Farm Bureau Ins. v. Abalos

• Decision Date: 18 October 2007
• Docket Number: Docket No. 269416.
• Citation: 742 N.W.2d 624,277 Mich. App. 41
• Parties: FARM BUREAU INSURANCE COMPANY, Plaintiff-Appellant, v. Maria ABALOS and Marcos Abalos, Defendants, and Robert Castellanos and Adrienne Castellanos, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

742 N.W.2d 624

277 Mich. App. 41

FARM BUREAU INSURANCE COMPANY, Plaintiff-Appellant, v. Maria ABALOS and Marcos Abalos, Defendants, and Robert Castellanos and Adrienne Castellanos, Defendants-Appellees.

Docket No. 269416.

Court of Appeals of Michigan.

Submitted August 8, 2007, at Detroit.

Decided October 18, 2007, at 9:00 a.m.

Released for Publication December 10, 2007.

Kopka, Pinkus, Dolin & Eads, PLC (by Mark L. Dolin), Farmington Hills, for Farm Bureau Insurance Company.

Kalniz, Iorio & Feldstein Co., LPA (by Jay E. Feldstein), Toledo, Ohio, for Robert and Adrienne Castellanos.

Before: DAVIS, P.J., and SCHUETTE and BORRELLO, JJ.

PER CURIAM.

In this action for declaratory judgment, plaintiff appeals as of right from a default judgment in plaintiff's favor against its insureds, Maria and Marcos Abalos, in which the court also ordered and adjudged that "the minimum Michigan statutory residual liability insurance amount" applies to plaintiff's liability to defendants Robert and Adrienne Castellanos. We affirm the trial court's determination that the Abalos defendants' failure to cooperate with plaintiff is not a defense to the extent that residual liability insurance is compulsory, but modify its ruling that the minimum amount of residual liability to the Castellanos defendants is governed by Michigan's financial responsibility law.

I. FACTS

The Castellanos defendants, Ohio residents, were involved in an automobile accident in Ohio, when their vehicle was hit from behind by a vehicle driven by defendant Marcos Abalos and owned by defendant Maria Abalos, who were Michigan residents. The Castellanos defendants filed suit in Ohio against the Abalos defendants, seeking recovery for their injuries. The Abalos defendants failed to answer the Ohio lawsuit. Plaintiff then sought a declaratory judgment in Michigan, requesting a declaration that because of the Abalos defendants' lack of cooperation, plaintiff had no duty to defend or indemnify the Abalos defendants under its insurance policy. Alternatively, plaintiff requested a declaration that reduced the Abalos defendants' policy limits to Michigan's residual liability coverage only, i.e, a maximum of $20,000. The trial court concluded that plaintiff did not have a duty to defend or indemnify the Abalos defendants. However, it also concluded that the Castellanos defendants were entitled to Michigan's statutory residual liability coverage. Plaintiff now appeals.

II. STANDARD OF REVIEW

In a declaratory judgment action, the trial court may declare the rights and other legal relations of an interested party. MCR 2.605(A)(1). Although plaintiff moved for declaratory relief with respect to the Castellanos defendants' interest in the insurance policy when seeking a default judgment against the Abalos defendants, we agree with plaintiff that its motion with respect to the Castellanos defendants' interest was essentially one seeking summary disposition. "A trial court's decision on a motion for summary disposition in an action for a declaratory judgment is subject to review de novo." Farmers Ins. Exch. v. Kurzmann, 257 Mich.App. 412, 416, 668 N.W.2d 199 (2003). An appellate court will review a trial court's decision under the correct rule. Spiek v. Dep't. of Transportation, 456 Mich. 331, 338, 572 N.W.2d 201 (1998). We have reviewed the trial court's decision under MCR 2.116(C)(10), because the record presented to the trial court was not limited to the pleadings. A motion under MCR 2.116(C)(10) tests the factual support for a claim and is "only appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law." Farmers Ins. Exch., supra at 417, 668 N.W.2d 199. The affidavits, pleadings, depositions, admissions, and other documentary evidence must be considered in a light most favorable to the nonmoving party to determine if there is a genuine issue of material fact for trial. Id.

III. ANALYSIS

Addressing first the parties' dispute regarding whether Michigan or Ohio law applies, we reject plaintiff's claim that this case should be treated as a hybrid action sounding in contract and tort. In general, there must be some breach of duty distinct from a breach of contract to support a tort. Rinaldo's Constr. Corp. v. Michigan Bell Tel. Co., 454 Mich. 65, 83-84, 559 N.W.2d 647 (1997). Here, plaintiff does not seek a declaration regarding tort liability, but only its contractual obligation to pay insurance benefits to the Castellanos defendants, Ohio residents whose vehicle was struck in Ohio by a vehicle owned by Maria Abalos and operated by Marcos Abalos, both of whom were Michigan residents. The Abalos defendants' alleged failure to cooperate, not the automobile accident in Ohio, was the triggering event for this lawsuit. The Castellanos defendants' interest in this action arises only from their potential ability to reach insurance benefits available under plaintiff's insurance policy. The trial court properly treated this action as strictly a contract action.

Examined in this context, we reject plaintiff's argument that Ohio law governs the insurance policy that plaintiff issued...