Miles v. State Farm Mut. Auto. Ins. Co.
Unpublished. Decided May 6, 2014 Michigan Court of Appeals Docket No. 311699.
The plaintiff was struck by a vehicle and injured when he attempted to cross a street. The driver of the vehicle was not insured. The plaintiff filed suit against his insurer to recover PIP benefits only. The parties subsequently settled the PIP claim, and two months after that settlement, the plaintiff filed suit for UM benefits and additional PIP benefits to which he claimed to be entitled. The trial court dismissed the second lawsuit because that action involved the same parties and evidence, and arose out of the same transaction as the first lawsuit.
The Court of Appeals reversed. The Court reasoned that, while all of the same evidence, witnesses, and parties were essential to a determination in both actions, the UM lawsuit involved a more significant level of proof, such as establishing fault, a threshold injury, and economic as well as non-economic damages. The Court held that requiring a party to bring UM claims in a PIP action would defeat the purpose of a PIP claim, which is to ensure timely payment of benefits so that proper care can be provided during recovery.[su_box title=”Kallas & Henk Note”] This appears to be a case of first impression for the Court of Appeals in that most plaintiffs do not have a problem raising in one case all claims for available benefits, even if more evidence is required to prove one claim (UM benefits) over another (PIP benefits). Further, it is clear that the additional proof required to establish a claim to UM benefits does not impede payment of a PIP claim. [/su_box]
Auto-Owners Ins. Co. v. Robt. E. McGowan Trust
Unpublished. Decided May 15, 2014 Michigan Court of Appeals Docket No. 314118.
The plaintiff insured property that had been purchased by the individual who created the defendant-trust. The property was subsequently conveyed to the defendant-trust, but the plaintiff was not notified of the transfer and was not requested to change the named insured on the policy. The defendants were later sued and requested defense and indemnification from the plaintiff under the policy, which still named the individual, and not the defendants as the insured. The plaintiff denied coverage for the reason that the defendants were not insured under the homeowners policy, and filed this action for a declaration that coverage was not available because the defendants were not insureds.
The defendants claimed that the plaintiff should be estopped from denying coverage, even though they were not insured under the policy, because the plaintiff had paid two prior property loss claims without objection. The Court of Appeals affirmed the trial court’s rejection of this defense. The Court determined the doctrine of equitable estoppel could not create a contract or increase existing obligations, and noted that estoppel was not shown in any event because the plaintiff paid the prior claims to the individual, and not the defendants. There also was no evidence that the plaintiff knew, or was notified by the defendants, of the change in ownership.[su_box title=”Kallas & Henk Note”] There was evidence that the defendants should have been aware of a need to notify the plaintiff of the changed circumstances because the trust which actually owned the property, and the defendants were receiving a discount on the policy premiums based on the age of the individual named insured, who was deceased. [/su_box]
Woodruff v. State Farm Mut. Auto. Ins. Co.
Unpublished. Decided May 27, 2014 Michigan Court of Appeals Docket No. 314093.
The plaintiff was injured while she was driving her sister’s car and was struck by an unknown motorist. The defendant paid PIP benefits, but the plaintiff also claimed a right to recover uninsured motorist benefits under the policy, which the defendant denied on the basis that the plaintiff had not suffered a threshold injury. The plaintiff filed suit, and in response, the defendant filed a general denial to the claim and asserted defenses, including an assertion that the plaintiff had not complied with policy conditions, but did not provide any facts in support of the defenses. The plaintiff was not aware of policy conditions, and requested a copy of the policy, but the defendant did not provide that to her until it was too late to comply.
The trial court held that, because the plaintiff did not comply with policy conditions, her claim for UM benefits should be dismissed. The Court of Appeals reversed on the basis that the defendant did not place the plaintiff on sufficient notice of the policy conditions with which she had to comply, and that, as a result, the defendant waived the defense.[su_box title=”Kallas & Henk Note”] There have been recent decisions in which the Courts are requiring much more detail when raising defenses to coverage. More specificity should be included in responsive pleadings in coverage cases to ensure that policy defenses will be properly enforced. The Court also took the opportunity to admonish the defendant for not providing a copy of the policy when requested, and expressed its belief that the defendant was not acting in good faith by not disclosing important information. [/su_box]
Meisner Law Group, PC v. Krispin
Unpublished. Decided May 27, 2014 Michigan Court of Appeals Docket No. 31395.
The plaintiff was general and litigation counsel for a condominium association which was insured under a general liability policy providing coverage for the association’s directors and officers. During the course of an unrelated lawsuit, the association fired the plaintiff as its attorney. The plaintiff filed suit against the association and its directors arising out of the termination, and it also alleged claims of defamation. The insurer provided a defense to the claims. The plaintiff filed this action against the association and its insurer, claiming that the insurer was wrongfully defending the insured in the underlying action because the policy did not apply.
The trial court granted summary disposition to the insurer because the plaintiff was not alleging an actual controversy for which a declaration of rights needed to be made. The fact that the association claimed coverage, and the insurer agreed to provide coverage, did not affect the plaintiff’s rights (in fact, it supported the plaintiff’s rights in that, if it were successful in its action against the association, there was a source of funds available to pay a judgment.) The Court of Appeals agreed, and also determined that the plaintiff lacked standing to assert the insurer’s rights under the policy, particularly when the insurer was not disputing its own duties to provide coverage.[su_box title=”Kallas & Henk Note”] The plaintiff’s motivation for filing this action appears to have arisen from factors other than a concern for the proper interpretation of an insurance policy, but the Court of Appeals did address this case in a serious manner and provided a relatively lengthy analysis on the standards to be applied when determining whether an actual case or controversy for purposes of declaratory relief have been met. [/su_box]
Villareal v. IDS Property Cas. Ins. Co.
Unpublished. Decided May 27, 2014 Michigan Court of Appeals Docket No. 314891.
The plaintiffs’ house was damaged in a fire which one of the plaintiffs had intentionally set, and she was charged with arson. The house was insured with the defendant under a homeowners policy, and the plaintiffs made a claim for their losses related to the fire. The defendant requested the plaintiffs to submit to an examination under oath in connection with their claim, but the plaintiffs refused, asserting their Fifth Amendment rights against self incrimination due to the pending criminal case. After that case was resolved with a plea to a lesser charge of insurance fraud, the plaintiffs offered to provide testimony under oath, however, the defendant refused that offer and denied coverage. The plaintiffs filed suit for breach of the insurance contract.
The trial court granted the defendant’s motion for summary disposition because submitting to an EUO was a condition for coverage in the policy that had to be met before the defendant was required to pay. The Court of Appeals reversed. While the Court agreed that the failure to submit to an EUO eliminated coverage, the plaintiffs’ policy contained a provision that the defendant had to be prejudiced by the plaintiffs’ failure to submit to an EUO, and no evidence of prejudice was produced.[su_box title=”Kallas & Henk Note”] There are a couple factors which led to this result. The main issue upon which the Court relied was the unusual policy term requiring prejudice to the insurer before the failure to satisfy a policy condition would invalidate coverage, and the panel of appellate judges hearing this case were not sympathetic to the insurer’s position. The defendant also did not rely on other policy defenses, such as those exclusions which are typically written into property coverage eliminating coverage related to arson or fraud perpetrated by an insured. [/su_box]