Turner v. Auto Club Ins. Ass'n

Decision Date22 February 1995
Docket Number97032,Nos. 14,15,Docket Nos. 97016,s. 14
Citation528 N.W.2d 681,448 Mich. 22
PartiesMead Wilson TURNER, Geoffrey Eaton, Michigan Basic Property Insurance Company, Ancona, Gorenski & Hartford Fire Insurance Company, Plaintiffs, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant/Third-Party Plaintiff-Appellee, and Royal Insurance Company of America, Defendant-Appellant, and League General Insurance Company, Defendant-Appellee, and City of Ferndale, Third-Party Defendant. Mead Wilson TURNER, Geoffrey Eaton, Michigan Basic Property Insurance Company, Ancona, Gorenski & Hartford Fire Insurance Company, Plaintiffs, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant/Third-Party Plaintiff-Appellant, and Royal Insurance Company of America and League General Insurance Company, Defendants-Appellees, and City of Ferndale, Third-Party Defendant-Appellee. Calendar
CourtMichigan Supreme Court
Opinion

MICHAEL F. CAVANAGH, Justice.

This consolidated case involves a dispute between no-fault insurers 1 regarding their respective liabilities for property protection benefits for property damage that resulted from a multivehicle accident. We conclude that the insurers who denied liability are primarily liable for no-fault property protection benefits because their insureds' vehicles were "involved in the accident" that arose out of the use of a motor vehicle as a motor vehicle. M.C.L. § 500.3121(1); M.S.A. § 24.13121(1); M.C.L. § 500.3125; M.S.A. § 24.13125. The Court of Appeals opinion is affirmed in part and reversed in part.

FACTS AND PROCEDURAL HISTORY

The facts of this case are not in dispute. A thief "hot-wired" Columbus Bone, Sr.'s, car as it was parked at a private residence. The next morning, while the thief was driving the stolen vehicle northbound on Woodward Avenue, a City of Ferndale police officer patrolling the area observed that the vehicle was running without keys in its ignition. Suspecting that the vehicle had been stolen, the officer activated his overhead lights and signaled the driver to pull over. The thief ignored this direction, and instead accelerated, continuing north on Woodward. The officer followed in quick pursuit.

The chase lasted for about half a mile, at which point the cars approached the intersection of Woodward and Nine Mile Road. The officer saw that the traffic signal for Woodward was red and slowed down, hoping to deter the stolen vehicle from disregarding the red light. The driver still ignored the signal and proceeded through the intersection, resulting in a multivehicle collision.

First, the vehicle crashed into a pickup truck driven by its owner, Clinton Durfee, on eastbound Nine Mile. Next, the vehicle collided with a truck driven by its owner, Randy Leroy Lemons, also on eastbound Nine Mile. The impact of this crash caused the truck to split in two. The rear portion of the truck smashed into a nearby building on the northeast corner of Woodward and Nine Mile. The truck's gas tank exploded, the building caught on fire, and both the building and its contents were destroyed. The police vehicle did not collide with any of the other vehicles, nor did it incur any damage.

The owners and insurers of the building sought no-fault property protection benefits from the insurers of the owners of the truck, the pickup truck, and the stolen vehicle. Auto Club Insurance Association (ACIA), the insurer of the owner of the truck, also filed a third-party complaint against the City of Ferndale, claiming that the allegedly self-insured Ferndale was liable for a share of the property protection benefits.

The insurers disagreed about their respective liabilities. League General Insurance Company, the insurer of the owner of the pickup truck, and ACIA conceded liability for a one-quarter pro-rata share of payable property protection benefits. Royal Insurance Company, the insurer of the owner of the stolen vehicle, denied liability, arguing that under § 3121(1) of the no-fault act, the damage could not be said to have arisen out of the ownership, operation, maintenance, or use of its insured's motor vehicle as a motor vehicle because a thief had been operating the vehicle when the accident occurred. Ferndale also denied liability, claiming that under § 3125 of the no-fault act, the police car was not "involved in the accident...."

The insurers filed cross-motions for summary disposition of the liability issue. The trial court granted ACIA's motion for summary disposition against Royal, ruling that Royal was liable for a share of property protection benefits. However, it denied ACIA's motion for summary disposition against Ferndale, ruling that Ferndale was not liable for a share of property protection benefits. The Court of Appeals 2 affirmed both decisions.

Royal and ACIA applied for leave to appeal in this Court. We granted both applications and consolidated the appeals.

I

Our basic task in this case is to interpret sections of the no-fault statute pertaining to property protection benefits. The rules governing interpretation of statutes are well established. The cardinal rule of statutory construction is to identify and to give effect to the intent of the Legislature. Mull v. Equitable Life, 444 Mich. 508, 514, n. 7, 510 N.W.2d 184 (1994); Coleman v. Gurwin, 443 Mich. 59, 65, 503 N.W.2d 435 (1993). The first step in ascertaining such intent is to focus on the language in the statute itself. Thornton v. Allstate Ins. Co., 425 Mich. 643, 648, 391 N.W.2d 320 (1986). If the statutory language is certain and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. Mull and Coleman, supra.

Where the meaning of statutory language is not clear, judicial construction becomes necessary. Courts are to accord statutory words their ordinary and generally accepted meaning. Id. Moreover, when courts interpret a particular phrase in a statute, they must, whenever possible, construe the phrase in such a way that the interpretation does not conflict with, or deny effect to, other portions of the statute. Grand Rapids v. Crocker, 219 Mich. 178, 182-183, 189 N.W. 221 (1922). Finally, when courts interpret the no-fault act in particular, they are to remember that the act is remedial in nature and must be liberally construed in favor of the persons intended to benefit from it. Gobler v. Auto-Owners Ins. Co., 428 Mich. 51, 61, 404 N.W.2d 199 (1987).

II

The provisions of the no-fault act dealing with property protection benefits are §§ 3121-3127. Generally, a no-fault insurer will be liable to pay property protection benefits if the three following requirements are met:

1. There has been "accidental damage to tangible property arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle...." Section 3121(1). 3

2. The facts do not implicate any of the statutorily enumerated exceptions for property protection liability. Section 3123. 4

3. The insurer insures the owner of a vehicle "involved in the accident," in which case the insurer will be primarily liable; or, the insurer insures the operator of a vehicle "involved in the accident," in which case the insurer will be secondarily liable. Section 3125. 5

When two or more insurers are liable for property protection benefits in the same order of priority, benefits are paid by insurers in a manner that accomplishes an equitable distribution of loss among the insurers. Section 3127. 6

Property protection benefits are distinguishable from personal protection benefits (PIPs) because, among other things, property protection benefits provide third-party protection, whereas PIPs provide first-party protection. In other words, when a person's property has been damaged because of a motor vehicle, he does not look first to his own no-fault insurer for recovery, but, rather, to the "insurers of owners or registrants of vehicles involved in the accident...." Section 3125. In contrast, when a person suffers injuries because of a motor vehicle, he generally looks first to his own no-fault insurer for recovery. See §§ 3114(1) and 3115(1). A significant exception to the general liability scheme exists with regard to property protection benefits where the property that has been damaged is a moving motor vehicle. In that situation, the damaged property owner does look to his own no-fault insurer for recovery, provided he has purchased optional collision protection. See § 3123(1)(b).

In this case, the damaged property owners and their insurers seek third-party property protection benefits from the insurers of the owners of four vehicles that were present at the accident scene. Two of the insurers already have admitted responsibility. We conclude that the other two insurers, Royal and Ferndale, are also liable for a share of property protection benefits because the facts presented satisfy each of the aforementioned requirements.

A

The accidental damage to the building in this case arose out of the use of a motor vehicle as a motor vehicle, thereby making the damaged property owners and insurers eligible for property protection benefits under § 3121(1).

We examined what is meant by the language "arising out of the ownership, operation, maintenance, or use of a motor vehicle as a motor vehicle" under no-fault law in Thornton, supra. While the specific no-fault benefits at issue in Thornton were PIPs, our analysis in Thornton of the causal nexus that must exist between the injury and the motor vehicle equally applies to property protection benefits. 7

In Thornton, we...

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