Progressive Michigan Ins Co v. William Smith ( 2011 )

Order Michigan Supreme Court
Lansing, Michigan
December 29, 2011 Robert P. Young, Jr.,
Chief Justice
6/October 2011 Michael F. Cavanagh
Marilyn Kelly
Stephen J. Markman
141255 Diane M. Hathaway
Mary Beth Kelly
Brian K. Zahra,
PROGRESSIVE MICHIGAN INSURANCE Justices
COMPANY,
Plaintiff-Appellant,
v SC: 141255
COA: 287505
Kent CC: 07-003903-CK
WILLIAM SMITH and SHERI HARRIS,
Defendants,
and
SCOTT MIHELSIC and ANDREA MIHELSIC,
Defendants-Appellees,
and
PIONEER STATE MUTUAL INSURANCE
COMPANY,
Intervening Defendant.
_________________________________________/
On order of the Court, leave to appeal having been granted and the briefs and oral
arguments of the parties having been considered by the Court, we VACATE our order of
December 17, 2010. The application for leave to appeal the March 16, 2010 judgment of
the Court of Appeals is DENIED, because we are no longer persuaded that the question
presented should be reviewed by this Court.
YOUNG, C.J. (concurring).
The judicial philosophical dilemma in statutory interpretation is . . .
whether the “jurist interpreter” will be faithful to the actual statutory text
and thus the intent of the lawgiver, or whether the jurist will be faithful to
his or her own subjective policy desires.
2
-Robert P. Young, Jr., A Judicial Traditionalist Confronts
Justice Brennan’s School of Judicial Philosophy.1
The dissents of Judge MARKEY in the Court of Appeals and Justice MARILYN
KELLY in this Court illustrate the interpretive “dilemma” that I describe above when
judges choose to ignore the statutory words.
I concur in this Court’s order vacating our prior order in this case and denying
leave to appeal. This is a simple case. MCL 500.3009(2) clearly and unambiguously
requires that insurance companies place particular statutorily specified notice language in
certain insurance policy documents when excluding a named driver pursuant to that
provision.2 Progressive, the insurer, failed to comply with this requirement and is thus
required to pay the claim. I write to respond to the dissents in the Court of Appeals and
this Court.
There is no ambiguity in the requirement that the Legislature’s precise statutory
disclaimer must be used in insurance policy documents in order to effectuate the
exclusion of a bad driver. In this case, Progressive failed to include the required statutory
disclaimer but paraphrased it, suggesting that its paraphrase was “close enough” to avoid
paying the claim. The dissents here and in the Court of Appeals believe that “close
enough” is as valid in law as it is in horseshoes.
1
33 OK CITY UNIV LAW REV 263, 280 (2008).
2
The Legislature has made it possible for insureds and insurers to exclude bad drivers
from a policy. The reason why an insured would wish to do so is obvious: the coverage
of a bad driver in the household drastically increases the price of insurance. In order to
make this exclusion, though, the Legislature has required that certain policy documents
have the following specific disclaimer, otherwise the named driver exclusion “shall not
be valid.” MCL 500.3009(2) provides:
If authorized by the insured, automobile liability or motor vehicle liability
coverage may be excluded when a vehicle is operated by a named person.
Such exclusion shall not be valid unless the following notice is on the face
of the policy or the declaration page or certificate of the policy and on the
certificate of insurance:
Warning—when a named excluded person operates a vehicle all liability
coverage is void—no one is insured. Owners of the vehicle and others
legally responsible for the acts of the named excluded person remain fully
personally liable.
3
However, the majority of the Court of Appeals correctly held that, because the
notice language employed on the insured’s certificate of insurance in this case deviated
from that statutory language, Progressive did not comply with the statutory notice
requirement. Thus, the court was obligated to enforce the Legislature’s directive that the
named driver exclusion “shall not be valid.”3 Progressive was required to pay the claim
of the imperfectly excluded bad driver and appealed here from that decision.
The dissenting opinion of Judge MARKEY in the Court of Appeals, although
professing an adherence to the philosophy of interpreting the law as plainly written,
nevertheless ignored the statutory language:
[O]n rare occasion there may arise a situation where following this
philosophy with myopic rigidity effects not only a complete thwarting of
the Legislature’s intent but also a profoundly unfair and inequitable result.
. . . Must we as strict constructionists abandon “common sense” and render
a decision not only remarkably hyper-technical legally but also profoundly
unjust and jarring to what I will presume to say is the average person’s
sense of justice and fair play? I think not.”4
While my concurring colleague may argue that the result urged by the dissent is not so
unreasonable, statements such as this represent a shocking departure from the rule of
law.5 All Michigan citizens should be extraordinarily troubled by any judge who
advances the notion that the rule of law must be enforced unless a judge finds an outcome
in a particular case to be one of which he personally disapproves. In a constitutional
republic, judges have no such authority, and the rule of law crumbles where a
constitutional, validly enacted statutory mandate can be ignored simply because it offends
a judge’s sensibilities—even if on “rare occasion[s].”
3
See Progressive Mich Ins Co v Smith, 287 Mich App 537 (2010).
4
Id. at 546, 550 (MARKEY, J., dissenting).
5
My concurring colleague correctly states that the obligation of a judge committed to the
rule of law is to read the law “reasonably.” Yet I believe that it is decidedly unreasonable
and “indefensible,” to sanction the view that a court may substitute its own words, even if
they are synonymous, for those chosen by the Legislature. As my concurring colleague
has otherwise observed, “we believe that it is the constitutional duty of this Court to
interpret the words of the lawmaker, in this case the Legislature, and not to substitute our
own policy preferences in order to make the law less ‘illogical.’ . . . It is only by
interpretations of the law that are in accord with the words of the lawmaker—that is,
interpretations in which judges look outside themselves for a source of law—that the
decisions of courts are truly removed from the realm of politics and policymaking.”
Robertson v DaimlerChrysler Corp, 465 Mich 732, 758, 761 (2002).
4
With all due respect to Judge MARKEY, our judicial oaths require judges to enforce
the Legislature’s policy choices, even when we may personally find the outcome in a
given case “unjust,” “inequitable,” “jarring,” “hyper-technical,” or contrary to what we
intuit an “average person’s” sensibilities to be.6 As this Court has stated, it is a mere
“caricature” of judicial restraint for a judge “to assert that her common sense should be
allowed to override the language of the statute.”7
As Judge MURRAY aptly noted in his concurring opinion in the Court of Appeals,
our judicial duty is more than to “almost always” apply a statute’s unambiguous words to
the facts presented.8 The law must always guide the outcome, regardless of whether a
judge perceives that outcome in a given case to be formalistic or “inequitable.”
This Court has prided itself on its commitment to the rule of law, and in particular
a return to fundamental constitutional principles regarding judicial interpretation of
statutes.9 This has been true even where, as a personal matter, a Justice may be
discomforted by the ultimate result.10 But in a government characterized by the
6
The conclusion of my dissenting colleague on this Court suffers from the same
analytical and interpretative errors as that of Judge MARKEY. See infra (MARILYN
KELLY, J., dissenting). The dissent here is content to allow a deviation from the statutory
mandate because Progressive’s decision to use “more plain-English” words rather than
the statutorily mandated words satisfies the “intent” of MCL 500.3009(2). Doing so, my
dissenting colleague here urges, is apparently appropriate because it avoids “elevat[ing]
form over substance” and, therefore, prevents “an unreasonably harsh and unjust result.”
The goal exhibited in the dissent here and in the Court of Appeals—to effectuate an
intent other than that plainly stated in the statutory text—fails to apply first principles of
judicial interpretation.
7
Elezovic v Ford Motor Co, 472 Mich 408, 425 n 23 (2005).
8
Progressive Mich Ins Co, 287 Mich App at 544 (MURRAY, J., concurring).
9
See, e.g., People v Dowdy, 489 Mich 373 (2011); Allison v AEW Cap Management, 481
Mich 419 (2008); Rowland v Wash Co Rd Comm’n, 477 Mich 197 (2007); People v
Derror, 475 Mich 316 (2006); Devillers v Auto Club Ins Ass’n, 473 Mich 562 (2005);
Mayor of Lansing v Mich Pub Serv Comm, 470 Mich 154 (2004); Taylor v Gate
Pharmaceuticals, 468 Mich 1 (2003); Stokes v Millen Roofing Co, 466 Mich 660 (2002);
Wickens v Oakwood Healthcare System, 465 Mich 53 (2001); Robinson v City of Detroit,
462 Mich 439 (2000); People v McIntire, 461 Mich 147 (1999).
10
See, e.g., Stokes, 466 Mich at 677 (MARKMAN, J., concurring) (stating that even where
a result is “unfair” and “highly inequitable,” “we cannot allow equity to contravene the
clear statutory intent of the Legislature.”).
5
separation of powers, the people of this state elect judges to enforce the law as the
political branches of our government have given it to us.
The rule of law requires a judge to be subservient to the law itself, not the law to
be subservient to the personal views of a judge.
MARKMAN, J. (concurring).
Although I reach the same result as the Chief Justice, and, even had I not, I would
have articulated my position much differently than do the dissents in this Court and in the
Court of Appeals, I nonetheless respectfully believe that the Chief Justice is overly severe
in his criticism of these dissents.
The issue here is whether an insurance policy stating that an owner of an insured
vehicle, under specified circumstances, remains “personally responsible” conforms with
a statute requiring that all policies must communicate that an owner, under these
circumstances, remains “personally liable.” In my judgment, plaintiff-insurer’s insurance
policy did not satisfy the statute because an exact identity in language is required in the
instant circumstances, in which an insurance statute has specified precise language for
inclusion in such a policy. However, I also believe that this is a case in which a judge
who adheres to the interpretative philosophy articulated by the Chief Justice, as do I, may
quite reasonably disagree with his, and my, conclusion. In fairly giving meaning to the
law, the obligation of the “textualist” or “interpretivist” is not to read the law “literally”
or “narrowly,” or to engage in “strict construction,” but it is simply to read the law
“reasonably.” In light of this premise, I do not believe that either of the dissents has
reached an indefensible conclusion. A judge who views the difference between
“liability” and “responsibility” as being of no reasonable consequence in the insurance
policy at issue is not “ignoring words,” engaging in a “shocking departure from the rule
of law,” or otherwise acting in disregard of his or her “oath of office.” Nor do I believe,
as suggested by the Chief Justice’s citation to People v McIntire, that a judge who
undertakes within the most narrow realm to consider the genuine “absurdity” of a result is
acting in violation of his or her judicial powers. See Cameron v Auto Club Ins Ass'n, 476
Mich 55, 78-86 (2006) (MARKMAN, J., concurring). While I respect the Chief Justice’s
convictions — and while I appreciate his apparently-approving references to my own past
jurisprudential statements, to which I continue to adhere — I also believe that there are
many better cases in which to bring those convictions to bear.
MARILYN KELLY, J. (dissenting).
[C]anons [of interpretation] are not mandatory rules. They
are guides that “need not be conclusive.” They are designed
to help judges determine the Legislature’s intent as embodied
in particular statutory language. And other circumstances
6
evidencing congressional intent can overcome their force.
Chickasaw Nation v United States, 534 US 84, 94 (2001).
[citations omitted].
Because I agree with Judge MARKEY’s Court of Appeals dissent, I dissent from
the Court’s decision to vacate our December 17, 2010 order granting leave to appeal and
denying plaintiff’s application for leave to appeal. I would reverse the Court of Appeals
decision and reinstate the decision of the trial court.
Defendant Smith owned a vehicle but had no driver’s license. Thus, he could not
obtain no-fault insurance or license plates for the vehicle. He added defendant Harris to
the title as a co-owner of the vehicle. Harris was able to obtain insurance from
Progressive but signed a form listing Smith as an excluded driver under the policy, as
permitted by MCL 500.3009(2).
Smith drove the vehicle and became involved in a collision with another vehicle
owned by defendants Scott and Andrea Mihelsic. The Mihelsics filed a third-party
negligence suit against Smith that he failed to defend, resulting in a default judgment
against him. Progressive then brought this declaratory judgment and filed a motion for
summary disposition arguing that it had no duty to indemnify Smith because he was a
named excluded driver under MCL 500.3009(2). The Mihelsics opposed the motion and
filed their own motion for summary disposition, arguing that the exclusion was invalid.
Progressive, they argued, had failed to use the exact language that appears in the statute.
The trial court denied the Mihelsics’ motion and granted Progressive’s motion for
summary disposition.
The Court of Appeals reversed the trial court in a 2-1 decision. It concluded that
Progressive’s failure to use the exact language that appears in MCL 500.3009(2) rendered
the named-driver exclusion invalid.
The principal question on appeal is whether Progressive’s use of the word
“responsible” in place of “liable” on Harris’s certificate of insurance, by itself, renders
the named-driver exclusion invalid. The language of MCL 500.3009(2) provides:
If authorized by the insured, automobile liability or motor
vehicle liability coverage may be excluded when a vehicle is
operated by a named person. Such exclusion shall not be
valid unless the following notice is on the face of the policy
or the declaration page or certificate of the policy and on the
certificate of insurance: Warning — when a named excluded
person operates a vehicle, all liability coverage is void — no
one is insured. Owners of the vehicle and others legally
7
responsible for the acts of the named excluded person remain
fully personally liable.
Progressive used the warning language verbatim on Harris’s insurance declaration.
However, on her certificate of insurance, it replaced the word “liable” with the more
plain-English “responsible.”
To begin with, nothing signals that the Legislature intended that the warning
language it used in the statute must be used verbatim in insurance policies. The statute
does not require it nor does it employ block quoting or quotation marks to show that its
wording is the only way to communicate its message.
Moreover, this Court has “frequently observed that statutory interpretation is
primarily an exercise in locating the intent of the Legislature. . . . While examination of
statutory language is certainly a crucial element in that inquiry, . . . a dogged literalism
should not be employed to defeat the Legislature’s intent.”11 The language Progressive
used on the certificate of insurance satisfied the intent of the Legislature. The intent of
MCL 500.3009(2) is to inform policy owners that their insurance is ineffective for
damages caused by an excluded driver and that they risk personal responsibility for those
damages. Black’s Law Dictionary defines “liable” as “responsible or answerable in law;
legally obligated.”12 “Responsibility” is defined as “liability.”13 The insertion of the
word “responsible” in place of “liable” did not materially change the meaning of the
warning. Moreover, nothing in the record indicates that it misled or confused either
Smith or Harris. To find the named-driver exclusion that was used here invalid is to
elevate form over substance and defy common sense.
Chief Justice YOUNG asserts in his concurring statement that Judge MARKEY’s
position is a “shocking departure from the rule of law.” He is perhaps too readily
shocked. Her statement and mine are not departures at all. Our reading is faithful to the
statutory language and effects exactly what the Legislature intended when it enacted this
law: an exempted driver should not receive insurance benefits. The result of the
majority’s decision is to enforce the law in a manner that violates the Legislature’s
intent.14 My personal views play no part in my interpretation. I interpret the statutory
language to conform with the obvious reason it was written.15
11
Goodridge v Ypsilanti Township Board, 451 Mich 446, 453 n 8 (1996).
12
Black’s Law Dictionary (8th ed).
13
Black’s Law Dictionary (8th ed).
14
United States v Ron Pair Enterprises, 489 US 235, 242 (1989). “The plain meaning of
legislation should be conclusive, except in the ‘rare cases [in which] the literal
application of a statute will produce a result demonstrably at odds with the intentions of
its drafters.’”; Nat Railroad Pass Corp v Nat Assoc of Railroad Pass, 414 US 453, 458
8
In this case, Smith knew he could not obtain insurance, so he got Harris to buy it.
He then drove his truck illegally with no license and no insurance. It is quite a departure
from the statute’s intent to require Progressive to indemnify Smith when he knowingly
violated the law and knew himself to be excluded from the insurance policy. The Court
requires Progressive to provide insurance coverage for a party it never had a contract with
and never agreed to insure.
Moreover, although the Mihelsics are correct that the insurance commissioner’s
bulletin 79-11 addresses the named-driver exclusion and quotes the § 3009(2) language,
bulletin 81-4 also deals with the excluded-driver exception. It addresses certificates of
insurance, shows examples of what the forms should look like and states what language
should be on the forms. In bulletin 81-4, the commissioner writes that the wording on the
certificate “shall appear as follows.” It then uses the word “responsible” in place of
“liable.” 16 Although the bulletins do not supplant the statute, there is unrefuted evidence
that the industry relies on the commissioner for guidance. Thus, I do not think it
unreasonable for Progressive to have relied on Bulletin 81-4 for direction in wording its
insurance certificates.
The named-driver exclusion in this case should be found valid and enforceable.
Its deviation in wording from MCL 500.3009(2) is not material. Smith was not confused
by it. It would seem an unreasonably harsh and unjust result to allow Smith to profit
from his wrongful actions.
(1974). “[E]ven the most basic general principles of statutory construction must yield to
clear contrary evidence of legislative intent.”
15
Salas v Clements, 399 Mich 103, 109 (1976) (Departure from literal construction of a
statute is justified when such construction would produce absurd and unjustified results
and would be clearly inconsistent with the purposes and policies of the act.); People v
Bewersdorf, 438 Mich 55, 68 (1991) (An unambiguous statute is to be given effect,
although departure may be justified when literal construction would produce absurd and
unjust results and would be clearly inconsistent with the purposes and policies of the act
in question.); Franges v General Motors Corp, 404 Mich 590, 612 (1979) (Statutes must
be construed to prevent absurdity, hardship, injustice, or prejudice to the public interest.);
Webster v Rotary Elec Steel Co, 321 Mich 526, 531 (1948) (The occasion of and
necessity for a statute are matters of judicial concern, and the purpose of a statute should
be effected if possible. Its spirit and purpose should prevail over its strict letter. In
construing a statute, injustice in its application should be prevented and absurd
consequences avoided.).
16
Bulletin: Insurance Bureau 81-4, Automobile Insurance Policies; Certificates of
Insurance (1981).
9
Therefore, I dissent and would reverse the Court of Appeals and reinstate the
decision of the trial court.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
December 29, 2011 _________________________________________
t1220 Clerk