FARMERS INS EXCHANGE V FARM BUREAU GENERAL INS CO OF MI
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STATE OF MICHIGAN
COURT OF APPEALS
FARMERS INSURANCE EXCHANGE,
FOR PUBLICATION
August 17, 2006
9:05 a.m.
Plaintiff-Appellee,
v
No. 259763
Tuscola Circuit Court
LC No. 03-21922-CK
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN,
Defendant-Appellant.
Official Reported Version
Before: Whitbeck, C.J., and Zahra and Donofrio, JJ.
DONOFRIO, J.
Defendant, Farm Bureau General Insurance Company of Michigan, appeals as of right an
order denying defendant's motion for summary disposition and granting summary disposition to
plaintiff, Farmers Insurance Exchange, under MCR 2.116(C)(10). Underlying this case is a vanmotorcycle accident. The trial court concluded that under MCL 500.3114(5)(a), defendant was
required to reimburse plaintiff for first-party no-fault benefits paid to the injured motorcyclist
and to continue providing benefits to the motorcyclist because defendant was the insurer of the
owner of the van involved in the underlying accident. Because the trial court properly construed
MCL 500.3114(5)(a) to require that an insurer that insures an owner or registrant who owns the
motor vehicle involved in an accident with a motorcycle is first in priority to pay no-fault
benefits to the injured person, and correctly concluded that defendant was required to pay nofault benefits, we affirm.
I
Rory Osentoski was riding a motorcycle when he was struck by a van driven by Lynn
Smith. Smith and John Petiprin, who were dating, owned the van. On the day of the accident,
the van was uninsured due to a failure to pay the insurance premium. Smith admitted that she
did not have any type of insurance on the date of the accident. Defendant had issued Petiprin a
no-fault insurance policy, effective on the date of the accident, that listed a vehicle owned by
Petiprin, but did not list Smith as an insured, or the vehicle involved in the accident.
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Osentoski, who had insurance as required by statute,1 submitted a first-party no-fault
benefits claim through the Assigned Claims Facility under MCL 500.3171 et seq., which the
facility assigned to plaintiff. Pursuant to Osentoski's claim, plaintiff paid him no-fault benefits.
Plaintiff requested that defendant begin making no-fault payments to Osentoski and further
requested reimbursement for benefits it had already paid, arguing that defendant was first in
priority to pay benefits under MCL 500.3114(5). Defendant argued that it had no obligation to
pay under MCL 500.3114(5) and refused to pay.
Plaintiff filed for declaratory relief, requesting a declaration that defendant was required
to reimburse plaintiff for benefits paid to Osentoski under MCL 500.3114(5). Plaintiff then
moved for summary disposition under MCR 2.116(C)(10), asserting that it was last in priority to
pay first-party no-fault benefits as the assigned claims servicing insurer. While asserting that
Michigan courts had not interpreted the relevant language in MCL 500.3114(5), plaintiff stated
that Michigan courts had interpreted similar language in MCL 500.3115(1) consistent with its
position that defendant was required to pay. Defendant also moved for summary disposition
under MCR 2.116(C)(8) and (10), arguing that it did not issue a policy covering the van involved
in the accident and that there is no statute requiring it to provide coverage. In response to
plaintiff 's argument, defendant asserted that interpretation of MCL 500.3115(1) was irrelevant
because the language in that section greatly differs from MCL 500.3114(5).
The trial court issued an opinion granting summary disposition for plaintiff under MCR
2.116(C)(10). In construing MCL 500.3114(5), the trial court reasoned in part as follows:
Because the first two words of subsection (5)(a) directly precedes [sic] the
words "of the owner or registrant" and not the words "of the motor vehicle" they
clearly provide that the injured person must seek benefits from the specific
insurance company that possesses a contractual relationship with the owner or
registrant of the vehicle–not from the specific insurance company that insures the
motor vehicle involved in the accident. Moreover, because there exists the word
"of " between "owner or registrant" and "the motor vehicle involved in the
accident" it indicates a possessive relationship between a person and the motor
vehicle that was involved in the accident . . . .
The trial court further reasoned that the legislative intent of MCL 500.3114(5) was consistent
with the no-fault act in that persons rather than vehicles are insured against loss.
Defendant moved for rehearing or reconsideration, arguing that the financial
responsibility act, MCL 257.501 et seq., should be considered for purposes of construing MCL
500.3114(5), claiming that the two acts are in pari materia. Defendant asserted that under the
financial responsibility act, an owner's policy is limited to insuring only the vehicles listed in the
1
The parties agreed at oral argument before us that Osentoski had the insurance required of him
as a motorcycle owner or registrant pursuant to MCL 500.3103(1).
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policy. Thus, defendant argued that under MCL 500.3114(5), an insurer is required to provide
coverage only if the insurer listed the motor vehicle involved in the accident. The trial court
denied defendant's motion, reasoning that defendant's reliance on the financial responsibility act
was untimely because defendant did not present it at oral argument or address it in writing prior
to that motion. The trial court entered a stipulated order of declaratory judgment for plaintiff,
ordering defendant to reimburse plaintiff for no-fault benefits it paid to Osentoski, and to
continue providing benefits to Osentoski. Defendant now appeals as of right.
II
This Court reviews de novo a trial court's decision on a motion for summary disposition,
Collins v Comerica Bank, 468 Mich 628, 631; 664 NW2d 713 (2003), and questions of statutory
interpretation, Griffith v State Farm Mut Automobile Ins Co, 472 Mich 521, 525-526; 697 NW2d
895 (2005).
III
The issue before us is whether MCL 500.3114(5)(a) requires an insurer to pay an injured
motorcyclist no-fault benefits when the insurer did not issue a policy covering the vehicle
involved in the accident. Defendant's position is that MCL 500.3114(5)(a) does not require
payment of no-fault benefits because MCL 500.3114(5)(a) only requires an insurer to provide
no-fault benefits under these facts if the insurer actually insured the motor vehicle involved in
the accident. Plaintiff 's position is that MCL 500.3114(5)(a) does require payment of no-fault
benefits because the plain language of MCL 500.3114(5)(a) states that the insurer need not
insure the vehicle in the accident, but must insure the owner or registrant.
"'[O]ur primary task in construing a statute[ ] is to discern and give effect to the intent of
the Legislature.'" Neal v Wilkes, 470 Mich 661, 665; 685 NW2d 648 (2004), quoting Sun Valley
Foods Co v Ward, 460 Mich 230, 236; 596 NW2d 119 (1999). "If the statutory language is
unambiguous, we must presume that the Legislature intended the meaning it clearly expressed
and further construction is neither required nor permitted." Nastal v Henderson & Assoc
Investigations, Inc, 471 Mich 712, 720; 691 NW2d 1 (2005). In construing a statute, a court
must give effect to every word, phrase, and clause and avoid a construction that would render
any part of the statute surplusage or nugatory. Griffith, supra at 533-534. "Undefined statutory
terms must be given their plain and ordinary meanings and it is proper to consult a dictionary for
definitions." Halloran v Bhan, 470 Mich 572, 578; 683 NW2d 129 (2004).
Generally, under MCL 500.3101(1) and MCL 500.3114(1), an individual must seek nofault benefits from his own insurer unless one of the exceptions enumerated in MCL
500.3114(2), (3), or (5) applies. Parks v Detroit Automobile Inter-Ins Exch, 426 Mich 191, 202203; 393 NW2d 833 (1986). The exception at issue here, MCL 500.3114(5), establishes the
priority in which a motorcycle rider accidentally injured by a motor vehicle must claim no-fault
benefits. MCL 500.3114(5) provides in relevant part as follows:
A person suffering accidental bodily injury arising from a motor vehicle
accident which shows evidence of the involvement of a motor vehicle while an
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operator or passenger of a motorcycle shall claim personal protection insurance
benefits from insurers in the following order of priority:
(a) The insurer of the owner or registrant of the motor vehicle involved in
the accident. [Emphasis added.]
In certain limited circumstances, a person may also claim benefits through the Assigned Claims
Facility under MCL 500.3172(1), which provides in relevant part as follows:
A person entitled to claim because of accidental bodily injury arising out
of the ownership, operation, maintenance, or use of a motor vehicle as a motor
vehicle in this state may obtain personal protection insurance benefits through an
assigned claims plan if no personal protection insurance is applicable to the injury
....
Under these facts, the general rule pursuant to MCL 500.3101(1) and MCL 500.3114(1)
does not apply. This is the case because the accident falls squarely within the purview of MCL
500.3114(5), and MCL 500.3114(1) specifically exempts its application to motor vehicle
accidents that meet the requirements of MCL 500.3114(2), (3), and (5). So for purposes of this
case, while an injured motorcyclist must first seek no-fault benefits from the insurer described in
MCL 500.3114(5)(a), no-fault benefits are also available from an assigned claims insurer under
MCL 500.3172(1) if no other personal protection insurance applies, because the assigned claims
insurer is last in order of priority. See Spencer v Citizens Ins Co, 239 Mich App 291, 301; 608
NW2d 113 (2000). Thus, the question is whether defendant is responsible for payment of
Osentoski's no-fault benefits on the basis of MCL 500.3114(5)(a). We look to the language of
the statute to answer the question.
MCL 500.3114(5)(a) states that the insurer is liable if it is "[t]he insurer of the owner or
registrant of the motor vehicle involved in the accident." In order to scrutinize the plain
language of the statutory sentence, we consult the dictionary definition of the word "of." The
word "of" is "used to indicate inclusion in a . . . class" and "used to indicate possession or
association. . . ." Random House Webster's College Dictionary (2d ed, 1997). The sequential
prepositional phrases "of the owner or registrant" and "of the motor vehicle involved in the
accident" define the relevant insurer. The first prepositional phrase, "of the owner or registrant,"
establishes a relationship between the "insurer" and an individual "owner or registrant" on the
basis of the contractual nature of the parties' relationship. The second phrase establishes a
relationship between an individual "owner or registrant" and "the motor vehicle involved in the
accident" on the basis of "the owner or registrant['s]" possession of "the motor vehicle involved
in the accident."
The prepositional phrases demarcate contracting parties, with the first party defined by
the contractual relationship and the second party defined by the possessive relationship.
Pursuant to the plain language of the statute, all that is required for an insurer to be first in
priority to pay no-fault benefits is to insure "the owner or registrant of the motor vehicle
involved in the accident." In other words, the plain language of MCL 500.3114(5)(a) states that
the insurer need not insure the vehicle in the accident, but must insure the owner or registrant.
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Here, because defendant insured Petiprin, who owned the van involved in the accident, defendant
is first in priority to provide benefits under MCL 500.3114(5)(a). Had the Legislature intended
MCL 500.3114(5)(a) only to require an insurer to provide no-fault benefits if the insurer actually
insured the motor vehicle involved in the accident, it could have chosen the following language
for MCL 500.3114(5)(a): "The insurer of the motor vehicle involved in the accident," deleting
the first prepositional phrase, "of the owner or registrant." Clearly, the Legislature did not
choose that language, and for us to adopt defendant's position would be to render the phrase "of
the owner or registrant" in the statute nugatory. Griffith, supra at 533-534.
Defendant asserts that by repeating the article "the" in MCL 500.3114(5)(a), the
Legislature intended to "particularize the subject matter," i.e., indicate that priority is limited to
"the insurer of the motor vehicle involved in the motor vehicle accident." Again, to interpret the
statute as defendant suggests is contrary to the plain language of the subsection and renders
meaningless the qualifying phrase, "the owner or registrant of." If the Legislature had intended
to limit MCL 500.3114(5)(a) as defendant suggests, it could have done so, but it did not.
Because the plain language of MCL 500.3114(5)(a) requires that an insurer that insures an owner
or registrant who owns the motor vehicle involved in an accident with a motorcycle is first in
priority to pay no-fault benefits to the injured person, further construction is not permitted.
Nastal, supra at 720. Our holding "is consistent with the legislative intent that persons rather
than vehicles be insured against loss." Pioneer State Mut Ins Co v Titan Ins Co, 252 Mich App
330, 337; 652 NW2d 469 (2002).
Further supporting our reasoning in this case is this Court's holding in Pioneer, supra. In
construing similar language in MCL 500.3115(1)(a), the Court in Pioneer concluded that an
insurer is required to provide no-fault benefits regardless of whether the insurer covered the
motor vehicle involved in the accident. Pioneer, supra at 336. MCL 500.3115(1) establishes the
priority in which an uninsured nonoccupant of a vehicle must claim no-fault benefits and
provides in relevant part as follows:
Except as provided in subsection (1) of section 3114, a person suffering
accidental bodily injury while not an occupant of a motor vehicle shall claim
personal protection insurance benefits from insurers in the following order of
priority:
(a) Insurers of owners or registrants of motor vehicles involved in the
accident. [Emphasis added.]
The Pioneer Court was called on to construe MCL 500.3115(1)(a) and it concluded:
This statutory language clearly states that the insurer of the owner or
registrant of the motor vehicle involved in the accident is liable for payment of
personal protection insurance benefits. . . . [T]he statute does not state that the
injured person must seek these benefits from the insurer of the motor vehicle.
Stated another way, the statute does not mandate that the vehicle involved in the
accident must have been insured by the insurer of the owner before an injured
person can seek benefits. [Pioneer, supra at 336.]
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Because the language in MCL 500.3115(1)(a) is materially identical to that in MCL
500.3114(5)(a), the Pioneer reasoning also applies in this case and supports our holding. See
Amerisure Ins Co v Auto-Owners Ins Co, 262 Mich App 10, 15 n 3; 684 NW2d 391 (2004).
Terms contained in the no-fault insurance act must be read in the context of the
legislative history and of the act as a whole. Frierson v West American Ins Co, 261 Mich App
732, 734; 683 NW2d 695 (2004). In this vein, we compare the language of MCL 500.3114(6)
and MCL 500.3115(2). MCL 500.3114(6) states:
If 2 or more insurers are in the same order of priority to provide personal
protection insurance benefits under subsection (5), an insurer paying benefits due
is entitled to partial recoupment from the other insurers in the same order of
priority, together with a reasonable amount of partial recoupment of the expense
of processing the claim, in order to accomplish equitable distribution of the loss
among all of the insurers.
And MCL 500.3115(2) states:
When 2 or more insurers are in the same order of priority to provide
personal protection insurance benefits an insurer paying benefits due is entitled to
partial recoupment from the other insurers in the same order of priority, together
with a reasonable amount of partial recoupment of the expense of processing the
claim, in order to accomplish equitable distribution of the loss among such
insurers.
The language is nearly identical.
The Legislature adopted the already codified language of MCL 500.3115(2) almost
verbatim in the context of MCL 500.3114 and codified it as MCL 500.3114(6). Because the
Legislature chose to use the same language, we conclude that the Legislature intended the
sections be treated in the same manner to accomplish the same purpose. In both cases, it is clear
that the Legislature intended to shift the burden of loss to a broader potential base of insurers.2
This is further indication of the Legislature's intention to treat these separate sections of the nofault statute similarly.
Defendant also asserts that it did not contract for the risk imposed on it by the trial court
because defendant's policy did not cover Osentoski or the motor vehicle involved in the accident.
The issue before us is one of statutory interpretation and not contractual interpretation.
Defendant is precluded from arguing that its contract for insurance coverage prevails over the
requirements of MCL 500.3114(5)(a). See State Farm Mut Automobile Ins Co v Ruuska, 412
Mich 321, 336-337; 314 NW2d 184 (1982).
2
The plain language of both MCL 500.3114(6) and MCL 500.3115(2) supports this conclusion
as does 1980 PA 445 specifically regarding the enactment of MCL 500.3114(5) and (6).
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Defendant also argues that if we do not adopt its interpretation of the statute, then any
insurer of an owner of a vehicle would be equally responsible to provide coverage under MCL
500.3114(5)(a). Because of the operation of the doctrine of noscitur a sociis, one need not heed
defendant's apocalyptic predictions regarding the application of MCL 500.114(5)(a). Under the
doctrine of noscitur a sociis a word or phrase should not be read in isolation but should be given
meaning by its context including harmonizing the meaning to give effect to an act as a whole. G
C Timmis & Co v Guardian Alarm Co, 468 Mich 416, 421; 662 NW2d 710 (2003). MCL
500.3114 is codified within Chapter 31 of the Insurance Code of 1956, commonly referred to as
the no-fault automobile provisions chapter, MCL 500.3101 to 500.3179. MCL 500.3101 refers
to insurers that issue automobile insurance policies. In that regard, the language in MCL
500.3114 should be read in context with Chapter 31, and therefore "the insurer" as provided in
MCL 500.3114(5)(a) is limited to no-fault insurers. Defendant's concern is without merit.
IV
Defendant also relies on the financial responsibility act, MCL 257.501 et seq. Defendant
argues in particular that the financial responsibility act should be construed in pari materia with
the no-fault section at issue, MCL 500.3114(5)(a). This argument is not properly preserved for
our review because defendant raised it for the first time in its motion for rehearing or
reconsideration. See Pro-Staffers, Inc v Premier Mfg Support Services, Inc, 252 Mich App 318,
328-329; 651 NW2d 811 (2002). Nevertheless, because the argument involves a question of law
and the parties have presented all facts necessary for its resolution, we may review this issue.
See Brown v Loveman, 260 Mich App 576, 599; 680 NW2d 432 (2004).
[S]tatutes in pari materia are those which relate to the same subject matter
or share a common purpose. Such statutes must be read together as constituting
one law, even if they contain no reference to one another and were enacted on
different dates. When interpreting two statutes which arguably cover the same
subject matter, they must be construed to preserve the intent of each and, if
possible, interpreted in such a way that neither denies the effectiveness of the
other. [Crawford Co v Secretary of State, 160 Mich App 88, 95; 408 NW2d 112
(1987) (citations omitted).]
The goal of both the no-fault act and the financial responsibility act is to ensure that automobile
accident victims receive compensation for their injuries. Id. at 96.
Defendant claims that the phrase "the insurer of the owner," MCL 500.3115(5)(a), refers
to an owner's insurance policy, while the phrase "the insurer of the operator," MCL
500.3115(5)(b), refers to an operator's insurance policy, as referenced in MCL 257.520(a) of the
financial responsibility act. Regarding an owner's policies, MCL 257.520(b)(1) provides in
relevant part as follows:
(b) Such owner's policy of liability insurance:
(1) Shall designate by explicit description or by appropriate reference all
motor vehicles with respect to which coverage is thereby to be granted . . . .
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Thus, for purposes of the financial responsibility act, the Legislature only requires an insurer to
provide liability coverage to those automobiles listed in the policy. State Farm Mut Automobile
Ins Co v Ruuska, 90 Mich App 767, 775; 282 NW2d 472 (1979), aff 'd 412 Mich 321 (1982).
Defendant argues the same result should apply in this case.
Although defendant presents an interesting argument for relying on the financial
responsibility act as an aid in interpreting MCL 500.3114(5)(a), it is unpersuasive. The plain
language of MCL 500.3114(5)(a) is obviously contrary to defendant's argument regarding the
financial responsibility act. The rules of statutory interpretation are well settled, and there is
absolutely no question that we must refer to the plain language of the statute at issue to
determine the Legislature's intent. Further interpretation is not permitted.
Additionally, a more recently enacted statute has precedence over an older statute.
Travelers Ins v U-Haul of Michigan, Inc, 235 Mich App 273, 280, 597 NW2d 235 (1999). "This
rule is particularly persuasive when one statute is both the more specific and the more recent."
Id. Because "[t]he no-fault act, as opposed to the financial responsibility act, is the most recent
expression of this state's public policy concerning motor vehicle liability insurance," Citizens Ins
Co of America v Federated Mut Ins Co, 448 Mich 225, 232; 531 NW2d 138 (1995), and it is also
more specific, we accord the no-fault act precedence.
V
MCL 500.3114(5)(a) requires that an insurer that insures an owner or registrant who
owns the motor vehicle involved in an accident with a motorcycle is first in priority to pay nofault benefits to the injured person.
Affirmed.
/s/ Pat M. Donofrio
/s/ William C. Whitbeck
/s/ Brian K. Zahra
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