Lattimore-Wiegand v. State Farm Mut. Auto. Ins. Co.
Decision Date | 10 October 2013 |
Docket Number | Case No. 13-12194 |
Parties | WENDY A. LATTIMORE-WIEGAND, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant. |
Court | U.S. District Court — Eastern District of Michigan |
I. INTRODUCTION
This is an insurance fraud case. Plaintiff Wendy Lattimore-Wiegand (Plaintiff) is suing Defendant State Farm Mutual Automobile Insurance Company (Defendant) over a provision in her automobile insurance policy providing underinsured motorist (UIM) coverage. Plaintiff says that, although she pays a premium to Defendant for UIM coverage, her insurance policy's insuring agreement and limiting clauses render the UIM coverage illusory, and that the same is true as to all of Defendant's minimum liability coverage policies. In addition to raising her own claim, Plaintiff seeks to certify a class for a class action lawsuit.
Plaintiff's complaint is in seven counts, phrased by her as follows:
Count I Fraud and Misrepresentation
Count II Violations of RICO
Count III Constructive or Silent Fraud
Count IV Unjust Enrichment
Count V Breach of Contract
Count VI Class Action Allegations
Count VII Violation of Public Policy
Now before the Court is Defendant's motion to dismiss (Doc. 9). The Court held a hearing on October 2, 2013; the motion is ready for decision. For the reasons that follow, the motion will be granted.
II. BACKGROUND
Plaintiff purchased an automobile insurance policy from the Defendant. (Doc. 1-1, Ins. Policy). Under the policy, the bodily injury limits per occurrence for "Each Person" is $20,000 and "Each Accident" is $40,000. This is the minimum required amount of liability insurance coverage under Michigan law. See Mich. Comp. Laws § 500.3009.
For a premium of $1.87 paid every six-month policy term, Plaintiff opted for UIM coverage. UIM coverage applies when Plaintiff is involved in an accident and the driver at fault does not have enough insurance coverage, in the aggregate, to adequately compensate her for her injuries. In these instances, UIM coverage allows her to receive compensation from Defendant up to the policy's $20,000 limits to cover the at-fault driver's shortfall.1 UIM coverage is not mandated by Michigan No-Fault Automobile law but instead is an optional coverage. Dawson v. Farm Bureau Mut Ins. Co. of Mich., 293 Mich. App. 563, 568 (2011).
Here, the policy defines UIM coverage:
In addition, the UIM coverage insuring agreement states:
Finally, the policy places limits on UIM coverage:
(Id. at 21).
Under the policy, Plaintiff also has uninsured motor vehicle (UI) coverage. (Doc. 1-1 at 16-17). UI coverage applies if Plaintiff was involved in an accident with a driverwho did not maintain any insurance, or did maintain insurance but below the statutory minimum under Michigan law. Plaintiff is not challenging the UI coverage as illusory.
III. STANDARD OF REVIEW
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the sufficiency of a complaint. To survive a Rule 12(b)(6) motion to dismiss, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007). See also Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). The Court is "not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). Moreover, "[o]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. Thus, "acourt considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. Id. In sum, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face." Id. at 678 (internal quotation marks and citation omitted).
IV. DISCUSSION
The question presented is straightforward: Is UIM coverage in Defendant's minimum liability coverage insurance policies ($20,000 per person/$40,000 per accident) illusory? As long as there is "any manner in which the policy could be interpreted to provide coverage," the challenged policy provision is not illusory. See Cincinnati Ins. Co. v. Hall, No. 308002, 2013 WL 3107640, at *5 (Mich. Ct. App. June 20, 2013) (per curiam).2 As Defendant explained at the hearing, and as will be explained further below, there are three situations in which UIM coverage is available in Plaintiff's policy. Consequently, the UIM coverage provision in Defendant's automobile insurance policies is not illusory. Plaintiff therefore fails to state a claim upon which relief can be granted.
In reaching this conclusion, the Court is cognizant that UIM coverage "is not mandated by statute," and therefore, "the scope, coverage, and limitations of underinsurance protection are governed by the insurance contract and the law pertaining to contracts." Mate v. Wolverine Mut. Ins. Co., 233 Mich. App. 14, 19 (1998) (citing Auto-Owners Ins. Co. v. Leefers, 203 Mich. App. 5, 10-11 (1993)). Insurance contracts are interpreted "in accordance with Michigan's well-established principles of contract construction." Henderson v. State Farm Fire and Cas. Co., 460 Mich. 348, 353 (1999) (citing Arco Indus. Corp. v. Am. Motorists Ins. Co., 448 Mich. 395, 402 (1995)). This requires insurance contracts to be enforced according to their terms, and courts should not create an ambiguity when the policy is clear and precise. Id. at 354 (citations omitted). The insurance contract must "be read and interpreted as a whole." Taylor v. Blue Cross/Blue Shield of Mich., 205 Mich. App. 644,649 (1994) . "Exclusions are to be read with the insuring agreement and independent of other exclusions." Id. (citation omitted).
Where an insurance policy is clear, i.e. "if it fairly admits of but one interpretation," its "construction is a question of law for the court." Id. (citation omitted). However, if a contract is ambiguous, i.e. "after reading the entire contract, its language reasonably can be understood in differing ways," it must "be construed against the insurer and in favor of the insured." Id. (citation omitted).
Plaintiff's entire complaint is based on her assertion that the UIM coverage in her policy is illusory. However, there are at least three scenarios in which UIM coverage can be triggered under the policy. Therefore, Plaintiff's complaint is without merit.
The first scenario, depicted in attached Exhibit A, involves a two-car accident. Car #1 is the at-fault motor vehicle and has three occupants, none of which are Defendant's insured. The at-fault driver has minimum liability coverage of $20,000/$40,000. Car#2 has three occupants, including Plaintiff, who is driving. Plaintiff has $20,000/$40,000 coverage. Because Plaintiff is driving her vehicle, all of her occupants are defined as "insured" under her policy. All six people involved in the accident are injured and each sustains $10,000 in damages. The at-fault driver's insurance proceeds are used as follows: first, $30,000...
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