HENRY FORD HEALTH SYSTEM V FARMERS INS EXCHANGE

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STATE OF MICHIGAN COURT OF APPEALS FARMERS INSURANCE EXCHANGE, UNPUBLISHED August 3, 2010 Plaintiff-Appellee, v No. 275584 Wayne Circuit Court LC No. 06-601127-NF RUFUS YOUNG, Defendant-Appellant, and NICOLE WILLIAMS and LINDA LEE, Defendants. HENRY FORD HEALTH SYSTEM, Plaintiff-Appellee, v No. 283865 Wayne Circuit Court LC No. 06-611910-NF FARMERS INSURANCE EXCHANGE, Defendant-Appellant. Before: ZAHRA, P.J., and O’CONNELL and K.F. KELLY, JJ. O’CONNELL, J. (dissenting). I respectfully dissent. In Henry Ford Health Sys v Farmers Ins Exch, Docket No. 283865, a jury determined that the Kia was not taken unlawfully. Further, in Farmers Ins Exch v Young, Docket No. 275584, the trial court never determined that the Kia was taken unlawfully. Since no determination was ever made that the vehicle was taken unlawfully, the exception set forth in MCL 500.3113(a) precluding receipt of PIP benefits by an individual using a vehicle “which he or she had taken unlawfully” does not apply to this case. Accordingly, defendant- -1- appellant Rufus Young is entitled to no-fault personal protection insurance (PIP) benefits,1 and Henry Ford Health System is entitled to reimbursement for services provided to Young. I would reverse the trial court in Docket No. 275584 and affirm the trial court in Docket No. 283865. I note that the majority opinion reaches the opposite result in each of these cases. I. FACTS Although there is conflicting testimony in these cases, it appears that the essential facts are as follows. Nicole Williams owned a 2001 Kia. Linda Lee, Williams’ cousin, lived with Williams. Young is Lee’s boyfriend. Williams was on vacation in the Bahamas when the accident in question occurred. According to Lee, Cynthia Hughes, Williams’s sister, had driven Williams to the airport in the Kia. When Hughes returned from the airport after dropping off Williams, she handed the car keys to Lee and told Lee to drive Williams’ son, Jalen, in the Kia back to Williams’ house. If a jury accepts these facts as true, Lee had lawful possession of the Kia. The facts also suggest that on the day of the accident, an intoxicated Lee permitted Young to drive her and Jalen home. Unfortunately, as Young was driving Lee and Jalen home, they were involved in the accident at issue in this case. Under this set of facts, which the jury in Docket No. 283865 apparently accepted as true, neither Lee nor Young unlawfully took the Kia. II. ISSUES A. NO UNLAWFUL TAKING HAS BEEN ESTABLISHED These cases involve the interpretation of MCL 500.3113(a). The fundamental issue in this case is whether Young unlawfully took the motor vehicle in question. I conclude that there was no unlawful taking of this vehicle and, therefore, both Young and Henry Ford Health System are entitled to reimbursement for services provided to Young. The majority in Amerisure Ins Co v Plumb, 282 Mich App 417; 766 NW2d 878 (2009), lv den 485 Mich 909 (2009), set forth the circumstances under which MCL 500.3113 applies, stating: MCL 500.3113 precludes PIP benefits under certain circumstances, and it provides, in pertinent part: A person is not entitled to be paid personal protection insurance benefits for accidental bodily injury if at the time of the accident any of the following circumstances existed: (a) The person was using a motor vehicle or motorcycle which he or she had taken unlawfully, unless the person reasonably believed that he or she was entitled to take and use the vehicle. [Emphasis added in 1 The statutory phrase is “personal protection insurance benefits,” but they are also known as “first party” or “PIP” benefits. McKelvie v Auto Owners Ins Ass’n, 459 Mich 42, 44 n 1; 586 NW2d 395 (1998). -2- Amerisure Ins.] Thus, PIP benefits will be denied if the taking of the vehicle was unlawful and the person who took the vehicle lacked “a reasonable basis for believing that he [or she] could take and use the vehicle.” Bronson Methodist Hosp v Forshee, 198 Mich App 617, 626; 499 NW2d 423 (1993). When applying § 3113(a), the first level of inquiry will always be whether the taking of the vehicle was unlawful. If the taking was lawful, the inquiry ends because § 3113(a) does not apply. [Amerisure Ins, 282 Mich App at 424-425.] Accordingly, Amerisure Ins makes clear that when determining whether MCL 500.3113(a) precludes PIP coverage, “the first level of inquiry” is “whether the taking of the vehicle was unlawful.” Id. at 425. If the taking was lawful, MCL 500.3113(a) does not apply. Id. The lower court record in Docket No. 283865 indicates that the jury determined that Young had not unlawfully taken the vehicle. The jury verdict form states: Question No. 4: Did Rufus Young use a motor vehicle at the time of the accident which he had taken unlawfully and without reasonable belief that he was entitled to take and use the vehicle? Answer: N_ (yes or no) Accordingly, because the jury in Docket No. 283865 determined that Young did not “use a motor vehicle at the time of the accident which he had taken unlawfully,” the inquiry ends at this point with respect to this case. MCL 500.3113(a) does not apply, and Young is entitled to PIP benefits. The judgment in the case properly reflected this outcome, as Farmers Insurance Exchange (Farmers), the assigned claims provider, was required to reimburse Henry Ford Health System $157,523.86 to cover the cost of Young’s treatment for injuries arising from the accident. In Docket No. 275584, the trial court never made sufficient findings of fact to conclude that Young took the Kia unlawfully for purposes of MCL 500.3113(a). In the final order entered in this case, the trial court stated in its entirety: The Trial of this matter having been heard before the Honorable John O’Hara on December 6, 2006 and the Court returning a verdict in favor of Farmers Insurance Exchange, IT IS HEREBY ORDERED that Rufus Young was operating a vehicle in violation of MCLA 500.3113(a) as he was unlawfully operating said vehicle and had no reasonable belief that he was entitled to use same. IT IS FURTHER ORDERED that Rufus Young is therefore not entitled to the receipt of No-Fault Benefits arising out of the June 6, 2005 motor vehicle accident. IT IS SO ORDERED. -3- This order indicates that the trial court based its decision to deny Young PIP benefits on its conclusion that Young was “unlawfully operating” this vehicle at the time of the accident. However, I maintain that the unlawful operation of a vehicle is not a legal basis for denying PIP benefits. Amerisure Ins, 282 Mich App at 433 (O’CONNELL, J., dissenting). Further, although the order indicates that the trial court determined that Young “had no reasonable belief that he was entitled to use” the vehicle, the trial court never determined whether Young unlawfully took the vehicle.2 In my opinion, the trial court’s failure to even determine whether an unlawful taking occurred constitutes error. In the absence of a finding by the trial court in Docket No. 275584 that an “unlawful taking” occurred, Young is entitled to PIP benefits. The majority opinion compounds the error by assuming that the trial court concluded that Young unlawfully took this vehicle. Armed with this faulty conclusion, the majority then concludes that the doctrine of collateral estoppel applies in Docket No. 283865. I would note that neither the doctrine of collateral estoppel nor MCL 500.3113(a) applies if the trial court does not first determine that Young unlawfully took the vehicle.3 B. LAWFUL OPERATION IS NOT REQUIRED TO RECEIVE PIP BENEFITS For the reasons stated in my dissent in Amerisure Ins, 282 Mich App 417, I respectfully dissent from the majority’s conclusion that in order to obtain PIP benefits, defendant must reasonably believe that he was entitled to take and lawfully use the motor vehicle at the time of the accident. First, I note that this case is distinguishable from Amerisure Ins. In Amerisure Ins, the majority determined, and I concurred, that “there is no genuine issue of material fact that Plumb unlawfully took the Jeep, and § 3113(a) applies.” Id. at 427. Conversely, the facts of this case suggest that no lawful taking occurred in this case.4 However, I also maintain, as I did in Amerisure Ins, that MCL 500.3113(a) does not require “lawful” operation of a motor vehicle in order to obtain PIP benefits. Our Court has stated on numerous occasions, “[I]t is the unlawful nature of the taking, not the unlawful nature of the use, that is the basis of the exclusion under [MCL 500.3113(a)].” Butterworth Hosp v Farm Bureau Ins Co, 225 Mich App 244, 250; 570 NW2d 304 (1997). The majority simply assumes that the vehicle was “unlawfully taken,” and claims that defendant must have a reasonable belief that he could “legally use” and “lawfully operate” the motor vehicle in 2 “A court speaks through its orders, and the jurisdiction of this Court is confined to judgments and orders.” Lown v JJ Eaton Place, 235 Mich App 721, 726; 598 NW2d 633 (1999), quoting Law Offices of Lawrence J Stockler, PC v Rose, 174 Mich App 14, 54; 436 NW2d 70 (1989); see also MCR 7.203(A). Accordingly, we need not look beyond this order to conclude that the trial court failed to address whether an unlawful taking occurred. Nevertheless, the trial court’s statements at the conclusion of the bench trial indicate that the trial court never explicitly determined that an unlawful taking occurred. 3 Interestingly, the question whether Young had unlawfully taken the vehicle was decided for the first time in Docket No. 283865, the action that the majority concludes is barred by collateral estoppel. 4 In particular, the facts indicate that Williams, the owner of the Kia, gave the car keys to Hughes, who in turn gave them to Lee. Under these facts, Lee continued to have lawful possession of the Kia when she drove, intoxicated, to Young’s workplace and let him drive her back to Williams’ house. -4- order to receive PIP benefits.5 I disagree. The statute does not, nor was it intended to, address whether the use of the motor vehicle was legal or the operation of a motor vehicle was lawful.6 This statute is only concerned with whether the vehicle was taken in a lawful manner.7 In Bronson Methodist Hosp, 198 Mich App 617, Stanley Pefley permitted his son, Thomas, to use his vehicle, while prohibiting Thomas’s friends, especially Mark Forshee, from using the vehicle. Id. at 626. Thomas was driving Forshee and another friend, William Morrow, in the vehicle when he was pulled over and arrested for having beer and a billy club in the vehicle, in violation of his probation. Id. at 620. Thomas entrusted the vehicle to Morrow to drive home, but at Morrow’s request, Forshee later drove the vehicle, although he did not have a valid operator’s license. Id. at 620-621. Forshee began speeding in the vehicle and entered a high-speed chase with police, which ended when he crashed the car and was injured. Id. at 621. The Bronson Court noted that the question whether an individual has a reasonable basis for believing that he can take and use the vehicle does not lend itself to a hard and fast rule, but depends largely on the circumstances of a particular case. The Court explained: [U]nder [MCL 500.3113(a)], it is necessary not only that the taking of the vehicle be unlawful, but also that the person who took the automobile not have a reasonable basis for believing that he could take and use the vehicle. In the case at bar, the trial court focused on the restrictions imposed by Stanley Pefley on his son not to allow others to use the vehicle and specifically the restriction barring Mark Forshee’s use of the vehicle. While these facts are certainly relevant and would perhaps even be dispositive had Forshee borrowed the vehicle without anyone’s knowledge or consent, it is nevertheless necessary to look at the 5 It is axiomatic that a vast number of accidents are caused by the unlawful operation of a motor vehicle; a requirement that one must “legally use” or “lawfully operate” a motor vehicle before one can collect no-fault benefits would defeat the purpose of purchasing insurance. I suspect that many motorists would be surprised to learn that they would not be entitled to PIP benefits if they caused an accident by, for example, running a red light or speeding, or if they had a suspended or expired license at the time of an accident. 6 As in Amerisure Ins, the majority in this case adds the word “legally” before the word “use” in the savings clause. My response to this grafting of additional words onto the statute is the same as it was in that case: Although I note that it is not the role of this Court to add or subtract words from the statute, the ordinary reader of MCL 500.3113 may wonder how one can unlawfully take a motor vehicle and still have a reasonable belief that he or she is entitled to use the vehicle. As a reader of this statute, I share this concern. However, this Court’s job is merely to interpret the statute as it is written. The Legislature may wish to revise the statute to provide for a “reasonable belief” that one is entitled “to take the vehicle and legally use the vehicle.” [Amerisure Ins, 282 Mich App at 434 n 2 (O’CONNELL, J., dissenting).] 7 The term “unlawfully taken” indicates that the vehicle must have been taken in violation of a Michigan statute. The majority points to no Michigan statute that Young violated when he took this vehicle. Although Young unlawfully operated the vehicle, the statute does not disqualify an individual from receiving PIP benefits if he operated the vehicle unlawfully. -5- specific, unique facts that led up to Forshee’s driving of the vehicle on the night in question. Forshee’s use of the automobile did not arise in a context where he had merely “borrowed” his friend’s automobile for his personal use without the friend’s knowledge or permission or even in a context where he took possession of the vehicle contrary to the friend’s wishes while on an outing with his friend. Rather, Thomas Pefley had entrusted the vehicle to Morrow to drive home, with Pefley’s only other option presumably being to have the car impounded and towed and his friends stranded in need of transportation. Thereafter, Morrow turned the vehicle over to Forshee to drive, apparently because he was uncomfortable driving a vehicle with a manual transmission. We cannot say that it is unreasonable for a person to believe that he cannot take and use a vehicle where he was a passenger in the vehicle and the driver/owner (or owner’s son) is in police custody and wishes the vehicle taken home and the only other available driver is unwilling to drive because he is uncomfortable with the manual transmission. A person in such a position, while understanding that there is a general preclusion to his use of the vehicle, might nonetheless reasonably believe it permissible under those unique circumstances to take and use the vehicle. The fact that the subsequent use of the vehicle was beyond the scope of the entrustment is irrelevant, because the focus is on the taking of the vehicle, not the use. See State Farm [Mut Auto Ins Co v HawkeyeSecurity Ins Co, 115 Mich App 675; 321 NW2d 769 (1982)]. [Bronson Methodist Hosp, 198 Mich App at 626-627.] The Bronson Court also clarified that MCL 500.3113 does not exclude individuals who operate a motor vehicle without a valid operator’s license from receiving PIP benefits: Similarly, the fact that Forshee did not possess a driver’s license also does not control resolution of the insurance issue because it is the unlawful nature of the taking, not the unlawful nature of the use, that forms the basis of the exclusion under the statute. In MCL 500.3113; MSA 24.13113, the Legislature excluded from personal protection insurance benefits individuals who unlawfully take motor vehicles and those who have not procured the automobile insurance required under the no-fault act. If the Legislature had desired to also exclude from coverage those individuals who operate a motor vehicle without a valid operator’s permit, it could have included that class of individuals within the purview of the statute. It did not. [Id. at 627-628.] In Butterworth Hosp, 225 Mich App at 246, the injured party, Floyd Wright, was driving his mother’s vehicle without her permission when he was involved in an accident. In his majority opinion in the case, Judge Bandstra stated: Farm Bureau asserts that Wright took the vehicle unlawfully because he took it knowing that he was physically incapable of operating the vehicle safely and was not entitled to be a licensed driver. Farm Bureau argues that Wright was therefore driving recklessly in violation of MCL 257.626; MSA 9.2326 or driving -6- feloniously under MCL 752.191; MSA 28.661. Further, Farm Bureau argues that Wright’s taking of his mother’s vehicle was unlawful because he knew that it was uninsured. Farm Bureau argues that Wright violated MCL 500.3102(2); MSA 24.13102(2), which makes it a misdemeanor to operate a motor vehicle on a public highway knowing that it is uninsured. Each of these arguments raises questions regarding the use of the vehicle by Wright, not the taking. However, it is the unlawful nature of the taking, not the unlawful nature of the use, that is the basis of the exclusion under [MCL 500.3113(a)]. Bronson Methodist Hosp[, 198 Mich App at 627]; State Farm Mut Automobile Ins Co[, 115 Mich App at 682]. [Id. at 250.] In fact, to insert a “lawful use” requirement into MCL 500.3113(a) partially defeats the purpose of the no-fault act, which is to provide benefits to those who are involved in automobile accidents regardless of fault.8 Furthermore, it creates two classes of drivers under MCL 500.3113(a): those who have a reasonable belief that they are entitled to take and use a vehicle, and those who have a reasonable belief they can take and lawfully use a motor vehicle. Under the majority’s interpretation of MCL 500.3113(a), the first class would be denied benefits under the no-fault act, while the second class would be entitled to collect PIP benefits.9 I concur with the implication in the majority opinion that defendant could not lawfully operate this vehicle because his license was suspended. However, I disagree with the majority’s conclusion that MCL 500.3113(a) imposes a requirement on defendant that he reasonably believe he or she was entitled to take and legally use the motor vehicle. The savings clause does not contain the words “legally use” or “lawfully operate.” Instead, I would follow the Court’s 8 I note that instead of treating the word “use” as a legal term of art, as the majority advocates, this Court should presume that since the word is not defined by the no-fault act, it is subject to ordinary comprehension. See People v Martin, 271 Mich App 280, 352; 721 NW2d 815 (2006), affirmed 482 Mich 851 (2008). Random House Webster’s College Dictionary (1997) has 22 separate definitions for the word “use,” including “to employ for some purpose; put into service,” “to avail oneself of; apply to one’s own purposes,” and “to take unfair advantage of; exploit.” Nowhere in these 22 definitions does the dictionary define “use” as the equivalent of “lawful operation.” 9 I note that under the majority’s interpretation of this statute, both Bronson and Butterworth Hosp would have been wrongly decided. In both cases, the drivers of the motor vehicles lacked express permission to operate the vehicles, and the driver in Bronson did not have a valid driver’s license. Bronson Methodist Hosp, 198 Mich App at 625, 627; Butterworth Hosp, 225 Mich App at 246. Further, Young’s belief that he could take and use this vehicle is clearly more reasonable than that of the drivers in the aforementioned cases. In this case, Young had permission to take and use the vehicle from the person who had possession of both the motor vehicle and the motor vehicle’s keys. In the real world, one does not ask an intoxicated person if “she has permission to driver her cousin’s vehicle,” nor does one ask, “do you think your cousin would allow me to drive you home,” when deciding that she is not fit to drive. It is important to remember: “Friends don’t let friends drive drunk.” In his deposition, Young testified that in his opinion, Williams would allow him to operate her vehicle if she knew that Lee was intoxicated. -7- statement in Bronson, which specifically interpreted MCL 500.3113(a) so as not to exclude from coverage those individuals who operate a motor vehicle without a valid operator’s permit.10 In my opinion, the exclusion of PIP benefits should apply only if the injured party had the intent to steal the vehicle or, under some circumstances, the intent to joyride in the vehicle.11 As Judge Hoekstra stated in his concurrence in Butterworth Hosp, “[MCL 500.3113(a)] precludes coverage only where the person taking the vehicle unlawfully does so with the intent to steal and [] the provision was not intended to exclude coverage for a person injured while joyriding in an automobile.” Butterworth Hosp, 225 Mich App at 253 (Hoekstra, J., concurring). Under MCL 500.3113(a) and its savings clause, an individual who steals a motor vehicle is not entitled to coverage from the insurance company insuring the stolen vehicle. Again, MCL 500.3113(a) provides, in pertinent part: A person is not entitled to be paid personal protection insurance benefits for accidental bodily injury if at the time of the accident any of the following circumstances existed: (a) The person was using a motor vehicle or motorcycle which he or she had taken unlawfully, unless the person reasonably believed that he or she was entitled to take and use the vehicle. The purpose of MCL 500.3113(a) is to preclude PIP coverage on the stolen vehicle if, at the time of the accident, “[t]he person was using a motor vehicle . . . which he or she had taken unlawfully.” That means that if an individual takes a vehicle with the intent to steal that vehicle, the company insuring the vehicle does not have to provide PIP benefits to the thief. Nothing in this part of the statute addresses the unlawful operation of a motor vehicle. From a public policy standpoint, this makes sense. An insurance company does not assume the risk of paying PIP benefits to an individual who unlawfully takes (i.e., steals) and uses a motor vehicle insured by the company. Whether the vehicle was being lawfully or unlawfully operated at the time of the accident is of little consequence; because the taking was unlawful, the insurance company is not required to provide PIP benefits. The savings clause attached to MCL 500.3113(a), which reads “unless the person reasonably believed that he or she was entitled to take and use the vehicle,” only applies to the “intent to steal” element. If a person reasonably believes he is entitled to take and use the motor vehicle, the savings clause negates the “intent to steal” clause in the first part of the sentence. The savings clause was not intended to add a “lawful operation” clause to the equation. As the Bronson Court aptly noted, if that were the case, the Legislature would have added the words 10 Because Bronson was published after November 1, 1990, it is binding on this Court. MCR 7.215(J)(1). Under the principle of stare decisis, this Court is obligated to follow Bronson, not Amerisure Ins, to the extent that these rulings conflict. MCR 7.215(C)(2). 11 Although in Butterworth Hosp, 225 Mich App at 249-250, this Court touched on the circumstances in which joyriding would not necessarily preclude the recovery of PIP benefits, the question of joyriding is not at issue in this case and, in my opinion, is best left for another day. -8- “lawfully operate” to the savings clause. See Bronson Methodist Hosp, 198 Mich App at 627628. Stated another way, the savings clause was not intended to void insurance coverage based on the unlawful operation of a motor vehicle. Individuals purchase insurance to protect themselves from the financial consequences of involvement in an automobile accident, so that if such an accident does occur (often, arising from some type of unlawful operation), coverage is available for damages. The task of punishing those individuals who unlawfully operate a motor vehicle is best left to the police and prosecutor; the Legislature did not intend to preclude these individuals from receiving PIP benefits as an additional punishment. Under MCL 500.3113(a), the unlawful nature of the taking of the vehicle, not the unlawful use of the vehicle, determines if an individual is entitled to PIP benefits. I also note that MCL 500.3113(a) requires that the defendant “had taken unlawfully” the motor vehicle in order to forgo his entitlement to PIP benefits. I agree with the majority opinion that if defendant had unlawfully taken (i.e., stolen) this vehicle, then he would not be entitled to no-fault benefits. However, the facts of this case are clear: defendant is not the person who unlawfully took this vehicle. Defendant simply drove an intoxicated acquaintance back to her cousin’s home where she was staying at the time, taking her there in the car in which she arrived. In so doing, defendant was not using a motor vehicle that he had taken unlawfully; at most, he was using a motor vehicle that another person might have taken unlawfully.12 This is a far different act than stealing or even joyriding in a motor vehicle. Defendant neither had the intent to steal this vehicle nor to joyride. Since the intent element is not present, I would find that defendant is entitled to PIP benefits. I would reverse the decision of the trial court in Docket No. 275584 and affirm the decision of the trial court in Docket No. 283386. /s/ Peter D. O’Connell 12 I note that anyone who takes the keys of the vehicle that an intoxicated person had been driving from that person by subterfuge or force and drives the intoxicated person home in that vehicle may fall under the umbrella of the majority opinion. The majority’s decision could make a sober individual less inclined to drive an intoxicated person home, especially if he must use some type of subterfuge to obtain the intoxicated person’s car keys. -9-

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