Michigan Court of Appeals; Docket # 323036; Unpublished
Judges Shapiro, O'Connell, and Gleicher (Judge O'Connell concurring) (Judge Gleicher concurring); Unanimous, Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Lead Opinion; Link to Judge O'Connell's Concurring Opinion; Link to Judge Gleicher's Concurring Opinion
In this unanimous unpublished per curiam Opinion involving the renewal of a no-fault policy, the Court of Appeals issued several rulings:
1) a letter and other documents the insurer sent to its insured constituted a renewal of the policy, and not merely an offer of renewal;
2) when the insurer's attempt to debit the insured's account for payment of her premium was denied due to insufficient funds, the insurer was required to send a cancellation notice to the insured in order to successfully cancel the policy for nonpayment of her premium; and
3) the insurer was obligated to pay the insured PIP benefits when she was injured in an auto accident after it had sent the aforementioned letter and documents, but before it had unsuccessfully attempted to debit her premium payment.
Plaintiff Sandra Owen had a no-fault policy with defendant Bristol West Preferred Insurance Company and used a direct debit program to pay her premiums. In early February 2012, Bristol West sent plaintiff a letter and other documents regarding her policy renewal, which was set for March 9, 2012. The policy also indicated that Bristol West could only cancel for nonpayment of a premium after providing at least 10 days' notice. Plaintiff was involved in a car accident on March 11, 2012. However, Bristol West did not attempt to debit plaintiff's bank account for payment of her premium until March 12, 2012, and on that day, the account had insufficient funds. When plaintiff sought PIP benefits after her accident, Bristol West denied her claim, asserting the policy was not in effect at the time of the accident, although it never sent her a cancellation notice. Plaintiff filed suit seeking coverage. The trial court ruled the policy was in effect on the day of the accident.
On appeal, Bristol West argued it was not required to send a cancellation notice to plaintiff because the policy renewal never took effect, since the debit had failed. Bristol West also claimed the letter and documents sent to plaintiff about a month before the accident were merely an offer to renew the policy, which were not accepted until payment was made.
In three separate opinions, the Court of Appeals rejected Bristol West's arguments.
Judge Shapiro authored the lead opinion, explaining that if the letter and documents constituted a renewal, then plaintiff's policy was in effect on the day of the accident. However, if they were merely an offer to renew contingent on payment, then the policy was not in effect, he said.
According to Judge Shapiro, the letter and documents were a renewal of the policy and not merely a bill. He noted that Bristol West sent plaintiff a proof of insurance certificate that said: "BRISTOL WEST INSURANCE COMPANY, an authorized Michigan insurer, certifies that it has issued a policy complying with [Michigan's No-Fault Act] for the described motor vehicle." The past-tense phrase "has issued" indicated the policy was in effect, he said.
Judge Shapiro also noted that several other factors indicated the policy was in effect at the time of plaintiff's accident:
• The insurance certificate said the policy was issued and effective March 9, 2012.
• The letter and documents did not include the word "offer" and thanked plaintiff for choosing Bristol West as her insurer.
• The letter and documents said an automatic payment plan had been arranged.
• The letter did not indicate that plaintiff had to do anything further.
• The payment schedule did not advise plaintiff that, if an automatic payment was rejected, it would result in immediate cancellation of the policy.
Based on the foregoing, Judge Shapiro concluded:
"Because the policy was not properly cancelled, plaintiff's policy was in effect on the date of the accident, and the trial court did not err in granting summary disposition in plaintiff's favor."
Judge O'Connell, in his concurrence, noted the majority of the evidence showed the policy was renewed with no lapse in coverage. He further said that Bristol West's practice of automatically renewing coverage and including a bill with the renewal notice was "consistent with an agreement for the parties to renew the insurance contract."
Judge O'Connell further pointed out that Bristol West had to provide 10 days' notice before canceling the policy, which it did not do. As a result, he concluded:
"In my opinion, the ... correspondence cannot be considered an offer to renew; it is an actual renewal. Therefore, plaintiff was insured at the time of the accident."
Judge Gleicher, in her concurring opinion, said the letter and documents were merely an offer to renew. In so holding, she focused on the automatic payments, noting that Bristol West determined the dates on which the debits would occur. She pointed out that Bristol West, acting alone, determined the dates of these automatic debits.
Judge Gleicher further explained that plaintiff's acceptance of the renewal offer had to occur on the date that Bristol West chose for the automatic payment. In this regard, she said the failure of the attempted automatic payment on March 12 indicated that plaintiff rejected Bristol West's offer for renewal coverage.
Judge Gleicher continued by noting that plaintiff's accident occurred one day before Bristol West sought plaintiff's acceptance of its renewal offer by automatically debiting her account, which meant that plaintiff could not have accepted or rejected the renewal offer until March 12. As a result, she said that Bristol West's inaction "induced" plaintiff to believe that between March 8 and 12, her original policy remained in effect.
Based on this, Judge Gleicher said Bristol West was equitably estopped from denying coverage for the March 11 accident. She concluded:
"To hold otherwise would mean that Owen's no-fault coverage lapsed during the three days before Owen was required to accept the renewal coverage, rendering her 'bare' for no-fault insurance purposes through no fault of her own."