Background
In December 2020, Mohammed Abdulla, a commercial truck driver, was injured when the tractor-trailer he was operating collided with another tractor-trailer in Missouri. The tractor was registered in Michigan and titled to Tornado Trucking, LLC — a limited-liability company of which Abdulla was the sole member and only driver. Under a lease arrangement, Land Trucking, LLC leased the tractor from Tornado Trucking, and Abdulla transported Land Trucking’s cargo. He had operated the tractor regularly and exclusively for at least six months before the accident, made all decisions regarding its maintenance and operation, and stored it himself at a Dearborn truck stop.
No policy in the picture provided applicable PIP coverage. Tornado Trucking’s bobtail policy with Great American excluded PIP when the tractor was being used to transport cargo for a lessee. Land Trucking’s Progressive Southeastern policy did not list the tractor as a covered vehicle. And the Auto Club no-fault policy held by Abdulla’s father — with whom Abdulla lived — neither named Abdulla as an insured nor listed the tractor as a covered vehicle. Abdulla sued all three insurers plus the Michigan Automobile Insurance Placement Facility, seeking PIP benefits.
Auto Club argued that Abdulla was an “owner” of the tractor under MCL 500.3101(3)(l)(i) — which defines owner to include anyone “having the use of a motor vehicle, under a lease or otherwise, for a period that is greater than 30 days” — and was therefore barred from PIP recovery by MCL 500.3113(b) because no required security was in effect. The trial court denied Auto Club’s motion for summary disposition, and a divided Court of Appeals affirmed, reasoning that because the tractor was titled to Tornado Trucking (a separate legal entity), Abdulla lacked sufficient indicia of ownership. The dissent would have held him a co-owner. The Michigan Supreme Court ordered oral argument on the application.
The Court’s Holding
In a unanimous opinion by Justice Zahra, the Michigan Supreme Court reversed the Court of Appeals and held that Abdulla was an “owner” of the tractor under MCL 500.3101(3)(l)(i), and therefore was excluded from PIP benefits under MCL 500.3113(b) because the required security was not in effect at the time of the accident. Applying the framework from Twichel v. MIC General Insurance Corp, 469 Mich 524 (2004), the Court held that the proper focus is on “the nature of the person’s right to use the vehicle,” not the person’s actual use. Because Abdulla operated the tractor regularly and exclusively for at least six months, was the sole decisionmaker as to its operation and upkeep, required no one’s permission to use it, and kept it in his custody, the facts established a proprietary and possessory right to use the vehicle that comports with ownership under the statute.
The Court rejected the Court of Appeals’ reasoning on two grounds. First, the majority below erroneously focused on the purpose of Abdulla’s use — his business use for Tornado Trucking — rather than the scope of his right to use the tractor. Nothing in MCL 500.3101(3)(l)(i) limits “owner” to those with personal or individual use; the statute asks only whether the person has “the use of” the vehicle for more than 30 days. Second, the Court rejected the argument that Tornado Trucking’s status as a separate legal entity prevented Abdulla from being an owner. The no-fault act’s definition of “owner” prioritizes function over form, and the LLC statutes cited by the Court of Appeals cannot override the no-fault act’s controlling definition. This conclusion did not require piercing the corporate veil; it required only harmonizing the LLC statutes with the no-fault act, which expressly contemplates multiple owners of the same vehicle.
The Court also rejected Abdulla’s alternative argument that MCL 500.3111 (out-of-state accidents) or MCL 500.3114 (priority rules) entitled him to PIP benefits through Auto Club as a resident relative. Those provisions do not nullify MCL 500.3113(b), which categorically bars an owner of an uninsured vehicle from collecting PIP benefits regardless of which policy might otherwise apply. The case was remanded to the trial court for further proceedings.
Key Takeaways
- A sole member of an LLC who exclusively operates and controls a company-owned vehicle can be a statutory “owner” of that vehicle under Michigan’s no-fault act, without piercing the corporate veil — the LLC’s separate legal status does not defeat the no-fault act’s functional ownership definition.
- Under MCL 500.3101(3)(l)(i), ownership turns on the nature and scope of a person’s right to use the vehicle — whether it is proprietary and possessory — not on the actual purpose or character of the use (e.g., business versus personal).
- An owner who fails to maintain the security required by MCL 500.3101(1) is barred from PIP recovery under MCL 500.3113(b); neither priority provisions (MCL 500.3114) nor the out-of-state-accident provision (MCL 500.3111) override that exclusion.
- The “or otherwise” catchall in MCL 500.3101(3)(l)(i) is broad enough to capture de facto ownership arrangements beyond formal leases or rentals — including a sole member’s exclusive control over an LLC-titled vehicle.
Why It Matters
This decision has significant practical consequences for owner-operators in the trucking industry who structure their businesses through single-member LLCs. A driver who solely controls, operates, and maintains an LLC-owned truck cannot use the LLC’s separate legal identity as a shield against the no-fault act’s insurance requirements. If such a driver fails to secure PIP coverage on the vehicle — a gap that can easily arise given the complex interplay of bobtail, carrier, and occupational accident policies common in commercial trucking — the statutory bar of MCL 500.3113(b) will apply, leaving the driver without any PIP recovery for injuries sustained in an accident.
More broadly, the decision clarifies the reach of Michigan’s functional ownership definition, reaffirming that courts must look past legal title and corporate structure to the real-world pattern of control, possession, and autonomy over a vehicle. Attorneys advising commercial transportation clients, gig-economy drivers, or any client who operates a vehicle through a business entity should audit their insurance arrangements to ensure that PIP obligations are clearly assigned and actually covered — since no-fault priority rules offer no escape hatch once the ownership-and-no-insurance bar applies.