Michigan Coverage Decisions, Issue 194

Garrett v. Washington, et. al.

Published, Decided February 23, 2016, Michigan Court of Appeals Docket No. 323705

Plaintiff settled a PIP claim via case evaluation acceptance. Plaintiff filed a third-party claim against the other driver, along with a uninsured motorist claim against his insurer. The trial court denied a motion to consolidate the two actions, and the original action was dismissed with prejudice. The insurance carrier moved for summary disposition in the UM case based on res judicata which the trial court granted.

The Court of Appeals would have imposed res judicata were it not for the holding in Adam v. Bell, 311 Mich App 528 (2015) which held that res judicata was not triggered by the bringing of a subsequent UM claim, but reversed and remanded the order granting the defendant’s motion for summary disposition.

Kallas & Henk Note
The Court of Appeals declined to convene a special panel to address whether res judicata applied to require mandatory joinder of a potential UM claim with a PIP claim which leaves the holding in Adam v. Bell, 311 Mich App 528 (2015) as controlling that res judicata does not apply.

 

Schwartz v. Encompass Indemnity Company

Unpublished, Decided March 15, 2016, Michigan Court of Appeals Docket No. 324447

Plaintiff filed a claim with his insurer for mold and over-demolition. At the time of inspection, none of the alleged mold affected material was at the site, as it had already been removed. The plaintiff’s contractor disposed of the material after the claim was filed. The trial court found that the losses were covered but granted summary disposition based on the spoliation of evidence by plaintiff and denial of the demolition claim due to the faulty workmanship exclusion.

The Court of Appeals rejected the argument that the contractor’s over-removal of water-damaged material constituted a covered loss. Even if the contractor acted in error, he was the plaintiffs’ agent, and such action would have been faulty workmanship that would fall under the exclusion. Further, the policy imposed an affirmative duty on plaintiffs to allow defendant the opportunity to inspect the mold damaged materials and affirmed the trial court.

Kallas & Henk Note
The Court of Appeals enforced the policy conditions finding that the actions of the insureds or their agents prejudiced the insurance carrier.

 

Employers Insurance Company of Wausau v Hearthstone Senior Services, LP, et. al.

Unpublished, Decided March 15, 2016, Michigan Court of Appeals Docket No. 32477

The insurer then filed this dec action against Hearthstone, the owner of a bus, in which an elderly lady got trapped after being transported her from an assisted living facility. The representative for the injured party settled with the bus owner, who then went out of business. The trial court granted summary disposition for the insurance carrier finding that the injuries did not arise out of the use of the bus as a motor vehicle.

Ultimately, the Court of Appeals held that her injuries did not arise “out of the inherent nature” of the insured vehicle but instead arose out of the negligence of Hearthstone’s staff. The Court examined various “School Bus Cases,” and distinguished this case because an assisted living transportation vehicle was different from a school bus in function.

Kallas & Henk Note
The Court used the three-part test from Century Mutual v. League General Ins. Co., 213 Mich App 114 (1995) in reaching its final conclusion that the injuries did not arise out of the ownership or use of a motor vehicle. The Supreme Court denied leave to review the rulings of the lower courts.

 

Danhof v. State Farm Mutual Automobile Insurance Company

Unpublished, Decided March 15, 2016, Michigan Court of Appeals Docket No. 324991

In this uninsured motorist suit, a motorcyclist flipped over lumber in the roadway that was blocked from his view by another vehicle. The plaintiff believed the plank came from a truck that was in front of the car in front of him. Plaintiff was unable to avoid contact. The trial court granted the insurer’s summary disposition motion on the basis that it was speculation that the plank came from the truck as there was no evidence linking the plank with another motor vehicle.

The Court of Appeals vacated the trial court’s decision, holding that there was sufficient evidence to draw an inference, which precluded summary disposition. The Court followed the reasoning in Dancey v. Travelers Property Cas. Co., 288 Mich App 1 (2010) as controlling that it was reasonable to infer that the wood fell off another motor vehicle.

Kallas & Henk Note
The Court of Appeals relied on the prior line of cases which include coverage on the basis of indirect physical contact applying the theories of how the lumber came to be in the roadway and based on the circumstantial evidence presented by the Plaintiff.

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