Verbison v. Auto Club Ins. Ass'n

• Court: Court of Appeal of Michigan
• Writing for the Court: CORRIGAN
• Citation: Verbison v. Auto Club Ins. Ass'n, 506 N.W.2d 920, 201 Mich.App. 635 (Mich. App. 1993)
• Decision Date: 04 October 1993
• Docket Number: Docket No. 149786
• Parties: Keith M. VERBISON, Plaintiff-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee.

Page 920

506 N.W.2d 920

201 Mich.App. 635

Keith M. VERBISON, Plaintiff-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellee.

Docket No. 149786.

Court of Appeals of Michigan.

Submitted Aug. 3, 1993, at Detroit.

Decided Oct. 4, 1993, at 9:10 a.m.

Released for Publication Nov. 5, 1993.

Thomas K. Dipietro Law Offices by Thomas K. Dipietro and Ronald M. Haystead, Detroit, for plaintiff-appellant.

Brandt, Hanlon, Becker, Lanctot, McCutcheon, Schoolmaster & Taylor by Thomas A. Brandt, and John A. Lydick, of counsel, Detroit, for defendant-appellee.

Before BRENNAN, P.J., and CORRIGAN and R.C. ANDERSON, ^* JJ.

CORRIGAN, Judge.

In this action for declaratory judgment, plaintiff appeals as of right the grant of summary disposition to defendant and a declaration that defendant had no obligation to defend or indemnify plaintiff under an automobile insurance policy. We affirm.

The facts are undisputed. Plaintiff's automobile was insured with defendant pursuant to the no-fault act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq. The policy included an "Authorization for Excluded Driver (Named Excluded Person)" endorsement, pursuant to M.C.L. § 500.3009(2); M.S.A. § 24.13009(2), that named plaintiff's wife, Brenda Verbison, as an "excluded person." The endorsement included the following statutorily required language:

WARNING--When a named excluded person operates a vehicle all liability coverage is void--no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable.

The same language was repeated in the body of the policy, together with an additional paragraph that read:

If a vehicle is being operated by an individual named on the Declaration Certificate as an Excluded Driver, insurance under this policy is null and void for Bodily Injury Liability Insurance Coverage, Property Damage Liability Insurance Coverage, Comprehensive Coverage, Collision Coverage, Car Rental Coverage and Sound Equipment Coverage.

Plaintiff did not permit his wife to operate the vehicle. On October 12, 1990, she found a hidden set of keys, took the car, and was involved in an automobile accident. The injured motorist sued plaintiff and his wife. Plaintiff's alleged liability was presumably based on the owner's liability statute, M.C.L. § 257.401; M.S.A. § 9.2101. Plaintiff tendered the defense of the suit to defendant, which denied coverage, citing the "excluded driver" endorsement. Plaintiff then sought a declaration that defendant was required to defend and indemnify him in the third-party suit.

Because both parties agree that there are no material factual issues and the question involved is one of law, we treat the motion as one granted pursuant to MCR 2.116(C)(10). A motion for summary disposition under MCR 2.116(C)(10) tests the factual support for a claim. The court must consider the pleadings, affidavits, depositions, admissions, and other documentary evidence available to it and grant summary disposition if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. AFL-CIO v. Civil Service Comm., 191 Mich.App. 535, 546-547, 478 N.W.2d 722 (1991); Panich v. Iron Wood Products Corp., 179 Mich.App. 136, 139, 445 N.W.2d 795 (1989).

Plaintiff principally argues that M.C.L. § 500.3009(2); M.S.A. § 24.13009(2) unconstitutionally authorizes the deprivation of a property right without due process of law. We disagree.

M.C.L. § 500.3009(2); M.S.A. § 24.13009(2) provides:

If authorized by the insured, automobile liability or motor vehicle liability coverage may be excluded when a vehicle is operated by a named person. Such exclusion shall not be valid unless the following notice is on the face of the policy or the declaration page or certificate of the policy and on the certificate of insurance: Warning--when a named excluded person operates a vehicle all liability coverage is void--no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable.

Statutes are presumed constitutional. Katt v. Ins. Bureau, 200 Mich.App. 648, 651, 505 N.W.2d 37 (1993), citing Beacon Club v. Kalamazoo Co. Sheriff, 332 Mich. 412, 425, 52 N.W.2d 165 (1952). The presumption of constitutionality is rebuttable. A party challenging a legislative judgment may attack its constitutionality in terms of purely legal arguments, if the legislative judgment is so arbitrary and irrational as to render the legislation unconstitutional on its face. Shavers v. Attorney General, 402 Mich. 554, 614, 267 N.W.2d 72 (1978). As long as the Legislature's judgment is supported by a rational basis, the choices made and the distinctions drawn are constitutional. O'Donnell v. State Farm Mutual Automobile Ins. Co., 404 Mich. 524, 542, 273 N.W.2d 829 (1979). The test to determine whether legislation enacted pursuant to the police power comports with due process is whether the legislation bears a reasonable relation to a permissible legislative objective. Shavers, supra, 402 Mich. at 612, 267 N.W.2d 72.

The applicability of procedural due process guarantees depends initially on the presence of a "property" or "liberty" interest within the meaning of the Fifth or Fourteenth Amendment. Williams v. Hofley Mfg. Co., 430 Mich. 603, 610, 424 N.W.2d 278 (1988), citing Arnett v. Kennedy, 416 U.S. 134, 165, 94 S.Ct. 1633, 1649; 40 L.Ed.2d 15 (1974). To have a property interest in a benefit, a person must have more than a unilateral expectation of it. Williams, supra, 430 Mich. at 610, 424 N.W.2d 278, quoting Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709; 33 L.Ed.2d 548 (1972). Property interests "are created and their dimensions are defined by existing rules or understandings that stem from an independent source." Williams, supra, 430 Mich. at 610-611, 424 N.W.2d 278. Because insurance companies "are the instruments through which the Legislature carries out a scheme of general welfare,"Shavers supra, 402 Mich. at 597, 267 N.W.2d 72, due process protections under the state and federal constitution are operative. Id. at 599, 267 N.W.2d 72.

Although the issue presented has not been squarely addressed, a number of our decisions have concluded that the provisions of M.C.L. § 500.3009(2); M.S.A. § 24.13009(2) are a valid exercise of legislative power, i.e., that the "rational basis" test of Shavers and O'Donnell, supra, has been met. As the Court said in Muxlow v. Auto Club Ins. Ass'n, 152 Mich.App. 817, 820, 394 N.W.2d 121 (1986) (holding that the owner of a vehicle may be named as an excluded driver), "the choice by the Legislature among competing policy considerations is best left to its determination and is not for the courts to question." See also Detroit Automobile Inter-Ins Exchange v. Comm'r of Ins., 86 Mich.App. 473, 480, 272 N.W.2d 689 (1978). "[T]he Legislature balanced the competing policy considerations of coverage versus lower costs by retaining within the broad coverage of no-fault the named driver exclusion provisions." This Court "will not question the wisdom of the Legislature's determination." Id.

Plaintiff has not overcome the presumption that M.C.L. § 500.3009(2); M.S.A. § 24.13009(2) is constitutional. First, a nontangible property interest involves "reasonab[le] reli[ance] upon an existing practice." Bundo v. Walled Lake, 395 Mich. 679, 694; 238 N.W.2d 154 (1976) (process for renewal of liquor licenses). Plaintiff proposed to limit the excluded driver rule to only those instances when the named insured has consented to the excluded driver's use of the vehicle. No panel of this Court has construed the statute in this fashion. Indeed, the Court has explicitly held that § 3009(2) presents "no room for judicial construction or interpretation." Allstate Ins. Co. v. Detroit Automobile Inter-Ins Exchange, 142 Mich.App. 436, 442, 369 N.W.2d 908 (1985). See also, e.g., Allstate Ins. Co. v. Detroit Automobile Inter-Ins Exchange, 73 Mich.App. 112, 115-116, 251 N.W.2d 266 (1976). Plaintiff, therefore, cannot have "reasonably relied upon an existing practice" in believing that the excluded driver provision applies only when the insured consents to the use of his vehicle. Plaintiff has no more than a "unilateral expectation" of his interpretation of the statute, not a property interest "defined by existing rules or understandings that stem from an independent source." See Roth, supra, 408 U.S. at 577, 92 S.Ct. at 2709 (emphasis supplied).

Plaintiff's argument is really no more than a public policy argument in constitutional garb. This Court will not interpose a policy-driven interpretation on the plain language of a statute in which the Legislature has chosen among competing policy concerns. The situations that plaintiff presents as arising because of the application of § 3009(2) are simply inapposite. For example, plaintiff did not permit his car to be driven without insurance coverage. Thus, he cannot be subject to criminal sanctions under M.C.L. § 500.3102(2); M.S.A. § 24.13102(2).

Finally, even if the suggested right to procedural due process were recognized, the outcome of this case would remain the same. According to Bundo, supra, rudimentary due process requires

(i) timely written notice detailing the reasons for proposed administrative...