Michigan Coverage Decisions, Issue 23

State Farm v Johnson

Unpublished. Decided May 4, 2001. Michigan Court of Appeals Docket Number 218225.

In this declaratory action, Plaintiff insurer sought a ruling that it had no duty to provide uninsured motorist coverage to Defendant. Defendant was standing alongside her vehicle pumping gas in a privately owned station. An uninsured farm tractor moved forward and struck Defendant’s vehicle causing injuries to her. The Trial Court granted summary disposition to Plaintiff insurer on the basis that the uninsured motorist coverage unambiguously excluded from the definition of uninsured motor vehicle a land motor vehicle “designed for use mainly off public roads except while on public roads.”

A majority of the panel at the Court of Appeals reversed finding that the above quoted definition was ambiguous and could be interpreted to include vehicles designed for use off roads but being used in the type of operation in which the tractor would be going to and from farms or when used on the road for hauling. The Court held that under this interpretation of the definition, the tractor in question was being used to go to and from a farm.

[su_box title=”Kallas & Henk Note”] There is a dissent in this case. The dissent would find that the policy language was unambiguous and that “any sensible definition of a public road clearly does not include a privately owned gas station which is neither public nor a road”. We would predict that the Michigan Supreme Court would reverse the majority and adopt the dissenting opinion if it reviews the decision.  [/su_box]


Macintosh v Auto Club Insurance Association

Unpublished. Decided May 15, 2001. Michigan Court of Appeals Docket Number 222295.

Plaintiff sought coverage under her uninsured motorist coverage for injuries she sustained when she swerved to avoid a vehicle and struck a curb. The operator of the other vehicle is unknown and there was no physical contact between the vehicles. The Trial Court granted summary disposition on the basis that the uninsured motorists coverage requires physical contact between the insured vehicle and a hit and run driver.

The Court of Appeals affirmed finding that the facts were undisputed that there was no contact between the vehicles and any damage done to the insured vehicle was a result of its impact with the curb.

[su_box title=”Kallas & Henk Note”] This decision is consistent with prior decisions interpreting the contact between vehicles requirement contained in most uninsured motorist policy language.  [/su_box]


Z & R Electric Service, Inc. v Cincinnati Insurance Company

Unpublished. Decided June 5, 2001. Michigan Court of Appeals Docket Number 226605.

Plaintiff was hired to build a condenser system. After installation of the system, the motor failed on two occasions and plaintiff incurred significant costs to repair the system. Plaintiff sought reimbursement from Defendant under its commercial general liability policy. The Trial Court granted summary disposition to Defendant insurer on the basis that the business risks exclusions applied to eliminate coverage.

The Court of Appeals in this decision affirmed but for different reasons. The Court of Appeals held that because the damage was to the insured’s work product and not to the property of others, the claim did not satisfy the “occurrence” requirement of the policy. Because the Court held that the basic insuring agreement did not provide coverage because this was not an “occurrence”, there was no need to address the business risks exclusions.

[su_box title=”Kallas & Henk Note”] The Court in this case relied heavily on the prior decision in Hawkeye-Security Insurance Co. vs. Vector Construction, 185 Mich App 369; 460 NW2d 329 (1990). In that case, the Court of Appeals simply held that for an incident to be an “occurrence” there had to be damage to a third party for which claim is made against the insured.  [/su_box]


Hilderbrandt v Westfield Insurance Company and Travelers Casualty & Surety Co.

Unpublished. Decided June 5, 2001. Michigan Court of Appeals Docket Number 220340.

In this garnishment action, Plaintiff sought to recover a judgment entered against Defendant Westfield’s insured resulting from personal injury sustained on a construction site. Defendant Westfield provided a commercial general liability policy to ETC, an engineering firm that “designed the watermain project” involved, “assisted in preparation of the bidding documents, and recommended to whom the did should be awarded.” The allegations of the underlying personal injury lawsuit against ETC involved claims of failure to recognize safety issues and advise regarding safety issues. Westfield had denied coverage on the basis of a “professional services” exclusion in its policy. The Trial Court granted summary disposition to Plaintiff finding that there was coverage.

In this decision, the Court of Appeals reversed the Trial Court finding that the “professional services” exclusion did apply to eliminate coverage based on the specific allegations made against the insured in the underlying action. The Court held that the allegations required specialized knowledge and expertise and did constitute professional services.

[su_box title=”Kallas & Henk Note”] In analyzing prior decisions, the opinion finds that the Michigan cases accept a broad view of the term “professional services” and that the fact that a nonprofessional may perform the same function under different circumstances does not mean that the services are not professional in nature. It should also be noted that the factual backdrop of this case is that the insured failed to obtain professional liability coverage which would certainly have responded to the underlying lawsuit.  [/su_box]


McKusick v Travelers Indemnity Company and Hi-Tech Engineering, Inc.

Published. Decided June 8, 2001. Michigan Court of Appeals Docket Number 221171.

Plaintiffs were injured as result of exposure to TDI, a toxic substance, when a hose failed. High-Tech Engineering designed and manufactured the hose delivery system. Coverage was sought for the injuries under High-Tech’s commercial general liability policy issued by Defendant. The Trial Court granted summary disposition to Defendant on the basis that its “absolute pollution exclusion” endorsement eliminated coverage.

In this decision, the Court of Appeals affirmed the grant of summary disposition specifically rejecting Plaintiff’s argument that the Pollution Exclusion Endorsement was designed to address only traditional forms of pollution damage to the general environment and was not intended to preclude coverage for bodily injury resulting from products liability. The Court held that it was not necessary to determine the intent in formulating the endorsement was not necessary where the policy language was clear and unambiguous.

[su_box title=”Kallas & Henk Note”] This is a case of first impression in Michigan. There are no other Michigan decisions applying a pollution exclusion in similar circumstances. Caution should be used with this case, however, because the opinion is careful to state that it is dependent on specific language used in this particular endorsement. The specific language used is not universal to all exclusions and endorsements labeled “absolute pollution exclusion”.  [/su_box]

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