Michigan Coverage Decisions, Issue 19

Singer vs. American States Insurance

Published. Decided December 5, 2000. Michigan Court of Appeals Case Number 217148.

Plaintiff sold his residence on a land contract. The purchaser bought property insurance from the defendant. Plaintiff was named as a “contract holder” on the declarations page. The purchaser defaulted on the land contract and quitclaimed her interest in the property back to the Plaintiff and then leased the home from Plaintiff. A fire destroyed the property and Plaintiff made claim under the policy. Defendant rejected Plaintiff’s claim taking the position that only the named insured was entitled to recover for loss to the property. The trial court granted summary disposition to defendant.

The Court of Appeals reversed and directed the Trial Court to enter judgment in favor of Plaintiff. The Court found dispositive the fact that certain terms of the policy contemplated that persons other than the named insured would have an insurable interest and be entitled to payment in the event of a loss. Specifically, the designation of Plaintiff as a “contract holder” indicated to the Court that payment to Plaintiff was contemplated.

[su_box title=”Kallas & Henk Note”] Defendant’s position in this case was clearly untenable. A footnote suggests that the insurer believed that Plaintiff had something to do with causing the fire. No such defense was raised, however, and the Court of Appeals properly held that a land contract holder can recover where the contract holder is specifically identified and the policy language contemplates such a recovery. [/su_box]


Allstate Insurance Company v Goss and Findlay

Unpublished. Decided December 26, 2000. Michigan Court of Appeals Docket Number 219955.

In this action, Plaintiff homeowner’s insurer sought declaratory relief. Plaintiff’s insured was involved in some type of altercation and Plaintiff asked the Court to find that it had no duty to defend or indemnify the insured in an underlying lawsuit arising out of the altercation. The Trial Court granted summary disposition in favor of the insured finding that the Plaintiff had a duty to defend and indemnify.

The Court of Appeals, in this decision, reversed the Trial Court on the duty to indemnify holding that it was a jury question whether the insured’s actions were accidental or intentional. The Court of Appeals did find that because there was a jury question as to whether the insured’s actions were accidental or intentional, there was a duty to defend the underlying action.

[su_box title=”Kallas & Henk Note”] The Court of Appeals in this decision based its ruling on the Supreme Court decision in Nabozny vs. Pioneer State Mutual, 461 Mich 471; 606 NW2d 639 (2000). The Trial Court’s decision was based on the Court of Appeals’ decision in Nabozny which was reversed by the Supreme Court. The decision of the Court of Appeals, however, on the issue of duty to defend is curious and, in our opinion, erroneous. It is difficult to reconcile this decision with prior decisions which held that where only intentional actions are alleged, there is no duty to defend or indemnify, irrespective of the accuracy of the allegations. This panel of the Court of Appeals seems to be saying that if a jury trial is required on the coverage questions, there is, automatically, a duty to defend. Because the decision does not tell us exactly what was alleged in the underlying lawsuit against the insured, it is difficult to determine if this decision is simply contrary to Michigan law or if the appellate briefs failed to raise the proper issues.  [/su_box]


Hill-Haynes vs. Automobile Club Insurance Association

Unpublished. Decided January 2, 2001. Michigan Court of Appeals Docket Number 214768.

Plaintiff was injured by an automobile driven by Suzanne Comer. Ms. Comer was driving an automobile owned by her live-in boyfriend. She was insured by the Defendant. Coverage was sought under her automobile liability coverage. The insurer denied on the basis that the vehicle she was driving (her boyfriend’s) did not fit the definition of “other car”. The definition of “other car” specifically excluded vehicles furnished or available to the insured for frequent or regular use.

The Trial Court granted summary disposition in favor of Plaintiff finding there was coverage under the policy. The Court of Appeals reversed finding that the definition of “other car” in the policy was unambiguous in excluding vehicles available for regular use by the insured and also finding that it was undisputed that the boyfriend’s vehicle was available to her for regular use.

[su_box title=”Kallas & Henk Note”] The Court of Appeals in this case relied on the recent Supreme Court decision in Farm Bureau vs. Nikkel, 460 Mich 558; 596 NW2d 915 (1999). This is the first case to address the common circumstance of unmarried couples living together and, when convenient, using each other’s vehicle. [/su_box]


State Farm Mutual Automobile Insurance Company v Smith et al

Unpublished. Decided January 16, 2001. Michigan Court of Appeals Docket Number 21918.

Plaintiff provided automobile insurance to Valerie Smith. The policy excluded coverage for Steven Smith. Steven Smith was involved in an accident while driving the subject vehicle. Plaintiff insurer filed this declaratory action seeking a ruling from the court that it had no duty to defend or indemnify the Smiths in the underlying personal injury lawsuit. The Trial Court granted a directed verdict in favor of defendant insureds on the basis that Plaintiff had failed to prove that the certificate of insurance issued to Valerie Smith contained language required by the State of Michigan when a driver is excluded from coverage. The Trial Court held that because State Farm could not produce a copy of the certificate, it failed to prove that it had included the appropriate state mandated language.

In this decision, the Court of Appeals reversed finding that the testimony of the Plaintiff’s representative, to the effect that the required language was on the declaration sheet and would have been included on all certificates (including the one for the date of the accident), was sufficient to establish the fact and that production of a copy of the actual certificate was not required.

[su_box title=”Kallas & Henk Note”] Michigan courts have required that insurers strictly comply with a requirement under MCL 500.3009 (2) that a certificate of insurance must include specific language warning that when an excluded person operates the vehicle that all coverage is void and owners of the vehicle and others remain fully personally liable. Prior decisions have held that, unless the insurer includes this language, driver exclusions are invalid even where it can be shown that the insureds knew of and consented to the exclusion. In this decision, the insureds attempted to take advantage of this prior case law by arguing that the failure to produce a copy of the certificate was equivalent to a failure to show that the warning was contained on the certificate. [/su_box]

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