Michigan Coverage Decisions, Issue 186

Harrell v Titan Indem. Co.

Unpublished. Decided January 20, 2015 Michigan Court of Appeals Docket No. 318744.

The plaintiff was injured while driving her husband’s vehicle. Neither she nor her husband were insured, and the plaintiff had never had a driver’s license. She had been cited numerous times for driving without a license. The plaintiff filed this lawsuit for personal protection benefits. The matter was assigned to the defendant, which denied benefits because the plaintiff was an uninsured owner of the vehicle. The plaintiff asserted that she only used the car occasionally, only with permission of her husband, and could not be considered an owner. The trial court denied summary disposition and, after trial, held that the plaintiff could not be considered an owner of the vehicle because her use was sporadic and intermittent.

The Court of Appeals affirmed. While PIP benefits are unavailable to an uninsured vehicle owner, if an uninsured person is using a vehicle only on occasion and only with the owner’s permission, and is otherwise not using the vehicle in a way which suggests ownership, that person will not be considered an owner for purposes of PIP benefits. Because the trial court found the plaintiff’s testimony as to the limits on her ability to use the car to be credible, the Court of Appeals would not overturn the decision.

[su_box title=”Kallas & Henk Note”] The full context of the plaintiff’s testimony is not known because unpublished opinions, like this one, often do not include all of the facts. The plaintiff’s claim that she had limited use of the car is not supported by the fact she had received several citations for driving without a license in a relatively short period of time prior to the accident. If this evidence had been developed further, a different decision may have resulted. [/su_box]


Hobson v Indian Harbor Ins. Co.

Unpublished. Decided March 10, 2015, Michigan Court of Appeals Docket No. 316714.

The plaintiffs were tenants in a building damaged by fire, and were injured due to smoke inhalation during the fire. They sought coverage under their landlord’s commercial general liability policies. The policies generally covered bodily injury arising from accidental causes, but excluded coverage for damages caused by pollution. The insurers denied coverage on the basis of this exclusion, claiming that smoke inhalation was bodily injury arising from a pollutant (smoke) and not from an accident (the fire).

The trial court denied summary disposition, and the insurers filed an application for leave to appeal. The Court of Appeals initially denied that application, but, the Supreme Court directed the Court of Appeals to consider the appeal. The Court of Appeals affirmed denial of summary disposition, strongly disagreeing with the insurers’ arguments that the policy only covered bodily injury caused by burns from a fire and not from the consequences of fire.

[su_box title=”Kallas & Henk Note”] Both the trial court and Court of Appeals were dismissive of the insurers’ arguments, and made it clear that they would not accept the insurers’ attempt to draw such a fine distinction in the policy language, which they believed would lead to absurd results. [/su_box]


Auto Owners Ins. Co. v Olympia Entertainment, Inc.

Published. Decided March 26, 2015, Michigan Court of Appeals Docket No. 315891.

An intoxicated person murdered two people and seriously injured two others following a day of heavy drinking, which included consumption at an event at which the insured, a non-profit organization, was serving alcohol as a fund-raising activity. The insured had not obtained liquor liability insurance, and its general liability policy excluded coverage for injuries arising out of alcohol service, but only if the insured was “in the business of” serving alcohol. The plaintiff denied coverage because the insured, by serving alcohol, was in the business of serving alcohol.

The trial court held that the insured was not in the business of serving alcohol because the service was basically a one-time event. The Court of Appeals affirmed. The Court reasoned that, in order for the exclusion to apply, the insured had to be “in the business” of alcohol service, meaning that the service was a defining characteristic, or general nature of the insured’s business. Because the defining characteristic of the insured was raising funds for its non-profit purpose, it was not in the business of serving alcohol for purposes of the exclusion.

[su_box title=”Kallas & Henk Note”] The Court also decided a related issue on whether an indemnification agreement between the insured and the event organizer was an insured contract. An insured contract was defined as one “pertaining to [the insured’s] business” in which the insured assumed the tort liability of another. The Court held that use of the word “business” was broader than the liquor liability exclusion, and therefore included the business in which the insured was engaged at the time of alleged improper service. It is questionable whether this same decision would have been reached without such terrible consequences at issue. [/su_box]


Auto-Owners Ins. Co. v. Chandra L. Nyhof a/k/a Chandra L. Jowar et. al.

Unpublished. Decided May 7, 2015 Michigan Court of Appeals Docket No. 320256, Leave Denied February 3, 2016 Supreme Court Docket No. 151954.

This is a declaratory action to determine the insurer’s liability under a commercial policy and a dwelling fire policy relating to the landlord’s liability for a sexual assault perpetrated by a tenant against a third-party. The policies only insured injuries caused by an occurrence, which is defined as an accident. Both policies also excluded acts expected or intended by the insured. The trial court granted summary disposition in favor of the insurance carrier on the basis that the allegations against the landlord were not the cause of the third-party’s injuries, rather the injuries were caused by an intentional act, therefore, no occurrence triggered coverage.

The Court of Appeals affirmed the lower court finding no duty to defend or indemnify. The Court found that the injuries were caused by an intentional act, which did not an accident, therefore, not an occurrence as defined. The Court declined to address the exclusionary provisions of the policies presented.

[su_box title=”Kallas & Henk Note”] The Court reached its decision by following the analysis that has been upheld in numerous cases since Frankenmuth Mut. Ins. Co. V. Masters, 460 Mich 105 (1999) which have found that an intentional act, with intended consequences, cannot be an accident for purposes of liability coverage. [/su_box]

Comments are closed.