Court Opinion

ID: 6350634
Source: CourtListenerOpinion
Date Created: 2022-06-17 06:05:03.644102+00
Date Added: 2024-06-11T09:15:25.333961
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

MICHIGAN HEAD AND SPINE INSTITUTE, PC,                            UNPUBLISHED
MCLAREN PORT HURON, and MCLAREN                                   June 16, 2022
MACOMB,

              Plaintiffs-Appellees,
and

STACEY KREBS,

              Intervening Plaintiff-Appellee,

V                                                                 No. 357144
                                                                  Oakland Circuit Court
MID-CENTURY INSURANCE CO,                                         LC No. 2020-184934-NF

              Defendant-Appellant,
and

USAA CASUALTY INSURANCE CO, and
CITIZENS INSURANCE COMPANY OF THE
MIDWEST,

               Defendants.

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

PER CURIAM.

        Defendant, Mid-Century Insurance Co. (“Mid-Century”), appeals by leave granted1 the
trial court’s order denying its motion for partial summary disposition under MCR 2.116(C)(10).
Because plaintiffs, including intervening plaintiff, were required to seek payment for personal

1
 Mich Head & Spine Institute, PC v Mid-Century Ins Co, unpublished order of the Court of
Appeals, entered August 2, 2021 (Docket No. 357144).

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injury protection (PIP) benefits from the assigned claims plan, the trial court erred when it denied
Mid-Century’s motion, and we reverse.

                       I. BASIC FACTS AND PROCEDURAL HISTORY

        On September 25, 2020, intervening plaintiff, Stacey Krebs, was severely injured as a
passenger in a vehicle driven by Stephen Basnaw.2 The vehicle was owned by Stephen’s father,
Charles Basnaw. Charles maintained a business auto insurance policy with Mid-Century on the
subject vehicle in connection with his landscaping and gardening business. The insurance policy
included an entitlement to PIP benefits under the no-fault act, MCL 500.3101 et seq., to persons
who fell under its definition of “insured.” Charles was the only person listed as a “named insured,”
and Charles and his wife, Alice Basnaw, were the only persons listed as “drivers” under the policy.
At the time of the accident, Stacey did not own a vehicle, did not have a no-fault insurance policy,
and was not domiciled with a relative who had a no-fault insurance policy. Stacey’s father, Robert
Krebs, however, had a policy with defendant USAA Casualty Insurance Co. (“USAA”).

         After the accident, Stacey sought payment for PIP benefits from Mid-Century under
Charles’s policy. Mid-Century denied the claim on the grounds that it was not within the order of
priority for the payment of PIP benefits under MCL 500.3114. Mid-Century instructed Stacey to
file a claim with the Michigan Assigned Claims Plan,3 and Stacey subsequently assigned her rights
to recover PIP benefits to plaintiffs.

       Plaintiffs sought payment for the medical care provided to Stacey from Mid-Century,
USAA, and the Michigan Automobile Insurance Placement Facility (“MAIPF”). Each refused
payment. Plaintiffs subsequently filed a complaint seeking recovery of PIP benefits from Mid-
Century, USAA, and MAIPF, which subsequently assigned its claim to defendant Citizens
Insurance Company of the Midwest (“Citizens”). Stacey also filed an intervening complaint
seeking recovery of PIP benefits from Mid-Century or, alternatively, from USAA4 and MAIPF.

        Mid-Century moved for partial summary disposition under MCR 2.116(C)(10), asserting
that under MCL 500.3114(1), an injured person must first look to his or her own policy as a named
insured, a spouse’s policy, or the policy of a resident relative with whom he or she is domiciled.

2
  For ease of reading and to avoid confusion, we will refer to the individuals involved in this case
by their first names. For the defendants who are not a party to this case, we will refer to them by
their full names. We will refer to Michigan Head and Spine Institute, McLaren Port Huron, and
McLaren Macomb as “plaintiffs.”
3
  Under MCL 500.3171(2) and MCL 500.3301(1), the Michigan Automobile Insurance Placement
Facility must maintain an assigned claims plan, and every insurer authorized to write automobile
insurance in Michigan must participate in it. Under the assigned claims plan, the MAIPF assigns
claims of individuals entitled to recover PIP benefits to a participating insurer, who will adjust the
claim, pay any PIP benefits that the individual is entitled to recover, and then obtain reimbursement
from the MAIPF. See MCL 500.3175(1).
4
  USAA ultimately was granted summary disposition on the basis that plaintiffs could not establish
that Stacey was domiciled with a relative who was insured by USAA on the date of the accident.

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If no such coverage is available, the injured person must then seek benefits from the assigned
claims plan under MCL 500.3114(4). According to Mid-Century, it was not within the legislative
order of priority for PIP benefits under MCL 500.3114(1) and, therefore, plaintiffs and Stacey
were required to pursue their claims with the assigned claims plan.

       Relying on Lewis v Farmers Ins Exchange, 315 Mich App 202, 210; 888 NW2d 916
(2016), plaintiffs and Stacey responded that the language of Mid-Century’s insurance policy
extended PIP coverage to anyone who suffered a bodily injury while occupying a covered
automobile. Thus, because Stacey suffered a bodily injury while occupying an automobile covered
by Mid-Century’s policy, she qualified as an “insured” under the policy, such that she and her
assignees were entitled to recover PIP benefits from Mid-Century.

        On April 26, 2021, the trial court, without holding oral argument, denied Mid-Century’s
motion, stating:
              The court has considered the legal arguments of the parties and the evidence
       submitted in the light most favorable to [Stacey]. The court concludes that Mid-
       Century has not shown that it is entitled to summary disposition. The policy here
       provided for broader coverage than what is mandated by the (amended) No Fault
       Act. See Lewis v Farmer Ins Exchange, 315 Mich App 202 (2016).

        Mid-Century moved for reconsideration, which the trial court denied, reiterating that Mid-
Century’s “policy expanded coverage beyond what was required by the No Fault on the date of
the accident.” The trial court explained:
               The Court agrees with the Defendant that [Stacey] is not a “named insured”
       on the policy. However, as previously stated, the policy expanded coverage beyond
       what was required by the No Fault Act on the date of the accident. Under the
       Michigan Personal Injury Protection Endorsement provision of the policy[,] the
       Defendant states it will pay PIP benefits to or for an “insured” (not a “named
       insured”). The Defendant has not shown that [Stacey] does not qualify as an
       “insured” under this provision.

       Mid-Century subsequently sought leave to appeal the trial court’s order denying its motion
with this Court, which was granted. Mich Head & Spine Institute, PC v Mid-Century Ins Co,
unpublished order of the Court of Appeals, entered August 2, 2021 (Docket No. 357144). This
appeal followed.

                                II. STANDARDS OF REVIEW

        We review de novo a trial court’s decision on a motion under MCR 2.116(C)(10). Maiden
v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). We review a motion brought under MCR
2.116(C)(10) “by considering the pleadings, admissions, and other evidence submitted by the
parties in the light most favorable to the nonmoving party.” Latham v Barton Malow Co, 480
Mich 105, 111; 746 NW2d 868 (2008). “Summary disposition 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.” West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). “A genuine issue

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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.” Id.

        Issues of statutory interpretation are also questions of law that we review de novo. Lear
Corp v Dep’t of Treasury, 299 Mich App 533, 537; 831 NW2d 255 (2013). If a statute is not
ambiguous, “judicial construction is neither necessary nor permitted.” Griffith v State Farm Mut
Auto Ins Co, 472 Mich 521, 526; 697 NW2d 895 (2005). “If the statute’s language is clear and
unambiguous, then [this Court] assume[s] that the Legislature intended its plain meaning and the
statute is enforced as written.” Halloran v Bhan, 470 Mich 572, 577; 683 NW2d 129 (2004)
(quotation marks and citation omitted).

        “[G]eneral rules of contract interpretation apply” to insurance contracts. Fuller v GEICO
Indemnity Co, 309 Mich App 495, 498; 872 NW2d 504 (2015). “Clear and unambiguous
provisions of an insurance policy must be enforced according to their plain meanings.” Id. When
interpreting contracts, this Court will “avoid an interpretation that would render any part of the
contract surplusage or nugatory.” Klapp v United Ins Group Agency, Inc, 468 Mich 459, 468; 663
NW2d 447 (2003). Additionally, we read contracts “as a whole, giving harmonious effect, if
possible, to each word and phrase.” Wilkie v Auto-Owners Ins Co, 469 Mich 41, 50 n 11; 664
NW2d 776 (2003).

                                         III. ANALYSIS

        On appeal, Mid-Century argues that the trial court erred when it denied Mid-Century’s
motion for partial summary disposition because the plain language of MCL 500.3114(4) mandates
that plaintiffs and Stacey seek recovery of PIP benefits under the Michigan Assigned Claims Plan.
We agree.

        The no-fault act “is the ‘rule book’ for deciding the issues involved in questions regarding
awarding [PIP] benefits.” Meemic Ins Co v Fortson, 506 Mich 287, 298; 954 NW2d 115 (2020)
(quotation marks and citation omitted). “The priority statutes, MCL 500.3114 and MCL 500.3115,
define against whom an individual may make a claim for [PIP] benefits.” Covenant Med Ctr, Inc
v State Farm Mut Auto Ins Co, 500 Mich 191, 215; 895 NW2d 490 (2017). The insurance policy,
on the other hand, “controls the interpretation of its own provisions providing benefits not required
by statute.” Fortson, 506 Mich at 298 (quotation marks and citation omitted). In other words,
insurance policies providing no-fault auto insurance coverage may expand coverage beyond the
mandatory coverages required by the no-fault act. Lewis, 315 Mich App at 216. Thus, because
PIP benefits are mandated by the no-fault act, entitlement to such benefits is governed by the no-
fault act, not by the insurance policy. Fortson, 506 Mich at 298.

        Plaintiffs and Stacey contend that under Lewis, 315 Mich App 202, an insurance policy
may expand the scope of its coverage beyond the plain language of the no-fault act. Because Mid-
Century’s insurance policy expands the definition of the “insured” beyond the prescriptions of the
no-fault act, including the priority scheme laid out in MCL 500.3114, they are entitled to PIP
benefits under Mid-Century’s policy.

       In Lewis, this Court addressed the issue of whether, under the no-fault act, the plaintiff was
considered a “relative” domiciled in the same house as her cousin, insured by the defendant, even

                                                -4-
though the plaintiff was not a blood-relative, but was instead a cousin by a marriage. Lewis, 315
Mich App at 204-208. The plaintiff alleged that she was entitled to benefits under the defendant’s
policy because she qualified as her cousin’s “family member” under the plain language of the
policy. Id. The trial court ultimately held that the plaintiff was a “relative” of her cousin, according
to both the plain language of MCL 500.3114(1) and the language in the insurance policy. Lewis,
315 Mich App at 208.
        On appeal, this Court reversed the trial court’s determination that the plaintiff was entitled
to PIP benefits under the policy, first explaining:
       [O]ur analysis of this issue requires two separate, but related, inquiries: (1) whether
       plaintiff qualifies as a relative of [the cousin] for purposes of MCL 500.3114(1);
       and (2) if the policy provides broader coverage than that required under MCL
       500.3114(1), whether plaintiff qualifies as a family member as that term is used in
       the policy. [Id. at 210.]

        This Court added that, because “no-fault insurance policies may expand coverage beyond
the mandatory coverages required by the act . . . if the language of the policy expanded the scope
of PIP coverage beyond that required by MCL 500.3114(1), and plaintiff falls within that expanded
scope of coverage, we must affirm the trial court’s decision.” Id. at 216 (quotation marks and
citation omitted). However, because “[t]he definition of ‘family member’ in the policy is
substantively identical to the definition of ‘relative’ . . . for purposes of MCL 500.3114(1),” and
because the plaintiff fell under neither definition, she was not entitled to PIP benefits under the
policy. Id. at 217-218.

        According to plaintiffs and Stacey, Lewis stands for the proposition that, regardless of
whether Stacey was entitled to PIP benefits from Mid-Century under MCL 500.3114, she was
entitled to PIP benefits under the insurance policy because an insurer is permitted to provide PIP
coverage to a broader class of persons than is required by statute. The subject policy stated, in
relevant part:

       A. Coverage

               We will pay Personal Injury Protection benefits to or for an “insured” who
       sustains “bodily injury” caused by an “accident” and resulting from the ownership,
       maintenance or use of an “auto” as an “auto.” These benefits are subject to the
       provisions of Chapter 31 of the Michigan Insurance Code. Personal Injury
       Protection benefits consist of the following benefits:

       1. Medical Expenses

              Reasonable and necessary medical expenses for an “insured’s” care,
       recovery or rehabilitation. Charges for a hospital room are limited to those
       customary for a semiprivate room, unless special or intensive care is required.

                                               * * *

       B. Who Is An Insured

                                                  -5-
         1. You or any “family member.”

         2. Anyone else who sustains “bodily injury”:

         a. While “occupying” a covered “auto”;

         b. As the result of an “accident” involving any other “auto” operated by you or a
         “family member” if that “auto” is a covered “auto” under the Policy’s Covered
         Autos Liability Coverage; or

         c. While not “occupying” any “auto” as a result of an “accident” involving a
         covered “auto.”

        Plaintiffs and Stacey further argue that under the unambiguous policy language, Stacey
was an “insured” at the time of the accident as an “occupant” of a “covered auto.” Thus, they
assert that the policy broadened coverage beyond what is required under MCL 500.3114 to include
Stacey as an “insured” and, that as an “insured,” she was entitled to collect PIP benefits from Mid-
Century.

         Regardless of the breadth of Mid-Century’s policy coverage, the policy does not control
whether plaintiffs or Stacey may claim PIP benefits from Mid-Century. As noted, the no-fault act
governs the coverages it mandates, while an insurance policy governs optional coverage not
required by the no-fault act. Fortson, 506 Mich at 297-298. PIP benefits are mandated by the no-
fault act; therefore, entitlement to, and payment of, PIP benefits is governed by statute, not by the
insurance contract. Id. at 298. This is embodied in the insurance policy itself, which expressly
states that liability for PIP benefits is “subject to the provisions of [the no-fault act].” Accordingly,
Lewis is of no help to plaintiffs or Stacey because Mid-Century’s insurance policy mandates that
the no-fault act be followed.

       Thus, Mid-Century’s potential liability for payment of PIP benefits is dependent upon the
no-fault act, including its priority provisions, MCL 500.3114 and MCL 500.3115. See South
Dearborn Environmental Improvement Ass’n v Dep’t of Environmental Quality, 502 Mich 349,
364; 917 NW2d 603 (2018) (stating the phrase “subject to” is synonymous with “dependent
upon”). Subsection 3114(4) provides that claimants such as plaintiffs and Stacey “shall claim
personal protection insurance benefits under the assigned claims plan.”

       Stated differently, because plaintiffs and Stacey are seeking no-fault PIP benefits for
treatment provided to Stacey for injuries resulting from an accident occurring while she was an
occupant in a motor vehicle, her entitlement to PIP benefits is controlled by MCL 500.3114.5

5
    MCL 500.3114 states, in relevant part:
                (1) Except as provided in subsections (2), (3), and (5), a personal protection
         insurance policy described in section 3101(1) applies to accidental bodily injury to

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Under MCL 500.3114(1), an injured person must generally seek PIP benefits from his or her own
insurer. Titan Ins Co v American Country Ins Co, 312 Mich App 291, 298; 876 NW2d 853 (2015).
Where there is no insurer identified under the statute, MCL 500.3114(4) provides for the
assignment of the claim. Titan Ins, 312 Mich App at 301-302.

        As the trial court recognized, the only named insured under the subject policy is Charles.
Under the priority rule stated in MCL 500.3114(1), at the time of the accident, Stacey was not
covered by any other no-fault policy because she was not the person named in the policy insuring
Charles’s vehicle; she was not Charles’s spouse; and she was neither a relative of either Charles
or his wife, nor domiciled in their household. Thus, MCL 500.3114(1) does not entitle plaintiffs
or Stacey to PIP benefits from Mid-Century. Moreover, under the priority rule in MCL
500.3114(3), Stacey was not an employee of Charles, nor a spouse of his employee, nor was she a
relative or in-law of one of Charles’s employees at the time of the accident. Accordingly, MCL
500.3114(3) does not entitle plaintiffs or Stacey to claim PIP benefits from Mid-Century.

       Lastly, plaintiffs and Stacey argue that MCL 500.3172(1) specifically provides that there
are only four circumstances in which an individual is to receive benefits through the assigned
claims plan, and that none of those subsections apply here. MCL 500.3172(1) states:
                A person entitled to claim because of accidental bodily injury arising out of
       the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle
       in this state may claim personal protection insurance benefits through the assigned
       claims plan if any of the following apply:

               (a) No personal protection insurance is applicable to the injury.

               (b) No personal protection insurance applicable to the injury can be
       identified.

       the person named in the policy, the person’s spouse, and a relative of either
       domiciled in the same household, if the injury arises from a motor vehicle accident.

                                              * * *

               (3) An employee, his or her spouse, or a relative of either domiciled in the
       same household, who suffers accidental bodily injury while an occupant of a motor
       vehicle owned or registered by the employer, shall receive personal protection
       insurance benefits to which the employee is entitled from the insurer of the
       furnished vehicle.

               (4) Except as provided in subsections (2) and (3), a person who suffers
       accidental bodily injury arising from a motor vehicle accident while an occupant
       of a motor vehicle who is not covered under a personal protection insurance policy
       as provided in subsection (1) shall claim personal protection insurance benefits
       under the assigned claims plan under sections 3171 to 3175 . . . . [Emphasis added.]

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               (c) No personal protection insurance applicable to the injury can be
       ascertained because of a dispute between 2 or more automobile insurers concerning
       their obligation to provide coverage or the equitable distribution of the loss.

               (d) The only identifiable personal protection insurance applicable to the
       injury is, because of financial inability of 1 or more insurers to fulfill their
       obligations, inadequate to provide benefits up to the maximum prescribed.

       According to plaintiffs, MCL 500.3172 does not apply because Stacey has PIP coverage
available to her injury because: (1) she is an “insured” under the terms of Mid-Century’s policy;
(2) she has identified a policy and submitted a claim to Mid-Century; (3) there is no dispute
between two or more carriers; and (4) Mid-Century is able to fulfill its obligations. According to
MCL 500.3172(1), therefore, Stacey may not claim PIP benefits from the assigned claims plan.
We are not persuaded.

        MCL 500.3114(4) specifically applies because Stacey is “a person who suffer[ed]
accidental bodily injury arising from a motor vehicle accident while an occupant of a motor vehicle
who is not covered under a personal protection insurance policy as provided in [MCL
500.3114](1).” Thus, a claimant such as Stacey “shall claim personal protection insurance
benefits under the assigned claims plan under [MCL 500.]3171 to [MCL 500.]3175.” Under MCL
500.3172(a), the assigned claims plan is the appropriate insurer for PIP benefits because, as
addressed above, there is no insurance policy otherwise applicable to Stacey’s injuries.

       For these reasons, plaintiffs and Stacey must seek PIP benefits from the assigned claims
plan under MCL 500.3114(4). The trial court, therefore, erred when it denied Mid-Century’s
motion for partial summary disposition.

        Reversed and remanded for further proceedings consistent with this opinion. Mid-Century,
as the prevailing party, may tax costs. MCR 7.219(A). We do not retain jurisdiction.

                                                            /s/ Anica Letica
                                                            /s/ Kirsten Frank Kelly
                                                            /s/ Michael J. Riordan

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