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### STATE OF MICHIGAN

COURT OF APPEALS

AUTO-OWNERS INSURANCE COMPANY,

Plaintiff/Counter-DefendantAppellant, UNPUBLISHED November 19, 2015

v No. 322635 Calhoun Circuit Court WILLIAM MORSE and CALLY MORSE, LC No. 2012-000320-CK

Defendants/CounterPlaintiffs/Third-Party PlaintiffsAppellees,

and

HUMANA HEALTH PLAN OF MICHIGAN, INC.,

Defendant,

and

ACUITY INSURANCE COMPANY,

Third-Party Defendant.

Before: S ERVITTO , P.J., and W ILDER and B OONSTRA , JJ.

P ER C URIAM

. In this interlocutory appeal, plaintiff appeals by leave grant ed 1 the trial court’s order denying its motion for summary disposition pursuant to MCR 2.11 6(C)(10) (no genuine issue of material fact) and granting summary disposition in part to defe ndants William and Cally Morse

1 Auto-Owners Ins Co v Morse , unpublished order of the Court of Appeals, entered December 16, 2014 (Docket No. 322635).-2- pursuant to MCR 2.116(I)(2) (opposing party entitled to judgmen t). 2 The trial court’s order reformed a no-fault automobile i nsurance policy issued by plain tiff to Mor-Dall Enterprises, Incorporated (Mor-Dall), a bus iness owned by defendants’ son, A aron Morse, so as to provide personal protection (PIP) benefits to defendants for injuries s ustained in an out-of-state automobile accident. We revers e and remand for further proceed ings.

I. PERTINENT FACTS AND PROCEDURAL HISTORY

While vacationing in Hawaii in 2011, defendants, passengers in a rental van, were involved in a motor vehicle accident. At the time of the accid ent, neither defendant owned a vehicle or was listed as a na med insured on a Michigan no-fault automobile insurance policy.

Nonetheless, defendants sought PIP benefits from plaintiff und er the policy it had issued to Mor-Dall; the parties refer to that policy as “Policy 42.” Aaron had obtained Policy 42, in his individual name, in June 2006 through Medler Insurance Agency. In September 2006, at Aaron’s request, the named ins ured on Policy 42 was changed to Mor-Dall.

In 2009, plaintiff canceled defenda nts’ personal no-fault poli cy at defendants’ request and transferred their names to Policy 42 as “added drivers.” The e ndorsement adding defendants as drivers also added William’s 2005 Ford Explorer as a vehicle on Policy 42. On the date of the accident, Policy 42 listed five identified drivers and seven ve hicles. Defendants were two of the listed drivers. Two of the vehicles were owned by Mor-Dall and the other five, including William’s Explorer, were privately owned. However, despite rem aining listed on the policy, it is undisputed that William sold the Explorer more than three month s before the accident. At the time of the accident, Policy 42 did not provide “broad form cov erage” to either defendant. 3

Plaintiff denied coverage to de fendants, citing the language o f Policy 42. “SECTION II – PERSONAL INJURY PROTECTION” of the “no-fault insurance endorsem ent” section of Policy 42 provides in relevant part:

1. COVERAGE

Subject to the provisions of this endorsement and of the policy to which this endorsement is attached, we will pay personal injury protection benefits to or on behalf of an injured person for accidental bodily injury arisin g out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle, subject to the provisions of Ch apter 31 of the Michigan Insuran ce Code.

2 Defendant Humana Health Plan of Michigan, Incorporated and thi rd-party defendant Acuity Insurance Company are not parties to this appeal. Accordingly, this opinion will refer to William and Cally Morse as “defendants.”

3 The record reflects that a broad form coverage endorsement is commonly used in commercial automobile insurance policies where the named insured is a corp oration. Such an endorsement confers upon listed persons “named insured” status, entitling t hose persons to bodily injury and PIP coverage.-3- 2. EXCLUSIONS

We will not pay personal protecti on insurance benefits for:

* * *

d. bodily injury sustained out side of Michigan unless:

(1) the injured person was occupying the insured motor vehicle , the motor vehicle accident occurred within the United States, its territo ries, and possessions of Canada, and if other than the named insured or relative is n ot entitled to benefits as a named insured or relative in any other insurance policy providing benefits under Chapter 31 of t he Michigan Insurance Code.

(2) the injured person

(a) is a named insured unde r this insuran ce policy; or

(b) is the spouse or relat ive of such named insured.

This exclusion is consistent with MCL 500.3111, which provides:

Personal protection insurance benefits are payable for acciden tal bodily injury suffered in an accident o ccurring out of this state, if the accident occurs within the United States, its territories and possessions or in Canada, and the person whose injury is the basis of the claim was at the time o f the accident a named insured under a personal protection insurance policy, his spouse, a relative of either domiciled in the same household or an occupant of a v ehicle involved in the accident whose owner or reg istrant was insured under a pers onal protection insurance policy or has provide d security approved by the secre tary of state under subsection (4) of section 3101.

After defendants threatened to bring suit for PIP benefits, pl aintiff filed a complaint for declaratory judgment, requesting that the trial court declare t hat defendants were not entitled to PIP benefits under Policy 42. Def endants counterclaimed, in part requesting the trial court reform the policy to make them na med insureds that would theref ore be entitled to PIP benefits. 4

Plaintiff moved for summary disposition on both its declarator y judgment claim and defendants’ counterclaim pursuan t to MCR 2.116(C)(10). The tri al court denied the motion and

4 Defendants also asserted a claim for breach of contract. As d iscussed later in this opinion, defendants concede that, under Policy 42 as written, they are n ot entitled to PIP benefits for the subject accident. As a result, absent the reformation defendan ts seek, plaintiff cannot be found to have breached Policy 42 by failing to pay PIP benefits. Defend ants’ claim for breach of contract is thus dependent on the validity of t he trial court’s reformat ion of the policy.-4- instead granted partial summary disposition to defendants under MCR 2.116(I)(2). Specifically, and in reliance on Corwin v DaimlerChrysler Ins Co , 296 Mich App 242; 819 NW2d 68 (2012), the court found that Policy 42 must be reformed to make defenda nts named insureds because (1) Mor-Dall lacked an insurable interest in Policy 42, and (2) the policy impermissibly shifted plaintiff’s primary statutory bu rden for the payment of defenda nts’ PIP benefits. This Court granted plaintiff’s appli cation for leave to appeal.

II. STANDARD OF REVIEW

We review de novo a trial court’s ruling on a motion for summa ry disposition under MCR 2.116(C)(10). “Equitable issu es, such as arguments for . . . reformation, are also reviewed de novo.” Kaftan v Kaftan , 300 Mich App 661, 665; 834 NW 2d 657 (2013). Likewise, whethe r one has an “insurable interest” is a question of law that we re view de novo. Morrison v Secura Ins , 286 Mich App 569, 572; 781 NW2d 151 (2009).

III. ANALYSIS

At the outset, we reject plain tiff’s unpreserved argument that defendants, as non-parties to Policy 42, lacked standing to request reformation of the pol icy. In initiating this action, plaintiff identified defendants as named parties to the action, and requested that the trial court declare it not to be responsible for the payment of PIP benefit s to defendants under Policy 42. Defendants’ future conduct in pursuing PIP benefits would be gu ided by the result of this declaratory action. Accordingly, the trial court was entitled to declare the rights and responsibilities of all parties under the policy, including ref orming the policy if appropriate. See Allstate Ins Co v Hayes , 442 Mich 56, 61, 69-70; 499 NW2d 743 (1993); MCR 2.605. An a ctual controversy thus existed between the parties, and we decline to reverse the trial court on standing grounds. See Lansing Schools Educ Ass'n v Lansing Bd of Educ , 487 Mich 349, 372; 792 NW2d 686 (2010).

Defendants concede that they are not entitled to PIP benefits under Policy 42 as written. Therefore, the sole issue is whether the trial court erred in r eforming the policy. We conclude that it did. “An automobile insurance policy may be reformed a s a result of fraud, mutual mistake, or inequitable conduct.” Liberty Mut Ins Co v Mich Catastrophic Claims Ass’n , 248 Mich App 35, 47; 638 NW2d 155 (2001). 5 Additionally, in Corwin , 296 Mich App at 247, this Court held that the no-fault insurance policy at issue in that case required reformation because

5 The trial court declined to grant summary disposition under MC R 2.116(C)(10) on grounds of mutual mistake, finding that a question of fact existed in that respect. Although an argument to the contrary was advanced in plaintiff’s application for leave to appeal, plaintiff’s brief and reply brief advance no such argument. Accordingly, we deem any issue related to mutual mistake abandoned for purposes of this appeal and decline to address it

. Prince v MacDonald , 237 Mich App 186, 197; 602 NW2d 834 (1999) (“It is axiomatic that where a party fails to brief the merits of an allegation of error, the issue is deemed abandoned by thi s Court.”). Defendants did not allege before the trial court th at the policy should be reforme d on the grounds of fraud or inequitable conduct.-5- (1) as written, the policy was void since the na med insured lac ked an “insurable interest”; and (2) the policy as written allowed the insurer to “avoid or shift it s statutory primary responsibility for PIP benefits.” This Court t hus found that the policy at issue in Corwin violated public policy and the legislative intent behind the no-fault act, see MCL 500.311 4. Id

. at 261-263.

We hold that the trial court erred in concluding that Mor-Dall lacked an insurable interest in Policy 42. Mor-Dall was stat utorily obligated to carry no-f ault insurance with respect to the two insured vehicles owned by the corporation. See MCL 500.310 1(1). By paying insurance premiums to plaintiff for these two vehicles, Mor-Dall received not only the benefit of complying with this statutory mandate, but received coverage fo r property damage and residual liability arising from the use of these two vehicles. Further, the policy provided for PIP benefits relating to bodily injury resulting from the use of these two v ehicles. Pursuant to the policy language, Mor-Dall also received coverage for property damage a nd residual liability involving the five listed privately owned vehicles, and PIP benefits were available for bodily injury arising out of the use of thos e five vehicles.

Defendants appear to argue that Mor-Dall lacked an insurable i nterest because defendants were not eligible for PIP benef its under the particular circums tances of this accident. However, “[A]n ‘insurable interest’ . . . can be any kind of benefit fro m the thing so insured or any kind of loss that would be suffered by its damage or destruction.” Corwin , 296 Mich App at 257-258 (quotation marks and citation om itted). Mor-Dall received seve ral types of coverages, applicable in several different circumstances, as a result of its payment of insurance premiums to plaintiff. By contrast, in Corwin , the named insured, a corporation, lacked any insurable interest in the nofault policy, i.e., absent reformation, there was no situation in which the defendant-insurer would be liable for the payment of pe rsonal protection, property prot ection, or residual liability benefits. Id . at 258. Defendants also place great weight on the fact that, as a corporation, Mor-Dall cannot suffer bodily injury. Id . at 259. While this is true, it does not necessarily follow t hat Mor-Dall received no benefit from its payment for PIP coverage. On the contrary, as discussed, PIP benefits were available to occupa nts of the listed vehicles if they were involved in an accident. In this case, however, defendants were not in a listed vehicle when injured and were out of state at the time. Coverage in those circumstances was excluded by P olicy 42; however, the presence of an exclusion does not equate t o the lack of an insurable int erest, provided that there are some situations (as indeed there are here) where plaintiff would be required to pay PIP benefits on behalf of Mor-Dall. See id . at 258. Accordingly, the trial court erred in concluding tha t reformation of Policy 42 was requi red because Mor-Dall lacked a n insurable interest.

The trial court also erred in concluding that Policy 42 shifte d responsibility for the payment of PIP benefits from plaintiff to the Assigned Claims F acility. Benefits from the Assigned Claims Facility are only available for accidents occur ring in Michigan, MCL 500.3172(1); thus, the Assigned Claims Facility has little bearing on the instant question. Moreover, even if the accident had occurred in Michigan, Policy 42 would not necessarily have shifted liability from plaintiff to the Assigned Claims Facilit y. In that event, PIP benefits would have been available under the policy if at the time of the acci dent defendants had occupied a vehicle listed in Policy 42. I f, on the other hand, defendants had been injured in a Michigan accident while occupying a vehicle not listed in Policy 42, the y indeed then would only have been eligible for PIP benefits from the Assigned Claims Facilit y. See MCL 500.3114. However, this fact does not require reformation of the policy. At the t ime of the accident, defendants did-6- not own a motor vehicle and, therefore, were not required to ca rry no-fault insurance. MCL 500.3101(1). The described situation is therefore one to w hich the Assigned Claims Facility is expressly intended to apply. MCL 500.3172(1) (An i ndividual is entitled to PIP benefits from the Assigned Claims Facility “if no personal prot ection insurance is applicable to the injury”). 6 For all of these reasons, Policy 42 did not impermissibly shi ft plaintiff’s statutory responsibility to the Assi gned Claims Facility.

We accordingly reverse the trial court’s partial grant of summ ary disposition in favor of defendants. 7 We remand for further proceedings consistent with this opinio n. We do not retain jurisdiction.

/s/ Deborah A. Servitto /s/ Kurtis T. Wilder /s/ Mark T. Boonstra

6 By contrast, in Corwin , this Court noted that the insurance policy, as written, was v oid, and absent reformation the plainti ff would have been in violation o f his statutory duty to maintain nofault insurance, which he had at tempted to comply with by purch asing insurance from the defendant. See Corwin , 296 Mich App at 260. No such concer n exists in the instant c ase.

7 As a result, we need not address plaintiff’s argument that the trial court abused its discretion in denying its motion for reconsideration.