DONNA GELLER V FARMERS INSURANCE EXCHANGE
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STATE OF MICHIGAN
COURT OF APPEALS
DONNA GELLER,
FOR PUBLICATION
November 1, 2002
9:25 a.m.
Plaintiff-Appellee,
v
No. 232579
Sanilac Circuit Court
LC No. 00-027209-CK
FARMERS INSURANCE EXCHANGE,
Defendant-Appellant.
Updated Copy
January 31, 2003
Before: White, P.J., and Neff and Jansen, JJ.
PER CURIAM.
Defendant appeals as of right from the trial court's order denying its motion for summary
disposition and granting summary disposition in favor of plaintiff. We reverse and remand for
an order of judgment in favor of defendant.
Plaintiff accidentally struck and killed her two-year-old daughter while operating a
vehicle owned by plaintiff 's grandmother. The grandmother's vehicle was insured by Allstate
Insurance Company. Plaintiff owned a vehicle insured by defendant. Defendant issued a
residual liability insurance policy to plaintiff covering her own vehicle (which was not involved
in the accident) and defendant's policy excluded coverage for bodily injury to "an insured
person." The policy defined "insured person" as the policyholder or a member of the
policyholder's family. Thus, it is undisputed that plaintiff 's daughter was an insured person
within the meaning of the policy.
Defendant refused to defend or indemnify plaintiff in proceedings brought by the
personal representative of the child's estate. Plaintiff filed a complaint for declaratory judgment,
seeking a ruling that defendant was obligated to provide a defense and indemnification.
Defendant moved for summary disposition pursuant to MCR 2.116(C)(10). The trial court
granted summary disposition in favor of plaintiff on the authority of State Farm Mut Auto Ins Co
v Sivey, 404 Mich 51; 272 NW2d 555 (1978). In Sivey, State Farm insured a vehicle owned by
Emily Sivey and her father. Sivey was a passenger in her vehicle while it was being driven by
Sandra Andary, and they were involved in an accident in which Sivey was injured. Sivey filed
suit against Andary and the driver of the other vehicle involved. Andary claimed protection by
the insurance policy issued by State Farm for Sivey's vehicle. State Farm claimed that the policy
did not provide bodily injury liability coverage to Sivey under the exclusion denying coverage
for "bodily injury to any insured." The Supreme Court concluded that this clause is against
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public policy because its operation would prevent coverage required by the financial
responsibility act. MCL 257.520.
Defendant, however, contends that an exclusion from residual liability coverage
contained in a policy issued to the driver who did not own the vehicle involved in the accident is
valid and must be enforced, relying on Citizens Ins Co v Federated Mut Ins Co, 448 Mich 225;
531 NW2d 138 (1995), and Husted v Auto-Owners Ins Co, 459 Mich 500; 591 NW2d 642
(1999). Defendant asserts that although Citizens and Husted did not deal with the insured person
exclusion, their central holdings, i.e., that an insurer need not provide residual liability coverage
to its insured when the insured is operating a vehicle that the insured does not own, validates the
application of the insured person exclusion in plaintiff 's policy.
In Citizens, Martina Wiswell was injured while a passenger in a rental vehicle insured by
Federated and driven by another person whose no-fault insurer was State Farm. State Farm
denied coverage on the basis of a "car business" exclusion. The Supreme Court initially noted
that the no-fault act requires that a policy sold under the act must provide residual liability
coverage for use of the vehicle insured. Id. at 230. The Supreme Court further stated that "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." Id. at 235-236. Because residual
liability coverage for another vehicle is optional, the extent of an insurer's obligation is governed
by the terms of the insurance policy. Id. at 236. The Supreme Court upheld the "car business"
exclusion contained in State Farm's policy as not being violative of the no-fault act, MCL
500.3101 et seq., and ruled that State Farm was not liable for the payment of residual liability
benefits.
In Husted, Henry Dobbs was driving his employer's uninsured vehicle and struck and
killed Richard Husted while Husted was driving his motorcycle. Dobbs had automobile
insurance with Auto-Owners. Auto-Owners denied coverage under a "business-use" exclusion.
The Supreme Court held that the no-fault act does not require residual liability coverage for an
insured's operation of a vehicle that the insured neither owns nor has registered and that is
unambiguously excluded from the insured's insurance pursuant to a valid exclusion. Id. at 517.
Here, plaintiff was not driving her own vehicle when the accident occurred. As held in
Citizens and Husted, plaintiff was not required to have residual liability coverage for her
operation of a vehicle that she did not own or register. See MCL 500.3101. She was only
required to carry residual liability coverage for her own vehicle, and she had such coverage.
Plaintiff argues, however, that Sivey is controlling because the Court there held as a general
matter that the "insured person" exclusion is invalid and that the Husted test cannot be met here
because Husted held that the no-fault act does not require residual liability coverage for an
insured's operation of a vehicle that the insured neither owns nor has registered and that is
unambiguously excluded under a valid exclusion.
We disagree with plaintiff 's contention that the holding in Sivey is so broad that the
"insured person" exclusion is always invalid. The Supreme Court did not consider the no-fault
act in Sivey. Rather, the Court held that the "insured person" exclusion was against public policy
because its operation prevented coverage required by the financial responsibility act, not the nofault act, and further noted that "the Legislature intended that there be coverage in circumstances
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such as are present here," Sivey, supra at 58, those circumstances being that the insured was
injured while a passenger in her own vehicle. The present case, on the other hand, involves a
claim under the no-fault act for residual liability insurance where plaintiff was not driving her
own vehicle.
We find that Citizens and Husted are controlling. Although plaintiff had residual liability
coverage issued by her insurer, the exclusion unambiguously states that there is no coverage for
"bodily injury to an insured person." The Supreme Court has not found the "insured person"
exclusion to be invalid in the context of a claim under the no-fault act for residual liability
insurance where the insured was driving a vehicle neither owned nor registered by the insured.
We emphasize the fact that defendant is not the insurer of the vehicle involved in the accident,
but of the driver involved. This is an owner's policy and the insurer is not required under the nofault act to provide blanket portable coverage to the insured when the insured drives another
person's insured vehicle. Citizens, supra at 237-238. Instead, any coverage is afforded by the
insurance policy issued for the vehicle involved in the accident, that being plaintiff 's
grandmother's vehicle.
To the extent that plaintiff claims that she had a reasonable expectation that she would be
covered by her insurance policy when she drove any vehicle, we reject that contention because
where an exclusion is clear and unambiguous, "the rule of reasonable expectations has no
applicability." Farm Bureau Mut Ins Co v Nikkel, 460 Mich 558, 569; 596 NW2d 915 (1999);
see also Citizens, supra at 237.
Further, to the extent that plaintiff argues that the exclusion violates public policy
because it is in conflict with the abolition of intrafamily immunity, we note that this argument
has been rejected by this Court in Farm Bureau Mut Ins Co v Moore, 190 Mich App 115; 475
NW2d 375 (1991), and Bogas v Allstate Ins Co, 221 Mich App 576; 562 NW2d 236 (1997).
Accordingly, for the reasons set forth, the trial court erred in granting summary
disposition in favor of plaintiff and denying defendant's motion for summary disposition.
Reversed and remanded for entry of an order of judgment in favor of defendant.
/s/ Helene N. White
/s/ Janet T. Neff
/s/ Kathleen Jansen
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