WESTFIELD INS CO V LEAGUE GENERAL INS COAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
WESTFIELD INSURANCE COMPANY,
July 21, 1998
LEAGUE GENERAL INSURANCE COMPANY,
Otsego Circuit Court
LC No. 96-006606 CZ
Before: White P.J., and Hood and Gage, JJ.
This action involves a priority dispute between two automobile no fault insurers that arose out of
an automobile accident. Plaintiff, the insurer of one of the vehicles involved in the accident, appeals as of
right from a trial court order granting summary disposition in favor of defendant pursuant to MCR
2.116(C)(10). We affirm.
Robin and David Babcock, husband and wife, were taking their 1990 Pontiac to be repaired,
when it ran out of gas. They went to get gas in David's 1995 Ford pickup, and returned to the Pontiac.
The pickup was parked facing the Pontiac. Mr. Babcock started putting gas into the Pontiac, while
Mrs. Babcock sat in the pickup, so that the Pontiac could be jump-started with the pickup once fuel
was added. The Pontiac was titled in the name of Robin Babcock, and was insured by defendant under
a family automobile insurance policy in which the name of the insured was "Robin M. Babcock." The
Ford pickup was owned by "David Babcock, d/b/a David Babcock Construction" under a commercial
automobile policy issued by plaintiff, in which named insured was also "David Babcock, d/b/a Babcock
While the refueling process was in progress, another automobile came down the roadway and
hit the back of the Pontiac. The Pontiac then struck Mr. Babcock, injuring him, and also struck the
pickup, injuring Mrs. Babcock. There was no dispute that at the time of the accident, Robin Babcock
was an occupant of the 1995 Ford pickup and David Babcock was not an occupant of any motor
vehicle. Plaintiff paid, and continues to pay no fault benefits on behalf of both the Babcocks, but
claimed that defendant was responsible for benefits paid to David Babcock. Defendant responded to
plaintiff's declaratory judgment action with a motion for summary disposition, which was granted,
resulting in this appeal.
Plaintiff first argues that, since a sole proprietorship is a distinct entity from the proprietor
himself, the trial court erred in finding that David Babcock, as an i dividual, was a “named insured”
under plaintiff’s policy. Plaintiff relies on the recent Supreme Court case of Celina Mutual Ins Co v
Lake States Ins Co, 452 Mich 84; 549 NW2d 834 (1996), for this proposition. Plaintiff’s reliance on
Celina is mistaken. The question in Celina was whether the injured individual could recover under
MCL 500.3114(3); MSA 24.13115(3), which allows recovery by an employee from an employer’s
insurance policy when the employee is an occupant of the employer’s vehicle. The Celina Court held
that the plaintiff insurer was solely responsible for no-fault benefits under the policy and that “employee”
under §3114(3) of the no-fault statute could encompass a sole proprietor. Id. at 90. The Celina
Court rejected the holding of this Court, which had stated that:
. . . Implicit in these definitions [of “employer” and “employee”] is the assumption that
the existence of an employer-employee relationship requires more than one individual or
entity, and it follows that a sole proprietor cannot be an employee of his proprietorship.
[Celina, supra at 88, citing this Court’s unpublished, per curiam opinion, issued March
23, 1995 (Docket No. 170289).]
In essence then, the Celina Court held that the sole proprietor was both employer and employee and
that the sole proprietorship could be the same entity as the individual, still allowing the individual to
recover as an employee under MCL 500.3114(3); MSA 24.13115(3). See Raska v State Farm
Insurance Co, 412 Mich 355; 314 NW2d 440 (1982). Since plaintiff’s contention that a sole
proprietorship is a distinct entity from the proprietor himself is without merit, we hold that David
Babcock was a named insured under the stated terms of plaintiff’s insurance policy. Therefore, plaintiff
bears primary responsibility for paying his no-fault benefits. MCL 500. 3114(1); MSA 24.13115(1).
Cvengros v Farm Bureau, 216 Mich App 261, 267; 548 NW2d 698 (1996).
Plaintiff also argues that, even if David Babcock was a named insured under plaintiff's policy, he
was also a named insured under defendant’s policy, through his marital relationship with defendant’s
named insured, Robin Babcock, and, therefore, defendant is also partly responsible for payment. This
argument is also without merit. Defendant’s insurance policy makes no mention of David Babcock.
According to the terms of defendant's policy itself, a spouse is not automatically a “named insured” for
Michigan no-fault insurance coverage. Plaintiff would have this Court ignore the terms of the policy and
hold that the “named insured” of an insurance policy encompasses not only those persons listed
specifically on the policy, but any person with a marital relationship to the specifically listed individuals.
Were we to follow plaintiff’s recommendation and expand the term “named insured” to include anyone
insured by the policy, this would result in an absurdity by substantially expanding the insurer’s exposure
to risk without the insurer having any practical means of calculating the risk. Transamerica Ins Co v
Hastings Mutual Co, 185 Mich App 249, 254; 460 NW2d 291 (1990); Dairyland Ins Co v AutoOwners Ins Co, 123 Mich App 675, 685-686; 333 NW2d 322 (1983). Accordingly, we do not
choose to extend the definition of a “named insured” to this extent. Therefore, since David Babcock’s
no-fault benefits must be paid first by his own insurer, plaintiff, without recoupment
from his spouse’s insurer, defendant, MCL 500.3114(1);1 MSA 24.13115(1); Shinabarger v Citizens
Mutual Ins Co, 90 Mich App 307, 311; 282 NW2d 301 (1979), the trial court did not err in granting
summary disposition in favor of defendant.
/s/ Helene N. White
/s/ Harold Hood
/s/ Hilda R. Gage
While the trial court mistakenly relied on MCL 500.3114(3); MSA 24.13114(3), since David
Babcock was not the occupant of any vehicle, the trial court correctly declined to change its ruling on
reconsideration, as MCL 500.3114(1) is concededly the operative provision.