Satellite Bowl, Inc. v. Michigan Property & Cas. Guar. Ass'n

• Decision Date: 26 February 1988
• Docket Number: Docket No. 96214
• Citation: 165 Mich.App. 768,419 N.W.2d 460
• Parties: SATELLITE BOWL, INC., a Michigan corporation, Plaintiff-Appellant, v. MICHIGAN PROPERTY & CASUALTY GUARANTY ASSOCIATION, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 460

419 N.W.2d 460

165 Mich.App. 768

SATELLITE BOWL, INC., a Michigan corporation, Plaintiff-Appellant, v. MICHIGAN PROPERTY & CASUALTY GUARANTY ASSOCIATION, Defendant-Appellee.

Docket No. 96214.

Court of Appeals of Michigan.

Submitted Nov. 17, 1987.

Decided Jan. 20, 1988.

Released for Publication Feb. 26, 1988.

Damm & Smith, P.C. by Geoffrey L. Smith, Detroit, for plaintiff-appellant.

Dykema, Gossett, Spencer, Goodnow & Trigg by Donald S. Young, Katherine McCree Lewis and Nancy S. Martin, Detroit, for defendant-appellee.

Before MacKENZIE, P.J., and DOCTOROFF and CLULO, ^* JJ.

PER CURIAM.

Plaintiff filed suit against defendant, Michigan Property & Casualty Guaranty Association (association), seeking a determination that the association was obligated to defend and indemnify plaintiff pursuant to the Property and Casualty Guaranty Association Act (the act), M.C.L. § 500.7901 et seq.; M.S.A. § 24.17901 et seq. Following cross-motions for summary disposition submitted on stipulated facts, the trial court granted summary disposition in favor of defendant. Plaintiff appeals as of right. We affirm.

Plaintiff is a bowling alley, bar and restaurant located in Dearborn Heights, Michigan, which was insured by Proprietor's Insurance Company, an Ohio corporation authorized to do business in Michigan. On August 5, 1981, Proprietor's Insurance was declared insolvent under Ohio law by an Ohio Court of Common Pleas. The Ohio court ordered the insurance company's receiver to notify policyholders of an August 5, 1982, deadline for filing claims against the insurer's estate. Plaintiff received notice of the filing deadline.

Two actions accrued against plaintiff prior to the insolvency of Proprietor's Insurance, but plaintiff was not notified of these actions until after the August 5, 1982, filing deadline in the Ohio insolvency proceedings had passed. Plaintiff promptly notified the association of the claims, but the association refused to defend because they were not filed with the receiver until after August 5, 1982.

Plaintiff petitioned the Ohio court to allow the claims to be filed for good cause, since plaintiff was not notified of the claims until after the August 5, 1982, filing deadline. The claims were allowed, but considered untimely. Plaintiff also petitioned the Ohio court to retroactively apply a change in Ohio law which gave late claims allowed for good cause the same status as claims filed by the filing deadline. The Ohio Court of Appeals held that the amendment could not be given retroactive effect. Thus, plaintiff's claims were entitled to participate in the proceeds of the liquidation only after the timely claims were satisfied. Plaintiff then brought this action to require the association to defend and indemnify it pursuant to the act.

As a condition of doing business in Michigan, specified insurers are required under the act to be members of the association. M.C.L. § 500.7911; M.S.A. § 24.17911. The act is designed to protect the public against financial losses to policyholders or claimants because of the insolvency of insurers. The benefits of the act are triggered if the claimant presents a "covered claim." M.C.L. § 500.7931; M.S.A. § 24.17931. M.C.L. § 500.7925(1)(c); M.S.A. § 24.17925(1)(c) provides that, to constitute a "covered claim," a claim must be presented by an insured to the association "on or before the last date fixed for the filing of claims" at the insurer's insolvency proceedings in its domiciliary state.

The issue in this case is whether a "covered claim" under the act includes any claim, timely or not, which is accepted by the domiciliary state, or whether "covered claim" is limited to those claims timely filed in the domiciliary jurisdiction. The trial court concluded that the Ohio statute which allowed the receiver to accept untimely claims for good cause did not change the August 5, 1982, deadline for purposes of Michigan's "covered claims" statute. We agree. We hold that the requirement in M.C.L. § 500.7925(1)(c); M.S.A. § 24.17925(1)(c) that claims be presented "on or before the last date fixed for the filing of claims" in the domiciliary insolvency proceedings means that covered claims include only timely claims with priority among creditors, and not any claim accepted by the domiciliary state.

Plaintiff argues that the purpose of the act was to eliminate the risk for policyholders of doing business with an insolvent insurer. While that is indeed the purpose of the act, the deadline requirement in § 7925(1)(c) indicates that the Legislature did not intend to make this protection absolute, indemnifying any claim no matter when it arose. The requirement in the statute that claims be presented before the filing deadline evidences an intent on the...