Michigan Court of Appeals; Docket Nos. 161736 and 162770; Unpublished
Judges Weaver, Connor, and Kowalski; Unanimous; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
In this unpublished per curiam Opinion, the Court of Appeals affirmed the trial court's grant of summary disposition regarding a claim for third-party liability coverage, ruling that the insured person was not a permissive user of the accident vehicle and, therefore, not covered under the subject no-fault policy.
A woman named Marilyn Altizer was injured when she was struck by a vehicle owned by Danny Shropshire which was being driven by Joseph Canty. Altizer filed suit against Shropshire and Canty, and a default judgment entered against them. Subsequently, Altizer served a writ of garnishment upon State Farm, who insured Canty's mother, for the judgment owed against Canty claiming he was covered under the policy. State Farm then filed a declaratory relief action as to whether it was obligated to provide third-party liability coverage to Canty.
The State Farm policy grants third-party liability coverage for a relative of the named insured, provided that the use of a vehicle is "with the permission, or reasonably believed to be with the permission, of the owner." The issue in this case was whether Canty, the driver of the vehicle, was using the vehicle with the permission of the owner, Shropshire.
The Court of Appeals found that the trial court did not err in finding that Canty did not have permission of Shropshire. At the time that Canty began operating the vehicle, Shropshire was sitting on the passenger vehicle with one or both of his legs on the ground outside the car. The Court of Appeals upheld the trial court's conclusion that it would not be reasonable for any person, even someone intoxicated, to believe that he had permission to drive a car under those circumstances.
The plaintiff in the underlying suit, Ms. Altizer, argued that the insurance company was barred from raising the defense under the doctrine of collateral estoppel, due to the default judgment entered against their insured. However, the Court of Appeals found no error by the trial court in ruling that collateral estoppel did not apply because the issue of insurance coverage was not a matter essential to support the default judgment.
Finally, Altizer alleged that State Farm had waived or was estopped from raising the defenses by virtue of the fact that it provided Canty with a defense in the underlying tort suit. However, the insurance company had defended Canty under a reservation of rights letter that specifically preserved the right to raise the defense that Canty was operating the vehicle without the permission of the owner. Therefore, the court held that State Farm was not precluded from raising this defense for coverage.