Kay Wilkie v Auto Owners Insurance Co.
Decided July 16, 2003 Michigan Supreme Court Docket No. 119295.
This case involves a dispute between the insurer and its insureds over underinsured motorist coverage and limitation on recovery. The insurer claims recovery is limited to the difference between the under insured motorist limit and the liability limits of the at-fault driver. Insureds claim that because they were required to share the at-fault driver’s limits that they are entitled to the difference between what they were actually paid and the underinsured motorist limit. The Trial Court and Court of Appeals agreed with the insureds’ reasonable expectations argument for underinsured motorist benefits owed.
The Supreme Court reversed finding the contract to be unambiguous and enforceable according to its terms. The amount owed is limited to the difference between the under insured motorist limit and the entire liability limits of the at-fault driver. The Supreme Court determined the rule of reasonable expectation has no application to unambiguous contracts.[su_box title=”Kallas & Henk Note”] By its decision, the Court eliminated the long-standing rule of reasonable expectations in Michigan. This is significant because many insureds attempt to use the rule of reasonable expectation to “find coverage”. [/su_box]
McBrien v Titan Insurance Company et al.
Unpublished. Decided June 24, 2003 Michigan Court of Appeals Docket No. 238045.
Defendant insurer denied plaintiff’s auto claim due cancellation for nonpayment. Plaintiff’ failed to pay the renewal. Directed by the agent, Plaintiff made payment that was not received. Plaintiff sued the agent for negligence and misrepresentation and the insurer on the basis of estoppel. Trial Court granted summary disposition in favor of the agent on the ground no duty was owed to plaintiff and in favor of the insurer finding that plaintiff’s reliance on coverage was unreasonable.
The Court of Appeals determined a recognized cause of action for an agent’s failure to procure requested coverage and issues of fact as to whether the plaintiffs’ reliance on the agent’s representation about reinstatement were reasonable. The Court of Appeals reversed and remanded both summary dispositions finding factual circumstances about the reinstatement made summary disposition improper. Under estoppel principles, the Court expanded policy coverage but did not directly address whether the agent was the agent of the insurer. The decision indicates that implicitly the Court found the agent to represent the insurer.[su_box title=”Kallas & Henk Note”] This decision is based on specific factual circumstances . [/su_box]
Arbor Woods Associates v Amerisure Insurance Company
Unpublished. Decided July 1, 2003 Michigan Court of Appeals Docket No. 237419.
Plaintiff insured filed a declaratory action seeking coverage from its general liability insurer for a number of third-party water damage suits. Defendant insurer argued no “occurrence” and no “property damage” as defined and exclusions also eliminated coverage. The Trial Court determined no coverage existed because there was no “occurrence” and granted summary disposition for the insurer.
Court of Appeals vacated and remanded determining that neither party had demonstrated their position as to whether or not there was an “occurrence” stating that the factual record did not resolve the disputed facts sufficiently to determine coverage.[su_box title=”Kallas & Henk Note”] Due to the class-action lawsuit against the insured, the Court’s decision reflected its concerns about making a coverage determination with a myriad of factual scenarios leading to the individual damages. [/su_box]
Hastings Mutual v James LeGrow et. al
Unpublished. Decided July 1, 2003 Michigan Court of Appeals Docket No. 238923, 238941 and 239023.
Plaintiff insurer sought a declaration that no coverage existed under a homeowner policy for third party lawsuits claiming violation of MCL 750.539d(secret observation of a private place felony statute), invasion of privacy and intentional infliction of emotional distress. The insured surreptitiously videotaped sexual acts involving the third parties. The trial Court granted judgment in favor of the insurer finding coverage was eliminated under an exclusion for injuries caused by a violation of a penal law or ordinance committed knowingly by an insured.
The Court of Appeals acknowledged that the policy provided coverage for enumerated “offenses”, with exceptions for offenses which violate penal statutes. The Court of Appeals upheld the Trial Court finding that the insured’s secret videotaping constituted a violation of a penal statute for videotaping a “private place” and was excluded.[su_box title=”Kallas & Henk Note”] Following the rules of policy construction, the Court rejected the ambiguity argument because a fair reading of the policy lead only one possible conclusion. [/su_box]
Hastings Mutual v Kelly Scott Rundell et. al
Unpublished. Decided July 1, 2003 Michigan Court of Appeals Docket No. 238549.
Plaintiff insurer sought a declaration that a homeowner policy did not apply to a shooting incident.The insured’s son shot a third party. The Trial Court granted judgment in favor of the insurer finding 1) the shooting was not an “occurrence”, 2) intentional acts exclusion applied, 3) mental illness did not negate an intentional act, and 4) derivative negligent conduct is also excluded.
The Court of Appeals agreed even assuming an occurrence, intentional acts are excluded. The Court further stated that the insured did not provide valid legal arguments for his position that coverage should exist.[su_box title=”Kallas & Henk Note”] The Court relied on Auto-Owners Ins Co v Churchman to support its determination that mental illness does not negate an intentional acts exclusion. [/su_box]
Farmers Insurance v Christopher Kurzmann et. al
Published. Decided July 3, 2003 Michigan Court of Appeals Docket No. 238008 and 239778.
Plaintiff auto insurer disclaimed coverage because the policy excluded liability for bodily injury to an insured person. Insured person was defined as you or any family member. The insured’s son was injured and sued his father, the vehicle owner, in a third-party action. The Trial Court denied the insurer’s motion for summary disposition and granted judgment in favor of the insured finding the policy ambiguous because it stated it was in compliance with financial responsibility laws but included an invalid limitation on liability coverage for bodily injury to its insureds.
The Court of Appeals affirmed the trial Court specifically finding that the policy was ambiguous and public policy precluded any policy from including an “insured person” exclusion due to financial responsibility law requirements.[su_box title=”Kallas & Henk Note”] The Court relied on the Supreme Court decision in State Farm v Sivey addressing the same issue in its determination. [/su_box]