Michigan Court of Appeals; Docket #337812; Unpublished
Judges Gadola, Kelly, and Riordan; per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
TOPICAL INDEXING:
Interpretation of Insurance Contracts
Exclusions from Uninsured Motorist Benefits
CASE SUMMARY:
In this unanimous per curiam opinion, the Court of Appeals reversed the trial court denial for summary disposition against co-Defendant Farm Bureau General Insurance Company (“Farm Bureau”) regarding its dismissal from the case. The Court reversed the trial court’s order and allowed Farm Bureau to be dismissed from the case because it found that two provision of the no-fault contract for underinsured motorist benefits were not ambiguous since they could both be complied with at the same time.
Plaintiff, Rose Strauss (“Strauss”), brought an action seeking damages from co-Defendants Ryan and Sharon Kantola and underinsured motorist benefits from Farm Bureau. Strauss brought an action against the Kantola’s for negligence. The Kantolas were covered by a policy of automobile insurance providing coverage for bodily injury of up to $250,000 per person. Farm Bureau had a policy with Strauss for underinsured motorist benefits up to $300,000. The relevant portions of the Farm Bureau underinsured policy stated:
. . .
(b) Coverage under this endorsement shall be void if:
(1) an Insured agrees to settle a bodily injury claim without our permission.
. . .
(c) The following shall not occur until after the limits of liability under all other liability bonds or policies that apply at the time of the accident have been exhausted by payment of judgments or settlements:
(1) No action by way of a suit shall be brought against us.
The trial court found that the two provisions created an ambiguity because (b)(1) suggests that a plaintiff must include Farm Bureau in the litigation, while subparagraph (c)(1) prohibits bringing Farm Bureau into the lawsuit until other policy limits have been exhausted. Farm Bureau appealed.
The Court of Appeals found that the two provisions did not create an ambiguity because they could be complied with simultaneously. The Court explained that (b)(1), by itself, was clear by its language: it required Strauss to get Farm Bureau’s permission to settle a claim. Similarly, (c)(1) was clear by its language: it required Strauss to bring an action only when all other remedies had been exhausted. Strauss could seek Farm Bureau’s permission to settle the case without bringing Farm Bureau into the action. Therefore, Strauss could comply with both clauses at the same time and there was no conflict between the two. Although Strauss might be inconvenienced by bringing two actions, that was not sufficient to create an irreconcilable difference. Therefore, the potential unreasonableness of the two actions did not create a public policy issue within the contract.
“In this case, subparagraphs (b)(1) and (c)(1) do not irreconcilably conflict because plaintiff can comply with both provisions to maintain coverage. Although plaintiff must seek Farm Bureau’s permission to settle her claim to avoid losing her UIM benefits, there is nothing that requires that Farm Bureau be a party to the litigation to give that permission. Thus, plaintiff has the option of litigating her claim against the Kantolas and then suing Farm Bureau for any amount in excess of all other policies to which plaintiff can prove entitlement. While the juxtaposition of the two provisions arguably may create an unreasonable outcome where plaintiff is forced to twice litigate the issues of liability and damages, ‘a mere judicial assessment of ‘reasonableness’ is an invalid basis upon which to refuse to enforce contractual provisions.’”
Thus, the Court reversed the trial court’s denial of summary disposition denying Farm Bureau’s motion to dismiss.
