Nick v Grange Ins. Co.
Unpublished. Decided November 4, 2014 Michigan Court of Appeals Docket No. 317136.
The plaintiff filed this lawsuit when the defendant-insurer refused to pay for a fire loss at the plaintiff’s residence. The reasons for the denial was the fire was intentionally set and that the plaintiff made misrepresentations when filing his claim for the loss. At the conclusion of the trial, the trial court instructed the jury that their decision was to be on the issue of whether the insurer had established arson and false swearing in the claim for coverage. The verdict form provided that, if the insurer established these defenses, the jurors were not to consider any other issues and that their verdict was for the defendant.
The jury found that the insurer had proven the defenses, but attempted to answer additional questions on the verdict form (which related to measurement of damages). The trial court interrupted and did not allow the jurors to answer the additional questions, and then asked the jurors if the verdict as read was their verdict, which all jurors then affirmed. On appeal, the plaintiff argued that the jurors had attempted to provide an inconsistent verdict (i.e., finding that the defendant had proven its defenses, but also trying to assess a measure of damages to the plaintiff). The Court of Appeals affirmed the no cause verdict on the basis that the verdict as read was not inconsistent, and all jurors acknowledged that verdict was their decision.[su_box title=”Kallas & Henk Note”] While this matter involves a coverage determination, the principal issue is the analysis Courts employ when reviewing jury verdicts, and provides insight into that process. It is also important to note that the Court determined the jury’s attempt to answer the additional questions in the verdict form was not evidence of an inconsistent verdict, but mere surplusage because they had already found the defendant proved its defenses. [/su_box]
Theater Group, LLC v Secura Ins. Co.
Unpublished. Decided November 13, 2014, Michigan Court of Appeals Docket No. 317393.
The plaintiff filed suit arising out of the insurer’s failure to pay for water damage caused by a broken appliance in the plaintiff’s business. The policy excluded coverage for damages resulting from water under the ground surface. The leak which caused the damage was under the floor of the building, but the trial court held that there was at least a question of fact as to whether the pipe was under the ground surface. The court denied summary disposition to the insurer and ordered the parties to binding arbitration, which resulted in a finding that the loss was covered by the policy.
On appeal, the insurer argued that the trial court should have granted summary disposition and that the arbitrator incorrectly interpreted the coverage provisions of the policy. The Court of Appeals rejected these arguments, agreeing with the trial court that there was no evidence the broken pipe was under the ground, and finding there was no basis to reverse, or even review, the arbitrator’s decision.[su_box title=”Kallas & Henk Note”] The premise for this opinion is that arbitration decisions are subject to limited judicial scrutiny and will not be reversed unless the arbitrator has made a clear legal error. This opinion also underscores the importance of presenting evidence on all issues material to a coverage denial to ensure a proper analysis of the facts and applicable law. [/su_box]
Dupree v Auto-Owners Ins. Co.
Decided November 18, 2014 Michigan Supreme Court Docket No. 147647, 497 Mich 1 (2014).
The plaintiff suffered a fire loss at her home. While the parties settled the plaintiff’s claim for loss to the dwelling, they were not able to agree on payment for personal property loss. The dispute was sent to appraisal, according to the policy terms, which resulted in a determination of the actual cash value of the damaged property as well as its replacement cost. The defendant refused to pay replacement cost because the policy terms required the plaintiff to provide proof that she actually replaced damaged property. The plaintiff did not provide this proof.
The trial court held that the plaintiff was entitled to replacement cost of the damaged property because the appraisal award provided for this payment. The Court of Appeals affirmed. Instead of granting leave to appeal , the Supreme Court reversed, and held that summary disposition should have been granted for the defendant. Because the plaintiff failed to provide evidence that she had actually replaced damaged property, she was not entitled to receive replacement cost for that property.[su_box title=”Kallas & Henk Note”] The plaintiff’s position was based on the premise that appraisal awards are considered to be conclusive, and because the appraisal included a determination of replacement cost, she was entitled to receive that amount. The Supreme Court noted, however, that matters of coverage addressed in an appraisal are not entitled to conclusive effect. Because replacement cost coverage was subject to proof that the plaintiff actually replaced property, the Court considered this a coverage matter which enabled the Court to review the appraisal. [/su_box]
Farm Bureau Gen. Ins. Co. Of Mich. v. Walsh
Unpublished. Decided November 25, 2014 Michigan Court of Appeals Docket No 317505.
The insureds rented a portion of their property as a residence. They were sued for negligence arising out of a fire which resulted in the death of their tenant. The plaintiff-insurer filed suit seeking a declaration that the policy’s exclusion for business pursuits applied and that coverage was not available. The exclusion provided that liability did not exist for damages arising out of a business in which the insured was engaged. The evidence presented was inconclusive as to whether a business was conducted on the premises or from what cause the fire originated.
The trial court held that the policy exclusion was not applicable because there was no evidence that the fire resulted from business operations. The Court of Appeals reversed and held that there was a question of fact as to whether a business was conducted on the property and whether the fire arose from those operations.[su_box title=”Kallas & Henk Note”] This case involves the sometimes tricky application of exceptions to exclusions. The insuring agreement gives coverage, the exclusion takes it away and the exception gives it back. [/su_box]
Auto-Owners Ins. Co. v. All Star Lawn Specialists Plus, Inc.
Published. Decided November 25, 2014 Michigan Supreme Court, 497 Mich 13 (2014).
The underlying plaintiff worked as a laborer for the defendant and was injured in the scope of his work. The defendant-insurer provided coverage under a workers compensation policy, a general liability policy, and a no-fault auto policy. The underlying plaintiff claimed that he was an independent contractor and that coverage under the worker’s compensation policy was not applicable as a result. The trial court agreed he was an independent contractor, and cited to the employee definition in the Workers Disability Compensation Act, which sets forth 3 criteria establishing whether a person is an independent contractor. An employee under the WDCA is defined in the negative (i.e., an employee does not maintain a separate business, does not hold himself or herself out to the public, and is not an employer) The trial court determined that a person is to be considered an independent contractor only if all 3 criteria are established, and because the plaintiff only satisfied two of the criteria, he was an independent contractor, and worker’s compensation liability did not apply..
The Court of Appeals disagreed with the trial court, but determined it was required to follow a prior decision of the appellate court which had issued an opinion consistent with the trial court (See Michigan Coverage Decisions, vol 170). The Supreme Court reversed. The Supreme Court held the WDCA plainly provides that if only one of the 3 criteria included in the definition of an employee was met, then the person is to be considered an independent contractor. A person would be an employee only if none of the criteria in the definition was met. As a result, the plaintiff was an employee and the proper coverage was under the worker’s compensation policy.[su_box title=”Kallas & Henk Note”] The principles of statutory interpretation, and that no word is to be considered void or without meaning, are demonstrated in this opinion, which gives effect to the complete definition of an employee under the WDCA. [/su_box]