Meridian Mut. Ins. Co. v. Hunt, Docket No. 98050

• Decision Date: 07 July 1988
• Docket Number: Docket No. 98050
• Citation: 168 Mich.App. 672,425 N.W.2d 111
• Parties: MERIDIAN MUTUAL INSURANCE COMPANY, a foreign corporation, Plaintiff-Appellee, v. Eric J. HUNT, a minor, and Thelma Nichols, Defendants-Appellants, and Carl Roy Nichols, Allan Enterprises, Inc., formerly a Michigan corporation, and Richard A. Hughes, individually, d/b/a The Keg Bar, Defendants.
• Court: Court of Appeal of Michigan — District of US

Page 111

425 N.W.2d 111

168 Mich.App. 672

MERIDIAN MUTUAL INSURANCE COMPANY, a foreign corporation Plaintiff-Appellee, v. Eric J. HUNT, a minor, and Thelma Nichols, Defendants-Appellants and Carl Roy Nichols, Allan Enterprises, Inc., formerly a Michigan corporation, and Richard A. Hughes individually, d/b/a The Keg Bar, Defendants.

Docket No. 98050.

Court of Appeals of Michigan.

Submitted Nov. 17, 1987.

Decided Feb. 5, 1988.

Released for Publication July 7, 1988.

Fraser, Trebilcock, Davis & Foster, P.C. by Everett R. Trebilcock and Mark A. Bush, Lansing, for plaintiff-appellee.

Hubbard, Fox, Thomas, White & Bengtson, P.C. by Thomas A. Bengtson and Brian L. Hiesrodt, Lansing, for defendants.

Before KELLY, P.J., and McDONALD and PAYANT, ^* JJ.

PER CURIAM.

Defendants appeal as of right from a January 8, 1987, order granting plaintiff's motion for summary disposition which was based on the court's finding that plaintiff is not contractually obligated to provide insurance coverage to Carl Roy Nichols pursuant to two homeowner's insurance policies.

Plaintiff filed the instant action for declaratory judgment seeking a declaration that plaintiff no longer had a duty to defend and indemnify Carl Nichols with respect to claims made by Eric Hunt and Thelma Nichols in a separate action in which they sought damages for alleged injuries inflicted on Eric Hunt by Carl Nichols on November 10, 1984. Carl Nichols was being defended by plaintiff under a reservation of rights in that separate action. Plaintiff alleged in the instant action that the policy of insurance under which Nichols sought to be defended and indemnified specifically excluded coverage for the type of injury at issue.

There are two identical policies of homeowner's insurance involved in the instant case. According to the insurance policy declaration sheets, plaintiff issued a "renewal" policy in the names of Carl and Thelma Nichols for coverage on a residence on 605 Raeburn Drive. The coverage period was from May 18, 1984, to May 18, 1985. Plaintiff also issued a "new business declaration" policy in the names of Carl and Thelma Nichols for coverage on a residence on Nye Highway. The coverage ran from April 10, 1984, to April 10, 1985.

The personal liability coverage section of both homeowner's insurance policies states in pertinent part: "We do not cover bodily injury to you or a family member residing in your household."

Eric Hunt's deposition testimony reveals that he was fourteen years old and was residing at the Raeburn Drive home with his mother and stepfather, Carl Nichols, when he sustained the injuries on November 10, 1984. He had been living at that residence for about one year prior to the incident. He was relying on his mother for support and did not get along well with his stepfather, Carl Nichols.

Thelma Hunt's deposition testimony reveals that she was married to Carl Nichols from February 14, 1982, until January 24, 1985. She resided at the Raeburn address from 1978 through 1984. She acquired the home in a divorce from John Hunt in 1978. After their marriage, Carl Nichols moved into the house with her and lived there up to and including November 10, 1984. Hunt alone was supporting Eric at this time because Carl did not bring any money into the household.

On June 25, 1986, plaintiff moved for summary disposition in the instant case "pursuant to the provisions of MCR 2.116." No subsection of the court rule was specified. Plaintiff contended in its motion that Eric Hunt was a "family member" as a stepson to the insured, Carl Nichols, residing in his household on Raeburn and that the insurance policy excludes from coverage bodily injury to the insured or a family member residing in his household. Because of this exclusion, plaintiff claimed it was entitled to a declaratory judgment that it had no obligation to provide a defense for Nichols or pay any claim relating to the injury sustained by Eric Hunt. Following a December 22, 1986, hearing on the motion, the court found that the bodily injury exclusion was applicable under both policies issued by plaintiff. Since there was no coverage provided for injuries to Eric or Thelma Hunt, plaintiff was not responsible "as a matter of contract" under either policy.

On January 8, 1987, an order was entered incorporating the court's findings and granting plaintiff's motion for summary disposition. Defendants now appeal as of right.

Defendants contend that the trial court erred in granting plaintiff's motion for summary disposition. We disagree. Initially we note that plaintiff failed to state in its motion for summary disposition the subsection of MCR 2.116 under which the motion was being brought. In addition, no reference is found to the grounds upon which plaintiff's motion was granted in either the December 22, 1986, hearing transcript or the January 8, 1987, written order. Nonetheless, since the record is clear that the parties have relied on matters outside the pleadings to argue the motion, this Court construes the motion as one brought pursuant to MCR 2.116(C)(10), no genuine issue of material fact, and reviews it as such. Huff v. Ford Motor Co., 127 Mich.App. 287, 338 N.W.2d 387 (1983).

A motion for summary disposition premised upon MCR 2.116(C)(10), no genuine issue as to any material fact, requires the trial court to review the entire record to determine whether the nonmoving party has discovered facts to support the claim or defense. Consequently, the trial court must look beyond the pleadings and consider affidavits, depositions, and interrogatories. In reviewing this evidentiary record, the trial court must give the benefit of any reasonable doubt to the nonmoving party in deciding whether a genuine issue as to a material fact exists. The party opposing the motion must then come forward with a showing that there is evidence to make an issue on which a dispute truly exists. If no showing is forthcoming, summary judgment is granted. Rizzo v. Kretschmer, 389 Mich. 363, 207 N.W.2d 316 (1973). Before judgment may be granted, the trial court must be satisfied that it is impossible for the claim asserted to be supported by the evidence at trial. Huff, supra.

The duty of an insurance company to provide a defense to a lawsuit brought against its insured is separate and severable from its duty to indemnify the insured for liability imposed after trial. Reurink Bros. Star Silo, Inc. v. Maryland Casualty Co., 131 Mich.App. 139, 345 N.W.2d 659 (1983). The rule regarding an insurer's duty to defend was elaborated on by this Court in Detroit Edison Co. v. Michigan Mutual Ins. Co., 102 Mich.App. 136, 141-142, 301 N.W.2d 832 (1980):

" 'The duty of the insurer to defend the insured depends upon the allegations in the complaint of the third party in his or her action against the insured. This duty is not limited to meritorious suits and may even extend to actions which are groundless, false, or fraudulent, so long as the allegations against the insured even arguably come within the policy coverage. An insurer has a duty to defend, despite theories of liability asserted against any insured which are not covered under the policy, if there are any theories of recovery that fall within the policy. Dochod v Central Mutual Ins Co, 81 Mich App 63; 264 NW2d 122 (1978). The duty to defend cannot be limited by the precise language of the pleadings. The insurer has the duty to look behind the third party's allegations to analyze whether coverage is possible. Shepard Marine Construction Co v Maryland Casualty Co, 73 Mich App 62; 250 NW2d 541 (1976). In a case of doubt as to whether or not the complaint against the insured alleges a liability of the insurer under the policy, the doubt must be resolved in the insured's favor. 14 Couch on Insurance 2d, § 51:45, p 538.' (Emphasis in original.)"

Despite the above quoted pronouncement, the duty to defend is not an unlimited one. The insurer is not required to defend against claims for damage expressly excluded from policy coverage. The exception in the policy is part of the contract between the parties. See Burton v. Travelers Ins. Co., 341 Mich. 30, 67 N.W.2d 54 (1954).

In the instant case, defendants claim that plaintiff's obligation to defend and indemnify arises from the following policy provision:

"SECTION II

"COMPREHENSIVE PERSONAL LIABILITY PROTECTION

"PERSONAL LIABILITY COVERAGE

"We will pay all sums arising out of any one occurrence which an insured becomes legally obligated to pay as damages because of bodily injury or property damage covered by this policy. If a claim is made or suit is brought against the insured for liability under this coverage, we will defend the insured. We will use our lawyers and bear the expense. We are not obligated to defend after we have paid an amount equal to the limit of our liability. We may investigate or settle any claim or suit as we think appropriate.

"MEDICAL PAYMENTS TO OTHERS COVERAGE

"We will pay the reasonable medical expenses incurred within three years from the date of the accident for each person who sustains bodily injury caused by accident to which this insurance applies.

"Each person who sustains bodily injury is entitled to this protection when that person is:

"1. on an insured premises with the permission of an insured,...