Burton v State Farm Fire and Casualty Company
Unpublished. Decided August 29, 2000. Michigan Court of Appeals Docket Number 212479.
This case involves a variety of substantive and procedural issues. The only significant insurance issue involves the plaintiff’s claim that defendant had a duty to defend him under business liability coverage. Plaintiff had hired a building contractor to repair plaintiff’s home. The building contractor brought suit against plaintiff for failure to pay for the repairs. Plaintiff sought defense from defendant insurer under the business liability coverage.
The Court of Appeals affirmed the trial court ruling that the exclusion for liability assumed under a contract was applicable and that there was no duty to defend this failure to pay claim brought by the contractor.
Lumbermens Mutual Casualty Company v RLI Insurance Company
Unpublished. Decided September 15, 2000. Michigan Court of Appeals Docket Number 214487.
In this unusual fact setting, plaintiff issued a primary liability policy to a tortfeasor in the amount of $1,000,000. Both plaintiff and defendant had issued policies covering liability in excess of $1,000,000. Plaintiff defended the tortfeasor and settled the underlying lawsuit for $1,625,000. At the time of the settlement, both plaintiff’s claims handlers and defendant’s claims handlers believed that plaintiff’s excess policies were in effect. It subsequently turned out that plaintiff’s excess policy had been effectively canceled prior to the subject accident.
Following the settlement, and upon discovering that the plaintiff’s excess policy was canceled, plaintiff sought reimbursement from defendant for $625,000 (the amount in excess of plaintiff’s primary coverage limits). Defendant denied liability on the basis of its “no action” clause, which provides that an action may not be brought against the insurer until the insured’s obligation has been set by final judgment or by agreement of the insurer.
The trial court granted summary disposition to defendant on the basis that the “no action” clause applied because defendant was not given an adequate opportunity to participate in the settlement. The Court of Appeals reversed on the basis that there was an issue of fact whether defendant’s claims representatives had sufficient knowledge and opportunity to participate in the settlement conference and whether they had knowledge that defendant’s coverage could be applicable to any settlement in excess of $1,000,000.
It is also apparent that there were many other issues raised by the parties but not addressed by the Court of Appeals or the trial court. It appears that the equities of the situation (the defendant should have been responsible for the amount in excess of $1,000,000) may have driven the Court of Appeals decision in this case. [/su_box]
Allstate Insurance Company v McCarn et al
Unpublished. Decided October 3, 2000. Michigan Court of Appeals Docket Number 213041.
In this declaratory action, plaintiff sought a ruling that it had no duty to defend or indemnify its insureds under a homeowners policy. The insured’s son discharged a shotgun into the face of his friend killing him. The undisputed facts were that the friends were engaging in horse play and that, although the trigger was intentionally pulled, the insured’s son believed that the weapon was not loaded.
Plaintiff moved for summary disposition in the trial court on the basis that the shooting did not constitute an “occurrence” because the pulling of the trigger was not accidental. The trial judge denied defendant’s motion for summary disposition and granted summary disposition in favor of defendants finding that because the son thought that the gun was unloaded, the shooting was accidental.
In a two to one decision, the Court of Appeals reversed and remanded for entry of judgment in favor of plaintiff insurer. The majority held that, under any circumstances, whether the actor believes the gun is loaded or not, the act of pointing a firearm at another person and pulling the trigger constitutes conduct that cannot be deemed accidental when the firearm actually discharges.
Central Michigan Board of Trustees M.U.S.I.C. v Employers Reinsurance Corp.
Decided October 3, 2000. United States District Court Eastern District of Michigan Northern Division.
In this action, the defendant insurer provided insurance to members of an education association. One of the members was sued for assault and battery and unwanted sexual contact by a student. Defendant offered to provide a defense while maintaining a reservation of rights to deny coverage. The member (defendant in the underlying action) refused to accept counsel provided by defendant insurer insisting on using his own attorney.
The underlying lawsuit was ultimately dismissed and plaintiffs in this action sought reimbursement for attorney fees paid to the member’s lawyer. Defendant insurer denied any liability for the attorney fees taking the position that it had discharged its contractual duties by offering to provide defense counsel.
In this trial court opinion from the Eastern District of Michigan Northern Division, the court held in favor of defendant insurer, finding that it had discharged its obligations by offering to provide defense counsel, and rejected plaintiff’s contention that because the insurer had reserved its rights under the policy, the insured then had the right to select counsel at the expense of the insurer.