Harris v. Moore

1

MARGARET HARRIS, Plaintiff, and ALWAYZ ON TIME TRANSPORTATION, Intervening Plaintiff, v. THOMAS MOORE and MILLER PIPELINE, LLC, Defendants, and FARMERS INSURANCE EXCHANGE, Defendant/Third-Party Plaintiff- Appellant, v. USA UNDERWRITERS, Third-Party Defendant-Appellee.

No. 364669

Court of Appeals of Michigan

June 27, 2024

UNPUBLISHED

Before: BOONSTRA, P.J., and CAVANAGH and PATEL, JJ.

PER CURIAM.

Farmers Insurance Exchange (Farmers), the insurer assigned by the Michigan Automobile Insurance Placement Facility (MAIPF) appeals as of right, challenging an order granting summary disposition in favor of USA Underwriters (Underwriters) in this priority dispute regarding the payment of personal injury protection (PIP) insurance benefits under the no-fault act, MCL 500.3101 et seq., to plaintiff, Margaret Harris after she was allegedly injured while riding in a vehicle owned by her mother and ostensibly insured by Underwriters. We reverse and remand.

I. BACKGROUND FACTS

On August 8, 2020, Margaret was a passenger in her mother's vehicle when she was involved in an automobile accident and allegedly sustained injuries. On May 21, 2021, she filed her complaint against the other driver involved in the accident, Thomas Moore, and his employer, Miller Pipeline, LLC. Plaintiff also named Farmers as a defendant, alleging that she was entitled to, but wrongfully denied, first-party PIP benefits.^[1]

Subsequently, Farmers filed a third-party complaint against Underwriters, alleging that plaintiff's claim for PIP benefits was assigned to Farmers by the MAIPF but, in fact, Margaret lived with her mother, Marisa Harris, who was insured by Underwriters at the time of the accident. Therefore, Farmers alleged, Underwriters was first in priority to pay PIP benefits, not Farmers. Farmers sought a declaratory ruling that Underwriters was the highest priority insurer and a judgment in the amount of benefits it had paid to Margaret. In its initial disclosures filed under MCR 2.302, Underwriters asserted that "there was no active policy of insurance with Marisa Harris, the alleged resident relative of Margaret Harris on the date of the accident. The policy was cancelled for non-payment of premiums on July 23, 2020."

On September 1, 2022, Underwriters filed a motion for summary disposition under MCR 2.116(C)(8) and (C)(10), arguing that Marisa Harris executed an application for automobile insurance and made an initial payment for the policy on July 8, 2020. A schedule of future payments required under the policy was allegedly provided to Harris at that time which stated that the next premium installment in the amount of $214.49 was due two days later, on July 10, 2020. Underwriters argued that Harris did not make the required payment and a Notice of Cancellation, dated July 13, 2020, was sent to Harris which stated that the policy would be cancelled if payment was not "received or postmarked before" July 23, 2020. The cancellation date and time was stated to be "07/23/2020 12:01 AM." Underwriters argued that Harris did not, in fact, pay the applicable premium and the policy was cancelled effective July 23, 2020. Therefore, at the time of the automobile accident on August 8, 2020, Harris was not insured by Underwriters. Accordingly, Underwriters was not liable to pay PIP benefits with regard to Margaret under any policy of insurance and Farmers' claim against it must be dismissed as a matter of law.

On September 28, 2022, Farmers filed a response to Underwriters' motion for summary disposition, arguing that Underwriters' purported cancellation of Harris's insurance policy failed to comply with MCL 500.3020(1)(b) and Yang v Everett Nat'l Ins Co, 507 Mich. 314, 325-326; 968 N.W.2d 390 (2021); therefore, it was of no legal effect and the policy of insurance remained in force at the time of the accident at issue. Consequently, Farmers argued, it was entitled to summary disposition under MCR 2.116(I)(2). In particular, Farmers argued, Underwriters' proposed cancellation notice was conditional and was sent before the time to make the payment had passed-which did not comport with MCL 500.3020(1)(b). See Yang v Everest Nat'l Ins Co, 329 Mich.App. 461, 469-470; 942 N.W.2d 653 (2019), affirmed 507 Mich. 314, 325-326 (2021). To the contrary, Farmers argued, Underwriters' July 13, 2020 purported notice of cancellation was sent before the premium payment was due and was "explicitly conditioned upon her failing to submit payment by July 23, 2020." Therefore, its policy of insurance was still in effect at the time of Harris's accident and Underwriters' motion for summary disposition must be denied. Moreover, Farmers argued, Underwriters' purported notice of cancellation was not sent to Harris so that she received it at least ten days before the cancellation became effective, as discussed in Nowell v Titan Ins Co, 466 Mich. 478, 483-484; 648 N.W.2d 157 (2002); therefore, Harris had insurance on the date of the accident. And Farmers-as a MAIPF servicing insurer-was entitled to reimbursement and indemnification under MCL 500.3175(2) for the PIP benefits provided in this matter.

On October 13, 2022, Underwriters filed a reply brief in support of its motion for summary disposition arguing that, unlike in the Yang case, here, "the grounds for cancellation had already occurred before [it] issued the notice of cancellation. The [] insured missed her payment of $214.49 due on July 10, 2020. The notice of cancellation was issued on July 13, 2022-after the premium payment was already missed." Consequently, Underwriters argued, the notice of cancellation complied with both MCL 500.3020(1)(b) and Yang. And, further, because the notice was issued on July 13 and the cancellation was not effective until July 23, the 10-day-written-notice requirement set forth in MCL 500.3020(1)(b) was also met. Therefore, Farmers was not entitled to reimbursement from Underwriters for any benefits Farmers paid arising out of Harris's accident.

On October 27, 2022, the trial court held oral arguments on Underwriters' motion for summary disposition. The parties argued consistently with their briefs, after which the trial court held that Underwriters' notice of cancellation clearly stated that the policy would be cancelled unless payment was received or postmarked before July 23-which was sufficient-and Underwriters' motion for summary disposition was granted. On October 28, 2022, an order was entered granting Underwriters' motion for summary disposition and dismissing Farmers' case against Underwriters.

On November 2, 2022, Farmers filed a motion for reconsideration, arguing that the trial court committed palpable legal error because Underwriters' notice of cancellation was not effective in that it was not "peremptory, explicit and unconditional" as required under our Supreme Court's decision in Yang, 507 Mich. at 325-326. Although Underwriters claimed that Harris missed the payment due on July 10, 2020, it never established that fact with admissible documentary evidence. Further, even if Harris did miss the July 10, 2020 payment, the notice of cancellation did not state that fact or that the policy was cancelled because she had missed that payment. And the notice was not peremptory or unconditional because cancellation could have been avoided by making the required payment by July 23, 2020. Farmers also argued that the purported cancellation did not comply with the 10-day-written-notice requirement discussed in Nowell, 466 Mich. 483-484. That is, even if the notice of cancellation was sent on July 13, 2020 as claimed, then Harris would not have received that notice at least ten days before July 23, 2020, the date specified for cancellation. Therefore, Farmers argued, Underwriters purported cancellation of Harris's policy was ineffective and that policy was still in effect on the date of the accident. Accordingly, Farmers argued, the trial court erred when it granted summary disposition in favor of Underwriters and not in favor of Farmers.

On November 16, 2022, the trial court entered a stipulated order of dismissal as to plaintiff's claim against defendant Farmers after there was mutual acceptance of the case evaluation award. On December 15, 2022, a stipulated order of dismissal as to plaintiff's claims against defendants Moore and Miller Pipeline was entered by the trial court.

On December 27, 2022, the trial court entered an opinion and order denying Farmers' motion for reconsideration on the ground that the motion presented the same issues previously considered and rejected by the court when it granted Underwriters' motion for summary disposition. On January 19, 2023, the trial court entered a stipulated order of dismissal as to the claim of intervening plaintiff Alwayz on Time Transportation's after a settlement was reached. On January 24, 2023, Farmers filed its claim of appeal.

On appeal, Farmers argues that Underwriters' cancellation notice did not comply with MCL 500.3020(1)(b) or prevailing law because it was not "peremptory, explicit and unconditional" and the 10-day-written-notice requirement was not met; therefore, the trial court erred in concluding that the cancellation notice was effective and Harris did not have insurance on the date of the automobile accident. We agree with both arguments.

II. ANALYSIS

A. STANDARD OF REVIEW

We review de novo a trial court's decision to grant a motion for summary disposition. Sheridan v Forest Hills Pub Sch, 247 Mich.App. 611, 620; 637 N.W.2d 536 (2001). Underwriters sought summary disposition under both MCR 2.116(C)(8) and (C)(10), and the court did not specify under which subrule it granted summary disposition. However documents outside the pleadings were relied upon by the parties and considered by the trial court so we ...