Simpson v. Memberselect Ins. Co.
Unpublished. Decided November 22, 2011 Michigan Court of Appeals Docket No. 299658.
The plaintiff applied for homeowners insurance, but paid the initial premium with a check drawn on an account containing insufficient funds. The plaintiff claimed that she intended to deposit sufficient funds after writing the check, but was told by her bank that she could not do so. The following week, the plaintiff suffered water damage at her home and made a claim for coverage. The defendant-insurer, however, notified the plaintiff that her check for the premium payment was dishonored and that any insurance therefore was void. The plaintiff filed suit claiming that she was entitled to a 10-day notice of cancellation and, because the insurer did not provide such notice, her policy should be considered effective and her claim allowed.
The trial court held that the insurer was entitled to rescind the policy due to the plaintiff’s failure to pay the premium, and the Court of Appeals agreed. The Court reached this decision on the basis of language in the application for insurance which stated that the policy would not become effective if the initial premium payment was not honored.[su_box title=”Kallas & Henk Note”] While the plaintiff argued that the policy language should control how and when a policy is cancelled, the Court could not find a reason to disregard the plain language of the application, which also stated that it should be construed as part of the policy. [/su_box]
Blaser v. DeVries
Unpublished. Decided November 29, 2011 Michigan Court of Appeals Docket No. 297555.
The plaintiffs purchased 5 of 7 lots that had been split from a larger parcel of land. The deed they received for these parcels stated that, among other things, a house with less than 1,200 square feet could not be built on a lot. The defendants purchased one of the other lots that had been split off from the larger parcel, however, their deed did not contain any restrictions. The plaintiff filed suit to impose the same deed restrictions on the defendants’ property, claiming that the intent when the lots were first split was to have all lots subject to the same restrictions. The defendants demanded defense and indemnification from the third-party defendant who had issued a title insurance policy on the defendants’ parcel.
The title insurer denied coverage for the reason that the title policy excluded claims related to restrictions on the use of property that were not in the chain of title. The defendants argued that the size restriction was not a use restriction but was a building restriction, and the exclusion did not apply. While the trial court agreed, the Court of Appeals reversed. The Court held that limitations on what may be built on property necessarily restricts the use of the property.[su_box title=”Kallas & Henk Note”] The defendants raised an interesting argument in an attempt to avoid the plain terms of the policy, but the Court was not persuaded that a technical and narrow interpretation of the exclusion was warranted. [/su_box]
McGuinness v. IDS Property Cas. Ins. Co.
Unpublished. Decided November 29, 2011 Michigan Court of Appeals Docket No. 299902.
The plaintiff’s son stole several hundred comic books from the plaintiff’s home. At the time, the plaintiff’s son was living part-time with his mother, but the plaintiff had physical custody of his son under an order in the plaintiff’s prior divorce proceedings. The plaintiff made a claim with the defendant to cover the loss, which the defendant denied on the basis of an exclusion in the policy for property theft committed by a person defined as an insured in the plaintiff’s homeowner’s policy. The issue was whether the plaintiff’s son was an insured person as defined in the policy.
The trial court held that he was, and the Court of Appeals affirmed. The policy defined an insured person to include resident relatives who reside in the insured household, including minors in the care of an insured. Due to the physical custody arrangement, the Court concluded that the plaintiff’s son was residing in the insured household at the time of the theft and coverage for the loss was therefore not available.[su_box title=”Kallas & Henk Note”] The Courts have addressed the issue of when a minor child of divorced parents is considered to be a resident of an insured household in several prior decisions. The decision generally is based on the specific facts of that arrangement. [/su_box]
Nolan v. Auto-Owners Ins. Co.
Unpublished. Decided November 22, 2011 Michigan Court of Appeals Docket No. 300106.
The plaintiff leased a home to tenants under a written lease agreement which prohibited keeping any animals on the property. While the tenants subsequently vacated the property and did not use it as a residence, the tenants did house at least 18 animals, mostly dogs, on the premises. This resulted in a substantial amount of property damage, and the plaintiff made a claim for the cost of repairing the damage. The defendant denied coverage on the basis of an exclusion which stated that loss resulting directly or indirectly from animals owned or kept by the insured or a tenant was not covered.
The plaintiff filed sued, alleging that coverage should be available, and setting forth several strained interpretations of the animal exclusion and why it should not apply (such as the damage to the premises did not result from the animals themselves but by the failure of the tenants to clean up after the animals.) Both the trial court and the Court of Appeals rejected the plaintiff’s arguments, and held that policy exclusions are to be enforced as written, and that the damages to the premises clearly resulted from the animals that were kept on the premises.[su_box title=”Kallas & Henk Note”] In light of the explicit terms of the exclusion, this result (that coverage was excluded) is not surprising. [/su_box]
Fremont Ins. Co. v. Izenbaard
Unpublished. Decided November 18, 2011 Michigan Court of Appeals Docket No. 300825.
The defendant was sued for injuries caused to the underlying plaintiff while the defendant was driving an all-terrain vehicle on land owned by Consumers Energy Company. The land was adjacent to the defendant’s property. The plaintiff provided a homeowners insurance policy to the defendant covering the defendant’s residence, and any premises used by the defendant in connection with that residence. The plaintiff filed this lawsuit for a declaration that there was not a duty to defend under the policy because the injuries to the underlying plaintiff did not arise on the defendant’s property or on premises used by the defendant in connection with that property.
The trial court determined that the policy was ambiguous because it did not specifically define the premises for which coverage would be available and, construing the terms against the insurer, held that Fremont had a duty to defend in the underlying action. The Court of Appeals disagreed, and went through an extensive analysis as to whether the Consumers Energy property was a premises. The Court eventually determined that, because the land was unimproved, except for the erection of power lines and supporting structures, the property was not a premises. Because the policy only insured premises used in connection with the defendant’s residence, no coverage was available, and a duty to defend and indemnify in the underlying action did not arise.[su_box title=”Kallas & Henk Note”] The Supreme Court has reversed the Court of Appeals and found that the term “premises” may also include underdeveloped land. The Court remanded to the Court of Appeals to determine whether the Consumers Energy property was used in connection with the insured residence. [/su_box]