Celina Mut. Ins. Co. v. Aetna Life & Cas. Co.

• Decision Date: 03 April 1990
• Docket Number: Docket No. 83892
• Parties: CELINA MUTUAL INSURANCE COMPANY, an Ohio insurance corporation, individually and as subrogee of Ernest E. Kuhns, d/b/a Corrosion Control Company, an individual, Plaintiff-Appellee v. AETNA LIFE & CASUALTY COMPANY, a foreign insurance corporation, Defendant-Appellant. 434 Mich. 288, 454 N.W.2d 93
• Court: Michigan Supreme Court

Page 93

454 N.W.2d 93

CELINA MUTUAL INSURANCE COMPANY, an Ohio insurance corporation, individually and as subrogee of Ernest E. Kuhns, d/b/a Corrosion Control Company, an individual Plaintiff-Appellee v. AETNA LIFE & CASUALTY COMPANY, a foreign insurance corporation, Defendant-Appellant.

Docket No. 83892.

434 Mich. 288, 454 N.W.2d 93

Supreme Court of Michigan.

Argued Oct. 4, 1989.

Decided April 3, 1990.

[434 MICH 290] R. Edward Kuhn, R. Jay Hardin, Menmuir, Zimmerman, Kuhn and Bearup, Traverse City, for plaintiff/appellee.

Stephen M. Overton, Petoskey, for defendant/appellant.

OPINION

ARCHER, Justice.

The issue presented is whether a motor vehicle no-fault insurer, pursuant to the omnibus clause of its no-fault policy, should be held liable for all or part of a settlement a landowner's general liability insurer pays where an injury arising out of the use of a motor vehicle occurs on the landowner's premises. We hold the no-fault insurer has no duty to indemnify the general liability insurer because the landowner's conduct did not arise from the use of a motor vehicle and was beyond the scope of the no-fault policy.

I

Shell Oil Company contracted with Ernest E. Kuhns, doing business as Corrosion Control Company, to sandblast pipes. Shell Oil, in turn, contracted with B & L Hotshot, Inc. (BLH), to deliver pipes to Corrosion Control's premises, and, after sandblasting, to pick up the sandblasted pipes and return them to Shell.

On April 10, 1980, Russell Naasko, a BLH foreman, and another BLH employee drove to Corrosion Control's premises in a BLH boom truck to retrieve the sandblasted pipes. During the loading operation, Naasko held a guideline attached to the pipe being lifted by the boom. ¹ Naasko was injured when the boom came into contact with an overhead electrical power line Consumer's Power Company maintained on Corrosion Control's premises. Naasko was severely burned and collected workers' compensation benefits.

In June 1981, Naasko sued Corrosion Control and Consumer's Power Company in Kalkaska Circuit Court. Naasko asserted a landowner's liability claim against Corrosion Control. In his complaint, Naasko alleged that Kuhns ordered the BLH employee, who had delivered the pipes to Corrosion Control's premises, to place them near the power line where they would be sandblasted. Naasko claimed that, by storing the sandblasted pipes near an overhead power line, Corrosion Control created a hazardous work environment. He further alleged that Kuhns knew or should have known that, when BLH employees came back to pick up the finished pipes, the boom would come into contact with the overhead power line. Naasko's wife asserted a loss of consortium claim.

Celina Mutual Insurance Company, Corrosion Control's general liability insurer, agreed to defend Corrosion Control and filed an answer on its behalf. The only affirmative defense raised was Naasko's own negligence.

In June 1983, six months after mediation, Celina tendered to Aetna Life & Casualty Company, BLH's no-fault motor vehicle insurer, its defense of Corrosion Control. Celina claimed that, through the acts or omissions of Naasko and his co-workers, Corrosion Control became an additional insured under the omnibus clause ² of Aetna's no-fault policy ³ issued to BLH. Aetna, however, refused to defend Corrosion Control. The following day, which was less than one month before trial, Naasko settled with Corrosion Control for $32,000, which Celina paid.

Celina, subrogated to any claim Corrosion Control might have against Aetna, then filed the present lawsuit in November 1983. In addition to requesting a declaration that Aetna wrongfully refused to defend Corrosion Control in the underlying suit, Celina sought to recover the $32,000 settlement paid to Naasko and the cost of Corrosion Control's defense.

Both parties moved for summary disposition. ⁴ This appeal, however, only concerns Aetna's amended motion for summary disposition in which Aetna claimed that, even if the BLH vehicle was insured under its policy, ⁵ Corrosion Control had no contractual rights under the policy because Naasko's complaint against Corrosion Control did not state a claim arising out of the use, ownership, or maintenance of a motor vehicle. ⁶

The trial court rejected Aetna's argument and denied the motion, holding that, even though Naasko's complaint alleged a landowner's liability claim, Naasko's injuries arose from the use of a motor vehicle. ⁷ In light of the omnibus insured clause ⁸ of Aetna's policy, the trial court concluded that Corrosion Control was an additional insured under Aetna's liability policy. Consequently, the court held that Naasko's complaint alleged an injury within the scope of the policy.

Aetna appealed, and the Court of Appeals unanimously affirmed in an unpublished per curiam opinion, decided June 23, 1988 (Docket No. 95658). The Court held that Corrosion Control was an additional insured under Aetna's omnibus clause, and that it was "using" the boom truck as a motor vehicle when Naasko was injured. The Court, consequently, concluded that Naasko had pled a cause of action within the scope of Aetna's policy.

Aetna subsequently applied for leave to appeal, which we granted to determine whether Aetna is liable to Celina for the costs of Corrosion Control's defense and the $32,000 settlement Celina paid to Naasko. 432 Mich. 892, 437 N.W.2d 260 (1989).

II

Three elements establish prima facie liability coverage under Aetna's policy. First, the injury must arise from the use of a motor vehicle. ⁹ Second, the tortfeasor must be an insured. ¹⁰ Finally, the motor vehicle from which the injury arose must be "an owned or a temporary substitute" vehicle within the meaning of the policy.

Aetna alleged in its amended motion for summary disposition that, pursuant to MCR 2.116(C)(8), Celina had failed to state a claim for which the law could grant relief because Aetna, as a matter of law, had no duty to indemnify or defend Corrosion Control in Naasko's suit. A motion for summary disposition brought under MCR 2.116(C)(8) tests the legal sufficiency of the plaintiff's complaint. Abel v. Eli Lilly & Co., 418 Mich. 311, 323, 343 N.W.2d 164 (1984), cert. den., 469 U.S. 833, 105 S.Ct. 123, 83 L.Ed.2d 65 (1984). For purposes of Aetna's amended motion for summary disposition, therefore, we assume, without deciding, Celina's allegation that Naasko's injuries, as against his employer, arose from the use of the BLH boom truck and were otherwise within the scope of Aetna's policy. Consequently, our task is to determine whether Corrosion Control is an insured under Aetna's policy.

This Court held in Citizens Ins. Co. of America v. Tuttle, 411 Mich. 536, 309 N.W.2d 174 (1981), that the no-fault act, M.C.L. Sec. 500.3101 et seq.; M.S.A. Sec. 24.13101 et seq., did not abrogate a nonmotorist defendant's tort liability even though his negligence caused a motor vehicle accident. Defendant Tuttle's cow was roaming on a highway when a Zaiger Beverage Company truck struck the cow. Citizens Insurance Company, Zaiger Beverage's insurer, paid Zaiger's no-fault claim for the damage to its truck. Subsequently, Citizens Insurance, subrogated to Zaiger's claim, sued Tuttle.

We began our analysis in Tuttle, by examining the language of the section of the no-fault act abrogating tort liability:

"(2) Notwithstanding any other provision of law, tort liability arising from the ownership, maintenance, or use within the state of a motor vehicle with respect to which the security required by section 3101(3) and (4) was in effect is abolished...." M.C.L. Sec. 500.3135(2); M.S.A. Sec. 24.13135(2).

Subsection (2) addresses tort liability that arises from either a defendant's wrongful act or failure to act. 411 Mich. at 544, 309 N.W.2d 174. Only that liability, however, arising from a defendant's "ownership, maintenance, or use of a motor vehicle" is abrogated. Thus, from the plain and unambiguous statutory language, we concluded that, in order for tort liability to be abrogated, the no-fault act required more than a plaintiff's injuries having arisen merely from the use of a motor vehicle. The defendant's wrongful act or omission, upon which his liability was predicated, must also have arisen from the ownership, maintenance, or use of a motor vehicle. In addition to the plain and unambiguous statutory language, we also found support for this position in the model no-fault act, ¹¹ the unreasonableness of a contrary construction in light of other sections of the Michigan no-fault act, ¹² and the act's policy to eliminate duplicative recoveries and reduce insurance costs. ¹³

Because defendant Tuttle was negligent, if at all, for the improper keeping of his cow, we concluded that his wrongful act did not arise from the ownership, maintenance, or use of a motor vehicle. The act, consequently, did not abrogate his tort liability:

"In the instant case, the wrongful act asserted is Tuttle's improper keeping of his cow. Such a wrongful act does not relate to the ownership, maintenance or use of a motor vehicle. Tuttle's tort liability, if any, arose only from his alleged wrongful keeping of the cow, not from the ownership, maintenance or use of a motor vehicle.

"Tuttle would have been subject to tort liability for his wrongful keeping of a cow whether it collided with a motor vehicle, trampled a rose garden, or walked through a plate glass window. His tort liability in the instant case no more 'arose from' the ownership, maintenance or use of a motor vehicle than it would have 'arisen from' the ownership, maintenance or use of a rose garden or a plate glass window. It arose solely from the wrongful keeping of a cow." 411 Mich. at 545, 309 N.W.2d 174.

Hence, Tuttle's conduct was beyond the scope of the no-fault act. His conduct was still subject to tort liability, even though the damage to the plaintiff's truck arose out of the plaintiff's use of a motor vehicle and the damage was otherwise...