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142874 - Spectrum Health Hospitals v Farm Bureau Mutual Insurance

Spectrum Health Hospitals,
Richard E. Hillary II
(Appeal from Ct of Appeals
(Kent – Leiber, D.)
Farm Bureau Mutual Insurance Company of Michigan and Farm Bureau General Insurance Company of Michigan,
Kimberlee A. Hillock


​On May 16, 2008, Craig Smith, Jr. was driving a car owned by his father, Craig Smith, Sr., when he hit a tree and was injured. Craig Jr. was legally intoxicated and had no valid license at the time of the accident. He was treated at Spectrum Health Hospitals.

Spectrum sued Farm Bureau, which insured the car, for Craig Jr.’s medical expenses, but the insurance company argued that it was not liable, contending that Craig Jr. had “unlawfully” taken the car. Craig Sr. had entrusted the vehicle to Craig Jr.’s girlfriend with instructions that she not allow Craig Jr. to drive it, but she had given Craig Jr. permission to take the car. Farm Bureau argued that Craig Jr. – who knew that his father did not want him to drive the car – had “taken unlawfully” in violation of Michigan’s No-Fault Act, MCL 500.3113(a). That statute states, in part: “A person is not entitled to be paid personal protection insurance 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.”

But the trial court ruled in favor of Spectrum, finding that Farm Bureau had wrongfully denied benefits. By having Craig Sr.’s permission to use the car, Craig Jr.’s girlfriend was empowered to grant others permission to operate the vehicle, the judge said. In addition, MCL 500.3113(a) does not apply to cases where the person taking the vehicle unlawfully is a family member doing so not to steal, but for joyriding purposes, the trial judge said. The Court of Appeals affirmed in an unpublished per curiam opinion, citing, among other authorities, the Michigan Supreme Court’s 1975 decision in Cowan v Strecker, 394 Mich 110: “[W]hen an owner willingly surrenders control of his vehicle to others he ‘consents’ to assumption of the risks attendant upon his surrender of control regardless of admonitions which would purport to delimit his consent.” Farm Bureau appeals.