If this opinion indicates that it is “FOR PUBLICATION,” it is subject to 

revision until final publication in the Michigan Appeals Reports.

S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

WILLIAM AHEE,

Plaintiff-Appellee,

UNPUBLISHED

March 19, 2019

v No. 341072

Oakland Circuit Court

CITY OF NOVI, NOVI SENIOR 

TRANSPORTATION, and TERRY EASTIN,

LC No. 2016-152483-NI

Defendants,

and

AUTO-OWNERS INSURANCE COMPANY,

Defendant/Cross-Plaintiff-Appellee,

and

US SPECIALTY INSURANCE COMPANY,

Defendant/Cross-DefendantAppellant.

Before: GLEICHER, P.J., and K. F. KELLY and LETICA, JJ.

PER CURIAM.

In this priority dispute arising under the no-fault act, MCL 500.3101 et seq., US Specialty 

Insurance Company (US Specialty) appeals by leave granted1 an order granting summary 

disposition in favor of Auto-Owners Insurance Company (Auto-Owners) based upon the trial 

 1 Ahee v City of Novi, unpublished order of the Court of Appeals, entered April 11, 2018 (Docket 

No. 341072).
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court’s conclusion that US Specialty was the insurer of highest priority under MLC 500.3114(2). 

Because US Specialty’s insured, the City of Novi (the City), was not in the business of 

transporting passengers, we agree that the trial court erred by granting Auto-Owners’ motion for 

summary disposition. Consequently, we reverse the trial court’s order and remand for entry of 

an order granting summary disposition in favor of US Specialty on the issue of priority.

I. BACKGROUND

Through its Parks, Recreation, and Cultural Services Department, the City operates the

Older Adult Services Transportation Program (OASTP). The OASTP provides low-cost 

transportation services to medical appointments and social activities for City residents 55 years 

of age and older, as well as younger residents with limiting disabilities. The OASTP receives 

funding from the City’s general fund; the Parks, Recreation, and Cultural Services budget; 

Suburban Mobility Authority for Regional Transportation; St. John Providence Hospital; vehicle 

advertising; and the fare box. Passengers schedule transportation in advance and are charged a 

fee of $3 or $5 depending on the location of the drop-off. Rides to certain designated locations 

within the City are provided free of charge.

On the morning of July 30, 2015, Terry Eastin was operating a Ford E-350 van equipped 

with a wheelchair lift, which was owned by the City and dedicated solely to OASTP use. Eastin 

picked up William Ahee, who was confined to a wheelchair, without incident. After dropping 

off another passenger, Eastin drove Ahee to St. John Providence Hospital for a doctor 

appointment. Eastin parked the van, lowered the wheelchair lift to the ground, and unfastened 

the straps that secured Ahee’s wheelchair in place. Forgetting that the wheelchair lift remained 

on the ground, Eastin pushed Ahee’s wheelchair out of the van, causing Ahee and the wheelchair 

to fall to the ground. Ahee was injured in the fall.

At the time of this incident, Ahee owned a 2010 Ford Focus that was insured by AutoOwners.2

 Ahee sought no-fault benefits, but Auto-Owners determined that it was not the insurer 

of highest priority because Ahee was a passenger in a motor vehicle in the business of 

transporting passengers at the time he was injured. Ahee initiated this lawsuit, naming both US 

Specialty and Auto-Owners as defendants with respect to his claim for no-fault benefits. After 

discovery, both insurers moved for summary disposition concerning the issue of priority. The 

trial court determined that US Specialty was the insurer of highest priority under MCL 

500.3114(2) and, therefore, granted Auto-Owners’ dispositive motion.

 2 Auto-Owners defended the action below, but asserted in its answer to Ahee’s complaint and its 

motion for summary disposition that Home-Owners Insurance Company issued Ahee’s insurance 

policy and was the proper party. By stipulation of the parties, the trial court ordered that the case 

caption be amended to include Home-Owners Insurance Company, that Auto-Owners be 

dismissed, and that service of the complaint upon Auto-Owners constituted service upon HomeOwners Insurance Company. However, the trial court continued to refer to Ahee’s insurance 

company as Auto-Owners in its subsequent orders and the parties continued this naming 

convention on appeal. For the sake of consistency, we will likewise refer to Auto-Owners as 

plaintiff’s insurance company.
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II. STANDARD OF REVIEW

This Court reviews rulings on summary disposition motions de novo. Corwin v 

DaimlerChrysler Ins Co, 296 Mich App 242, 253; 819 NW2d 68 (2012). The trial court granted 

summary disposition in favor of Auto-Owners pursuant to MCR 2.116(C)(10), which is 

appropriate “if there is no genuine issue regarding any material fact and the moving party is 

entitled to judgment as a matter of law.” Dancey v Travelers Prop Cas Co, 288 Mich App 1, 7; 

792 NW2d 372 (2010) (quotation marks and citation omitted). “A genuine issue of material fact 

exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open 

an issue upon which reasonable minds might differ.” West v Gen Motors Corp, 469 Mich 177, 

183; 665 NW2d 468 (2003). “When deciding a motion for summary disposition under this rule, 

a court must consider the pleadings, affidavits, depositions, admissions, and other documentary 

evidence then filed in the action or submitted by the parties in the light most favorable to the 

nonmoving party.” Bialick v Megan Mary, Inc, 286 Mich App 359, 362; 780 NW2d 599 (2009).

Statutory interpretation is a question of law subject to de novo review. Corwin, 296 Mich 

App at 253. This Court’s main goal in interpreting statutes is to give effect to the intent of the 

Legislature, as discerned from the common and ordinary meaning of the language of the statute 

itself. Joseph v Auto Club Ins Ass’n, 491 Mich 200, 205-206; 815 NW2d 412 (2012). “If the 

statutory language is unambiguous, we presume that the Legislature intended the meaning that it 

clearly expressed, and further construction is neither required nor permitted.” Id. at 206. 

“However, if reasonable minds can differ regarding the statute’s meaning, judicial construction is 

appropriate.” Gauntlett v Auto-Owners Ins Co, 242 Mich App 172, 177; 617 NW2d 735 (2000).

III. DISCUSSION

A. “IN THE BUSINESS OF TRANSPORTING PASSENGERS”

Unless an exception applies, MCL 500.3114(1) provides that an injured party must turn 

to his or her own insurer for payment of no-fault benefits, regardless of whether the injured 

party’s insured vehicle was involved in the accident. Farmers Ins Exch v AAA of Mich, 256 

Mich App 691, 695; 671 NW2d 89 (2003). At issue in this appeal is the exception set forth in 

MCL 500.3114(2), which provides, in pertinent part, “A person suffering accidental bodily 

injury while an operator or a passenger of a motor vehicle operated in the business of 

transporting passengers shall receive the personal protection insurance benefits to which the 

person is entitled from the insurer of the motor vehicle.” US Specialty first argues that MCL 

500.3114(2) does not apply to this case because, as a municipality, the City is not in any 

“business,” let alone the “business of transporting passengers.” We disagree.

In support of its position,3 US Specialty relies primarily on opinions from this Court that 

are either unpublished or published before November 1, 1990, neither of which is binding upon 

 3 We note that US Specialty also cites a number of cases involving whether a government actor 

was involved in a proprietary function for purposes of determining whether liability could be 

imposed under the government tort liability act (GTLA), MCL 691.1401 et seq. See, e.g., Ward 
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this Court. MCR 7.215(C)(1) and (J)(1). The only binding authority cited by US Specialty with 

respect to this issue is Farmers Ins Exch, which recognized that dicta in an earlier case suggested 

that MCL 500.3114(2) “relate[s] to ‘commercial’ situations.” Farmers Ins Exch, 256 Mich App 

at 698 & n 3, quoting State Farm Mut Auto Ins Co v Sentry Ins, 91 Mich App 109, 114; 283 

NW2d 661 (1979). The Court further observed in a footnote that a more recent panel of this 

Court had found, in an unpublished opinion, that the term “business” signified a “for-profit 

endeavor.” Farmers Ins Exch, 256 Mich App at 701 n 5, citing Lampman v Workman, 

unpublished per curiam opinion of the Court of Appeals, issued March 22, 2002 (Docket No. 

225743). But despite acknowledging these occasional references to commercial situations and 

for-profit endeavors, the Farmers Ins Exch Court explicitly adopted what it coined the “primary 

purpose/incidental nature test” developed in Thomas v Tomczyk, 142 Mich App 237; 369 NW2d 

219 (1985), as the appropriate standard for determining whether a vehicle was operated in the 

business of transporting passengers for purposes of MCL 500.3114(2). Farmers Ins Exch, 256 

Mich App at 701.

In Thomas, 142 Mich App 237, this Court considered the meaning of the phrase “in the 

business of transporting passengers.” The case involved a priority dispute with respect to nofault benefits owed to two students who suffered injuries while passengers in a vehicle driven by 

a third student and insured by Michigan Educational Employees Mutual Insurance Company 

(MEEMIC). Id. at 239. The passengers each paid the driver $25 for a ride to their home town 

during the holidays. Id. The passengers sought no-fault benefits from MEEMIC, arguing that 

they were passengers in a motor vehicle operated in the business of transporting passengers. Id. 

at 239-240. The trial court dismissed their claims against MEEMIC, reasoning that

it wasn’t the primary function of the driver to carry passengers for hirer [sic], he’s 

a student, as far as I can tell. And it is not the primary purpose of the vehicle to 

carry passengers for hirer [sic], it just happened that incidental to coming home, it 

was convenient to take on passengers . . . . [Id. at 240 n 2 (quotation marks 

omitted; alterations in original).]

Without detailed analysis, this Court affirmed the dismissal, concluding that “college students 

[who] pay other college students for the privilege of carpooling home for the holidays . . . [are] 

not passengers of ‘a motor vehicle operated in the business of transporting passengers’.” Id. at 

241-242. 

As already noted, the Farmers Ins Exch Court later approved of and adopted the analysis 

of the trial court in Thomas, concluding that it accurately encompassed the legislative intent of 

MCL 500.3114(2). Farmers Ins Exch, 256 Mich App at 700-701. Importantly, neither the 

statutory language of MCL 500.3114(2) nor the opinions in Farmers Ins Exch or Thomas

mandate that the vehicle in question must be operated by a commercial or for-profit entity. 

 

v Mich State Univ (On Remand), 287 Mich App 76; 782 NW2d 514 (2010); Hyde v Univ of Mich 

Bd of Regents, 426 Mich 223; 393 NW2d 847 (1986). These cases are inapposite because this 

case does not turn on the question of governmental tort immunity or whether the government is 

engaged in activity for the primary purpose of producing pecuniary profit.
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Instead, the relevant inquiries under the primary purpose/incidental nature test are (1) whether 

the transportation of passengers is the primary purpose for which the vehicle is used and (2) 

whether the transportation of passengers is a primary, as opposed to incidental, component of the 

overall business or activity of the operator. See id. at 700-702 (finding that children injured in 

daycare provider’s vehicle were not entitled to coverage under MCL 500.3114(2) where vehicle 

was primarily used as daycare provider’s personal vehicle and transportation of children was an 

incidental or small part of daycare business); Thomas, 142 Mich App at 240 n 2, 241-242 

(finding that college student who drove other students home was not in the business of 

transporting passengers because neither the student nor the vehicle were primarily engaged in 

transporting passengers for hire and carpool arrangement was undertaken as a matter of 

convenience).

This conclusion is consistent with the well-established principle that “[a] court must give 

effect to every word, phrase, and clause, and avoid an interpretation that renders any part of a 

statute nugatory or surplusage.” Cadwell v Highland Park, 324 Mich App 642, 651; ___ NW2d 

___ (2018) (quotation marks and citation omitted; alteration in original). When a person is 

injured in a vehicle operated in the business of transporting passengers, MCL 500.3114(2) 

provides that the injured party must turn to the insurer of the vehicle for no-fault benefits, unless 

the person was a passenger in a specified type of vehicle.4 Among the vehicles that are excepted 

from MCL 500.3114(2) are buses operated by or providing service to a nonprofit organization. 

MCL 500.3114(2)(d). If we construed the relevant language in the manner urged by US 

Specialty, MCL 500.3114(2)(d) would be rendered nugatory because no vehicle operated by a 

non-profit entity would trigger coverage under MCL 500.3114(2) and, thus, no exception for 

such buses would be necessary. Similarly, the exception for buses operating under a government 

sponsored transportation program, MCL 500.3114(2)(c), would be surplusage if a government 

entity could never be “in the business of transporting passengers.” Because we are charged with 

avoiding such an interpretation, Cadwell, 324 Mich App at 651, we reject US Specialty’s 

contention that a vehicle must be operated by a commercial, for-profit entity in order to trigger 

an insurer’s priority under MCL 500.3114(2).

B. PRIMARY PURPOSE/INCIDENTAL NATURE TEST

Turning to application of the primary purpose/incidental nature test, the trial court 

determined that the sole use of the vehicle was for transporting passengers, and US Specialty 

does not appear to dispute that conclusion. Indeed, the evidence demonstrates that there is no 

genuine issue of fact on this point. The OASTP operates a fleet of several vehicles, and the City 

admitted that the Ford E-350 at issue “was obtained for the purpose of transporting eligible City 

residents in connection with the [OASTP].”

US Specialty’s claim of error arises from the trial court’s analysis of the second prong of 

the primary purpose/incidental nature test, which examines whether the transportation of 

 4 At the time Ahee was injured, MCL 500.3114(2) had six listed exceptions. It has since been 

amended by 2016 PA 347, effective March 21, 2017, to include a seventh exception for 

passengers in a “transportation network company vehicle.” MCL 500.3114(2)(g).
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passengers is a primary or incidental component of the operator’s overall business or activities. 

See Farmers Ins Exch, 256 Mich App at 700-702. In analyzing this inquiry, the trial court relied 

exclusively on this Court’s opinion in State Farm Mut Auto Ins Co v Progressive Mich Ins Co, 

unpublished per curiam opinion of the Court of Appeals, issued September 29, 2005 (Docket No. 

262833). In that case, the defendant insured a vehicle owned by an adult daycare. Id. at 1. The 

van was equipped to transport a wheelchair-bound passenger and five or six other passengers. 

Id. The daycare used the van to transport clients between their homes and the daycare facility, as 

well as for field trips. Id. After a client was injured in the van, a priority dispute arose between 

plaintiff—an insurance carrier that issued a policy to a resident of the client’s household—and 

defendant, the insurer of the van. Id. at 1-2. This Court determined that defendant was the 

insurer of highest priority under MCL 500.3114(2) because the insured daycare purchased the 

van for the specific purpose of transporting its clients and, “[w]hile transporting passengers was 

not the primary purpose of [the insured], it was a significant enough component for [the insured] 

to provide the transportation in a specially equipped vehicle, owned and operated by the business 

and insured according to the commercial requirements established by the Area Agency on Aging 

that referred clients to the business.” Id. at 3.

The trial court in the instant case determined that “there can be no question as to the 

second element,” because, like the van in State Farm Mut Auto Ins, the City’s transportation 

program was important enough for it to purchase and equip a vehicle for that specific purpose. 

US Specialty argues on appeal that the trial court erred by failing to recognize that the OASTP 

was but a small program run by a single department of the City’s large organizational structure. 

US Specialty maintains that the transportation services the City facilitates through the OASTP 

are incidental to the City’s main function of operating as a government entity. We agree.

We acknowledge that there are certain similarities between the transportation service 

provided by the OASTP and the transportation provided by the daycare provider in State Farm

Mut Auto Ins Co, unpub op at 1. Nonetheless, this case is distinguishable in that the daycare 

provider’s overall business was centered on providing services to adults who were disabled or 

had other special needs. Id. The transportation service was an important part of the overall 

business because it enabled the daycare’s clientele to travel to and from the facility and attend 

field trips. Id. In contrast, the City’s operations did not solely cater to the elderly or disabled 

residents the OASTP served, nor were the OASTP’s services necessary to the City’s operations. 

According to its charter, 

The City and its officers shall have power to exercise all municipal powers 

in the management and control of municipal property and in the administration of 

the municipal government, whether such powers be herein expressly enumerated 

or not; to do any act to advance the interests of the City, good government and 

prosperity of the municipality and its inhabitants; to make and enforce all laws, 

ordinances and resolutions which shall be necessary and proper for carrying into 

execution the foregoing powers and all other powers vested by the Constitution 

and Statutes of the State of Michigan in cities, except where forbidden, or where 

the subject is covered exclusively by a general law. The City and its officers 

should have power to provide for the public peace and health and for the safety of 

persons and property and to provide that the levy[,] collection and return of state, 

county, and school taxes shall be in conformity with the general laws of the state 
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except that the preparation of the assessment roll, the meeting of the Board of 

Review, and the confirmation of the assessment roll shall be as provided by this 

Charter. [Novi Charter, § 2.1 (alteration in original).]

In light of the foregoing, we agree with US Specialty’s contention that the City’s primary 

function is to provide for the health, safety, and welfare of the municipality and its residents. 

While the OASTP may fit within the large scope of that function, it serves only a fraction of the 

City’s residents and accounts for an insignificant portion of the City’s activities.

Accordingly, because transportation of passengers was incidental to the City’s primary 

function, we conclude that the City is not in the business of transporting passengers for purposes 

of MCL 500.3114(2).5 Having so concluded, we need not address US Specialty’s remaining 

argument regarding the applicability of exceptions to MCL 500.3114(2).

IV. CONCLUSION

In sum, because the transportation of passengers was incidental to the City’s overall 

activity of governing, Ahee was not injured as a passenger in a vehicle operating in the business 

of transporting passengers. Therefore, US Specialty is not the insurer of highest priority under 

MCL 500.3114(2). Instead, Auto-Owners, as Ahee’s personal insurance carrier, is obligated to 

pay any no-fault benefits to which he may be entitled as a result of his July 30, 2015 injuries 

pursuant to MCL 500.3114(1). We reverse the trial court’s order granting Auto-Owners’ motion 

for summary disposition and remand for entry of an order granting summary disposition in favor 

of US Specialty on the issue of priority. As the prevailing party, US Specialty may tax costs. 

MCR 7.219. We do not retain jurisdiction.

/s/ Kirsten Frank Kelly

/s/ Anica Letica

 5 As US Specialty observed at oral argument, we acknowledge that this case is factually similar 

to the circumstances involved in a recent opinion issued by this Court. See MIC Gen Ins Corp v 

Mich Muni Risk Mgt Auth, unpublished per curiam opinion of the Court of Appeals, issued 

October 18, 2018 (Docket No. 341766). In that case, a passenger in a medical transportation 

vehicle owned and operated by the Mecosta County Commission on Aging (MCCOA) was 

injured in a motor vehicle accident. This Court determined that the transportation of passengers 

was “a primary and not incidental component of MCCOA’s mission, and MCL 500.3114(2) 

applies.” Id. at 6. The case at hand is distinguishable. In MIC Gen Ins Corp, this Court rejected 

arguments that focused on Mecosta County’s business activities because the MCCOA, and not 

the county, was the title owner of the vehicle in question and responsible for purchasing and 

operating the vehicles used in the transportation program. Id. at 5. Here, the City—and not the 

OASTP—was the title owner of the van and the specific entity insured by US Specialty’s policy.