Michigan Court of Appeals; Docket #255604; Unpublished
Judges Sawyer, Wilder, and Hood; unanimous; per curiam
Official Michigan Reporter Citation: Not applicable, Link to Opinion 
STATUTORY INDEXING:
Not applicable
TOPICAL INDEXING:
Uninsured Motorist Benefits: Exclusions from Uninsured Motorist Benefits
CASE SUMMARY:
In this unanimous unpublished per curiam opinion, the Court of Appeals found that plaintiff was improperly awarded uninsured motorist benefits because she failed to exhaust benefits available under other uninsured motorist policies. The plaintiff in this case was a passenger in a vehicle driven by her daughter when they were struck by a vehicle driven by an uninsured driver. Plaintiff and her daughter were both insured by defendant. Plaintiff’s policy was issued in Indiana; her daughter’s policy was issued in Michigan. More than three years after the accident, plaintiff filed a claim for uninsured motorist benefits which defendant denied. Defendant denied the claim for several reasons: first, plaintiff filed the claim after the three-year limitation period contained in her daughter’s policy; second, plaintiff’s claim was filed beyond the two-year limitation period for uninsured claims under Indiana law; and third, plaintiff did not exhaust benefits available under her daughter’s policy. Plaintiff filed a breach of contract action in circuit court. The court denied defendant’s motion for summary disposition, and awarded plaintiff $50,000.
On appeal, defendant first argues that plaintiff was improperly awarded uninsured motorist benefits when her policy required her to exhaust uninsured benefits available under another policy. Plaintiff’s failure to exhaust her right to benefits under her daughter’s policy, therefore, barred her from recovery of uninsured benefits under her policy. In finding for defendant, the Court of Appeals examined both policies. Plaintiff’s policy provided that it is excess to any other policy and that defendant will only pay up to the policy limit after other insurance has been exhausted. Plaintiff’s daughter’s policy provided that if the parties do not agree to a coverage issue, the person claiming benefits must submit a written request for arbitration within three years of the accident. The court determined that reading the two policies together, plaintiff’s policy requires that she exhaust all available benefits as a condition precedent to defendant’s performance. The court also rejected plaintiff’s argument that because she was not a party to her daughter’s policy, she cannot be bound to the three-year limitation period contained in that policy. In rejecting this argument, the court stated that as a third-party beneficiary to her daughter’s policy, she may enforce the contract rights under the policy, and, since she did not file a claim for arbitration within the three-year period, her right to recovery is barred. In this regard, the court reasoned:
“We agree with defendant’s contention that plaintiff is not entitled to excess coverage under her policy because she failed to submit a claim within the three-year limitation period under Andrew’s policy, and reject plaintiff’s contention that she cannot be bound to the three year limitation period because she was not a party to defendant’s and Andrews’ agreement. Although plaintiff was not a party to this agreement, as a third-party beneficiary of the promises made by defendant in the agreement, plaintiff stands in the shoes of the promisee and may only enforce the rights the promisee possessed under the contract against the promisor.”
In addition, the court also rejected plaintiff’s argument that since defendant denied her initial claim, she exhausted her remedies. In finding that she did not exhaust her remedies, the court concluded that under the plain meaning of the word “exhaust,” plaintiff’s inaction was insufficient to satisfy the requirement to exhaust in her policy. And, because plaintiff failed to exhaust her remedies under her daughter’s policy, plaintiff was not entitled to benefits under her policy. In this regard, the court stated:
“‘Plaintiff’s policy does not define the term ‘exhaust.’ Terms which are not explicitly defined in the contract should be afforded their commonly understood meanings and a court may refer to dictionary definitions to discern common meanings. . . . Random House Webster’s College Dictionary (2nd ed), p 457, defines the term ‘exhaust’ as ‘to draw out or drain off completely.’ Giving the term ‘exhaust’ its commonly understood meaning, we conclude that plaintiff’s inaction, i.e. failing to file a timely demand for arbitration, is insufficient to satisfy the condition precedent requiring her to exhaust Andrews’ policy. . . . Therefore, even when viewing the evidence in a light most favorable to plaintiff as the nonmovant, plaintiff’s inaction and the language of plaintiff’s policy bar her recovery of uninsured motorist benefits under the excess coverage provisions. The trial court erred when it denied defendant’s motion for summary disposition. . . . Reversed.”
