BETTY A WILEY V PRIME UNDERWRITERSAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
BETTY A. WILEY,
July 10, 1998
PRIME UNDERWRITERS, GARY J. GUNDLE,
and ESTATE OF CURTIS D. GUNDLE,
Wayne Circuit Court
LC No. 95-508384-NI
AUTO OWNERS INSURANCE CO,
Before: Holbrook, Jr., P.J., and Young, Jr. and J.M. Batzer*, JJ.
This is a no-fault insurance case involving two separate accidents. Plaintiff appeals as of right
from an order granting defendant Auto Owners’ motion for summary disposition pursuant to MCR
2.116(C)(10). Plaintiff settled her claims against Prime Underwriters and the Gundles following
mediation. We affirm.
On March 10, 1994, plaintiff approached Prime Underwriters to procure no-fault insurance
coverage through the Michigan Automobile Insurance Placement Facility (MAIPF or the “Facility”).
Plaintiff paid Prime Underwriters a $260.00 premium, signed an insurance application, and received a
receipt and a certificate of insurance dated March 10, 1994. The certificate identifies Auto Owners as
the insurer. On April 27, 1994, plaintiff was involved in an auto accident for which she requested
benefits under her no-fault insurance policy. On April 28, 1994, a cancellation notice was issued by
Prime Underwriters, not by Auto Owners. Plaintiff then
* Circuit judge, sitting on the Court of Appeals by assignment.
paid an additional $98.00 to Prime Underwriters on May 12, 1994. On July 21, 1994, Auto Owners
denied plaintiff’s claim on the grounds that her insurance coverage did not take effect until May 4, 1994,
when it issued her policy. Apparently, Prime Underwriters did not date or submit plaintiff’s application
for insurance to the MAIPF and Auto Owners until May 4, 1994.
On August 19, 1994, plaintiff was the victim of a hit and run accident. Auto Owners denied
plaintiff’s claim for this accident because it had issued her a cancellation notice on June 9, 1994,
effective June 23, 1994, for nonpayment of premiums. Auto Owners mailed the cancellation notice to
16301 Lawton, Detroit, Michigan 48208, which is the address listed on the May 4, 1994, application
for insurance submitted by Prime Underwriters. Plaintiff claims, however, that she has never lived at
that address and that it is not the address she gave to Prime Underwriters when she initially purchased
the policy. She also notes that the cancellation notice issued by Prime Underwriters on April 28, 1994,
was mailed to her correct address, not the address written on the application. 1
The trial court initially denied Auto Owners’ motion for summary disposition as to the August
accident, finding a question of fact regarding the June cancellation notice. The trial court granted the
motion as to the April accident because it found no agency relationship between Prime Underwriters
and Auto Owners, and therefore Auto Owners was not responsible for plaintiff’s no-fault insurance until
it received her application on May 4, 1994. Upon reconsideration, the trial court decided that Auto
Owners was also not obligated to pay benefits for plaintiff’s August accident because Auto Owners was
not responsible for Prime Underwriters submitting the wrong address and thus the June cancellation
notice was effective.
On appeal, plaintiff contends that the trial court erred in granting summary disposition regarding
her April 27, 1994, because an agency relationship existed between Prime Underwriters and Auto
Owners and thus Auto Owners was bound by its agent’s representations regarding coverage.
Alternatively, plaintiff argues that coverage became immediately effective under the MAIPF’s rules
when she purchased the policy on March 10, 1994, even if the application was not forwarded to Auto
Owners until much later. We disagree on both counts.
A trial court’s decision to grant summary disposition is reviewed de novo. Pinckney
Community Schools v Continental Casualty Co, 213 Mich App 521, 525; 540 NW2d 748 (1996).
On review, this Court considers the affidavits, depositions, admissions, pleadings, and any other
evidence submitted below in the light most favorable to the nonmoving party and determines whether a
genuine issue of fact exists and whether the moving party is entitled to judgment as a matter of law. SSC
Associates v General Retirement System, 192 Mich App 360, 365; 480 NW2d 275 (1991).
Auto Owners issued plaintiff’s policy through the MAIPF. The MAIPF is a statutorily
mandated program whose goal is to guarantee automobile insurance coverage to those who are unable
to procure insurance through ordinary methods. Auto-Owners Ins Co v Mich Mut Ins Co, 223 Mich
App 205, 208 n 1; 565 NW2d 907 (1997); see also MCL 500.3301(1); MSA 24.13301(1). Every
insurer authorized to write insurance in Michigan is required to participate in the MAIPF and to adhere
to its plan of operation.
MCL 500.3301(1); MSA 24.13301(1); MCL 500.3310(5); MSA
Pursuant to the Policy Administration and Service Standards of the MAIPF User’s Manual,
Section III (G)(1)(a)-(c), a producer such as Prime Underwriters may effect “[i]mmediate certification”
of a risk if it certifies the date and time the application was written, forwards the application and fee to
the MAIPF by the next working day, gives the applicant a copy of the certification, maintains a record
of “all risks so certified” and agrees to allow the insurer or the MAIPF to inspect and copy those
records if coverage is in question due to an accident or claim. Under Section III (G)(1)(d), the
producer is encouraged to establish a “tickler file” and to contact the MAIPF if no placement notice is
received within thirty days. The closing paragraph of Section III (G)(1) provides that, if no effective
date is specified on the application and no certificate is issued by the producer, coverage becomes
effective “at 12:01 A.M. on the day after placement notice is mailed from the Facility.” Section III
(G)(1)(e) further states that “[i]n no event shall coverage be effective prior to the time and date shown
on the application.”
As seen above, the MAIPF’s plan of operation gives Prime Underwriters authority to effect
immediate coverage subject to various conditions. However, there is no evidence that Prime
Underwriters transmitted plaintiff’s application to the MAIPF by the next day as required by the plan.
Therefore, pursuant to the plan’s provisions, Auto Owners’ no fault coverage did not become effective
until the date and time shown on the insurance application, May 4, 1994, a week after plaintiff’s first
As to the claim of agency, we note that the application for insurance appears to bear plaintiff’s
signature on the certification section. That section states that Prime Underwriters is not an agent of Auto
. . . I understand that the Producer of Record for this insurance is not acting as an agent
of any company or of the Michigan Automobile Insurance Placement Facility for the
purposes of this transaction and any other transaction with respect to this insurance, but
is acting as an agent for me.
Further, the producer’s statement portion of the application, which Prime Underwriters signed, states
I do hereby certify that I am an agent appointed by American Fellowship to
transact automobile insurance in the State of Michigan and am presently authorized to
solicit, negotiate, or effect automobile insurance for a member of the Facility.
An independent insurance agent is ordinarily an agent of the insured, not the insurer. Harwood
v Auto-Owners Ins Co, 211 Mich App 249, 254; 535 NW2d 207(1995); Auto-Owners Ins Co,
supra, 223 Mich App 215. The certification portion of the application merely restates this common law
principle. The application also states that Prime Underwriters has the authority to effect automobile
insurance “for a member of the Facility.” Auto-Owners Ins Co, supra, 223 Mich App 216. We
ackowledge that the language in the producer’s statement of the application could lead a lay person to
believe that Prime Underwriters had the authority to bind the insurance company. However, in law, the
general language of the application did not give Prime Underwriters the specific authority to bind Auto
Owners. Auto-Owners Ins Co, supra, 223 Mich App 216-217.
Plaintiff concedes that Prime Underwriters was an independent agent but she contends that
there was an implied agency relationship between Prime Underwriters and Auto Owners, such that the
certificate issued by Prime Underwriters should bind Auto Owners. We again disagree.
The authority of an agent to bind a principal may be either actual or apparent. Meretta
v Peach, 195 Mich App 695, 698; 491 NW2d 278 (1992). Actual authority may be
either express or implied. Implied authority is the authority that an agent believes the
agent possesses. Id. Apparent authority arises where the acts and appearances lead a
third person reasonably to believe that an agency relationship exists. However,
apparent authority must be traceable to the principal and cannot be established only by
the acts and conduct of the agent. Id., pp 698-699. [Alar v Mercy Memorial
Hospital, 208 Mich App 518, 528; 529 NW2d 318 (1995).]
Along with its motion, defendant produced an affidavit of a representative of the MAIPF stating
that the producer does not act as an agent of the MAIPF or of the insurance company who issues the
policy. This is consistent with the application itself. The representative also stated that the producer is
the insured’s agent as set forth in the insurance application. Thus, there is no evidence that Prime
Underwriters had actual authority, express or implied, to bind Auto Owners.
As to the claim of apparent authority, plaintiff concedes that the only representations, acts,
conduct, and appearances regarding the alleged agency relationship between Prime Underwriters and
Auto Owners came from Prime Underwriters. Thus, they were not “traceable” to Auto Owners as
required by the caselaw. See Alar, supra, 208 Mich App 528. Plaintiff therefore failed to create a
question of material fact regarding agency.
Plaintiff next argues that the trial court erred in granting summary disposition to Auto Owners
regarding her August accident because, although Auto Owners mailed the June notice of cancellation to
the address last known to it, the notice did not comply with MCL 500.3020; MSA 24.13020, because
it was mailed to the wrong address and she did not receive it. We disagree.
The process of canceling a no-fault insurance policy is governed by MCL 500.3201-500.3262;
MSA 24.13201-24.13262. An insured must ordinarily receive actual notice of cancellation before the
cancellation is effective. Causin v AutoClub Ins Ass’n, 211 Mich App 369, 372; 536 NW2d 247
(1995); see also MCL 500.3020; MSA 24.13020 (mailing to last known address creates rebuttable
presumption of notice). However, the procedural protections of the act
do not apply to cancellations due to nonpayment of premiums such as this one. MCL 500.3212; MSA
24.13212. Thus, although plaintiff may have rebutted the statutory presumption of notice, she has failed
to create an issue of material fact.2
/s/ Donald E. Holbrook, Jr
/s/ Robert P. Young, Jr.
/s/ James M. Batzer
It is impossible to tell from the copies contained in the lower court file whether the address was written
on the application by plaintiff or by someone else.
Auto Owners also argues that plaintiff has no standing to assert a claim for benefits resulting from the
August 19, 1994, accident because her medical bill were paid by another insurer pursuant to the
assigned claims provisions of the act. See MCL 500.3171-500.3176; MSA 24.13171-24.13176.
We decline to review this issue because it was not addressed by the trial court, and therefore was not
properly preserved, and also because it has not been adequately developed or briefed. Alford v
Pollution Control Inds, 222 Mich App 693, 699; 565 NW2d 9 (1997).