Wells Fargo Bank v. Null

Decision Date06 March 2014
Docket NumberDocket No. 312485.
Citation847 N.W.2d 657,304 Mich.App. 508
CourtCourt of Appeal of Michigan — District of US


Plunkett Cooney, Bloomfield Hills, by Jeffrey C. Gerish, Hilary A. Ballentine, and Matthew J. Boettcher, for Wells Fargo Bank, NA.

Yeager, Davison & Day, PC, Ada, by Phillip K. Yeager, for Auto–Owners Insurance Company.



In this insurance dispute, plaintiff Wells Fargo Bank, N.A., appeals by right the September 4, 2012 order of the trial court granting summary disposition in favor of defendants Elizabeth A. Null and Auto–Owners Insurance Company under MCR 2.116(C)(10).1 Specifically, the trial court ruled that Wells Fargo, the mortgagee, was not entitled to coverage under an insurance policy issued by Auto–Owners to the mortgagor, Lonnie Null, Elizabeth's brother-in-law. The trial court also held that a previous order, entered in an earlier case brought by Elizabeth against Auto–Owners and Wells Fargo, which barred her claims because the property was not covered under the Auto–Owners policy, also barred Wells Fargo's claims in this case. We reverse the trial court's award of summary disposition in favor of Auto–Owners, and remand for further proceedings consistent with this opinion.


The underlying insurance dispute in this case arose from an April 11, 2009 fire that destroyed a residence located at 17285 Williamsville Street, Cassopolis, Michigan. In 1994, Lonnie purchased the residence and obtained from Auto–Owners a homeowners insurance policy covering the residence (hereinafter “the policy”). Wells Fargo held the note on the residence. Accordingly, Lonnie was the mortgagor of record and Wells Fargo the mortgagee. In 1997, Lonnie executed a “Residential Real Estate Contract” with Elizabeth; however, the mortgage was never assigned to Elizabeth and the Auto–Owners policy remained in Lonnie's name. Lonnie stayed in the residence with Elizabeth sporadically for a few days or weeks at a time, through approximately 2004. However, when the fire occurred in April 2009, Lonnie had not lived in the residence for several years. In fact, evidence of record indicates that Lonnie was incarcerated in 2008 and had not resided or stayed in the home since that time.

After the fire, Elizabeth filed a claim for insurance benefits from Auto–Owners under the policy that was then in effect for the policy term of December 22, 2008 to December 22, 2009. In a letter dated April 21, 2009, Auto–Owners advised Wells Fargo, as the mortgagee, that fire had damaged the residence and that a claim had been filed. As Lonnie remained the named insured under the policy, the letter indicated that Lonnie, not Elizabeth, was the individual who suffered damages resulting from the fire. The letter also informed Wells Fargo that, as the mortgagee, its name would be included on any insurance checks, in accordance with Auto–Owners's policy.

In late 2009, Auto–Owners denied Elizabeth's insurance claim for damage to the residence and her personal property on the ground that Lonnie, who was the named insured, did not reside there, which was a requirement under the policy. Specifically, the insurance policy provided in relevant part:

a. Coverage A—Dwelling

(1) Covered Property

We cover:

(a) your dwelling located at the residence premises including structures attached to that dwelling. Thisdwelling [sic] must be used principally as your private residence.

* * *

c. Coverage C—Personal Property

(1) Covered Property

We cover:

(a) personal property owned or used by any insured anywhere in the world including property not permanently attached to or otherwise forming a part of realty.

(b) at your option, personal property owned by others while it is in that part of the residence premises occupied by any insured.

Additionally, the policy defined “insured” as:

a. you;

b. your relatives; and

c. any other person under the age of 21 residing with you who is in your care or the care of a relative.

“Relative” was defined as “a person who resides with you and who is related to you by blood, marriage or adoption. Relative includes a ward or foster child who resides with you. “You” or “your” was defined as the “first named insured,” which was Lonnie. Finally, “residence premises” was defined as “the one or two family dwelling where you reside....”


Elizabeth sued Auto–Owners for breach of contract in March 2010, naming both Auto–Owners and Wells Fargo as defendants in the case. That case was captioned in the trial court as Null v. Auto–Owners Ins. Co., LC No. 10–228–NI. Wells Fargo and Auto–Owners continued to correspond during the pendency of that companion case.

On December 2, 2010, the trial court entered an order granting summary disposition in favor of defendant Wells Fargo. The order stated, “This is a final Judgment as to [Wells Fargo] only and does not resolve all pending matters in this case.” Although it had been dismissed from the litigation, Wells Fargo moved to intervene as a counterplaintiff sometime in May 2011. The motion stated that Wells Fargo was not asserting a new claim against Auto–Owners, that its claim was derivative of the policy held by Lonnie, and that, if intervention was granted, Wells Fargo intended to file a counterclaim against Elizabeth only. The trial court denied this motion on May 9, 2011.

After a bench trial, the trial court reversed its earlier initial grant of summary disposition in favor of Elizabeth and granted summary disposition in favor of Auto–Owners, denying coverage in an opinion dated October 5, 2011, and an order entered on October 21, 2011.

Elizabeth appealed, and this Court issued an opinion affirming the trial court's order on October 22, 2013. See Null v. Auto–Owners Ins. Co., unpublished opinion per curiam of the Court of Appeals, issued October 22, 2013 (Docket No. 308473) at 1, 3, 2013 WL 5731840. Relevant to this appeal, this Court stated that the residence did not fall within the policy's definition of covered property because

[t]he controlling Michigan case law establishes that defendant properly denied coverage on the basis of the policy's residence requirements. In Heniser [v. Frankenmuth Mut. Ins. Co., 449 Mich. 155, 161, 534 N.W.2d 502 (1995) ], our Supreme Court explained that when a property insurance policy includes a “residence premises” definition, there is no coverage if the insured does not reside at the property. The property at issue in Heniser was a vacation home that the insured had sold on a land contract, and the insured did not live in the home. Id. at 157 . The Court held, [w]e agree with those courts that have found the exact language of this policy to unambiguously require the insured to reside at the insured premises at the time of the loss.” Id. at 168 .

This Court applied Heniser to confirm a denial of insurance coverage in McGrath v. Allstate Ins. Co., 290 Mich.App. 434, 802 N.W.2d 619 (2010). The McGrath Court determined that the residence premises requirement precluded coverage unless the insured lived in the premises at the time of the loss. Id. at 441 . The Court rejected the argument that the insured could be deemed to reside in the premises if the insured intended to return at some time in the future. Id. at 442 . The Court determined that the term “reside” had no technical meaning in the policy, and that the policy plainly required the insured to live in the premises in order to obtain coverage. Id. at 442–443 .

* * *

Heniser and McGrath control the coverage question in this case. There is no ambiguity in the policy language at issue; the policy limits coverage to the dwelling in which the insured resides and which is used as the insured's primary residence. The record confirms that Lonnie did not reside in the home at the time of the fire. Plaintiff testified in deposition that Lonnie lived at the Cassopolis house with plaintiff and her husband for approximately one month after being released from jail in 1997. After that, Lonnie “bounced around a lot,” meaning he stayed sporadically at the Cassopolis house for a few days at a time, and stayed there for two weeks in approximately 2005. Nothing in the record indicates that Lonnie resided in the home after 2005. Accordingly, the home did not fall within the policy definition of covered property, and defendant properly denied coverage. [ Null, unpub. op. at 1–3.]


While the companion case was proceeding, Wells Fargo filed a complaint against Auto–Owners and Elizabeth on June 13, 2011, asserting that it was entitled to any insurance proceeds recovered by Elizabeth. The complaint also alleged unjust enrichment and requested injunctive relief. Wells Fargo later amended the complaint and added a breach of contract claim against Auto–Owners.

On February 28, 2012, Auto–Owners moved for summary disposition pursuant to MCR 2.116(C)(8) and (10). Auto–Owners acknowledged that the policy at issue contained a mortgage clause that gave rise to a separate contract with the mortgagee, and that the clause would afford coverage to the mortgagee, even if coverage would not be afforded to the insured, in cases of fraud or arson. However, Auto–Owners asserted that the first step in interpreting an insurance policy is to determine whether coverage is afforded to any named insured by virtue of the satisfaction of all conditions precedent to coverage. Then, and only then, if coverage is afforded, the policy is reviewed to determine whether any exclusions apply.

Auto–Owners argued, on the basis of the trial court's ruling in the companion case, that the policy did not cover the residence because Lonnie did not reside there at the time of the fire. Because the residence was not a “residence premises” under the policy, it was not “covered property,” and there accordingly was no coverage under the policy in the...

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