Many businesses carry no-fault insurance for vehicles used in the operation of their business. From trucking companies to used car sales, PIP benefits from the employer cover employees on the job. But what if a person is the self-employed owner of such a business? Does the business coverage apply?
When a company’s business involves the use of motor vehicles, no-fault insurance becomes a necessity. The Michigan No-Fault Act makes clear that employees can take advantage of such a policy, even over their own personal PIP benefits. But what about the owner of the business? Are self-employed business owners covered under their businesses’ no-fault policies?
Owning a Car Dealership Can Raise No-Fault Questions
Ali El-Najjar was a banker with side businesses. While he worked full time as a branch manager at First Merit Bank, he also owned Conz Auto and Wayne Auto Center, used-car businesses. He left much of the day-to-day operation of those businesses to his uncles, Fouad Chedid and Melhem Chedid.
On February 11, 2015, El-Najjar was seriously injured while driving a vehicle owned by Conz Auto. The case came to court on an issue of priority among auto insurers. El-Najjar maintained a personal PIP policy through Allstate Property and Casualty Insurance Company. But the business was injured by Argonaut Insurance Company. Priority among the insurers depended on whether El-Najjar was an employee of Conz Auto, working at the time of the accident.
Depositions of El-Najjar and his managers created a confusing picture of each person’s responsibilities related to the business. El-Najjar testified that he purchased the car businesses purely for investment purposes. He said that he was driving the vehicle as a test drive to determine whether he would buy it. Months later, the car remained at his home, but he had never transferred titled.
But when the insurance companies deposed the managers, each testified that El-Najjar would come into the business on a regular basis, and complete paperwork in his office. Melhem Chedid (also called “Alex” or “Mo”) testified that El-Najjar was involved in buying and selling vehicles, paying employees, purchasing parts and supplies, and handling insurance coverage, as well as other significant business decisions. Fouad Chedid (also called “Frank”) said he didn’t think El-Najjar was the manager of Conz Auto, but he couldn’t say who was, or where the cars sold at that business came from.
Self-Employment Counts Under the No-Fault Act
The first question for the Michigan Court of Appeals in El-Najjar v Wilson was whether, as a business owner, El-Najjar could be considered an “employee” of his own company. Traditionally, a person turns to his or her own no-fault insurance provider after an accident, rather than the owner of the vehicle. However, MCL 500.3114(3) states:
“An employee, his or her spouse, or a relative of either domiciled in the same household, who suffers accidental bodily injury while an occupant of a motor vehicle owned or registered by the employer, shall receive personal protection insurance benefits to which the employee is entitled from the insurer of the furnished vehicle.”
A Michigan Supreme Court case, Celina Mut Ins Co v Lake States Ins Co, from 1996, determined that a self-employed person was considered an employee for this section. That court said:
“We believe that it is most consistent with the purposes of the no-fault statute to apply § 3114(3) in the case of injuries to a self-employed person. The cases interpreting that section have given it a broad reading designed to allocate the cost of injuries resulting from use of business vehicles to the business involved through the premiums it pays for insurance.”
The question for the court, then, was whether what El-Najjar did counted as employment. Or at least whether there was a material question of fact as to whether El-Najjar was employed when he was injured.
Summary Judgment is More Than Just Skepticism
The line between investment owner and employee is not always concrete, or clear. But to support a Motion for Summary Disposition, a party needs to demonstrate that the record, as it may be developed, does not create any issue upon which reasonable minds could differ. Argonaugh argued that El-Najjar could not be an employee because he had no involvement in the operation of the business. But there was significant testimony to the contrary. The court of appeals held:
“Further, by concluding that Allstate could not ‘demonstrate’ or ‘prove’ that plaintiff was self-employed, the trial court demanded not only that Allstate ‘set forth specific facts showing that a genuine issue of material fact exists[,]’ Quinto, 451 Mich at 362, but also that the facts show that Allstate would ultimately prevail on the issue. In addition, the trial court’s conclusion is tantamount to a finding of fact that plaintiff is not self-employed. Such is contrary to the guidance this Court provided trial courts in Citizens to the effect that courts should be ‘liberal’ in finding questions of material fact and ‘carefully avoid making findings of fact under the guise of determining that no issues of material fact exist.’ Citizens, 179 Mich App at 464.
The trial court improperly played the role of fact-finder when it determined that Allstate could not “demonstrate” or “prove” El-Najjar’s self-employment. By ignoring the possibility that a jury could interpret the admittedly conflicted testimony differently.
Representing Self-Employed Clients in Light of El-Najjar
Auto accident attorneys have their work cut out for them when a self-employed client is injured in an on-the-job car accident. Issues of the injured motorist’s role at the business and whether he or she was on the clock are all complicated issues of fact that require careful investigation.
Don’t allow an over-zealous insurance company attorney cut that process short through preemptive motions for summary disposition. Make sure you provide clear offers of proof to demonstrate that a material question of fact exists to get your case in front of the jury.