Michigan Court of Appeals; Docket #294505; Published
Judges Murphy, Stephens, and M.J. Kelly; unanimous: by Judge Murphy
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
The Michigan Supreme Court granted mini oral argument on 9/21/11; Link to Order
The Michigan Supreme Court reversed the Court of Appeals decision on 6/5/12; Link to Opinion
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Interpretation of Insurance Contracts
Notice and Statute of Limitations for Underinsured Motorist Coverage
CASE SUMMARY:
In this unanimous published decision by Judge Murphy, the Court of Appeals affirmed the trial court’s order denying State Farm’s motion for summary disposition seeking to dismiss plaintiff’s claim for uninsured motorist benefits on the basis that plaintiff failed to provide written notice to State Farm within 30 days of hit-and-run accident, as required under the subject State Farm uninsured motorist policy.
In this case, on May 31, 2008, the plaintiff-decedent was walking as a pedestrian when he was struck by a motor vehicle that fled the scene. The plaintiff-decedent ultimately died as a result of these injuries on November 11, 2008. However, before his death, on August 25, 2008, notice of the accident was provided to State Farm on behalf of the plaintiff-decedent. Apparently, between the time of the accident and up until his death, the plaintiff-decedent underwent extensive medical treatment, including brain surgery. However, in footnote 2 in the opinion, the Court of Appeals explicitly indicated that the fact that the plaintiff-decedent was receiving intensive medical treatment did not play any role in the Court’s analysis of whether the plaintiff-decedent’s failure to comply with the 30-day notice provision should result in the dismissal of his case.
The specific language of the 30-day notice provision in the State Farm policy explicitly stated that a person making a claim for uninsured motorist benefits “must report an accident involving a ‘hit-and-run’ motor vehicle to the police within 24 hours and to us within 30 days.” The policy further stated that in notifying State Farm of an uninsured motorist claim and to give it “all the details about the death, injury, treatment, and other information that [State Farm] may need as soon as reasonably possible after the injured insured is first examined or treated for the injury.” The trial court denied State Farm’s motion for summary disposition finding ambiguity in the policy language and also that State Farm did not demonstrate any real prejudice that resulted from the failure to comply with the 30-day notice provision.
In affirming the trial court’s ruling, the Court of Appeals set aside the issue of whether the policy language was ambiguous, and focused on how State Farm did not demonstrate any actual prejudice that resulted from the failure to comply with the 30-day notice provision. In reaching its holding, the Court relied on the Supreme Court’s holding in Koski v Allstate Ins Co, 456 Mich 439 (1998), wherein the Supreme Court ruled that “it is a well-established principle that an insurer who seeks to cut off responsibility on the ground that its insured did not comply with a contract provision requiring notice immediately or within a reasonable time must establish actual prejudice to its position.”
In arguing that the trial court’s denial of summary disposition should be reversed, State Farm relied on Jackson v State Farm Mut Automobile Ins Co, 472 Mich 942 (2005), wherein the Supreme Court, in lieu of granting leave to appeal, vacated a judgment entered by the Court of Appeals and reinstated an order of summary dismissal entered by the trial court “for the reasons stated in the Court of Appeals dissent.” In Jackson, the majority found there was ambiguity in the policy, and in light of such ambiguity, it was not necessary to address the plaintiff’s argument that the notice provision was only enforceable if State Farm could prove prejudice. However, the dissent in Jackson focused on the prejudice issue and ultimately rejected the proposition that an insurer must establish prejudice in order to void coverage for an insureds failure to satisfy a notice provision in the insurance policy.
The Court of Appeals ultimately rejected State Farm’s argument on the basis that the dissent in Jackson is of questionable and limited value because it did not address the Supreme Court’s opinion in Koski. The Court of Appeals further reasoned that the Court of Appeals must give more weight to a Supreme Court opinion as opposed to an order. In support of this proposition, the Court used the example of Mullins v St Joseph Mercy Hosp, 271 Mich App 503 (2006), overruled 480 Mich 948 (2007), wherein the Supreme Court reversed the Court of Appeals ruling that a prior Supreme Court opinion had to be applied retroactively because the Supreme Court applied the decision retroactively in three consecutive orders. In Mullins, the Supreme Court reasoned that despite its three orders applying retroactive application of the prior Supreme Court decision, those orders did not mean that the opinion was fully retroactive.
In further support of its holding, the Court also relied on the recent published Court of Appeals decision in Bradley v State Farm Mut Automobile Ins Co, ___ Mich App ___ (2010), where the Court of Appeals applied the Koski prejudice requirement in a case where the plaintiff failed to join State Farm as tortfeasors in a suit as required by the insurance policy relative to UIM benefits. Notably, the Court in Bradley recognized the Supreme Court’s holding in Rory v Continental Ins Co, 473 Mich 457 (2005), in which the Supreme Court held that unambiguous provisions in a UIM policy must be enforced as written regardless of the equities and the provisions’ reasonableness. The Bradley court, however, recognized that Koski carved down a narrow prejudice requirement relative to all insurance contracts and that Rory did not overrule Koski.
