Casey v. Auto Owners Ins. Co.
| Decision Date | 21 September 2006 |
| Docket Number | Docket No. 266576. |
| Citation | 729 N.W.2d 277,273 Mich. App. 388 |
| Parties | Everett CASEY and Maryalice Casey, Plaintiffs-Appellants, v. AUTO OWNERS INSURANCE COMPANY, Home-Owners Insurance Company, ASU Group, and Meredith Reschly, Defendants-Appellees. |
| Court | Court of Appeal of Michigan — District of US |
Kopka, Pinkus, Dolin & Eads, PLC (by Mark L. Dolin and Angela K. Harmon-Kuhl), Farmington Hills, for ASU Group and Meredith Reschly.
Before: WHITBECK, C.J., and HOEKSTRA and WILDER, JJ.
Plaintiffs, Everett and Maryalice Casey, appeal as of right the trial court orders denying the Caseys' motions for summary disposition under MCR 2.116(C)(10) and granting defendants, Auto-Owners Insurance Company and its subsidiary Home-Owners Insurance Company (collectively referred to as Auto-Owners), ASU Group, and Meredith Reschly, summary disposition under MCR 2.116(C)(8) and (C)(10). This case arose when a fire damaged the Caseys' home and they filed a claim for insurance benefits. We affirm.
On November 10, 2001, a fire damaged the Caseys' Orchard Lake home. At the time of the fire, Auto-Owners insured the property for fire loss. The policy, which was allegedly effective on the date of the fire, provided the following coverage limits: $805,500 for the dwelling, $80,550 for other structures, $563,850 for personal property, and $161,100 for additional living expenses. The Caseys' principal allegation is that they were not advised of the $805,500 dwelling coverage limit, which was significantly lower than the previous years' dwelling coverage limits.
The Caseys filed suit in propria persona, disputing the amount of coverage available to them under the policy and seeking reformation of the policy limits to an amount that would cover their claimed actual losses, alleging breach of contract and equitable estoppel, and requesting punitive damages. The Caseys alleged that Auto-Owners erroneously recalculated the replacement cost of the home, and then unilaterally and tortiously reduced the replacement-cost coverage. The Caseys asserted that the adjusted policy limits were erroneously low and that Auto-Owners had a duty to establish limits that would actually cover their losses. The Caseys further alleged that ASU Group and its adjuster, Meredith Reschly, whom Auto-Owners appointed to assess the Caseys' property damage, tortiously induced them not to employ a public adjuster and to instead rely on Reschly's determinations. In January 2003, New York attorney Joseph A. Camardo, Jr., was admitted as pro hac vice counsel on the Caseys' behalf.
Numerous competing motions for summary disposition followed. The trial court concluded that equitable estoppel was not a proper cause of action, that Michigan does not recognize a tort claim for bad-faith breach of contract, and that Michigan does not allow punitive damages. The trial court further concluded that exemplary damages were not proper because the Caseys failed to allege torts independent of the claimed breach. The trial court declined to recognize the Caseys' allegations of bad-faith denial of insurance claims and breach of implied duty of good faith and fair dealing as valid claims. With respect to the Caseys' breach of contract and reformation claims, the trial court noted that the Caseys admitted that Reschly had no part in the policy limits' being reduced. The trial court also noted that Everett Casey admitted that he was informed of the policy change at the time it took effect. The trial court then explained that the Caseys did not seek other insurance but accepted the reduced limit by making premium payments after receiving notice of the change. The trial court also concluded that the Caseys misinterpreted MCL 500.2117 because, contrary to their assertions, subsection i of that statute did not require minimum 80 percent replacement cost insurance. The trial court concluded, "Given that the defendant has tendered the policy limits, . . . [there is] no basis for a claim for breach of contract" or reformation of the contract. The trial court ordered that Auto-Owners retender any policy limits that the Caseys had rejected. Ultimately, the trial court granted defendants' motions for summary disposition and denied the Caseys' motions for summary disposition.
The Caseys also moved several times to amend their complaint. The trial court initially denied the motion; however, on reconsideration, the trial court ruled that the Caseys could "amend the complaint to allege further facts relating to the events leading up to the defendants' rejection of [their] insurance claims," but could "not amend to add new counts, claims, or causes of action." Despite the trial court's ruling, the Caseys attempted once more to amend their complaint, but the trial court denied their motion, stating that the 23-count proposed amendment was late and simply restated claims that were previously dismissed.
The Caseys asserted that they were entitled to a mandatory award of statutory interest under MCL 600.6013. The Caseys contended that the previous tenders were conditional advances that became binding on the trial court's order directing Auto-Owners to retender the policy limits. The trial court concluded that no interest was due on the amounts paid before litigation commenced or the amounts that Auto-Owners paid and the Caseys retained during the litigation, explaining that "[t]hose amounts are subject only to the declaratory relief that the [Caseys] are entitled to retain those amounts." However, the trial court concluded that interest was due on the amounts tendered conditionally that the Caseys rejected. Because the trial court could not determine whether the payments for the Caseys' personal property losses were tendered unconditionally or conditionally as a full settlement for all their claims, it requested further evidence on the issue. Ultimately, the trial court concluded that the amounts were tendered as unconditional advances and not as an accord and satisfaction. Accordingly, the trial court held that Auto-Owners was not liable for prejudgment interest on those amounts either. The Caseys now appeal.
We review de novo a trial court's ruling on a motion for summary disposition.1 We also review de novo the proper interpretation and application of an insurance policy.2 Under MCR 2.116(C)(8), a party may move for summary disposition on the ground that the opposing party has failed to state a claim on which relief can be granted. Under this motion, the legal basis of the complaint is tested by the pleadings alone.3 All factual allegations are taken as true and construed in the light most favorable to the nonmoving party.4 The motion should be denied unless the claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recover.5 Under MCR 2.116(C)(10), a party may move for dismissal of a claim on the ground that there is no genuine issue with respect to any material fact and that the moving party is entitled to judgment as a matter of law. The moving party must specifically identify the undisputed factual issues and support its position with documentary evidence.6 The trial court must consider all the documentary evidence in the light most favorable to the nonmoving party.7
Whether contract language is ambiguous is also a question of law that we review de novo.8 We review equity cases de novo, but we will not reverse or modify the judgment unless convinced that we would have reached a different result had we occupied the position of the trial court.9
It is well established that an insured is obligated to read his or her insurance policy and raise any questions about the coverage within a reasonable time after the policy is issued.10 Consistent with this obligation, if the insured has not read the policy, he or she is nevertheless charged with knowledge of the terms and conditions of the insurance policy.11 However, there is an exception to this rule when the insurer renews the policy but fails to notify the insured of a reduction in coverage.12 When the insurer fails to provide notice, the insurer is bound to the greater coverage in the earlier policy, and the insurer is estopped from denying coverage on the basis of the discrepancy between the current policy and the prior one that was not brought to the insured's attention.13
The primary issue here is whether the Caseys received notice of the change in their insurance policy's dwelling coverage limit. The Caseys concede that their insurance agent, James Thurmon, informed them before the fire that their coverage was being reduced. But they argue that they had no notice of the actual amount of their reduced coverage until after the fire. Accordingly, they argue that they should not be bound by that reduced coverage limit and that they should instead receive 100 percent of the full cost to replace their dwelling. Auto-Owners argues that the Caseys are charged with knowledge of their policy's terms and that it fulfilled its duty to notify the Caseys of the reduced coverage when it notified James Thurmon.
At his deposition, Everett Casey admitted that a year before the fire he received notice from James Thurmon that Auto-Owners had chosen to reduce the Caseys' dwelling coverage. Everett Casey also explained that, although he did not recall receiving one, it was possible that he received a copy of his insurance policy when the Caseys purchased the policy in 1995. He also admitted that he "had the...
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