Fuller v. GEICO Indem. Co.

• Decision Date: 05 March 2015
• Docket Number: No. 319665.,319665.
• Citation: 872 N.W.2d 504,309 Mich.App. 495
• Parties: FULLER v. GEICO INDEMNITY CO.
• Court: Court of Appeal of Michigan — District of US

309 Mich.App. 495

872 N.W.2d 504

FULLER

v.GEICO INDEMNITY CO.

No. 319665.

Court of Appeals of Michigan.

Submitted March 3, 2015, at Detroit.

Decided March 5, 2015, at 9:15 a.m.

The Joseph Dedvukaj Firm, PC, Southfield (by Joseph Dedvukaj ), for Gregory M. Fuller and Patrice Fuller.

Drew W. Broaddus, Troy and Sarah L. Walburn, Grand Rapids, for GEICO Indemnity Company.

Before: GLEICHER, P.J., and CAVANAGH and FORT HOOD, JJ.

GLEICHER, P.J.

Nonparty Saundra House rented a vehicle from Lakeside Car Rental while her own vehicle was undergoing routine repairs. She allowed a family friend, plaintiff Gregory Fuller, to drive the rented car, and he was involved in an accident. Gregory and his passenger, plaintiff Patrice Fuller, were both injured and believed they were entitled to first-party personal protection insurance (PIP) benefits. As neither owned a vehicle or was covered under a relative's policy, the Fullers sought PIP benefits from the GEICO insurance policy that House had purchased to cover her personal vehicle. Defendant GEICO Indemnity Company determined that Lakeside owned the rental car, and therefore, that Lakeside's insurer was responsible for coverage.

The circuit court agreed with GEICO's position and dismissed the Fullers' first-party no-fault action. MCL 500.3101(1) demands that a vehicle's owner or registrant maintain the insurance coverage required by the no-fault act. And our Supreme Court has ruled that a rental agency, as the owner of the vehicle, cannot shift the burden of maintaining mandatory no-fault insurance onto a short-term renter. Accordingly, we affirm.

I. BACKGROUND

As noted, while House's GEICO-covered personal vehicle was in the shop for repairs, she entered a one-week rental contract for a 2008 Chevy Impala with Lakeside. The rental agreement provided that House's GEICO policy would " be first in priority in payment of any and all personal injury and property damage claims that arise from the [use] of this vehicle." After the Fullers' accident, they filed a claim for first-party no-fault benefits with GEICO. GEICO rejected the Fullers' claim, and they filed suit seeking a declaration of coverage and a ruling that GEICO had violated the no-fault statute.

GEICO sought summary dismissal of the Fullers' claims. The circuit court, based on the incorrect assumption that House had entered a long-term rental contract, initially determined that House was required to insure the rental vehicle and that the Fullers were eligible for coverage under the GEICO policy. After further clarification by the parties, however, the court determined that Lakeside remained liable to insure the Impala and its policy was the proper source of PIP benefits for the injured Fullers. The court therefore dismissed the Fullers' action and they filed this appeal.

II. STANDARD OF REVIEW

We review de novo a trial court's decision on a motion for summary disposition. Maiden v. Rozwood, 461 Mich. 109, 118, 597 N.W.2d 817 (1999). A motion for summary disposition pursuant to MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Corley v. Detroit Bd. of Ed., 470 Mich. 274, 278, 681 N.W.2d 342 (2004). We must 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 N.W.2d 868 (2008). "There is a genuine issue of material fact when reasonable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party." Allison v. AEW Capital Mgt., LLP, 481 Mich. 419, 425, 751 N.W.2d 8 (2008).

We also review de novo matters of statutory interpretation. Stanton v. Battle Creek, 466 Mich. 611, 614, 647 N.W.2d 508 (2002). The goal of statutory interpretation is to discern and give effect to the intent of the Legislature. Odom v. Wayne Co., 482 Mich. 459, 467, 760 N.W.2d 217 (2008). To that end, the first step in determining legislative intent is the language of the statute. Id. If the statutory language is unambiguous, then the Legislature's intent is clear and judicial construction is neither necessary nor permitted. Id. [Barclae v. Zarb, 300 Mich.App. 455, 466–467, 834 N.W.2d 100 (2013).]

We review de novo questions of contract interpretation and considerations regarding the legal effect of a contractual provision. Alpha Capital Mgt., Inc. v. Rentenbach, 287 Mich.App. 589, 611, 792 N.W.2d 344 (2010). Because a no-fault insurance policy is a contract, the general rules of contract interpretation apply. Rory v. Continental Ins. Co., 473 Mich. 457, 461, 703 N.W.2d 23 (2005). When considering the meaning of policy terms, we must read the whole instrument with the goal of enforcing the parties' intent. Fresard v. Mich. Millers Mut. Ins. Co., 414 Mich. 686, 694, 327 N.W.2d 286 (1982) (opinion by FITZGERALD, C.J. ). Clear and unambiguous provisions of an insurance policy must be enforced according to their plain meanings. Henderson v. State Farm Fire & Cas. Co., 460 Mich. 348, 354, 596 N.W.2d 190 (1999).

III. ANALYSIS

Pursuant to MCL 500.3101(1), Lakeside was required to maintain PIP insurance over the Impala as the vehicle's owner and registrant. Lakeside was prohibited from shifting that burden onto a short-term renter by State Farm Mut. Auto. Ins. Co. v. Enterprise Leasing Co.,

452 Mich. 25, 27, 549 N.W.2d 345 (1996). Accordingly, Lakeside's insurer was liable to pay the Fullers' PIP benefits, not GEICO as the insurer of House's personal vehicle, and the circuit court properly dismissed plaintiffs' claims.

The Fullers based their claims for PIP benefits on Section I of House's GEICO policy. Section I of the policy pertains to "Liability Coverages," and protects the insured against tort claims raised by third parties. It does not govern entitlement to PIP benefits.¹ Section II of the GEICO policy applies to PIP coverage and provides different coverage and definitions than Section I. Section II starts with a general statement of 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.

"Eligible injured person" includes "[a]ny other person who suffers bodily injury while occupying an insured auto [.]" The definition of an "insured auto" in Section II is different from the definition of an "owned auto" in Section I and is key to the resolution of this matter:

Insured auto means 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.

The words "you" and "your" are also defined in the policy and include only the named policyholder and, under certain conditions, his or her spouse.

As correctly noted by GEICO, Section I of the policy, upon which the Fullers rely, applies only to liability, not PIP, coverage. Had Gregory Fuller been sued by a person in the other car involved in the accident, coverage would be determined by an analysis of Section I.² This case involves only a claim for first-party PIP benefits. Eligibility for PIP coverage is governed by Section II.

When analyzing coverage under Section II, two things are important: (1) the Fullers were not the named insureds—House was, and (2) the Fullers were not in the vehicle covered by the GEICO policy—that vehicle was in the shop.

Part 1 of Section II of the GEICO policy begins by declaring that GEICO will pay PIP benefits to "each eligible injured person." An injured person is deemed eligible if he or she "suffers bodily injury while occupying an insured auto." The Fullers want to apply the definition of "owned auto" from Section I of the policy. However, GEICO gave "insured auto" a particular definition for purposes of Section II. It is an auto (1) "with respect to which you are required to maintain" no-fault coverage, and (2) "to which the Bodily Injury liability coverage policy applies," and (3) "for which a specific premium is charged." (Bold added.) "You" is defined in the policy as only the named insured—House—and, under specific circumstances, her spouse, if any.

The Fullers' request for PIP benefits fails under the first prong of the "insured auto" definition. House was not required to maintain no-fault coverage for the Impala and therefore it is not an insured auto under the PIP benefits section of the GEICO policy. MCL 500.3101(1) demands that: " 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, property protection insurance, and residual liability insurance." The circuit court correctly determined that House was not the "owner or registrant" of the Chevy Impala, Lakeside was.

At the time of the Fullers' accident, MCL 500.3101(2) defined "owner" as follows:

(h) "Owner" means any of the following:

(i ) A person renting a motor vehicle or having the use thereof, under a lease or otherwise, for a period that is greater than 30 days.

(ii ) A person who holds the legal title to a vehicle, other than a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle pursuant to a lease providing for the use of the motor vehicle by the lessee for a period that is greater than 30 days.

(iii ) A person who has the immediate right of possession of a motor vehicle under an installment sale contract. [MCL 500.3101(2)(h), as amended by 2008 PA 241.]

"Registrant," at the time of the accident, was defined as follows:

(i) "Registrant" does not include a person engaged in the business of leasing motor vehicles who is the lessor of a motor vehicle pursuant to a lease providing for the use of the motor vehicle by the

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