Michigan Coverage Decisions, Issue 51

Terrell Moss v Farmers Insurance Exchange

Unpublished. Decided October 2, 2003 Michigan Court of Appeals Docket No. 24039.

This case involves a dispute between the insurer and its insureds over uninsured motorist coverage and the policy notice requirement for a hit and run accident. The uninsured motorist provision requires notice within 30 days for a hit and run accident. Plaintiff was injured in a hit and run accident, but did not notify his insurer until nearly two years after the accident. The Trial Court granted the insurer’s motion for summary disposition agreeing that Plaintiff did not comply with policy notice requirements.

[su_box title=”Kallas & Henk Note”] The Court of Appeals affirmed the Trial Court, noting that the scope of uninsured motorist coverage is determined by policy language and contract law. This decision is consistent with prior decisions that uninsured motorist coverage is determined solely by the contract provisions.  [/su_box]

 

Modern Service Ins. Co. v Rachel Finkel et. al.

Unpublished. Decided October 7, 2003 Michigan Court of Appeals Docket No. 237161.

Plaintiff auto insurer filed a declaratory action seeking a judgment that no defense or indemnity was owed for its insured’s action of hitting and injuring a third party with an automobile. The injured party’s auto insurer intervened arguing Plaintiff had a duty to provide coverage. The Trial Court granted the intervening insurer’s motion for summary disposition finding coverage under Plaintiff insurer’s auto policy.

On appeal, Plaintiff argued its policy only covered “accidents” and excludes coverage for intentional acts. The Court of Appeals determined that the No-Fault Act precluded an “intentional acts” exclusion under an auto liability insurance policy and upheld the Trial Court.

[su_box title=”Kallas & Henk Note”] The Court relied on the reasoning used in DAIIE v. Higginbotham to make its ruling. The Court noted that the Trial Court used different reasoning, but reached the right result. [/su_box]

 

Jerome Wobio, Jr. v Farmers Insurance Exchange

Unpublished. Decided October 14, 2003 Michigan Court of Appeals Docket No. 240991.

Plaintiff sued to collect uninsured motorist benefits from his insurer for the death of his nonresident grandson. The grandson was killed in an auto accident involving a vehicle not insured under the Plaintiff’s policy. Plaintiff based his claim to recovery on the definition of “bodily injury” which includes the “death of any person.” The Trial Court denied insurer’s motion for summary disposition.

The Court of Appeals determined that the disputed provision required “bodily injury” must be sustained by the insured person to qualify for uninsured motorist coverage. Plaintiff did not follow the definition in context of the policy language in his argument for coverage. The Court of Appeals reversed the Trial Court’s denial and ordered summary disposition in favor of the insurer.

[su_box title=”Kallas & Henk Note”] The Court determined that interpretation requires looking to the contextual understanding and consider the phrase as a whole to determine the proper meanings.  [/su_box]

 

City of Grosse Pointe Park v Michigan Municipal Liability & Property Pool

Unpublished. Decided October 30, 2003 Michigan Court of Appeals Docket No. 228347.

Plaintiff insured sued for insurer’s refusal to pay the portion of a class action settlement for which Plaintiff was responsible. Insurer refused payment due to an absolute pollution exclusion. The Trial Court granted Plaintiff’s summary disposition based on equitable estoppel because of past claims payments by the insurer, sewage discharges constituted “occurrences” and the insurer owed the settlement payment.

In a split decision, the Court of Appeals reversed the Trial Court’s grant of summary disposition on the pollution exclusion and equitable estoppel finding questions of fact existed regarding the parties’ intent on application of the pollution exclusion, whether equitable estoppel applied to this circumstance, and ordered review of additional exclusions. The Court upheld the Trial Court’s determination that the sewage discharges qualified as “occurrences”.

[su_box title=”Kallas & Henk Note”] The minority opinion would have entered judgment in favor of the insurer based on the unambiguous policy exclusion and rules of contract construction rather than apply estoppel principles.  [/su_box]

 

Aero-Motive Company v Great American Insurance

Decided November 7, 2003 United States District Court Western District of Michigan Case No. 1:03-CV-55.

Plaintiff insured claims that its commercial general liability insurer owes coverage relating to pollution cleanup at the insured’s manufacturing facility. Insured sought coverage for pollution generated from a “ state of the art” disposal pit. Defendant insurer denied coverage under the “sudden and accidental pollution exclusion” clause.

The Court found the insured did not meet its burden of proving coverage existed for dumping in the disposal pit due to the insured’s strained application of the definition of “sudden and accidental”.The Court held the pollution exclusion applied to preclude coverage.

[su_box title=”Kallas & Henk Note”] The first decision relating to this case was reported on in our November 2003 Coverage Reporter. In disclaiming coverage, the Court relied on prior case law definitions as providing specific and well-recognized meanings and would not apply alien construction merely for the purpose of benefitting an insured. [/su_box]

 

Dale Osburn, Inc. v Auto-Owners Ins. Co. et. al.

Unpublished. Decided November 18, 2003 Michigan Court of Appeals Docket No. 242313.

Plaintiff sued for breach of contract for denial by its insurer for payment of contractual indemnity payments owed in a third-party action. Defendant insurer denied payment under a contractual liability exclusion. The Trial Court granted insurer’s motion for summary disposition finding the policy excluded the contractual liability and the reservation of rights letter informed Plaintiff so estoppel did not expand policy coverage.

The Court of Appeals agreed that the contractual liability exclusion precluded coverage. However, the Court found the reservation of rights letter sent by the insurer did not provide reasonable notice, therefore, the insurer was estopped from denying coverage.

[su_box title=”Kallas & Henk Note”] The Court focused on specific wording of the reservation of rights to expand the policy coverage to require payment by the insurer. The Court broadly applied the reasonable notice requirement for purposes of waiver and estoppel. [/su_box]

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