Michigan Coverage Decisions, Issue 197

Bakri v Sentinel Ins Co.

Unpublished, Decided June 21, 2016, Michigan Court of Appeals (Docket No. 326109),leave denied November 30, 2016 (Docket No. 154182) .

Plaintiff was injured and sued the at-fault driver as well as and underinsured motorist benefits. The coverage required consent of the carrier to settle any claim and excluded any coverage for a claim settled without consent. The parties accepted case evaluation which concluded the case and the carrier denied coverage for failing to obtain consent. The trial court denied summary disposition to the insurer.

On appeal, the Court overturned the lower court finding that the parties settled the matter via the case evaluation acceptance without obtaining consent of the underinsured motorist carrier which violated the express policy conditions.

Kallas & Henk Note
The Court upheld the contract in accordance with its express terms. While not reviewed as such, the consent to settle qualifies as a condition precedent which must be complied with before the contract can be enforced.

 

Walker v Lloyds of London

Unpublished, Decided July 12, 2016, Michigan Court of Appeals (Docket No. 326354), leave denied June 27, 2017 (Docket No. 154319).

Plaintiff obtained a default judgment against the insured of the Defendant and sought to collect the judgment via garnishment under the professional liability policy issued. The Defendant insurance carrier denied coverage on the basis that the policy was claims-made and had expired prior to the service of process on the insured. The trial court granted summary disposition in favor of the insurer finding that service on the insured took place after the policy expired.

The Court of Appeals affirmed based on plain language of the policy which required that any claim be made during the policy term, rejecting the argument that the insurance carrier must be prejudiced to avoid liability under the policy.

Kallas & Henk Note
The Court relied on the Michigan Supreme Court decision in DeFrain v. State Farm Mutual Auto Ins. Co., 491 Mich 359, 362 (2012) which eliminated the prejudice requirement specifically relating to notice requirements.

 

Frost v Progressive Michigan Ins Co.

Unpublished, Decided July 28, 2016, Michigan Court of Appeals (Docket No. 316157).

The plaintiff obtained liability insurance through Progressive, and the car was destroyed the next month. A month after the car’s destruction, the insured’s daughter was injured while riding in an uninsured car. The Assigned Claims Facility assigned the claim to Citizens Insurance Company and the claim was paid. Progressive rescinded the insured’s policy ab initio based on fraud. The insured sued for benefits arising from the accident that destroyed the car, and Citizens intervened for reimbursement of the daughter’s benefits arising from the second accident. Citizens filed a dispositive motion arguing that Progressive could not rescind the policy based on the innocent third-party doctrine. The trial court ruled in favor of Citizens.

The Court of Appeals reversed, holding that, pursuant to Titan Ins Co v Hyten, 491 Mich 547(2012) and Bazzi v Sentinel Ins Co, ___ Mich App ___(2016) (Docket No. 320518), the claims of an innocent third party do not bar rescission of an insurance policy ab initio in the contexts of both PIP benefits and liability benefits.

Kallas & Henk Note
This Court relied entirely upon the Bazzi decision’s analysis regarding the innocent third-party rule relating to the question of rescission involving no-fault benefits.

 

Miller v Farm Bureau Mutual Ins Co.

Unpublished, Decided August 2, 2016, Michigan Court of Appeals Docket No. 325885, leave denied May 24, 2017 (Docket No. 154420).

The plaintiffs’ house burned down, and at trial, they failed to formally admit to the insurance policy. The defendant insurer moved for a directed verdict based on this failure, and the court granted it. The Court of Appeals held that the trial court abused its discretion, as there was no question of fact that the policy existed, was current, was valid, and defense counsel referred to it during opening. There was no surprise, inconvenience or prejudice that could arise from its admission into evidence.

The trial court also based its directed verdict on the plaintiffs’ failure to present evidence of damages to the dwelling and personal property, which the Court of Appeals also held to be an abuse of discretion. Under the “broad evidence rule,” courts are no longer confined to consideration of only market values, reproduction values, or replacement values, but may be used in conjunction with other principles to assist in the determination of values. “A lack of precise proof of damages does not preclude recovery.” Berrios v Miles, Inc, 226 Mich App 470, 478; 574 NW2d 677 (1997)(citations omitted) “Moreover, the certainty requirement is relaxed where the fact of damages has been established and the only question to be decided is the amount of damages.” Hofmann v Auto Club Ins Ass’n, 211 Mich App 55, 108; 535 NW2d 529 (1995)

Kallas & Henk Note
The Court of Appeals also examined and upheld the trial court’s granting of the plaintiffs’ motion to reform the insurance contract. Although the plaintiffs did not originally make a claim for reformation in their original complaint, the Court of Appeals determined that reformation was a remedy, and not a claim, and therefore it was not necessary to plead it in their original complaint.

 

Sarkozy v Hanover Ins Co, et. al.

Unpublished, Decided August 30, 2016, Michigan Court of Appeals Docket No. 326454, leave denied September 12, 2017 (Docket No. 154790) .

The plaintiffs’ bakery burned down, and they were compensated by their insurer to the limits of the building and content provisions of the insurance policy. The plaintiff sued in negligence, claiming that she was underinsured due to the tortious acts of her insurers and her independent insurance agents. The defendant insurers and independent insurance agents moved for summary disposition, and the trial court granted; the Michigan Court of Appeals affirmed.

The Court relied on Zaremba Equip, Inc v Harco Nat’l Ins Co, 280 Mich App 16, 29; 761 NW2d 151(2008), which held that the plaintiff had a duty to read to the policy and raise any questions about the policy limits within a reasonable time, and she failed to do so. Because an insurer’s duties to an insured arise from the written contract, the plaintiff failed to identify any provision in their insurance policy that would impose a duty upon the insurers to warn about underinsurance, or to disclose its internal valuations of the plaintiff’s property. Further, the Court of Appeals looked at the difference in duties between independent and “captive” insurance agents. While her insurance agents were independent, meaning they owed her a duty of loyalty and good faith, the plaintiff failed to present any affirmative evidence of their negligence.

Kallas & Henk Note
The Courts relied on the long-standing principle that the policyholder has a duty to read their contract in reaching their decisions and declined to impose obligations on the insurance carrier which were not included in the policy.

Comments are closed.