Allstate Ins. Co. v. Keillor, Docket No. 116006

• Citation: 476 N.W.2d 453,190 Mich.App. 499
• Decision Date: 05 August 1991
• Docket Number: Docket No. 116006
• Court: Court of Appeal of Michigan (US)
• Parties: ALLSTATE INSURANCE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. William KEILLOR, Personal Representative of the Estate of Susan Keillor, Deceased, Defendant-Counter-Plaintiff-Appellant.

Page 453

476 N.W.2d 453

190 Mich.App. 499

ALLSTATE INSURANCE COMPANY, Plaintiff-Counter-Defendant-Appellee, v. William KEILLOR, Personal Representative of the Estate of Susan Keillor, Deceased Defendant-Counter-Plaintiff-Appellant.

Docket No. 116006.

Court of Appeals of Michigan.

Submitted March 19, 1991, at Lansing.

Decided Aug. 5, 1991, at 9:20 a.m.

Released for Publication Nov. 18, 1991.

Chasnis, Dogger & Grierson, P.C. by John A. Chasnis, Saginaw, for plaintiff-counter-defendant-appellee.

Kalo, Zilinski & Swann, P.C. by Philip D. Swann, Burton, for defendant-counter-plaintiff-appellant.

Before HOOD, P.J., and JANSEN and ALLEN, ^* JJ.

JANSEN, Judge.

The present action stems from an automobile accident in which defendant William Keillor's wife was killed. The accident allegedly was caused by Scott Koppelberger, a minor, who had been furnished alcoholic beverages by Daniel Hayes, plaintiff's insured. Plaintiff brought a declaratory action against defendant and Hayes, among others, to determine whether plaintiff owed a duty to defend or provide coverage to Hayes. All of the original defendants in the declaratory action, including Hayes but not defendant Keillor, either entered into a consent judgment or defaulted. Following a hearing on February 14, 1989, the trial court granted plaintiff's motion for summary disposition. Defendant appeals as of right, alleging: (1) the trial court erred in holding that he did not have standing to litigate Hayes' coverage, (2) the default judgment against Hayes does not bind him, (3) plaintiff is estopped from asserting the automobile exclusion, and (4) the criminal-acts exclusion and the motor-vehicle exclusion should not be interpreted to deny coverage. We hold that defendant does not have standing to litigate the extent of Hayes' insurance coverage, and we affirm the trial court's grant of summary disposition.

On appeal, defendant claims that he has standing as a third-party beneficiary to litigate the extent of Hayes' coverage because he has an interest in the action since he seeks the insurance proceeds in a tort action. We hold that, under Michigan law, defendant does not have standing as a third-party beneficiary of the contract of insurance. Michigan's third-party beneficiary statute, M.C.L. § 600.1405; M.S.A. § 27A.1405, states:

Any person for whose benefit a promise is made by way of contract, as hereinafter defined, has the same right to enforce said promise that he would have had if the said promise had been made directly to him as the promisee.

(1) A promise shall be construed to have been made for the benefit of a person whenever the promisor of said promise has undertaken to give or to do or refrain from doing something directly to or for said person.

In order for defendant to assert rights under Hayes' insurance policy, defendant must be an intended third-party beneficiary of the contract. To create an intended-beneficiary relationship, the promisor must have undertaken to do something to or for the benefit of the party asserting status as an intended beneficiary. Rieth-Riley Construction Co., Inc. v. Dep't of Transportation, 136 Mich.App. 425, 429-430, 357 N.W.2d 62 (1984). In interpreting the contract, we use an objective standard to discern the parties' intentions from the contract itself. Id. Where the contract is primarily for the benefit of the parties thereto, the mere fact that a third person would be incidentally benefited does not give that third person the right to recover for its breach. Id. at 430-431, 357 N.W.2d 62.

In Itrich v. Huron Cement Division of National Gypsum Co., 670 F.Supp. 199 (E.D.Mich., 1987), the court addressed the Michigan third-party beneficiary statute in the context of an insurance contract. The Itr...