Michigan Coverage Decisions, Issue 162

Gifford v. MHA Ins. Co.

Unpublished. Decided July 5, 2012 Michigan Court of Appeals Docket No. 301759.

After back surgery, the plaintiff suffered complications and attempted to contact the surgeon for direction on how to address those complications. The surgeon did not respond to the plaintiff’s attempts and, the plaintiff became disabled. He filed the underlying action alleging malpractice arising out of the surgery and the failure of the surgeon to provide necessary post-operative care. The surgeon tendered the defense to the defendant, who denied coverage on the basis that the policy excluded coverage for malpractice claims arising out of medical treatment provided at the hospital where the plaintiff underwent his surgery. The plaintiff’s claims related to the surgery were subsequently dismissed because the plaintiff did not have evidence of malpractice, and the only issue remaining in the underlying action was the claim related to post-operative care, which was not performed in the excluded hospital. The defendant, however, continued to deny coverage.

The surgeon settled with the plaintiff without obtaining the consent of the defendant. The plaintiff then filed this garnishment action against the defendant to recover the judgment balance. The defendant again denied liability based on the hospital exclusion, however, the trial court held that the exclusion did not apply because the only claim in the underlying action for which judgment was entered related to post-operative care provided outside the hospital. The Court of Appeals affirmed on the basis that the exclusion was not ambiguous, and applied only to medical care rendered at the named hospital, and the care which was the subject of the underlying action was not rendered in that hospital.

[su_box title=”Kallas & Henk Note”] The policy at issue also had a consent-to-settle provision, which the defendant attempted to invoke to avoid liability. An insurer is bound by a reasonable settlement, however, if it has refused to defend a claim that is covered by policy terms. Because the Court found that the defendant was obligated to cover the claim, it was required to pay the settlement. [/su_box]

 

Home-Owners Ins. Co. v. Downs

Unpublished. Decided July 10, 2012 Michigan Court of Appeals Docket No. 301105.

The underlying plaintiff was injured in an accident while driving an off-road vehicle, and sued the owners of that vehicle for negligence. The owners were insured under a homeowners policy which provided coverage for such accidents, but only if the accident occurred on the insured premises. The accident occurred on a roadway that was not on the insured premises.

The insurer filed this action for a declaration that there was no duty to defend or indemnify in the underlying action based on the ORV exclusion. The trial court held that the exclusion was ambiguous, and that the alleged negligence occurred on the insured premises. The Court of Appeals reversed, finding that there was no ambiguity in the exclusion and that it plainly eliminated coverage for damages arising out of ORV accidents that do not occur on the insured’s property.

[su_box title=”Kallas & Henk Note”] The opinion does not detail the reasoning that the trial court applied to reach its conclusion, but the Court was clear in stating that the only reasonable interpretation of the exclusion was that it quite plainly eliminated coverage for the accident. [/su_box]

 

Envision Bldrs, Inc v. Citizens Ins. Co. of America

Unpublished. Decided July 24, 2012 Michigan Court of Appeals Docket No. 303652.

The plaintiff sub-contracted the construction of a building, which subsequently collapsed due to wind, and the failure of the sub-contractor to properly install braces and trusses in that building. The plaintiff sought coverage under its general liability policies, issued by the defendant, for the costs to repair the damaged building. The defendant denied coverage on the basis that the damages did not constitute an occurrence, and coverage was otherwise excluded, because defective workmanship is not intended to be covered in standard general liability policy. The trial court held that the building collapse did not arise from defective workmanship, and that the policies covered the damages. The Court of Appeals reversed.

The Court held that damage to an insured’s own work product is not an occurrence, and that the policy would not apply in the first instance. The Court also noted that the plaintiff had assumed the duty in its construction contract to replace defective work. The policy excluded coverage for any liability the insured assumes in a contract. The Court held that the insured’s construction contract was within the provisions of this exclusion. The Court further determined that the policy exclusions for damage to an insured’s work product also applied.

[su_box title=”Kallas & Henk Note”] One important finding by the Court was that the work performed by the plaintiff’s sub-contractor was still the work of the plaintiff, and not an occurrence. The Court also provided a detailed analysis in the interpretation of the business risks and contractual liability exclusions that is helpful to guide analysis of these provisions. [/su_box]

 

Mieske v. Secura Ins

Unpublished. Decided July 31, 2012 Michigan Court of Appeals Docket No. 304346.

The plaintiff filed this action for breach of an insurance contract when the insurer declined to defend and indemnify the plaintiff in an underlying action arising out of an assault perpetrated by the plaintiff. The assault resulted in very serious injuries to the plaintiff’s victim, and the plaintiff asserted that he did not intend to cause such significant injuries. The plaintiff claimed that his liability policy should apply because the consequences of his intentional act were accidental and constituted an occurrence for which coverage should be available.

The trial court disagreed and held that the plaintiff either actually intended to injure his victim, or reasonably should have expected that injuries would result from the assault. As such, his conduct was not an accident, and the insurer did not have any duty to defend or indemnify. The Court of Appeals affirmed for the same reasons and held that the policy was inapplicable because the assault was not an occurrence to which the policy applied.

[su_box title=”Kallas & Henk Note”] This decision is another example in a long line of cases finding that intentional conduct with reasonably expected results is not covered under general liability policies.  [/su_box]

 

Wiley v. Osmun

Unpublished. Decided July 19, 2012 Michigan Court of Appeals Docket No. 304992.

The plaintiff was seriously injured in a motor vehicle accident, and the at-fault driver’s insurance was inadequate to compensate for all of her injuries. When she filed an under-insured motorist coverage claim with her own insurer, coverage was denied because her auto policy plainly did not provide for under-insured motorist benefits. The plaintiff sued, claiming that she had requested “full coverage” for her vehicles and reasonably believed she had such coverage. The trial court granted summary disposition for the insurer on the basis that the plain terms of the policy did not provide under-insured motorist coverage, and the Court of Appeals affirmed.

The Court held that the policy was not ambiguous. While it provided uninsured motorist coverage, the policy did not provide a recovery for under-insured motorist benefits. The declarations page for the policy also expressly stated that the policy did not provide such benefits. As a result, the Court held that the policy had to be enforced as written, and the plaintiff was not entitled to recover from her insurer.

[su_box title=”Kallas & Henk Note”] The Court did not consider the plaintiff’s deposition testimony because this was evidence extrinsic to the plain terms of an unambiguous agreement. The Court also rejected the plaintiff’s argument that she had a special relationship with the insurer based on her discussions with the insurer’s agent as to her request for full coverage. The plaintiff could not provide any evidence of specific inquiries regarding under-insured coverage, and the Court also determined that she failed in her duty to read and understand her policy. [/su_box]

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