Besic v. Citizens Ins. Co. of The Midwest.

• Decision Date: 14 September 2010
• Docket Number: Docket No. 291051.
• Citation: 290 Mich.App. 19,800 N.W.2d 93
• Parties: BESICv.CITIZENS INSURANCE COMPANY OF THE MIDWEST.
• Court: Court of Appeal of Michigan — District of US

290 Mich.App. 19

800 N.W.2d 93

BESIC

v.CITIZENS INSURANCE COMPANY OF THE MIDWEST.

Docket No. 291051.

Court of Appeals of Michigan.

Submitted July 6, 2010, at Detroit.Decided Sept. 14, 2010, at 9:05 a.m.

Garan Lucow Miller, P.C. (by Daniel S. Saylor and Caryn A. Gordon), Detroit, for Citizens Insurance Company of the Midwest.Sullivan, Ward, Asher & Patton, P.C. (by Thomas L. Auth, Jr.), Southfield, for Clearwater Insurance Company.Law Offices of Ronald M. Sangster, Jr., PLLC (by Ronald M. Sangster, Jr.), Troy, for Lincoln General Insurance Company.Before: MURRAY, P.J., and DONOFRIO and GLEICHER, JJ.PER CURIAM.

The dispute before us concerns which of three insurance companies must shoulder responsibility for payment of plaintiff Muhamed Besic's first-party no-fault insurance benefits. In a summary disposition ruling, the circuit court imposed liability for all of Besic's first-party benefits on defendant Clearwater Insurance Company, which issued plaintiff a bobtail insurance policy. Clearwater appeals as of right, and we affirm.

I. UNDERLYING FACTS AND PROCEEDINGS

In January 2007, Besic, a Michigan resident, sustained personal injuries in a motor vehicle accident in Ohio. At the time of the accident, Besic was driving a tractor-trailer rig, hauling freight from Illinois to New York. Besic owned the tractor, registered and licensed the vehicle in Michigan, and leased it to MGR Express, Inc., pursuant to a “Contractor Operating Agreement” (COA). The COA identified Besic Express, a corporation solely owned by Besic, as the contractor and owner of the truck; however, Besic testified at his deposition that he owned the truck personally. The COA contemplated that during the term of the lease, MGR would “assume all responsibility and pay for all liability insurance” for the truck “while [Besic] is operating under the terms of this Agreement,” and that Besic “has and reserves the right to contract independently for Workers' Compensation coverage, bobtail, ¹ or physical damage insurance required hereunder and for health and accident or other insurance....”

MGR bought liability insurance for the truck from defendant Lincoln General Insurance Company. Besic purchased bobtail insurance coverage from Clearwater. Defendant Citizens Insurance Company of the Midwest insured Besic's household vehicles.

In November 2007, Besic sued Citizens in the Wayne Circuit Court, seeking payment of first-party no-fault benefits related to the injuries he sustained in the Ohio accident. Besic subsequently amended his complaint to add Clearwater and Lincoln as defendants. In February 2008, Clearwater filed cross-claims against Citizens and Lincoln, requesting “reimbursement or recoupment ... for the entire amounts of monies paid” by Clearwater and asserting that Citizens and Lincoln shared “a higher order of priority to pay Michigan no-fault benefits.” The cross-claims also sought reformation of the Lincoln policy if the court determined that it “does not include an express provision for Michigan no-fault coverage....”

All parties filed motions for summary disposition. At a September 2008 hearing, the circuit court expressed on the record its finding that the

Lincoln contract, MGR contract with Muhamed Besic doesn't require him to provide PIP [personal injury protection insurance] coverage, and they provided liability only, so the Court will grant Lincoln's motion for Summary Disposition....

And Clearwater's argument under the exclusions of page two subsection C, the Court finds that none of those apply. Clearwater's motion for Summary Disposition is denied.

In October 2008, the court entered an order granting summary disposition to Citizens and Lincoln, denying Clearwater summary disposition, and granting Besic summary disposition with respect to Clearwater only. Besic settled his claim against Clearwater,² and in March 2009 the circuit court dismissed the action with prejudice.

II. SUMMARY DISPOSITION STANDARD OF REVIEW

Clearwater challenges the circuit court's summary disposition rulings, which we review de novo. Walsh v. Taylor, 263 Mich.App. 618, 621, 689 N.W.2d 506 (2004). The circuit court did not specify under which subrule of MCR 2.116(C) it found summary disposition appropriate, but a review of the record reflects that the court considered documentation beyond the pleadings and thus made its summary disposition rulings under MCR 2.116(C)(10). Subrule (C)(10) tests a claim's factual support. “In reviewing a motion under MCR 2.116(C)(10), this Court considers the pleadings, admissions, affidavits, and other relevant documentary evidence of record in the light most favorable to the nonmoving party to determine whether any genuine issue of material fact exists to warrant a trial.” Walsh, 263 Mich.App. at 621, 689 N.W.2d 506.

[290 Mich.App. 24 , 800 N.W.2d 96]

III. COVERAGE OF BESIC'S FIRST–PARTY PERSONAL INJURY PROTECTION BENEFIT CLAIM UNDER CLEARWATER'S BOBTAIL POLICY

Clearwater initially submits that its bobtail insurance policy plainly offered only limited coverage that did not apply when Besic had an accident while under dispatch, the situation in this case. Clearwater emphasizes that the bobtail policy endorsement with respect to Michigan personal injury protection (PIP) coverage ³ must be read in conjunction with the rest of the policy, which excludes coverage when the insured suffers injury while under motor dispatch.

When reviewing an insurance policy dispute, an appellate court looks “ ‘to the language of the insurance policy and interpret[s] the terms therein in accordance with Michigan's well-established principles of contract construction.’ ” Citizens Ins. Co. v. Pro–Seal Serv. Group, Inc., 477 Mich. 75, 82, 730 N.W.2d 682 (2007), quoting Henderson v. State Farm Fire & Cas. Co., 460 Mich. 348, 353–354, 596 N.W.2d 190 (1999).

“First, an insurance contract must be enforced in accordance with its terms. A court must not hold an insurance company liable for a risk that it did not assume. Second, a court should not create ambiguity in an insurance policy where the terms of the contract are clear and precise. Thus, the terms of a contract must be enforced as written where there is no ambiguity.”

[ Citizens Ins. Co., 477 Mich. at 82, 730 N.W.2d 682, quoting Henderson, 460 Mich. at 354, 596 N.W.2d 190.]

In deciding whether an insured is entitled to insurance benefits, we employ a two-part analysis. Heniser v. Frankenmuth Mut. Ins. Co., 449 Mich. 155, 172, 534 N.W.2d 502 (1995). “First, we determine if the policy provides coverage to the insured.” Id. (quotation marks and citation omitted). “An insurer is free to define or limit the scope of coverage as long as the policy language fairly leads to only one reasonable interpretation and is not in contravention of public policy.” Id. at 161, 534 N.W.2d 502. If the policy does supply coverage, “we then ascertain whether that coverage is negated by an exclusion. It is the insured's burden to establish that his claim falls within the terms of the policy.” Id. at 172, 534 N.W.2d 502 (quotation marks and citation omitted).

The Clearwater policy contains a “Certificate of Non–Trucking Automobile Liability Insurance,” which states in relevant part, “No coverage is afforded when the described vehicle(s) is (are): 1. Under motor carrier direction, control, or dispatch.” The policy also incorporates an endorsement entitled “Michigan Truckers—Insurance for Non–Trucking Use,” which reads:

For the covered “auto” described in this endorsement, LIABILITY COVERAGE, Michigan Personal Injury and Property Protection coverages are changed as follows:

A. LIABILITY COVERAGE does not apply while the covered “auto” is used in the business of anyone to whom it is leased or rented if the lessee has liability insurance sufficient to pay for damages in accordance with Chapter 31 of the Michigan [Insurance] Code [MCL 500.3101 et seq.].

B. Michigan Personal Injury and Property Protection coverages do not apply to “bodily injury” or “property damage” resulting from the operation, maintenance or use of the covered “auto” in the business of anyone to whom it is leased or rented if the lessee has Michigan Personal Injury and Property Protection coverages on the “auto.” [Emphasis added.]

As discussed in greater detail in part IV of this opinion, the lessee of Besic's truck, MGR, did not buy “Michigan Personal Injury and Property Protection” coverage for Besic's truck. In light of the plain and unambiguous language of the Clearwater “Michigan Truckers—Insurance for Non–Trucking Use” endorsement, the Clearwater policy thus affords coverage. Clearwater essentially concedes this conclusion in its brief:

While [Besic] relied upon this provision as creating a duty to pay personal protection (“PIP”) benefits, the Endorsement's language did not create such a new duty. Rather, the Endorsement's language serves instead to limit any such duty which may otherwise exist to pay PIP benefits under the policy to those instances where PIP coverage is not available under any other policy. However, as explained, the duty to pay PIP benefits does not otherwise exist under the policy when the truck is under dispatch.

We reject Clearwater's contention that because the policy language in general excludes coverage while the truck is under dispatch, the endorsement should be similarly construed. “[E]ndorsements often are issued to specifically grant certain coverage or remove the effect of particular exclusions. Thus, such an endorsement will supersede the terms of the exclusion in question.” 4 Holmes, Appleman on Insurance (2d ed), § 20.1, p 156. “When a conflict arises between the terms of an endorsement and the form provisions of an insurance contract, the terms of the endorsement prevail.” Hawkeye–Security Ins. Co. v. Vector Constr. Co., 185 Mich.App. 369, 380, 460 N.W.2d 329 (1990). “[E]ndorsements by their very nature are designed to trump general policy provisions, and where a conflict exists between...