Auto-Owners Ins. Co. v. Elchuk

• Decision Date: 04 February 1981
• Docket Number: AUTO-OWNERS,Docket No. 49910
• Parties: INSURANCE COMPANY, a Michigan Corporation, Plaintiff-Appellant, v. Artem and Theresa ELCHUK, d/b/a Capitol Car Wash, Defendants-Appellees. 103 Mich.App. 542, 303 N.W.2d 35
• Court: Court of Appeal of Michigan — District of US

Page 35

303 N.W.2d 35

AUTO-OWNERS INSURANCE COMPANY, a Michigan Corporation Plaintiff-Appellant, v. Artem and Theresa ELCHUK, d/b/a Capitol Car Wash Defendants-Appellees.

Docket No. 49910.

103 Mich.App. 542, 303 N.W.2d 35

Court of Appeals of Michigan.

Feb. 4, 1981.

Released for Publication March 23, 1981.

[103 MICHAPP 543] George H. Wyatt, III, East Lansing, for plaintiff-appellant.

William L. Ferrigan, Grand Ledge, for defendants-appellees.

Before V. J. BRENNAN, P. J., and ALLEN and BEASLEY, JJ.

V. J. BRENNAN, Presiding Judge.

The question presented on this appeal is whether the trial court properly dismissed the action below on the ground that it lacked subject matter jurisdiction over the claim.

In its complaint, plaintiff alleged that a policy of workers' disability compensation insurance inaccurately expressed the effective date of the policy. By terms of the policy, coverage commenced on February 2, 1979, at 12:01 a. m. Plaintiff asserted that this did not reflect the understanding and intention of the parties to this action inasmuch as the request for coverage was made subsequent to an injury to one of defendants' employees, which occurred at approximately 10 a. m. on that date. [103 MICHAPP 544] Plaintiff's agent allegedly accepted the application from defendants, but specified that the policy would not insure against a loss which had already occurred. Plaintiff alleged the defendants sought to recover under the terms of the policy as a workers' compensation claim had been filed by the injured employee naming the insured and the insurer as parties. Plaintiff requested the lower court to issue a declaratory order reforming the terms of the insurance policy to accurately reflect the contractual intention of the parties.

In their answer, defendants claimed that the injury occurred after the request for insurance coverage. Defendants denied any conditions or limitations as to the issuance of the policy. In light of the action pending before the Bureau of Workmen's Compensation, defendants requested dismissal of the civil suit pursuant to GCR 1963, 116.1(4), on the basis that the Bureau was the proper forum to determine plaintiff's liability.

Subsequently, the trial court dismissed the action on the ground that it lacked subject matter jurisdiction. The court relied on M.C.L. § 418.841; M.S.A. § 17.237(841) and St. Paul Fire & Marine Ins. Co. v. Littky, 60 Mich.App. 375, 230 N.W.2d 440 (1975), for its conclusion that exclusive jurisdiction was vested in the Bureau of Workmen's Compensation to determine the issue of liability under the insurance contract.

M.C.L. § 418.841; M.S.A. § 17.237(841) requires that "(a)ny controversy concerning compensation shall be submitted to the bureau and all questions arising under this act shall be determined by the bureau". This statutory enactment has been construed as vesting in the Bureau of Workmen's Compensation the exclusive jurisdiction to resolve all disputes relating to workmen's compensation, St. Paul Fire & Marine Insurance Co. v. Littky, supra.

[103 MICHAPP 545] In Littky, an insurance company sought a declaratory judgment with respect to its liability under a policy issued to the employer. The complaint alleged that an employee had filed a petition with the Bureau of Workmen's Compensation seeking compensation for injuries sustained while in the course of employment. Allegedly, the injured employee was engaged in the practice of law although he had never been licensed to practice in this state. The sole question in Littky was whether, under a clause excluding from coverage any employee employed in violation of law, plaintiff was liable to defendant. The circuit court dismissed the complaint on the basis that the Bureau of Workmen's Compensation was the proper forum to determine the rights and liabilities of the parties. This Court affirmed, ruling that "(a) declaratory judgment action cannot be maintained to resolve disputes which are within the exclusive jurisdiction of an administrative agency. United Skilled Maintenance Trades Employees of the Board of Education of Pontiac v. Pontiac Board of Education, 375 Mich. 573, 134 N.W.2d 736 (1965)." Littky, supra, 60 Mich.App. 375, 378, 230 N.W.2d 440.

However, we conclude that the statutory bar of M.C.L. § 418.841; M.S.A. § 17.237(841) and the underlying facts of Littky are distinguished in the instant case, and, hence, the trial court's reliance upon them was misplaced.

We begin by noting that the gravamen of plaintiff's complaint is reformation of the insurance policy, i. e., whether the terms of the policy reflect the agreement struck between the...