policy.  Not only does our interpretation of the statute  
comport with the plain language of the text, but it is also  
consistent with the legislative intent that may reasonably be  
inferred from the text, i.e., to preclude a person who damages  
his 
own 
property 
from 
collecting 
property 
protection 
insurance  
8  
benefits under that person’s no-fault policy. In this case,  
the property damage clearly would have been excluded if Mroue  
had been driving his own vehicle.  The result should not be  
different merely because he was driving a rented one.  
We acknowledge that our interpretation of the statute  
would allow a party in Mroue’s circumstances to recover from  
an insurer in Old Republic’s circumstances where that party  
does not have another no-fault policy, but would prevent  
recovery where he does.  While such a factor might be  
considered fortuitous, the plain language of the statute  
mandates this interpretation.  
Further, perhaps the Legislature chose to exclude these  
risks from no-fault coverage to reduce consumer premium costs  
for 
this 
mandatory 
insurance.6
 
For 
example, 
MCL 
500.3123(1)(a) 
also 
excludes 
from 
property 
protection 
insurance benefits: 
6 In Michigan Educational Employees Mut Ins Co v Morris, 
460 Mich 180, 194; 596 NW2d 142 (1999), this Court recognized 
the Legislature’s goal of rendering mandatory no-fault  
insurance affordable:  
“The no-fault insurance act was a radical  
restructuring of the rights and liabilities of 
motorists.  Through comprehensive action, the  
Legislature sought to accomplish the goal of  
providing an equitable and prompt method of  
redressing injuries in a way which made the  
mandatory insurance coverage affordable to all  
motorists.” [Quoting Tebo v Havlik, 418 Mich 350, 
366; 343 NW2d 181 (1984) (emphasis added).]  
9  
 
Vehicles 
and 
their 
contents, 
including 
trailers, operated or designed for operation upon a 
public highway by power other than muscular power, 
unless the vehicle is parked in a manner as not to 
cause unreasonable risk of the damage which  
occurred.  
Therefore, a driver must obtain motor vehicle collision  
coverage to collect benefits for property damage to the  
driver’s own vehicle.  By exempting coverage for property that  
can be insured through policies other than a mandatory no­
fault 
policy, 
the 
Legislature has, consistent with its ongoing  
efforts over the years,7 attempted to make such mandatory  
insurance affordable.  
V. Conclusion  
In these circumstances, the plain language of MCL  
500.3123(1)(b) 
limits 
no-fault 
property 
protection 
benefits 
to  
persons not named in a no-fault property protection policy.  
Because this aspect of the statute was not considered in the  
circuit court, the record was not developed regarding whether  
Mroue was named in a no-fault property protection policy other  
than the policy covering the rental truck.  Accordingly, we  
7 The Legislature made a similar effort to reduce 
mandatory insurance premiums when it revised the original no­
fault scheme, 1972 PA 294, seven years after its enactment. 
The essential insurance act, 1979 PA 145, was designed, inter 
alia, to permit certain costly coverages to be excluded by 
insurers and thus to contain premium costs.  
10  
 
 
 
 
reverse the judgment of the Court of Appeals and remand this  
case to the Wayne Circuit Court for further proceedings  
consistent with this opinion.  
WEAVER, TAYLOR, YOUNG, and MARKMAN, JJ., concurred with  
CORRIGAN, C.J.  
11  
___________________________________ 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
STATE FARM FIRE AND CASUALTY  
COMPANY, a Foreign Corporation, 
as Subrogee of IBRAHIM MROUE 
d/b/a Family Bakery,  
Plaintiff-Appellee,  
No. 117470  
OLD REPUBLIC INSURANCE COMPANY  
Defendant-Appellant.  
CAVANAGH, J. (dissenting).  
I disagree with the majority’s conclusion that the  
“household 
exclusion” provision of the no-fault act applies if  
a person is named in any no-fault property protection policy.1  
Rather, I would conclude that the provision should apply only  
when the person (or a spouse or family member) involved in an  
accident causing property damage is named in the property  
protection insurance policy covering the vehicle operated in  
the accident.  To hold otherwise elevates the literal reading  
1  MCL 500.3123(1)(b).  
of the statute into an overbroad exclusion that hinges  
recovery on the fortuitous event that an individual owns any  
other no-fault policy. Therefore, I respectfully dissent.  
In this case, the Court was called upon to determine the  
meaning of MCL 500.3123(1)(b), which provides:  
Damage to the following kinds of property is 
excluded 
from 
property 
protection 
insurance  
benefits:  
* * *  
(b) Property owned by a person named in a 
property protection insurance policy, the person's 
spouse or a relative of either domiciled in the 
same household, if the person named, the person's 
spouse, or the relative was the owner, registrant, 
or operator of a vehicle involved in the motor 
vehicle accident out of which the property damage 
arose.  
It is well settled that we must discern and give effect to the  
intent of the Legislature when applying statutes.  See Sun  
Valley Foods v Ward, 460 Mich 230, 236; 596 NW2d 119 (1999).  
First, the Court must examine the text, and, where there is no  
ambiguity, the statute must be applied as written.  See, e.g.,  
Tryc v Mich Veterans’ Facility, 451 Mich 129, 135; 545 NW2d  
642 (1996).  However, if the meaning of the statute is  
ambiguous, the plain meaning as well as the placement and  
purpose of the words in the statutory scheme must be analyzed.  
Sun Valley Foods at 237.  
2  
 
 
In this case, the majority employs a method that  
extensively analyzes the meaning of “a” in reference to “a”  
policy of insurance, without considering the practical  
consequences 
or 
the 
statutory intent.  While claiming reliance  
on the plain meaning of “a,” the majority imposes an expansive  
interpretation on the article, prohibiting recovery for  
property damage where an individual involved in the accident  
has any no-fault policy, not simply when the individual has a  
policy for the vehicle involved in the accident.  
Moreover, use of the article “a” is dictated by  
grammatical construction of the sentence and by the chance  
occurrence that the accident involved more than one vehicle  
and, thus, more than one policy, thereby precluding the use of  
“the.”  Had the Legislature intended such a broad exclusion  
simply by choosing the word “a,” the statute surely would have  
been drafted to reflect that unusual departure from the common  
purpose of “provid[ing] victims of motor vehicle accidents  
assured, adequate, and prompt reparation for certain economic  
losses.” McKenzie v Auto Club Ins Ass’n, 458 Mich 214, 229,  
n 3; 580 NW2d 424 (1998).  I am unconvinced that the use of  
the word “a” in the statute carries such a broad significance,  
and I am instead persuaded that the exclusion is intended to  
apply only to policies insuring vehicles involved in the  
accident.  
3  
 
The 
majority 
correctly 
acknowledges 
our 
duty to  
reasonably 
infer 
legislative intent from the text of statutes.  
Unfortunately, the Court fails in this duty by proclaiming  
irrelevant a portion of the statutory text it would prefer to  
ignore.  
Whether the no-fault policy covered a vehicle 
involved in the accident is not relevant under the  
plain language of the statute. [Slip op, p 5.]  
To the contrary, the text of the statute excludes coverage  
only for “[p]roperty owned by a person named in a property  
protection insurance policy . . . if the person named . . .  
was the owner, registrant or operator of a vehicle involved in  
the accident . . . .”  MCL 500.3123(1)(b).  Though not  
entirely without ambiguity, the statute clearly links “a  
person named in a . . . policy” with “the operator of a  
vehicle 
involved 
in 
the accident” and, thus, excludes coverage  
only when the operator has a policy on the vehicle or vehicles  
involved in the accident.  Otherwise, the text would be  
rendered mere surplusage.  To declare “not relevant” a portion  
of a statute that would negate its conclusion illustrates the  
majority’s excessive reliance on ambiguous terms at the  
expense of the most reasonable interpretation.  Because the  
Court today ignores the forest for the trees, I would affirm  
the decision of the Court of Appeals.  
KELLY, J., concurred with CAVANAGH, J.  
4