Rose Strauss v. Ryan Kantola ( 2018 )


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  •                           STATE OF MICHIGAN
    COURT OF APPEALS
    ROSE STRAUSS,                                                      UNPUBLISHED
    April 10, 2018
    Plaintiff-Appellee,
    v                                                                  No. 337812
    Washtenaw Circuit Court
    RYAN KANTOLA and SHARON KANTOLA,                                   LC No. 16-001051-NI
    Defendants,
    and
    FARM BUREAU GENERAL INSURANCE
    COMPANY OF MICHIGAN,
    Defendant-Appellant.
    Before: GADOLA, P.J., and K. F. KELLY and RIORDAN, JJ.
    PER CURIAM.
    In this interlocutory appeal, defendant Farm Bureau General Insurance Company of
    Michigan (Farm Bureau) appeals by leave granted1 the trial court’s order denying its motion for
    summary disposition pursuant to MCR 2.116(C)(10). We reverse and remand for entry of an
    order consistent with this opinion.
    Plaintiff, Rose Strauss, initiated this suit seeking damages from defendants Ryan and
    Sharon Kantola and underinsured motorist (UIM) benefits from Farm Bureau. In her complaint,
    plaintiff alleges that she sustained injuries in an automobile accident on December 17, 2015.
    According to the complaint, plaintiff was a passenger in a vehicle traveling westbound on I-94
    when a vehicle owned by Sharon Kantola, and driven by defendant Ryan Kantola, negligently
    collided with the vehicle in which plaintiff was a passenger. Plaintiff claims that she suffered
    1
    This Court granted Farm Bureau’s application for leave to appeal limited to the issues raised in
    the application. Strauss v Kantola, unpublished order of the Court of Appeals, entered May 11,
    2017 (Docket No. 337812).
    -1-
    serious and permanent injuries. The Kantolas are covered by a policy of automobile insurance
    providing coverage for bodily injury liability up to $250,000 per person. Plaintiff alleges that if
    the Kantolas’ underlying bodily injury coverage is insufficient to compensate her for her injuries,
    Farm Bureau, as plaintiff’s insurer, will be obligated to pay UIM benefits.
    Farm Bureau issued a policy of automobile insurance to plaintiff, including UIM
    coverage up to $300,000 per person per occurrence. This policy incorporated an Underinsured
    Motorist Endorsement, which provides in pertinent part:
    b. Coverage under this endorsement shall be void if:
    (1) an Insured agrees to settle a bodily injury claim without our
    permission[.]
    * * *
    c. The following shall not occur until after the limits of liability under all other
    liability bonds or policies that apply at the time of the accident have been
    exhausted by payment of judgments or settlements:
    (1) No action by way of a suit shall be brought against us[.]
    Farm Bureau moved for summary disposition pursuant to MCR 2.116(C)(10) on the
    ground that the clear and unambiguous language of subparagraph (c)(1) of the Underinsured
    Motorist Endorsement barred suit against Farm Bureau until the limits of all other applicable
    policies had been exhausted by payments of judgments or settlements. At the hearing on the
    motion, Farm Bureau argued that it did not believe that plaintiff’s injuries would warrant even
    $250,000 in damages and that it should not be required to expend the costs necessary to its
    involvement in the suit when its exposure to liability is limited to $50,000. Farm Bureau
    admitted that if plaintiff did receive a judgment for $300,000 or more in damages, plaintiff
    potentially would be obligated to relitigate the issues of liability and damages, this time against
    Farm Bureau, to collect the remaining $50,000 in UIM benefits. Plaintiff argued that
    subparagraphs (b)(1) and (c)(1) of the endorsement conflict because the two provisions, read in
    conjunction, require plaintiff to obtain Farm Bureau’s permission on any settlement to avoid
    forfeiting coverage, but do not allow plaintiff to join Farm Bureau as a party to the litigation.
    The trial court agreed with plaintiff that the two provisions created ambiguity because
    subparagraph (b)(1) suggests that a plaintiff must include Farm Bureau in the litigation, while
    subparagraph (c)(1) prohibits bringing Farm Bureau into the lawsuit until other policy limits
    have been exhausted. The trial court therefore denied Farm Bureau’s motion for summary
    disposition.
    On appeal to this Court, Farm Bureau contends that the trial court erred by denying its
    motion for summary disposition. We agree. We review de novo questions of contractual
    interpretation, Titan Ins Co v Hyten, 
    491 Mich. 547
    , 553; 817 NW2d 562 (2012), including
    whether contractual language is ambiguous. Farm Bureau Mut Ins Co of Mich v Nikkel, 
    460 Mich. 558
    , 563; 596 NW2d 915 (1999). We also review de novo the grant or denial of summary
    disposition. Hoffner v Lanctoe, 
    492 Mich. 450
    , 459; 821 NW2d 88 (2012). A motion for
    -2-
    summary disposition under MCR 2.116(C)(10) tests the factual sufficiency of a claim, and is
    appropriately granted when, except as to the amount of damages, there is no genuine issue as to
    any material fact, and the moving party is entitled to judgment as a matter of law. Joseph v Auto
    Club Ins Ass’n, 
    491 Mich. 200
    , 206; 815 NW2d 412 (2012). This Court reviews the record in the
    same manner as the trial court, “consider[ing] affidavits, pleadings, depositions, admissions, and
    other evidence submitted by the parties, MCR 2.116(G)(5), in the light most favorable to the
    party opposing the motion.” Maiden v Rozwood, 
    461 Mich. 109
    , 120; 597 NW2d 817 (1999).
    Michigan law does not require underinsured-motorist coverage. Dawson v Farm Bureau
    Mut Ins Co of Mich, 
    293 Mich. App. 563
    , 568; 810 NW2d 106 (2011). “Because such insurance
    is not mandated by statute, the scope, coverage, and limitations of underinsurance protection are
    governed by the insurance contract and the law pertaining to contracts.” 
    Id. (citation omitted).
    This Court in McGrath v Allstate Ins Co, 
    290 Mich. App. 434
    , 439; 802 NW2d 619 (2010),
    summarized:
    The rules of contract interpretation apply to the interpretation of insurance
    contracts. Citizens Ins Co v Pro–Seal Serv Group, Inc, 
    477 Mich. 75
    , 82; 730
    NW2d 682 (2007). The language of insurance contracts should be read as a
    whole and must be construed to give effect to every word, clause, and phrase.
    Klapp v United Ins Group Agency, Inc, 
    468 Mich. 459
    , 467; 663 NW2d 447
    (2003). When the policy language is clear, a court must enforce the specific
    language of the contract. Heniser v Frankenmuth Mut Ins Co, 
    449 Mich. 155
    ,
    160; 534 NW2d 502 (1995). However, if an ambiguity exists, it should be
    construed against the insurer. 
    Id. An insurance
    contract is ambiguous if its
    provisions are subject to more than one meaning. Vushaj v Farm Bureau Gen Ins
    Co of Mich, 
    284 Mich. App. 513
    , 515; 773 NW2d 758 (2009), citing Raska v Farm
    Bureau Mut Ins Co of Mich, 
    412 Mich. 355
    , 362; 314 NW2d 440 (1982).
    An insurance contract is also ambiguous “if two provisions of the same contract irreconcilably
    conflict with each other[.]” 
    Klapp, 468 Mich. at 467
    . But this Court will “not strain to find
    ambiguity” and will “ultimately strive to enforce the agreement intended by the parties.” Scott v
    Farmers Ins Exch, 
    266 Mich. App. 557
    , 561; 702 NW2d 681 (2005).
    Subparagraph (c)(1) of Farm Bureau’s Underinsured Motorist Coverage Endorsement,
    standing alone, is not ambiguous. The plain and ordinary meaning of the words in the provision
    make it subject to only one meaning, being that plaintiff cannot sue Farm Bureau until after the
    limits of liability under all other policies that apply have been exhausted. This Court in Dawson
    concluded that a provision similar to the one in this case in a policy issued by Farm Bureau was
    unambiguous. 
    Dawson, 293 Mich. App. at 569
    (“[T]he policy is also clear that Farm Bureau
    cannot be sued for underinsured-motorist benefits unless and until other payments or judgments
    are exhausted”). Similarly, the type of “consent to settle” provision in subparagraph (b)(1) has
    been found by this Court to be unambiguous. See Lee v Auto-Owners Ins Co (On Second
    Remand), 
    218 Mich. App. 672
    , 676; 554 NW2d 610 (1996).
    Plaintiff argues, and the trial court determined, that subparagraph (c)(1) is ambiguous
    because it conflicts with subparagraph (b)(1). We disagree. For two unambiguous provisions to
    work together to render a contract ambiguous, they must “irreconcilably conflict.” Klapp, 468
    -3-
    Mich at 467. In this case, subparagraphs (b)(1) and (c)(1) do not irreconcilably conflict because
    plaintiff can comply with both provisions to maintain coverage. Although plaintiff must seek
    Farm Bureau’s permission to settle her claim to avoid losing her UIM benefits, there is nothing
    that requires that Farm Bureau be a party to the litigation to give that permission. Thus, plaintiff
    has the option of litigating her claim against the Kantolas and then suing Farm Bureau for any
    amount in excess of all other policies to which plaintiff can prove entitlement. While the
    juxtaposition of the two provisions arguably may create an unreasonable outcome where plaintiff
    is forced to twice litigate the issues of liability and damages, “a mere judicial assessment of
    ‘reasonableness’ is an invalid basis upon which to refuse to enforce contractual provisions.”
    Rory v Continental Ins Co, 
    473 Mich. 457
    , 470; 703 NW2d 23 (2005)
    Although a clause in an insurance policy does not have to be reasonable, this Court
    should ensure that it is not in contravention of public policy. See 
    Nikkel, 460 Mich. at 568
    .
    “[T]he determination of Michigan’s public policy is not merely the equivalent of the personal
    preferences of a majority of this Court; rather, such a policy must ultimately be clearly rooted in
    the law.” 
    Rory, 473 Mich. at 471-472
    (quotation marks and citation omitted). Therefore, this
    Court looks to “policies that, in fact, have been adopted by the public through our various legal
    processes, and are reflected in our state and federal constitutions, our statutes, and the common
    law.” 
    Id. (quotation marks
    and citation omitted).
    In this case, neither provision standing alone cuts against public policy. The combination
    of the two provisions potentially requires plaintiff to twice litigate the issues of liability and
    damages—once against the Kantolas to recover from their policy and once against Farm Bureau
    to recover the additional UIM benefits—which arguably wastes the courts’ resources, running
    “contrary to important public policy favoring judicial economy.” Sumner v Gen Motors Corp
    (On Remand), 
    245 Mich. App. 653
    , 666; 633 NW2d 1 (2001). We conclude, however, that the
    policy favoring enforcement of unambiguous contracts as written outweighs the policy favoring
    judicial economy, given this Court’s affirmation of the former policy in countless decisions.
    See, e.g., 
    McGrath, 290 Mich. App. at 439
    ; 
    Scott, 266 Mich. App. at 561
    .
    We reverse and remand for entry of an order consistent with this opinion. We do not
    retain jurisdiction.
    /s/ Michael F. Gadola
    /s/ Kirsten Frank Kelly
    /s/ Michael J. Riordan
    -4-