Michigan Coverage Decisions, Issue 166

Fremont Ins. Co. v. Izenbaard

Unpublished. Decided November 18, 2012 Michigan Court of Appeals Docket No. 300825.

The underlying plaintiff sued the defendant for injuries caused in an accident involving an all-terrain vehicle, which the defendant was driving on vacant land adjacent to the insured premises. The adjoining property was not owned by the defendant but he often operated his vehicle on that property. The underlying plaintiff, who had been standing in the bed of the vehicle, was thrown and injured when the vehicle overturned on a sharp turn. The homeowners policy at issue covered the defendant’s property, and any premises used by the defendant in connection with that property. The plaintiff asserted that there was no 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. The Court of Appeals held that the policy did not apply, but based its decision on the idea that a “premises” for purposes of liability coverage meant property with a structure on it. The Supreme Court reversed that decision and directed the Court of Appeals to interpret the applicable policy provision and determine whether the adjacent property was used in connection with the insured premises. The Court of Appeals instead remanded the case to the trial court on the basis that the parties had not provided enough evidence from which to determine whether the adjoining property was used in connection with the insured premises.

[su_box title=”Kallas & Henk Note”] While there was evidence that the defendant often drove his vehicle on the adjoining property, our view is that the trial court should find that the adjacent property is not used in connection with the insured premises, and determine that the policy was not intended to extend to the property of third persons, particularly in that the owner of the adjoining property had posted a notice that the use of all-terrain vehicles was prohibited. [/su_box]


Ogg v Taylor

Decided December 6, 2012 Michigan Court of Appeals Docket No. 307196.

The plaintiff made a claim for uninsured motorist benefits more than one year after the accident in which she was injured. The auto policy under which she claimed such benefits contained a one-year limitation of actions period. The insurer denied liability because of the one-year limitation. The trial court held that, due to an order of the Michigan Office of Financial and Insurance Services, the one-year limitation of actions provision was unenforceable, and the Court of Appeals affirmed.

The OFIS order prohibits clauses in UM policies that limited the time in which to bring a claim to a period of less than 3 years. The order also prohibits modifications to such policies, unless the policy form had been issued by the insurer prior to the date of the order. The insurer attempted to argue that the form under which the plaintiff claimed benefits was the same form that had been issued prior to the OFIS order, however, the Court noted that there were significant changes to the form since the date of the order, and that the form was not in compliance with OFIS requirements.

[su_box title=”Kallas & Henk Note”] The insurer tried to argue that the endorsement really did not modify the existing policy, even though the terms of the endorsement specifically stated that it did. The Court did not follow this technical argument, but followed the OFIS order and determined that the limitation of action provision could not be enforced.  [/su_box]


United Services Auto. Ass’n v McDevitt Estate

Unpublished. Decided November 27, 2012 Michigan Court of Appeals Docket No. 307958.

The plaintiff issued a no-fault policy to the mother of the defendant-decedent, with whom he was residing, prior to joining the military. The defendant-decedent had previously resided in different households, including that of his father, and had returned to lie with his mother. As a condition of staying in her house, the mother insisted that the defendant-decedent either enroll in school or enlist in the military. The defendant-decedent decided to enlist and, after boot camp, but before being deployed, he caused an auto accident in which the underlying plaintiff’s decedent was killed. The plaintiff filed this action for a declaration that the policy, which identified an insured person as the named insured and any resident relatives, did not apply to the defendant-decedent.

The trial court held that the policy did provide coverage, and the Court of Appeals affirmed. The Court held that the trial court properly analyzed applicable case law to find that the totality of the circumstances demonstrated that the defendant-decedent was a resident relative of the insured’s household and that he intended to continue residing with his mother when not in active military service.

[su_box title=”Kallas & Henk Note”] The plaintiff attempted to argue that there was a difference between a person’s domicile and a person’s residence for purposes of coverage, suggesting that the defendant-decedent was domiciled in places other than with his mother and consequently he was not a resident relative. The Court dismissed the argument and relied on established case law to determine his status as a resident relative. [/su_box]


Auto Club Ins. Ass’n v Frankenmuth Mut. Ins. Co.

Unpublished. Decided November 29, 2012 Michigan Court of Appeals Docket No. 305592.

This case involves a priority dispute between the insurers over payment of personal protection insurance benefits. The party receiving such benefits was hit while trying to walk across a freeway. The plaintiff insured the vehicle owned by the driver involved in the accident, and it paid PIP benefits. When the plaintiff discovered that the mother of the injured party had insurance through the defendant, the plaintiff filed this action for a declaration that the defendant was first in priority for PIP benefits because the injured party was domiciled in her mother’s household.

The trial court agreed and held that the defendant was obligated to the injured party for PIP. The Court of Appeals affirmed, even though there was conflicting evidence as to the injured party’s domicile. While she lived a somewhat itinerant lifestyle, and had stated she did not intend to stay at her mother’s house, she continued to use that address for mail, her state-issued identification card, voter registration, telephone contract, and in an application for government benefits. She also kept possessions at the house and she had a room available to her. The only other possible domicile for the injured party were local hotels, which she clearly stated was not her intent for a permanent residence.

[su_box title=”Kallas & Henk Note”] The Court noted that while MCL 500.3115(1) places the insurer of a driver of the vehicle in the first order of priority, that provision of the No-Fault Act is subject to MCL 500.3114(1), which states that a PIP policy applies to the named insured and relatives domiciled in the same household. Based on the factors that the courts have found persuasive in determining domicile, the Court held that the injured party was domiciled with the defendant’s insured.  [/su_box]


Auto-Owners Ins. Co. v Tax Connection Worldwide, LLC

Unpublished. Decided December 4, 2012 Michigan Court of Appeals Docket No. 306860.

The plaintiff filed this action for a declaration that it did not have a duty to defend or indemnify the defendants in an underlying action related to unsolicited fax transmissions. The defendants maintained that the underlying claims arose out of an advertising injury that was covered by the terms of the general liability policy that the plaintiff had issued. The policy provided coverage for liability and damages arising out of the publication of material that invades a person’s right of privacy and, based on this language, the trial court held that the policy applied.

The Court of Appeals affirmed in that an insurer has a duty to defend claims that are arguably within the coverage provisions of the policy and unsolicited faxes arguably violate a person’s privacy rights. The Court also rejected the plaintiff’s argument that the policy should be declared void because the insured denied sending the faxes, but it was later determined that it had done so. The Court held that this was not the type of misrepresentation that would void a policy because there was no intent to defraud the plaintiff.

[su_box title=”Kallas & Henk Note”] Coverage for advertising liability typically is subject to an exclusion for the knowing violation of the rights of another, but this issue was not addressed in the opinion. Many policies now contain provisions by way of endorsement addressing the issues that are specific to unsolicited fax transmissions, which would probably dictate a different result.  [/su_box]

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