Michigan Coverage Decisions, Issue 44

Carolyn Ann Brooks v State Farm Mutual Auto Insurance Company et.al.

Unpublished. Decided November 19, 2002 State of Michigan Court of Appeals Docket No. 231898.

Plaintiff insured sought to compel arbitration of an uninsured motorist claim. The policy provided excess coverage because Plaintiff occupied a non-owned vehicle and the vehicle was driven by a driver with other insurance. The policy contained an arbitration clause providing specific time limits. It was undisputed that Plaintiff failed to provide the insurer with notice until five years after the accident. The insurer declined to arbitrate. The Trial Court granted summary disposition in favor of the insurer.

The Court of Appeals determined that Plaintiff’s failure to comply with the notice provisions precluded recovery.

[su_box title=”Kallas & Henk Note”] Based on this failure, the Trial Court decision was affirmed. The Court of Appeals followed precedent in Michigan which provides that uninsured/underinsured coverages can be limited in any way because they are not coverages mandated by law. [/su_box]

 

Amerisure Insurance Company, Subrogee v MBM Fabricators Company, Inc. et. al.

Unpublished. Decided November 19, 2002 State of Michigan Court of Appeals Docket No. 231753 and 236242 and 237616.

Plaintiff insurer sought reimbursement from contractors for benefits paid to its insured from a construction fire loss. Plaintiff insured the property owner against fire loss. The construction contracts waived the insurer’s right of subrogation. Based on the language in the construction contracts, the Trial Court granted summary disposition in favor of the insureds.

Plaintiff appealed, arguing that the subrogation waiver did not apply because they were not a party to the construction contracts. The Court of Appeals determined the construction contract language clearly expressed the parties’ intent, including the waiver of the insurer’s rights. The Court of Appeals affirmed.

[su_box title=”Kallas & Henk Note”] The Court applied rules governing subrogation to determine that the insurer’s rights were derivative of the rights of its insured. Because the specific provisions applicable to this loss waived all subrogation, the insurer’s rights were waived. With different terms in the construction contract, the insurer might have been able to pursue subrogation against the contractors.  [/su_box]

 

Adolphus Heath v State Farm Mutual Automobile Insurance Company et. al.

Unpublished. Decided November 19, 2002 State of Michigan Court of Appeals Docket No. 235030.

Plaintiff sought uninsured motorist benefits from Defendant due to an accident involving his motorcycle and an uninsured motorist. Plaintiff’s motorcycle was not listed as an insured vehicle on his policy. Coverage was denied under the other owned vehicle exclusion. The policy did not define the term “motor vehicle”. Trial Court granted summary disposition for Plaintiff.

Insurer appealed claiming “motor vehicle” includes a motorcycle under its ordinary meaning. The Court of Appeals agreed and reversed the decision of the Trial Court.

[su_box title=”Kallas & Henk Note”] By using the common meaning to define “motor vehicle”, the Court applied long-standing rules of contract interpretation. This decision is consistent with prior rulings addressing similar or identical policy language pertaining to the definition of motor vehicle.  [/su_box]

 

David Jajo d/b/a Eastern Meat Market v Hartford Casualty Insurance

Unpublished. Decided November 26, 2002 State of Michigan Court of Appeals Docket No. 23795.

Plaintiff sued for breach of contract for failure to pay for a fire insurance claim. Plaintiff was required to complete a proof of loss form. Plaintiff failed to sufficiently complete the proof of loss. The Trial Court granted summary disposition in favor of the insurer.

The Court of Appeals determined that failure to provide specific information regarding the value of an insurance loss did not constitute substantial compliance with the proof of loss requirement affirmed.

[su_box title=”Kallas & Henk Note”] The Court analyzed Michigan’s substantial compliance performance of the contract rule to reach its decision. The Court reviewed the intended purposes for the proof of loss requirement and applied the factual circumstances of this claim to find Plaintiff’s proof insufficient to satisfy substantial compliance.  [/su_box]

 

Pioneer State Mutual Insurance Co. v Timothy and Deidra Splan

Unpublished. Decided August 24, 2001 State of Michigan Court of Appeals Docket No. 220477 Michigan Supreme Court Docket No. 120366 decided November 27, 2002.

Plaintiff insurer sought determination that there was no coverage under a homeowners policy. The insureds submitted a proof of loss showing the cause of loss as collapse. The insurer concluded the damages were caused by structural defects. The insurer relied on the defective design exclusion and the definition of “collapse” to preclude coverage. The Trial Court granted summary disposition in favor of Plaintiff.

The Court of Appeals found “collapse” was ambiguous and found that substantial impairment of the structural integrity was “collapse”. The Court also determined other policy provisions and exclusions did not affect the additional coverage for “collapse”. Accordingly, Court of Appeals reversed and remanded.

The Supreme Court determined “collapse” to be unambiguous and vacated the Court of Appeals’ decisionand remanded for reconsideration of factual issues regarding causation, whether collapse occurred and applicable coverage, if any.

[su_box title=”Kallas & Henk Note”] The Supreme Court held that the policy language must be interpreted according to policy definitions, not the Court’s own interpretation. The parties also disputed which edition of the policy applied, but the Court determined that this was irrelevant because the disputed language was identical in all editions. We previously reported the Court of Appeals decision in this case in our December 2001issue.  [/su_box]

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