Opinion
Docket No. 70942.
Decided August 7, 1984. Leave to appeal applied for.
Dickinson, Pike, Mourad, Brandt Hanlon (by Walter F. Finan, Jr.), and Gromek, Bendure Thomas (by James G. Gross), of counsel, for plaintiff.
Hill, Lewis, Adams, Goodrich Tait (by Robert B. Webster), for defendant.
ON REHEARING
Before: DANHOF, C.J., and T.M. BURNS and R.M. MAHER, JJ.
On December 20, 1983, this Court held that plaintiff was liable to defendant under the uninsured motorist provision of an automobile insurance policy issued by plaintiff. DAIIE v Tapp, 131 Mich. App. 308; 346 N.W.2d 99 (1983). After reconsideration, we have granted rehearing in this matter and now conclude that plaintiff is not liable to defendant.
The history and facts of this case were recounted in our original opinion. Briefly, the facts are as follow.
On September 16, 1973, Eddie Jenkins was driving an automobile owned by defendant Cedric Tapp, who was a passenger in the car. The defendant had no insurance coverage on his automobile. The defendant was neither related to Jenkins nor did he live in the same household. The defendant's automobile was struck by another uninsured vehicle. At the time of the accident, Jenkins owned his own automobile which was insured by plaintiff, DAIIE, under a policy which included uninsured motorist coverage.
Both Jenkins and defendant sought uninsured motorist coverage from plaintiff under Jenkins' policy. The case went to arbitration and resulted in an award for Jenkins and a $7,000 award to defendant. Plaintiff moved in the circuit court to vacate the award, but the motion was denied. This Court then affirmed the circuit court's decision in an unpublished per curiam opinion (No. 46520, released February 6, 1981) on the ground that this Court was without the authority to set aside the arbitration award. On April 20, 1983, the Supreme Court remanded the case to this Court "for reconsideration in light of Detroit Automobile Inter-Ins Exchange v Gavin [ 416 Mich. 407; 331 N.W.2d 418 (1982)]". 417 Mich. 962 (1983). We then issued our December 20, 1983, opinion. The issue then, as now, was whether or not the arbitrators had erred by concluding that defendant was an "insured" under plaintiff's policy with Jenkins. At that time, we concluded that the arbitrators had not erred because it was possible to read the "Liability" section of the policy in conjunction with an optional coverage section, "Family and Guest Protection", to provide that an owner of an automobile who had given permission to an insured to drive the automobile could be considered a "guest" should he remain in the car while the insured drove. Although this alone did not provide for uninsured motorist coverage for defendant under the "Uninsured Motorists Coverage" section of the policy, we concluded that such coverage could have been found by the arbitrators under the authority of the Supreme Court's decision in Pappas v Central National Ins Group of Omaha, 400 Mich. 475; 255 N.W.2d 629 (1977). In Pappas, the Supreme Court held that uninsured motorist provisions of a policy issued under the then-existing MCL 500.3010; MSA 24.13010 must be coextensive with the liability provisions.
MCL 500.3010; MSA 24.13010 was repealed by 1972 PA 345, effective October 1, 1973. Its provisions apply in this case because the accident occurred on September 16, 1973.
Defendant was not otherwise entitled to uninsured motorist coverage under the express terms of the policy. Uninsured motorist coverage was extended only to persons "insured" under the policy. "Insured" was defined as "the individual insured named first in Item 1 of the Declaration Certificate, and, while residents of the same household of such individual, the spouse and relatives of either, and any other person while occupying the owned automobile provided the actual use thereof is by or with permission of such individual insured so named or spouse so described". (Emphasis added.) Defendant's car was not an "owned" automobile under these terms and therefore defendant was not expressly entitled to the uninsured motorist coverage.
After reconsideration, we find that we were in error in interpreting both the individual insurance policy and the Supreme Court's opinion in Pappas. Jenkins' policy with plaintiff provided as follows:
"Persons Insured
"The following are insureds under Section I [Liability Protection]:
* * *
"(b) with respect to a non-owned automobile used with the permission of any person having the right to grant it, and providing the automobile described in the Declaration Certificate is a private passenger or utility automobile,
"(1) the named insured, if an individual, and
"(2) any relative, provided such relative or his spouse does not own a private passenger or utility automobile;
"(c) with respect to any automobile or trailer, any other person or organization,
"(1) who is legally responsible for the use thereof, and
"(2) who, except with respect to a temporary substitute automobile, does not own or hire such automobile or trailer and provided
"(3) the actual use thereof is by a person who is insured under (a) [with respect to the owned automobile] or (b) above."
These terms were defined under "Section I — Liability Protection" as follows:
"(a) `named insured' means the person or persons named in Item I of the Declaration Certificate, and if an individual, includes the spouse, if a resident of the same household; provided, with respect to a non-owned automobile, if two or more named insureds are individuals, `named insured' means the individual, and spouse so described, named first therein
* * *
"(i) `non-owned automobile' means any automobile or trailer, other than a temporary substitute automobile, not owned by, furnished or available for the frequent or regular use of the named insured, relative or other resident of the same household of such named insured".
Under these provisions, it is clear that defendant did not fall within the policy's liability coverage. Defendant was neither related to Jenkins nor did he live in the same household. Defendant may have been entitled to the optional "Family and Guest Protection" coverage under the analysis adopted by us in our earlier opinion but, if so, this enlarged coverage applied only to that particular section. The provisions of the liability section did not by themselves apply to defendant. We therefore erred by incorporating the provisions of the separate section into the provisions of the liability section so as to broaden the extent of liability agreed upon by the contracting parties.
This Court also erred by applying the Supreme Court's decision in Pappas to further extend the liability coverage under the uninsured motorist provision of the policy beyond that which was agreed upon by Jenkins and plaintiff. In Pappas, the Supreme Court broadened the extent of the uninsured motorist coverage available beyond that expressly provided for in the insurance policy at issue to provide uninsured motorist coverage to the plaintiff. This decision was directly based on three determinations. The first was a legal determination that, under MCL 500.3010; MSA 24.13010 as it then read, the uninsured motorist coverage provided by an insurance policy must be provided to the same persons included as insureds in the liability portion of the policy. The second determination was a finding that the specific insurance policy involved did not meet this legal requirement because it extended uninsured motorist coverage to a narrower class of "insureds" than were covered under the liability portion of the policy. Finally, the Supreme Court found that the individual plaintiff fit within the definition of "insured" provided by the liability coverage, although he did not fit within the narrower class of "insureds" covered by the uninsured motorist provision of the policy. Under these circumstances, the Supreme Court in effect rewrote the uninsured motorist provision of the policy so that its coverage was coextensive with the coverage of the liability provision.
In this case, as stated earlier, defendant is not included within the class of "insureds" covered by the liability provision, nor is he included within the class of "insureds" covered by the uninsured motorist provision. Defendant is only arguably within the coverage of the "Family and Guest Protection" section of the policy. Pappas is therefore inapplicable to this case. Not only is the third determination made by the Supreme Court in Pappas nonexistent in this case, but there is no statutory requirement that an insurance policy provide "Family and Guest Protection" coextensive with its uninsured motorist protection. We therefore erred in applying Pappas to the policy at issue in this case.
Because defendant is not included within the class of insureds protected by the "Uninsured Motorists Coverage" portion of the policy, and because defendant is not otherwise entitled to such coverage under the terms of the policy and the law of this state, we hold that the circuit court erred by affirming the arbitration award in favor of defendant. The arbitration award was based on an error in law which led the arbitrators to a wrong conclusion. DAIIE v Gavin, supra. We therefore reverse.
I would not grant rehearing in this cause because I believe our previous opinion, published at 131 Mich. App. 308 (1983), correctly analyzes this dispute. In that opinion this panel found that defendant fit within the family and guest protection provision of the insurance policy in question. This panel held:
"Uninsured motorist provisions must be coextensive with the liability provisions. Pappas v Central National Ins Group of Omaha, 400 Mich. 475; 255 N.W.2d 629 (1977). The primary purpose of this requirement is `to reduce claims against the motor vehicle accident claims fund'. 400 Mich. 480. We believe that the purpose would also be served by including guest provision coverage as well, an interpretation which the arbitrator apparently adopted." 131 Mich. App. 311-312.
I do not agree with the majority which now holds that the Supreme Court's decision in Pappas, supra, is strictly limited to its factual situation and policy considerations behind that decision should be ignored. In Pappas, the Supreme Court held that the uninsured motorist provision must be at least coextensive with the policy's liability provision. In Pappas, the Court noted a very important policy reason for extending liability under the uninsured motorist provision. I believe that the majority now errs in interpreting Pappas as holding that an uninsured motorist provision cannot be extended beyond a liability provision.
In our previous opinion we correctly noted that the policy involved in the instant case would allow for an interpretation that the family and guest protection provision was coextensive with the uninsured motorist provision. While plaintiff set forth exclusions in the policy, it failed to exclude coverage under the accident and guest protection provisions for accidents involving uninsured motorists. Considering that family and guest protection coverage is optional, I feel that it would be more fair to hold that it is generally coextensive with an uninsured motorist provision unless the insurer specifically states otherwise in the policy. The majority's current interpretation of the policy severely restricts this provision's coverage without giving any warning to the insured.
For these reasons, I believe we correctly affirmed the circuit court's order in our decision published at 131 Mich. App. 308. Accordingly, I would not grant rehearing and reverse our decision.