Maher v. Federated Serv. Ins. Co.
| Decision Date | 26 October 2015 |
| Docket Number | Case No. 15-10790 |
| Citation | 143 F.Supp.3d 663 |
| Parties | William Lee Maher and Selective Insurance Company of South Carolina, Plaintiffs, v. Federated Service Insurance Company, Aon Automotive Group, Inc. d/b/a Brooklyn Ford and Melissa Strang, Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Francis J. Lagrou, Merry Farnen & Ryan, Roseville, MI, Drew Louis Block, Cremer, Spina, Chicago, IL, for Plaintiffs.
Laura J. Hanson, Meagher & Geer, PLLP, Minneapolis, MN, Warren J. White, Warren J. White, Attorney at Law, West Bloomfield, MI, Charles W. Browning, Plunkett & Cooney, Bloomfield Hills, MI, Robert E. Packus, Jr., Moffett, Vitu, Birmingham, MI, David J. Elkin, The Sam Bernstein Law Firm, Farmington Hills, MI, for Defendants.
This is a dispute between insurance companies. Plaintiffs William Lee Maher ("Maher") and Selective Insurance Company of South Caroline ("Selective")1 seek a declaration that Defendant Federated Service Insurance Company ("Federated") owes a duty to defend and indemnify Maher up to the limits of the insurance policy it issued to Aon Automotive Group, Inc. d/b/a Brooklyn Ford ("Brooklyn Ford") in an automobile accident case pending in the Jackson County Circuit Court, Melissa Strang v. William Lee Maher and Aon Automotive Group, Inc. d/b/a Brooklyn Ford ("the underlying case").
Now before the Court is the Plaintiffs' Motion for Judgment on the Pleadings pursuant to Fed. R. Civ. P. 12(c)
(Doc. 11). For the reasons that follow, the motion is GRANTED.
When reviewing a motion for judgment on the pleadings, the Court assumes that well-plead facts alleged by the non-movant are true. Finisar Corp. v. Cheetah Omni, LLC. , No. 11–cv–15625, 2012 WL 6949236 at *1 (E.D.Mich. Dec. 10, 2012)
.
a.
At the time of the underlying case, Maher was an employee of West Michigan Auto Auction ("West Michigan Auto"). Brooklyn Ford has a contract with West Michigan Auto to auction vehicles Brooklyn Ford owns. Before an auction, West Michigan Auto sends an employee to pick up the vehicles from Brooklyn Ford and takes them to the auction site. West Michigan Auto provides its own license plates for the vehicles which its employee attaches prior to taking a vehicle from Brooklyn Ford to the site.
On August 1, 2013, Melissa Strang ("Strang") says that she sustained injuries as a result of an automobile accident involving Maher while he was driving a Brooklyn Ford vehicle to an auction. Maher was acting within the course and scope of his employment with West Michigan Auto. He had changed the plate on the Brooklyn Ford vehicle to the plate provided by West Michigan Auto. Maher was driving the Brooklyn Ford vehicle with Brooklyn Ford's permission at the time of the accident.2
In June 2014, Strang filed the underlying case.
At the time of the accident, West Michigan Auto was insured by Selective. Because Maher was acting within the scope of his employment for West Michigan Auto at the time of the accident, initially Selective provided a defense to Maher with respect to the underlying case.
In September 2014, Maher tendered his defense and indemnity with respect to the underlying case to Federated on the grounds that Brooklyn Ford was the owner of the vehicle involved in the accident (Doc. 1, Ex. 2). Commercial Package Policy, No. 9196563, issued by Federated to College Chevrolet Buick Pontiac LLC, with effective dates of 01-01-2013 to 01-01-2014 (the "Federated Policy") was in place at the time of the accident. Brooklyn Ford is identified as an "Additional Named Insured" under the policy. Federated initially denied Maher's request citing a specific provision referred to as the Auto Sales Exception within the "Who Is An Insured" provision in the Garage Coverage section of the Federated Policy (Doc. 1, Ex. 3). The Auto Sales Exception states as follows:
(Doc. 2, Ex. B)(emphasis added). Maher disputed Federated's denial. Federated later agreed to defend Maher with respect to the underlying case subject to a full reservation of rights.
In June 2015, Plaintiffs filed the pending motion for judgment on the pleadings seeking a declaration pursuant to MCR 2.605
that Federated has the sole and primary duty to defend and indemnify Maher in the underlying case up to the limits of any insurance policy it insured Brooklyn Ford (Doc. 11). Plaintiffs further seek a declaration that Federated is obligated and has a duty to reimburse Selective for any defense costs that have been incurred in connection with the defense of Maher in the underlying case.
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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (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, 129 S.Ct. 1937
. Thus, "a court 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, "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, 129 S.Ct. 1937 (internal quotation marks and citation omitted).
Plaintiffs say that based on the record before the Court, Federated has the sole and exclusive duty to defend and indemnify Maher up to the limits of any policy that it has issued to Brooklyn Ford that was in effect at the time of the accident. In support, Plaintiffs cite Michigan's No-Fault Act, M.C.L. § 500.3101(1)
, which requires that a policy of auto insurance issued to the owner of a vehicle must provide primary insurance for residual liability arising from the permissive use of the vehicle. Citizens Ins. Co. of America v. Federated Mut. Ins. Co. , 448 Mich. 225, 229, 531 N.W.2d 138 (1995). Plaintiffs say Federated's Auto Sales Exception provision is void as a matter of law because Federated is attempting to exclude from coverage an entire class of permissive users, i.e. those permissive users of vehicles owned by Brooklyn Ford separate from Brooklyn Ford's "garage operations."
To support its argument, Plaintiffs cite multiple cases which reiterate the rule that Auto Sales Exception provisions that preclude coverage for permissive users of insured vehicles are invalid under Michigan law. Plaintiffs' focus on the holding in Citizens Ins., supra.
In Citizens Ins. , Federated attempted to deny liability coverage by operation of an Auto Sales Exception provision to a certain class of permissive users, namely permissive users except those that were uninsured or underinsured. The Michigan Supreme Court held that this was not something that Federated could lawfully do because it violated the No-Fault Act. Id. at 234–35, 531 N.W.2d 138
. The Michigan Supreme Court found that the Auto Sales Exception provision was invalid and that Federated owed coverage for the loss. Id. at 235, 531 N.W.2d 138. See also Auto
–
Owners Ins. Co. v. Martin , 284 Mich.App. 427, 773 N.W.2d 29 (2009) ().
In response, Federated says that the cases cited by Plaintiffs do not directly apply to the situation here. Federated says the cases cited refer to situations when the Auto Sales Exception provision shifts the primary coverage obligation for a dealer-owned vehicle to a customer's personal auto policy. In contrast, here, the Auto Sales Exception provision allocates primary residual liability to West Michigan Auto—and that business's corresponding business auto policy—whose operations primarily were being conducted when the accident occurred.
Federated's argument is without merit; the Auto Sales Exception provision is unenforceable. Federated admits that the provision, if enforced, would preclude coverage to an...
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William Lee Maher & Selective Ins. Co. of S.C. v. Federated Serv. Ins. Co.
.... . . sends an employee to pick up the vehicles from Brooklyn Ford and take[] them to the auction site.Maher v. Federated Serv. Ins. Co., 143 F. Supp. 3d 663, 664-65 (E.D. Mich. 2015). On August 1, 2013, West Michigan sent William Maher to transport one of Brooklyn Ford's vehicles to West M......
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Owens v. Coffey (In re Coffey)
...non-movant are true. Finisar Corp. v. Cheetah Omni, LLC., 2012 WL 6949236 at *1 (E.D. Mich. 2012); Maher v. Federated Service Insurance Company, 143 F.Supp.3d 663, 664 (E.D. Mich. 2015). The Court can render summary judgment only when there is no genuine dispute as to any material fact and ......