Dawson v. Farm Bureau Mut. Ins. Co. of Michigan
| Decision Date | 16 August 2011 |
| Docket Number | Docket No. 296790. |
| Parties | DAWSON v. FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN. |
| Court | Court of Appeal of Michigan — District of US |
OPINION TEXT STARTS HERE
Boyer & Dawson, P.C., Sterling Heights (by William G. Boyer and William G. Boyer, Jr.), for plaintiff.
Willingham & Coté, P.C., East Lansing (by Anthony S. Kogut and Leon J. Letter), for defendant.
Before: SAAD, P.J., and JANSEN and KIRSTEN FRANK KELLY, JJ.
Defendant, Farm Bureau Mutual Insurance Company of Michigan, appeals the trial court's order that granted summary disposition to plaintiff. For the reasons set forth in this opinion, we reverse and remand for further proceedings.
Plaintiff, Timothy Dawson, asserts a contractual right to have his automobile insurance carrier, Farm Bureau, pay for a judgment entered in his prior lawsuit against the driver of the vehicle in which he was a passenger and wherein he sustained various injuries. In that lawsuit, the driver's automobile insurance carrier, Auto–Owners Insurance Company, did not vigorously defend questions of liability or serious impairment of body function and stipulated the amount of damages requested by plaintiff. The driver's policy limit amounted to only 20 percent of the judgment, and although Farm Bureau did not participate in the prior litigation, the trial court, nonetheless, ruled that Farm Bureau must pay plaintiff $80,000 in underinsured-motorist benefits because issues of liability and damages were litigated in the prior proceeding.
On June 10, 2006, plaintiff was a passenger in the backseat of a vehicle driven by Catrina Olinger when the vehicle struck a bridge abutment. Plaintiff sustained injuries when he was ejected from his seat and crashed through the windshield of the car. Plaintiff sued Olinger for negligence and also named Farm Bureau as a defendant. Plaintiff had an automobile insurance policy through Farm Bureau that contained an underinsured-motorist provision, and plaintiff claimed that Farm Bureau had refused to pay him benefits. Thereafter, plaintiff dismissed Farm Bureau from the lawsuit after Farm Bureau moved for summary disposition and argued that, under the policy, the insured may not sue Farm Bureau for underinsured-motorist benefits until the insured has exhausted all other available judgments or settlements. Plaintiff sued Farm Bureau again, but again dismissed the action because, at the time, he had not obtained a judgment against Olinger.
Though it appears that Olinger's insurer wanted to settle the case for Olinger's policy limit of $20,000, plaintiff's insurance policy with Farm Bureau required that it approve any settlement, which Farm Bureau declined to do. Therefore, plaintiff's case against Olinger went to trial. The trial lasted 29 minutes and merely consisted of plaintiff's testimony and his submission of medical records to the court. Olinger did not challenge plaintiff's claim that she was negligent or that plaintiff suffered a serious impairment of an important body function. Olinger also stipulated the amount of plaintiff's requested damages, $100,000. The trial court ruled in plaintiff's favor and awarded him $100,000.
Plaintiff then filed this action against Farm Bureau for underinsured-motorist benefits. Olinger signed asset interrogatories stating that she has no nonexempt assets from which plaintiff can collect the remaining $80,000 after her insurance company, Auto–Owners, covered the first $20,000 of the judgment. On August 24, 2009, plaintiff moved for summary disposition, arguing that Farm Bureau is collaterally estopped from denying underinsured-motorist coverage for the accident because the issues of liability and damages were litigated in the prior action. In response, Farm Bureau argued that, under the plain terms of the policy, it is not bound by prior judgments or settlements to which it did not agree in writing. Farm Bureau further asserted that, because it was not a party to the litigation against Olinger, it should not be collaterally estopped from asserting any available defenses in this action.
The trial court granted plaintiff's motion for summary disposition and ruled that Farm Bureau was estopped from relitigating issues of liability or damages in this case. It reasoned that those issues were litigated in the case against Olinger and Farm Bureau could have participated in that action, but chose to not do so.
We hold that the trial court erred by failing to enforce the unambiguous contractual provision in the policy that expressly stated that, for purposes of underinsured-motorist coverage, Farm Bureau is not bound by any judgment unless it gives written consent. Under the plain language of the policy, Farm Bureau may raise any available defenses in this action.
Plaintiff brought his motion for summary disposition under MCR 2.116(C)(7), (9), and (10).1 “We review a trial court's decision on a motion for summary disposition de novo on the basis of the entire record to determine if the moving party is entitled to judgment as a matter of law.” Auto–Owners Ins. Co. v. Martin, 284 Mich.App. 427, 433, 773 N.W.2d 29 (2009). This case involves the interpretation of plaintiff's insurance policy with Farm Bureau. “[I]nsurance policies are subject to the same contract construction principles that apply to any other species of contract.” Rory v. Continental Ins. Co., 473 Mich. 457, 461, 703 N.W.2d 23 (2005). Therefore, “unless a contract provision violates law or one of the traditional defenses to the enforceability of a contract applies, a court must construe and apply unambiguous contract provisions as written.” Id.
The insurance policy specifically states that Farm Bureau “will not be bound by any judgments for damages or settlements made without [Farm Bureau's] written consent.” Like uninsured-motorist benefits, underinsured-motorist coverage is not required by Michigan law, and the terms of coverage are controlled by the language of the contract itself, not by statute. As the Michigan Supreme Court explained in Rory, Rory, 473 Mich. at 465–466, 703 N.W.2d 23 (citation omitted).
Underinsurance automobile insurance protection is not required by law and therefore is optional insurance offered by some, but not all, Michigan automobile insurance companies. Because such insurance is not mandated by statute, the scope, coverage, and limitations of underinsurance protection are governed by the insurance contract and the law pertaining to contracts. Auto–Owners Ins. Co. v. Leefers, 203 Mich.App. 5, 10–11, 512 N.W.2d 324 (1993). As the Supreme Court stated in Rohlman v....
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