Ford Motor Co. v. Insurance Co. of North America

• Decision Date: 16 April 1987
• Docket Number: Docket No. 87928
• Citation: 403 N.W.2d 200,157 Mich.App. 692
• Parties: FORD MOTOR COMPANY, Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 200

403 N.W.2d 200

157 Mich.App. 692

FORD MOTOR COMPANY, Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee.

Docket No. 87928.

Court of Appeals of Michigan.

Submitted Dec. 9, 1986.

Decided Feb. 17, 1987.

Released for Publication April 16, 1987.

Denenberg, Tuffley, Bocan, Jamieson, Black, Hopkins & Ewald (by John L. Hopkins, Jr., and John A. Lawson), Southfield, for plaintiff-appellant.

Harvey, Kruse, Westen & Milan, P.C. (by Michael F. Schmidt and Maurice A. Borden), Detroit, for defendant-appellee.

Before GRIBBS, P.J., and CYNAR and KAUFMAN, ^* JJ.

PER CURIAM.

Plaintiff Ford Motor Company appeals as of right from an order of the Wayne Circuit Court granting defendant's motion for summary disposition, MCR 2.116(C)(10).

The parties stipulated to the following facts in the circuit court:

"Between 7:00 a.m. and 7:18 a.m. on October 29, 1973, a tank truck from Refiners Transport & Terminal Corporation driven by Allen G. Clark, a Refiners employee, arrived at the Ford Motor Company Casting Plant in Flat Rock, Michigan. The truck was carrying 2,500 gallons of catalyst from a Ford Motor Company plant located in Mt. Clemens, Michigan. The truck, following the Ford plant procedure, arrived at shipping and receiving where a sample was drawn by Ford's Quality Control Department to cross check the contents of the truck against that which was indicated on the shipper's invoice. A Ford Motor Company employee checked the contents of the truck. Walter Presley determined that the contents matched the specifications for the material and verified the contents of the tank truck as catalyst. The tank truck was then sent to the basement storage area, driven by Refiners driver, Clark, who was accompanied from the shipping and receiving area to the basement area of the plant by Ford Motor Company employee Gregory Davis. Davis, the Ford employee, incorrectly pointed out a resin tank to Clark, the Refiners driver, to unload, rather than a catalyst tank. The truck and Ford's tank were both equipped with pumps, but Ford's pump, which was controlled and operated by Ford's employee, was used to pump the catalyst from the tank truck into the resin tank. Clark apparently connected the tank truck to the tank pointed out by Davis. After the transfer of catalyst from the tank truck to the resin tank was complete, Clark drove the Refiner's truck from the basement area back to the shipping and receiving area where a Ford employee signed the bill of lading indicating that the delivery of the catalyst had been completed. The Refiners truck left the Ford plant site at approximately 9:23 a.m. At approximately 9:51 a.m. an explosion occurred. The explosion occurred because the catalyst, which was placed in the wrong tank, the resin tank, reacted with the resin resulting in the explosion."

The issue in this case is whether defendant, Refiners' no-fault insurer, is liable under the no-fault act for Ford's property damage.

In 1980, Judge Cohn of the United States District Court, Eastern District of Michigan, wrote that this case "has a long, somewhat tortured, and interesting history." Ford Motor Co. v. Ins. Co. of North America, 494 F.Supp. 846, 848 (E.D.Mich., 1980). That observation is even truer today in 1987. Ford had started the action in that court in 1974. The late Judge Gubow granted summary judgment for defendant on the ground that the property protection provisions of the Michigan no-fault act had been held unconstitutional in Shavers v. Attorney General, 65 Mich.App. 355, 237 N.W.2d 325 (1975). Upon the subsequent reversal of Shavers by the Michigan Supreme Court, 402 Mich. 554, 267 N.W.2d 72 (1978), the parties stipulated to set aside Judge Gubow's order. Both parties again filed motions for summary judgment. Judge Cohn granted summary judgment to defendant, reasoning that the no-fault act did not make defendant liable for property damage in this case because there was no direct causal relationship between the truck and the property damage. 494 F.Supp. at 853.

Ford appealed to the Sixth Circuit Court of Appeals, which vacated Judge Cohn's opinion on the ground that there was no diversity of citizenship between plaintiff and defendant's insured, Refiners, both being Delaware corporations. Lacking subject-matter jurisdiction, the court dismissed the action. 669 F.2d 421 (C.A.6, 1982). Ford then filed this action in Wayne Circuit Court on February 4, 1982. Defendant filed a motion for summary judgment, claiming that the property damage did not arise out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle as required under the no-fault act. The court granted this motion on June 28, 1985.

Ford does not dispute on appeal that this case is governed by construction of the no-fault statute providing for property damage benefits, M.C.L. § 500.3121(1); M.S.A. § 24.13121(1):

"Under property protection insurance an insurer is liable to pay benefits for accidental damage to tangible property arising out of the use, ownership, operation, maintenance or use of a motor vehicle as a motor vehicle subject to the provisions of this section and sections 3123, 3125 and 3127."

The parties disagree on whether the property damage in this case arose out of the "use of a motor vehicle as a motor vehicle" under this section. Ford argues that a tank truck engaged in unloading is covered by this phrase; defendant counters that the property damage in this case did not arise from an action integral to the use of the truck as a motor vehicle, making the statute inapplicable. No reported Michigan appellate case has construed this phrase in this statute.

In one recent case brought under § 3121(1), this Court found that the no-fault act did not apply to damage to a gasoline service station caused by a fire when fuel leaking from a car being repaired there was ignited by the open flame of a hot water heater in the service bay. Central Mutual Ins. Co. v. Walter, 143 Mich.App. 332, 372 N.W.2d 542, lv. den. 424 Mich. 851 (1985). The Walter Court, like Judge Cohn when this case was in his court, applied the test first enunciated by this Court in Kangas v. Aetna Casualty & Surety Co., 64 Mich.App. 1, 17, 235 N.W.2d 42, lv. den. 395 Mich. 787 (1975), for determining whether an accident arises out of the ownership, operation, maintenance or use of a motor vehicle:

"[W]hile the automobile need not be the proximate cause of the injury, there still must be a causal connection between the injury sustained and the ownership, maintenance or use of the automobile and which causal connection is more than incidental, fortuitous or but for. The injury must be foreseeably identifiable with the normal use, maintenance and ownership of the vehicle."

Judge Cohn, applying the standards of Kangas and its progeny, concluded that "the explosion and subsequent property damage was not reasonably identifiable with the use of the tank truck as a motor vehicle; rather I find it was a fortuitous occurrence, caused by an intervening independent act." 494 F.Supp. at 853.

We agree with Judge Cohn's well-reasoned analysis that it cannot be said that the property damage in this case "arose out of the ... use of a motor vehicle as a motor vehicle."

Ford argues, to no avail, that Judge Cohn found Ford at fault in reaching his conclusion. Under M.C.L. § 500.3121(2); M.S.A. § 24.13121(2), property protection insurance benefits are due under the conditions of this provision without regard to fault. Judge Cohn's analysis was based not on who was at fault, but who was in control; he found that, once Ford took control, delivery was effected and Refiners became a passive actor.

Nor did Judge Cohn err, as Ford argues, in applying proximate cause analysis...