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Cox III, LLC v Farmers Ins Co (COA – UNP; 4/12/2018; RB #3739)


Michigan Court of Appeals; Docket #336777; Unpublished
Judges Sawyer, Hoekstra, and Murray; per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 


Interpretation of Insurance Contracts

In this per curiam opinion, the Court of Appeals reversed the trial court’s grant of summary disposition for Plaintiff Cox III, LLC (“Cox III”) and Plaintiff Andre Queen (“Queen”) declaratory action against Defendant Farmers Insurance Company and Defendant Farmers Insurance Exchange (“Farmers”) regarding whether there was coverage under Farmers’ auto insurance policy covering the vehicle driven by Queen. The Court found that an exclusion clause in Farmers’ policy was unambiguous and that under that clause, there was not coverage under the policy to cover the liability claims asserted against Cox III and Queen.

Queen was delivering sandwiches for Cox III, a Jimmy John’s franchisee, when Queen hit another driver with his car. The other driver filed a liability case against Queen and Cox III. Queen’s vehicle was insured by an auto policy provided by Defendant Farmers Insurance Exchange (“Farmers”). Queen and Cox III sought coverage and indemnification through the auto liability policy provided by Farmers. Farmers declined to cover Queen and Cox III because of two exclusionary provisions in the subject insurance policy. The relevant provisions stated:

. . .

This coverage does not apply to:

1. Bodily injury or property damage arising out of the ownership, maintenance or use of a vehicle while used to carry persons or property for a charge.

. . .

6. Bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle by any person employed or otherwise engaged in a business . . . . This exclusion does not apply to the maintenance or use of a:

a. Private passenger car
b. Utility car that you own if rated as a private passenger car, or
c. Utility trailer used with a vehicle described in a. or b. above.

In the declaratory action filed by Queen and Cox III filed a declaratory action against Farmers, the trial court granted summary disposition for Queen and Cox III and found that Farmers was obliged to provide coverage for Plaintiffs liability claim because neither of the exclusions applied. Farmers appealed.

The Court of Appeals reversed the trial court because it found the first exclusion to apply to this case and bar Plaintiffs motion. The Court explained that exclusion #1 was not ambiguous and it simply precluded coverage when the vehicle was used to carry property for a charge. The Court cited to Amerisure Ins Co v Graff Chevrolet, Inc, 257 Mich App 585, 596; 669 NW2d 682 (2007) where it found an insurance contract precluded insurance coverage when the car was used “to carry . . . property for consideration.” There, the plaintiff was delivering pizzas and the Court found that his hourly wage constituted consideration. The Court found that Queen was an employee of Cox III’s Jimmy John’s franchise and delivered sandwiches in return for consideration—his hourly wage. Thus, following its precedent it found that the exclusion #1 barred Cox III and Queen from having Farmers cover them in this case. The Court found it unnecessary to address exclusion #6.

“In this case, Queen was an employee of Cox III’s Jimmy John’s franchise and delivered sandwiches in return for hourly compensation, as well as tips. With the exception of the type of food being delivered, the arrangement between plaintiffs is the same as the arrangement between the employee and employer in Amerisure. In Amerisure, this Court did not differentiate between a car rental contract and the type of automobile insurance contract that is typically issued to the owner of a vehicle. Id. at 597. This Court ultimately held that the exclusion in the rental contract, which closely mirrors the exclusion at issue in plaintiffs’ case, precluded insurance coverage for car accidents sustained while the insured’s car is being used to carry property in exchange for an hourly wage. Id. Therefore, the language in Exclusion #1 is not ambiguous, and plaintiffs are precluded from coverage because the accident occurred while Queen used the vehicle to carry property for a charge.”

Thus, the Court reversed the trial court and held that the exclusion clause barred Farmers from covering Queen and Cox III in this case.

Michigan auto accident attorney Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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