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McAuliffe v Auto Owners Ins Co; (COA-UNP, 12/10/2015; RB #3479)


Michigan Court of Appeals; Docket #323349; Unpublished  
Judges Owens, Murphy, and Hoekstra; Unanimous; Per Curiam  
Official Michigan Reporter Citation: Not Applicable; Link to Opinion   

Not Applicable

Equitable Estoppel
Evidentiary Issues
Interpretation of Insurance Contracts
Underinsured Motorist Coverage  

In this unanimous unpublished per curiam Opinion involving plaintiffs’ claim for UIM benefits, the Court of Appeals held that Auto Owners was not equitably estopped from enforcing an exclusion in plaintiffs’ policy regarding UIM benefits, because plaintiffs had violated the policy’s terms by entering into a settlement agreement with the at-fault driver’s insurer without first obtaining written consent from Auto Owners.

This case arises out of an auto accident that caused injuries to plaintiff John McAuliffe. Plaintiff’s wife, Ruth L. Rye, also alleged a loss of consortium claim. Defendant Auto Owners was plaintiffs’ no-fault insurer. Plaintiffs settled a claim for benefits with the no-fault insurer (Nationwide) of the other driver involved in the accident. Plaintiffs then filed a claim for UIM benefits with Auto Owners, which rejected the claim. Plaintiffs brought this action seeking UIM coverage. Auto Owners moved for summary disposition, arguing that plaintiffs were not entitled to UIM benefits because they had failed to obtain written consent to settle prior to the settlement with Nationwide, contrary to the terms of an exclusion in the policy. The Auto Owners policy provided $500,000 in UIM coverage, subject to a specific exclusion with respect to “any person who settles a bodily injury claim without our written consent.” The trial court denied Auto Owners’ motion for summary disposition, finding that Auto Owners was equitably estopped (through silence) from relying on the policy language.

The Court of Appeals held that, due to the “dearth of evidence” to support plaintiffs’ arguments, plaintiffs were barred from recovering UIM benefits under the “plain and unambiguous language” of the policy, because plaintiffs never sought Auto Owners consent to settle before the settlement with Nationwide was reached.

Relying on the language of plaintiffs’ policy, the Court of Appeals concluded:

“On appeal, the insurer argues that it was not equitably estopped from enforcing the plain and unambiguous language of the policy exclusion relative to UIM benefits on the basis of failure to respond or silence, where plaintiffs never made a request for consent to settle. We agree. … There is no dispute that plaintiffs failed to obtain written consent from the insurer with respect to the underlying settlement with Nationwide and its policy holders. Therefore, under the plain and unambiguous language of the UIM exclusion in the insurance policy, plaintiffs were not entitled to UIM benefits. The question becomes whether the doctrine of equitable estoppel can overcome this contractual obstacle. … Reasonable minds would not differ in agreeing that the record simply does not lend any support for the conclusion that the insurer, by its silence, intentionally or negligently induced plaintiffs to believe that it was consenting to the settlement at issue. … Accordingly, there is no genuine issue of material fact regarding the complete lack of reliance on the insurer’s silence. And, under the circumstances, reasonable minds would agree, assuming the existence of documentary evidence showing reliance, that the presumed reliance would not have been justified. In sum, there was no basis to invoke equitable estoppel; therefore, the policy exclusion was enforceable and barred plaintiffs’ claim for UIM benefits. Accordingly, the trial court erred in denying the insurer’s motion for summary disposition.”

Accordingly, the Court of Appeals reversed and remanded for entry of judgment in favor of Auto Owners.

Lansing car accident lawyer Stephen Sinas is the lead editor of the appellate case summaries published on this site regarding the Michigan auto insurance law. To learn more about how Stephen Sinas and how the Sinas Dramis Law Firm can help you if you have been injured in a Michigan auto accident, visit

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