Fire Ins. Exchange v. Fox

• Court: Court of Appeal of Michigan
• Writing for the Court: PER CURIAM
• Citation: Fire Ins. Exchange v. Fox, 423 N.W.2d 325, 167 Mich.App. 710 (Mich. App. 1988)
• Decision Date: 31 May 1988
• Docket Number: Docket No. 98639
• Parties: FIRE INSURANCE EXCHANGE, a California Corporation, Plaintiff-Appellee, v. James FOX, Defendant-Appellant, and Michael Daly, Defendant.

Page 325

423 N.W.2d 325

167 Mich.App. 710

FIRE INSURANCE EXCHANGE, a California Corporation, Plaintiff-Appellee, v. James FOX, Defendant-Appellant and Michael Daly, Defendant.

Docket No. 98639.

Court of Appeals of Michigan.

Submitted Jan. 21, 1988.

Decided April 5, 1988.

Released for Publication May 31, 1988.

Vandeveer, Garzia, Tonkin, Kerr, Heaphy, Moore, Sills & Poling, P.C. by Robert D. Brignall, Detroit, for plaintiff-appellee.

Vivian A. Phillips, Pontiac, for defendant-appellant Fox.

Before HOLBROOK, P.J., and HOOD and KAUFMAN ^*, JJ.

PER CURIAM.

Plaintiff in this case filed a declaratory judgment action in which plaintiff claimed an exclusionary provision in its insurance contract applied so that it had no duty to defend defendant James Fox in an underlying tort action. Defendant Fox appeals from the trial court's order granting plaintiff's motion for summary disposition pursuant to MCR 2.116(C)(10).

Michael K. Daly was seriously injured when the bicycle he was riding collided with a moped operated by Jenni Cortez and owned by Fox and others. On October 4, 1985, Daly filed suit against Cortez, Fox, and others, alleging that the accident was caused by the negligent and careless operation of the moped. ¹ Plaintiff, Fox's homeowner's insurance carrier, undertook Fox's defense in the underlying action. On February 21, 1986, however, plaintiff sent Fox a reservation of rights letter explaining that coverage might not exist in light of a provision excluding coverage for liability arising out of the ownership of a motor vehicle, as that term is defined in the insurance contract. Five months later, plaintiff instituted this declaratory judgment action, asserting it had no duty to defend Fox due to the provision.

The policy provision stated that coverage did not lie for personal liability where the insured's liability arises out of his or her ownership, maintenance, or use of a motor vehicle. "Motor vehicle" is defined in the policy as "a motorized land vehicle, including a trailer, semi-trailer or motorized bicycle, designed for travel on public roads " (emphasis added). The trial court found the moped to be a "motorized bicycle designed for travel on public roads," and held that plaintiff had no duty to defend Fox. The trial court further held that plaintiff was not estopped from withdrawing its defense of Fox since the plaintiff had initiated its action for declaratory judgment during the pendency of the underlying action.

On appeal, defendant first claims that the trial court erred in finding that a moped constitutes a motorized bicycle designed for travel on public roads. We disagree. A moped is defined in the Michigan Vehicle Code as

"a 2- or 3-wheeled vehicle which is equipped with a motor that does not exceed 50 cubic centimeters piston displacement, produces 2.0 brake horsepower or less, and cannot propel the vehicle at a speed greater than 30 miles per hour on a level surface...." M.C.L. § 257.32b; M.S.A. § 9.1832(2).

Thus, it is clear that a moped is a bicycle with a motor attached and, therefore, meets the first prong of the policy definition of motor vehicle. Next, it must be determined whether a moped is designed for travel on public roads. We note that mopeds are included in many Michigan statutes regarding their operation on a highway: M.C.L. § 257.705(a)(2); M.S.A. § 9.2405(a)(2) (brake requirement when moped is operated upon a highway); M.C.L. § 257.661; M.S.A. § 9.2361 (requirement that person operating moped not carry packages while driving); M.C.L. § 257.216(1); M.S.A. § 9.1916(1) (registration and certification of title provision); M.C.L. § 257.679a; M.S.A. § 9.2379(1), M.C.L. § 257.710d(3); M.S.A. § 9.2410(4)(3) (child restraint provision); M.C.L. § 257.679a; M.S.A. § 9.2379(1) (limited access highway provision); M.C.L. § 257.657; M.S.A. § 9.2357 (regulations applicable to mopeds driven on a roadway); M.C.L. § 257.801e; M.S.A. § 9.2501(5) (registration requirement); M.C.L. § 257.312a(2); M.S.A. § 9.2012(1)(2) (license requirement). Thus, there is no question that a moped is designed for travel on public roads since such use is expressly recognized and regulated in the Michigan Vehicle Code.

Next, defendant argues that the trial court erred in finding that plaintiff was not estopped from withdrawing its representation of defendant. The general rule is that an insurer which undertakes the defense of an insured while having actual or constructive knowledge of facts which would allow avoidance of liability will be deemed to have waived its right to avoid coverage unless reasonable notice is served to the insured of the possible disclaimer of liability. Meirthew v. Last, 376 Mich. 33, 135 N.W.2d 353 (1965); Multi-States Transport, Inc. v. Michigan Mutual Ins. Co., 154 Mich.App. 549, 553-554, 398 N.W.2d 462 (1986), lv. den. ...