Swoope v. Citizens Insurance Company – MCL 500.3113(a) Unlawful Taking and Operation

Can an unlicensed driver be denied No-Fault benefits for "unlawful taking"?
No. In the landmark case of Swoope v. Citizens Insurance, the Michigan Supreme Court ruled that driving without a license is "unlawful operation," not an "unlawful taking." Under MCL 500.3113(a) unlawful taking rules, you are only barred from PIP benefits if you gained possession of the vehicle without the owner's authority. If you had permission to use the car, your licensing status cannot be used to deny your claim.

Aggressive Insurance Tactics in Michigan No-Fault

Michigan no-fault insurance companies do not like paying out benefits. They make money by taking in premiums and paying out as little as possible. When defending no-fault PIP claims, insurance carriers are especially aggressive.

One of the more frustrating tactics used by auto insurance carriers over the past decade has been the argument that, when an injured plaintiff broke the law while operating a vehicle (such as driving without a license), they took the vehicle unlawfully and therefore cannot obtain Michigan no-fault benefits. In effect, insurance carriers have sought to add a fault component to Michigan's “no-fault” law by misinterpreting MCL 500.3113(a) unlawful taking clauses.

However, the Michigan Supreme Court put an end to this argument when it recently decided Swoope v. Citizens Insurance. The Swoope decision was unanimous and is a big win for plaintiffs and injured people throughout Michigan.

The Factual Background of the Swoope Case

In Swoope, the plaintiff was injured in a car crash while driving a car she borrowed from her friend. At the time of the crash, Ms. Swoope did not have a valid driver's license or auto insurance. She also had never driven her friend’s vehicle before.

After the crash, she applied for Personal Injury Protection (PIP) benefits through the Michigan Assigned Claims Plan (MACP). The MACP assigned the claim to the defendant, Citizens Insurance. This meant Citizens Insurance was responsible for paying first-party benefits, such as medical expenses, lost wages, medications, and other items for Ms. Swoope.

However, Citizens denied coverage, arguing Swoope’s claim was barred under MCL 500.3113(a).

Understanding the Statutory Language: MCL 500.3113(a)

Under Michigan’s no-fault law, a person injured in a motor vehicle accident is entitled to receive certain first-party no-fault benefits, even if they caused the crash. However, there are exceptions to this rule contained within MCL 500.3113. The Swoope decision dealt with subpart (a), which reads as follows:

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 willingly operating or willingly using a motor vehicle or motorcycle that was taken unlawfully, and the person knew or should have known that the motor vehicle or motorcycle was taken unlawfully.

Procedural History of the Case:

The Swoope case originated in Wayne County. Citizens Insurance filed a motion to dismiss the case, arguing that because Ms. Swoope did not have a valid driver’s license, she had taken her friend’s vehicle unlawfully, in violation of MCL 500.3113(a). The trial judge disagreed and denied Citizens’ motion.

However, the Court of Appeals reversed, holding that Ms. Swoope was not entitled to PIP benefits. It ruled she was unlawfully operating the vehicle because she didn’t have a driver’s license. The plaintiff asked the Michigan Supreme Court to consider the Court of Appeals’ ruling, and it agreed to do so.

Legal Issue:

Whether plaintiff was barred from recovering PIP benefits under MCL 500.3113(a), which denies benefits to a person who "was willingly operating or willingly using a motor vehicle or motorcycle that was taken unlawfully, and [she] knew or should have known that the motor vehicle or motorcycle was taken unlawfully."

Holding:

There is a difference between taking a vehicle unlawfully and operating a vehicle unlawfully. While the former prevents a person from claiming no-fault benefits, the latter does not. When the plaintiff took her friend’s vehicle, she may have been operating the vehicle unlawfully because she didn’t have a driver’s license.

However, the vehicle was not taken unlawfully as required by the statute. Ms. Swoope could therefore turn to Citizens Insurance for the payment of no-fault benefits.

Analysis: The Supreme Court’s Reasoning

In arriving at its decision, the Court considered two prior Supreme Court decisions involving the same statute, albeit an earlier version.

1. Spectrum Health v. Farm Bureau (2012)
In Spectrum Health v. Farm Bureau Mut Ins. Co., 492 Mich 503 (2012), the Court analyzed whether a person who was injured in a motor vehicle accident while driving a vehicle that had been taken contrary to the express prohibition of its owner was barred from recovering PIP benefits. The case involved two separate automobile accidents, and in both situations, the driver took the keys to a vehicle without the owner’s permission.

The Court in Spectrum held that “taken unlawfully” in MCL 500.3113(a) applies to anyone who takes a vehicle without the authority of the owner, regardless of whether that person intended to steal it. Both individuals did this and violated MCL 750.413 and MCL 750.414, informally known as the ‘joyriding’ statutes. Because they had unlawfully taken the respective vehicle within the meaning of MCL 500.3113(a), they were barred from recovering PIP benefits.

2. Ramblin v. Allstate (2014)
Two years later, in Ramblin v. Allstate, 495 Mich 316 (2014), the Michigan Supreme Court analyzed whether an individual had “unlawfully taken” a motorcycle. The Ramblin case did not involve the taking of a vehicle against the wishes of the vehicle’s owner. Instead, it involved a person injured while riding a motorcycle that had been stolen, although the rider did not know it had been stolen and believed the motorcycle had been loaned to him.

The Ramblin Court held that MCL 750.414 (the joyriding statute) included a mens rea element of knowingly taking the vehicle without authority or knowingly using it without authority. Because the rider did not know he was taking a motorcycle unlawfully, he was entitled to receive PIP benefits.

The Confusion Caused by Ahmed v. Tokio Marine

However, after those decisions, the Michigan Court of Appeals issued a confusing ruling involving a potential unlawful taking in Ahmed v. Tokio Marine America Ins. Co, 337 Mich App 1. In Ahmed, the plaintiff was injured in a rental car. The plaintiff’s wife rented the car, and the plaintiff did not have a driver’s license. The rental agreement prohibited unlicensed drivers from using the vehicle. The plaintiff got hurt while operating the rental car. The Court held that because the injured driver knew or should have known he was taking the rental vehicle unlawfully, he was not entitled to PIP benefits.

However, the Ahmed decision went even further. The Court stated:

‘[a]ny violation of the criminal law that leads to a taking of a motor vehicle will constitute an “unlawful taking” for purposes of MCL 500.3113(a).’

For all auto insurance companies, this was a huge sentence. To them, it meant that any person operating a vehicle while in violation of a criminal penalty was not allowed to obtain PIP benefits. After the holding in Ahmed, insurance companies went on a bonanza, filing motions to dismiss insurance claims against individuals who were drinking and driving, driving with an outstanding warrant, driving without a license, and a host of other reasons. In many trial courts, insurance companies were successful in getting otherwise valid PIP claims dismissed.

Correcting the Inquiry: Taking vs. Operation

Citizens Insurance in Swoope used this same logic from the Ahmed decision to persuade the Court of Appeals to dismiss Ms. Swoope’s case, holding that because she didn’t have a valid driver’s license, she had unlawfully taken the vehicle.

However, the Supreme Court in Swoope found that despite a change in the language of the statute, the phrase “taken unlawfully” was not modified, and reversed the Court of Appeals, holding. Instead, the correct inquiry requires a court to focus on whether the taking of the vehicle was unlawful, not on whether its operation was unlawful.

Plaintiff’s status as an unlicensed driver provided no insight as to whether she had unlawfully gained possession of the vehicle. The driver's operation of the vehicle has no bearing on whether MCL 500.3113(a) bars recovery of PIP benefits. Whether a driver took the vehicle unlawfully is a distinct inquiry from whether it was used or operated unlawfully. Ms. Swoope’s lack of a driver’s license is irrelevant to whether she unlawfully gained possession of the vehicle. As a result, she could recover no-fault benefits from the defendant, Citizens Insurance.

What the Outcome of Swoope Means for Future Litigants

The Supreme Court’s decision in Swoope v. Citizens will make it much more difficult for insurance carriers to deny otherwise valid no-fault claims.

1. Strict Authority Required: Insurance companies must now prove the vehicle was actually taken unlawfully, not just operated unlawfully. The inquiry will center around whether the claimant had the owner's consent or authority to take the vehicle before the crash.
2. Criminal Status Irrelevant: Criminal violations during operation (like driving without a license) will not automatically constitute an “unlawful taking.”
3. Operation Logic: How the vehicle was driven is irrelevant to whether a person is precluded from obtaining PIP benefits under MCL 500.3113(a).

The Supreme Court’s ruling in Swoope makes it easier for injured victims to obtain the no-fault benefits they paid for.

For over 50 years, the Lee Steinberg Law Firm has been advocating for injury victims across Michigan. The firm has recovered hundreds of millions of dollars for clients and built a reputation as one of the state’s leading personal injury law firms. Our experienced attorneys handle a wide range of cases, including car and truck accidents, motorcycle accidents, medical malpractice, and wrongful death.

Contact Our Michigan No-Fault Experts Today

If an insurance company denied your PIP benefits by claiming an "unlawful taking," do not take no for an answer. The Swoope decision has changed the game for injured victims in Michigan. Whether you were driving without a license or using a borrowed car, the law now protects your right to receive medical bills and wage loss payments. The experienced lawyers at The Lee Steinberg Law Firm know exactly how to fight these aggressive insurance denials to get you paid. Call us today at 1-800-LEE-FREE for a 100% free consultation. We are here to listen, and you never pay a cent unless we win your case.