No-fault insurance; PIP benefits; Priority; MCL 500.3114; Domicile; Minor child of divorced parents; Custody order; Joint physical custody; 50/50 parenting time; “Step-down” policy provision; Resident of household; Grange Ins Co of MI v Lawrence; Stare decisis; Workman v Detroit Auto Inter-Ins Exch; Dairyland Ins Co v Auto-Owners Ins Co

The court held that Grange’s rule treating a custody order as dispositive of a minor child’s domicile for no-fault purposes was wrongly decided and must be overruled. Plaintiff was severely injured in a motor vehicle accident while traveling to school from her father’s house. The trial court applied Grange to conclude she was domiciled with her father because the divorce judgment provided for joint physical custody and 50/50 residence time, even though plaintiff actually spent about 75% of her time at her mother’s home. The trial court also found plaintiff was a resident of her father’s household for purposes of a step-down provision in his policy with defendant=Esurance. The Court of Appeals affirmed both rulings. On appeal, the court held that a custody order “creates the custodial environment from which domicile can be established,” but does not itself establish domicile for purposes of MCL 500.3114. The court reasoned that custodial environment and domicile are distinct concepts, that the Child Custody Act does not purport to establish no-fault domicile, and that Grange was especially flawed in 50/50 custody cases because it allowed a child’s domicile to shift “weekly or daily” despite the common-law rule that a person has only one domicile. The court also held that stare decisis favored overruling Grange because the rule had proven impractical, generated little reliance, undermined insurers’ ability to assess risk, and departed from the traditional multifactor domicile analysis. Going forward, a custody order is the starting point and generally reflects domicile when the parties act consistently with it. But when the child’s actual living arrangements are “clearly inconsistent” with the order, it “should not be considered representative of the child’s domicile. In all cases, courts should” consider the actual facts, including the Workman and Dairyland factors, where the child spends most time, and where the child sleeps most nights. Because the lower courts relied on Grange to find plaintiff domiciled with her father and to find her a resident of his household, the court vacated both rulings and remanded to the trial court.

Justice Thomas concurred. She agreed with the majority’s critique of Grange and with the holding that a judgment of divorce or custody order is only a starting point in determining a minor child’s domicile for no-fault purposes, but she would have resolved the case more narrowly because the relevant Grange language about 50/50 parenting time appeared in dicta. She wrote separately to emphasize that family courts are not tasked with making domicile determinations and generally do not draft custody, parenting-time, or support orders with later no-fault priority disputes in mind.