Helder v. Sruba

• Decision Date: 15 June 2000
• Docket Number: Docket No. 114885.
• Citation: 611 N.W.2d 309,462 Mich. 92
• Parties: Linda Marie HELDER, Plaintiff-Appellant, v. Edward SRUBA and E.J.E.C.S. Corporation, jointly and severally, Defendants, and North Pointe Insurance Company, Garnishee Defendant-Appellee.
• Court: Michigan Supreme Court

611 N.W.2d 309

462 Mich. 92

Linda Marie HELDER, Plaintiff-Appellant, v. Edward SRUBA and E.J.E.C.S. Corporation, jointly and severally, Defendants, and North Pointe Insurance Company, Garnishee Defendant-Appellee.

Docket No. 114885.

Supreme Court of Michigan.

June 15, 2000.

Napieralski & Walsh, P.C. (by Peter P. Walsh), Grand Rapids, for plaintiff-appellant.

Thomas M. Tupper, East Lansing, for defendant-appellee North Pointe Insurance Company.

Opinion

PER CURIAM.

The plaintiff obtained a default judgment against the defendants, and then began garnishment proceedings to obtain the proceeds of an insurance policy that had been purchased by one of the defendants. The insurer defended by asserting that the insured had breached the insurance contract by failing to provide notice of the suit. On a statutory ground, the circuit court ordered the insurer to pay the plaintiff. The Court of Appeals reversed, but we reinstate the judgment of the circuit court.

I

From late 1991 through early 1994, plaintiff Linda M. Helder had a relationship with defendant Edward Sruba.¹ Mr. Sruba was the sole shareholder of E.J.E.C.S. Corporation, which operated a tavern called The Neutral Corner on Ann Street in Grand Rapids.

In a May 1994 complaint, Ms. Helder alleged that during the years of their relationship, she was "repeatedly assaulted" by Mr. Sruba. The complaint listed a number of specific dates, and stated that assaults had occurred on "other unknown dates." Ms. Helder charged that Mr. Sruba had "intentionally engaged in a pattern of conduct including the above mentioned assaults, verbal abuse, manipulation and mindgames for the sole purpose of inflicting emotional distress upon the Plaintiff." She further alleged that Mr. Sruba had violated a January 1994 restraining order.²

Ms. Holder's complaint also listed E.J.E.C.S. as a defendant. She alleged that, on dates separately provided³ to E.J.E.C.S., Mr. Sruba "was served alcoholic beverages while visibly intoxicated either by himself or by other employees of [E.J.E.C.S.]." She further stated that "the illegal serving of alcoholic beverages to [Mr. Sruba] on the dates set forth in the [statutory notice] was a proximate cause of [Mr. Sruba's] subsequent assaults of the Plaintiff on those dates."⁴

In her complaint, Ms. Helder alleged serious physical injuries, including broken bones, inner ear damage, broken teeth, and closed head injury.

Both Mr. Sruba and E.J.E.C.S. were served with the summons and complaint.⁵ However, neither defendant filed an answer or filed any other response to this matter.

In this Court, Ms. Helder states that Mr. Sruba "testified in [a later] bankruptcy proceeding that he did notify his insurance carrier of this action pursuant to the instructions of his then attorney...." However, North Pointe Insurance Company says that it never received notice of this action, and we will assume that to be true for purposes of this opinion.⁶

In June 1994, the circuit court entered the default of Mr. Sruba and E.J.E.C.S. We are told that proceedings for entry of a default judgment were delayed until 1996 because of the pendency of the bankruptcy. On the basis of Ms. Helder's documentation of injuries suffered at the hands of Mr. Sruba, the circuit court entered a November 1996 default judgment in her favor and against Mr. Sruba and E.J.E.C.S., jointly and severally, in the amount of $100,749.51, plus interest and costs. Ms. Helder began garnishment proceedings against North Pointe Insurance Company in February 1996.⁷ On the garnishee disclosure form, North Pointe answered, "Principal defendant did not provide garnishee with notice of plaintiff's claim, as required by defendant's insurance policy with garnishee."⁸

Ms. Helder moved for summary disposition on the ground that North Pointe's policy defense was ineffective in light of M.C.L. § 436.22f; MSA 18.993(6), which provided:⁹

The insurance policy hereinbefore mentioned shall cover the liability imposed by [MCL 436.22; MSA 18.993], and shall contain the following conditions:

That no condition, provision, stipulation or limitation contained in the policy, or any other endorsement thereon, shall relieve the insurer from liability (within the statutory limits provided by [MCL 436.22a; MSA 18.993(1)]), for the payment of any claim for which the insured may be held legally liable under [MCL 436.22; MSA 18.993.]

North Pointe's rejoinder was that M.C.L. § 436.22f; MSA 18.993(6) did not apply to a defense based upon a complete lack of notice. Henderson v. Biron, 138 Mich.App. 503, 506, 360 N.W.2d 230 (1984). In turn, Ms. Helder cited this Court's subsequent decision in Coburn v. Fox, 425 Mich. 300, 389 N.W.2d 424 (1986).¹⁰

The circuit court agreed with Ms. Helder that M.C.L. § 436.22f; MSA 18.993(6) was applicable, and granted summary disposition. The court ordered North Pointe to pay its policy limits of $100,000, plus interest.

The Court of Appeals reversed. 234 Mich.App. 500, 595 N.W.2d 157 (1999).¹¹ Judge JANSEN dissented, saying that the circuit court had correctly applied the statute.

Ms. Helder has applied to this Court for leave to appeal.

II

In a nutshell, here is how the Court of Appeals majority saw this matter:

According to plaintiff's interpretation of [MCL 436.22f; MSA 18.993(6) ], an insured's failure to timely notify the insurer of a claim cannot relieve the insurer from liability. Garnishee defendant argues that plaintiff's interpretation "provides a blueprint for guaranteed recovery for plaintiffs who collude with insureds against their liquor liability insurer." We agree with garnishee defendant that plaintiff's interpretation is not only wrong, but would encourage fraudulent and collusive lawsuits. [234 Mich. App. at 504, 595 N.W.2d 157.]

The majority added, "[p]laintiff's interpretation is erroneous for many reasons, but primarily because it ignores a key phrase[¹²] and creates absurd and unjust results." 234 Mich.App. at 504-505, 595 N.W.2d 157.

"Accordingly," said the majority, "we interpret the statute to mean that the insured's failure to notify the insurer, absent any evidence of prejudice to the insurer, cannot preclude the plaintiff's recovery." 234 Mich.App. at 505, 595 N.W.2d 157. The majority placed on the insurer the burden of showing such prejudice,¹³ and remanded the case to circuit court "to give garnishee defendant the opportunity to demonstrate that it was prejudiced by the lost opportunity to demonstrate that plaintiff's claim was not one for which the insured could be held legally liable." 234 Mich.App. at 507, 595 N.W.2d 157.

III

Writing in dissent, Judge JANSEN relied on the plain language enacted by the Legislature. We agree with her analysis and, with slight editing to reflect the current status of this matter, adopt her opinion as our own.¹⁴

[T]he trial court did not err in ruling that a dramshop liability carrier may not assert a lack-of-notice defense to a garnishment action because the applicable statute in this case, M.C.L. § 436.22f; MSA 18.993(6), clearly and unambiguously does not permit the insurer to relieve itself of liability under a lack-of-notice defense.

Pursuant to M.C.L. § 436.22f; MSA 18.993(6), liquor liability policies must contain a condition "[t]hat no condition, provision, stipulation or limitation contained in the policy, or any other endorsement thereon, shall relieve the insurer from liability ... for the payment of any claim for which the insured may be held legally liable under [MCL 436.22; MSA 18.993]." Plaintiff asserts that this provision precludes defendant's lack-of-notice defense set forth in the dramshop liability policy. Garnishee defendant argues that this provision does not apply to a lack-of-notice defense, relying on [the Court of Appeals] decision in Henderson v. Biron, 138 Mich. App. 503, 360 N.W.2d 230 (1984).

This case requires us to construe and apply M.C.L. § 436.22f; MSA 18.993(6).

The "cardinal rule" of statutory construction is to identify and give effect to the intent of the Legislature. Shallal v. Catholic Social Services, 455 Mich. 604, 611, 566 N.W.2d 571 (1997); Turner v. Auto Club Ins. Ass'n, 448 Mich. 22, 27, 528 N.W.2d 681 (1995). The first step in discerning intent is to examine the language of the statute. Id. The language is to be read according to its ordinary and generally accepted meaning. Shallal, supra, at p. 611, 566 N.W.2d 571. Judicial construction is authorized only where the statute lends itself to more than one interpretation. Id. When statutory language is clear and unambiguous, the court must honor the legislative intent as clearly indicated in that language and no further construction is required or permitted. Western Michigan Univ. Bd. of Control v. Michigan, 455 Mich. 531, 538, 565 N.W.2d 828 (1997); Turner, supra, at p. 27, 528 N.W.2d 681. Therefore, where the statute is clear on its face, "the role of the judiciary is not to articulate its view of `policy,' but to apply the statute in accord with its plain language." Rogers v. Detroit, 457 Mich. 125, 140, 579 N.W.2d 840 (1998).

[We] find the language of M.C.L. § 436.22f; MSA 18.993(6) to be clear and unambiguous and, therefore, it must be applied as written. No provision or limitation contained in the dramshop liability policy can relieve the insurer from liability for which the insured may be held legally liable. Therefore, North Pointe cannot assert a lack-of-notice defense against plaintiff to preclude her from recovering her default judgment against defendants Sruba and E.J.E.C.S. Further, there is nothing absurd or unjust about applying the plainly worded statute as written to the facts of this case. None of the parties [has] attacked the default judgment, for which there are clear remedies,[¹⁵] and there is not one shred of evidence of fraud or collusion in this case.[¹⁶] In this regard, [we] note that the Legislature has created a check against collusion by requiring the plaintiff to name and retain the intoxicated

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