Butterworth Hospital v. Farm Bureau Insurance

Citations: 570 N.W.2d 304; 225 Mich. App. 244Docket: Docket 188374

Court: Michigan Court of Appeals; November 25, 1997; Michigan; State Appellate Court

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Butterworth Hospital appeals an order granting summary disposition in favor of Farm Bureau Insurance Company regarding a no-fault insurance claim. The case revolves around an incident where Floyd Wright, III, was injured while driving his mother's car without her permission after she explicitly refused his request to use it. Despite a previous head injury leading to a seizure disorder, which had resulted in his parents prohibiting him from driving, Wright claimed occasional permission for short trips. However, on the day of the accident, he unlawfully took the car and crashed it, incurring medical expenses treated at Butterworth Hospital.

Farm Bureau contended that under M.C.L. 500.3113(a), which denies coverage for individuals who unlawfully take a vehicle, Wright's actions excluded him from coverage. Butterworth argued that Wright did not unlawfully take the car as he did not intend to steal it but merely to joyride, relying on the interpretation from Priesman v. Meridian Mut. Ins. Co. Farm Bureau countered that Priesman lacked precedential value due to its non-majority opinion status and asserted that the current case was distinguishable.

The trial court sided with Farm Bureau, stating Wright was not entitled to coverage because he was not a member of the insured's household at the time of the accident. The appellate court is now reviewing this decision, with both parties maintaining their original arguments. The relevant statute indicates that personal protection insurance benefits are not available if the individual was using a vehicle unlawfully unless they reasonably believed they had the right to do so.

The term 'taken unlawfully' within the no-fault act is not explicitly defined but has been interpreted through the case Priesman, which examined a similar scenario involving an unlicensed, underage driver who was injured while driving his mother's car without her permission. The Michigan Supreme Court ruled that the provision in 3113(a), which denies no-fault coverage for individuals using a vehicle they 'took unlawfully,' does not apply to underage family members joyriding in their parents' vehicles. The Court reasoned that legislators likely did not intend to exclude family members from coverage in such common situations. Although the lead opinion in Priesman was signed by only three justices, affecting its binding precedent, it was still upheld and supported by a concurring opinion.

In the present case, the court determined that Wright, as a family member joyriding, did not 'unlawfully' take the car under 3113(a), thus qualifying for coverage. Farm Bureau contends that Wright's actions differ from Priesman based on three arguments: (1) Wright took the car against the owner's express wishes and potentially violated state laws regarding the unlawful driving away of a vehicle. However, merely violating these statutes does not imply intent to steal. (2) Farm Bureau argues that Wright was incapable of safely operating the vehicle and was unlicensed, suggesting reckless or felonious driving. (3) Lastly, they assert that Wright knew the vehicle was uninsured, violating a statute against operating an uninsured vehicle. Despite these claims, the court concluded that Wright's actions did not reflect an intent to steal, maintaining that the joyriding exception applies.

Arguments presented focus on the distinction between the unlawful use of a vehicle and the unlawful taking, emphasizing that the latter is the basis for exclusion under MCL 500.3113(a). Relevant case law, including Bronson Methodist Hosp. v. Forshee and State Farm Mut. Automobile Ins. Co. v. Hawkeye-Security Ins. Co., underlines this principle. Farm Bureau argues that Wright's adult status and separate domicile from his parents distinguish his case from Priesman, where the driver was a minor living at home. However, the trial court's distinction was based on domicile rather than age or family ties. The Priesman case focused on the joyriding intent rather than the familial relationship, which only influenced the insurer’s obligations. It is highlighted that MCL 500.3114 defines coverage for personal protection insurance based on household domicile, but this does not diminish the relevance of joyriding intent. Farm Bureau's argument regarding the vehicle's uninsured status versus the insured vehicle in Priesman is considered less critical, as the court's ruling appeared to reflect legislative intent to deny coverage for injuries during theft rather than being influenced by insurance status. The concurrence asserts that coverage should not be limited to family members joyriding; rather, the statute should exclude coverage only in cases where the intent was to steal. The conclusion is that Wright is entitled to no-fault benefits, reversing the trial court's denial.

The Court of Appeals has previously examined the interpretation of the 'taken unlawfully' language in M.C.L. 500.3113(a), notably in Bronson Methodist Hosp. v. Forshee, where it ruled that a driver was not unlawfully taking a vehicle with permission, despite violating usage restrictions. Similarly, in State Farm Mut. Automobile Ins. Co. v. Hawkeye-Security Ins. Co., the court found 3113(a) inapplicable when an employee used an employer's vehicle for personal reasons without permission. The opinion emphasizes that the joyriding exception recognized in prior cases should not apply to vehicles owned by strangers or nonfamily members, reiterating Justice Griffin's dissent in Priesman, which argued against extending the exception beyond familial contexts.

In the current case, M.C.L. 500.3172 is relevant for determining benefit payments rather than 3114, as this section allows for personal protection insurance benefits through an assigned claims plan when no applicable insurance is available. Farm Bureau highlights that the distinction of Wright driving an uninsured vehicle is critical; if benefits under 3113(a) are awarded, a judgment against Farm Bureau could be imposed, leading to financial responsibility for Wright's parents under M.C.L. 500.3177. This statute allows a no-fault insurer to recover benefits from the owner of an uninsured vehicle, and non-compliance by the owner can result in both indemnification judgments and loss of driving privileges. Wright's mother was not mandated to insure her vehicle as it was not intended for highway use, and she took reasonable measures to prevent its use, but the court must still consider the implications of the Priesman decision.