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Auto-Owners Ins. Co. v. All Star Lawn Specialists Plus, Inc.

Supreme Court of Michigan

November 25, 2014

AUTO-OWNERS INSURANCE COMPANY, Plaintiff-Appellee,
v.
ALL STAR LAWN SPECIALISTS PLUS, INC., and JEFFERY A. HARRISON, Defendants, and JOSEPH M. DERRY, Defendant-Appellant

For AUTO-OWNERS INSURANCE COMPANY, Plaintiff-Appelant: MICHELE RIKER-SEMON, BLOOMFIELD HILLS, MI.

For JOSEPH M DERRY, Defendant-Appelle: MARK GRANZOTTO, BERKLEY, MI; DANIEL P BECK, MT CLEMENS, MI.

Chief Justice: Robert P. Young, Jr. Justices: Michael F. Cavanagh, Stephen J. Markman, Mary Beth Kelly, Brian K. Zahra, Bridget M. McCormack, David F. Viviano. CAVANAGH, J. I would have granted leave to appeal.

OPINION

[497 Mich. 15] BEFORE THE ENTIRE BENCH

Per Curiam.

In this case, we are called upon to interpret the definition of " employee" as found in MCL 418.161(1)(n), prior to being amended in 2011, which is a provision in the Worker's Disability Compensation Act (WDCA), MCL 418.101 et seq. By a special panel convened to hear this case under MCR 7.215(J), the Court of Appeals rejected that Court's previous interpretation of this definition in Amerisure Ins Cos v Time Auto Transp, Inc.[1] Because we believe the term " employee" as defined in the WDCA was properly interpreted in Amerisure, we reverse the Court of Appeals.

Page 521

[497 Mich. 16] While working on a fall clean-up job for defendant All Star Specialists Plus, Inc., defendant Joseph Derry was loading leaves into a truck using a leaf vacuum machine when the machine tipped over, injuring him. At the time, All Star had three insurance policies issued by Auto-Owners Insurance Company: (1) a commercial general liability policy, (2) a commercial automobile insurance (no-fault) policy, and (3) a commercial workers' compensation policy. The general liability policy excludes from coverage " [a]ny obligation of the insured under a workers['] compensation . . . law," and the no-fault policy excludes coverage for " any expenses that would be payable under any workers['] compensation law . . . ."

Derry brought a negligence suit against All Star and one of its owners, Jeffery Harrison, for his injuries and sued Auto-Owners for no-fault benefits. Plaintiff Auto-Owners later filed the present declaratory judgment action, seeking a determination that Derry was an employee of All Star and, thus, that the only insurance coverage available was under the workers' compensation policy. Plaintiff Auto-Owners moved for summary disposition pursuant to MCR 2.116(C)(10). Derry contended that because he was an independent contractor, the general liability policy and no-fault policy applied to his negligence and no-fault claims, respectively. The trial court concluded that because it was uncontroverted that Derry held himself out to the public to perform the same services as the work he performed for All Star, Derry was an independent contractor at the time of his injury and not an employee, and that Derry was therefore entitled to coverage under Auto-Owners' general liability and no-fault policies. The court denied Auto-Owners' motion for summary disposition and granted summary disposition in favor of Derry.

[497 Mich. 17] Auto-Owners appealed in the Court of Appeals, and the panel affirmed in part and reversed in part in a published opinion.[2] The panel affirmed the trial court's conclusion that Derry was an independent contractor for purposes of the WDCA. However, the panel only reached this conclusion because it was bound under MCR 7.215(J)(1) to follow the Court of Appeals' prior decision in Amerisure, which held that each criterion of MCL 418.161(1)(n) must be satisfied for an individual to be an employee, and otherwise would have held that Derry was an employee. The panel called for a special panel to resolve the conflict.

A special panel was convened,[3] and in a published 4-3 decision, the majority reversed the trial court's order granting summary disposition in favor of Derry and, thus, its determination that Derry was an independent contractor.[4] The special panel majority overruled Amerisure and held " that all three of the statutory criteria in MCL 418.161(1)(n) must be met before an individual is divested of 'employee' status." [5] The majority concluded that because Derry only met two of the three criteria, Derry remained an employee at the time of his injury.[6] The majority concluded that only the workers' compensation policy provided coverage and that the

Page 522

trial court had erred by entering summary disposition in favor of Derry.[7]

[497 Mich. 18] Derry sought leave to appeal in this Court, specifically seeking reversal of the special panel majority's ruling that he ...


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