Michigan Coverage Decisions, Issue 138

Mother of Doe v. Citizens Ins. Co. of America

Published. Approved for Publication March 23, 2010 Michigan Court of Appeals Docket No. 288776.

John Doe, a five-year-old, was molested by Hand, a thirteen-year-old, in a public restroom at the beach. Hand resided with Boyle at the time of the incident and Boyle had a homeowners policy with Citizens. Plaintiff brought an action against Hand and Boyle alleging negligence, false imprisonment, and negligent supervision. Plaintiff then brought an action to determine Citizens’ obligations regarding the underlying suit. The trial court granted summary disposition in favor of Citizens based on the “sexual molestation” exclusion.

The Court of Appeals affirmed. The policy excludes coverage for bodily injury “arising out of sexual molestation”. Although “sexual molestation” was undefined by the policy, the Court relied on the dictionary definition of “molest” and found that Hand’s conduct clearly fell within the definition. Plaintiff argued that under Fire Ins. Exchange v. Diehl, where an action is based upon a minor performing sexual acts on another minor, intent cannot be inferred as a matter of law. The Court held that the language of the sexual molestation exclusion does not require intent to injure. Because the complaint alleges that Doe’s injuries arose out of sexual molestation, the exclusion applies.

[su_box title=”Kallas & Henk Note”] The court reached the correct result, but it is worth noting that there is no analysis of the allegation of false imprisonment and negligent supervision. [/su_box]


Integon Nat. Ins. Co. v. Berry

Unpublished. Decided March 25, 2010 Michigan Court of Appeals Docket Nos. 289320, 289366, 291175.

In June of 2006, Long was rear-ended by Berry. Berry was driving a car owned by his mother, Patricia Berry. The police report did not list an insurer for Berry’s car. Long’s no-fault insurer was Bristol West. Long sued Berry and his mother for damages from the auto accident and also sued Bristol West for failure to pay uninsured motorist benefits. Although Berry asserted that he was uninsured at the time of the accident, his mother actually had insurance through Integon. The Berrys never contacted Integon about the accident or litigation. Several weeks after entry of default against the Berrys, but before entry of default judgment, Bristol West notified Integon about the litigation. Integon sued the Berrys and Long, asking the court to declare that it had no duty to provide coverage or defend the Berrys against the claims made by Long. The trial court held that Integon had no duty to defend or cover the Berrys because Integon had been prejudiced by its insured’s failure to give notice. Bristol West argued that it did not have to provide uninsured motorist coverage to Long because Berry had coverage at the time of the accident. The trial court denied Bristol West’s motion.

The Court of Appeals affirmed. The Court held that Integon presented clear evidence of prejudice because by the time it received notice of the underlying action, the litigation had progressed to a point where it no longer had any reasonable opportunity to appear in or defend the action. The Court noted that the Bristol West policy defines an uninsured motor vehicle as “not insured by a bodily injury liability bond or policy that is applicable at the time of the accident.” The Court held that under this definition, a motor vehicle is uninsured unless it is covered by a bodily injury policy and the policy is applicable at the time of the accident. The Court held that in order for the policy to be applicable, Patricia Berry had to perform all her obligations under the agreement, including providing notice. Because the policy was not applicable at the time of the accident, it was an uninsured motor vehicle within the meaning of the policy. Bristol West also argued that Long destroyed its subrogation rights by contesting the motion to set aside default which led to the denial of coverage under the Integon policy. The Court held that to trigger subrogation rights under the policy, Bristol West had to make payment and there was no evidence that Bristol West made payment.

[su_box title=”Kallas & Henk Note”] The interesting part of this decision is the analysis of what is required to show that an insurer is prejudiced by late notice of a claim.  [/su_box]


Progressive Michigan Ins. Co. v. Sneden

Unpublished. Decided March 30, 2010 Michigan Court of Appeals Docket No. 285265.

A milk truck being driven by Sneden rear-ended a vehicle driven by McComiskey. Mr. and Mrs. McComiskey were injured and their son was fatally injured. At the time of the accident, Sneden was driving the milk truck as part of his job for a milk hauling service. The milk truck weighed over 12,000 pounds and the car driven by McComiskey weighed under 10,000 pounds. Progressive insured Sneden’s personal vehicle at the time of the accident. Progressive argued that Sneden was not an insured person under its policy because an insured person includes “you with respect to an accident arising out of the maintenance or use of any vehicle with the express or implied permission of the owner of the vehicle.” The policy defined “vehicle” in pertinent part as a land motor vehicle with a gross vehicle weight rating of 12,000 pounds or less. The McComiskeys filed a counter-complaint against Progressive and argued that they were entitled to relief as third-party beneficiaries of the contract. Progressive alleged that the McComiskeys lacked standing. The trial court denied McComiskey’s motions and granted Progressive’s motion finding that Sneden was not an insured person because the milk truck did not qualify as a “vehicle” under the policy definition.

The Court of Appeals reversed. The Court held that the McComiskeys’ vehicle, which was under 12,000 pounds, fits the definition of a “vehicle”. The Court held that the policy does not require that the involved vehicle be driven by its insured. The Court held that the McComiskeys were entitled to summary disposition because Sneden was an insured person with respect to the accident. The Court found that the trial court erred in failing to strike Progressive’s affirmative defense asserting that McComiskeys lack standing. The Court found Allstate Ins. Co. v. Hayes on point, stating that “in a declaratory judgment action by a liability insurer, in which the insurer names as a defendant the person injured in the underlying accident, a default judgment against the insured does not deprive the injured person of standing to contest coverage.” Application for leave to appeal was denied.

[su_box title=”Kallas & Henk Note”] This is a curious interpretation of the policy in question. It seems safe to conclude that the drafters of the policy language did not intend this result. [/su_box]


Dancey v. Travelers Property Casualty Co. of America

Published. Decided April 6, 2010 Michigan Court of Appeals Docket No. 288615.

Dancey was involved in a single-vehicle accident after hitting a ladder lying in the roadway of the I-696 and I-75 interchange in Royal Oak. Plaintiff sought uninsured motorist benefits from defendant under a policy issued to Maryland Electric. Defendant argued that plaintiff was not an insured as defined in the policy and that there was no evidence that the accident was caused by the driver of an uninsured motor vehicle. The trial court denied defendant’s motion for summary disposition, holding that the vehicle that plaintiff was driving was covered by the policy and there was a genuine issue of material fact whether the driver of an uninsured vehicle caused the accident.

The Court of Appeals affirmed for slightly different reasons and remanded. The Court noted that plaintiff did not see the ladder fall off a vehicle and none of the witnesses could connect the ladder to any passing vehicle. Defendant’s policy provides that coverage is available in two situations (1) where there is vehicle to vehicle contact; and (2) where the unidentified vehicle causes an object to hit the insured’s vehicle. It was undisputed that plaintiff’s car was not struck by another car. Further, there was no evidence that another vehicle caused the ladder to hit plaintiff’s car. The Court noted that if this were the only evidence presented they would reverse the trial court. However, the Court found that plaintiff also presented evidence supporting an inference that the ladder must have fallen off another vehicle. The accident occurred on an overpass that is inaccessible to pedestrians and non-vehicular traffic, and other witnesses testified that no construction was taking place in the area at the time of the accident. The Court held that a reasonable juror could conclude that the presence of the ladder in the roadway under these circumstances established a “substantial physical nexus” between a hit-and-run vehicle and the ladder struck by plaintiff.

[su_box title=”Kallas & Henk Note”] This is a unique decision finding that the location of the accident could provide the nexus between an object in the road and an unknown vehicle. [/su_box]

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