Auto-Owners Ins. Co. v. Leefers

• Decision Date: 20 December 1993
• Docket Number: AUTO-OWNERS,Docket Nos. 152342,152648
• Citation: 203 Mich.App. 5,512 N.W.2d 324
• Parties: INSURANCE COMPANY, Plaintiff-Appellee, v. Brenton LEEFERS, Personal Representative of the Estate of Phyllis Ann Leefers, Deceased, and Jauron Katrina Leefers, a minor, Defendant, and Keysha Deneen Cash, Defendant-Appellant.INSURANCE COMPANY, Plaintiff-Appellee, v. Brenton LEEFERS, Personal Representative of the Estate of Phyllis Ann Leefers, Deceased, and Jauron Katrina Leefers, a minor, Defendant-Appellant, and Keysha Deneen Cash, Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 324

512 N.W.2d 324

203 Mich.App. 5

AUTO-OWNERS INSURANCE COMPANY, Plaintiff-Appellee, v. Brenton LEEFERS, Personal Representative of the Estate of

Phyllis Ann Leefers, Deceased, and Jauron Katrina

Leefers, a minor, Defendant,

and

Keysha Deneen Cash, Defendant-Appellant.

AUTO-OWNERS INSURANCE COMPANY, Plaintiff-Appellee, v. Brenton LEEFERS, Personal Representative of the Estate of

Phyllis Ann Leefers, Deceased, and Jauron Katrina

Leefers, a minor, Defendant-Appellant,

and

Keysha Deneen Cash, Defendant.

Docket Nos. 152342, 152648.

Court of Appeals of Michigan.

Submitted June 3, 1993, at Lansing.

Decided Dec. 20, 1993, at 9:00 a.m.

Released for Publication March 4, 1994.

Reeves & Jones, P.C. by Donald L. Jones, Lansing, for plaintiff-appellee.

Hardy, Lewis, Pollard & Page, P.C. by Thomas Hardy, Birmingham, for Brenton Leefers and Jauron Leefers.

Abood, Abood & Rheaume, P.C. by David P. Pasichnyk, Lansing, for Keysha Cash.

Before REILLY, P.J., and SAWYER and CLULO, ^* JJ.

CLULO, Judge.

In Docket No. 152342, defendant Keysha Cash appeals an April 30, 1992, order of summary disposition for the plaintiff in its action for declaratory relief whereby plaintiff's complaint for interpleader was granted and plaintiff was ordered to remit the sum of $250,000 to the court for disbursement to defendants as compensation for injuries they suffered in an automobile accident. The order further enjoined Cash from pursuing a suit for coverage under her grandfather's insurance policy. In Docket No. 152648, defendant Brenton Leefers appeals from the same order. We affirm.

On January 27, 1990, Phyllis Leefers, now deceased, was operating her motor vehicle in which defendants Jauron Leefers and Keysha Cash were passengers. The vehicle was struck by an automobile owned and operated by Josh Prather. Phyllis Leefers died as a result of injuries she sustained in the accident, while both Jauron Leefers and Keysha Cash sustained serious injuries. It is undisputed that the sole cause of the accident was Prather's negligence.

Prather had a policy of liability insurance with State Farm Insurance Company that limited coverage to $50,000 a person and $100,000 an occurrence. The proceeds from the policy were distributed as follows: the estate of Phyllis Leefers received $50,000, Jauron Leefers received $10,000, and Keysha Cash received $40,000. It is undisputed that the Prather policy was inadequate to cover the damages of each defendant, requiring defendants to make claims under other insurance policies. Phyllis Leefers' policy (hereinafter the Leefers policy), issued by plaintiff, contained an underinsurance clause that limited coverage to $300,000 a person and an occurrence. ¹ Similarly, Keysha Cash's grandfather, Arthur L. Hall, had a policy (hereinafter the Hall policy) issued by plaintiff containing an identical clause for underinsured motorist coverage. ²

On October 15, 1991, plaintiff filed a complaint for interpleader on the basis that defendants had made conflicting claims for underinsured motorist coverage under the Leefers and Hall policies and were unable to agree upon a division of the benefits. Plaintiff offered to submit $250,000 to the court (representing the coverage of $300,000 an occurrence under the Leefers policy less the coverage of $50,000 a person paid under the Prather policy) and walk away from further liability for any damage that arose out of the accident. Plaintiff denied any liability under the Hall policy on the basis of a clause in the Hall policy that provides:

This coverage shall not apply: (a) to bodily injury to an insured sustained while in, upon, entering or alighting from, any motor vehicle not owned by the insured if the owner has insurance similar to that afforded by this coverage and such coverage is available to the insured....

On the basis of this exclusion and our Supreme Court's decision in Rowland v. DAIIE, 388 Mich. 476, 201 N.W.2d 792 (1972), the trial court concluded that Cash was precluded from seeking underinsured motorist benefits under the Hall policy. Thereafter, the parties entered into a conditional consent decree whereby the $250,000 in underinsured motorist benefits available under the Leefers policy were distributed to defendants in prorated shares. ³

On appeal, defendants ⁴ claim that because it is agreed that the aggregate amount of their injuries exceeds the adjusted $250,000 limitation of underinsured motorist coverage available under the Leefers policy, the underinsured motorist coverage that would otherwise be available to Cash is, in fact, not available and that, therefore, the identical exclusion in the Hall policy does not operate to preclude Cash's recovery of underinsured motorist benefits under the Hall policy. In response, plaintiff claims that because defendants have equal rights to the underinsured motorist coverage under the Leefers policy, the benefits are equally available to all and the clause in the Hall policy operates to exclude Cash's recovery of underinsured motorist benefits from the Hall policy. We resolve this issue of first impression in favor of plaintiff and affirm the decision of the trial court.

In determining that the aforementioned clause prevented Cash from availing herself of the underinsurance coverage under the Hall policy, the trial court relied upon our Supreme Court's decision in Rowland. On appeal, defendants seek to distinguish the holding of Rowland, while plaintiff argues that the case is controlling.

In Rowland, the claimant was a guest passenger who was injured when the host driver had an accident caused solely by the negligent acts of an uninsured motorist. The host driver and the guest passenger had policies of insurance with identical uninsured motorist coverage of up to $10,000 for each passenger. The guest passenger recovered $10,000 from the host driver's policy, which was admittedly insufficient to compensate her for the injuries she sustained. She then turned to her own policy of insurance and sought uninsured motorist benefits, which the trial court denied on the basis of an exclusion similar to the one in the Hall policy. In affirming the decision of the trial court, our Supreme Court concluded that the policies provided identical uninsured motorist coverage and that the guest passenger was limited to recovery under the host policy. Rowland, supra at 481, 201 N.W.2d 792. The Court found it significant that the host and guest were insured by the same company. Id.

In the present case, defendants argue that Rowland is distinguishable on two separate grounds. First, defendants claim that the $10,000 a person guarantee in the policies at issue in Rowland assured the policyholder that the funds articulated would be "available" to an insured, whereas in this case there was no such guarantee. Second, defendants argue that different purposes are served by uninsured motorist benefits than are served by the underinsurance benefits at issue here. While it is true that the Rowland case is factually distinguishable, we cannot agree with defendants that the differences warrant coverage under both the Leefers and Hall policies.

Because underinsured motorist benefits are not statutorily mandated, we must look to policy interpretation to determine under what circumstances benefits are to be provided. Rohlman v. Hawkeye-Security Ins. Co., 442 Mich. 520, 525, 502 N.W.2d 310 (1993). In interpreting a policy of insurance, we are obligated to construe clear and unambiguous provisions according to the plain and ordinary meaning of the terms as used in the provision. Clevenger v. Allstate Ins. Co., 443 Mich. 646, 654, 505 N.W.2d 553 (1993). A provision is said to be ambiguous when its words may reasonably be understood in different ways. Id., quoting Raska v. Farm Bureau Ins. Co., 412 Mich. 355, 362, 314 N.W.2d 440 (1982). An ambiguous contract is to be construed against its drafter and in favor of coverage. Id. at 654.

In the instant case, we are faced with the task of construing an exclusion containing the term "available." While no court in this state has specifically construed that term, courts of foreign jurisdictions have done so. See Hoffman v. United Services Auto Ass'n, 671 F.Supp. 922 (D.Conn.1987); Kraft v. Allstate Ins. Co., 6 Ariz.App. 276, 279, 431 P.2d 917, 920 (1967); Gordon v. Maupin, 469 S.W.2d 848, 850 (Mo.App.1971). Each of those courts concluded that the term is ambiguous and is to be construed against the insurer. Hoffman, supra at 924; Kraft, supra 6 Ariz.App. at 279, 431 P.2d at 920; Gordon, supra at 849-850. Each of the courts also concluded that the term "available," when construed in favor of the insured, meant "actually available" or "accessible," or that which is reasonably available, as opposed to that which is theoretically or hypothetically available. Hoffman, supra at 925; Kraft, supra at 279, 431 P.2d at 920; Gordon, supra at 850.

In the instant case, we agree that the term "available" is ambiguous, inasmuch as it is capable of being defined in different ways. Clevenger, supra 443 Mich. at 654, 505 N.W.2d 553. Moreover, we agree with those jurisdictions cited above that have construed the term to...