holding that the no-fault automobile insurance act controlsSummary of this case from Liberty Mutual Insurance v. Insurance Co. of North America
Docket No. 48721, 49891.
Decided July 27, 1981. Leave to appeal applied for.
Baxter Hammond (by Phillip J. Nelson and Robert N. Alt, Jr.), for Buckeye Union Insurance Company.
Smith, Haughey, Rice Roegge (by Lance R. Mather), for Home Insurance Company, Hartford Insurance Company, American States Insurance Company, Citizens Mutual Insurance Company, Fremont Mutual Insurance Company, and Frankenmuth Mutual Insurance Company.
Linsey, Strain Worsfold, P.C. (by Dale M. Strain), for United Security Insurance Company.
Before: R.M. MAHER, P.J., and R.B. BURNS and D.F. WALSH, JJ.
Plaintiffs in these consolidated cases appeal the order of the trial court granting summary judgment in favor of defendant United Security Insurance Company.
On November 27, 1974, the fuel line connecting the main and auxiliary fuel tanks on a truck belonging to Olen Morgan was cut by an unknown person. Morgan took the truck to a Ford dealer, Kenneth Johnson, who was doing business as Johnson Ford in Sparta, Michigan. Repairs were completed and Morgan picked up the truck. Fuel was not properly flowing between the two tanks, however, so Morgan returned the truck to the dealer for further repairs on December 2 or 3, 1974. A mechanic got under the truck with a trouble light in order to check on the problem. He planned to disconnect the fuel line, directing the fuel into a bucket. Unfortunately the fuel squirted past the bucket and hit the light bulb, causing the fuel to explode and ignite a fire that ultimately caused several hundred thousand dollars worth of damages.
Plaintiffs are insurance companies who paid claims for damages resulting from the fire. Most of the claims were for damage to nearby buildings and their contents, although two of the claims were for damage to motor vehicles at the dealership. Plaintiffs brought suit, as subrogees of their insureds, against the dealership alleging negligence on the part of its employees, and additionally sued defendant United Security Insurance Company, the no-fault insurer of Morgan's truck, alleging that the losses resulting from the fire were covered under Morgan's policy with United. In each case the plaintiffs were seeking to recover, as subrogees of the individual insureds, the amounts they had paid in claims.
United brought a motion for summary judgment on the basis that it was not liable as a matter of law. The motion was granted and plaintiffs have appealed.
Section 3121(1) of the no-fault automobile insurance act provides in part as follows:
"Under property protection insurance an insurer is liable to pay benefits for accidental damage to tangible property arising out of the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle * * *." MCL 500.3121(1); MSA 24.13121(1).
In the instant case it is not disputed that the damage was to tangible property or that it was accidental. Instead, the issue is whether the damage arose out of the maintenance of a motor vehicle as a motor vehicle. Clearly, Morgan's truck was being maintained at the time of the accident. It is difficult to imagine a clearer example of maintenance of a motor vehicle as a motor vehicle. Work was being undertaken to correct a problem in the fuel line between two fuel tanks, work that was clearly related to the truck's characteristics as a motor vehicle. Cf. Kudek v Detroit Automobile Inter-Ins Exchange, 100 Mich. App. 635, 637; 300 N.W.2d 350 (1980), Miller v Auto-Owners Ins Co, 92 Mich. App. 263; 284 N.W.2d 525 (1979), lv gtd 408 Mich. 897 (1980). Contrary to defendant's suggestion, the statute in no way requires that the maintenance be done personally by the policy holder. Cf. Kudek, supra. It is also clear, however, that a sufficient causal nexus must exist between the maintenance and the damage such that it may be said the damage arose out of the maintenance. In this regard defendant argues that the accident did not arise out of the maintenance, but out of the intervening negligence of the dealer and its mechanic. This misses the point. While the intervening negligence of one party may be sufficient to defeat a claim that another party's negligence was the proximate cause of an accident in a fault-based system, the term "arising out of" does not require as strict a showing of causation as does the concept of proximate cause. Shinabarger v Citizens Mutual Ins Co, 90 Mich. App. 307, 313-314; 282 N.W.2d 301 (1979), lv den 407 Mich. 895 (1979), Kangas v Aetna Casualty Surety Co, 64 Mich. App. 1, 17; 235 N.W.2d 42 (1975), lv den 395 Mich. 797 (1975). The relationship between the maintenance and the damage must, however, be more than incidental, fortuitous, or but for. Detroit Automobile Inter-Ins Exchange v Higginbotham, 95 Mich. App. 213, 222; 290 N.W.2d 414 (1980), lv den 409 Mich. 919 (1980), Kangas, supra, 17. It is not sufficient that the motor vehicle is merely the site of the accident. Shinabarger, supra, 314. A sufficient causal connection is established, however, if the injury is foreseeably identifiable with the normal maintenance of a motor vehicle. Higginbotham, supra, 222, Kangas, supra, 17. If maintenance of a motor vehicle is one of the causes, a sufficient causal connection exists even though there are independent causes. Shinabarger, supra, 313.
Based on these principles, we hold that a sufficient causal connection existed in the instant case between the maintenance of Morgan's truck and the damage which resulted. The damage arose directly out of the work being done on Morgan's truck. While the alleged negligence of the dealership and its mechanic might be seen as an independent cause, this does not defeat the otherwise established causal connection. Accordingly, under the no-fault act, United would be liable for the damage based on its policy with Morgan.
United also argues, however, that the no-fault act was not intended to displace well-established principles concerning the liability of garage keepers. In support of this position is this Court's recent decision in Liberty Mutual Ins Co v Allied Truck Equipment Co, 103 Mich. App. 33; 302 N.W.2d 588 (1981), where the facts were strikingly similar to those in the instant case. In Liberty Mutual Gerald K. Sterling brought his truck to the Allied Truck Equipment Company for the installation of an auxiliary fuel tank. The tank was installed but did not function properly, so Sterling returned the truck to Allied. Repairs were made but Sterling returned the truck a second time complaining that the problem still had not been resolved. This time the service manager crawled under the truck to examine the auxiliary tank's fuel line. While working underneath the truck, fuel dripped from the line, hit the floor, and splashed on the bulb of a trouble light. The fuel ignited, resulting in a fire which destroyed Allied's building and several trucks which had been left with Allied for repairs.
Insurers of the damaged trucks brought suit against Allied and Aetna Casualty Surety Company, the no-fault insurer of Sterling's truck, seeking to recover the money they had paid to their insureds. The trial court granted partial summary judgment in favor of Aetna, holding that the garage keepers' liability act, MCL 256.541 et seq.; MSA 9.1721 et seq., controlled and not the no-fault act. Accordingly, the trial court held the garage keeper, Allied, liable to the plaintiff insurance companies.
On appeal, this Court examined both the garage keepers' liability act and the property protection provisions of the no-fault act and concluded that the damage did not arise out of the maintenance of a motor vehicle, but out of a bailment for hire. The Court continued:
"While a strong argument may be made that the accident arose out of the maintenance of the vehicle within the meaning of the no-fault insurance act, we feel constrained to hold that, whenever a bailment-for-hire situation is presented, it is the bailment of the vehicle and not the maintenance of the vehicle that governs. To hold otherwise would unnecessarily eviscerate the garage keepers' liability act and would extend no-fault insurance coverage beyond what we believe the Legislature intended. The garage keepers' liability act protects a vehicle owner from property damages inflicted on the vehicle while in the care and custody of a bailee for hire. The no-fault insurance act, if applicable to a bailment situation, would render that presumption in the garage keepers' liability act meaningless. We cannot find that the Legislature intended to alter the common law of bailments for hire so drastically when it enacted the no-fault insurance act." Liberty Mutual, supra, 40-41.
After careful analysis, we do not believe that the garage keepers' liability act should control the disposition of the instant case. The garage keepers' liability act is a short piece of legislation which sets up certain presumptions concerning damage to automobiles left with a garage keeper. Generally, and as applicable to the instant case, the act provides that proof of damage to an automobile in the possession, care, custody, or control of a garage keeper is prima facie evidence that the damage was due to the negligence of the garage keeper. Accordingly, we do not perceive how that act would apply to the bulk of the claims in the instant case, which involve damage to property with no legal connection to the garage. The act is clearly designed to protect the owners of vehicles who entrust their vehicles to a garage keeper. There is no expression of legislative intent that the act also be used in some manner to determine the interests of owners of buildings or other forms of property with no connection to the garage other than geographic proximity. The no-fault act, on the other hand, is not so limited and applies to all forms of tangible property. Accordingly, where it clearly can be said that the damage arose out of the maintenance of a motor vehicle the garage keepers' liability act should not be used to artificially defeat this causal connection, at least as to owners of property other than motor vehicles which were entrusted to the garage keeper.
This does not end matters since at least two of the claims in the instant case concern damage to vehicles entrusted to the dealership and since Liberty Mutual could be read as holding that the no-fault act does not apply to damage to any sort of property which results from an accident such as that in the instant case. In this regard we respectfully suggest that Liberty Mutual was wrongly decided. The garage keepers' liability act is principally designed to set up certain presumptions of negligence applicable to a fault-based theory of recovery. The no-fault act, on the other hand, is clearly designed to replace a fault-based system for claims of property damage with a sufficient causal connection to the maintenance of a motor vehicle. That causal connection, once established, controls despite the existence of other, independent causes. Shinabarger, supra. While the garage keepers' liability act would set up a presumption of negligence on the part of the dealership (at least as to claims on behalf of the owners of motor vehicles entrusted to the dealership), that presumption is meaningless in a no-fault system. Accordingly, the garage keepers' liability act cannot logically supersede the no-fault act in cases where the no-fault act applies.
The Court in Liberty Mutual was obviously concerned that a holding such as ours in the instant case would effectively destroy the garage keepers' liability act. This is not necessarily the case. In cases where the causal connection between the ownership, operation, maintenance, or use of a motor vehicle and damage to a motor vehicle entrusted to a garage keeper is insufficient to invoke the operation of the no-fault act the parties will be cast back into a fault-based system of recovery and the presumptions set up in the garage keepers' liability act will be in full force. In cases where the causal connection is established, however, we can only conclude that the Legislature intended the no-fault act (which was enacted well after the garage keepers' liability act) to apply notwithstanding fault-based concepts such as those involved in the garage keepers' liability act.
The trial court erred in granting summary judgment in favor of defendant United Security Insurance Company. This cause is remanded to the trial court for further proceedings on plaintiffs' complaints consistent with this opinion.
Reversed and remanded.
D.F. WALSH, J., concurred.
I respectfully dissent for the reasons set forth in Liberty Mutual Ins Co v Allied Truck Equipment Co, 103 Mich. App. 33; 302 N.W.2d 588 (1981).