Sandra Jean Owen v. Bristol West Preferred Insurance Company ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
SANDRA JEAN OWEN, UNPUBLISHED
March 10, 2016
Plaintiff-Appellee,
and
BEAUMONT HEALTH SYSTEM,
Intervening Plaintiff-Appellee,
v No. 323036
Wayne Circuit Court
BRISTOL WEST PREFERRED INSURANCE LC No. 12-006993-NI
COMPANY,
Defendant-Appellant.
Before: SHAPIRO, P.J., and O’CONNELL and GLEICHER, JJ.
GLEICHER, J. (concurring).
I concur with the result reached by the majority but write separately to offer an alternate
legal analysis.
In insurance coverage disputes, dates matter. In this case, the pertinent dates establish
that Bristol West extended the policy period of Sandra Jean Owen’s no-fault coverage until the
day after the accident. On this basis, I concur with the majority that Bristol West must afford
Owen personal injury protection benefits.
Owen’s original no-fault insurance policy stated a policy period of September 9, 2011
through March 8, 2012. In February 2012, defendant Bristol West offered Owen a renewal
policy with a term of March 9, 2012 through February 8, 2012. The cover letter for the renewal
policy stated in relevant part:
You are currently enrolled in our Direct Debit (EFT) payment plan, which
also applies to this renewal. For your convenience, the amount due for your next
renewal down payment will be automatically deducted from your bank account.
Please refer to the next page for your payment schedule. It includes the due dates
and amounts of future withdrawals from your account.
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The “payment schedule” offered by Bristol West indicates that Owen’s first payment
would be due on March 8, 2012, and that the payment method was “Automatic.” Bristol West
further provided in this form: “Funds will be debited from your bank account on or after the
payment due date. The debit will appear on your bank statement as ‘BRISTOL WEST INS’.
Please be sure there are sufficient funds in your account.” (Emphasis added.) Underneath that
notification, the Bristol West renewal form informed Owens that the amount charged for each
installment payment “includes an EFT installment fee of $5.00.” In other words, Bristol West
collected an extra $5.00 for each payment made electronically. The following is the “payment
schedule” offered by Bristol West:
Bristol West set up the automatic payment plan through Owen’s bank. Bristol West
determined the dates that the withdrawals would be made. Bristol West directed Owen’s bank
when to debit Owen’s account. Owen played no part in determining the dates of the automatic
debits; that decision was Bristol West’s and Bristol West’s alone. Once Owen authorized Bristol
West to debit her account, Bristol West initiated the debits electronically and controlled their
timing. See 12 CFR § 1005.3 (providing a basic description of electronic fund transfers).
Owen’s no-fault policy was set to expire on March 8, 2012. According to Bristol West,
the renewal policy would commence on March 9, 2012. By its terms, Bristol West’s renewal
offer required Owen’s consent to electronically debit premium payments “on or after the
payment due date[s]” (emphasis added) identified on the Bristol West form. Owen could accept
the renewal offer by having the necessary funds in her account to pay the amount that Bristol
West sought to debit for the first premium payment.1
But Owen’s acceptance necessarily had to occur on the date that Bristol West selected for
the electronic debit. Bristol West did not condition acceptance of the renewal policy on its
receipt of a mailed or hand-delivered premium payment on or before March 9; rather, Bristol
West represented that it would accept payment for the renewal policy electronically, on a date to
1
In this regard, I respectfully disagree with my colleagues. I believe that the renewal materials
mailed to Owen did constitute an offer to renew. “Generally, delivery of a renewal policy by the
insurer to the insured upon the expiration of a policy without request by the insured is an offer or
proposal to affect a contract of insurance.” 2 Couch, Insurance, 3d, § 29:17.
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be chosen by Bristol West on or after March 8. In other words, Bristol West was in the driver’s
seat as to when Owen could electronically accept its renewal offer. The only method for
acceptance of Bristol West’s renewal offer was through a successful electronic transfer of funds
on a date selected solely by Bristol West.
Bristol West did not attempt to debit Owen’s account until March 12, 2012, and on that
date the account lacked sufficient funds. I agree with Bristol West that the failure of the
attempted electronic transaction on March 12 means that Owen rejected Bristol West’s offer for
renewal coverage. The only way that Owen could have accepted that offer was to have
maintained adequate funds in her account to cover the March 12, 2012 electronic debit. And she
failed to do so.
But the accident that gives rise to this case occurred on March 11, 2012—one day before
Bristol West actually sought Owen’s acceptance of its renewal offer. Owen could not have
accepted or rejected Bristol West’s renewal offer until March 12. In the meantime, she was
involved in an accident and sustained personal injuries.
I would hold that Bristol West is equitably estopped from denying coverage for the
March 11 accident because it failed to seek Owen’s acceptance of the renewal offer until March
12. In that interim, Bristol West extended the previous term of coverage by implication. The
Supreme Court applied the same reasoning in Morales v Auto-Owners Ins Co, 458 Mich. 288,
298; 582 NW2d 776 (1998), to extend an insurer’s liability based on the insurer’s course of
conduct, which “induced in the mind of the insured an honest belief that the terms and conditions
of the policy . . . [would] not be enforced[.]” (Quotation marks and citation omitted, first
brackets in original.) The Supreme Court explained:
The principle of estoppel is an equitable defense that prevents one party to
a contract from enforcing a specific provision contained in the contract. With
regard to payment provisions of an insurance policy, it is generally recognized
that “[b]ecause provisions for forfeiture, lapse, or suspension for nonpayment of
premiums, assessments, or dues are for the benefit of the insurer, the insurer may
waive, or may be estopped to assert, such a provision through its conduct or
words.” 5 Couch, Insurance, 3d, § 78:1, p 78–5. Moreover, “[u]nder certain
circumstances the insurer may be estopped from asserting that the policy had
expired and that it had not been renewed.” 2 Couch, Insurance, 3d, § 29:45, p 29–
54. [Id. at 295-296.]
Equitable estoppel applies if (1) the defendant’s acts induced the plaintiff “to believe that
the policy was in effect at the time of the accident,” (2) “the plaintiff justifiably relied on this
belief,” and (3) the plaintiff suffered prejudice as a result of her belief that the policy remained in
effect. Id. at 296-297. Bristol West is estopped from enforcing the termination date of Owen’s
original policy (March 8, 2012) because Bristol West did not attempt to initiate continuation
coverage under the offered renewal policy until March 12, 2012. This inaction induced Owen to
believe that between March 8 and 12, her original policy remained in effect. To hold otherwise
would mean that Owen’s no-fault coverage lapsed during the three days before Owen was
required to accept the renewal coverage, rendering her “bare” for no-fault insurance purposes
through no fault of her own. And “[i]t is elementary that the law abhors forfeitures and will
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avoid them whenever reasonable ground can be found for so doing.” Staffan v Cigarmakers’ Int’l
Union of America, 204 Mich. 1, 7; 169 N.W. 876 (1918).
Considered from another angle, Bristol West’s attempt to collect the renewal premium on
March 12 serves as an acknowledgment that the previous policy remained in effect. Owen was
either covered or she was not on March 11. Because “[r]ights under an insurance policy become
fixed as of the date of the accident,” Cason v Auto Owners Ins Co, 181 Mich. App. 600, 609; 450
NW2d 6 (1989), Owen’s March 12 failure to accept the renewal policy offer did not void her
coverage on March 11.
On these legal grounds, I join the majority opinion.
/s/ Elizabeth L. Gleicher
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