In a recent opinion released for publication, the Court of Appeals examined whether the owner of a closely-held limited liability company (LLC) can be excluded from recovering personal protection insurance (PIP) benefits as a consequence of failing to maintain PIP coverage on an automobile owned by the LLC.
In Abdulla v Progressive Southeastern Ins Co, ___ Mich App ___; ___ NW3d ___ (2024) (Docket Nos. 364797, 364866), the plaintiff sought PIP benefits from multiple insurers after sustaining injuries in a trucking accident. When the accident occurred, the plaintiff was operating a commercial tractor owned by his company, Tornado Trucking, LLC, while hauling cargo on a trailer owned by another company. Both the plaintiff’s company and the company that owned the trailer maintained auto insurance, but neither policy included PIP benefits applicable to the accident.
One of the insurers the plaintiff turned to for coverage was Auto Club Group Insurance Company. However, Auto Club argued that MCL 500.3113(b) barred the plaintiff’s recovery. The statute excludes a person from recovering PIP benefits from any insurer if, when the accident occurred, the “person was the owner or registrant of a motor vehicle…involved in the accident with respect to which the security” required by the no-fault act “was not in effect.”
PIP insurance is required under MCL 500.3101(1), which mandates that every “owner or registrant of a motor vehicle required to be registered in this state” maintain auto insurance, including PIP benefits. Auto Club thus argued that the plaintiff qualified as an “owner” of the tractor and, therefore, was required to maintain PIP coverage for the vehicle under MCL 500.3101(1); since he did not, MCL 500.3113(b) barred his recovery.
The Court of Appeals disagreed, noting that as an LLC, Tornado Trucking was “a separate legal entity distinct from” the plaintiff, who, although the sole member of the LLC, legally had “no interest in specific limited liability company property.” The Court also noted that the plaintiff used the tractor only for the business of Tornado Trucking and that he stored the tractor at a truck stop rather than his own home. Accordingly, the Court found the plaintiff could not be deemed an “owner” of the tractor, meaning he could not be penalized for failing to maintain the appropriate insurance for it.
In her dissent, Judge Jansen opined that the majority’s conclusion “defeats the purpose of the no-fault act.” She emphasized that the plaintiff was the sole owner of and driver for the LLC and that he was the sole driver of the tractor. Thus, she explained, it would be against public policy for the plaintiff “to isolate himself from liability under the no-fault act by setting up the LLC and putting the tractor in its name.”
This, she opined, was consistent with the fact that MCL 500.3101’s definition of “owner” includes someone “having the use” of a motor vehicle “in ways that comport with concepts of ownership” for more than 30 days. Accordingly, Judge Jansen concluded that the plaintiff was “at minimum, a co-owner of the tractor, and therefore was required to maintain a no-fault policy…” Thus, she would have held that the plaintiff was not entitled to benefits under MCL 500.3113(b).
This opinion, and the dissent, raise important implications for who is responsible for maintaining PIP benefits on a company-owned vehicle. While the majority’s reasoning is logical, the dissent raises strong concerns regarding the purpose of the no-fault act and the plain statutory definition of the term “owner,” and it will be interesting to see whether the parties seek further appeal in the Supreme Court.
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