McCormic v. Auto Club Ins. Ass'n

• Decision Date: 28 October 1993
• Docket Number: Docket No. 138086
• Citation: 202 Mich.App. 233,507 N.W.2d 741
• Parties: Rebecca McCORMIC, Mark McCormic, and McCormic & Associates, Plaintiffs-Appellees, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 741

507 N.W.2d 741

202 Mich.App. 233

Rebecca McCORMIC, Mark McCormic, and McCormic & Associates Plaintiffs-Appellees, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant.

Docket No. 138086.

Court of Appeals of Michigan.

Submitted April 7, 1993, at Lansing.

Decided June 11, 1993.

Approved for Publication

Oct. 28, 1993, at 9:00 a.m.

Released for Publication Dec. 3, 1993.

Van Benschoten, Hurlburt, Tsiros & Allweil, P.C. by Mandel I. Allweil, Saginaw, for plaintiffs-appellees.

Collison & Collison, P.C. by Jeffrey C. Collison, Saginaw (Nancy L. Bosh, of counsel), Detroit, for defendant-appellant.

Before RICHARD ALLEN GRIFFIN, P.J., and REILLY and FITZGERALD, JJ.

PER CURIAM.

Defendant appeals by leave granted from a Saginaw Circuit Court order denying its motion for summary disposition pursuant to MCR 2.116(C)(10). We reverse.

Plaintiffs sought a declaratory judgment that defendant must defend and indemnify them in an underlying automobile-related negligence action. Plaintiffs claim that they are entitled to such defense and indemnification by reason of a no-fault insurance policy issued to them on March 5, 1987. The accident occurred on December 1, 1987.

In support of its motion, defendant argued that plaintiffs' six-month policy automatically expired on September 5, 1987, because plaintiffs had declined renewal by failing to pay the required renewal premium. ¹ The notice sent to plaintiffs on August 4, 1987, stated:

Your policy premium for coverage from 9/05/87 to 3/05/88 is $589.90. This policy will renew only if the balance of $703.56 or a minimum amount of $267.00 is paid by 9/04/87. ² You will not receive another renewal billing notice.

On September 9, 1987, a confirmation of nonrenewal stating the following was mailed to plaintiffs:

Your policy was not renewed September 5, 1987 due to non-payment of premium. However, if we receive a payment of $414.61 by the close of business on September 25, 1987, your policy will be renewed effective September 5, 1987 with no loss of coverage.

There is no dispute that the plaintiffs failed to pay the required renewal premium.

Plaintiffs acknowledge receipt of a series of renewal notices that stated that renewal would occur only if the balance was paid, but claim that under the terms of the policy their insurance continued in effect until a cancellation notice was received. The insurance policy provides in pertinent part:

10. CANCELLATION

* * * * * *

Coverage under this policy for any car identified on the Declaration Certificate, or the entire policy, may be cancelled by us. We will mail or deliver 10 days written notice of cancellation to the Principal Named Insured....

* * * * * *

11. CANCELLATION BY US, LIMITED

After coverage under this policy for a car identified on the Declaration Certificate has been effective for a period of 55 days; or if this policy is designated as a renewal on the Declaration Certificate and that car had been insured by us for 55 days immediately preceding the renewal date; we shall issue a notice of cancellation when: (1) the Principal Named Insured or a person on his/her behalf fails to pay any premium or installment, when due; ....

12. NONRENEWAL

We may decline to renew this policy. If we do, we will mail notice of nonrenewal to the Principal Named Insured at the address last known to us at least 30 days before the end of the policy term.

If we offer to renew this policy, and the Principal Named Insured declines, this policy will automatically terminate at the end of the current policy term. Failure to pay the required renewal premium means that our offer to renew has been declined.

Plaintiffs also contend that defendant was obligated to send a notice of cancellation pursuant to M.C.L. § 500.3020(1)(b); M.S.A. § 24.13020(1)(b), which requires language in no-fault insurance policies regarding notices of cancellation.

In denying the motion for summary disposition, the trial court stated that defendant may have waived its right under the insurance policy to claim that the policy automatically expired on September 5, 1987. The trial court reasoned that waiver may have occurred because defendant actively sought plaintiffs' continued patronage and had extended credit to them notwithstanding their known history of delinquency or nonpayment of premiums when due.

Defendant perhaps had the right, and, under the circumstances shown, an obligation, to unequivocally notify Plaintiffs that if the stipulated premiums were not paid on or before the expiration date the policy would expire and would not be renewed by thereafter tendering part or all of the unpaid premiums. This, Defendant did not do. Rather than send such a notice, Defendant apparently chose to extend the time for payment, and, in effect, again extended a line of credit to Plaintiffs.

The trial court found that the failure of defendant to unequivocally insist upon the termination or cancellation of its policy on September 5, 1987, for nonpayment of premiums then due, created a genuine issue of material fact regarding defendant's voluntary waiver of any such right of termination or cancellation.

A motion for summary disposition under MCR 2.116(C)(10) tests the factual support for a claim. The court must consider the pleadings, affidavits, depositions, and other documentary evidence available to it and grant summary disposition if there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. A party opposing a motion brought under C(10) may not rest upon the mere allegations or denials in that party's pleadings, but must by affidavit, deposition, admission, or other documentary evidence set forth specific facts showing that there is a genuine issue for trial. MCR 2.116(G)(4). Panich v. Iron Wood Products Corp., 179 Mich.App. 136, 139, 445 N.W.2d 795 (1989). This Court is liberal in finding a genuine issue of material fact. St. Paul Fire & Marine Ins. Co. v. Quintana, 165 Mich.App. 719, 722, 419 N.W.2d 60 (1988). Nonetheless, where the opposing party fails to come forward with evidence, beyond allegations or denials in the pleadings, to establish the existence of a material factual dispute, the motion is properly granted. Morganroth v. Whitall, 161 Mich.App. 785, 788, 411 N.W.2d 859 (1987); MCR 2.116(G)(4).

Having reviewed the record, we are convinced that there is no issue of fact and that defendant is entitled to judgment as a matter of law. The delivery of the policy without exacting full payment extended credit to plaintiffs and put the policy in force. DeHaan v. Marvin, 331 Mich. 231, 49 N.W.2d 148 (1951). The policy continued in effect until it was canceled or it expired. While the policy was in effect, it could not be canceled without a notice of cancellation in accordance with the provisions of paragraph 10 of the General Conditions of the policy, which incorporated the language of M.C.L. § 500.3020(1)(b); M.S.A. § 24.13020(1)(b). However, after the period of coverage had expired, the policy was no longer in effect and a notice of cancellation was not required. Gutierrez v. Dairyland Ins. Co., 110 Mich.App. 126, 131, 312 N.W.2d 181 (1981), vacated on other grounds 414 Mich. 956, 327 N.W.2d 253 (1982); Wynn v. Farmers Ins....