Pioneer State Mut. Ins. Co. v. Dells

• Decision Date: 18 June 2013
• Docket Number: Docket No. 310986.
• Citation: 836 N.W.2d 257,301 Mich.App. 368
• Parties: PIONEER STATE MUTUAL INSURANCE COMPANY v. DELLS.
• Court: Court of Appeal of Michigan — District of US

301 Mich.App. 368

836 N.W.2d 257

PIONEER STATE MUTUAL INSURANCE COMPANY

v.DELLS.

Docket No. 310986.

Court of Appeals of Michigan.

Submitted June 4, 2013, at Grand Rapids.

Decided June 18, 2013, at 9:10 a.m.

Jonathon Shove Damon for Pioneer State Mutual Insurance Company.

Varnum LLP, Grand Rapids, (by Mark S. Allard) for Tiffany Drye and Stephanie Helder.

Before: MURPHY, C.J., and FITZGERALD and HOEKSTRA, JJ.

MURPHY, C.J.

Defendants Tiffany Drye and Stephanie Helder, copersonal representatives of the estate of Toni L. Hall (hereafter collectively referred to as “the estate”), appeal as of right the trial court's order granting summary disposition in favor of plaintiff, Pioneer State Mutual Insurance Company. Hall was killed when a trailer towed by a van driven by defendant Thomas Edward Dells separated from the van and crashed into a vehicle driven by Hall. This appeal concerns whether the liability coverage in a homeowner's insurance policy issued by Pioneer to Dells is applicable with respect to wrongful-death damages. The policy contains a liability exclusion for bodily injuries arising out of the use of a motor vehicle, as well as a trailer, but there is an exception to the trailer exclusion for a “trailer not towed.” The estate argues that Hall's death arose out of the use of a trailer that was no longer being towed at the point of impact; therefore, the trailer exclusion does not apply pursuant to the exception, resulting in liability coverage under the policy. Considering that the use of a motor vehicle, Dells's van, played an integral and indispensable role in giving rise to Hall's death, without which “use” the trailer would not have slammed into Hall's vehicle in the first place, we conclude that the motor vehicle exclusion itself bars liability coverage, regardless of the fact that it was the trailer and not the van that directly impacted Hall's car. And even if we assumed that the “ trailer not towed” exception needed to be examined as part of the analysis, we conclude that Hall's death arose out of a towed trailer, given that the accident would never have occurred but for the towing of the trailer moments before impact. Accordingly, we affirm.

On the morning of October 28, 2009, Dells was driving his van eastbound on a 45 mile-per-hour, two-lane stretch of Ten Mile Road located in Kent County, and he was towing a utility trailer filled with scrap metal. At that time, the decedent, Hall, was driving a car heading westbound on the same stretch of Ten Mile Road. The trailer towed by Dells was attached to his van by means of a Reese hitch and, according to Dells's affidavit, the “hitch had been inserted into the receiver with a pin and clip (cotter) pin for six months prior to the accident[.]” In his affidavit, Dells averred that as his van and Hall's car came close to crossing paths, and “the Reese trailer hitch separated from its receiver, causing the trailer, with the Reese hitch still attached to the trailer tongue, to separate from the van.” ¹ The trailer flew or bounced over another motor vehicle that had been proceeding behind Dells's van, crossed over the center line into the westbound lane, and then, hitch first and while airborne, punctured the driver's side front windshield of Hall's westbound car, impaling and killing her. Hall's car rolled over several times before coming to rest on its four wheels. A passenger in Hall's car suffered nonfatal injuries.

At the time of the accident, Dells and his vehicles were covered by a motor vehicle insurance policy issued by Auto–Owners Insurance Company (AOIC), which had a liability limit of $100,000. Pioneer insured Dells under a homeowner's insurance policy at the time of the accident, and the policy had a limit of $500,000 in regard to liability for bodily injury. In a separate action filed in January 2010, the estate sued Dells for wrongful death. AOIC retained an attorney to defend Dells, and a tentative settlement agreement was reached in December 2010 whereby the wrongful-death action would be dismissed without prejudice or costs to any party, a judgment of $600,000 would be entered against Dells, the first $100,000 of the judgment would be satisfied with insurance policy proceeds tendered by AOIC, the estate would seek the $500,000 balance from Pioneer under Dells's homeowner's policy, and if it was determined that there was no coverage under the homeowner's policy, the estate would dismiss the action with prejudice. While AOIC was prepared to settle for the $100,000 policy limit, Pioneer had not even participated in the settlement discussions, and there were indications that Pioneer would deny coverage under the homeowner's policy.² Pioneer had previously been notified about the lawsuit by Dells's AOIC-retained counsel, who indicated that while he had not yet determined whether the Pioneer policy was implicated, the estate thought that there may be coverage under the homeowner's policy.

The settlement agreement was not executed because Pioneer warned Dells that execution of the settlement agreement would jeopardize Dells's coverage under the homeowner's policy even if coverage was applicable.³ As to the instant suit, in January 2011 Pioneer filed a complaint for a declaratory judgment against Dells and the estate, alleging that AOIC had tendered its policy limits to the estate, that the estate had made a claim against Pioneer for additional sums under the homeowner's policy, and that, with respect to any liability that might be imposed against Dells, there was no available coverage under the Pioneer policy given its exclusion for bodily injury arising out of the use of a motor vehicle. The estate filed a counterclaim, alleging that Dells had refused to execute the settlement agreementbecause of Pioneer's intrusion and its warning that execution would jeopardize Dells's coverage under the homeowner's policy, assuming the existence of any coverage. The estate alleged a cause of action for breach of contract on the basis of a third-party-beneficiary theory, and it made claims for penalty interest, declaratory relief, tortious interference with a contract, and tortious interference with a business expectancy.

The estate moved for summary disposition pursuant to MCR 2.116(C)(8), (9), and (10) on Pioneer's declaratory judgment action and the estate's counterclaim. Before reciting the estate's arguments, it is necessary to give context to those arguments by quoting the relevant provisions in the homeowner's policy. In the portion of § II of the policy addressing liability coverages, the following is provided:

COVERAGE E—Personal Liability

If a claim is made or a suit is brought against an insured for damages because of bodily injury ... caused by an occurrence ⁴ to which this coverage applies, we will:

1. pay up to our limit of liability [$500,000] for the damages for which the insured is legally liable.

2. provide a defense at our expense by counsel of our choice.... [Boldface omitted.]

In the portion of § II of the policy addressing exclusions, the following pertinent language is found:

1. Coverage E—Personal Liability ... do[es] not apply to bodily injury or property damage:

* * *

g. arising out of:

(1) the ownership, maintenance, use, occupancy, renting, loaning, loading or unloading of any motor vehicle or all other motorized land conveyances, including trailers;

* * *

This exclusion does not apply to:

(1) a trailer not towed by or carried on a motorized land conveyance. [Boldface omitted.]

In its motion for summary disposition, the estate argued that insurance policies must be construed pursuant to their clear and unambiguous terms, that exclusions to coverage must be strictly interpreted in favor of coverage, that the trailer that killed Hall was “not towed” at the time that she directly incurred bodily injury and thus the exclusion was not applicable, and that the estate was entitled to judgment as a matter of law on the counts in the counterclaim. Pioneer filed its own motion for summary disposition pursuant to MCR 2.116(C)(8) and (10), arguing that the estate had failed to state a claim on which relief could be granted relative to the counterclaim and that there was no genuine issue of material fact that the coverage exclusion was applicable given that the trailer that struck Hall was set in motion while in the process of being towed by Dells's van.

The trial court granted Pioneer's motion for summary disposition with respect to the estate's entire counterclaim, and the estate has not appealed that ruling except to the extent that the estate had sought a declaratory judgment that the homeowner's policy provided coverage for the accident. The trial court granted Pioneer's motion for summary disposition on the declaratory judgment claim, finding that the exclusion barred coverage in regard to the fatal injuries suffered by Hall that arose out of the accident. In a thoughtful written opinion, the trial court ruled that courts in other jurisdictions addressing comparable policy language and similar facts had held, without exception, that the exclusion forecloses coverage under a homeowner's policy when damages were incurred as the result of collisions with trailers that had broken free from the vehicles that had been towing them. Relying on language of these opinions, the trial court found that the exclusion was intended to apply where a trailer had been in tow when it became detached and then caused bodily injury. The trial court, again referring to language from foreign opinions, noted that although the trailer was not in tow at the instant of impact and for a very brief moment beforehand, the only reason the trailer ended up on westbound Ten Mile Road and striking Hall's vehicle was that it had been in tow up to the moment of separation. The exception to the exclusion was intended to address only those circumstances in which a trailer was stationary, in dead storage, or otherwise not in the process of being towed. The...