Michigan Court of Appeals; Docket # 326109; Unpublished
Judges Murphy, Saad and Borrello; Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion 
STATUTORY INDEXING:
Not Applicable
TOPICAL INDEXING:
Case Evaluation - Accept/Reject in PIP Cases
Exclusions from Underinsured Motorist Benefits
Interpretation of Insurance Contracts
CASE SUMMARY:
In this unanimous unpublished per curiam Opinion involving underinsured motorist (UIM) benefits and a case evaluation award, the Court of Appeals issued several holdings:
1) Sentinel Insurance Company’s motion for summary disposition was improperly denied because plaintiff violated the terms of his UIM policy by accepting the case evaluation award without Sentinel’s consent, and
2) the mutual acceptance of a case evaluation award cannot reasonably be interpreted as a “tentative settlement.”
Plaintiff was injured in a car accident and brought a negligence claim against the underinsured driver of the other car, Youssef Ftouni. Plaintiff named Sentinel as a defendant because it had issued his UIM policy. The matter was submitted to case evaluation and two awards were recommended for plaintiff: $100,000 (Ftouni’s policy limits) and $100,000 against Sentinel. The case evaluation results indicated that plaintiff and Ftouni accepted the award regarding plaintiff’s negligence claim against Ftouni, and that plaintiff and Sentinel rejected the award involving plaintiff’s UIM claim. Thereafter, Sentinel notified plaintiff that his UIM claim was barred under a policy exclusion that precluded coverage for a claim settled without Sentinel’s consent. Sentinel argued this exclusion was triggered when plaintiff accepted the case evaluation award against Ftouni, without first obtaining or requesting Sentinel’s consent. Plaintiff filed a motion for declaratory relief, asserting his case evaluation acceptance with Ftouni did not impact his UIM claim. The trial court denied plaintiff’s motion and entered judgment against Ftouni pursuant to the case evaluation award. Sentinel then moved for summary disposition, arguing plaintiff’s claim was barred by the plain language of the UIM policy. Plaintiff, however, maintained the case evaluation acceptance should be treated as a “tentative settlement” and that written notification of the case evaluation results was provided by the mediation tribunal and in a letter that counsel had mailed to Sentinel. The trial court denied Sentinel’s motion for summary disposition, finding that any ambiguity in the policy language should be construed against Sentinel.
The Court of Appeals reversed and remanded, finding the policy’s UIM exclusion precluded plaintiff’s claim and that summary disposition should have been granted for Sentinel.
In so holding, the Court of Appeals cited the following portions of plaintiff’s UIM policy:
A. Coverage
1. We will pay all sums the “insured” is legally entitled to recover as compensatory damages from the owner or driver of an “uninsured motor vehicle.” The damages must result from “bodily injury” sustained by the “insured” caused by an “accident.” The owner’s or driver’s liability for these damages must result from the ownership, maintenance or use of the “uninsured motor vehicle.”
2. With respect to damages resulting from an “accident” with . . . [an] “uninsured motor vehicle,” we will pay under this coverage only if Paragraph a. or b. below applies:
* * *
b. A tentative settlement has been made between an “insured” and the insurer of . . . [an] “uninsured motor vehicle” and we:
(1) Have been given prompt written notice of such tentative settlement; and
(2) Advance payment to the “insured” in an amount equal to the tentative settlement within 30 days after receipt of notification.
* * *
C. Exclusions
This insurance does not apply to any of the following:
1. Any claim settled without our consent. However, this exclusion does
not apply to a settlement made with the insurer of . . . [an] “uninsured motor
vehicle,” in accordance with the procedures described in Paragraph A.2.b.
According to the Court of Appeals, there was no question that plaintiff settled his claim with Ftouni because 1) they both accepted the case evaluation award and 2) the trial court entered judgment against Ftouni in accordance with the case evaluation award. The Court further noted that plaintiff did not dispute that he settled with Ftouni without Sentinel’s consent. As a result, the Court said that, under the language of the policy, plaintiff’s claim was excluded unless he satisfied paragraph A.2.b.
Sentinel argued that plaintiff did not satisfy paragraph A.2.b. because compliance was only possible if plaintiff had entered into a “tentative settlement,” and that plaintiff’s case evaluation was not a “tentative settlement.” But plaintiff claimed that the phrase “tentative settlement” was ambiguous and should be construed against Sentinel.
The Court of Appeals agreed with Sentinel’s argument, finding that mutual case evaluation cannot reasonably be interpreted as a “tentative settlement.” Looking to the dictionary definition of “tentative” and appellate case law, the Court said:
“’An accepted [case] evaluation serves as a final adjudication … and is therefore binding on the parties similar to a consent judgment or settlement agreement.’ … Thus, if case evaluation acceptance is akin to a consent judgment or settlement agreement and intended to facilitate final settlements, a settlement reached by way of case evaluation cannot reasonably be characterized as ‘not fully worked out or developed.’”
The Court of Appeals continued by noting that, even if plaintiff was able to avail himself of paragraph A.2.b. to avoid exclusion of his UIM claim, the procedures in that section were not satisfied. The Court observed:
“Paragraph A.2.b provides that Sentinel will pay UIM benefits when its insured reaches a tentative settlement with the insurer of an underinsured motor vehicle, but only if two conditions are met: (1) Sentinel is given prompt written notice of the tentative settlement, and (2) Sentinel advances the amount of the tentative settlement to its insured within 30 days. The first requirement was fulfilled: Sentinel received written notice of the settlement by way of the Mediation Tribunal’s September 17, 2014, notification of results, as well as plaintiff’s October 6, 2014, correspondence. However, the second requirement remains unsatisfied because there is no dispute that Sentinel never advanced payment of the case evaluation award to plaintiff.”
In conclusion, the Court of Appeals found that Sentinel did not consent to plaintiff’s settlement with Ftouni and, therefore, the trial court erred in holding that Sentinel was not entitled to summary disposition.
