Frankenmuth Mutual v Anolick
Unpublished. Decided March 9, 2001. Michigan Court of Appeals Docket Number 218392.
The Defendant construction subcontractor’s employee was injured on a construction site. The employee sought damages for bodily injury from the general contractor. The general contractor sought indemnification from the Defendant pursuant to the contract entered into between the parties which required indemnification for damages for bodily injury to the Defendant’s employees. Defendant sought coverage from Plaintiff under its commercial general liability policy. Plaintiff insurer initiated this declaratory action seeking a ruling from the Court that it had no coverage because of the “contractual liability exclusion” in the insurance policy.
The Trial Court granted summary disposition to Plaintiff finding that the exclusion eliminated coverage because the “insured contract” exception to the exclusion was inapplicable. The Trial Court found the exception did not apply because the agreement to indemnify occurred after the injury to the employee.
The Court of Appeals reversed the Trial Court finding that the “contractual liability exclusion” did not apply because the agreement to indemnify was contained in an “insured contract”. The Court found that the mere fact that the contract was signed after the injury did not mean that there was not an agreement in place prior to that time. The Court held that the agreement commenced upon acceptance of the job or commencement of the work, both of which were prior to the injury.[su_box title=”Kallas & Henk Note”] The Court of Appeals was unwilling to find that a writing is necessary to constitute a “contract or agreement” as used in the contractual liability exclusion. The Court rejected the insurer’s argument that because the agreement containing the indemnification language was not signed until after the injury that it was not executed earlier. The Court also noted that any ambiguity with regard to the meaning of the term executed must be interpreted against the insurer. [/su_box]
Fremont Mutual Insurance Company v Stinnett
Unpublished. Decided March 13, 2001. Michigan Court of Appeals Number 216603.
Plaintiff brought this action seeking a ruling that it had no obligation to provide coverage to Defendant under a homeowners policy issued to the Defendant’s mother on the basis that Defendant did not reside in the mother’s household. Defendant brought a motion for summary disposition seeking a ruling, as a matter of law, that Defendant was a resident of the mother’s household. The Trial Court denied Plaintiff’s motion.
The Court of Appeals affirmed the denial of the motion for summary disposition finding that there was an issue of fact with regard to the Defendant’s residence. The Court found there was a factual dispute on the residency issue because Defendant spent considerable time at two different homes.[su_box title=”Kallas & Henk Note”] The most significant aspect of this case is the following statement by the Court: “Where Stinnett considered his residency to be at the time of the dog attack is not dispositive of this issue”. While prior cases have held that the trier of fact is to consider a variety of factors for purposes of determining residency, there has never been a finding that residency could be somewhere other than where the insured believed the residence to be. [/su_box]
Lansing Board of Water and Light v Deerfield Insurance Company
Decided March 22, 2001. United States District Court Case Number 5:00-CV-131.
Plaintiff brought this declaratory action seeking an order of the Court that defendant insurer has a duty to defend and indemnify Plaintiff in a pending action against Plaintiff. Defendant brought a Motion to dismiss under the FRCP on the basis that (1) the insurance policy “No Action” clause prohibited an action against the insurer before resolution of the underlying action and (2) there was no actual controversy between the parties sufficient for a declaration of rights because Defendant is defending Plaintiff in the underlying lawsuit.
In this decision, the Court denied Defendant’s Motion on the basis that the “No Action” clause in the policy in question is different from policies with true “No Action” clauses in that in the subject policy, the insured is prohibited from bringing any “legal action”. The Court distinguished actions at law from equitable relief (such as declaratory actions) and found that the policy only prohibited actions at law. The Court also found that there was an actual controversy because Defendant had, in a reservation of rights letter, itself threatened to bring litigation for a declaration of rights.[su_box title=”Kallas & Henk Note”] The policy language in the subject policy in this case was somewhat unusual in its “No Action” clause. The Court was correct in distinguishing between legal actions and equitable actions. The Court’s findings with regard to an actual controversy are questionable. While the Court was interpreting Michigan law, it used federal standards for declaratory actions. It is our opinion that, under Michigan law and procedures, a declaratory action brought by an insured seeking a ruling that there is a duty to defend and indemnify is premature where the insurer is defending the underlying suit for the reason that if the insured receives a no cause in the underlying action or if the matter is otherwise resolved, there is no need whatsoever for Court intervention on the coverage question. [/su_box]
Nowell v Titan Insurance Company
Unpublished. Decided March 23, 2001. Michigan Court of Appeals Docket Number 218229.
Plaintiff was a passenger in an automobile owned by Isley. Isley had auto coverage with Defendant. Defendant sent a notice of cancellation for nonpayment of premium on Feb. 20, 1997. The notice advised that the policy would be canceled effective March 5, 1997 at 12:01 AM. The accident involving Plaintiff occurred later that same day. Isley was in jail and claimed that he discovered the notice of cancellation for the first time on March 11, 1997 when he was released. Plaintiff brought this action seeking benefits under the policy on the basis that the policy had not been effectively canceled because Isley did not receive notice of cancellation at least ten days prior to the cancellation as required by Michigan law.
The Trial Court granted summary disposition to Plaintiff based on Isley’s affidavit stating he did not receive notice until March 11, 1997. The Trial Court rejected Defendant insurer’s argument that Isley’s affidavit did not rebut the statutory presumption that notice is received if properly mailed.
The Court of Appeals affirmed the summary disposition in favor of Plaintiff finding that the Trial Court was correct in its ruling that the testimony of Isley was sufficient to rebut the presumption of receipt. The Court of Appeals relied on a series of cases finding that in order for cancellation to be effective, the insurer must prove actual receipt.[su_box title=”Kallas & Henk Note”] This is a curious decision from the Court of Appeals. While the Court was justified in relying on prior appellate decisions finding that the carrier must prove actual receipt in order for the cancellation to be effective, the Court did not state why there was no dispute as to the facts (when the notice was actually received by Isley) given that the notice was mailed 13 days before the date of cancellation. There’s also nothing in the opinion on when Isley went to jail (the opinion notes he got out on March 11, 1997). It is our opinion that this decision is largely a product of a very Plaintiff oriented panel of the Court of Appeals.
It is also our opinion that the line of cases which hold that an insurer must prove actual receipt by the insured is suspect. We are attacking the holding in those cases in a presently pending action on the basis that they are contrary to the statute governing cancellation of insurance policie. The statute only requires that the carrier prove that it properly mailed the notice of cancellation at least ten days prior to the date of cancellation. The cases that hold otherwise are derived from decisions interpreting a predecessor statute that required actual notice. Because of the present status of the case law, we recommend that carriers send notices of cancellation by certified mail, return receipt requested, even though there’s nothing in the cancellation statute requiring proof of receipt. [/su_box]