Court of Appeals Interprets “Unlawful Taking” in Case Where End User of Stolen Motorcycle Was Denied Benefits Under No-Fault Act

In a published opinion, the Michigan Court of Appeals reversed a trial court decision denying the Plaintiff insurance benefits after he was injured in a collision with an automobile and the motorcycle Plaintiff was driving.  Unbeknownst to the Plaintiff, the motorcycle was stolen.  It was loaned to him by a friend who told him he could use it for a motorcycle riding event.

The Plaintiff pursued insurance benefits from the legal owner’s insurance company.  The insurance company denied benefits on the basis of MCL 500.3113(a) the “unlawful taking” exception to the statutory requirement for personal insurance protection benefits under the No-Fault Act.

Basing its decision on the Michigan Supreme Court’s recent decisions in Spectrum v. Farm Bureau and Progressive v. DeYoung, the latter of which I had written an amicus brief for in the Michigan Supreme Court on behalf of Insurance Institute of Michigan, the Court holds that because Plaintiff did not know the motorcycle had been stolen PIP benefits should have been extended to him from the true owner’s insurance company.

MCL 500.3113(a) provides:  A person is not entitled to be paid [PIP] benefits for accidental bodily injury if at the time of the accident any of the following circumstances existed: (a) The person was using a motor vehicle or motorcycle which he or she had taken unlawfully, unless the person reasonably believed that he or she was entitled to take and use the vehicle….

Although the Court bases its decision on the “unlawful taking” language of the statute there is extensive discussion about the second provision of the exclusion, the “savings clause” as the Court puts it, regarding whether Plaintiff reasonably believed he had permission to use the vehicle.

The fact that this case is published is significant.  There was also a partial concurrence by Judge Ronayne Krause in which she states there was no need for the latter discussion the Court having concluded, rightly, in her opinion, that the trial court’s decision should be reversed for the first reason, i.e., that there had been no unlawful taking within the meaning of the statute and the Supreme Court’s recent decisions in the Spectrum and Progressive cases.

Even though the Supreme Court just wrote significant opinions addressing MCL 500.3113(a), the facts of this case and the opinion on the heels of those decisions indicates that further analysis is necessary.

The opinion is attached here:  Rambin v. Allstate Ins Co et al.

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