KYLE ROBERTS V TITAN INSURANCE COMPANYAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
KYLE ROBERTS, a minor, by his next friend,
December 4, 2008
TITAN INSURANCE COMPANY,
Kalamazoo Circuit Court
LC No. 06-000311-NF
Advance Sheets Version
Before: Hoekstra, P.J., and Whitbeck and Talbot, JJ.
In this first-party no-fault automobile insurance action, plaintiff Kyle Roberts, by his next
friend and mother, Lillian Irwin, appeals as of right the trial court’s order granting defendant
Titan Insurance Company (Titan) summary disposition under MCR 2.116(C)(10). We reverse.
But, were it not for the statements in the lead opinion in Priesman v Meridian Mut Ins Co1 that
were adopted by this Court in Butterworth Hosp v Farm Bureau Ins Co,2 we would affirm. And
for this reason, we declare a conflict with Butterworth.3
I. Basic Facts and Procedural History
In June 2005, Roberts, at age 12, was seriously injured when he crashed a Ford Explorer
into a tree. Roberts was intoxicated at the time of the accident. Following the accident, Roberts
spent three weeks in the hospital and required follow-up care for months.
Steven Vandenberg, Roberts’s and Irwin’s landlord and housemate, was the title owner of
the Explorer that Roberts was driving at the time of the accident. Irwin and Roberts moved into
Vandenberg’s home on or about May 1, 2005; they were looking for a place to live, and
Priesman v Meridian Mut Ins Co, 441 Mich 60; 490 NW2d 314 (1992). The lead opinion was
signed by three justices; one justice concurred in the result of the lead opinion only; three justices
signed a dissenting opinion.
Butterworth Hosp v Farm Bureau Ins Co, 225 Mich App 244; 570 NW2d 304 (1997).
Vandenberg needed someone to take care of his dog when he went out of town. There is no
dispute that Roberts was not legally or biologically related to Vandenberg. There is also no
dispute that Roberts did not have permission to drive the Explorer on the day of the accident.
During his deposition, Vandenberg explained that when Irwin moved in he noticed that
there was water spilling out from underneath Irwin’s Jeep. According to Vandenberg, it turned
out that the water pump was in need of repair. At that time, Vandenberg had three vehicles: the
Explorer, a Ford Expedition, and a Jaguar. Because he drove the Expedition “all the time” and
did not need to use the Explorer, he offered to let Irwin use the Explorer. Irwin thanked him, and
he gave her the keys to the Explorer.
Vandenberg stated, to the best of his knowledge, that from May 2005 until the accident in
June 2005, Irwin used the Explorer for all her daily needs. According to Vandenberg, Irwin did
not pay him anything for the use of the Explorer, and they had no arrangement for the sale of the
Explorer to Irwin. Vandenberg and Irwin also had no agreement regarding how long Irwin
would be allowed to use the Explorer, but Vandenberg did not intend that Irwin have
“permanent” use of the vehicle. Vandenberg agreed that, during the times that Irwin was not
using it, he probably could have used the Explorer anytime that he wanted, but he explained that
he would probably have asked Irwin for permission first “because [he] gave it to her to use.”
However, he also agreed that Irwin was using the vehicle with his permission and that he could
have told her anytime that he did not want her to use the vehicle anymore. Vandenberg admitted
that he did not tell his insurance carrier that Irwin was driving the Explorer.
Vandenberg testified that his insurance company “totaled out” the Explorer after the
accident, but he was responsible for the $1,000 deductible, which he paid. Irwin agreed to pay
back Vandenberg for the deductible, which he told her was only $500, to give her a break after
“what she had been through with her son,” but she never paid him.
During her deposition, Irwin testified that when Vandenberg gave her the Explorer to use,
she felt that she owned it because she drove it all the time, she was the only person who used it,
and all her stuff was in it. Irwin explained, “I just took it that it was mine and I could use it. I
could go wherever I wanted. If I wanted to go to Georgia, I could go there. I could do anything
in the vehicle.” Despite her belief that she owned the Explorer, Irwin later admitted that she did
not believe that she had the right to sell the vehicle because she knew she was not the title owner.
Irwin confirmed that she did not pay Vandenberg for her use of the Explorer, nor was there any
agreement that she pay him for her use. Irwin also admitted that Vandenberg never told her that
she owned the Explorer. But, despite confirming that the Explorer was titled in Vandenberg’s
name and that he paid the insurance for it, Irwin stated that she did not believe Vandenberg had
the right to tell her she could no longer use the vehicle because he “gave it to” her. Irwin stated
that she paid all the general maintenance costs for the Explorer, including gas, oil, transmission
fluid, and windshield washer fluid. Irwin also stated that if the Explorer had broken down, she
would have paid for the repairs.
On further questioning, Irwin admitted that she lied to a Titan agent who interviewed her
after the accident. When the agent asked her who had use of the Explorer before the accident,
Irwin told him that Vandenberg had sole use of the vehicle. Indeed, she specifically denied ever
driving the Explorer. Irwin explained that she lied because she did not want Vandenberg to “get
in any trouble.” However, she could not specify what kind of trouble she was worried about.
Irwin confirmed that she agreed to pay Vandenberg $500 for the deductible, and although she
planned to do so, she had not yet paid him. Irwin confirmed that she also lied to the Titan agent
when she told him that she had already paid Vandenberg $500 for the deductible.
Roberts testified that when he took the Explorer on the night of the accident, he believed
that it belonged to Irwin because “[s]he was always driving it around, had everything in it.”
Roberts stated that he had never driven any vehicle before, and he admitted that neither Irwin nor
Vandenberg gave him permission to drive the Explorer on the night in question. Roberts also
admitted that, after Irwin and Vandenberg had gone to bed on the night of the accident, he drank
some tequila that he found in the kitchen cupboard. Roberts explained that after drinking the
tequila he sat down to watch television and then noticed the car keys in the mesh pocket of
Irwin’s backpack, which was on the kitchen counter. Roberts could not explain exactly why he
took the car. He stated that he just felt like going for a drive. Roberts stated that the next thing
he remembered after pulling out of the driveway was waking up in the hospital.
Vandenberg testified that he did not know how Roberts obtained the keys to the Explorer
on the night of the accident. Vandenberg stated that he had a spare set of keys for the Explorer
that he kept “locked up,” and that he did not know where Irwin kept the set of keys that he had
given to her. Vandenberg also denied knowing where Roberts obtained the alcohol that he
consumed that night, but he admitted that he noticed that some alcohol was missing from his
home after the accident.
Although she stated that she often let Roberts start up the Explorer in the mornings, Irwin
confirmed that she did not give Roberts permission to drive the Explorer on the night of the
accident or at any other time before the accident. Irwin stated that she did not know that Roberts
had taken the Explorer on the night of the accident until the police came to the house in the
morning. Irwin stated that she normally kept her car keys in her backpack, her purse, or on a set
of hooks near the back door. However, she did not know where she put the keys on the night of
At the time of the accident, Irwin was covered by a no-fault automobile insurance policy
that Titan issued to her in March 2005. Irwin had initially purchased the policy to cover a Jeep
Grand Cherokee, but in April 2005, she changed the policy to instead cover a Ford Escort. When
she applied for the Escort coverage, Irwin provided Titan with a copy of the previous owner’s
title without any of the buyer information filled in. During her deposition, Irwin first claimed
that the title to the Escort was in her name. However, Irwin later revealed that she did not own it
and had never even driven the Escort at the time she sought the insurance coverage. Irwin also
confirmed that the Escort was never stored at her house. Irwin explained that the Escort was for
her son Vernon Austin, III. Irwin admitted during her deposition that she did not tell the Titan
agent that she would not be using the Escort, or that Austin would be using it. However, she
clarified that the agent did not ask her who would be using the car. A title search later revealed
that the Escort was in fact titled in Austin’s name. Irwin stated that she insured the Escort in her
name because Austin needed insurance and he was not responsible enough to obtain it for
Citing MCL 500.3113(a), Titan denied Roberts personal protection insurance (PIP)
benefits on the ground that Roberts had unlawfully taken the Explorer. And in June 2006,
Roberts filed a complaint, alleging that Titan breached the insurance policy by denying Roberts
recovery. Titan then moved for summary disposition under MCR 2.116(C)(10), arguing that
Roberts’s claim was barred because (1) Roberts unlawfully took the Explorer, and (2) the
insurance policy issued by Titan was void ab initio because of Irwin’s misrepresentation that she
owned the Escort. Roberts responded, arguing that the trial court should (1) deny Titan’s motion
for summary disposition because there were genuine issues of material fact regarding whether
Roberts “unlawfully” took the Explorer in light of the family member joyriding exception to
MCL 500.3113(a) and (2) grant partial summary disposition in his favor instead with regard to
Titan’s misrepresentation defense because there was no genuine issue of material fact that
Roberts was an innocent third party to Irwin’s alleged misrepresentation.
After hearing oral arguments on the motion, the trial court issued its written opinion and
order in which it concluded that, as a matter of law, the family member joyriding exception to
MCL 500.3113(a) was not binding in this case and that, therefore, the statute barred Roberts’s
recovery. The trial court’s full analysis consisted of the following paragraph:
Without question [Roberts] unlawfully took the Explorer. [Roberts] did
not have a reasonable belief that he was entitled to take and use the vehicle. The
family joyriding exception to MCL 500.3113(a) as stated by the Priesman court is
not binding on this court or case. Recovery is barred pursuant to MCL
500.3113(a) and the language contained in [Titan’s] policy. As such, it is not
necessary for this court to address [Titan’s] misrepresentation argument, whether
Irwin qualified as an owner, whether Irwin had an insurable interest, whether the
innocent third party doctrine applies, or whether [Titan’s] policy bars recovery.
Accordingly, the trial court granted Titan’s motion for summary disposition and denied
Roberts’s motion for partial summary disposition. Roberts now appeals.
II. Summary Disposition
A. Standard of Review
Under MCR 2.116(C)(10), a party may move for dismissal of a claim on the ground that
there is no genuine issue with respect to any material fact and the moving party is, therefore,
entitled to judgment as a matter of law. The moving party must specifically identify the
undisputed factual issues and support its position with documentary evidence.4 The trial court
must consider all the documentary evidence in the light most favorable to the nonmoving party.5
We review de novo the trial court’s ruling on a motion for summary disposition.6 Construction
MCR 2.116(G)(3)(b); Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817 (1999).
MCR 2.116(G)(4); Maiden, supra at 120.
Tillman v Great Lakes Truck Ctr, Inc, 277 Mich App 47, 48; 742 NW2d 622 (2007).
of unambiguous contract language and interpretation of statutes are questions of law that this
Court also reviews de novo.7
B. Priesman and MCL 500.3113(a)
1. MCL 500.3113
Section 3113 of the no-fault insurance act8 provides, in pertinent part, as follows:
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
(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.
Thus, under the plain language of the statute, if a person is injured while using a vehicle
that he or she took unlawfully, that person is not entitled to PIP benefits. And, under the plain
language of the statute, the only exception to this exclusion is where the person had a reasonable
belief that he or she was entitled to take and use the vehicle.
In Priesman v Meridian Mut Ins Co,10 the Michigan Supreme Court considered whether
“an underage, unlicensed driver injured while driving his mother’s automobile without her
knowledge or consent may recover medical benefits from the no-fault insurer of her automobile.”
Similar to the facts in the present case, in Priesman a 14-year-old boy sustained serious bodily
injuries from an automobile accident after he took his mother’s car without her permission
during the night while she was asleep.11 Citing MCL 500.3113(a), the insurer argued that the
boy was not entitled to no-fault medical benefits because he was using his mother’s car
unlawfully at the time of the accident.12 The insurer contended that the boy’s use of the vehicle
Archambo v Lawyers Title Ins Corp, 466 Mich 402, 408; 646 NW2d 170 (2002); Putkamer v
Transamerica Ins Corp of America, 454 Mich 626, 631; 563 NW2d 683 (1997); Hafner v Detroit
Automobile Inter-Ins Exch, 176 Mich App 151, 156; 438 NW2d 891 (1989).
MCL 500.3101 et seq.
Priesman, supra at 61 (opinion by Levin, J.).
Id. at 62.
Id. at 62-63.
was “‘unlawful’” because, under Michigan law, it is a misdemeanor to take or use a vehicle
After recognizing that the no-fault act does not define the term “taken unlawfully,” three
members of the Court stated in the lead opinion that MCL 500.3113(a) did not apply to
“joyriding” family members, who most commonly were teenagers driving their parents’ cars
without permission.14 In so stating they first noted that the Uniform Motor Vehicle Accident
Reparations Act (UMVARA), which was a model for Michigan’s no-fault act, excluded from
coverage persons injured while driving a stolen vehicle, unless that person was covered under an
insurance contract issued to that person, his or her spouse, or a relative living in the same
household.15 Also acknowledging this provision, the insurer argued that by substituting “‘taken
unlawfully’” for “‘converts’” the Michigan Legislature intended to exclude not only thieves who
intend to steal the vehicles, but also joyriders.16 The lead opinion rejected this argument, stating
that the Legislature’s modification of the UMVARA model merely showed its intent to deny
coverage to any thief regardless of his or her insurance coverage, “not necessarily to except
joyriders from coverage.”17 In other words, they wrote, “the Legislature did not intend any
substantial difference in scope or meaning from the prototypical UMVARA concept excepting
thieves from no-fault coverage . . . .”18 They reasoned that the Legislature’s intent could not
have been to deny coverage to joyriding family members, noting that teen joyriding was a
common occurrence: “Legislators generally are also parents and sometimes grandparents. Some
may have had experience with children, grandchildren, nephews, nieces, and children of friends
who have used a family vehicle without permission. Some may have themselves driven a family
vehicle without permission.”19 Accordingly, the lead opinion favored a judicially created family
member joyriding exception to MCL 500.3113(a).
Despite the fact that a majority of the Priesman Court did not agree on the existence of
this joyriding exception, Roberts argues that the trial court erred in ruling as a matter of law that
the exception was not binding in this case. Roberts acknowledges that Priesman itself is not
Id. at 63, citing MCL 750.414.
Id. at 63, 68.
Id. at 66, citing § 21 of the UMVARA, 14 ULA 87-88 (“[A] person who converts a motor
vehicle is disqualified from basic or added reparation benefits, including benefits otherwise due
him as a survivor, from any source other than an insurance contract under which the converter
is a basic or added reparation insured . . . .” [Emphasis added.]), and § 1(i) and (ii) of the
UMVARA, 14 ULA 42.
Priesman, supra at 67 (opinion by Levin, J.).
Id. at 67-68.
Id. at 68.
precedentially binding.20 However, Roberts argues that the rationale of the lead opinion in
Priesman is binding because it has been adopted in subsequent decisions of this Court.
In Butterworth Hosp v Farm Bureau Ins Co,21 this Court recognized that Priesman was
not binding precedent and even commented that “any joyriding exception seems to be in
derogation of the clear language of the statutes.” Nonetheless, this Court felt “compelled” to
follow the reasoning of the lead opinion of Priesman and extended the exception to adult family
members from another household who take a relative’s vehicle joyriding.22 In doing so, this
Court clarified that MCL 500.3113(a) did not apply to any person who takes a family member’s
vehicle for joyriding purposes; rather, the statute only operated to exclude a person from
coverage if he or she had an actual intent to steal the vehicle.23
In Mester v State Farm Mut Ins Co,24 three girls were skipping school together and took a
stranger’s truck that they eventually crashed during a police chase. The plaintiff argued that the
joyriding exception should be extended to anyone who merely joyrides without intent to steal.25
This Court rejected the plaintiff’s argument, noting that, by statute,26 “[a]n unlawful taking does
not require an intent to permanently deprive the owner of the vehicle,” and reasoning that “[h]ad
the Legislature intended to exempt from subsection 3113(a) all joyriding incidents, it would have
chosen a different term than ‘unlawful taking,’ such as ‘steal’ or ‘permanently deprive.’”27 This
Court then explained that the lead opinion in Priesman “recognized a joyriding exception . . . not
because joyriding does not involve an unlawful taking, but only because of special
considerations attendant to the joyriding use of a family vehicle by a family member.”28 This
Court then concluded that those “special considerations” did not “warrant expansion of the
exception beyond the family context.”29
As Roberts concedes and this Court has repeatedly acknowledged, the lead opinion in
Priesman is not binding precedent because it was adopted by only three of the seven justices.30
See Wilkie v Auto-Owners Ins Co, 469 Mich 41, 58; 664 NW2d 776 (2003).
Butterworth Hosp, supra at 248, 249 n 2.
Id. at 248-249.
Mester v State Farm Mut Ins Co, 235 Mich App 84, 85-86; 596 NW2d 205 (1999).
Id. at 88.
Citing MCL 750.413.
Mester, supra at 88.
Id. See also Allen v State Farm Mut Automobile Ins Co, 268 Mich App 342, 346; 708 NW2d
131 (2005) (declining to extend the exception to nonfamily members who reside in same
household as the vehicle owner).
See Mester, supra at 87; Butterworth Hosp, supra at 248.
Further, in urging us to disregard the Priesman decision, Titan points out that in recent years the
Michigan Supreme Court has more strictly enforced the dictate that “[s]tatutory—or
contractual—language must be enforced according to its plain meaning, and cannot be judicially
revised or amended to harmonize with the prevailing policy whims of members of this Court.”31
Accordingly, the Court has stated that “[a]lthough stare decisis is generally ‘“the preferred
course,”’ [the Court] will nevertheless depart from erroneous precedent ‘when governing
decisions are unworkable or are badly reasoned.’”32 Titan therefore contends that the current
membership of the Supreme Court would likely conclude that the justices signing the lead
opinion in Priesman sought improperly to legislate from the bench and judicially create a
joyriding exception when the plain language of MCL 500.3113(a) shows no such intent.
Although we are persuaded by Titan’s position, we cannot render decisions on the basis
of speculation regarding what the current membership of the Supreme Court may decide. As
stated, this Court in Butterworth Hosp specifically adopted the reasoning stated in the lead
opinion in Priesman, and we are now bound by court rule to follow that decision.33 However,
were we not so bound to follow the Butterworth decision, we would instead follow Justice
Griffin’s dissent in Priesman, in which he concluded that, by creating the joyriding exception,
the lead opinion improperly “depart[ed] from the clear and unambiguous language of § 3113(a) .
. . .”34 As Justice Griffin stated, although there may be “emotional appeal” to the rationale of the
lead opinion that the legislators could not have meant to exclude coverage to young, joyriding
family members given their own likely experience with that common occurrence, such an
exception is not supported by the plain, unambiguous language of the statute.35
3. Applying the Family Member Joyriding Exception
(a) Family Member’s Vehicle
Having concluded that the family member joyriding exception is binding on this Court,
we now turn to application of that exception to the present case. Therefore, we must determine
whether Roberts’s conduct falls within that scope of that exception; that is, whether Roberts was
joyriding in a family member’s vehicle.
Roberts concedes that the vehicle was titled to and owned by Vandenberg and that,
therefore, the joyriding exception would seem to not apply.36 However, Roberts argues that
Devillers v Auto Club Ins Ass’n, 473 Mich 562, 582; 702 NW2d 539 (2005).
Id. at 584, quoting Robinson v Detroit, 462 Mich 439, 463-464; 613 NW2d 307 (2000)
See MCR 7.215(J)(1).
Priesman, supra at 69 (Griffin, J., dissenting).
Id. at 73.
See Allen, supra at 346.
Irwin’s use of the vehicle qualified her as an “owner” of the vehicle sufficient to fall within the
scope of the exception.
The no-fault insurance act defines the term “owner” as:
(i) A person renting a motor vehicle or having the use thereof, under a
lease or otherwise, for a period that is greater than 30 days.
(ii) A person who holds the legal title to a vehicle, other than a person
engaged in the business of leasing motor vehicles who is the lessor of a motor
vehicle pursuant to a lease providing for the use of the motor vehicle by the lessee
for a period that is greater than 30 days.
(iii) A person who has the immediate right of possession of a motor
vehicle under an installment sale contract.
Here, there is no dispute that Irwin did not hold legal title to the Explorer; Vandenberg
was the title owner. Therefore, subsection ii does not apply. Further, there is no dispute that
Irwin was not purchasing the vehicle under an installment sale contract. Therefore, subsection iii
does not apply. Accordingly, we must determine if Irwin’s use of the Explorer for a period
greater than 30 days, as referred to in subsection i, operated to classify her as an “owner” of the
We first note that in applying the no-fault act’s definition of “owner,” this Court has
recognized that there may be more than one “owner” of a vehicle.38 For example, this Court has
held that both a lessee and the legal titleholder could be owners under the no-fault act’s
definition of “owner,” thereby requiring them both to maintain security for payment of benefits
under PIP insurance.39
Where there is no lease agreement, “‘having the use’ of a motor vehicle for purposes of
defining ‘owner,’ . . . , means using the vehicle in ways that comport with concepts of
ownership.”40 The focus must be on the nature of the person’s right to use the vehicle.41
“[O]wnership follows from proprietary or possessory usage, as opposed to merely incidental
usage under the direction or with the permission of another.”42 It is a “regular pattern of
MCL 500.3101(2)(h). We note that MCL 500.3101 was amended, effective July 17, 2008,
redesignating the previous subsection 3101(2)(g) to (2)(h). 2008 PA 241. However, the
substance of the section remains unchanged.
Integral Ins Co v Maersk Container Service Co, Inc, 206 Mich App 325, 332; 520 NW2d 656
Id., citing MCL 500.3101(1).
Ardt v Titan Ins Co, 233 Mich App 685, 690; 593 NW2d 215 (1999).
Twichel v MIC Gen Ins Corp, 469 Mich 524, 530; 676 NW2d 616 (2004).
Ardt, supra at 691 (emphasis in original).
unsupervised usage” rather than “spotty and exceptional” usage that will support a finding of
Here, there is no dispute that Vandenberg gave the Explorer to Irwin to use because her
Jeep broke down right after she moved into his house and that thereafter she had exclusive use of
that vehicle. As stated, there was no dispute in the record that Irwin used the vehicle for all her
daily needs, and Vandenberg testified that if he had wanted to use the Explorer he probably
would have asked Irwin for permission first “because [he] gave it to her to use.” Therefore, we
conclude that Irwin’s use of the car comports with the concepts of ownership. Further, the
record indicates that Irwin had possessory use of the Explorer from approximately March 1,
2005, until June 14, 2005. Therefore, the record establishes that Irwin had use of the vehicle for
a period greater than 30 days. Accordingly, viewing the evidence in the light most favorable to
Roberts, we conclude that there was no question of fact concerning Irwin’s ownership.44
(b) Roberts’s Intent
In Butterworth, this Court explained that MCL 500.3113(a) “does not apply to cases
where the person taking the vehicle unlawfully is a family member doing so without the intent to
steal but, instead, doing so for joyriding purposes.”45 Here, there was no evidence that Roberts
intended to steal the vehicle. According to his testimony, after becoming intoxicated, he simply
decided to take the vehicle for a drive.
Therefore, because Roberts was a family member joyriding rather than attempting to steal
the car, under the precedent that Butterworth set by adopting the reasoning of the lead opinion in
Priesman, he did not “unlawfully” take the car for purposes of MCL 500.3113(a) of the no-fault
act and is thus not excluded from coverage under that provision.
C. The Policy Language
When presented with a contractual dispute, a court must read the contract as a whole with
a view to ascertaining the intention of the parties, determining what the parties’ agreement is,
See Botsford Gen Hosp v Citizens Ins Co, 195 Mich App 127, 134; 489 NW2d 137 (1992).
Butterworth, supra at 249. See MCL 750.413 (“Any person who shall, wilfully and without
authority, take possession of and drive or take away . . . any motor vehicle, belonging to another,
shall be guilty of a felony . . . .”); Mester, supra at 88 (“An unlawful taking does not require an
intent to permanently deprive the owner of the vehicle . . . .”). See also MCL 750.414 (“Any
person who takes or uses without authority any motor vehicle without intent to steal the same . . .
is guilty of a misdemeanor . . . .”); Landon v Titan Ins Co, 251 Mich App 633, 644; 651 NW2d
93 (2002), quoting People v Laur, 128 Mich App 453, 455; 340 NW2d 655 (1983) (“‘To be
convicted of this offense, a defendant must have intended to take or use the vehicle, knowing that
he had no authority to do so.’”).
and enforcing it.46 Absent ambiguity, a contract must be construed to adhere to its plain and
ordinary meaning.47 Technical and constrained constructions are to be avoided.48
It is a cardinal principle of construction that a contract is to be construed
as a whole; that all its parts are to be harmonized so far as reasonably possible;
that every word in it is to be given effect, if possible; and that no part is to be
taken as eliminated or stricken by some other part unless such a result is fairly
. . . Every word in the agreement must be taken to have been used for a
purpose, and no word should be rejected as mere surplusage if the court can
discover any reasonable purpose thereof which can be gathered from the whole
“[C]lear and specific exclusions in an insurance policy should be given effect.”50
1. Unlawfully Taken Vehicle
Under the terms of Irwin’s Titan insurance policy, “coverage does not apply to bodily
injury sustained by: 1. Any person using an auto taken unlawfully.” (Emphasis in original.)
Relying on this provision, Titan argues that the insurance policy alone clearly precludes coverage
for Roberts’s claims. However, “[t]o the degree that the contract is in conflict with the statute, it
is contrary to public policy and, therefore, invalid.”51 But “contracting parties are assumed to
want their contract to be valid and enforceable,” and “we are obligated to construe contracts that
are potentially in conflict with a statute, and thus void as against public policy, where reasonably
possible, to harmonize them with the statute.”52 Therefore, preferring a construction of the
contract that renders it legal and enforceable, we construe this contract in a manner that renders it
compatible with the existing public policy by concluding that the exclusion does not apply to a
joyriding family member.53
Detroit Trust Co v Howenstein, 273 Mich 309, 313; 262 NW 920 (1935); Whitaker v Citizens
Ins Co, 190 Mich App 436, 439; 476 NW2d 161 (1991). Perry v Sied, 461 Mich 680, 689 & n
10; 611 NW2d 516 (2000), citing 3 Corbin, Contracts, § 549, pp 183-186 (contracts are to be
interpreted and their legal effects determined as a whole).
St Paul Fire & Marine Ins Co v Ingall, 228 Mich App 101, 107; 577 NW2d 188 (1998).
Bianchi v Automobile Club of Michigan, 437 Mich 65, 71, n 1; 467 NW2d 17 (1991).
Laevin v St Vincent De Paul Society, 323 Mich 607, 609-610; 36 NW2d 163 (1949) (citations
and quotation marks omitted).
Huggins v MIC Gen Ins Corp, 228 Mich App 84, 90; 578 NW2d 326 (1998).
Cruz v State Farm Mut Automobile Ins Co, 466 Mich 588, 601; 648 NW2d 591 (2002).
Id. at 599.
Although the trial court did not rule on the issue, Roberts argues that Titan was not
entitled to void the insurance policy and therefore deny Roberts benefits on the basis of Irwin’s
alleged misrepresentations. Titan argues that Irwin fraudulently obtained insurance coverage by
misrepresenting that she owned the Escort and, therefore, the insurance contract was void ab
Irwin’s insurance policy excludes coverage when the policy is obtained by fraud.
Specifically, the policy states as follows:
We do not provide coverage for any insured who has made fraudulent
statements or engaged in fraudulent conduct in obtaining or maintaining this
policy or concerning any accident or loss for which coverage is sought under this
Further, it is a well-established rule that “[w]here a policy of insurance is procured
through the insured’s intentional misrepresentation of a material fact in the application for
insurance, and the person seeking to collect the no-fault benefits is the same person who
procured the policy of insurance through fraud, an insurer may rescind an insurance policy and
declare it void ab initio.”54
Here, there is no dispute that Irwin lied to Titan when she said that she owned the Escort,
which was actually owned and used by her son Vernon. And Irwin’s misrepresentation was
material to the risk insured because Titan would have increased the premium had it known the
truth about the vehicle’s ownership and usage. Karen Gines, an employee in Titan’s
underwriting department, attested that
[t]he risk Titan assumed by issuing the policy to Lillian Irwin for the 1995 Ford
Escort was substantially less than the actual risk assumed due to the car being
owned by, in the possession of, and driven by Ms. Irwin’s 19-year-old son,
Vernon Austin, III. The risk of insuring a 19-year-old male is significantly
greater than the risk of insuring a 36-year-old female.
Therefore, the Titan policy was procured through Irwin’s intentional misrepresentation of a
material fact in the application for insurance.
However, an insurer may not void a policy of insurance ab initio where an innocent third
party is affected.55 Therefore, “‘only the claim of an insured who has committed the fraud’ will
be barred, leaving unaffected ‘the claim of any insured under the policy who is innocent of
Darnell v Auto-Owners Ins Co, 142 Mich App 1, 9; 369 NW2d 243 (1985).
Id. at 10. See also Hammoud v Metro Prop & Cas Ins Co, 222 Mich App 485, 488; 563
NW2d 716 (1997).
fraud.’”56 Titan argues that this innocent third party doctrine does not apply in this case because,
given that Roberts is a minor, it is Irwin who is actually responsible for paying his medical
expenses and therefore she is the person actually seeking to collect any insurance benefits.
However, caselaw demonstrates that the innocent third party doctrine ensures coverage
for any person who is innocent of participation in the alleged fraud. For example in Darnell v
Auto-Owners Ins Co, this Court held that the plaintiff was entitled to recover benefits where his
wife, not the plaintiff, made the alleged misrepresentations.57 In contrast, in Hammoud v Metro
Prop & Cas Ins Co, this Court held that the plaintiff was not entitled to recover benefits because
he was actively involved in defrauding the insurer by allowed his older brother to obtain the
insurance policy by misrepresenting the plaintiff’s status as a driver of the vehicle.58 Therefore,
the relevant inquiry is whether the injured third party was innocent with respect to the
misrepresentation made to the insurance company, or was actively involved in defrauding the
Here, it was Irwin, not Roberts, who is alleged to have misrepresented facts on the
application for insurance. Consequently, while we certainly do not condone Irwin’s actions, the
fact remains that Roberts made no misrepresentation and coverage may not be denied to him on
the basis of his mother’s improper actions.
3. Insurable Interest
Titan also argues that Irwin did not have an insurable interest in the Escort; thus, the
policy should be void. However, “there is no requirement that an insured actually own or be the
registrant of a vehicle in order to have an insurable interest adequate to support PIP coverage.”59
[T]here is no requirement that there be an insurable interest in a specific
automobile since an insurer is liable for personal protection benefits to its insured
regardless of whether or not the vehicle named in the policy is involved in the
accident. A person obviously has an insurable interest in his own health and wellbeing. This is the insurable interest which entitles persons to personal protection
benefits regardless of whether a covered vehicle is involved.
Therefore, the fact that Irwin may not have had an insurable interest in the Escort does not
preclude recovery of PIP benefits.
Darnell, supra at 10, quoting Morgan v Cincinnati Ins Co, 411 Mich 267, 277; 307 NW2d 53
Darnell, supra at 10.
Hammoud, supra at 488-489.
Universal Underwriters Group v Allstate Ins Co, 246 Mich App 713, 725; 635 NW2d 52
Madar v League Gen Ins Co, 152 Mich App 734, 739; 394 NW2d 90 (1986).
Despite our disagreement with Butterworth’s adoption of the Priesman lead opinion’s
reasoning regarding a family joyriding exception, it is controlling, and we must follow it as
binding precedent.61 We therefore reverse the trial court’s grant of summary disposition in favor
of Titan. In the absence of Butterworth, we would follow Justice Griffin’s dissent in Priesman,
and we therefore declare a conflict between the present case and Butterworth.62
We reverse and remand for further proceedings consistent with this opinion. We do not
/s/ William C. Whitbeck
/s/ Michael J. Talbot