Universal Underwriters Group v. Allstate Ins. Co., Docket No. 217470.

• Decision Date: 09 October 2001
• Docket Number: Docket No. 217470.
• Citation: 635 N.W.2d 52,246 Mich. App. 713
• Parties: UNIVERSAL UNDERWRITERS GROUP, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

635 N.W.2d 52

246 Mich. App. 713

UNIVERSAL UNDERWRITERS GROUP, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Appellee.

Docket No. 217470.

Court of Appeals of Michigan.

Submitted February 13, 2001, at Detroit.

Decided July 20, 2001, at 9:05 a.m.

Released for Publication October 9, 2001.

Thomas J. Doyle, Saginaw, for the plaintiff.

Collison, Collison & Zimostrad, P.C. (by Jeffrey C. Collison and Michael J. Hutchinson), Saginaw, and Ruwart & Karas (by Timothy P. Ruwart), Flint, for the defendant.

Before WHITE, P.J., and WILDER and ZAHRA, JJ.

PER CURIAM.

Plaintiff Universal Underwriters Group appeals as of right from an order denying its motion for summary disposition and granting summary disposition in favor of defendant Allstate Insurance Company in this insurance coverage dispute. We reverse and remand.

I

A

This case arises from an April 28, 1996, motor vehicle accident Cherry Broadway was involved in while driving a 1989 Buick LeSabre she was in the process of purchasing from Prestige Pontiac. As a result of injuries Broadway sustained, plaintiff, as Prestige's insurer, paid personal injury protection (PIP) benefits to Broadway. Plaintiff filed the present action against defendant seeking reimbursement for the benefits paid. Plaintiff alleged that defendant provided insurance to Broadway and was responsible for the benefits paid by plaintiff. Defendant claimed that defendant's insurance binder had not taken effect and that Broadway did not have an insurable interest in the vehicle at the time of the accident. The circuit court granted summary disposition in defendant's favor, concluding that Broadway did not have an insurable interest in the vehicle and therefore had no insurance coverage at the time of the accident.

B

On Wednesday, April 24, 1996, Broadway went automobile shopping at Prestige with Kevin Edmonds,¹ an agent of defendant Allstate Insurance. On that day, Broadway applied for financing for the LeSabre, informed the Prestige salesman that she did not own a vehicle or have insurance at that time, signed² a temporary driving permit allowing her to use the LeSabre while financing was being approved, and gave Prestige $100. Prestige's "Temporary Driving Permit" standardized form, as completed, stated that Allstate was Broadway's insurance company and that Edmonds was Allstate's agent. The temporary driving permit form contained an "Agreement" section³ under which Broadway agreed that her insurer would be the primary insurer. A Prestige employee told Broadway that Prestige would have her financing approved and the paperwork ready for the LeSabre on Saturday, April 27, 1996, and that she should return that day and pay an additional $700. Broadway complained that something was wrong with the brakes on the LeSabre, but nevertheless took possession of the LeSabre on Wednesday April 24, 1996.

Edmonds faxed to Prestige a certificate of no-fault insurance for Broadway, covering the LeSabre, on either Friday, April 26, or Saturday, April 27, 1996.⁴ The certificate stated an expiration date of September 27, 1996.⁵

When Broadway returned to Prestige as instructed on Saturday, April 27, 1996, she paid the additional $700 and stated that she was not going to purchase the LeSabre unless the brakes were repaired. Broadway testified during a deposition that she was told the financing "still hadn't been done and nor had the paperwork been typed up, but everything, they thought everything was going to work out [and told her to] [g]o ahead and keep the car," and that the paperwork should be ready on Monday, April 29, 1996, and to return then. Broadway testified that because Prestige kept telling her there was nothing wrong with the brakes, she took the LeSabre to Tuffy Muffler and to Northwest Tire and Service on the afternoon of Saturday, April 27, 1996, and obtained estimates for the needed repair work. Copies of the estimates were submitted to the circuit court.

On Sunday, April 28, 1996, Broadway was involved in an automobile accident while driving the LeSabre, resulting in minor damage to the muffler and personal injury to Broadway. On Monday, April 29, 1996, Broadway again returned to Prestige, on her way to the hospital. She was told that Prestige would repair the LeSabre's brakes and tires, clean the vehicle and do some minor repairs, and that the LeSabre would be ready that afternoon. Prestige gave Broadway a loaner vehicle. When Broadway returned later on Monday, April 29, 1996, the paperwork still was not done, nor was the LeSabre repaired.

On May 2, 1996, the dealership notified Broadway that the paperwork and the LeSabre were ready. Broadway and her daughter went to Prestige that day to finalize the purchase of the LeSabre. However, Broadway determined that the muffler had not been properly repaired and the brakes still were not operating properly. While reading through various forms, Broadway noticed a disclaimer clause that released the dealership from liability arising out of any injuries sustained while driving one of their automobiles. Broadway decided not to go through with the purchase of the LeSabre because of the disclaimer clause and the inadequate repairs. Broadway testified during a deposition that she said she wanted her money back, but Prestige found her another vehicle to purchase, a 1984 Chevrolet Cavalier.

Documentary evidence submitted to the circuit court⁶ establishes that Guardian National Acceptance Corporation approved Broadway's financing at noon on May 2, 1996. On May 3, 1996, Broadway signed an application for a Michigan Certificate of Title and Registration for the Cavalier. The application stated that defendant was the insurer and stated the same policy number as did the certificate of insurance Edmonds had faxed to Prestige pertaining to the LeSabre. On May 6, 1996, Broadway signed a vehicle purchase agreement for the Cavalier. The $800 she had made as a down payment on the LeSabre was applied to the Cavalier. She picked up the Cavalier the following Saturday.

C

Plaintiff paid Broadway's PIP benefits and sought reimbursement from defendant. Plaintiff filed this action for declaratory judgment asserting that defendant was obligated to pay Broadway PIP benefits under M.C.L. § 500.3114(1) and that if the court deemed both insurers in the same order of priority, plaintiff should be entitled to partial recoupment under M.C.L. § 500.3114(6). Plaintiff moved for summary disposition pursuant to MCR 2.116(C)(9), for failure to state a valid defense, relying on the insurance binder defendant issued April 26, 1996. Defendant answered plaintiff's motion for summary disposition and moved for summary disposition pursuant to MCR 2.116(C) (10), asserting that the insurance binder was conditioned on Broadway's actual purchase of the vehicle and that the insurance binder was not in effect on the day of the accident because Broadway did not have an insurable interest in the vehicle.

The circuit court determined that Broadway had applied for financing, but did not have ownership of the vehicle when the accident occurred. The circuit court reasoned that automobile insurance could not be acquired unless one owned an automobile and, therefore, an insurable interest did not exist until one obtained ownership of a vehicle. Relying on Clevenger v. Allstate Ins. Co., 443 Mich. 646, 505 N.W.2d 553 (1993), which states that a valid automobile liability insurance policy had to be supported by an insurable interest, the circuit court granted defendant's motion for summary disposition and denied plaintiff's motion for summary disposition.

II

Plaintiff's principal argument is that the circuit court erred in concluding that because Broadway did not own a vehicle at the time of the accident, she had no insurable interest and therefore the purported coverage was not in effect. Plaintiff argues that Broadway had an insurable interest in her own health and well-being, that defendant had issued a valid insurance binder that was in effect at the time of the accident, and that defendant was the primary insurer of the vehicle at the time of the accident under the temporary driving permit Broadway had signed on April 24, 1996.

Defendant argued below that its binder was issued in anticipation of Broadway's purchase of the LeSabre, which purchase never occurred, that financing for the LeSabre had not been approved at the time of the accident, and that PIP benefits cannot be purchased independently of being either an owner or a registrant of a vehicle. Defendant notes that Prestige, as the owner and registrant of the vehicle, was required to, and did, maintain the required no-fault coverage on the LeSabre.

A

A motion for summary disposition under MCR 2.116(C)(10) tests whether there is factual support for a claim. Libralter Plastics, Inc. v. Chubb Group of Ins. Cos., 199 Mich.App. 482, 485, 502 N.W.2d 742 (1993). Affidavits, pleadings, depositions, admissions, and documentary evidence are considered in reviewing a motion for summary disposition pursuant to MCR 2.116(C)(10), and the evidence is viewed "in the light most favorable to the party opposing the motion." Quinto v. Cross & Peters Co., 451 Mich. 358, 362, 547 N.W.2d 314 (1996). Summary disposition is proper under MCR 2.116(C)(10) if the documentary evidence shows that there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Id.

B

An insurance binder is "a contract of temporary insurance pending issuance of a formal policy or proper rejection by [the insurer]." Blekkenk v. Allstate Ins. Co., 152 Mich.App. 65, 68, 393 N.W.2d 883 (1986).

Temporary insurance is usually evidenced by a binding slip or interim receipt, usually called a "binder." A binder has generally been defined as a written instrument which is used when a policy cannot be immediately issued, to evidence that the insurance coverage attaches at a specified time and continues until the policy is issued or the

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