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Monaco v. Home-Owners Insurance Co.

Court of Appeals of Michigan

November 15, 2016

LAURA MONACO, Personal Representative of the ESTATE OF ALISON MONACO, Plaintiff-Appellee,
v.
HOME-OWNERS INSURANCE COMPANY, Defendant-Appellant. and COVENANT MEDICAL CENTER, INC., and MARY FREE BED REHABILITATION HOSPITAL, Intervenors-Plaintiffs/Appellees,

         Huron Circuit Court LC No. 13-105217-NF

          Before: Jansen, P.J., and Murphy and Riordan, JJ.

          Murphy, J.

         In this dispute concerning the recovery of personal protection insurance benefits, commonly referred to as PIP benefits, under the no-fault act, MCL 500.3101 et seq., defendant Home-Owners Insurance Company (HOIC) appeals as of right the judgment entered in favor of plaintiff Laura Monaco (hereafter "plaintiff" in the singular) and intervening plaintiffs Covenant Medical Center, Inc., and Mary Free Bed Rehabilitation Hospital (jointly referred to as "the medical providers").[1] The judgment reflected the verdict rendered by a jury following trial and certain stipulations between HOIC and the medical providers regarding the amount of damages. HOIC challenges the pretrial denial of its motion for summary disposition and the denial of its motion for a directed verdict. There is but one issue in this appeal that we must resolve. It concerns the legal question whether a person injured in a motor vehicle accident is barred from recovering PIP benefits under MCL 500.3113(a), which generally precludes coverage when a person used a vehicle that he or she had "taken unlawfully, " where the owner of the vehicle permitted, gave consent to, or otherwise authorized the injured person to take and use the vehicle, but where the injured person used the vehicle in violation of the law with the owner's knowledge. We hold that PIP benefits are available in such circumstances, given that the phrase "taken unlawfully, " as employed in MCL 500.3113(a), does not encompass the unlawful use or operation of a motor vehicle, just the unlawful taking of a vehicle. Accordingly, we affirm.

         I. BACKGROUND

         In July 2012, plaintiff's daughter Alison, then 15 years old, sustained severe injuries when she lost control of a vehicle that she was driving and crashed into a roadside ditch. At the time, Alison had completed and passed a driver's training course and obtained a permit to drive, but only if accompanied by a licensed parent, guardian, or 21-year-old, and she was not so accompanied when the accident occurred.[2] The motor vehicle was owned by plaintiff, customarily driven by plaintiff's partner, and insured by HOIC. The medical providers treated Alison's extensive injuries and assisted in her rehabilitation.

         Plaintiff filed a claim with HOIC for PIP benefits. In a recorded statement, plaintiff told HOIC's insurance adjustor that Alison did not have permission to drive the vehicle when the accident took place. HOIC thus denied coverage under MCL 500.3113(a) and language in the insurance policy that tracked the statutory provision. Plaintiff then telephoned the adjustor inquiring if there would be coverage if her partner had permitted Alison to use the vehicle. According to HOIC's adjustor, she informed plaintiff that HOIC would "reevaluate" the question of coverage in that event, but the adjuster never heard back from plaintiff in the matter.

         Plaintiff, then acting as Alison's next friend, filed suit challenging HOIC's denial of PIP benefits. The medical providers, aligning themselves with plaintiff, intervened in the action, seeking reimbursement for costs associated with providing medical care to Alison. HOIC filed a motion for summary disposition under MCR 2.116(C)(10), asserting that plaintiff had admitted during her deposition that she had previously lied to HOIC's adjuster when she stated that Alison lacked permission to drive the vehicle. HOIC argued that MCL 500.3113(a) barred Alison from obtaining PIP benefits because she took the vehicle unlawfully and did not reasonably believe that she had permission to use the car. HOIC maintained that "self-serving" deposition testimony given by plaintiff, her partner, and Alison, which contradicted plaintiff's earlier recorded statement, was inadequate to establish a genuine issue of material fact for trial. HOIC additionally contended that Alison had taken the vehicle unlawfully regardless of any possible parental permission, considering that, in light of Alison's age and the restricted nature of the driver's permit, plaintiff had violated the law by allowing or authorizing Alison's unaccompanied operation of the car.

         Plaintiffs responded that Alison had taken the vehicle lawfully, citing the deposition testimony of plaintiff, her partner, and Alison, which indicated that Alison had permission to take and drive the car on her own at the time of the accident. Plaintiffs further asserted that Alison's lack of a driver's license that would have allowed her to drive on her own was irrelevant with respect to whether she took the car lawfully, as HOIC was conflating unlawful taking with unlawful use. The trial court denied HOIC's motion for summary disposition, concluding that there was a factual issue regarding whether Alison had permission to take the vehicle and that the law supported plaintiffs' proffered distinction between "taking" and "using" a vehicle for purposes of MCL 500.3113(a).

         At trial, plaintiff testified that her initial statement to the insurance adjustor was not truthful and that Alison actually had permission to take and use the vehicle on the day of the crash. Plaintiff admitted that she feared criminal liability for allowing her daughter to drive when she gave the statement to HOIC's adjustor. Plaintiff's partner testified that Alison had permission to take and use the vehicle on the day of the accident, and Alison indicated that she frequently drove the vehicle with plaintiff's knowledge and consent.[3] Plaintiffs additionally produced witnesses who testified that they saw Alison driving the vehicle alone on several occasions, with one witness claiming that he observed plaintiff's partner at times giving Alison the car keys. HOIC in turn elicited testimony from witnesses who questioned the credibility of plaintiffs' witnesses, and one of HOIC's witnesses testified that the partner had stated that he told Alison not to take the vehicle.

         At trial, HOIC renewed its summary disposition arguments in moving for a directed verdict at the close of proofs, and the court again rejected them. HOIC and the medical providers had stipulated before trial to the amount of damages (outstanding medical charges plus penalty interest) should there be liability for PIP benefits, leaving for the jury to resolve the issue of liability. And the jury concluded that HOIC had failed to meet its burden of showing that Alison took the car without permission, effectively rendering HOIC liable for the stipulated sums. The jury, of course, reached the same conclusion on liability relative to plaintiff, and the jurors made additional findings in regard to the nature and amount of allowable expenses and interest to which plaintiff was entitled. A judgment consistent with the jury's verdict and the stipulation was entered, and this appeal followed.

         II. ANALYSIS A. STANDARD OF REVIEW AND GOVERNING TEST FOR SUMMARY DISPOSITION AND DIRECTED VERDICT MOTIONS

         "A trial court's decision regarding a motion for summary disposition and a motion for a directed verdict are reviewed de novo[, ]" Lewis v LeGrow, 258 Mich.App. 175, 192; 670 N.W.2d 675 (2003), as is the question of statutory interpretation, Krohn v Home-Owners Ins Co, 490 Mich. 145, 155; 802 N.W.2d 281 (2011). The test with respect to a motion for summary disposition brought under MCR 2.116(C)(10) is essentially the same in regard to a motion for a directed verdict, "namely, whether reasonable minds, taking the evidence in a light most favorable to the ...


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