Michigan Court of Appeals; Docket No. 296790; Published
Judges Saad, Jansen, and K.F. Kelly; Unanimous
Official Michigan Reporter Citation: Forthcoming; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Underinsured Motorist Coverage: Underinsured Motorist Coverage In General
CASE SUMMARY:
In this unanimous published opinion by Judge Saad, the Court of Appeals reversed the trial court ruling in favor of the plaintiff Dawson and held that the defendant Farm Bureau was not bound by a judgment in a prior lawsuit against the driver of the vehicle who caused the plaintiff’s injuries where Farm Bureau did not participate in that prior litigation and did not consent to entry of the judgment that was obtained.
The plaintiff sustained injuries in a motor vehicle accident and brought action against the responsible driver. That driver’s insurance coverage was limited to the amount of $20,000. The plaintiff initially brought an action against both the driver and Farm Bureau claiming that Farm Bureau owed under-insured motorist benefits under the provisions of its policy for the difference between the underlying coverage of $20,000 available to the driver who caused the accident and the $100,000 limits of the Farm Bureau under-insured motorist coverage.
The Farm Bureau policy had express language stating that it would not be bound by any judgments for damages or settlements made without Farm Bureau’s written consent.
After initially bringing Farm Bureau into the lawsuit against the driver who caused the accident, that claim was dismissed as to Farm Bureau because Farm Bureau had a policy provision stating that Farm Bureau could not be sued for under-insured motorist benefits until the insured had exhausted all other available judgments or settlements. The plaintiff then proceeded to trial against the other driver and obtained a judgment in the amount of $100,000. Farm Bureau did not participate in that litigation. Plaintiff then filed this lawsuit against Farm Bureau for under-insured motorist benefits seeking a judgment of $80,000 representing the difference between the $20,000 judgment against the other driver and the $100,000 of under-insured motorist coverage under the Farm Bureau policy. Farm Bureau sought dismissal of the plaintiff’s claim on the basis that it was not bound by the terms of the prior judgment or settlement as it had not agreed to the prior judgment in writing as required by its policy.
In reversing the trial court ruling in favor of the plaintiff, the Court of Appeals held that the plaintiff was bound by the “plain language” of the written contract with Farm Bureau. That contract indicated that Farm Bureau was not bound by any prior judgment for damages or settlements without its written consent. In the absence of that written consent, the contract language clearly held that Farm Bureau was not bound by the prior judgment and was entitled to litigate the issues of liability and damages. Therefore, the Court of Appeals reversed the trial court’s ruling and remanded it for further proceedings.
