Michigan Coverage Decisions, Issue 187

Gilbert Banks, et. al. v. Auto Club Group Ins. Co.

Unpublished. Decided June 18, 2015, Michigan Court of Appeals Docket No. 320985.

The defendant insurance carrier issued a homeowners policy to Gilbert Banks. A fire destroyed the residence in 2006, and it was rebuilt with insurance proceeds. After the fire, the Banks’ son and his wife and children lived at the property. Gilbert Banks and his wife lived with his elderly mother at another location. In 2009, another fire damaged the residence. It was determined that the fire was arson. The Banks’ son pleaded no contest to arson of a dwelling. The insurer denied coverage for the loss because Gilbert Banks did not reside at the insured property at the time of the fire. The trial court granted summary disposition in favor of the insurance carrier, finding that Gilbert was not residing at the property and the Banks’ son and his wife were not resident relatives.

The Court of Appeals affirmed this decision, reviewing the applicable policy terms and definitions provided in the policy. The Court further looked to prior case law and dictionary definitions to define those terms which were not defined in the policy.

Kallas & Henk Note
The Court relied on and followed the reasoning provided in the decision of McGrath v. Allstate Ins. Co. , 290 Mich App 434 (2010) which addressed a similar issue whether the named insured resided at the insured property at the time of loss.

 

Garden City Rehab, LLC v. State Farm Mutual Auto Insurance Co.

Unpublished. Decided June 18, 2015, Michigan Court of Appeals Docket No. 320543.

A healthcare provider sought payment for physical therapy services rendered in 2012 to a party injured in an auto accident in 2009. The injured party had previously sued and a bench trial determined that the injured party had recovered and was not entitled to no-fault benefits after 2010. In reliance on this prior decision, the insurance carrier filed a motion for partial summary disposition based on collateral estoppel and res judicata which was denied by the district court. The circuit court affirmed the denial of summary disposition.

The Court of Appeals granted leave to review the issue and reversed and remanded for entry of judgment in favor of the insurer. The Court reviewed the elements of collateral estoppel, finding that the services provider was in privity with respect to this issue and the ultimate issue was actually decided in the prior action. The Court also determined that res judicata applied to bar the present action involving the recovery of the no-fault benefits sought.

Kallas & Henk Note
The Court relied on a very factually similar case, TBCI, PC v. State Farm Mutual Auto Ins. Co., 289 Mich App 39 (2010) in reaching its decision.  

 

Craig M. Hanson v. Fremont Michigan Insuracorp a/k/a Fremont Insurance

Unpublished. Decided July 2, 2015, Michigan Court of Appeals Docket No. 320607.

A fire loss at the insured premises resulted in the carrier denying the claim on the basis that the policyholder misrepresented information on the signed application regarding the applicants’ criminal histories. The plaintiff sued the carrier for denying the claim and insurance agent and agency for incorrectly completing the application. The trial court dismissed the insurance carrier by stipulation of the parties and granted summary disposition in favor of the insurance agent and agency.

The Court of Appeals affirmed the trial court ruling, although on a different basis than the trial court, granted summary disposition in favor of the insurance agent and agency. The Court rejected any liability on the part of the insurance agency and its personnel because the plaintiff did not produce any evidence that another insurer would have issued a policy with disclosure of the criminal history.

Kallas & Henk Note
While the Court recognized the relationship between the parties, the Court focused on the lack of evidence regarding the causation of the injuries claimed which would be required to be proved to claim a breach of any duty.  

 

Kimberly Johnson , Executrix of Estate of Douglas Johnson v. Doodson Insurance Brokerage of Texas LLC et. al.

Unpublished. Decided July 15, 2015, Case No. 2:13-CV-10198 (ED Mich 2014); Affirmed 793 F 3d 674(6th Cir. 2015).

A party was fatally injured and it was discovered that the liability insurance policy excluded coverage for the type of loss involved in the death. The injured party sought recovery against the insurance broker for failing to obtain a policy which afforded coverage, on theories of negligence and breach of contract. The district court rejected the claims on the basis that there was no privity between the broker and the injured party and that no independent tort duty to comply with the contractual obligation to obtain the liability insurance coverage at issue.

The Court of Appeals affirmed the lower court on the basis that the voluntary liability policy was only intended to benefit the policyholder and not other parties and that the injured party was not an intended-third-party beneficiary of the insurance contract.

Kallas & Henk Note
The Court rejected the idea that the insurance agent had any duty to a stranger to the transactions at issue. The Court relied on several Michigan Supreme Court cases, including Schmalfeldt v. North Pointe Ins. Co., 670 NW 2d 651 (2003) to reach its decision.  

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