Li Yun Yee v. Aaa Insurance ( 2022 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
LI YUN YEE, UNPUBLISHED
February 24, 2022
Plaintiff-Appellee,
v No. 356603
Wayne Circuit Court
AAA INSURANCE, doing business as LC No. 2019-004205-NF
MEMBERSELECT INSURANCE COMPANY,
Defendant-Appellant.
Before: RICK, P.J., and MURRAY and SHAPIRO, JJ.
PER CURIAM.
Defendant appeals as of right from the stipulated judgment in favor of plaintiff, arguing
that the trial court erred when it refused to grant summary disposition to defendant regarding
plaintiff’s underinsured motorist (UIM) benefits claim. We reverse and remand for entry of a
judgment on the UIM claim in favor of defendant.
I. FACTS AND PROCEDURAL BACKGROUND
Plaintiff and her husband, Michael Yee, purchased a no-fault insurance policy in October
2016 for plaintiff’s 2003 Honda CR-V and her husband’s 2013 Ford Escape. Plaintiff and her
husband paid separate premiums for uninsured (UM) and UIM coverage of up to $250,000 per
person. These premiums were paid separately for each vehicle.
Plaintiff’s insurance policy provides UIM coverage:
1. Subject to the Definitions, Exclusions, Conditions and Limits of Liability of this
policy, we will pay damages for bodily injury to an insured person which:
a. is caused by accident; and
b. arises out of the ownership, operation, maintenance or use of an underinsured
motor vehicle; and
-1-
c. that insured person suffers death, serious impairment of bodily function or
permanent serious disfigurement; and
d. that insured person is legally entitled to recover from the owner or operator of
an underinsured motor vehicle.
2. We will pay under this coverage only after the Limits of Liability under all
applicable bodily injury liability bonds and policies have been exhausted by
payment of judgments or settlements.
Plaintiff’s policy defines underinsured motor vehicles, in part:
4. Underinsured Motor Vehicle means a motor vehicle whose ownership,
maintenance or use has resulted in bodily injury of an insured person and for which
the sum of the Limits of Liability under all bodily injury liability insurance policies,
bonds or other security required to be maintained under law applicable to the driver
or to the person or organization legally responsible for such vehicle and applicable
to the vehicle is less than the limits of Underinsured Motorists Coverage provided
the insured person at the time of the accident.
5. Uninsured Motor Vehicle and Underinsured Motor Vehicle does not include any
motor vehicle which is:
a. owned by you or any resident of your household;
b. furnished or available for the frequent or regular use of you or any resident of
your household[ . . . .]
In July 2018, plaintiff was injured in a car accident as a passenger in her husband’s Ford.
Plaintiff settled her negligence claim against her husband for $20,000, the liability limit of his
bodily injury coverage. While her husband’s bodily injury insurance initially provided up to
$250,000 of coverage, this amount was reduced to $20,000 under his policy due to his relationship
with plaintiff.
Plaintiff filed a claim for UIM benefits, arguing the expenses for her injuries exceeded the
liability limits imposed by defendant on her husband, which rendered him underinsured.
Defendant informed plaintiff UIM benefits were not covered, and plaintiff initiated this suit.
Plaintiff and defendant moved for partial summary disposition.
The trial court determined “under the terms of the exclusion provision, Plaintiff is not
precluded from under insured [sic] motorist coverage[,]” but concluded there was a conflict
between the two underinsured motor vehicle provisions, creating a question of material fact. The
trial court denied defendant’s motion for summary disposition of plaintiff’s UIM claim, but
granted defendant’s motion for summary disposition of plaintiff’s UM claim under MCR
2.116(C)(8), as improperly pleaded. The trial court entered a stipulated judgment awarding
plaintiff $230,000, staying the judgment’s execution until defendant had exhausted its appellate
remedies. This appeal followed.
-2-
II. ANALYSIS
The trial court erred in denying defendant’s motion for summary disposition of plaintiff’s
UIM claim.
“An issue is preserved for appeal if it was raised, addressed, and decided by the trial court.”
George v Allstate Ins Co, 329 Mich App 448, 453; 942 NW2d 628 (2019). While defendant’s
argument that plaintiff was not entitled to UIM benefits was properly preserved, plaintiff’s
contention that her policy is ambiguous regarding how the reduction of bodily injury coverage for
under her husband’s plan impacts his insured status is unpreserved, because plaintiff introduces
this argument for the first time on appeal. When considering unpreserved arguments, “this Court
may overlook preservation requirements if the failure to consider the issue would result in manifest
injustice, if consideration is necessary for a proper determination of the case, or if the issue
involves a question of law and the facts necessary for its resolution have been presented[.]” Smith
v Foerster-Bolser Constr, Inc, 269 Mich App 424, 427; 711 NW2d 421 (2006).
“This Court reviews de novo the trial court’s decision to grant or deny summary
disposition.” Rory v Continental Ins Co, 473 Mich 457, 464; 703 NW2d 23 (2005) (citation and
footnote omitted). “In reviewing the motion, the pleadings, affidavits, depositions, admissions,
and any other admissible evidence are viewed in the light most favorable to the nonmoving party.”
Id. (citation and footnote omitted). “Summary disposition under MCR 2.116(C)(10) is warranted
when there is no genuine issue as to any material fact, and the moving party is entitled to judgment
as a matter of law.” Jeffrey-Moise v Williamsburg Town Houses Coop, Inc, ___ Mich App ___,
___; ___ NW2d ___ (2021) (Docket No. 351813); slip op at 2. “A genuine issue of material fact
exists when the record leaves open an issue upon which reasonable minds might differ.” Id.(quotation marks and citation omitted).
“The proper interpretation of a contract is a question of law, which this Court reviews de
novo.” Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d 776 (2003). “The same
standard applies to the question of whether an ambiguity exists in an insurance contract.” Id.“Accordingly, we examine the language in the contract, giving its ordinary and plain meaning if
such would be apparent to a reader of the instrument.” Id.“Insurance policies are subject to the same contract construction principles that apply to
any other species of contract.” Rory, 473 Mich at 461. “[U]nless a contract provision violates law
or one of the traditional defenses to the enforceability of a contract applies, a court must construe
and apply unambiguous contract provisions as written.” Id. “Like uninsured-motorist benefits,
underinsured-motorist coverage is not required by Michigan law, and the terms of coverage are
controlled by the language of the contract itself, not by statute.” Dawson v Farm Bureau Mut Ins
Co of Mich, 293 Mich App 563, 568; 810 NW2d 106 (2011). “After ascertaining the meaning of
a contract’s terms, a court must construe and apply unambiguous contract provisions as written.”
Auto-Owners Ins Co v Seils, 310 Mich App 132, 145; 871 NW2d 530 (2015) (quotation marks and
citation omitted). “A contract is ambiguous when, after considering the entire contract, its words
may reasonably be understood in different ways.” Id. at 146. “Thus, when a fair reading of the
entire contract of insurance leads one to understand that there is coverage under particular
circumstances and another fair reading of it lends one to understand there is no coverage under the
same circumstances the contract is ambiguous.” Id. (quotation marks and citation omitted). “An
-3-
ambiguous provision in an insurance contract is construed against the insurer and in favor of
coverage.” Id.
Whether an insured is entitled to insurance benefits requires application of a two-part
analysis. Besic v Citizens Ins Co of the Midwest, 290 Mich App 19, 24; 800 NW2d 93 (2010).
“First, we determine if the policy provides coverage to the insured.” Id. at 24-25 (quotation marks
and citation omitted). “An insurer is free to define or limit the scope of coverage as long as the
policy language fairly leads to only one reasonable interpretation and is not in contravention of
public policy.” Id. at 25 (quotation marks and citation omitted). “If the policy does supply
coverage, we then ascertain whether that coverage is negated by an exclusion. It is the insured’s
burden to establish that his claim falls within the terms of the policy.” Id. (quotation marks and
citation omitted). However, “[w]hile it is the insured’s burden to establish that his claim falls
within the terms of the policy, the insurer should bear the burden of proving an absence of
coverage.” Mich Battery Equip Inc v Emcasco Ins Co, 317 Mich App 282, 284; 892 NW2d 456
(2016) (quotation marks and citation omitted).
Before we consider the applicability of any exclusionary clauses, we must first determine
whether plaintiff’s claim is covered by her policy. Besic, 290 Mich App at 24-25. Defendant
contends there is no coverage because the vehicle in question did not qualify as an underinsured
motor vehicle under plaintiff’s insurance policy. In response, plaintiff contends the language of
her policy is ambiguous and therefore must be interpreted in favor of coverage. The relevant
portions of the two provisions provide:
4. Underinsured Motor Vehicle means a motor vehicle whose ownership,
maintenance, or use has resulted in bodily injury of an insured person and for which
the sum of the Limits of Liability under all bodily injury liability insurance policies,
bonds, or other security required to be maintained under law applicable to the driver
or to the person or organization legally responsible for such vehicle and applicable
to the vehicle is less than the limits of Underinsured Motorists Coverage provided
the insured person at the time of the accident.
5. Uninsured Motor Vehicle and Underinsured Motor Vehicle does not include any
motor vehicle which is:
a. owned by you or any resident of your household . . . .
These clauses do not conflict. A fair reading of the clauses together, in the context of plaintiff’s
policy as a whole, yields one reasonable interpretation: paragraph 4 defines the term underinsured
motor vehicle generally, while paragraph 5 identifies exclusions to the definition. Paragraph 5 is,
essentially, an exclusionary provision. It serves the same purpose as the other exclusionary clauses
in plaintiff’s policy: to narrow the applicability of coverage under the general definition in certain
circumstances.
“An insurer is free to define or limit the scope of coverage as long as the policy language
fairly leads to only one reasonable interpretation and is not in contravention of public policy.”
Besic, 290 Mich App at 25 (quotation marks and citation omitted). Additionally, “[c]lear and
specific exclusionary provisions must be given effect, but are strictly construed against the insurer
-4-
and in favor of the insured.” Hastings Mut Ins Co v Safety King, Inc, 286 Mich App 287, 292; 778
NW2d 275 (2009). The language in the fifth paragraph is clear and specific: while a motor vehicle
owned by the policyholder or any household resident of the policyholder may qualify as an
underinsured motor vehicle under the broad definition in the fourth paragraph, the fifth paragraph
explicitly and clearly modifies the definition to exclude such vehicles from the definition. Even
strictly construed against defendant, the language clearly narrows the overall definition of
underinsured motor vehicle, and leaves no room for alternative reasonable interpretations.
Because there is no ambiguity in plaintiff’s policy, it must be interpreted as written. Seils,
310 Mich App at 145. Plaintiff’s policy clearly excludes vehicles owned by the policyholder, or
residents of their household, from the definition of underinsured motor vehicle. Plaintiff does not
contest her husband, with whom she lives, is the owner of the vehicle she claims is underinsured.
This is also reflected in the renewal declaration certificates for both vehicles, which assign both
vehicles the same address, which is also the address listed for plaintiff’s husband. Because the
vehicle in question falls within this exclusion, it is not an underinsured motor vehicle under
plaintiff’s policy, and plaintiff is not entitled to UIM benefits, regardless of the inapplicability of
any subsequent exclusions.
Plaintiff’s contention that her policy is ambiguous regarding how defendant’s reduction of
her husband’s bodily injury coverage impacts his insured status is irrelevant. Plaintiff asserts this
argument for the first time on appeal. While “this Court may overlook preservation requirements
if the failure to consider the issue would result in manifest injustice, if consideration is necessary
for a proper determination of the case, or if the issue involves a question of law and the facts
necessary for its resolution have been presented,” Smith, 269 Mich App at 427, there is no manifest
injustice from refusing to consider this claim nor is its determination necessary for the resolution
of this case. Defendant did not argue against plaintiff’s assertion that the clause reducing her
husband’s bodily injury coverage to $20,000 rendered him underinsured. Instead, defendant’s
contention is, regardless of her husband’s insured status, plaintiff cannot recover UIM benefits
because the car in which she sustained her injuries did not qualify as an underinsured motor
vehicle—not because plaintiff’s husband was not underinsured, but because the car in question
was owned by a member of plaintiff’s household.
We likewise reject plaintiff’s argument that she is seeking coverage because her husband
was an “underinsured motorist” and not because she was injured in an underinsured motor vehicle.
Plaintiff’s argument is based on her husband’s status as an “underinsured motorist” under the
definition of underinsured motor vehicle, but the paragraph plaintiff cites does not reference
underinsured motorists, only “Underinsured Motorists Coverage[.]” Furthermore, under plaintiff’s
policy, UIM coverage requires defendant to:
[P]ay damages for bodily injury to an insured person which:
a. is caused by accident; and
b. arises out of the ownership, operation, maintenance or use of an underinsured
motor vehicle; and
-5-
c. that insured person suffers death, serious impairment of body function or
permanent serious disfigurement; and
d. that insured person is legally entitled to recover from the owner or operator of
an underinsured motor vehicle.
In this respect, plaintiff’s UIM coverage is limited to an injury resulting from an accident
concerning an underinsured motor vehicle, not an underinsured motorist. Because the
unambiguous language of the contract precludes the Ford driven and owned by plaintiff’s husband
at the time of the accident from qualifying as an underinsured motor vehicle, plaintiff cannot
recover.1
Plaintiff’s contention that she is claiming benefits under the coverage for her Honda, and
not the coverage for her husband’s Ford, similarly lacks merit. Plaintiff is of course filing her
claim under her own coverage, because she already claimed the maximum benefits provided by
her husband’s bodily injury coverage, which did not cover all her injuries. However, the
exclusionary provision under plaintiff’s policy precludes the Ford owned by plaintiff’s husband
from qualifying as an underinsured motor vehicle, and therefore plaintiff cannot claim UIM
benefits.
Because there is no coverage, we need not decide whether an exclusion applies. Besic, 290
Mich App at 25.
Reversed and remanded for entry of a judgment in favor of defendant on plaintiff’s UIM
claim. We do not retain jurisdiction. Having prevailed in full, defendant may tax costs.
/s/ Michelle M. Rick
/s/ Christopher M. Murray
/s/ Douglas B. Shapiro
1
Lee v Detroit Auto Inter-Ins Exch, 412 Mich 505; 315 NW2d 413 (1982), does not affect this
analysis. While the Lee Court acknowledged that “it is the policy of the no-fault act that persons,
not motor vehicles, are insured against loss[,]” Lee, 412 Mich at 509 (footnote omitted), this
analysis does not run contrary to defendant’s interpretation plaintiff’s policy. There is no dispute
that it is plaintiff, not her car or her husband’s car, that is insured under her policy.
-6-