Michigan Court of Appeals; Docket #360262; Unpublished
Judges Swartzle, Cavanagh, and Letica; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Exclusions from Underinsured Motorist Coverage
In this unanimous, unpublished, per curiam decision, the Court of Appeals reversed the trial court’s denial of Defendant Allstate Insurance Company’s (“Allstate”) motion for summary disposition, in which Allstate sought dismissal of Plaintiff Justin Mathis’s action for underinsured (“UIM”) motorist coverage under his automobile insurance policy. The Court of Appeals held that Mathis was barred from pursuing UIM coverage under his policy because he failed to comply with the policy’s requirement that he obtain consent from Allstate before settling with the owner of the vehicle that caused the subject motor vehicle collision.
Justin Mathis was injured in a motor vehicle collision that occurred while he was traveling as a passenger in his own vehicle. The driver that caused the collision was driving a vehicle owned by Kimberly Kapp, and after the collision, Mathis filed a complaint against the driver of Kapp’s vehicle, Kapp, and Allstate—the count against Allstate being one for UIM coverage under Mathis’s policy. The case proceeded to case evaluation, after which Mathis and Kapp accepted a case evaluation award of $3,000 against Kapp, dismissing her from the case. Following Mathis’s acceptance of the case evaluation award, Allstate moved for summary disposition, arguing that Kapp was precluded from pursuing UIM coverage under his policy because, by accepting the case evaluation award against Kapp, Mathis had violated the provision in his policy requiring that he obtain Allstate’s consent before entering into a settlement, lest he be precluded from pursuing UIM coverage. Mathis argued, in response, that he did not know about the consent requirement provision because Allstate delayed in producing a copy of his insurance policy during discovery. The trial court agreed with Mathis, ordering that, as a sanction for its delay in producing the policy, Allstate be precluded from asserting its consent-requirement defense, and denying Allstate’s motion.
The Court of Appeals reversed the trial court’s denial of Allstate’s motion for summary disposition, holding that Mathis plainly violated the controlling terms of his policy by settling with Kapp and was therefore barred from pursuing UIM coverage. The Court also rejected Mathis’s argument that Allstate’s delay in producing the insurance policy forced him to participate in, and accept, the case evaluation award, because he could not have known about the consent-requirement provision without seeing the policy. The Court noted that, as the insured who signed the policy, Mathis was charged with knowing its terms and conditions.
“Plaintiff’s claim that he did not know about the consent requirement in his insurance policy is unavailing. Plaintiff’s claim against Allstate was, in fact, for UM/UIM benefits pursuant to that same insurance policy. As the insured under the insurance policy, plaintiff is ‘charged with the knowledge of the terms and conditions of the insurance policy’ and cannot claim Allstate’s failure to produce the insurance policy was the reason he did not know about the consent requirement before settling with Kapp.”
The Court of Appeals held, second, that the trial court erred in sanctioning Allstate for failing to produce a copy of Mathis’s insurance policy. Mathis had claimed that Allstate violated MCR 2.302(A) by not producing the policy with its initial disclosures, but the Court of Appeals noted that MCR 2.302(A) only requires that policies ‘under which another person may be liable to satisfy all or part of a possible judgment in the action” be produced. This was a contract claim for failure to pay UIM benefits, and thus “not a situation where another person would be liable for Allstate’s failure to pay UM/UIM benefits.”
The Court of Appeals also held that the trial court abused its discretion in precluding Allstate from asserting its consent-requirement defense as a discovery sanction because, again, Mathis was charged with knowing the terms and conditions of his policy. Moreover, the Court noted that, contrary to Mathis’s assertions, Allstate actually did produce the policy after Mathis filed a motion to compel and before Mathis entered into case evaluation.