Morley v. Automobile Club of Michigan

• Decision Date: 11 September 1998
• Docket Number: No. 6,107662,Docket Nos. 107661,6
• Citation: 581 N.W.2d 237,458 Mich. 459
• Parties: Mervin Allen MORLEY and Linda Carol Morley, Plaintiffs-Appellants, v. AUTOMOBILE CLUB OF MICHIGAN Defendant-Appellee. Calendar
• Court: Michigan Supreme Court

Page 237

581 N.W.2d 237

458 Mich. 459

Mervin Allen MORLEY and Linda Carol Morley, Plaintiffs-Appellants, v. AUTOMOBILE CLUB OF MICHIGAN Defendant-Appellee.

Docket Nos. 107661, 107662.

Calendar No. 6.

Supreme Court of Michigan.

Argued May 5, 1998.

Decided July 30, 1998.

Rehearing Denied Sept. 11, 1998.

Giddy & Associates (by Ronald J. Giddy), Holland, for plaintiffs-appellants.

John A. Lydick, Detroit, for defendant-appellee.

Opinion

TAYLOR, Justice.

This case presents a dispute regarding whether the insureds under a contract of automobile insurance failed to comply with the requirements of their policy and thus waived their claim for benefits. Specifically, defendant claims that it properly denied plaintiffs' claim for uninsured motorist benefits because the policy required that the claim be made within three years of the date of the accident and plaintiffs' claim was submitted after this deadline. Plaintiffs, in turn, argue that the three-year time limit is ambiguous and therefore unenforceable. The trial court agreed with plaintiffs, finding that the contractual period of limitation was ambiguous. Consequently, the trial court ordered that the parties proceed to arbitration of plaintiffs' claim. The Court of Appeals reversed, finding the contract unambiguous and the three-year time limit enforceable. We agree that the contract unambiguously requires that the insured make a claim for uninsured motorist benefits within three years of the accident and therefore affirm the decision of the Court of Appeals.

I Facts

Because this case presents a dispute regarding insurance coverage, it is helpful at the outset to understand the relevant parts of the policy at issue. The policy provides coverages required pursuant to Michigan's no-fault insurance act, M.C.L. § 500.3101 et seq.; M.S.A. § 24.13101 et seq., e.g., personal protection insurance (PIP) benefits, property protection benefits, etc. These parties also contracted for supplemental coverage not required by the no-fault act, including uninsured motorist coverage.

In its general provisions, the contract requires that in the event of "an accident, occurrence or loss," the insured must give prompt notice of the time and place of the accident and the names and addresses of the parties involved. In addition to this simple notice requirement, the contract specifies additional duties imposed on the insured depending on what type of insurance benefits are claimed. For example, when claiming uninsured motorist benefits the insured must give written notice of the injury, submit to physical examinations and release of medical records, forward legal documents to the insurer, and provide written notice of hit-and-run accidents when they occur.

In the section of the policy relating only to uninsured motorist benefits, the contract provides that if the insurer does not agree that the insured is entitled to these benefits a demand for arbitration (which would resolve disputes concerning the liability of the uninsured motorist or the damages attributable to him) or suit (which would resolve the insured's entitlement to uninsured motorist coverage under his policy) must be filed within three years of the date of accident.

The dispute arose in this case from an accident that occurred on November 28, 1987. Plaintiffs Mervin Allen Morley and Linda Carol Morley were involved in a collision with another vehicle driven by Leonard Mileskiewicz. At the time of the accident, plaintiffs' vehicle was insured by defendant ACIA. Immediately after the accident, plaintiffs believed that Mileskiewicz was also insured by defendant. ¹ Plaintiffs filed suit against Mileskiewicz on October 20, 1988. In the course of this litigation, however, plaintiffs were notified by defendant, by letter dated May 9, 1989, that defendant was not Mileskiewicz' insurer at the time of the accident and therefore would not represent him in that litigation. On June 26, 1991, plaintiffs obtained a default judgment against Mr. Mileskiewicz in excess of $900,000. ²

The instant litigation commenced on April 5, 1990, when, before obtaining the judgment against Mr. Mileskiewicz, but after being notified that defendant did not believe it was Mileskiewicz' insurer at the time of the accident, plaintiffs filed suit against defendant, claiming that defendant had unreasonably refused to fully pay PIP benefits due under their policy. No mention of the uninsured motorist benefits at issue here was made in plaintiff's initial complaint. Subsequently, on August 28, 1991, roughly three years and nine months after the accident and approximately two months after the default judgment had been entered against Mr. Mileskiewicz, plaintiffs claimed, for the first time, entitlement to the uninsured motorist coverage under their policy. Shortly thereafter, on October 25, 1991, defendant informed plaintiffs that they were not entitled to those benefits because plaintiffs had not claimed them within three years of the date of the accident, as required by the policy. ³

Subsequently, on June 4, 1992, plaintiffs amended their initial complaint to include two new counts. In count II, plaintiffs claimed that the Mileskiewicz vehicle was insured at the time of the accident. In count III, plaintiffs claimed in the alternative that defendant had wrongfully refused to pay uninsured motorist benefits under the policy. The parties settled their dispute regarding the original PIP benefits claim, and on March 24, 1993, that portion of plaintiffs' complaint was resolved through a partial judgment in the amount of $22,281. However, the remaining two issues, i.e., whether defendant was Mileskiewicz's insurer at the time of the accident and alternatively whether plaintiffs were entitled to uninsured motorist benefits under their contract if Mileskiewicz was uninsured at the time of the accident, were submitted to the court for a bench trial on stipulated facts.

The trial court found that Mileskiewicz's vehicle was not insured at the time of the accident. Further, it found that, by providing notice of the accident under the general notice provision of the policy, plaintiffs had fully complied with their contractual obligations and defendant had therefore wrongfully denied coverage on the basis that the claim was late. The court found that the uninsured motorist clause of the contract was ambiguous with respect to who must request arbitration and how an insured would know that the defendant did not agree with plaintiffs' entitlement to these benefits, rendering a demand for arbitration necessary. Consequently, the trial court found that the three-year time limit for filing a demand for arbitration would not bar plaintiffs' claim for uninsured motorist benefits, even though the claim was made more than three years after the date of the accident. On appeal, the Court of Appeals reversed, finding that the three-year time limit was unambiguous and therefore enforceable. We granted leave to appeal and now affirm the judgment of the Court of Appeals.

II

The issue presented in this case is a question regarding the import of a contractual term of an insurance policy. Such a question is a question of law that we review de novo. McKinstry v. Valley Obstetrics-Gynecology Clinic, PC, 428 Mich. 167, 177, 405 N.W.2d 88 (1987); Hewett Grocery Co. v. Biddle Purchasing Co., 289 Mich. 225, 236, 286 N.W. 221 (1939); St. Paul Fire & Marine Ins. Co. v. Ingall, 228 Mich.App. 101, 107, 577 N.W.2d 188 (1998).

As with any contract, we examine to the instrument itself to determine its meaning. Thus, we enforce the contract as written if it fairly allows but one interpretation. Bianchi v. Automobile Club of Michigan, 437 Mich. 65, 70-71, 467 N.W.2d 17 (1991).

In this case, we find that the contract at issue is not ambiguous as claimed by plaintiffs because it fairly allows but one interpretation, that being, as stated by the Court of Appeals: "[T]he policy is unambiguous in its requirement that a person claiming uninsured motorist benefits must do so within three years of the date of the accident." Unpublished opinion per curiam, issued June 11, 1996 (Docket Nos. 172969, 173000), slip op at 4. In particular, the contract requires that an insured make a specific claim for uninsured motorist benefits when it states: "A person claiming ⁴.... Uninsured Motorists Coverage must ⁵...." (Emphasis added.)

Moreover, reinforcing this understanding is that another term in the uninsured motorist section of the contract contemplates that a specific claim be made. It is indicated that if the insurer does not agree that the insured is entitled to uninsured motorist benefits, suit or a demand for arbitration must be filed. Obviously, the insurer could not disagree with the insureds until a request for benefits was made, which in essence is a claim.

Consequently, we think it express that the contract itself requires that an insured actually claim entitlement to these uninsured motorist benefits. Furthermore, even if one accepts, arguendo, that this language is not express, it certainly is clear by implication that a claim must be made. In this regard the rule is that "what is plainly implied from the language used in a written instrument is as much a part thereof as if it was expressed therein." Maclean v. Fitzsimons, 80 Mich. 336, 343, 45 N.W. 145 (1890); Draper v. Nelson, 254 Mich. 380, 384, 236 N.W. 808 (1931).

In addition, not surprisingly, this Court's precedent reinforces the understanding that insurance contracts require a claim to be made for benefits before entitlement can be established. This Court has recognized this in other insurance contexts that "[u]ntil a specific claim is made, an insurer has no way of knowing what expenses have been incurred, whether those expenses are covered losses and, indeed, whether the insured will file a claim at all." Welton v. Carriers Ins. Co., 421 Mich. 571, 579, 365 N.W.2d 170 (1985). Indeed, in considering the whole topic of...