Michigan Court of Appeals; Docket No. 82286; Published
Judges Beasley, Brennan, and Cynar; Unanimous; Per Curiam
Official Michigan Reporter Citation: 153 Mich App 52; Link to Opinion 
STATUTORY INDEXING:
Scope of Mandated Coverages [§3131(1)]
TOPICAL INDEXING:
Motor Vehicle Code (Financial Responsibility Act) (MCL 257.501, et seq.)
CASE SUMMARY:
In this unanimous per curiam Opinion, the Court of Appeals reversed a judgment in the plaintiff’s favor, which plaintiff had obtained against the Automobile Club Insurance pursuant to a writ of garnishment. Plaintiff had sought recovery of non-economic losses against the principal defendant, and obtained a default judgment in the amount of $15,000. Subsequently, a writ of garnishment was served on the principal defendant's insurance company, Automobile Club, which denied liability on the basis that the principal defendant had failed to comply with its insurance contract obligation to notify the insurance company of the plaintiff’s lawsuit. The trial court, in its decision, relied on Coburn v Fox (Item No. 735), where the Court of Appeals held that an insured's failure to comply with the insurance contract clause requiring cooperation in defending suit did not provide the insurer with a valid defense against an injured plaintiff.
The Court of Appeals in this case distinguished Coburn because it involved only failure of an insured to cooperate, whereas this case involves an insured's total failure to notify the insurer of the existence of a suit.
The Court of Appeals, in deciding this case, relied upon the reference contained in §3131(1) of the No-Fault Act which determines the scope of the residual liability insurance coverage required under the No-Fault Act by reference to the Michigan Financial Responsibility Act, MCLA 257.501, et seq; MSA 9.2201, etseq. The Court of Appeals held that the Financial Responsibility Act expressly provides that an insurance carrier shall not be liable on any judgment if it has not had prompt notice of the action.
Thus, the Court of Appeals reversed the trial court's grant of summary judgment on the garnishment in plaintiff’s favor and remanded for further proceedings on the issue of whether the insurance company was "prejudiced" by the failure of the principal defendant to notify it of the existence of plaintiff s suit.
