Husted v. Auto-Owners Ins. Co., AUTO-OWNERS

• Decision Date: 22 September 1995
• Docket Number: Docket No. 172743,AUTO-OWNERS
• Citation: 213 Mich.App. 547,540 N.W.2d 743
• Parties: Marcia HUSTED, Personal Representative of the Estate of Richard Allen Husted, Jr., Plaintiff-Appellant, v.INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 743

540 N.W.2d 743

213 Mich.App. 547

Marcia HUSTED, Personal Representative of the Estate of Richard Allen Husted, Jr., Plaintiff-Appellant, v. AUTO-OWNERS INSURANCE COMPANY, Defendant-Appellee.

Docket No. 172743.

Court of Appeals of Michigan.

Submitted June 14, 1995, at Grand Rapids.

Decided Sept. 22, 1995, at 9:20 a.m.

Released for Publication Dec. 18, 1995.

Ford & Kobayashi, P.C. by James B. Ford, Kalamazoo, for the plaintiff.

Piatt, Bartosiewicz, Tiderington & Kimbrel, P.C. by Gary Bartosiewicz, Kalamazoo, for the defendant.

Before GRIBBS, P.J., and MARKEY and TAYLOR, ^* JJ.

PER CURIAM.

Plaintiff appeals as of right from an order granting defendant Auto-Owners Insurance Company's motion for summary disposition. We affirm.

Plaintiff's decedent, Richard Allen Husted, Jr., was killed in August 1984, when his motorcycle collided with a truck driven by defendant Henry Clifton Dobbs. At the time of the accident, Dobbs was driving his employer's uninsured truck. Dobbs had an automobile insurance policy issued by Auto-Owners that covered his two personal vehicles. Plaintiff instituted this action against Dobbs and the truck owner. Dobbs failed to defend, and a default judgment was entered against him. Following entry of the default judgment, Dobbs filed an action against Auto-Owners on the basis that the policy provided coverage. Auto-Owners contended that Dobbs had no coverage because of a policy exclusion denying coverage when the insured drove any non-private passenger automobile used in a business or occupation of the named insured. The trial court found that the policy language was clear and unambiguous, that coverage was not provided, and that nothing in the policy could have led Dobbs to believe otherwise. This Court affirmed that decision in Dobbs v. Auto-Owners Ins Co, unpublished opinion per curiam of the Court of Appeals, decided May 27, 1992 (Docket No. 134674).

In March 1993, plaintiff filed a writ of garnishment against Auto-Owners, alleging that the no-fault act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq., mandated residual liability coverage. Auto-Owners denied liability on the basis of this Court's opinion in Dobbs v. Auto-Owners upholding the policy exclusion. In June 1993, plaintiff filed her motion for summary disposition against Auto-Owners pursuant to MCR 2.116(C)(9) and (10), contending that pursuant to the no-fault statute and public policy, Auto-Owners must provide residual liability coverage for the injuries suffered by plaintiff's decedent. Auto-Owners also moved for summary disposition and responded to plaintiff's motion by alleging that res judicata barred the claim and that the no-fault act did not require portable residual liability coverage. The trial court formulated the issues presented as whether the prior Dobbs decision was res judicata or collateral estoppel to the claims and issues raised in this suit, and whether the exclusion in the Auto-Owners' policy was void because it contravenes the financial responsibility act, M.C.L. § 257.501 et seq.; M.S.A. § 9.2201 et seq., and the Michigan no-fault act. The court first found that the doctrines of collateral estoppel and res judicata did not preclude it from deciding the issue of portable residual liability because the parties were not the same and there was no decision on the merits of these issues in the prior Dobbs case. The court further found that the legislative intent behind the no-fault act was to have all people insure vehicles that are on the road. In short, the court concluded that this exclusion in Auto-Owners' policy fit within the no-fault statutory scheme by permitting the insurer to predicate its insurance coverage on the type of driving the insured will be doing and the type of vehicle the insured will be driving.

The insurance policy provisions at issue in the instant case provide:

4. DRIVE OTHER CARS.

(b) Coverage does not apply:

* * * * * *

(3) to any automobile not of the private passenger type while used in a business or occupation of the named insured, spouse or relative, or to any private passenger automobile while used in such business or occupation if operated by a person other than the named insured or spouse or the chauffeur or servant of such named insured or spouse unless the named insured or spouse is present in such automobile.

Again, this Court found that the insurance policy's exclusionary language was unambiguous and applicable to Dobbs because he was driving his employer's delivery truck when the accident occurred. However, this Court did not at that time address the question whether that exclusion is violative of the no-fault act requirements. Consequently, the issue presented in this appeal is whether the no-fault act's residual liability requirement voids the instant exclusionary clause. We believe it does not.

In reviewing a trial court's decision to grant summary disposition pursuant to MCR 2.116(I), this Court conducts a review de novo to determine whether the pleadings show that a party was entitled to judgment as a matter of law or whether affidavits or other documentary evidence showed that no genuine issue of material fact existed. Wieringa v. Blue Care Network, 207 Mich.App. 142, 144, 523 N.W.2d 872 (1994). If either inquiry results in an affirmative response, the trial court should have rendered judgment without delay. Id. at 144-145, 523 N.W.2d at 875.

The exclusionary language in the case at bar denies coverage when an insured drives a nonowned, nonpassenger vehicle for business use. Plaintiff first argues that the instant exclusionary clause violates the no-fault residual liability requirement, specifically, the pertinent sections listed below.

M.C.L. § 500.3101(1); M.S.A. § 24.13101(1) of the no-fault act provides 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, property protection insurance, and residual liability insurance.

Section M.C.L. § 500.3131(1); M.S.A. § 24.13131(1) provides:

Residual liability insurance shall cover bodily injury and property damage which occurs within the United States, its territories and possessions, or in Canada. This insurance shall afford coverage equivalent to that required as evidence of automobile liability insurance under the financial responsibility laws of the place in which the injury or damage occurs. In this state this insurance shall afford coverage for automobile liability retained by section 3135.

M.C.L. § 500.3009(1); M.S.A. § 24.13009(1), incorporated into the no-fault act by M.C.L. § 500.3131(2); M.S.A. § 24.13131(2), provides:

An automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for property damage, bodily injury, or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall not be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless the liability coverage is subject to a limit, exclusive of interest and costs of not less than $20,000.00 because of bodily injury to or death of 1 person in any 1 accident.

Section M.C.L. § 500.3135(1); M.S.A. § 24.13135(1) also provides:

A person remains subject to tort liability for noneconomic loss caused by his or her ownership, maintenance, or use of a motor vehicle only if the injured person has suffered death, serious impairment of body function, or permanent serious disfigurement.

Plaintiff contends that these sections, when read together, require residual liability coverage when an insured drives any automobile and that exclusionary clauses that defeat this residual liability requirement are void as against public policy and the no-fault act. Recently, this contention was expressly rejected by our Supreme Court in Citizens Ins. Co. of America v. Federated Mutual Ins. Co., 448 Mich. 225, 235-236, 531 N.W.2d 138 (1995):

As this Court has previously held, one who uses another's vehicle generally is not required to provide residual liability coverage for injuries or death arising from use of that other vehicle. State Farm [Mutual Automobile Ins. Co.] v. Ruuska, [412 Mich. 321, 343, 314 N.W.2d 184 (1982) ] (opinion of Levin, J.), and 353 (opinion of Coleman, C.J.). Because such coverage is optional, the extent of [the insurance companies'] obligations is governed by the terms of their respective policies.

In the case at bar, the terms of Auto-Owners' insurance contract excluded coverage when an insured drove a nonowned, nonpassenger vehicle for business purposes. This is an unambiguous exclusion that does not violate the no-fault act because portable liability coverage is optional, not mandatory, under the act. Citizens, supra.

Next, plaintiff relies on the jurisprudence surrounding car lease agreements for the proposition that exclusionary clauses are void. This reliance is misplaced. The basis for finding that the exclusionary clauses were void in the lease cases was that the car rental companies were the owners of the vehicles, and owners are required to carry coverage under the...