State Farm Fire & Casualty Co. v. Old Republic Insurance

                                                                       Michigan Supreme Court
                                                                       Lansing, Michigan 48909
____________________________________________________________________________________________
                                                                C hief Justice                   Justices
                                                                Maura D. Cor rigan	              Michael F. Cavanagh




Opinion
                                                                                                 Elizabeth A. Weaver
                                                                                                 Marilyn Kelly
                                                                                                 Clifford W. Taylor
                                                                                                 Robert P. Young, Jr.
                                                                                                 Stephen J. Markman

____________________________________________________________________________________________________________________________

                                                                                      FILED MAY 29, 2002





                STATE FARM FIRE AND CASUALTY,

                COMPANY, a Foreign Corporation,

                as Subrogee of IBRAHIM MROUE

                doing business as Family Bakery,


                        Plaintiff-Appellee,


                v	                                                                             No.          117470


                OLD REPUBLIC INSURANCE COMPANY,


                     Defendant-Appellant.

                ____________________________________

                BEFORE THE ENTIRE BENCH


                CORRIGAN, C.J.


                        We granted leave to appeal to consider whether the


                “household exclusion” provision of MCL 500.3123 applies where


                a person owning damaged property is insured under a no-fault


                property protection policy that does not cover the vehicle


                that person was operating at the time of the accident.                                          We

hold that the exclusion applies in those circumstances.    We


thus reverse the judgment of the Court of Appeals and remand


this case to the circuit court for further proceedings.


         I. Underlying Facts and Procedural History


     Ibrahim Mroue drove a rented Ryder truck into a bakery


that he owned, causing damage to real and personal property.


The Ryder truck was insured under a no-fault policy issued by


defendant Old Republic Insurance Company.     Plaintiff State


Farm Fire and Casualty Company, the insurer of the real


property, paid Mroue for the damages.    As Mroue’s subrogee,


State Farm filed this action seeking indemnification from Old


Republic for the amount that State Farm had paid to Mroue.


     A no-fault insurer’s liability to pay property protection


benefits to its insured is subject to exceptions, including


MCL 500.3123(1)(b), the “household exclusion,” which provides:


          (1) Damage to the following kinds of property

     is excluded from property protection insurance

     benefits:


                            * * *


          (b)   Property owned by a person named in a

     property protection insurance policy, the person’s

     spouse or a relative of either domiciled in the

     same household, if the person named, the person’s

     spouse, or the relative was the owner, registrant,

     or operator of a vehicle involved in the motor

     vehicle accident out of which the property damage

     arose. [Emphasis added.]


     The circuit court granted summary disposition for Old


Republic on the ground that Mroue, the owner of the real


                              2

property, was a named insured in the Old Republic policy.


Thus, since Mroue could not recover, State Farm could not


recover as his subrogee. 


     The    Court   of   Appeals   reversed,1      holding       that    the


exclusion in MCL 500.3123(1)(b) did not apply because Mroue


was not a named insured in the Old Republic policy.                      Old


Republic appealed, and we remanded to the Court of Appeals for


reconsideration.     Our order directed the Court to consider


whether    MCL   500.3123(1)(b)    excluded      coverage    only       if   a


property    protection   insurance      policy   covered     a    “vehicle


involved in the motor vehicle accident out of which the


property damage arose,” or if the statute precluded coverage


regardless of whether the vehicle insured under a property


protection insurance policy was involved in the accident.2


     On remand, the Court of Appeals again reversed.                         It


concluded that the phrase “by a person named in a property


protection insurance policy” refers to the policy on the


vehicle or vehicles involved in the accident.                    The Court


stated that the use of the article “a” was not significant and


that the grammatical construction of the sentence dictated the


use of the article “a.”3



     1
         234 Mich App 465; 595 NW2d 149 (1999).

     2
         461 Mich 928 (1999).

     3
         242 Mich App 105, 109; 617 NW2d 715 (2000).


                                   3

                         II. Standard of Review


      This case requires us to ascertain the meaning and proper


application     of     MCL   500.3123(1)(b).                Issues   of    statutory


interpretation are questions of law that we review de novo.


Oade v Jackson Nat’l Life Ins Co, 465 Mich 244, 250; 632 NW2d


126 (2001); Donajkowski v Alpena Power Co, 460 Mich 243, 248;


596 NW2d 574 (1999).


           III. Principles of Statutory Interpretation


      When interpreting statutory language, we must ascertain


the legislative intent that may reasonably be inferred from


the   words    expressed       in    the    statute.          Wickens      v   Oakwood


Healthcare System, 465 Mich 53, 60; 631 NW2d 686 (2001). When


the Legislature has unambiguously conveyed its intent in a


statute,      the     statute       speaks      for    itself,       and       judicial


construction is not permitted.                  Huggett v Dep’t of Natural


Resources,      464     Mich    711,       717;       629    NW2d    915        (2001);


Donajkowski, supra at 248.                 Because the proper role of the


judiciary is to interpret and not to write the law, courts do


not have authority to venture beyond the unambiguous text of


a statute. 


      Courts must give effect to every word, phrase, and clause


in a statute and avoid an interpretation that would render any


part of the statute surplusage or nugatory. Wickens, supra at


60.   Further, we give undefined statutory terms their plain



                                           4

and ordinary meanings. Donajkowski, supra at 248-249; Oakland


Co Rd Comm’rs v Michigan Property & Casualty Guaranty Ass’n,


456 Mich 590, 604; 575 NW2d 751 (1998). 


                               IV. Analysis


         MCL 500.3123(1)(b) excludes property damage from no-fault


property     protection    coverage        if   the   property     owner,    the


person’s spouse, or a relative of either residing in the same


household,     is    “named    in   a    property     protection       insurance


policy” and was “the owner, registrant, or operator of a


vehicle involved” in the accident.               Contrary to the Court of


Appeals decision and the dissent’s contention, the statute


does not require that the individual be named in a property


protection insurance policy covering “a vehicle involved in


the motor vehicle accident out of which the property damage


arose.”      242 Mich App 109.          Rather, the plain meaning of MCL


500.3123(1)(b) indicates that if Mroue was named in a property


protection insurance policy and was the “operator of a vehicle


involved” in the accident, coverage for damage to his property


would be excluded.         Whether the no-fault policy covered a


vehicle involved in the accident is not relevant under the


plain language of the statute.             Therefore, if Mroue was named


in   a    no-fault    policy   covering,        for   example,     a    personal


vehicle,      the    statute   would       exclude    property     protection


coverage.      Stated another way, MCL 500.3123(1)(b) allows a



                                         5

party in Mroue’s circumstances to recover from the rental


vehicle’s insurer only if he was not named in a no-fault


policy. 


     Like the Court of Appeals, our dissenting colleagues


would essentially rewrite the statutory phrase “named in a


property protection insurance policy” to state, “named in the


property protection insurance policy.” Thus, the dissent does


not give effect to the distinct meanings of the words “a” and


“the.” In Robinson v Detroit, 462 Mich 439, 461-462; 613 NW2d


307 (2000), we overruled Dedes v Asch, 446 Mich 99; 521 NW2d


488 (1994), an earlier case that had misconstrued “the” to


mean “a.”     We explained in Robinson that 


             (1) common English usage,


          (2) the rules of statutory construction enacted by

     our Legislature,4 and 


          (3) the assumption of legislator competence and

     comprehension that all courts should apply to acts of the

     Legislature,


make clear that a difference exists between the indefinite


article “a” and the definite article “the.”5    We presume that



     4
          See, e.g., MCL 8.3a.

     5

        The following passage from Hagerman v Gencorp

Automotive, 457 Mich 720, 753-754; 579 NW2d 347 (1998)

(Taylor, J., dissenting), reflects the heart of the Robinson

position:


          Traditionally in our law, to say nothing of

     our classrooms, we have recognized the difference

                                             (continued...)


                                  6

the Legislature understood the distinct meanings of these


terms.   We are not free to conflate their meanings.


     The Court of Appeals and the dissent’s reasoning that the


grammatical   construction   of   the   sentence   in   the   statute


mandated the use of “a” instead of “the” is flawed.              The


Legislature chose the specific construction of the sentence


and was not bound by any particular language or structure. If


the Legislature had intended to use the definite article “the”


instead of the indefinite article “a,” it could have simply


changed the construction of the sentence.          It is untenable


that the Legislature intended a meaning other than that


plainly expressed because it somehow felt itself confined to


the particular grammatical construction utilized. 


     Our dissenting colleagues further contend, without citing


any authority, that the phrase “a person named in a . . .



     5
       (...continued)

     between “the” and “a.”       “The” is defined as

     “definite article. 1. (used, esp. before a noun,

     with a specifying or particularizing effect, as

     opposed to the indefinite article or generalizing

     force of the indefinite article a or an). . . .”

     Random House Webster’s College Dictionary, p 1382.

     Further, we must follow these distinctions between

     “a” and “the” as the Legislature has directed that

     “[a]ll words and phrases shall be construed and

     understood according to the common and approved

     usage of the language . . . .”          MCL 8.3a.

     Moreover, there is no indication that the words

     “the” and “a” in common usage meant something

     different at the time this statute was enacted . .

     . . [Emphasis in original.]



                                  7

policy” is clearly linked to the subsequent phrase “[the]


operator of a vehicle involved in the motor vehicle accident.”


They contend that the text would be rendered mere surplusage


if the above phrases were not linked. The phrase “involved in


the   motor    vehicle    accident,”    however,   follows    the   term


“vehicle” and clearly modifies that term. Nothing in the text


of the statute suggests that the phrase “involved in the motor


vehicle accident” modifies the phrase “a property protection


insurance policy.”         The dissent essentially rewrites the


statute   by    reading   the   language   “a   property     protection


insurance policy” as stating “a property protection insurance


policy covering a vehicle involved in the motor vehicle


accident.”


      It is not the role of the judiciary to second-guess the


wisdom of a legislative policy choice; our constitutional


obligation is to interpret—not to rewrite—the law.                  The


Legislature apparently determined that where the household


exclusion applies, damaged property should be covered, if at


all, by a form of insurance other than a mandatory no-fault


policy.       Not only does our interpretation of the statute


comport with the plain language of the text, but it is also


consistent with the legislative intent that may reasonably be


inferred from the text, i.e., to preclude a person who damages


his own property from collecting property protection insurance



                                   8

benefits under that person’s no-fault policy.               In this case,


the property damage clearly would have been excluded if Mroue


had been driving his own vehicle.           The result should not be


different merely because he was driving a rented one.


      We acknowledge that our interpretation of the statute


would allow a party in Mroue’s circumstances to recover from


an insurer in Old Republic’s circumstances where that party


does not have another no-fault policy, but would prevent


recovery     where   he   does.   While     such    a    factor    might   be


considered fortuitous, the plain language of the statute


mandates this interpretation.


      Further, perhaps the Legislature chose to exclude these


risks from no-fault coverage to reduce consumer premium costs


for       this   mandatory    insurance.6          For     example,        MCL

500.3123(1)(a)       also    excludes   from       property       protection

insurance benefits:



      6
       In Michigan Educational Employees Mut Ins Co v Morris,

460 Mich 180, 194; 596 NW2d 142 (1999), this Court recognized

the Legislature’s goal of rendering mandatory no-fault

insurance affordable:


           “The no-fault insurance act was a radical

      restructuring of the rights and liabilities of

      motorists.    Through comprehensive action, the

      Legislature sought to accomplish the goal of

      providing an equitable and prompt method of

      redressing injuries in a way which made the

      mandatory insurance coverage affordable to all

      motorists.” [Quoting Tebo v Havlik, 418 Mich 350,

      366; 343 NW2d 181 (1984) (emphasis added).]


                                   9

          Vehicles   and   their   contents,   including

     trailers, operated or designed for operation upon a

     public highway by power other than muscular power,

     unless the vehicle is parked in a manner as not to

     cause unreasonable risk of the damage which

     occurred. 


Therefore,   a    driver   must   obtain   motor   vehicle   collision


coverage to collect benefits for property damage to the


driver’s own vehicle. By exempting coverage for property that


can be insured through policies other than a mandatory no­

fault policy, the Legislature has, consistent with its ongoing


efforts over the years,7 attempted to make such mandatory


insurance affordable.


                           V. Conclusion 


     In   these    circumstances,    the   plain   language    of   MCL


500.3123(1)(b) limits no-fault property protection benefits to


persons not named in a no-fault property protection policy.


Because this aspect of the statute was not considered in the


circuit court, the record was not developed regarding whether


Mroue was named in a no-fault property protection policy other


than the policy covering the rental truck.           Accordingly, we





     7
       The Legislature made a similar effort to reduce

mandatory insurance premiums when it revised the original no­
fault scheme, 1972 PA 294, seven years after its enactment.

The essential insurance act, 1979 PA 145, was designed, inter

alia, to permit certain costly coverages to be excluded by

insurers and thus to contain premium costs.


                                   10

reverse the judgment of the Court of Appeals and remand this


case to the Wayne Circuit Court for further proceedings


consistent with this opinion.


     WEAVER , TAYLOR , YOUNG , and   MARKMAN , JJ.,   concurred   with


CORRIGAN , C.J.





                                 11

                 S T A T E O F M I C H I G A N


                            SUPREME COURT





STATE FARM FIRE AND CASUALTY

COMPANY, a Foreign Corporation,

as Subrogee of IBRAHIM MROUE

d/b/a Family Bakery,


     Plaintiff-Appellee,


v                                                           No. 117470


OLD REPUBLIC INSURANCE COMPANY


     Defendant-Appellant.

___________________________________

CAVANAGH, J. (dissenting).


     I    disagree   with   the   majority’s   conclusion    that   the


“household exclusion” provision of the no-fault act applies if


a person is named in any no-fault property protection policy.1


Rather, I would conclude that the provision should apply only


when the person (or a spouse or family member) involved in an


accident causing property damage is named in the property


protection insurance policy covering the vehicle operated in


the accident.    To hold otherwise elevates the literal reading



     1

          MCL 500.3123(1)(b).

of   the   statute   into   an   overbroad   exclusion   that    hinges


recovery on the fortuitous event that an individual owns any


other no-fault policy.      Therefore, I respectfully dissent. 


      In this case, the Court was called upon to determine the


meaning of MCL 500.3123(1)(b), which provides:


           Damage to the following kinds of property is

      excluded   from  property   protection  insurance

      benefits:


                                 * * *


           (b) Property owned by a person named in a

      property protection insurance policy, the person's

      spouse or a relative of either domiciled in the

      same household, if the person named, the person's

      spouse, or the relative was the owner, registrant,

      or operator of a vehicle involved in the motor

      vehicle accident out of which the property damage

      arose.



It is well settled that we must discern and give effect to the


intent of the Legislature when applying statutes.               See Sun


Valley Foods v Ward, 460 Mich 230, 236; 596 NW2d 119 (1999).


First, the Court must examine the text, and, where there is no


ambiguity, the statute must be applied as written. See, e.g.,


Tryc v Mich Veterans’ Facility, 451 Mich 129, 135; 545 NW2d


642 (1996).      However, if the meaning of the statute is


ambiguous, the plain meaning as well as the placement and


purpose of the words in the statutory scheme must be analyzed.


Sun Valley Foods at 237.





                                   2

     In    this    case,   the    majority     employs     a   method     that


extensively analyzes the meaning of “a” in reference to “a”


policy    of    insurance,      without     considering    the    practical


consequences or the statutory intent. While claiming reliance


on the plain meaning of “a,” the majority imposes an expansive


interpretation      on    the   article,     prohibiting       recovery    for


property damage where an individual involved in the accident


has any no-fault policy, not simply when the individual has a


policy for the vehicle involved in the accident. 


     Moreover,      use    of    the   article    “a”     is   dictated     by


grammatical construction of the sentence and by the chance


occurrence that the accident involved more than one vehicle


and, thus, more than one policy, thereby precluding the use of


“the.”     Had the Legislature intended such a broad exclusion


simply by choosing the word “a,” the statute surely would have


been drafted to reflect that unusual departure from the common


purpose of “provid[ing] victims of motor vehicle accidents


assured, adequate, and prompt reparation for certain economic


losses.”       McKenzie v Auto Club Ins Ass’n, 458 Mich 214, 229,


n 3; 580 NW2d 424 (1998).          I am unconvinced that the use of


the word “a” in the statute carries such a broad significance,


and I am instead persuaded that the exclusion is intended to


apply only to policies insuring vehicles involved in the


accident. 



                                       3

     The     majority   correctly     acknowledges     our     duty   to


reasonably infer legislative intent from the text of statutes.


Unfortunately, the Court fails in this duty by proclaiming


irrelevant a portion of the statutory text it would prefer to


ignore. 


          Whether the no-fault policy covered a vehicle

     involved in the accident is not relevant under the

     plain language of the statute. [Slip op, p 5.] 


To the contrary, the text of the statute excludes coverage


only for “[p]roperty owned by a person named in a property


protection insurance policy . . . if the person named . . .


was the owner, registrant or operator of a vehicle involved in


the accident . . . .”         MCL 500.3123(1)(b).            Though not


entirely without ambiguity, the statute clearly links “a


person named in a . . . policy” with “the operator of a


vehicle involved in the accident” and, thus, excludes coverage


only when the operator has a policy on the vehicle or vehicles


involved in the accident.           Otherwise, the text would be


rendered mere surplusage. To declare “not relevant” a portion


of a statute that would negate its conclusion illustrates the


majority’s    excessive   reliance    on   ambiguous   terms    at    the


expense of the most reasonable interpretation.           Because the


Court today ignores the forest for the trees, I would affirm


the decision of the Court of Appeals.


     KELLY , J., concurred with CAVANAGH , J.



                                 4