Allstate Ins. Co. v. Detroit Auto. Inter-Insurance Exchange

• Court: Court of Appeal of Michigan
• Writing for the Court: MacKENZIE
• Citation: Allstate Ins. Co. v. Detroit Auto. Inter-Insurance Exchange, 369 N.W.2d 908, 142 Mich.App. 436 (Mich. App. 1985)
• Decision Date: 12 July 1985
• Docket Number: INTER-INSURANCE,Docket No. 75165
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff-Appellant, v. DETROIT AUTOMOBILEEXCHANGE, Defendant-Appellee. Edward and Mary GRONKIEWICZ, Defendants-Cross-Plaintiffs-Appellees, v. Billy Wayne JOHNSON, Defendant-Cross-Defendant.

Page 908

369 N.W.2d 908

142 Mich.App. 436

ALLSTATE INSURANCE COMPANY, Plaintiff-Appellant, v. DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE, Defendant-Appellee.

Edward and Mary GRONKIEWICZ, Defendants-Cross-Plaintiffs-Appellees, v. Billy Wayne JOHNSON, Defendant-Cross-Defendant.

Docket No. 75165.

Court of Appeals of Michigan.

Submitted Nov. 14, 1984.

Decided May 6, 1985.

Released for Publication July 12, 1985.

Baxter & Hammond by James R. Piggush, Grand Rapids, for plaintiff-appellant.

Allaben, Massie, Vander Weyden & Timmer by John J. Timmer, Grand Rapids, Willingham, Cote, Hanslovsky, Griffith & Foresman, P.C. by John A. Yeager, East Lansing, and Weidner & McAuliff, Ltd. (Richard J. Leamy, Jr., Chicago, Ill., of counsel), for Edward and Mary Gronkiewicz.

Before MacKENZIE, P.J., and BRENNAN and ROBINSON ^*, JJ.

MacKENZIE, Presiding Judge.

This case involves the question of whether an owner of a motor vehicle may be listed as an excluded driver in a no-fault policy. Plaintiff, Allstate Insurance Company, appeals as of right from an order granting defendant DAIIE's motion for summary judgment and finding the exclusion valid. We affirm.

On April 25, 1982, Edward and Mary Gronkiewicz's vehicle collided with a 1977 Oldsmobile owned and operated by defendant Billy Wayne Johnson. Johnson's car was insured by defendant DAIIE on a policy which listed the "principal named insured" as "Ruby or Billy W. Johnson". However, the DAIIE policy also listed Billy W. Johnson as an excluded driver. The policy contained the following warning:

"WARNING--WHEN A NAMED EXCLUDED PERSON OPERATES A VEHICLE ALL LIABILITY COVERAGE IS VOID--NO ONE IS INSURED. OWNERS OF THE VEHICLE AND OTHERS LEGALLY RESPONSIBLE FOR THE ACTS OF THE NAMED EXCLUDED PERSON REMAIN FULLY PERSONALLY LIABLE."

The renewal declaration certificate of the Johnsons' policy listed the principal driver as Ruby Johnson. It stated that the vehicle was rated for principal use by Ruby Johnson. A form excluding Billy W. Johnson from coverage (Insurance Bureau Notice and Authorization Form PL 72-1) had been signed only by Ruby Johnson on February 25, 1975. ¹

The Gronkiewiczes, insured under a no-fault policy with Allstate, brought an uninsured motorist claim against Allstate. Allstate denied coverage on the ground that Billy Wayne Johnson was not an uninsured motorist.

On March 11, 1983, Allstate filed a complaint for declaratory judgment asserting that the DAIIE policy exclusion of owner/operator Billy W. Johnson was contrary to law and public policy. DAIIE countered with a motion for summary judgment claiming that M.C.L. § 500.3009(2); M.S.A. § 24.13009(2) specifically authorized exclusion of named drivers such as Johnson.

The trial court granted DAIIE's motion for summary judgment on November 28, 1983, finding the exclusion of Billy W. Johnson valid under M.C.L. § 500.3009(2). The court opined that an owner's risk could be separately insured because it might be different from a driver's risk.

M.C.L. § 500.3009(2) provides:

"When authorized by the insured, automobile liability or motor vehicle liability coverage may be excluded when a vehicle is operated by a named person. Such exclusion shall not be valid unless the following notice is on the face of the policy or the declaration page or certificate of the policy and on the certificate of insurance * * *: Warning--when a named excluded person operates a vehicle all liability coverage is void--no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable."

On appeal Allstate argues, first, that the exclusion of Billy Wayne Johnson was ineffective because he had an owner's policy of insurance pursuant to M.C.L. § 257.520(b); M.S.A. § 9.2220(b). The Johnsons did not purchase an operator's policy of liability insurance, which would cover operation of a vehicle not owned by the driver. M.C.L. § 257.520(b) describes an owner's policy as follows:

"Such owner's policy of liability insurance:

"(1) Shall designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; and

"(2) Shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles * * *."

Allstate contends that the above provision mandated coverage of an owner for the "use" of his vehicle. In addition, Allstate argues, it is contrary to public policy to exclude an owner from liability insurance. Allstate maintains that the Legislature reasonably assumed that an owner would habitually drive his own car, and thus an owner's policy is required to cover that situation.

The Gronkiewiczes and DAIIE respond that exclusion of Billy Wayne Johnson was proper under M.C.L. § 500.3009(2). They contend that DAIIE followed all of the statutory requirements and that the trial court correctly granted summary judgment.

Allstate has raised an issue of first impression concerning the named driver exclusion. Although Allstate's arguments are ingenious, we find them lacking in merit.

Michigan courts have dealt with the named driver exclusion of M.C.L. § 500.3009(2) on several occasions. In Citizens Mutual Ins. Co. v. Central National Ins. Co. of Omaha, 65 Mich.App. 349, 237 N.W.2d 322 (1975), the Court found invalid a policy provision attempting to exclude passengers of a motorcycle from coverage. The Court stated that a clear intent of § 3009 was to allow an insurance company to exclude only named persons, not classes of persons such as passengers.

This Court construed the named driver exclusion again in Allstate Ins. Co. v. DAIIE, 73 Mich.App. 112, 251 N.W.2d 266 (1976), in a situation similar to that in the present case. In Allstate v. DAIIE a husband was named as an excluded driver in his wife's policy. The wife had authorized the exclusion, and the proper warning appeared on the policy and certificate of insurance. However, Allstate argued that the exclusion was void because the certificate of insurance did not specifically list the name of the excluded driver. This Court rejected that argument, ruling that the exclusion complied with the statute. The Court found that the warning was intended to notify the insured, not the general public, of the consequences of permitting a named excluded driver to operate a vehicle. The warning informed the owner, and others legally responsible for the named driver's acts, of their personal liability for the named driver's wrongdoing.

Another case to deal with the named driver exclusion was DAIIE v. Comm'r of Ins., 86 Mich.App. 473, 272 N.W.2d 689 (1978). In that case the Court reviewed the history of M.C.L. § 500.3009(2) and found that it was a legislative response to Allstate Ins. Co. v. Motor State Ins. Co., 33 Mich.App. 467, 469, 190 N.W.2d 352 (1971), a decision which had invalidated a named driver exclusion as unauthorized by statute and thus contrary to public policy.

In DAIIE v. Comm'r of Ins., supra, the panel rejected the argument that the no-fault act had repealed the named driver exclusion by implication. The defendant raised a public policy argument similar to that made by Allstate here: that since the Legislature had enacted a comprehensive, compulsory insurance system, it would be inconsistent to force accident victims to recover from the personal holdings of those responsible. The panel found that argument unconvincing, noting that the problem had been remedied by the requirement of uninsured motorist coverage. The panel also observed that named driver exclusions resulted in lower insurance costs for some automobile owners, thereby making insurance affordable when it would otherwise be prohibitively expensive.

In the case at bar, the question is whether the Legislature intended to allow an insurance company to exclude an owner from liability coverage under the named driver exclusion. Looking to the statute itself, it is clear that § 3009(2) contains no exception for vehicle owners. Where a statute is clear and unambiguous, there is no room for judicial construction or interpretation; the statute must be applied as written. Pittsfield Charter Twp. v. City of Saline, 103 Mich.App. 99, 302 N.W.2d 608 (1981). In DAIIE v. Felder, 94 Mich.App. 40, 44, 287 N.W.2d 364 (1979), the Court found no ambiguity in M.C.L. § 500.3009(2) and termed § 3009(2) "clear and to the point".

Section 3009(2) permits an insurance company to exclude liability coverage "when a vehicle is operated by a named person". In our...