Farm Bureau Insurance v. Allstate Insurance , 233 Mich. App. 38 ( 1999 )

Markey, P.J.

In this declaratory judgment action, Allstate appeals as of right from a determination that it is required to pay no-fault personal protection insurance (pip) benefits to a person who was a Michigan resident at the time of the pertinent automobile accident under an automobile insurance policy issued in another state that does not require the maintenance of no-fault insurance. We reverse and remand.

The trial court did not clearly err in determining that Allstate’s insured was a resident of Michigan who was domiciled with the accident victim, also a Michigan resident, and that the accident victim was a resident relative of Allstate’s insured, MCL 500.3114; MSA 24.13114, in light of the following facts: that she spent a significant amount of time at the Cass County, Michigan, Chain Lakes Road residence, that she frequently slept at this residence, that she received public assistance from the state of Michigan and that the public assistance checks were mailed to the Chain Lakes Road residence, the infrequency of Allstate’s insured’s stays with relatives in Elkhart, Indiana, and the fact that her children’s school had the telephone number of the Chain Lakes Road residence as a number to use to contact Allstate’s insured in the case of an emergency. MCR 2.613(C); Arco Industries Corp v American Motorists Ins Co, 448 Mich 395, 410; 531 NW2d 168 (1995); Witt v American Family Mut Ins Co, 219 Mich App 602, 605-606; 557 NW2d 163 (1996).

However, because Allstate’s insured was a resident of Michigan domiciled in this state, she was not a nonresident for purposes of the no-fault act. Wilson v League General Ins Co, 195 Mich App 705, 709-710; 491 NW2d 642 (1992). Accordingly, because Allstate’s insured was not a nonresident within the meaning of the no-fault act, MCL 500.3163; MSA 24.13163 has no application on the facts of this case and may not be used to impose responsibility for payment of pip benefits on Allstate. Further, Allstate’s insured did not own or operate any of the motor vehicles involved in the pertinent accident. Thus, on that basis as well, under the plain language of MCL 500.3163; MSA 24.13163, Allstate had no obligation to provide coverage based on its Indiana policy with its insured.

We further note that, while Allstate’s insured was a Michigan resident,¹ we find no reasonable basis in the record to conclude that Allstate violated Michigan law in issuing an Indiana insurance policy to her because there is no evidence from which one may reasonably determine that Allstate should have known that she was a Michigan resident. We recognize that MCL 500.3012; MSA 24.13012 provides:

Such a liability insurance policy issued in violation of sections 3004 through 3012 [MCL 500.3004; MSA 24.13004 to MCL 500.3012; MSA 24.13012] shall, nevertheless, be held valid but be deemed to include the provisions required by such sections, and when any provision in such policy or rider is in conflict with the provisions required to be contained by such sections, the rights, duties and obligations of the insured, the policyholder and the injured person shall be governed by the provisions of such sections: Provided, however, That the insurer shall have all the defenses in any action brought under the provisions of such sections that it originally had against its insured under the terms of the policy providing the policy is not in conflict with the provisions of such sections.

In our view, it is evident that the basic purpose of § 3012 is to treat an insurance policy that an insurer issues purporting to be a Michigan policy that complies with Michigan law as such even if the written terms of the policy are inconsistent with Michigan law. See, e.g., Adrian School Dist v Michigan Public School Employees Retirement System, 458 Mich 326, 332; 582 NW2d 767 (1998) (primary goal of statutory construction “is to ascertain and give effect to the intent of the Legislature”). Simply put, the Indiana insurance policy issued by Allstate in this case was not issued “in violation of” the no-fault act because Allstate neither purported to issue a policy that complied with Michigan’s no-fault act nor knew that it was dealing with a Michigan resident.

Indeed, the Michigan Supreme Court in one of the cases relied on by the dissent was referring to a policy issued by a company that purported the policy provided statutorily required no-fault insurance:

It would be unconscionable to permit an insurance company offering statutorily required coverage to collect premiums for it with one hand and allow it to take the coverage away with the other by using a self-devised “other insurance” limitation. Nothing could more clearly defeat the intention of the Legislature. [Blakeslee v Farm Bureau Mut Ins Co of Michigan, 388 Mich 464, 474; 201 NW2d 786 (1972) (emphasis added).]

Further down on the same page of the Blakeslee opinion, the Court stated, as quoted by the dissent:

Given this clear purpose and the mandatory language of the statute, such language must be read into those provisions of a policy of insurance that differ or vary from the statutory language. [Id.]

In our view, the portion of Blakeslee cited by the dissent stands for the basic principle that an insurer purporting to provide a Michigan no-fault automobile insurance policy may not include provisions that reduce the benefits an insured may obtain below the amount to which the insured would be entitled under the no-fault act. We cannot construe Blakeslee as requiring an insurance policy issued in good faith by an insurer outside this state to a person who provides no indication to the insurer of being a Michigan resident as if it were a Michigan no-fault insurance policy.

It is common knowledge that Michigan “no-fault” automobile insurance policies are generally more expensive than automobile insurance policies from states such as Indiana that do not have “no-fault” laws. To generally hold that such an out-of-state policy entered into by a Michigan resident would be treated as if it were a Michigan “no-fault” policy might well assist some unscrupulous Michigan residents to obtain a Michigan no-fault policy at the lower rate of an out-of-state policy. We will not construe § 3012 in such a manner and, thus, we conclude that it has no application to the Indiana insurance policy that Allstate issued to its insured in this case. See, e.g., McAuley v General Motors Corp, 457 Mich 513, 518; 578 NW2d 282 (1998) (“[statutes should be construed so as to prevent absurd results, injustice, or prejudice to the public interest”).²

From the record developed below, it is evident that Allstate’s insured presented herself to an insurance agent who worked in some manner with Allstate in Indiana and obtained an Indiana automobile insurance policy. From all indications, Allstate’s insured only used an Indiana address in connection with the transaction. Thus, Allstate could not reasonably have been expected to have known when the policy was issued that its insured was actually a Michigan resident. The dissent would effectively require an insurer, at least one that does business both in Michigan and in other states, to routinely investigate every person who seeks automobile insurance outside Michigan while using a non-Michigan address to determine whether that person is a Michigan resident. Such an investigation would be required for the insurer to avoid being treated as if it had issued a Michigan no-fault policy in the event that the insured turns out to have been a Michigan resident when the policy was issued. We do not believe that a reasonable construction of the plain language of the no-fault act and pertinent case authority supports imposing such an onerous burden on insurers.

Reversed and remanded for entry of an order granting summary disposition in favor of Allstate. We do not retain jurisdiction.

Whitbeck, J., concurred.

1 This is a finding by the trial court that is not clearly erroneous and that we must respect.

2 We emphasize that a case in which an insurer is aware that it is dealing with a Michigan resident and nevertheless issues an out-of-state automobile insurance policy that does not comply with Michigan's no-fault act would be a far different circumstance.