Farm Bureau Mut. Ins. Co. of Michigan v. Stark

• Court: Michigan Supreme Court
• Citation: Farm Bureau Mut. Ins. Co. of Michigan v. Stark, 468 N.W.2d 498, 437 Mich. 175 (Mich. 1991)
• Decision Date: 29 April 1991
• Docket Number: Nos. 87254,87255,s. 87254
• Parties: FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, a Michigan insurance corporation, Plaintiff/Counter Defendant-Appellant, v. Timothy STARK and Patrick Allen Stark, a minor, Defendants/Counter Plaintiffs-Appellees, v. Karl L. HELWIG and Opal R. Helwig, Intervening Defendants/Counter Plaintiffs-Appellees.
• Writing for the Court: GRIFFIN; CAVANAGH; MALLETT

Page 498

468 N.W.2d 498

437 Mich. 175

FARM BUREAU MUTUAL INSURANCE COMPANY OF MICHIGAN, a Michigan

insurance corporation, Plaintiff/Counter Defendant-Appellant, v. Timothy STARK and Patrick Allen Stark, a minor, Defendants/Counter Plaintiffs-Appellees, v. Karl L. HELWIG and Opal R. Helwig, Intervening

Defendants/Counter Plaintiffs-Appellees.

Nos. 87254, 87255.

Supreme Court of Michigan.

Argued Nov. 9, 1990.

Decided April 29, 1991.

[437 Mich. 176] Willingham & Cote, P.C. by John A. Yeager, Anthony S. Kogut, Curtis R. Hadley, East Lansing, for plaintiff/counter defendant-appellant.

Wietek & Summers, P.C. by Michael G. Summers, Marquette, for defendants/counter plaintiffs-appellees.

Kendricks, Bordeau, Adamini, Keefe, Smith & Girard, P.C. by Dennis H. Girard, Marquette, for intervening defendants/counter plaintiffs-appellees.

OPINION

GRIFFIN, Justice.

This declaratory judgment action requires that we construe a motor vehicle exclusion clause in a homeowner's insurance policy purchased from plaintiff insurance company by one of the defendants. We hold that the policy does not provide coverage for the claim at issue and that plaintiff insurer therefore has no duty to defend or indemnify the insured. Accordingly, we reverse the decision of the Court of Appeals and reinstate the judgment of the trial court granting summary disposition in favor of the plaintiff.

I

On August 13, 1985, Karl Helwig was jogging on a bicycle/pedestrian path in Marquette, Michigan, when he was struck and injured by a moped owned by Timothy Stark and operated by his minor son, Patrick Stark. Karl Helwig and his wife, Opal, brought a personal injury action against Timothy and Patrick Stark in Marquette Circuit Court. The Starks, in turn, sought a defense and indemnification pursuant to a homeowner's insurance contract issued to Timothy Stark by the present plaintiff, Farm Bureau Mutual Insurance Company. On April 20, 1987, plaintiff Farm Bureau commenced the instant declaratory judgment action against Timothy and Patrick Stark, seeking a determination that its policy provides no liability coverage for the injuries to Karl Helwig which resulted from the accident, and that it has no duty to defend the Starks in the lawsuit brought by the Helwigs. The Starks counterclaimed, asserting that the insurance contract does provide coverage and that plaintiff Farm Bureau is contractually obligated to defend and indemnify its insureds. The Helwigs subsequently intervened as defendants in this declaratory judgment action. ¹

All of the parties filed motions for summary disposition, under MCR 2.116(C)(10), contending that there was no genuine issue of material fact. The trial court issued an opinion finding that Timothy Stark's moped was excluded from coverage under the homeowner's policy, and that plaintiff had no duty to defend the Starks in the Helwigs' suit. Separate claims of appeal filed by the Starks and the Helwigs were consolidated by the Court of Appeals, which reversed. 180 Mich.App. 55, 446 N.W.2d 866 (1989). Pointing out that the motor vehicle exclusion clause in the policy relied upon by plaintiff does not specifically exclude coverage for accidents involving mopeds, the Court of Appeals concluded that the language of the clause is ambiguous with respect to mopeds and held that the policy provides coverage.

Plaintiff's timely application for leave to appeal was granted by this Court. 435 Mich. 861 (1990).

II

According to its terms, the homeowner's policy issued to Timothy Stark does not provide coverage for personal liability and medical payments to others arising out of the ownership, maintenance, or use of "motor vehicles," and the policy does not apply "to any Recreational Motor Vehicle subject to the Motor Vehicle Registration Act." ²

A definitions section of the policy explains the meaning of the terms "motor vehicle" and "recreational motor vehicle":

"3. DEFINITIONS--SECTION II

* * * * * *

"c. 'motor vehicle': means a land motor vehicle, trailer or semi-trailer designed for travel on public roads (including any machinery or apparatus attached thereto) but does not include, except while being towed by or carried on a motor vehicle, any of the following: utility, boat, camp or home trailer, recreational motor vehicle, farm trailer, farm tractor, farm implement or, if not subject to motor vehicle registration, any equipment which is designed for use principally off public roads.

* * * * * *

"f. 'recreational motor vehicles': means (1) a golf cart or snowmobile or (2) if not subject to motor vehicle registration, any other land motor vehicle designed for recreational use off public roads."

Our task is to decide whether this language unambiguously excludes the moped from coverage.

The Court of Appeals reasoned that because the homeowner's policy in question neither describes the physical characteristics of a "land motor vehicle" nor expressly includes or excludes mopeds from that category, the contract is ambiguous and must be strictly construed against the plaintiff insurer. The panel was persuaded that the rationale employed in an earlier Court of Appeals decision involving a similarly worded exclusion is applicable in this case. It explained:

"This Court in Westen v Karwat, 157 Mich App 261; 403 NW2d 115 (1987), was called upon to determine whether similar homeowner's policy language had properly excluded coverage because a moped fell within the policy's definition of a motor vehicle. In Westen, the plaintiff was the personal representative of the estate of a girl who died from injuries suffered after she was struck by a moped. The trial court held that a moped was a motor vehicle under the terms of the exclusion in the insurance policy. The policy in Westen defined 'motor vehicle' almost identically as it is defined in the instant case.

* * * * * *

"This Court in Westen concluded that coverage would be allowed because the term motor vehicle was ambiguous, offering no guidance whatsoever as to whether mopeds fell within the definition.

" '[W]e find that the term "motor vehicle" is ambiguous and should be construed against the insurer. Home Owners defines the term "motor vehicle" by adding the word "land" and then listing two other vehicles which qualify as motor vehicles and nine vehicles which do not, without any guidance as to whether mopeds qualify. A description of the physical characteristics of a motor vehicle would have been more helpful. Without such a physical description against which to measure a moped and no specific mention of moped in the lists of vehicles included or excluded from the definition of "motor vehicle" the term is ambiguous and we will construe it against the insurer, allowing insurance coverage for plaintiff's claim.' [Westen, supra, p. 264, 403 N.W.2d 115]" Stark, supra, 180 Mich.App. pp. 59-60, 446 N.W.2d 866.

In the instant case the Court of Appeals noted that another panel of that Court, in Fire Ins. Exchange v. Fox, 167 Mich.App. 710, 423 N.W.2d 325 (1988), had reached a result contrary to that in Westen. The Stark panel distinguished Fox:

"[T]he policy provision in Fire Ins Exchange defined motor vehicle as 'a motorized land vehicle, including a trailer, semi-trailer or motorized bicycle, designed for travel on public roads.' (Emphasis added.) Because the policy language in the instant case is for all intents and purposes identical to the language construed by this Court in Westen, and the policy exclusion in this case did not specifically exclude coverage for motorized bicycles designed for travel on public roads, we conclude that plaintiff did not sufficiently exclude coverage for accidents involving mopeds." Id., 180 Mich.App. pp. 60-61, 446 N.W.2d 866. ³

In rendering its decision, the Court of Appeals cited two principles of construction applicable to insurance policies: (1) that an ambiguous contract provision must be construed against the insurer and in favor of the insured, and (2) that exclusionary clauses in insurance policies are to be strictly construed against the insurer. Id., pp. 57-58, 446 N.W.2d 866. While accurate, ⁴ the rule of strict construction is tempered by the principle that " '[c]ontracts ... are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous, their terms are to be taken and understood in their plain, ordinary, and popular sense.' " Kingsley v. American Central Life Ins. Co., 259 Mich. 53, 55, 242 N.W. 836 (1932), quoting Imperial Fire Ins. Co. v. Coos Co., 151 U.S. 452, 463, 14 S.Ct. 379, 381, 38 L.Ed. 231 (1894). As most recently explained by this Court in Raska v. Farm Bureau Ins. Co., 412 Mich. 355, 361-362, 314 N.W.2d 440 (1982):

"Any clause in an insurance policy is valid as long as it is clear, unambiguous and not in contravention of public policy.

* * * * * *

"The only pertinent question, therefore, is whether the exclusionary clause in this contract is ambiguous, for if it is not ambiguous we are constrained to enforce it.

"A contract is said to be ambiguous when its words may reasonably be understood in different ways.

"If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand there is no coverage under the same circumstances, the contract is ambiguous and should be construed against its drafter and in favor of coverage.

"Yet if a contract, however inartfully worded or clumsily arranged, fairly admits of but one interpretation, it may not be said to be ambiguous or, indeed, fatally unclear." (Emphasis added.) See also Fresard v. Michigan Millers Mutual Ins. Co., 414 Mich. 686, 694, 327 N.W.2d 286 (1982), reh. den. 417 Mich. 1103 (1983).

In the instant case, we have no difficulty in concluding that the term "land motor vehicle," taken and understood in its plain, ordinary, and popular sense, would include a moped. A ...