Michigan Coverage Decisions, Issue 126

Vushaj v. Farm Bureau Gen. Ins. Co. of Michigan

Unpublished. Decided March 17, 2009 Michigan Court of Appeals Docket No. 283243.

A house owned by Mr. Vushaj was damaged by a fire in January of 2006. No one had resided in the house since January of 2004. Mr. Vushaj would generally spend a night at the house every other week when he would have a doctor’s appointment. In the course of two years, he slept at the house approximately 52 times and slept elsewhere 678 times. The court noted that he occasionally cooked food at the house, but also relied on McDonalds. The court also noted that he completed light maintenance tasks at the house. There were no beds in the house and Mr. Vushaj would sleep in a sleeping bag that he kept in the car when he would stay the night at the house. The trial court granted summary disposition for defendant because it held that plaintiff was not entitled to coverage where the house was vacant prior to the fire.

The policy provided that the insured is not entitled to coverage for any loss that occurs “while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of 30 consecutive days.” Plaintiff alleged that defendant was not entitled to summary disposition because the terms “vacant” and “unoccupied” were ambiguous. The Court of Appeals disagreed. The Court held that the terms “vacant” and “unoccupied” have commonly used meanings and are easily understood. The Court held that when read in the context of the contract, the terms “vacant” and “unoccupied” are not ambiguous as a fair reading of the contract leads only to the conclusion that coverage is not available in this case. The Court found that plaintiff’s assertion that a structure must be wholly empty for the provision to take effect is unpersuasive. The Court held that because the terms must be interpreted in the context of the contract in which they appear, the terms “vacant” and “unoccupied” mean “not routinely characterized by the presence of human beings.” The Court noted that mail deliveries and sparse furnishings are not highly relevant in determining whether a home is occupied for purposes of this insurance policy.

[su_box title=”Kallas & Henk Note”] The Court of Appeals looked at the purpose of the “vacant or unoccupied” provision to support its finding.  The court found that the purpose was to protect the insurance company from increased risks that accompany unoccupied structures.  This is something of a departure from the recent tendency to reject a court’s opinion of the intention of contract language as opposed to a literal application of the language.  While benefitting the insurer in this case, examining the purpose or intention of a particular insurance contract provision is a sword that cuts both ways. [/su_box]

 

Calderon v. Auto-Owners Ins. Co.

Unpublished. Decided March 24, 2009 Michigan Court of Appeals Docket No. 283313.

Krumm, a legally incapacitated person, was injured in an automobile accident while visiting friends in North Carolina in May of 2003. The only insurance possibly available to Krumm was that of his grandmother, Beverly Krumm. Defendant at first paid benefits, but stopped paying after it concluded that Krumm was not domiciled with his grandmother. Plaintiff sued to continue benefits and defendant counter-claimed for reimbursement of benefits already paid. Personal protection insurance benefits are available to “the person named in the policy, the person’s spouse, and a relative of either domiciled in the same household.” MCL 500.3114(1). The courts examine a number of factors when analyzing whether a person is domiciled in the same household as the insured. The Supreme Court has held that “[d]omicile [is] that place where a person has voluntarily fixed his abode not for a mere special or temporary purpose, but with a present intention of making it his home, either permanently or for an indefinite or unlimited length of time.” The trial court found as a matter of law that Krumm was not domiciled at his grandmother’s house. The trial court considered as dispositive that Krumm had a wife, had taken up residence in at least two other states after he was married, and that he apparently left Michigan to avoid legal troubles. The trial court expressly credited a statement provided via affidavit from a defense witness that Krumm had stated “specifically that his intent was to go back to Arkansas when he left South Carolina.” The trial court recognized that Krumm returned to Michigan at times and stayed at his grandmother’s house but characterized those periods as “visits”.

The Court of Appeals noted that defendant presented the trial court with a number of facts supporting its position that Krumm was not domiciled at his grandmother’s house at the time of the accident. However, the Court noted that the record also revealed that plaintiff submitted evidence that Krumm was domiciled with his grandmother in Michigan at the time of the accident. Krumm’s grandmother and her husband had legally adopted Krumm when he was a young boy. The grandmother testified that in her opinion Krumm still lived in her home. He kept possessions at her home and had his own room there. His Michigan ID card and his voter’s registration listed his grandmother’s address. He received mail at his grandmother’s address. He did not have one set residence in Arkansas but instead drifted from place to place. Further, he was estranged from his wife and no longer lived with her. Krumm’s wife testified that she believed Krumm always considered Michigan his home. The Court held that while these facts do not prove that Krumm resided with his grandmother, they provide a basis for a reasonable jury to conclude that he was domiciled with her at the time of the accident. The Court held that the trial court did not consider all of the evidence in the light most favorable to plaintiff and instead impermissibly usurped the role of the jury when it decided this factual question and issues of witness credibility as a matter of law. The Court held that the trial court erred when it concluded that plaintiff had not shown there was a question of fact regarding whether Krumm was domiciled at his grandmother’s house at the time of the accident.

[su_box title=”Kallas & Henk Note”] Curiously, this opinion makes no reference to the age of Krumm.  From the description of the events in his life, it appears he was well into his adulthood.  Also curious in this opinion is that the Court of Appeals found that: “ Krumm plainly lived a transient lifestyle.”  If he was a transient person, it is hard to understand how the Court of Appeals could find that there was a question of fact whether he lived with the grandmother.  Under the rationale of this panel of the Court of Appeals, if there’s any single fact which would be supportive of a claim of residence, a trial court can never grant summary disposition. [/su_box]

 

Gray v. MEEMIC Ins. Co.

Unpublished. Decided March 24, 2009 Michigan Court of Appeals Docket No. 280392.

The automobile insurance policy in this case provided that uninsured motorist coverage does not apply to bodily injury sustained by an insured person “which is caused intentionally by or at the direction of another person[.]” The trial court held that this intentional act exclusion did not apply and held that there was coverage on the basis of physical contact between plaintiff’s vehicle and the uninsured driver’s vehicle.

The Court of Appeals noted that “intentional” is defined by Webster’s Dictionary as “done with intention or on purpose.” Gray testified that an unknown female in a blue truck approached from behind at a high rate of speed and was directing profanity and hand gestures at her. Gray was in the middle lane but could not move to the other lane of traffic. The female driver moved to the left lane alongside of Gray and continued to yell at Gray to move out of the way. The female driver “played chicken” with Gray, staggered between the two lanes, and hit the front driver’s side of Gray’s car. Gray was unable to maintain control of the vehicle. Gray testified that she believed that the female driver “played chicken” intentionally and hit her on purpose. The Court held that the trial court erred in denying defendant summary disposition. The Court held that defendant was entitled to summary disposition because the policy clearly and unambiguously excluded coverage for bodily injury caused by the intentional act of another person. The Court noted that Gray unequivocally testified that the female driver intentionally hit her and that the intentional act of hitting her was the cause of the accident and Gray’s resultant injuries.

[su_box title=”Kallas & Henk Note”] It appears the Court of Appeals found that Plaintiff’s testimony that she believed that the unknown driver acted intentionally was dispositive.  The facts of the actual incident are somewhat ambiguous with regard to intentional acts.  This leads to the question of whether the outcome would have been the same had Plaintiff simply stated she did not know what the drivers intentions were at the time of the accident.  It also leads to the question of why would the Plaintiff’s subjective belief be outcome determinative as opposed to the objective facts. [/su_box]

 

Auto-Owners Ins. Co. v. Ferwerda Enterprises, Inc.

Published. Decided April 9, 2009 Michigan Court of Appeals Docket No. 277574.

The Holiday Inn offers guests the use of a swimming pool located in a building attached to the hotel. The broiler used to heat the pool water serves as the primary source of heat for the entire pool building. On April 9, 2004, an elbow in the PVC line (that carries pool water to and from the water pump) “blew out”. A Holiday Inn maintenance man repaired it but did not turn off the Rola Chem (which feeds chemicals into the pool water) while completing the repair. Gases created by the continuously flowing chlorine and muriatic acid formed in the PVC lines. When the maintenance man turned the system back on, a cloud of gas traveled through the PVC lines, entered the pool area, and injured the Bronkema family.

Plaintiff filed a declaratory judgment action seeking a determination whether Holiday Inn’s policy with plaintiff covered the Bronkema’s personal injury claims. The circuit court granted Holiday Inn summary disposition and held that the Bronkema’s personal injury claims fell within the heating equipment exception to the policy’s pollution exclusion. The policy contained an endorsement entitled “Amendment of Pollution Exclusion – Exception for Building Heating Equipment” which provided: “This insurance does not apply to “bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants: (a) at or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to any insured. However, this subparagraph, (a), does not apply to “bodily injury” if sustained within a building at such premises, site or location and caused by smoke, fumes, vapor or soot from equipment used to heat a building at such premises, site or location.” The circuit court held that the building heating equipment endorsement unequivocally provided coverage under the policy. The circuit court determined that the harmful gases emanated from the integrated mechanical system that heated the pool room. The Court of Appeals noted that the building heating equipment endorsement usually applies to pollution occurrences emanating from a furnace. In this case, the pool’s heating equipment provided the only mechanical source of heat for the pool room. The Court found it equally plausible that the building heating equipment endorsement applies to the lone mechanical source of heat in the pool room. The Court held that the language of the policy fairly admits both an interpretation that the building heating equipment language does and does not encompass the apparently integrated heating, filtration and treatment system in the pool room. The Court held that because an ambiguity exists with respect to whether the building heating equipment endorsement encompasses the heating, filtration and treatment system in Holiday Inn’s pool room, the insurance contract is ambiguous and a fact finder should ascertain its meaning.

Justice O’Connell dissented, finding that the endorsement was unambiguous. Justice O’Connell stated that the endorsement clearly provides coverage if bodily injury is “caused by smoke, fumes, vapor or soot from equipment used to heat a building at such premises, site or location.” Because the facts indicate that the broiler and attachments used to heat the pool constituted the sole heating unit for the pool building, Justice O’Connell found that the endorsement provided coverage for this occurrence.

[su_box title=”Kallas & Henk Note”] This case has been reversed by the Supreme Court.  The Supreme Court found that the trial court was correct in granting summary disposition for the insured on the basis that the building heating equipment endorsement clearly applied and that the insured was entitled to coverage. Supreme Court Docket Nos. 138917, 138919, Decided October 9, 2009. [/su_box]

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