                            STATE OF MICHIGAN

                             COURT OF APPEALS



GREGORY M. FULLER and PATRICE                                        FOR PUBLICATION
FULLER,                                                              March 5, 2015
                                                                     9:15 a.m.
                 Plaintiffs-Appellants,

v                                                                    No. 319665
                                                                     Wayne Circuit Court
GEICO INDEMNITY COMPANY,                                             LC No. 12-014065-NF

                 Defendant-Appellee.


Before: GLEICHER, P.J., and CAVANAGH and FORT HOOD, JJ.

GLEICHER, P.J.

        Nonparty Saundra House rented a vehicle from Lakeside Car Rental while her own
vehicle was undergoing routine repairs. She allowed a family friend, plaintiff Gregory Fuller, to
drive the rented car and he was involved in an accident. Gregory and his passenger, plaintiff
Patrice Fuller, were both injured and believed they were entitled to first-party personal protection
insurance (PIP) benefits. As neither owned a vehicle or was covered under a relative’s policy,
the Fullers sought PIP benefits from the GEICO insurance policy that House had purchased to
cover her personal vehicle. Defendant GEICO Indemnity Co. determined that Lakeside owned
the rental car and therefore its insurer was responsible for coverage.

        The circuit court agreed with GEICO’s position and dismissed the Fullers’ first-party no-
fault action. MCL 500.3101(1) demands that a vehicle’s owner or registrant maintain the
insurance coverage required by the no-fault act. And our Supreme Court has ruled that a rental
agency, as the owner of the vehicle, cannot shift the burden of maintaining mandatory no-fault
insurance onto a short-term renter. Accordingly, we affirm.

                                          I. BACKGROUND

        As noted, while House’s GEICO-covered personal vehicle was in the shop for repairs,
she entered a one-week rental contract for a 2008 Chevy Impala with Lakeside. The rental
agreement provided that House’s GEICO policy would “be first in priority in payment of any
and all personal injury and property damage claims that arise from the [use] of this vehicle.”
After the Fullers’ accident, they decided to file a claim for first-party no-fault benefits with
GEICO. GEICO rejected the Fullers’ claim and they filed suit seeking a declaration of coverage
and a ruling that GEICO had violated the no-fault statute.


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       GEICO sought summary dismissal of the Fullers’ claims. The circuit court, based on the
incorrect assumption that House had entered a long-term rental contract, initially determined that
House was required to insure the rental vehicle and that the Fullers were eligible for coverage
under the GEICO policy. After further clarification by the parties, however, the court
determined that Lakeside remained liable to insure the Impala and its policy was the proper
source of PIP benefits for the injured Fullers. The court therefore dismissed the Fullers’ action
and they filed this appeal.

                                 II. STANDARD OF REVIEW

               We review de novo a trial court’s decision on a motion for summary
       disposition. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). A
       motion for summary disposition pursuant to MCR 2.116(C)(10) tests the factual
       sufficiency of the complaint. Corley v Detroit Bd of Ed, 470 Mich 274, 278; 681
       NW2d 342 (2004). We must review a “motion brought under MCR 2.116(C)(10)
       by considering the pleadings, admissions, and other evidence submitted by the
       parties in the light most favorable to the nonmoving party.” Latham v Barton
       Malow Co, 480 Mich 105, 111; 746 NW2d 868 (2008). “There is a genuine issue
       of material fact when reasonable minds could differ on an issue after viewing the
       record in the light most favorable to the nonmoving party.” Allison v AEW Capital
       Mgt, LLP, 481 Mich 419, 425; 751 NW2d 8 (2008).

               We also review de novo matters of statutory interpretation. Stanton v City
       of Battle Creek, 466 Mich 611, 614; 647 NW2d 508 (2002). The goal of statutory
       interpretation is to discern and give effect to the intent of the Legislature. Odom v
       Wayne Co, 482 Mich 459, 467; 760 NW2d 217 (2008). To that end, the first step
       in determining legislative intent is the language of the statute. Id. If the statutory
       language is unambiguous, then the Legislature’s intent is clear and judicial
       construction is neither necessary nor permitted. Id. [Barclae v Zarb, 300 Mich
       App 455, 466-467; 834 NW2d 100 (2013).]

        We review de novo questions of contract interpretation and considerations regarding the
legal effect of a contractual provision. Alpha Capital Mgt, Inc v Rentenbach, 287 Mich App 589,
611; 792 NW2d 344 (2010). Because a no-fault insurance policy is a contract, the general rules
of contract interpretation apply. Rory v Continental Ins Co, 473 Mich 457, 461; 703 NW2d 23
(2005). When considering the meaning of policy terms, we must read the whole instrument with
the goal of enforcing the parties’ intent. Fresard v Mich Millers Mut Ins Co, 414 Mich 686, 694;
327 NW2d 286 (1982). Clear and unambiguous provisions of an insurance policy must be
enforced according to their plain meanings. Henderson v State Farm Fire & Cas Co, 460 Mich
348, 354; 596 NW2d 190 (1999).

                                         III. ANALYSIS

       Pursuant to MCL 500.3101(1), Lakeside was required to maintain PIP insurance over the
Impala as the vehicle’s owner and registrant. Lakeside was prohibited from shifting that burden
onto a short-term renter by State Farm Mut Auto Ins Co v Enterprise Leasing Co, 452 Mich 25;
549 NW2d 345 (1996). Accordingly, Lakeside’s insurer was liable to pay the Fullers’ PIP

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benefits, not GEICO as the insurer of House’s personal vehicle, and the circuit court properly
dismissed plaintiffs’ claims.

       The Fullers based their claims for PIP benefits on Section I of House’s GEICO policy.
Section I of the policy pertains to “Liability Coverages,” and protects the insured against tort
claims raised by third parties. It does not govern the entitlement to PIP benefits.1 Section II of
the GEICO policy applies to PIP coverage and provides different coverage and definitions than
Section I. Section II starts with a general statement of coverage:

               We will pay for personal injury protection benefits to or on behalf of each
       eligible injured person for allowable expenses, work loss and survivors’ benefits
       incurred as a result of bodily injury caused by an accident arising out of the
       ownership, operation, maintenance or use of a motor vehicle as a motor vehicle.
       [Emphasis in original.]

“Eligible injured person” is defined to include “Any other person who suffers bodily injury while
occupying an insured auto.” (Emphasis in original.) The definition of an “insured auto” is
different from an “owned auto” in the liability insurance section and is key to the resolution of
this matter:

       Insured auto means an auto with respect to which you are required to maintain
       security under Chapter 31 of the Michigan Insurance Code and to which the
       Bodily Injury liability coverage of this policy applies and for which a specific
       premium is charged. [Emphasis in original.]

The words “you” and “your” are also defined in the policy and include only the named
policyholder and his or her spouse.

       As correctly noted by GEICO, Section I of the policy, upon which the Fullers rely,
applies only to liability, not PIP, coverage. Had Gregory Fuller been sued by a person in the
other car involved in the accident, Section I would be analyzed to determine coverage.2 This
case involves only a claim for first-party PIP benefits. The eligibility for PIP coverage is
governed by Section II.




1
  The GEICO tort liability coverage provides protection of an “owned auto,” which includes a
“temporary substitute auto,” defined as “an automobile . . ., not owned by you, temporarily used
with the permission of the owner. This vehicle must be used as a substitute for the owned auto . .
. when withdrawn from normal use because of its breakdown, repair, servicing, loss, or
destruction.”
2
  In fact, it appears that coverage would be available to Gregory had he been sued. Under State
Farm, discussed below, Lakeside would not be permitted to foist its priority status onto the
renter’s insurer. However, if Lakeside’s policy fell short, Gregory could have relied upon the
GEICO policy to cover the remainder.


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       When analyzing coverage under Section II, it is important to remember two things: (1)
the Fullers are not the named insureds, House is, and (2) the Fullers were not in the vehicle
covered by the GEICO policy, that vehicle was in the shop.

        Part 1 of Section II of the GEICO policy begins by declaring that GEICO will pay PIP
benefits to “each eligible injured person.” An injured person is deemed eligible if he or she
“suffers bodily injury while occupying an insured auto.” The Fullers want to apply the definition
of “owned auto” from Section I of the policy. However, GEICO gave “insured auto” a particular
definition for purposes of Section II. It is an auto (1) “with respect to which you are required to
maintain” no-fault coverage, and (2) “to which the Bodily Injury liability coverage policy
applies,” and (3) “for which a specific premium is charged.” (Bold added.) “You” is defined in
the policy as only the named insured—House—and her spouse, if any.

        The Fullers’ request for PIP benefits fails under the first prong of the “insured auto”
definition. House was not required to maintain no-fault coverage for the Impala and therefore it
is not an insured auto under the PIP benefits section of the GEICO policy. MCL 500.3101(1)
demands that: “The owner or registrant of a motor vehicle required to be registered in this state
shall maintain security for payment of benefits under personal protection insurance, property
protection insurance, and residual liability insurance.” The circuit court correctly determined
that House was not the “owner or registrant” of the Chevy Impala, Lakeside was. MCL
500.3101(2) defines “owner” and “registrant” as follows:

       (h) “Owner” means any of the following:

             (i) A person renting a motor vehicle or having the use thereof, under a lease
       or otherwise, for a period that is greater than 30 days.

             (ii) A person who holds the legal title to a vehicle, other than a person
       engaged in the business of leasing motor vehicles who is the lessor of a motor
       vehicle pursuant to a lease providing for the use of the motor vehicle by the lessee
       for a period that is greater than 30 days.

            (iii) A person who has the immediate right of possession of a motor vehicle
       under an installment sale contract.

          (i) “Registrant” does not include a person engaged in the business of leasing
       motor vehicles who is the lessor of a motor vehicle pursuant to a lease providing
       for the use of the motor vehicle by the lessee for a period that is greater than 30
       days.

A person renting a vehicle can only become the owner or registrant of the vehicle if the rental
term is more than 30 days. See MCL 500.3101(2)(h)-(i). House’s rental agreement was for one
week. Accordingly, Lakeside remained the owner and registrant of the vehicle at all relevant
times.

        In its rental agreement, Lakeside attempted to shift the burden of paying PIP benefits
onto its renters’ insurance providers. This is not permitted under Michigan law. In State Farm,
452 Mich 25, the Supreme Court considered whether a car rental agency could shift the burden

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of residual liability insurance, which is also mandated by MCL 500.3101(1), onto the renter’s
insurance provider. The Court declared that such provisions in rental agreements violate the no-
fault act and are void.

        State Farm involved three consolidated appeals. The renter’s agreements underlying all
three cases included provisions placing the renter’s insurance policy in highest priority in
relation to residual liability. Id. at 28-30. The Court first analyzed its earlier decision in Citizens
Ins Co v Federated Mut Ins Co, 448 Mich 225; 531 NW2d 138 (1995). In Citizens, a car
dealership provided the driver a “loaner vehicle” while the driver’s personally-owned vehicle
was being repaired. State Farm, 452 Mich at 31. The driver was involved in an accident while
using the loaner vehicle and a third-party successfully sought compensation against the driver for
his or her damages. Id. Relying on MCL 500.3101(1), the Citizens Court “stressed that it is the
‘owner or registrant of a motor vehicle’ who must provide residual liability insurance under the
act.” State Farm, 452 Mich at 31-32, quoting Citizens, 448 Mich at 228 (emphasis in original).
The car dealership’s insurance policy in Citizens “purported to deny coverage to the driver of the
car.” State Farm, 452 Mich at 32. That provision was void, Citizens held, because the no-fault
act requires the vehicle owner to provide such coverage. Id.

        The State Farm Court was “no longer convinced that a distinction between a ‘loaner’ car
and a rental car can be sustained.” Id. at 32-33.

               In Citizens, Federated attempted to deny coverage, thus forcing the
       driver’s insurers to provide coverage. The car rental companies in this case
       similarly force a choice. A driver can either sign an agreement stating that the
       driver’s insurance will be primary, or the driver can agree to pay an extra fee to
       the car rental company for insurance coverage. The driver is not informed that the
       car rental company, as the owner, is required by law to carry insurance on the
       vehicle that covers any permissive user.          The owner cannot shift that
       responsibility to another party. Just as Federated was required to provide
       insurance coverage for permissive users in Citizens, we now hold that a car rental
       company, like any other car owner, must obtain insurance coverage for
       permissive users of its vehicles. [State Farm, 452 Mich at 33-34.]

“The gravamen” of this holding, the State Farm Court emphasized, “is that the no-fault act
requires car owners to be primarily responsible for insurance coverage on their vehicles.” Id. at
34. And a rental driver “cannot defeat the provisions of the no-fault act” by excusing the
vehicle’s actual owner (the rental company) from providing insurance. Id. at 35.

        MCL 500.3101(1) mandates a vehicle’s owner or registrant to maintain three types of
coverage under his or her no-fault policy: “security for payment of benefits under personal
protection insurance, property protection insurance, and residual liability insurance.” Citizens,
State Farm, and their progeny have all considered whether the owner/registrant can shift the
burden of maintaining residual liability insurance. The answer has been a resounding, “no.”
There is no reason to treat any differently the other two types of coverage mandated in the same
sentence of MCL 500.3101(1). The Legislature has decided that the vehicle’s owner or
registrant must maintain the required coverage and the Supreme Court has interpreted the


                                                 -5-
provision to prohibit shifting of the duty. Lakeside could not avoid its insurance requirements
and its contractual attempt to do so is void.

        The Fullers sued the wrong insurance company, without providing written notice to
Lakeside’s insurer, and it is now too late for them to seek PIP benefits from any other provider.
See MCL 500.3145 (notice must be give to insurer within one year of accident). They claim that
GEICO lulled them into sitting on their rights by implying that benefits would be provided. As a
result, the Fullers contend that GEICO should be equitably estopped from denying coverage
now.

              For equitable estoppel to apply, plaintiff must establish that (1)
       defendant’s acts or representations induced plaintiff to believe that the limitations
       period clause would not be enforced, (2) plaintiff justifiably relied on this belief,
       and (3) she was prejudiced as a result of her reliance on her belief that the clause
       would not be enforced. [McDonald v State Farm Ins Co, 480 Mich 191, 204-205;
       747 NW2d 811 (2008).]

Courts are to apply equitable estoppel sparingly and only in the most extreme cases, for example
when the defendant intentionally or negligently deceived the plaintiff. See Klass v Detroit, 129
Mich 35, 39-40; 88 NW 204 (1901).

        The letter cited by the Fullers in no way represents a deception. In the letter, a GEICO
claims adjuster posits, “We previously advised that we have now received documents requested
to support that Gregory and Patrice Fuller will be eligible for coverage under the GEICO policy.”
This does not imply that the Fullers actually are eligible. It implies that GEICO asked for certain
documents to ascertain whether the Fullers “will be eligible” and those documents had arrived at
the GEICO office. The letter goes on to explain that the Fullers had not been cooperative in
attending their scheduled independent medical exams. These exams were required “to assist in
our investigation,” the agent asserted. An ongoing investigation suggests that coverage had not
yet been determined.

        Moreover, as aptly noted by GEICO, the accident occurred on November 11, 2011. The
Fullers had until November 11, 2012 to notify the correct insurance provider of their injuries.
They obviously realized by October 24, 2012, that GEICO would not voluntarily pay the claim
given that they filed suit on that date. The next rational choice in selecting an insurer would be
the company that insured the rental company’s vehicles. Nothing prevented the Fullers from
notifying that insurance provider of the accident and beginning the process of requesting PIP
benefits. This could have been done contemporaneously with the Fullers’ suit against GEICO.
The Fullers did not justifiably forego their other remedies in response to GEICO’s letter.

        Ultimately, the circuit court properly dismissed the Fullers’ claims against GEICO.
Lakeside, as the statutorily-defined owner and registrant of the subject vehicle, was required by
statute to maintain PIP coverage over the car. Lakeside was precluded by caselaw from shifting




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the burden of coverage onto the renter of the vehicle. Accordingly, GEICO, the company
insuring the renter’s personal vehicle, was not responsible for paying the PIP benefits of a
permissive user injured while in the rental car.

       We affirm.



                                                        /s/ Elizabeth L. Gleicher
                                                        /s/ Mark J. Cavanagh
                                                        /s/ Karen M. Fort Hood




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