Michigan Coverage Decisions, Issue 45

Benjamin Park v American Casualty Insurance Co. et. al.

Unpublished. Decided December 13, 2002 State of Michigan Court of Appeals Docket No. 231451.

Plaintiff sought coverage for uninsured motorist benefits for injuries suffered while driving a vehicle for his employer. The policy provided uninsured motorist coverage would be reduced by benefits paid or payable under worker’s compensation, disability or similar law. The arbitration award entered only offset actually received amounts. The Trial Court order confirmed the arbitration award.

Defendant insurer appealed arguing the arbitration panel improperly applied setoff by only reduction for actually received amounts. Insurer argued “payable” means any amounts to which entitlement exists currently or in the future. The Court of Appeals agreed with this definition and reversed the Trial Court’s affirmation of the award.

[su_box title=”Kallas & Henk Note”] The Court followed previous cases to define “payable”. The Court noted that interpreting “payable” in this manner prevented double recovery which comports with the Legislature’s intent that parties injured in auto accidents on the job should only be entitled to the same compensation as any other auto accident victim. [/su_box]

 

Encompass Insurance v Dominic Riggio et. al.

Unpublished. Decided January 24, 2003 State of Michigan Court of Appeals Docket No. 235574.

Plaintiff homeowner’s insurer sought a declaration that it was not required to defend its insured from an assault and battery action. The insured was sued after he restrained a third party during a fight and the third party was injured. Insurer determined that the acts fell within the intentional acts exclusion. The Trial Court granted summary disposition in favor of insurer.

Insured appealed claiming he did not intend to injure the third party by restraining him. The Court of Appeals found the insured engaged in an intentional act – the restraint action. Such intentional action could result in consequences creating a direct risk of harm. The Court of Appeals affirmed the Trial Court.

[su_box title=”Kallas & Henk Note”] This case follows the extensive line of Michigan cases holding that where actions are intended, and injury is directly foreseeable, no coverage exists. [/su_box]

 

Marcia and Charles Wells v Hamilton Mutual Ins. Co. et. al.

Unpublished. Decided January 28, 2003 State of Michigan Court of Appeals Docket No. 233480.

Plaintiff insureds sued to recover payment after a fire. Defendant insurers denied coverage claiming arson. Plaintiffs and the agent agreed to increase policy limits before the fire. Defendants filed motions arguing wilful noncompliance with conditions precedent based on insured’s failure to provide certain reports and taped conversations to the company. The trial court denied insurers motions for summary disposition for noncompliance with conditions precedent and extent of policy coverage. After a jury trial, judgment was entered in favor of plaintiff.

Defendant insurers appealed arguing noncompliance with conditions precedent and no agreement to increase coverage. The court found questions of fact existed as to whether the insured substantially complied with the policy conditions precedent and whether a legally enforceable agreement existed to increase coverage and the questions were properly submitted to the jury for determination. The Court of Appeals also held competent evidence supported the jury’s verdict and affirmed the judgment.

[su_box title=”Kallas & Henk Note”] The court examined the detailed factual record to determine whether questions existed as to Plaintiffs’ sufficient cooperation to comply with the policy requirements and the increase in coverage limits. [/su_box]

 

Jayne M. Uber v TIG Specialty Ins. Co. et. al.

Unpublished. Decided January 31, 2003 State of Michigan Court of Appeals Docket No. 232687.

Plaintiff sought a declaration that defendant insurer owed indemnity for injuries suffered in a horseback riding accident. Plaintiff obtained a consent judgment, with an assignment of rights, from Defendant insurer’s policyholder. Insurer denied coverage on the basis that the policy did not cover horseback riding activities. The Trial Court granted summary disposition in favor of insurer finding that the allegations did not fall within the policy coverage.

On appeal, Plaintiff argued that the term “concession” included horseback riding activities. The Court determined, using plain meanings, the unambiguous terms of the policy did not cover any riding stable or horseback riding activities under the definition of “concession”. The Court of Appeals affirmed summary disposition.

[su_box title=”Kallas & Henk Note”] This decision is consistent with the rules used in contract construction, requiring reviewing Courts to interpret contract terms and all non-technical words and phrases according to their commonly used meanings. [/su_box]

 

Nancy and Jess A. Holton v A+ Insurance Associates, Inc. et. al.

Published. Decided February 11, 2003 State of Michigan Court of Appeals Docket No. 234134.

Plaintiffs sued to recover a shortfall in payment after a house fire claiming that Defendant insurance agents, negligently failed to place adequate coverage limits. Plaintiffs notified the agent to increase policy limits due to remodeling. Construction problems occurred and the roof caught fire, destroying the second story, exceeding policy limits. The insurer refused to pay the shortfall. Defendants filed notice of non-party fault allocating fault for causing the fire to Plaintiffs. The Trial Court held that non-party fault was improper because the allegations were based on the procurement of inadequate insurance rather than the cause of the fire.

The Court determined comparative fault allegations would have been proper, but only for apportionment of fault relative to the placement of proper insurance not the underlying cause of loss. The Court of Appeals affirmed.

[su_box title=”Kallas & Henk Note”] Under the statutes applying comparative fault, such comparative negligence doctrines do not create fault where none could exist. The factual basis for Defendants allocating fault was not a separate cause of action based on duty of the insurance agent, which was the basis of the Plaintiff lawsuit.  [/su_box]

 

Elbert Mahaffey v CNA Insurance Co. et. al.

Unpublished. Decided February 14, 2003 State of Michigan Court of Appeals Docket No. 235022.

Plaintiff insured was injured in an accident with an uninsured car. The uninsured motorist coverage required a threshold injury. Defendant insurer denied uninsured motorist benefits based on its determination that no threshold injury had occurred. A jury rendered judgment in favor of Plaintiff.

On appeal, Insurer argued that the jury was not entitled to hear evidence on the reason for denial. The Court of Appeals determined the evidence was admissible and no evidence refuted Plaintiff’s threshold injury. Any evidence offered on the reason for denial did not affect the insurer’s substantial rights. Therefore, the jury award was affirmed.

[su_box title=”Kallas & Henk Note”] The Court followed the terms of the contract to determine the existence of coverage. If the insurer had presented contrary evidence that no threshold injury existed, the ruling may have resulted in a finding of no coverage.  [/su_box]

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