Perry v. Sied

• Decision Date: 25 April 2000
• Docket Number: Docket No. 112898, Calendar No. 12.
• Parties: Sarah PERRY, Plaintiff-Appellee, v. Michael F. SIED, Defendant, and Auto Club Insurance Association, Intervening-Defendant Appellant.
• Court: Michigan Supreme Court

611 N.W.2d 516

461 Mich. 680

Sarah PERRY, Plaintiff-Appellee, v. Michael F. SIED, Defendant, and Auto Club Insurance Association, Intervening-Defendant Appellant.

Docket No. 112898, Calendar No. 12.

Supreme Court of Michigan.

Argued October 12, 1999.

Decided April 25, 2000.

Bernstein & Bernstein, P.C. (by Michael J. Butler), Southfield, for plaintiff-appellee.

Robert J. Dotson, Garan, Lucow, Miller & Seward, P.C., of counsel (by Daniel S. Saylor), Detroit, for intervening defendant-appellant.

Opinion

TAYLOR, J.

The issue in this case is whether a power of attorney and undertaking (PAU)¹ intervening defendant Auto Club Insurance Association filed with the Canadian government applies to plaintiff's Michigan lawsuit. If the PAU applies, defendant's potential liability would be $200,000 in Canadian funds rather than the insurance policy limit of $20,000 U.S. funds. We hold that defendant's expanded obligations under the PAU are limited to lawsuits filed in Canada and therefore the PAU does not apply to this lawsuit. We therefore reverse the judgment of the Court of Appeals and remand for further proceedings.

I. Underlying Facts and Procedural History

This case arises from an automobile accident involving two Michigan residents who were traveling in Windsor, Ontario, Canada. Defendant's insured rear-ended plaintiff's vehicle. Plaintiff commenced this lawsuit in Wayne County against defendant's insured, alleging that she suffered a serious impairment of bodily function and permanent serious disfigurement.² The policy that defendant's insured purchased limits defendant's liability for bodily injury to each injured person to $20,000, with its maximum liability for each occurrence limited to $40,000. However, defendant has filed a PAU with the Canadian government, wherein it agreed in part that it would:

[n]ot ... set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up if the contract had been entered into in, and in accordance with the law relating to the motor-vehicle liability insurance contracts of the Province or Territory of Canada in which such action or proceedings may be instituted, and to satisfy any final judgment rendered against it or its insured by a Court in such Province or Territory, in the claim, action, or proceeding, up to

(1) the limit or limits of liability provided in the contract; but

(2) in any event an amount not less than the limit or limits fixed as the minimum³ for which a contract of motor-vehicle liability insurance may be entered into in such Province or Territory of Canada, exclusive of interest and costs and subject to any priorities as to bodily injury or property damage with respect to such minimum limit or limits as may be fixed by the Province or Territory.

Plaintiff moved for a declaratory ruling that the PAU applied, making the applicable insurance coverage $200,000 in Canadian funds rather than the $20,000 limit stated in the insurance policy. Plaintiff argued that defendant, contrary to the PAU, was setting up a defense of limit of liability less than the $200,000 minimum coverage prescribed by Canadian law. Defendant intervened as a real party in interest to contest plaintiff's request.

The parties eventually entered into a settlement agreement under which they submitted the question of plaintiff's total damages to an arbitration panel and plaintiff released her claims against defendant's insured in exchange for $20,000. The parties agreed that they would resubmit the coverage issue to the trial court in the event the arbitrators awarded plaintiff more than $20,000. Plaintiff further agreed that she would not seek recovery from defendant's insured.

The arbitration panel awarded plaintiff $95,000. Plaintiff then renewed her motion for a declaratory ruling on the coverage issue. The trial court held that pursuant to ACIA v. Lozanis, 215 Mich. App. 415, 546 N.W.2d 648 (1996), Ontario's $ 200,000 minimum coverage requirement applied to this case.⁴

Defendant appealed, and the Court of Appeals affirmed in an unpublished decision stating in pertinent part:

We agree that Lozanis, supra, is controlling. In Lozanis, the claimant was injured by an unidentified motorist in Ontario. Id., pp. 416-417, 546 N.W.2d 648. The claimant's uninsured motorist policy with ACIA had $20,000 limits. Although the claimant filed suit in Ontario. that suit was enjoined. Id., p. 417, 546 N.W.2d 648. This Court concluded that ACIA had agreed in the PAU filed with the Canadian government not to assert policy limits below $200,000 against an insured injured in Ontario. Id., pp. 419-420, 546 N.W.2d 648. ACIA was therefore subjected to Canadian law, and the fact that ACIA had filed suit in Macomb County was not dispositive, since it had agreed to provide coverage for its insureds traveling in Canada.

Id., p. 420, 546 N.W.2d 648. The Court concluded that the PAU did not require that the action be filed in Canada. Id.

Following Lozanis, we conclude that here, too, the fact that the action was filed in Wayne County is not dispositive. The accident occurred in Ontario, and ACIA agreed in the PAU to provide coverage up to the Ontario limits. Although the claimant in Lozanis filed suit in Ontario, that suit was enjoined and was not the basis for this Court's decision applying the Ontario limits. Neither Lozanis nor the instant case involved an Ontario judgment. We find Lozanis to be controlling authority for the application of the Ontario limits in this case.⁵

Defendant appealed and we granted its application for leave to appeal.⁶

II. Other Court holdings

There is no dispute that the higher Canadian limits would apply if plaintiff had filed her lawsuit in Ontario. However, she filed her lawsuit in Michigan. Hence, the real issue is whether the PAU applies when a lawsuit is filed in Michigan that could have been filed in Canada.

Three sister state courts have addressed the issue whether a PAU applies when a lawsuit is filed, not in Canada, but in one of our states.⁷

In Mindell v. Travelers Indemnity Co., 46 A.D.2d 263, 361 N.Y.S.2d 777 (1974), a passenger was injured in a one-car accident in Ontario. A lawsuit was filed in New York. The plaintiff argued that the insurance company which had filed a PAU with Ontario was liable, not for the policy limits of $10,000 but the higher Ontario limit. After examining the PAU the court stated:

It is clear from the language and context of the foregoing undertaking ... that the provision quoted refers only to a claim, action or proceeding prosecuted in a Canadian province or territory, and that the insurer's agreement not to set up certain defenses .... extended only to such actions. It was in no respect an agreement to forego those defenses—and to assume an increased liability—in the present New York action. [Id. at 266, 361 N.Y.S.2d 777.]

This decision by New York's intermediate appellate court was unanimously affirmed by New York's highest appellate court.⁸

In Fiste v. Atlantic Mut. Ins. Co., 94 Ohio App.3d 165, 640 N.E.2d 551 (1994), an Ohio resident was injured by a Canadian citizen in a car accident while driving in Ontario. The plaintiff did not receive enough from the tortfeasor's insurer to cover his damages and subsequently sued his own insurance company in Ohio for additional payment. Auto Club Insurance Company paid the plaintiff the $5,000 due under its policy. The plaintiff argued that the insurance company which had a PAU with Ontario was responsible for an additional amount under Canadian law. The court rejected plaintiff's claim, stating:

Auto Club's execution of this power of attorney and undertaking by which it agreed to abide by Canadian law is not decisive of the issues herein, since that document applies only to causes of action arising in Canada and litigated in Canadian courts. The power of attorney and undertaking does not purport to require Auto Club to be bound by Canadian law with respect to actions against Auto Club by Ohio residents arising out of a contract of insurance executed in Ohio. [Id. at 168-169, 640 N.E.2d 551.]

In Motorists Mut. Ins. Co. v. Howard, 110 Ohio App.3d 709, 713-714, 675 N.E.2d 51 (1996), the Ohio Court of Appeals, without citation to or apparent knowledge of Mindell, or O'Shei, reached a contrary result involving a PAU stating:

[I]t is not necessary for [the insured] to file an action in Canada to enforce the power of attorney agreement. This agreement does not state as a condition precedent to enforcement that an individual must institute an action in Canada, and, indeed, the plain language states that an action may be instituted in Canada.⁹

As previously indicated, our Court of Appeals also addressed a defendant's PAU in Lozanis. In Lozanis, a Michigan resident was injured while driving in Ontario. Because the driver of the truck that hit Mr. Lozanis' vehicle was never identified, Lozanis sought uninsured motorist benefits for his injuries. Lozanis filed a lawsuit in Ontario seeking $200,000 in Canadian funds, rather than the $20,000 in U.S. funds provided for in his insurance policy for uninsured motorist coverage. The ACIA sued Lozanis in Michigan and obtained an injunction forbidding him from continuing his Ontario lawsuit on the basis that the insurance policy required claims to be arbitrated. The circuit court did however hold that the PAU applied so that $200,000 in benefits was available. The ACIA appealed, and the Court of Appeals considered whether the PAU precluded the defendant from asserting uninsured motorist policy limits of lower than $200,000 in Canadian funds in an action by its insured arising from an Ontario accident. The Court rejected the defendant's argument that the forum of the action determines whether the PAU applies, reasoning that the defendant submitted to Ontario law by agreeing to the PAU, and its execution of that document negated its contention that it did not intend to...