Michigan Supreme Court; Docket #119013
Opinion by Justice Taylor; 6-1 (Justice Kelly concurring in part; dissenting in part)
Official Michigan Reporter Citation: 465 Mich. 909, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Cancellation and Rescission of Insurance Policies
CASE SUMMARY:
In this 6-1 Opinion written by Justice Taylor, Justice Kelly concurring in part and dissenting in part, the Supreme Court, construing the notice of cancellation provision of MCL 500.3020(1)(b), held that actual notice to the insured of cancellation is not required to effectuate the cancellation of an insurance policy under that statute. However, the court held that the statute should be construed to mean that the mailing of the notice must be reasonably calculated to be delivered so as to arrive at the insured’s address at least 10 days before the date specified for cancellation for the notice to be effective.
The facts were undisputed that on February 20, 1997, Titan Insurance mailed a notice of cancellation to its insured with regard to the automobile that was insured under the insurance policy that Titan had issued to the driver of a vehicle involved in an accident. The notice of cancellation provided that the insurance policy would be cancelled effective March 5, 1997 at 12:01 a.m. unless the insured paid the necessary premium to continue coverage. At approximately 8:30 p.m. on March 5, 1997, Martin Nowell was injured in an automobile accident while a passenger in the insured’s vehicle. Titan refused to provide insurance coverage for the driver/insured for this accident, claiming that the policy had cancelled before the accident. Plaintiff Nowell presented evidence that the insured did not “personally receive the notice of cancellation” until after the motor vehicle accident. The trial court and the Court of Appeals, relying on prior case law interpreting the provisions of MCL 500.3020(1)(b) held that “actual notice,” i.e., personal receipt by the insured, was necessary for a notice of cancellation to be effective.
The relevant statutory language of MCL 500.3020(1)(b) requires every policy of casualty insurance in Michigan, including all classes of motor vehicle coverage, to have language that provides as follows:
“(b) That the policy may be cancelled at any time by the insurer by mailing to the insured at the insured’s address last known to the insurer or an authorized agent of the insurer, with postage fully prepaid, a not less than 10 days written notice of cancellation. . . .”
In reversing the lower court ruling which had found the cancellation notice to be ineffective because not actually received, the Supreme Court held that the plain language of the statute allowed cancellation by a “simple first class mailing” thereby precluding a conclusion that an insured must receive some type of actual notice, i.e., be aware of the issuance of a notice of cancellation by the insurer, in order for an insurer’s cancellation of the insured’s policy to be effective.
In addressing the plaintiff’s contention that the language of the statute means the insurer must show that upon delivery there remained 10 days until cancellation became effective, the Supreme Court held that such an interpretation would make the mailing provision a nullity because the mere notification by first class mail, as allowed by the statute, would be insufficient to inform with regard to when actual delivery took place. The court stated that the statute requires that the first class mailing must be done early enough to, with reasonable certainty, provide delivery to the insured at least 10 days before the cancellation date. The court stated:
“In other words, an insurer has the duty to mail far enough in advance of the beginning of the 10 day period so as to reasonably insure that the notice will arrive and provide an insured with the potential to have the full 10 days notice that the statute provides.”
In addressing plaintiff’s argument that case law in Michigan had previously established the requirement of “actual notice,” the court noted that the statute at issue in the present case does not require the “giving” of notice, as did the predecessor statute, but rather, only required the “mailing of notice” in accordance with its provisions. On this basis, the court distinguished the previous appellate decisions on this issue in American States Insurance Company v Auto Club Insurance Association, 193 Mich App 248; 484 NW2d 1 (1992), Citizens Insurance Company of America v Crenshaw, 160 Mich App 34; 408 NW2d 100 (1987), Citizens Insurance Company of America v Lemaster, 99 Mich App 325; 298 NW2d 19 (1980); and Phillips v DAIIE, 69 Mich App 512; 245 NW2d 114 (1976). The court noted that Phillips, supra, had relied on the previous decision in Gooden v Camden Fire Insurance Association, 11 Mich App 695; 162 NW2d 147 (1968), in support of its conclusion that actual notice was required. However, Gooden, according to the Supreme Court was “wrongly decided” because it relied on inapplicable precedent and failed to consider the actual language of MCL 500.3020.
In her dissent, Justice Kelly pointed out that subsection (5) of MCL 500.3020 creates a rebuttal presumption that proper mailing under the statute evidences notice. However, the presumption should be rebuttable by evidence that the notice did not arrive in a timely manner. By failing to recognize that proper mailing is only prima facie of the required 10 days notice, the majority minimizes the statutory notice requirement to the point of obscurity.
