Michigan Coverage Decisions, Issue 188

Auto-Owners Ins. Co. v. Lyle Christopher Kelley, North Arrow Log Homes, Inc. et. al.

Unpublished. Decided July 21, 2015, Michigan Court of Appeals Docket No. 319641

The insurer filed a declaratory action regarding underlying allegations of faulty workmanship by the insured. The insurer argued that there was no coverage based on no occurrence and policy exclusions. The trial court ruled that there was an occurrence due to the damage not being limited to the insured’s work but also including damage to the work of others. The trial court granted summary disposition finding coverage existed and the exclusions cited by the insurer did not eliminate coverage.

The Court of Appeals agreed with the trial court, finding an occurrence and rejecting the arguments that certain exclusions removed coverage. The Court rejected any application of the expected/intended exclusion (exclusion a) and the application of exclusion j which only applies to the repair, restoration or replacement of the insured’s own work. The Court did remand to the trial court for a determination of what aspects of the claimed damages were the insured’s own work for which no coverage would be provided.

Kallas & Henk Note
The Court  separately addressed the duty to defend, applying the “special” insurance  rule that the duty to defend is broader than the duty to indemnify and an insurer has a duty to defend the entire action, even if only a portion of the claims are covered.  

 

Wolverine Mutual Ins. Co. v. State Farm Mutual Auto Insurance Co.

Unpublished. Decided July 21, 2015, Michigan Court of Appeals Docket No. 322318

Injured motorcyclists sought recovery of no-fault benefits from the proper priority insurer under MCL 500.3114(5). The insurers were involved in a declaratory action to determine which insurer was in highest priority. The insurer for the vehicle owner and operator was the same carrier, having issued separate policies to the owner’s and operator’s parents. The Trial Court found that the insurer for the owner of a vehicle involved in the accident was the priority carrier, based on the domicile of the owner being determined as her parents’ residence.

The Court noted that the trial court did not specify which of the two policies issued would apply to provide the no-fault benefits to the injured parties. The Court of Appeals reversed the trial court finding as a matter of law that the vehicle owner was not domiciled with her parents, therefore, the insurer for her parents was not the proper priority insurer. The Court further determined that the record did not contain any evidence to establish the domicile of the vehicle operator to determine if his parents’ policy would respond. The Court determined that the trial court erred in its finding that the insurer for the injured motorcyclists was entitled to judgment in its favor.

Kallas & Henk Note
The Court relied upon the well established multiple-factor tests outlined in prior cases in reaching its conclusion regarding the owner’s domicile.  

 

Yvonne Thomas v. GEICO Indemnity Company and Auto-Owners Ins. Co.

Unpublished. Decided July 30, 2015, Michigan Court of Appeals Docket No. 320801, 322167

An injured party sued for no-fault benefits from two separate accidents. She and her insurance carrier agreed to submit the dispute to binding arbitration, and an award was entered in the injured parties’ favor. A motion for entry of judgment was filed in the Court with the court issuing an order for distribution of the award to various parties. The order also provided that the injured party’s employer, a non-party, was not entitled to any of the proceeds. The employer filed a separate action against the employee for recovery of disability benefits paid which the court dismissed on the basis of res judicata.

The employer filed an appeal that the disbursement order relating to the arbitration award functioned as a declaratory judgment with respect to it and the court did not have jurisdiction to make such a ruling as the employer was not a party to the arbitration proceedings. The Court of Appeals agreed and overturned the disputed order and remanded for dismissal of the proceeding. The Court of Appeals also reversed the decision in favor of the employee in the employer’s recoupment action for wage loss payments.

Kallas & Henk Note
Based on the Supreme Court’s decision in Estes v. Titus , the Court carefully reviewed the closely intertwined issues of res judicata and jurisdiction in reaching the decision in this unusual circumstance.  

 

Taevin Travon Johnson v. Metropolitan Property & Casualty Ins. Co. a/k/a Metlife Auto & Home

Unpublished. Decided August 11, 2015, Michigan Court of Appeals Docket No. 321649, 321774

A party was seriously injured in an auto accident and claimed no-fault benefits under his mother’s policy, including medical bills. The insurer denied coverage claiming that the policy had been non-renewed prior to the accident. The injured party and medical provider disputed the adequacy of the non-renewal notice. The trial court found that the notice was sufficient with notice being sent to the named insured at the last known address.

The Court of Appeals affirmed the ruling, finding that the policy provided the procedure to follow in a non-renewal. The Court noted that the record showed that the non-renewal notice was sent in compliance with the stated time frame. The Appeal Court rejected the arguments that separate notice had to be sent to the injured party as a named driver and that the notice did not have to be received for the non-renewal to be valid; proof of mailing was sufficient to uphold the non-renewal. The Court also rejected the arguments that the statutory cancellation notice requirements must be met.

Kallas & Henk Note
The Court followed the basic premise of contract law – enforcement of a contract as written.  The Court correctly examined the applicable policy provisions and definitions to reach its conclusion.  

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