Court of Appeals Reverses Decision on Dealership Courtesy Van Accident
The Michigan Court of Appeals has reversed a lower court’s ruling in a case concerning insurance liability following an accident involving a dealership shuttle van. The case, Smith v. Farm Bureau Mutual Insurance Company of Michigan, addresses critical questions about how Michigan’s no-fault insurance system applies to injuries sustained in vehicles operated as a courtesy by businesses.
The incident occurred in April 2020 when Keith Smith, a passenger in a shuttle van provided by George Matick Chevrolet in Redford Township, was injured. The van, a white Chevrolet Express clearly marked with dealership information, was rear-ended. Though initially, no injuries were reported at the scene, Smith later sought medical treatment and required surgery.
At the time of the accident, the dealership’s shuttle was insured by Motorists Commercial Mutual Insurance Company. Smith, who lived with his then-wife and was insured by Farm Bureau, sought coverage under her policy. Because he didn’t carry his own personal auto insurance, he also filed for benefits through the Michigan Automobile Insurance Placement Facility (MAIPF).
In the initial trial, MAIPF argued successfully that both Farm Bureau and Motorists could provide coverage. Farm Bureau countered that Motorists, as the shuttle’s insurer, had priority under Michigan’s no-fault statute. Motorists, however, contended that the shuttle service was merely ancillary to the business of selling and servicing vehicles.
The trial court sided with Motorists, finding that Farm Bureau was responsible for covering benefits. The appellate court, however, disagreed with this determination.
Writing for the court, Judges Young, O’Brien, and Swartzle concluded that the question of whether the shuttle service was central or incidental to the dealership’s business remained a factual issue. Farm Bureau presented evidence, including Google reviews, suggesting the dealership actively promoted and offered the shuttle service, implying its significance. Motorists, conversely, provided testimony indicating the service was simply a courtesy, not a revenue generator. Because of the conflicting evidence, the appellate court decided that a fact-finder would need to determine whether the shuttle service met the criteria of MCL 500.3114(2), the statute governing priority in cases involving vehicles used “in the business of transporting passengers.”
Judge Adrienne Young, in her concurring opinion, also raised broader concerns regarding the test usually used to assess these cases. She questioned whether the “primary purpose/incidental nature” test aligns with the phrasing of Michigan’s no-fault statute, urging the Michigan Supreme Court to revisit the issue. She suggested that focusing solely on the vehicle’s use could make litigation simpler and avoid complex analysis of business models.
What’s Next
The appellate court has reversed the trial court’s decision and sent the case back for further proceedings. The outcome of this case has the potential to influence how courtesy services provided by non-transportation businesses, such as hotels and car dealerships, are handled under Michigan’s no-fault system. The case highlights the potential for routine amenities to become complex legal battles surrounding insurance obligations.
