Court Opinion

ID: 8214079
Source: CourtListenerOpinion
Date Created: 2022-10-14 05:06:44.164857+00
Date Added: 2024-06-11T16:42:27.030057
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                           COURT OF APPEALS

BETH BRACY,                                                      UNPUBLISHED
                                                                 October 13, 2022
              Plaintiff,

and

ZMC PHARMACY, LLC, RIVERVIEW MACOMB
HOME & ATTENDANT CARE, and MICHIGAN
SPINE AND PAIN,

              Intervening Plaintiffs,

v                                                                No. 359397
                                                                 Wayne Circuit Court
YOLANDA YVETTE NICHOLS,                                          LC No. 15-016675-NF

              Defendant,

and

FARMERS INSURANCE EXCHANGE,

              Defendant/Cross-Plaintiff-Appellant,

and

GEICO INDEMNITY COMPANY,

              Defendant/Cross-Defendant-Appellee.

Before: SWARTZLE, P.J., and CAVANAGH and REDFORD, JJ.

PER CURIAM.

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        Defendant/cross-plaintiff-appellant, Farmers Insurance Exchange (Farmers), appeals as of
right the opinion and order granting summary disposition to defendant/cross-defendant-appellee,
Geico Indemnity Company (Geico), under MCR 2.116(C)(10). We affirm.

                                 I. FACTUAL BACKGROUND

        On March 7, 2012, Geico issued an automobile insurance policy to Marcus Nichols
(Marcus). Three years later, Marcus added a 1993 Chevrolet Lumina owned by his mother,
defendant, Yolanda Nichols (Nichols), to the policy. Nichols was identified as a driver on the
policy, but she was not a named insured on the policy. Nichols was driving the Lumina when she
was involved in an automobile accident with plaintiff, Beth Bracy, a pedestrian, on August 23,
2014. Bracy sought personal protection insurance (PIP) benefits under the Michigan no-fault act,
MCL 500.3101 et seq.,1 through the Michigan Assigned Claims Plan (MACP).2 MACP assigned
the claim to Farmers, and Farmers paid Bracy PIP benefits for her accident-related injuries.

        Bracy filed a complaint against Farmers and Nichols, alleging bodily injury liability against
Nichols3, and alleging Farmers had unreasonably and unlawfully refused to pay her PIP benefits
in accordance with the no-fault act.4 Farmers filed a third-party complaint against Geico for
reimbursement under MCL 500.3172. Later, Farmers sought summary disposition against Geico,
contending Geico was highest in priority for Bracy’s benefits. Geico also filed a motion for
summary disposition against Farmers, arguing that Farmers was highest in priority for Bracy’s
benefits. The trial court granted Farmers’ motion.

        Geico appealed to this Court, which remanded to the trial court for entry of an order
granting summary disposition in favor of Geico “because GEICO was not the insurer of the owner,
registrant, or operator of the Lumina and, therefore, had no obligation to pay Bracy’s PIP benefits
under MCL 500.3115(1).” Bracy v Nichols, unpublished opinion of the Court of Appeals, issued
September 19, 2019 (Docket No. 341837), p 9. Farmers applied for leave to appeal to our Supreme
Court, which granted, in part, Farmers’ application, vacating this Court’s judgment that summary
disposition should be granted in favor of Geico and remanding the matter to the trial court for
further proceedings. Bracy v Nichols, 505 Mich 1079; 943 NW2d 117 (2020). Our Supreme
concluded that this Court “acted prematurely in deciding issues that were not addressed by the
circuit court,” and instructed that “the circuit court may, in its discretion, allow further
development of the factual record and legal arguments, including the application, if any, of Dye v
Esurance Prop & Cas Ins Co, 504 Mich 167; 934 NW2d 674 (2019), before reconsidering whether
to grant either party’s motion for summary disposition.” Id.

1
  The no-fault act was amended by 2019 PA 21 and 2019 PA 22, each effective June 11, 2019.
The parties do not dispute that the preamendment version of the act applies in this case.
2
  The MACP is administered by the Michigan Automobile Insurance Placement Facility (MAIPF),
which is a statutorily-created nonprofit association of every “self-insurer and insurer writing
insurance” in Michigan. MCL 500.3171(1).
3
  Nichols was dismissed from the lawsuit on June 7, 2017, after being indemnified by Geico.
4
  Bracy’s claims against Farmers were dismissed on November 13, 2017.

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       The trial court reinstated the case and, following additional discovery and cross-motions
for summary disposition being filed by the parties, the trial court granted summary disposition in
favor of Geico under MCR 2.116(C)(10), holding:
       There is nothing in the language of the policy declarations or the general verbiage
       to suggest intent by Marcus or Geico to make others contractual insureds.
       Appellate courts have refused to declare the named insured’s family members as
       contractual insureds under the policy. This is true even when the potential named
       insured is identified as an additional driver in the policy declarations. See
       Dobbelaere [v Auto-Owners Ins Co], 275 Mich App [527,] 534 n 3[; 740 NW2d
       503 (2007)], which stated that such a designation is “insufficient to support these
       individuals were contractually intended to be insureds under the policy for purposes
       of no-fault benefit coverage.” This is consistent with the manner in which
       “insured” is defined elsewhere in the Geico policy in this case.

              In sum, Geico is not the insurer of the owner, registrant, or operator of the
       vehicle involved in the accident, and not in the No Fault order of priority and thus,
       summary disposition should be granted in favor of Geico.

        The trial court also disagreed with Farmers’ argument that Dye made the “insurable
interest” requirement irrelevant, holding that Dye “did not address insurable interest.” And even
if it was considered, the trial court reasoned, Farmers’ argument would fail:
              Marcus Nichols had no insurable interest in the Lumina. The vehicle was
       owned, registered, operated and garaged by Yolanda Nichols. Marcus, as the
       named insured but with no insurable interest in the vehicle, has no interest in the
       property as to the existence of which he will gain benefits, or as to the destruction
       of which he will suffer loss. Therefore, Geico is not obligated to provide first party
       no-fault benefits for Bracy.

After Farmers’ motion for reconsideration was denied, this appeal followed.

                                 II. STANDARD OF REVIEW

        We review de novo a trial court’s decision on a motion for summary disposition. Varela v
Spanski, 329 Mich App 58, 68; 941 NW2d 60 (2019). A trial court may grant a motion for
summary disposition under MCR 2.116(C)(10) when the evidence, viewed in the light most
favorable to the nonmoving party, shows there is no genuine issue as to any material fact and the
moving party is therefore entitled to judgment as a matter of law. West v Gen Motors Corp, 469
Mich 177, 183; 665 NW2d 468 (2003). Similarly, “[t]he proper interpretation of a contract is also
a question of law that this Court reviews de novo.” Titan Ins Co v Hyten, 491 Mich 547, 553; 817
NW2d 562 (2012).

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                                   III. NO-FAULT COVERAGE

       Farmers contends that Nichols’ vehicle was insured under Marcus’s Geico automobile
insurance policy, and thus, Bracy was entitled to recover no-fault benefits under that policy. We
disagree.

                                    A. LAW AND ANALYSIS

        The no-fault act, MCL 500.3101, et seq., “created a compulsory motor vehicle insurance
program under which insureds may recover directly from their insurers, without regard to fault,
for qualifying economic losses arising from motor vehicle incidents.” McCormick v Carrier, 487
Mich 180, 189; 795 NW2d 517 (2010).
       Under the no-fault act, . . . and with respect to personal protection insurance (PIP)
       benefits, “an insurer is liable to pay benefits for accidental bodily injury arising out
       of the ownership, operation, maintenance or use of a motor vehicle as a motor
       vehicle, subject to the provisions of [the act].” [Henry Ford Health Sys v Esurance
       Ins Co, 288 Mich App 593, 598-599; 808 NW2d 1 (2010) (citations omitted).]

An uninsured pedestrian who suffers accidental bodily injury must seek PIP benefits from insurers
in the following order of priority:
       (a) Insurers of owners or registrants of motor vehicles involved in the accident.

       (b) Insurers of operators of motor vehicles involved in the accident.            [MCL
       500.3115(1).]

When no such insurer exists, the uninsured pedestrian may seek PIP benefits through the MACP.
Spencer v Citizens Ins Co, 239 Mich App 291, 301-302; 608 NW2d 113 (2000). The insurer
designated by the MACP is considered the insurer of last resort. Id. at 301. If an insurer of higher
priority is later identified, the appointed insurer “ ‘is entitled to reimbursement from the defaulting
insurers to the extent of their financial liability.’ ” Williams v Enjoi Transp Solutions, 307 Mich
App 182, 186; 858 NW2d 530 (2014), quoting MCL 500.3172(1).

        “An insurance policy, like other contracts, is an agreement between parties; a court’s task
is to determine what the agreement is and then give effect to the intent of the parties.” Farm
Bureau Ins Co v TNT Equip, Inc, 328 Mich App 667, 672; 939 NW2d 738 (2019). Courts should
consider an insurance contract as a whole and give meaning to all terms of the contract. Id.
Whether an insurer is an insurer of someone other than the named insured depends on the language
of the insurance policy. Dobbelaere v Auto-Owners Ins Co, 275 Mich App 527, 532-533; 740
NW2d 503 (2007).

        In this case, the trial court did not err in granting summary disposition to Geico because
Geico is not the insurer of the owner, registrant, or operator of the Lumina, and therefore, was not
obligated to pay Bracy’s PIP benefits under MCL 500.3115(1). Under the Geico policy, Marcus
is identified as the named insured; Nichols is only identified as an additional driver—not a named
insured. Nothing in the language of the insurance policy suggests an intent by Marcus, or Geico,
to make Nichols a contractual insured. This Court stated in Dobbelaere, 275 Mich App at 534 n

                                                 -4-
3, that designating a family member as an additional driver in the insurance policy is “insufficient
to support that these individuals were contractually intended to be insureds under the policy for
purposes of no-fault benefit coverage.” Accordingly, Nichols is not an insured under the policy.
        We reject Farmers’ argument that Nichols was an “insured” under the Geico policy because
she met the definition of “persons insured” as set forth in Section I. While “persons insured” does
include the policyholder’s “relatives” Nichols was not a “relative” within the contemplation of
insurance coverage. The “Definitions” set forth in Section I, include “Relative” in Paragraph 8,
which means: “a person residing with you, and related by blood . . . provided neither such relative
nor his/her spouse owns a private passenger, farm or utility auto.” While Nichols’s testimony
regarding whether she resided with Marcus at the time of the accident is contradictory, it is
undisputed that Nichols was the owner of the Lumina. Therefore, because Nichols owned a private
passenger automobile, she does not qualify under the “persons insured” section of the policy and
Geico is not responsible for Bracy’s PIP benefits.

       Further, Section II, Part 1 of Geico’s policy addresses PIP coverage:
       We will pay for personal injury protection benefits to or on behalf of each eligible
       injured person for allowable expenses, work loss and survivors’ benefits
       incurred as a result of bodily injury caused by an accident arising out of the
       ownership, operation, maintenance or use of a motor vehicle as a motor
       vehicle.

The “Definitions” section of Section II, Part 1, Paragraph 3, Subsection (c) defines an “eligible
injured person” to include “[a]ny other person who suffers bodily injury while a pedestrian
through being struck by an insured auto[.]” And Paragraph 5 proceeds to define an “insured
auto” as “an auto with respect to which you are required to maintain security under Chapter 31 of
the Michigan Insurance Code and to which the Bodily Injury liability coverage of this policy
applies and for which a specific premium is charged.” MCL 500.3101(1) mandates, with limited
exceptions not applicable here, that “the owner or registrant of a motor vehicle required to be
registered in this state maintain security for payment of benefits under personal protection
insurance and property protection insurance . . . .” But in this case, it is undisputed that Marcus
was neither the owner nor registrant of the Lumina; thus, the Lumina was not an auto for which he
was “required to maintain security under Chapter 31 of the Michigan Insurance Code[.]”
Accordingly, Bracy was not an “eligible injured person” under the terms of the Geico policy.
       In summary, the trial court did not err in granting summary disposition in favor of Geico.
Nichols was not an “insured” under the Geico policy and Bracy was not an “eligible injured
person” under the Geico policy.

                                  IV. INSURABLE INTEREST

       Farmers also argues that Geico is responsible for Bracy’s requested PIP benefits because
Nichols successfully maintained the security required by MCL 500.3101. We disagree.

                                   A. LAW AND ANALYSIS

        It is well established that the named insured must have an “ ‘insurable interest’ to support
the existence of a valid automobile liability insurance policy.” Smith v Allstate Ins Co, 230 Mich

                                                -5-
App 434, 439-440; 584 NW2d 355 (1998), citing Clevenger v Allstate Ins Co, 443 Mich 646, 656-
661; 505 NW2d 553 (1993). “An insurable interest in property is broadly defined as being present
when the person has an interest in property, as to the existence of which the person will gain
benefits, or as to the destruction of which the person will suffer loss.” Madar v League Gen Ins
Co, 152 Mich App 734, 738; 394 NW2d 90 (1986). In Clevenger, our Supreme Court held that
the seller of a vehicle had an insurable interest in that vehicle because she voluntarily remained as
the insuring registrant of the vehicle. Clevenger, 443 Mich at 660-661. In Smith, we held that the
seller of a vehicle did not have an insurable interest in that vehicle because he removed every
possible indicator of his ownership of the vehicle. Smith, 230 Mich App at 440-441. In short,
“there simply [we]re no facts from which we could infer that [the seller] voluntarily remained the
insuring registrant.” Id. at 441 (internal quotation marks omitted). Michigan caselaw therefore
establishes the principle that (1) a named insured must have an insurable interest to support the
existence of a valid insurance policy, and (2) that an insurable interest can be deduced from the
factors indicating ownership of, or the retention of registrant capacity over, the vehicle at issue.

        The question essentially boils down to whether Marcus had an insurable interest in the
Lumina. Farmers frames the question in terms of whether we must find, under Dye v Esurance
Prop & Cas Ins Co, 504 Mich 167; 934 NW2d 674 (2019), that the Geico insurance policy was in
effect for the Lumina. But the answer to that question depends on whether Marcus had an insurable
interest in the Lumina because the policy in question belonged only to Marcus, not Nichols, who
was the sole owner and operator of the Lumina.

        Unlike in Clevenger, Marcus had no insurable interest in the Lumina because the Lumina
was solely owned and operated by Nichols. And there was neither evidence that Marcus had use
of the Lumina such as to be considered an owner under MCL 500.3101, nor that he intended to
acquire the vehicle. As in Smith, Marcus lacked the status of registrant regarding the Lumina;
indeed, he had no relation at all to the Lumina. The Lumina’s existence did not afford Marcus any
benefits, and the destruction of the Lumina would not have caused him any loss. See Madar, 152
Mich App at 738. The trial court summarized the issue, explaining:
       Marcus Nichols had no insurable interest in the Lumina. The vehicle was owned,
       registered, operated and garaged by Yolanda Nichols. Marcus, as the named
       insured but with no insurable interest in the vehicle, has no interest in the property
       as to the existence of which he will gain benefits, or as to the destruction of which
       he will suffer loss. Therefore, Geico is not obligated to provide first party no-fault
       benefits for Bracy.

        Farmers relies on Dye to argue the Lumina was effectively insured under Marcus’s policy,
and Geico was therefore required to pay Bracy’s requested PIP benefits. In Dye, Matthew Dye
was involved in a motor vehicle accident while driving his 1997 BMW, which his father had
purchased insurance for from Esurance. Dye, 504 Mich at 175. Matthew’s father was the only
named insured on the policy. Id. At the time of the accident, Matthew resided with his wife, who
maintained a no-fault policy through Geico on her van. Id. Our Supreme Court held that Matthew
sufficiently maintained the requisite coverage under MCL 500.3101, even though his father was
the one who had purchased the insurance policy. Id. at 188. Our Supreme Court rejected Geico’s
argument that a “vehicle is not properly insured unless that security is maintained by an ‘owner or
registrant.’ ” Id. at 190. “[W]e will not read into the statute a requirement that the insurance be

                                                -6-
purchased or obtained by a vehicle’s owner or registrant.” Id. at 173. In reaching its holding, our
Supreme Court analyzed the language of MCL 500.3101, which states, in part: “The owner or
registrant of a motor vehicle required to be registered in this state shall maintain security for
payment of benefits under personal protection insurance . . . .” MCL 500.3101.

         Farmers’ reliance on Dye is misplaced because Dye does not address the concept of
insurable interest. At most, Dye was concerned only with whether an owner or registrant of a
vehicle was required to personally purchase no-fault insurance to obtain PIP benefits. This case
is not concerned with that issue. In other words, this case does not deal with whether Nichols was
required to personally purchase no-fault insurance to obtain PIP benefits for herself. The question
in this case is whether Geico must pay Bracy’s PIP benefits in light of the fact that Nichols is not
a named insured on Marcus’s policy. And Dye is not germane to that question.

        Geico argues on appeal that the trial court’s grant of summary disposition in its favor was
also proper because the insurance policy was void in light of Marcus’s misrepresentations in
obtaining that policy for a vehicle in which he had no insurable interest. The trial court dismissed
Geico’s misrepresentation argument as moot because it was granting Geico’s motion for summary
disposition “on the basis of priority, coverage, and the inapplicability/distinguishing of Dye . . . .”
The argument remains moot on appeal for the same reason. “As a general rule, an appellate court
will not decide moot issues.” B P 7 v Bureau of State Lottery, 231 Mich App 356, 359; 586 NW2d
117 (1998).

       Affirmed.

                                                               /s/ Brock A. Swartzle
                                                               /s/ Mark J. Cavanagh
                                                               /s/ James Robert Redford

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