KATHLEEN WELLS V SHELBY OIL CO
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STATE OF MICHIGAN
COURT OF APPEALS
KATHLEEN WELLS and CHARLES WELLS,
UNPUBLISHED
March 13, 1998
Plaintiffs/Counter Defendants-Appellants
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Plaintiff-Appellant,
v
No. 189969
Macomb Circuit Court
LC No. 94-002514 PD
FEDERATED MUTUAL INSURANCE
COMPANY,
Defendant-Appellee,
and
SHELBY OIL COMPANY, INC, d/b/a
MONICATTI CHRYSLER PLYMOUTH SALES,
Defendant/Counter Plaintiff-Appellee.
Before: Holbrook, Jr., P.J., and Michael J. Kelly and Gribbs, JJ.
MEMORANDUM.
Plaintiffs appeal as of right from the summary dismissal of their claim for reimbursement from
defendant Federated Mutual for monies paid by State Farm as a consequence of collision damage
sustained by a rental vehicle operated by plaintiff Kathleen Wells. We affirm. This case is being
decided without oral argument pursuant to MCR 2.714(E).
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“[A] contract becomes the rule of action between the parties to it and governs their rights if it is
not contrary to law.” Schnack v Applied Arts Corp, 283 Mich 434, 440; 278 NW 117 (1938).
Where the language of the contract is clear and unambiguous, a court accepts the plain
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meaning of its written terms and enforces those terms as written. Bianchi v Auto Club of Mich, 437
Mich 65, 70; 467 NW2d 17 (1991). Here, the rental agreement signed by Kathleen Wells clearly and
unambiguously indicated that she “accept[ed] full responsibility for loss by collision or Physical damage”
and agreed to “pay for any and all damages to the rental vehicle of whatever sort incurred while the
vehicle is being rented.” Accordingly, the Wells are obligated to pay for the collision damage sustained
by the rental vehicle unless the agreement to accept responsibility for collision damage is contrary to
law. Schnack, supra at 440.
The question then becomes whether the no-fault act, MCL 500.3101 et seq.; MSA 24.13101
et seq., precludes the rental contract from shifting financial responsibility for collision damage to the
Wells. We conclude that it does not. A significant exception to the general liability scheme under the
no-fault act exists with regard to property protection benefits where the damaged property is a moving
motor vehicle. In that situation, the damaged property owner must look to his own no-fault insurer for
recovery, provided he has purchased optional collision protection. Turner v Auto Club Ins Ass'n,
448 Mich 22, 30; 528 NW2d 681 (1995); Dorey v Savage, 92 Mich App 726, 730; 285 NW2d 438
(1979). Hence, the rental agreement in this case was not void under the no-fault act because collision
coverage is optional, rather than statutorily-mandated. Cf. State Farm Mutual Automobile Ins Co v
Enterprise Leasing Co, 452 Mich 25, 40; 549 NW2d 345 (1996) (car rental agreement that shifted
the responsibility for providing primary residual liability coverage from the owner to the driver and the
driver’s insurer was void under the no-fault act).
Affirmed.
/s/ Donald E. Holbrook, Jr.
/s/ Michael J. Kelly
/s/ Roman S. Gribbs
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