One Court of Justice

The Michigan Supreme Court will hear oral argument on whether to grant the application for leave to appeal or take other action in Rambin v. Allstate Insurance Company.  The parties shall address at oral argument whether the plaintiff took the motorcycle on which he was injured “unlawfully” within the meaning of MCL 500.3113(a).  Specifically, whether “taken unlawfully” under MCL 500.3113(a) requires the person using the motorcycle to know that such use has not been authorized by the owner; and, if so, whether the Court of Appeals erred in concluding that the plaintiff lacked such knowledge as a matter of law given the circumstantial evidence presented.

In Tienda v Integon National Insurance Co, the Michigan Court of Appeals held that a migrant worker was a Michigan resident for the purpose of the No Fault Act because the migrant worker maintained no other residence when he lived in Michigan, and he took all his worldly possessions with him when he traveled from state to state.  In this case, the migrant worker lived in three different states where he picked fruit on a seasonal basis.  At the time of the accident, the migrant worker was living and working in Michigan, and did not have any other state which he called home.  The mere fact that the worker spent a longer period of time in Florida each year, due to the length of the picking seasons, did not make Florida his domicile.  The Court reasoned that a person does not need to maintain a residence for any particular length of time in order to establish domicile.

On remand from the Supreme Court, in In re Edward Carroll, the Michigan Court of Appeals held that a portion of a conservator’s fees were not compensable as allowable expenses under the no fault insurance act because they were for ordinary and necessary household services.  Previously, the Court of Appeals had concluded that when a person is so disabled that the court appoints a conservator to handle his estate, then the conservator’s services necessarily qualify as allowable expenses.  The Supreme Court vacated this initial judgment, and remanded to be considered in light of Johnson v. Recca and Douglas v. Allstate Insurance Company.  In light of those decisions, the Court of Appeals reasoned that the conservator’s fees are compensable under MCL 500.3107(1)(a) only to the extent they “are directly related to the injured person’s care, recovery, or rehabilitation.” 

The Michigan Supreme Court denied 11 applications for leave, and remanded three matters to the Court of Appeals or trial court.

In Michigan Insurance Company v. National Liability & Fire Insurance Company, the Supreme Court summarily reversed the Court of Appeals’ holding that an adult foster care home resident was covered on the home’s no-fault insurance policy, because it determined that the resident was not a “relative” of the home under the policy.

In Parks v. Department of Corrections, the Supreme Court summarily reversed the Court of Appeals in lieu of granting leave, and remanded the matter for reinstatement of the plaintiff-parolee’s habeas corpus complaint.  In that matter, MDOC rescinded an order of discharge from parole after determining it had miscalculated the parolee’s credit, and the Supreme Court confirmed that the MDOC does not have the power of rescission once the discharge is delivered.

Under Section 3107(1)(b) of the No-Fault Act, insurers are liable for benefits consisting of “the loss of income from work.”  In Brown v. Home Owners Insurance Company, the Michigan Court of Appeals held that the profits generated by an S corporation should be included when calculating the work loss benefits payable under that section, MCL § 500.3107(1)(b).

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The Court of Appeals published its per curiam decision in Acorn Investment Co. v. Michigan Basic Prop Ins. Ass’n, where it concluded that an appraisal of a property loss pursuant to an insurance policy does not constitute a verdict for purposes of the imposition of case evaluation sanctions.  Specifically, in this case, the insurer had denied coverage for a fire loss and the insured had filed suit.  The trial court awarded partial summary disposition to the insured, finding the loss to be covered under the policy.  The parties then agreed to submit the amount of the loss to be determined by an appraisal panel as provided by the policy.  That panel came back with a value that was higher than the case evaluation award that had been accepted by the insured and rejected by the insurer.  The trial court granted a motion to enter judgment at the appraisal amount, but declined to award case evaluation sanctions to the insured, finding that the appraisal was not a “verdict” and thus did not trigger the award of sanctions under MCR 2.403(O).  The Court of Appeals agreed and affirmed the trial court’s refusal to award sanctions.  It found that appraisal effectively constitutes arbitration, and that case law has established that judgments entered pursuant to arbitration or settlement are not “verdicts” for the purposes of case evaluation sanctions.

In Hunt v Drielick, a consolidated appeal, the Court of Appeals considered whether a “business use” exclusion in the trucking company’s insurance policy justified denial of coverage.  The insurance company had issued a non-trucking or “bobtail” policy that only covered damages incurred when the truck was not engaged in the business of hauling a trailer or under lease to a carrier.  In this case, the accident occurred when the trucking company’s employee was on his way to a yard to pick up a load of cargo.  The insurance company denied coverage based on the business use exclusion, claiming that the truck was under lease to or being used in the business of the yard at the time of the accident.  The insurance policy also listed the trucking company employee involved in the accident as an excluded driver.

The trial court held that the insurance company improperly denied coverage.  The trial court found that the named driver exclusion failed to comport with statutory requirements.  The trial court also found that the business use exclusion was ambiguous.  The Court of Appeals disagreed, and reasoned that under Michigan law “a factual question regarding the applicability of the plan language of an insurance policy ‘to specific circumstances does not render the policy language ambiguous.’”  The Court of Appeals found there was an issue of fact both as to whether there was a lease agreement between the trucking company and the yard, and whether the truck was being used for a business purpose at the time of the accident.  Accordingly, the Court of Appeals remanded the case in order for the trial court to take evidence on this issue.  The Court of Appeals affirmed, however, the trial court’s holding that the named driver exclusion was invalid because it failed to satisfy statutory requirements. 

In Bronson Methodist Hospital v Michigan Assigned Claims Facility, the Michigan Court of Appeals upheld a no-fault insurer’s denial of PIP coverage to an injured registered owner of a vehicle who was also an excluded driver under the insurance policy.  The court applied the plain language of the insurance policy’s “named driver exclusion endorsement” and the no-fault statute, and found that the excluded driver’s “act of driving the insured vehicle at the time of the accident rendered the vehicle uninsured.”  Relying on Iqbal v Bristol West Ins Group, Plaintiff argued that a vehicle owner is covered by a no-fault policy even when, as here, someone else insures the vehicle.  The Court of appeals distinguished Iqbal on grounds that the vehicle owner in that case was not an excluded driver.  The Court affirmed the trial court’s grant of summary disposition in favor of the insurer and the Michigan Assigned Claims Facility (MACF).

In Wescott v. Civil Service Commission, the Michigan Court of Appeals upheld the Michigan Civil Service Commission’s denial of an employee’s disability insurance benefits.  Although the circuit court held the denial was arbitrary and capricious because both the State Employee’s Retirement Board (SERB) and the Social Security Administration (SSA) determined that the employee was disabled, the Court of Appeals ruled that those decisions had no bearing on the Commission’s separate authority to make its own determination.

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In Amerisure Insurance Company v. Debruyn Produce Company, the Court of Appeals held that the losses Debruyn sustained when its employee issued herself unauthorized checks were covered under the “employee dishonesty” portion of Debruyn’s insurance policy with Amerisure.  When executing her payroll responsibilities for the company, Debruyn’s controller consistently created a second check to herself for the same amount as her actual payroll check. This scheme was eventually discovered and the controller was convicted of embezzlement.  Debruyn filed a claim under the “employee dishonesty” portion of its insurance policy with Amerisure, but was denied.  Americure argued that the extra paychecks constituted a “salary” within the meaning of certain policy exclusions.  The Court rejected Amerisure’s claim that the financial benefit received by Debruyn’s employee was in fact a “salary.”  Relying on the opinions from other jurisdictions, the Court concluded that this was not merely a case of an employer knowingly paying its employee funds that the employer incorrectly believed were honestly earned.  Rather, the conduct of Debruyn’s employee was analogous to stealing inventory, misusing company credit cards, and forging checks – behavior that clearly fell within the policy’s coverage. In fact, in several cases the Court of Appeals relied upon, embezzlement was specifically mentioned as the type of conduct that would be covered by such a policy. According to the Court of Appeals, the mere fact that the money was taken from Debruyn’s payroll account did not convert the employee’s act from outright theft into a fraudulently induced “salary.”  Thus, the Court concluded that no policy exclusions applied to the employee conduct at issue and that Debruyn’s insurance policy with Amerisure covered all losses.