Gongwer News Service
The Court of Appeals on Thursday reversed a no-fault auto insurance decision from the Wayne Circuit Court, but not without Judge Adrienne Young urging the Michigan Supreme Court to take up a whether a key judicial test was necessary, at all, to decide such cases.
In a published per curiam opinion released Friday, the panel in Smith v. Farm Bureau Mutual Insurance Company of Michigan (COA Docket No. 369139) reversed the trial court’s decision to deny summary disposition to the Farm Bureau and remanded the case for further proceedings to ferret out genuine issues of material fact.
The panel consisted of Young, Judge Kathleen O’Brien and Judge Brock Swartzle.
The lawsuit centered around the plaintiff receiving a ride home from a car dealership’s shuttle service van. The van was involved in a crash while the plaintiff was a passenger, and he sustained injuries requiring physical therapy and surgery. A lawsuit for no-fault benefits followed against Farm Bureau, Motorists Commercial Mutual Insurance Company and the Michigan Automobile Insurance Placement Facility.
A winding case history shows the Wayne Circuit Court eventually denied Farm Bureau’s motion for summary disposition, and the case was appealed to determine whether the dealership’s shuttle van service was considered a motor vehicle operated in the business of transporting passengers.
The panel held the trial court erred when it decided the case because a genuine fact dispute remained in the case.
The court used the primary purpose/incidental nature test, of which the second prong showed there were still facts to be resolved by the lower court.
Young wrote separately to concur dubitante, a legal term to describe a situation where a judge is doubtful about the legal proposition of a ruling but hesitates to declare it wrong.
The appellate judge used her concurring opinion to urge the high court to consider whether the test was consistent with the plain language of the No-Fault Act, which Young surmised it was not.
“Reviewing MCL 500.3114(2) in full is essential. First, the plain language of the full phrase ‘a motor vehicle operated in the business of’ clues the reader into the object we are to focus on: the motor vehicle,” Young wrote. “This indicates that it is unnecessary to engage in an analysis of what percentage of a company’s profit is generated from transporting passengers, or what the company’s primary business is and how much a motor vehicle contributes to that overall business or mission. The focus is not on the purpose of the business as a whole, but rather on the purpose of the motor vehicle.”
Young also said the term “operated in the business of” was akin to a regular, systematic undertaking or activity, with or without a direct profit motive.
“That the Legislature intended this to be the meaning of ‘operated in the business of,’ and for the focus to be on the purpose of the motor vehicle rather than the purpose of the business, is most apparent when reviewing the six exemptions from MCL 500.3114(2),” Young wrote. “For example, in Section 3114(2)(a), the Legislature specifically excludes school busses from falling within (the section). This is because the Legislature recognized that under the plain language of Section 3114(2), one could read a school bus to be ‘a motor vehicle in the business of transporting passengers.’ This is true even where the bus is owned by a school district that is in the business of educating children, not in transporting them. The same is true for a canoe livery, Section 3114(2)(d), whose business is recreational, but uses a shuttle to transport canoers to and from a destination to access a canoe.”
Because the Legislature noted several exceptions to the act that may not be for-profit endeavors, like governmental and non-profit vehicles, Young posited that the Legislature did not intend either to be necessary for Section 3114(2) to apply.
“Accordingly, the plain language of the statute indicates that the phrase ‘operated in the business of’ denotes a regular or systematic activity undertaken by an entity, regardless of whether the activity generates profit for the entity,” Young wrote. “Because this court in (the case that created the test) decided that the vehicle in question did not fall within Section 3114(2) because its primary use was as a personal vehicle, this court never needed to decide whether providing transportation to children at the day-care for a fee was incidental to the day-care’s primary business, rendering the creation of the second prong obiter dictum. Still, the discussion seems intentional and relevant to the controversy and as a result, will likely trigger an analysis under stare decisis.”
Young added that reconsidering the second prong of the test should give the Supreme Court “little concern under the principles of stare decisis.”
“First, (the precedent for the test) was wrongly decided because it created a second prong which added language to Section 3114(2) that does not exist, and has the opposite effect of controverting the statute’s legislative intent by complicating litigation on whether the exception applies,” Young wrote. “Next, (the precedential holding) defies practical workability. The present case is evidence of that. The second prong of this test has become a costly deep dive into profit margins, corporate data, even trade secrets. Overruling Farmers and adjusting the assessment under Section 3114(2) ends unnecessary litigation on numerical evidence, such as revenue and expenditure calculations.”
Although she agreed with the majority that fact questions remained, she questioned whether the test was necessary and asked the high court to weigh in, which could tee up the case before the bench at a later date.
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