Travelers Ins. v. U-Haul of Michigan, Inc.

• Decision Date: 27 July 1999
• Docket Number: Docket No. 194316.
• Citation: 597 N.W.2d 235,235 Mich. App. 273
• Parties: TRAVELERS INSURANCE, as Subrogee, of Pine Knob Wine Shop, Plaintiff-Appellee, v. U-HAUL OF MICHIGAN, INC., a Michigan Corporation, and U-Haul International, Inc., a Nevada Corporation, Defendants-Appellants, and Ben P. Nouri, Defendant.
• Court: Court of Appeal of Michigan — District of US

597 N.W.2d 235

235 Mich. App. 273

TRAVELERS INSURANCE, as Subrogee, of Pine Knob Wine Shop, Plaintiff-Appellee, v. U-HAUL OF MICHIGAN, INC., a Michigan Corporation, and U-Haul International, Inc., a Nevada Corporation, Defendants-Appellants, and Ben P. Nouri, Defendant.

Docket No. 194316.

Court of Appeals of Michigan.

Submitted November 18, 1998, at Lansing.

Decided April 16, 1999, at 9:05 a.m.

Released for Publication July 27, 1999.

Christopher Royce, Okemos, for Travelers Insurance.

Galbraith & Booms (by Laura A. Phillips), Southfield, for U-Haul of Michigan, Inc., and U-Haul International, Inc. Before: SAAD, P.J., and MICHAEL J. KELLY and BANDSTRA, JJ.

SAAD, P.J.

Defendants appeal as of right the trial court's order denying their motion for summary disposition under MCR 2.116(C)(8). Defendants also seek an award of costs under MCR 2.625 and M.C.L. § 600.2591; M.S.A. § 27A.2591. We reverse the denial of defendants' summary disposition motion, but affirm the denial of sanctions.

I NATURE OF CASE

In this appeal, we are asked to reconcile the seemingly contradictory mandates of two statutory schemes: the owner's liability act, M.C.L. § 257.401; M.S.A. § 9.2101, and the tort liability provision of the no-fault insurance act, M.C.L. § 500.3135; M.S.A. § 24.13135. The former, enacted in 1949 and amended several times, provides a cause of action against owners of motor vehicles arising from the negligent operation of those vehicles by authorized users. The no-fault act, which became effective in October 1973, abrogates tort liability arising from the use, ownership, or maintenance of motor vehicles except under specified circumstances. Here, plaintiff asserts that the owner's liability act preserves his right to sue defendants in tort for property damage caused by the individual who operated their rental truck. In response, defendants argue that such liability has been abrogated by the no-fault act. Oddly, although the no-fault act became effective more than a quarter of a century ago, there is no published opinion addressing the viability of tort claims for property damages in the no-fault era.

Considering the plain language of both statutes, and the policies behind them, we conclude that the no-fault act's abrogation of most tort liability arising from motor vehicle incidents limits the availability of relief under the owner's liability statute. Actions under the owner's liability statute are permissible only if not barred by the no-fault act. We apply this same restriction to actions under the common-law theory of negligent entrustment. To conclude otherwise would substantially undermine the no-fault act and its comprehensive scheme of compensation for accident victims.

II FACTS AND PROCEEDINGS

On June 13, 1993, defendant Ben P. Nouri rented a box truck from defendant U-Haul of Michigan, Inc., a Michigan franchisee of defendant U-Haul International, Inc.¹ The truck was insured by Republic Western Insurance Company. Nouri drove the truck to the Pine Knob Wine Shop in Clarkston. While Nouri was maneuvering the truck in the shop's parking lot, the front passenger-side corner of the truck hit and damaged the shop's awning. Plaintiff, the wine shop's insurer, adjusted the loss and paid $10,112 for the property damage.

Plaintiff filed this action as subrogee of the wine shop on May 18, 1995.² The complaint listed five counts: a negligence count against Nouri and counts of negligence and negligent entrustment against each U-Haul defendant. Plaintiff alleged that Nouri's negligent operation of the Haul truck was the proximate cause of the damage to the wine shop. The negligence counts against the two U-Haul defendants alleged that they were negligent in renting a truck with obstructed visibility. The two common-law negligent entrustment claims were based on allegations that U-Haul was negligent in renting the truck to Nouri, who had been involved in a prior accident with a vehicle he had rented from U-Haul.

In a summary disposition motion under MCR 2.116(C)(8) (failure to state a claim on which relief can be granted), the U-Haul defendants argued that plaintiff's action was barred by Michigan's no-fault automobile insurance act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq. Defendants also claimed that plaintiff's complaint was frivolous and sought costs and attorney's fees under MCR 2.625 and M.C.L. § 600.2591; M.S.A. § 27A.2591.³ In response, plaintiff argued that under the owners liability provision of Michigan's civil liability act, M.C.L. § 257.401; MSA 9.2101, the U-Haul defendants could be held liable as owners of the motor vehicle for Nouri's negligent operation. Plaintiff also argued that negligent entrustment remained a viable cause of action.

At the motion hearing, the trial court agreed with plaintiff that under M.C.L. § 257.401; M.S.A. § 9.2101, negligent entrustment continues to be a viable cause of action and denied defendants' motion. Defendants noted that the court's ruling did not differentiate between negligence in general and negligent entrustment. In response, the court stated that defendants' motion sounded only in negligent entrustment and failed to specifically address the owner's liability act or the ordinary negligence counts. The Court denied defendants' motion for summary disposition.

On March 23, 1996, the court entered an order based on the parties' stipulation to dismiss with prejudice defendant Ben P. Nouri. That same day, the court entered a consent judgment against defendants, jointly and severally, in the amount of $10,112. The consent judgment provided that the parties accepted as true the factual allegations in plaintiff's complaint, and reserved defendants' right to appeal the denial of the summary disposition motion.⁴ We now consider that appeal.

III ANALYSIS

A Defendants' Appeal of the Order Denying Their Motion for Summary Disposition

Defendants moved for summary disposition under MCR 2.116(C)(8), which tests the legal sufficiency of a claim on the basis of the pleadings alone. LaRose Market, Inc. v. Sylvan Center, Inc., 209 Mich.App. 201, 204-205, 530 N.W.2d 505 (1995). If the claim is so clearly unenforceable as a matter of law that no factual development could justify recovery, the motion should be granted. Holland v. Liedel, 197 Mich.App. 60, 63-64, 494 N.W.2d 772 (1992).

The No-Fault and Owner's Liability Acts

The interpretation and application of court rules and statutes presents a question of law that is reviewed de novo. McAuley v. General Motors Corp., 457 Mich. 513, 518, 578 N.W.2d 282 (1998); Szymanski v. Brown, 221 Mich.App. 423, 433, 562 N.W.2d 212 (1997). It is well established that the primary goal of judicial interpretation of statutes is to give effect to the intent of the Legislature. In re Messer Trust, 457 Mich. 371, 379-380, 579 N.W.2d 73 (1998). When statutory language is clear and unambiguous we must honor the legislative intent as clearly expressed in that statute. Western Michigan Univ. Bd. of Control v. Michigan, 455 Mich. 531, 538, 565 N.W.2d 828 (1997). Because further construction is not required, none is permitted. Id. When construing a statute, the court should presume that every word has some meaning and should avoid any construction that would render the statute, or any part of it, surplusage or nugatory. Western Michigan Univ., at 541-542, 565 N.W.2d 828. Statutes should be construed so as to prevent absurd results, injustice, or prejudice to the public interest. McAuley, supra at 518, 578 N.W.2d 282.

As a rule of statutory construction, statutes that relate to the same subject or that share a common purpose are in pari materia and must be read together as one, even if they contain no reference to one another and were enacted on different dates. In re Parole of Glover, 226 Mich.App. 655, 661, 575 N.W.2d 772 (1997), lv. gtd. 458 Mich. 867, 582 N.W.2d 837 (1998). The purpose of the "in pari materia" rule is to effectuate the purpose of the Legislature as evinced by the harmonious statutes on a subject. Id. If the Court can construe the two statutes so that they do not conflict, that construction should control. Id. However, the rules of statutory construction also provide that a more recently enacted law has precedence over the older statute. Malcolm v. East Detroit, 437 Mich. 132, 139, 468 N.W.2d 479 (1991). This rule is particularly persuasive when one statute is both the more specific and the more recent. Nat'l Center for Mfg. Sciences, Inc. v. Ann Arbor, 221 Mich.App. 541, 549, 563 N.W.2d 65 (1997).

Now, we apply these rules of interpretation to the owner's liability act and the no-fault act. Before its most recent amendment, the owner's liability act, M.C.L. § 257.401; M.S.A. § 9.2101,⁵ provided:

(1) Nothing herein contained shall be construed to abridge the right of any person to prosecute a civil action for damages for injuries to either person or property resulting from a violation of any of the provisions of this act by the owner or operator of a motor vehicle, his or her agent or servant. The owner of a motor vehicle shall be liable for any injury occasioned by the negligent operation of the motor vehicle whether the negligence consists of a violation of the provisions of the statutes of the state or in the failure to observe such ordinary care in the operation of the motor vehicle as the rules of the common law requires.

The provision further states that the owner is liable only for the consensual use of the vehicle, and it creates a rebuttable presumption of consent when the vehicle is operated by certain family members. The Supreme Court has stated that, "by statute, the owner of a motor vehicle is liable for its negligent operation if it is being driven with the owner's permission, M.C.L. § 257.401(1); M.S.A. § 9.2101(1)." Clevenger v. Allstate Ins. Co., 443 Mich. 646, 657, 505 N.W.2d 553 (1993). To subject an owner to liability under the statute, a plaintiff need only show that the defendant...