Michigan Court of Appeals; Docket # 346289, 347819, 348538; Unpublished
Judges Cameron, Shapiro, and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Not Applicable
SUMMARY:
In this unanimous unpublished per curiam decision, the Court of Appeals affirmed the trial court’s summary disposition order affirming the plaintiff’s entitlement to no-fault PIP benefits, as well as the trial court’s summary disposition order granting attorney fees to plaintiff. The Court of Appeals held: (1) that the plaintiff properly maintained insurance on the subject motor vehicle crash, even though she was not listed as the named insured or an “additional driver” on the policy covering the vehicle, (2) that the defendant, Esurance Insurance Company, was the highest priority of the vehicle pursuant to MCL 500.3114(4), (3) that the plaintiff did not engage in fraud such as would entitle Esurance to rescission of the policy, and (4) that Esurance did not establish, as a matter of law, that the plaintiff intentionally injured herself in the subject motor vehicle crash.
Shelby Sowle was injured in a motor vehicle crash shortly after she and her mother, Melissa Rees, purchased a Saturn for Sowle’s use. The Saturn was insured under a policy with Esurance that Rees shared with her boyfriend, Joel Herington, and the policy was paid for with Rees’s credit card. Sowle did not live with Rees at the time of the collision, however, and after the crash, Esurance denied her claim for no-fault PIP benefits. Sowle, in response, filed the underlying first party action, in which the trial court ultimately granted summary disposition in Sowle’s favor, as well as attorney fees against Esurance.
On appeal, Esurance first argued that the Saturn was not properly insured because Rees was not a “named insured” on the policy. The Court of Appeals disagreed, reasoning that the evidence clearly established that Rees both co-owned and maintained insurance on the Saturn, personally.
In this case, Rees was a co-owner of the Saturn, which was covered under the Esurance policy that she shared with her then-boyfriend, Joel Herington. Rees and Herington’s policy was paid for with Rees’s credit card. Because Rees maintained insurance on the Saturn, Esurance’s argument that Sowle is not entitled to no-fault benefits because she was not a named insured lacks merit.
Esurance next argued that it was not the highest priority insurer pursuant to MCL 500.3114(4) because, based on the policy language, Sowle and Rees were not covered because neither was the named insured under the policy. The Court of Appeals again disagreed, reasoning that an ambiguity existed in the policy as to the meaning of the term “additional driver,” which Rees was listed as. The Court of Appeals ultimately agreed with the trial court that, based on extrinsic evidence, the terms “named insured” and “additional driver” were synonymous, and that, as a result, Sowle was entitled to collect benefits from Esurance pursuant to MCL 500.3114(4)(a), because Esurance insured Rees, and Rees was the co-owner of the Saturn.
The trial court’s decision to define “named insured” and “additional driver” as synonymous was not erroneous because there was a latent ambiguity in the contract. First, the contract contemplates that more than one person may be a named insured by stating that “you” or “your” refers to “[t]he named insured(s) shown on the Declarations page[.]” Second, according to the testimony of the Esurance agent who originally facilitated the policy for Rees and Herington, a licensed insurance agent who was employed by and exclusively sold insurance policies for Esurance, the terms “Rated Operator” and “Additional driver” are synonymous with “named insured” under the policy. The agent testified that she listed Herington as the “named insured” on the policy because he had initiated the call, Esurance’s system only allowed her to designate one person as “named insured” on the declarations page, and the insurance coverage she intended to provide to Rees and Herington was identical because it was a “joint policy.” She testified that an “Additional driver” and a “named insured” would be covered equally under whatever terms the policy provided, agreeing that the terms were essentially synonymous. In fact, the agent testified that she could not have listed both Herington and Rees as the “named insured” if Herington had asked; instead, she would have explained that they would have been covered equally. Moreover, when Herington specifically asked whether Rees was the primary driver on the policy, the agent assured him that they would both be covered. Finally, the agent also testified that Esurance would not have allowed Rees to pay the premium if she had been a third-party to the insurance contract.
However, when the contract was to be applied, it was not clear whether the additional driver that appeared on the declarations page was considered one of the insureds under the contract. Because the contract did not define the terms “named insured,” “rated operator,” or “additional driver,” and extrinsic evidence in this case indicated that there was a latent ambiguity regarding whether “named insured(s)” also included the additional driver listed on the declarations page, the trial court did not err by holding that the term “additional driver” was synonymous with the term “named insured” under this contract in light of the evidence that Esurance considered the terms synonymous. Accordingly, Sowle was entitled to collect benefits from Esurance under MCL 500.3114(4)(a) because it insured Rees, the co-owner of the vehicle Sowle was operating.
Esurance next argued that it was entitled to rescission of the policy because of misrepresentations made by Herington as to who the Saturn was purchased for, and by failing to disclose that “(1) Rees and Sowle co-owned the Saturn, (2) the Saturn would not be garaged at his address, and (3) the car was for the use of Sowle, who did not reside with Herington and was an unlicensed driver.” The Court of Appeals disagreed, holding first that “Esurance did not establish that the vehicle’s ownership was material to whether it would issue an insurance policy”:
A misrepresentation is material when “knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make the contract.” Oade v Jackson Nat’l Life Ins Co of Mich, 465 Mich 244, 251; 632 NW2d 126 (2001) (quotation marks omitted). In this case, Esurance’s policy did not require the applicant to identify the ownership of the vehicle, nor did its definition of “covered auto” limit itself to vehicles owned by the insured. Esurance’s initial policy covered a Dodge RAM that Rees solely owned. Esurance’s representatives testified that it did not matter who owned the insured vehicles and they did not ask about ownership. Esurance has not established that it would have refused to make the contract if it knew that Rees, rather than Herington, owned the vehicle.
The Court of Appeals held second that, according to the evidence, Herington did not commit silent fraud because Esurance never solicited information regarding the vehicle’s ownership status, primary driver, or garaging address. Moreover, the Court held that “Herington had no reason to know that that information was important to Esurance or that Esurance would rely on it when issuing an amended policy including the Saturn.”
Esurance next argued that there was no genuine issue of material fact as to whether Sowle was attempting to commit suicide when she became involved in the subject crash, and that she was therefore precluded from recovering PIP benefits because the crash was not “accidental.” The Court of Appeals disagreed, noting that, “there are still equally probably, different explanations for Sowle’s accident.”
On the basis of the facts and circumstances, there are other reasonable hypotheses for Sowle’s accident that Esurance’s theory does not exclude with a fair amount of certainty. Sowle left the motel shortly after Wolff, traveled past him at a high rate of speed on the right after Wolff braked to turn left, entered a yaw before she left the roadway, and skidded for 20 yards before she hit a tree sideways. Other reasonable explanations for the evidence in this case include that Sowle, who had repeatedly been following Wolff throughout the evening in attempts to prevent him from leaving, may have recklessly chased after him. Or that Sowle, who had been involved in a verbal domestic dispute at the motel, was afraid and felt the need to leave rapidly. In either case, Sowle, who was an unlicensed, inexperienced driver, began to leave the road in a yaw. Sowle testified that she did not know what to do when going off the road at a high speed and may have accidentally slammed her foot on the gas pedal rather than the brake. When the evidence is viewed in a light most favorable to Esurance, Esurance’s hypothesis that Sowle was attempting to injure herself does not exclude other reasonable hypotheses—particularly that Sowle was an inexperienced driver who was driving recklessly and lost control of her vehicle—with a fair amount of certainty. Therefore, the trial court did not err when it determined that Esurance had presented speculation rather than circumstantial evidence to support that Sowle attempted suicide during this incident.
Lastly, the Court of Appeals determined that the trial court did not err in awarding attorney fees to Sowle, because the trial court was not “clearly mistaken in its factual findings [and did not abuse] its discretion.” Specifically, the Court of Appeals noted that Esurance “relied on clearly distinguishable caselaw” to justify its denial, and that it did not possess a “legitimate factual uncertainty” as to whether Sowle caused the crash intentionally.
The trial court found that Esurance’s refusal to pay was unreasonable on the basis that Esurance had the police report, the Saturn’s black box, Sowle’s examination under oath, and her medical records at the time it made its denial. The record reflects that the police generated a lengthy report and investigated whether Sowle had intentionally attempted to strike her boyfriend’s vehicle or run off the road. For the additional reasons we have already discussed, the trial court concluded that the circumstances surrounding this accident demonstrated that Esurance speculated that Sowle acted with the subjective intent to harm herself. Therefore, the trial court determined that Esurance had not met its burden of rebutting the presumption that its denial of benefits was unreasonable. We cannot conclude that the trial court was clearly mistaken in its factual findings or that it abused its discretion.
