Auto Club Ins. Ass'n v. Hardiman

579 N.W.2d 115 (1998) 228 Mich. App. 470

AUTO CLUB INSURANCE ASSOCIATION, Plaintiff-Appellant,
v.
Kimberly HARDIMAN, a minor by her next friend, Bonnie Hardiman, Defendant-Appellee.

Docket No. 196428.

Court of Appeals of Michigan.

Submitted September 9, 1997, at Detroit. Decided March 6, 1998, at 9:05 a.m. Released for Publication June 8, 1998.

Becker, Lanctot, McCutcheon, Schoolmaster, Taylor & Horn by Jeffrey A Oakes (John A. Lydick, of counsel), for plaintiff.

Hatchett, Dewalt & Hatchett by Arnold L. Weiner, for defendant.

Before HOLBROOK, P.J., and WHITE and R.J. DANHOF^[*], JJ.

PER CURIAM.

Plaintiff, Auto Club Insurance Association (ACIA), appeals as of right from an order denying its motion for summary disposition and granting summary disposition for defendant, Kimberly Hardiman, a minor, by her next friend, Bonnie Hardiman, in this declaratory judgment action. We affirm.

On March 1, 1991, six-year-old Kimberly Hardiman witnessed an accident in which her pedestrian brother, Kevin Hardiman, was struck by an automobile driven by Norma Lewis. Kevin became a paraplegic as a result of the accident. Lewis was insured under an automobile policy issued by ACIA. The policy provided liability coverage of $100,000 a person and $300,000 an occurrence for bodily injury. The policy further provided:

The Bodily Injury Limit for each person is the maximum amount that will be paid for bodily injury sustained by one person in one occurrence. This limit includes all claims for derivative damages allowed under the law. [Emphasis added.]

Defendant filed suit against Lewis, alleging a cause of action for negligent infliction of emotional distress.^[1] A separate cause of action for negligence was alleged by Kevin Hardiman. Kevin's claim was settled for $95,759. ACIA thereafter offered $4,241 in full settlement of defendant's claim, maintaining that her claim was derivative of her brother's claim and, therefore, subject to the $100,000 a person limitation, inclusive of all claims for derivative damages allowed under the law. Defendant rejected the offer and claimed that the $300,000 an occurrence limitation was available to satisfy her claim because it involved a separate, independent cause of action, not one that was a derivative of Kevin's claim.

In order to settle this dispute, ACIA filed this declaratory action against defendant, seeking a determination that her claim of negligent infliction of emotional distress was a derivative of her brother's negligence claim and, therefore, subject to the same $100,000 a person limitation that was applicable to her brother's claim. Both sides filed motions for summary disposition. The trial court ruled that defendant's claim involved an "independent and non-derivative" claim from her brother's and, therefore, denied ACIA's motion and granted summary disposition for defendant. This appeal followed.

We are presented with the single narrow legal issue whether defendant's bystander claim of negligent infliction of emotional distress is a derivative of Kevin's negligence claim, such that it is subject to the same $100,000 a person limit of coverage as her brother's claim.^[2]

An insurance policy must be enforced in accordance with its terms. Upjohn Co. v. New Hampshire Ins. Co., 438 Mich. 197, 207, 476 N.W.2d 392 (1991). Undefined terms in an insurance policy are to be interpreted in accordance with common usage. Group Ins. Co. of Michigan v. Czopek, 440 Mich. 590, 596, 489 N.W.2d 444 (1992). Where an ambiguity is found, the court must construe the policy in a manner most favorable to the insured. Michigan Millers Mut. Ins. Co. v. Bronson Plating Co., 445 Mich. 558, 567, 519 N.W.2d 864 (1994). However, where there is no ambiguity, the court must enforce the policy as written. Arco Industries Corp. v. American Motorists Ins. Co., 448 Mich. 395, 403, 531 N.W.2d 168 (1995).

ACIA's insurance policy expressly states that the limit of liability applicable to each person "includes all claims for derivative damages allowed under the law." (Emphasis added.) We find that this language is clear and unambiguous insofar as it provides that claims for derivative damages are subject to the limit of coverage applicable to a person. However, we must determine whether a claim of negligent infliction of emotional distress constitutes a "claim for derivative damages." We hold that it does not.

ACIA cites three cases in support of its argument that defendant's claim is a derivative of her brother's negligence claim. See Gibbs v. Armovit, 182 Mich.App. 425, 452 N.W.2d 839 (1990); State Farm Mutual Automobile Ins. Co. v. Descheemaeker, 178 Mich.App. 729, 444 N.W.2d 153 (1989); Auto Club Ins. Ass'n v. Lanyon, 142 Mich.App. 108, 369 N.W.2d 269 (1985). However, those cases all involve claims by family members for loss of consortium, society, and companionship. None of the cases involve a claim of intentional or negligent infliction of emotional distress. In each case, this Court held that the family member's loss of consortium claim was a derivative of the claim of the injured party and, therefore, subject to the liability limit of the injured party. We conclude that ACIA's reliance on these cases is misplaced.

Whereas a claim of loss of consortium is contingent upon the injured person's recovery of damages, Bias v. Ausbury, 369 Mich. 378, 382,120 N.W.2d 233 (1963); Morrison v. Grass, 314 Mich. 87, 106, 22 N.W.2d 82 (1946); Hilla v. Gross, 43 Mich.App. 648, 652, 204 N.W.2d 712 (1972), a claim of negligent or intentional infliction of emotional distress may be maintained as a separate, independent cause of action and is not dependent upon actual injury to, or recovery by, another person. Barnes v. Double Seal Glass Co., Inc., 129 Mich.App. 66, 75-76, 341 N.W.2d 812 (1983); Campos v. General Motors Corp., 71 Mich.App. 23, 25, 246 N.W.2d 352 (1976).

In Barnes, the plaintiffs' son died in a work-related accident. The plaintiffs sued their son's employer and coemployees for wrongful death, alleging claims of negligence as well as intentional tort. The plaintiffs also alleged claims in their individual capacities for intentional infliction of emotional distress. The trial court granted accelerated judgment with respect to the intentional infliction of emotional distress claims, but this Court reversed, stating:

Michigan has recognized intentional infliction of emotional distress as a separate cause of action....

The trial court erroneously assumed that plaintiffs' claim was derivative to decedent's claim under the wrongful death act. Plaintiffs' claim for intentional infliction of emotional distress is made on their own behalf, for their own injuries, for a tort directed at them rather than at their son. The claim is not for wrongful death and is not covered by § 2922 of the wrongful death act, M.C.L. § 600.2922; M.S.A. § 27A.2911, or the exclusive remedy provision of the [Worker's Disability Compensation Act], M.C.L. § 418.131; M.S.A. § 17.237(131). [Barnes, supra at 75-76, 341 N.W.2d 812.]

Defendant's claim of negligent infliction of emotional distress likewise involves a separate, independent cause of action. Her claim seeks recovery for a tort directed at her personally, not at her brother. The success of her claim is not contingent on any recovery by her brother. Accordingly, we conclude that defendant's claim is not a derivative of her brother's negligence claim and, therefore, not subject to the $100,000 "per person" limit of coverage for claims involving derivative damages.

Other states that have considered this issue have likewise concluded that a claim of negligent or intentional infliction of emotional distress is a separate cause of action, such that it is subject to a "per occurrence" as opposed to "per person" coverage limitation. Pekin Ins. Co. v. Hugh, 501 N.W.2d 508 (Iowa, 1993); Crabtree v. State Farm Ins. Co., 632 So. 2d 736 (La., 1994); Treichel v. State Farm Mut. Automobile Ins. Co., 280 Mont. 443, 930 P.2d 661 (1997); Wolfe v. State Farm Ins. Co., 224 N.J.Super. 348, 540 A.2d 871 (1988). In Pekin, supra at 511-512, the Iowa Supreme Court specifically distinguished a bystander claim of negligent infliction of emotional distress from a claim of loss of consortium and held that the bystander claim was subject to a "per occurrence," rather than "per person," limitation of coverage, stating:

Unlike the loss of consortium claim, an injury the bystander suffers is not one that results from an injury to another person. Rather, the injury is directly to the bystander as a result of the bystander seeing the accident and reasonably believing that the direct victim of the accident would be seriously injured or killed....

* * * * * *

... [T]he injury—emotional distress—is compensable to the extent of the $100,000 remaining of the $300,000 per occurrence underinsurance coverage limits. [Emphasis in Pekin.]

Accordingly, because defendant's claim of negligent infliction of emotional distress constitutes a separate, not a derivative, cause of action, the trial court did not err in denying ACIA's motion for summary disposition and granting summary disposition in favor of defendant.

Affirmed.

NOTES

[*] Former Court of Appeals judge, sitting on the Court of Appeals by assignment.

[1] It was alleged that defendant sustained psychological and emotional injuries, with physical manifestations.

[2] We are neither presented with, nor express any opinion concerning, the question whether defendant possesses a valid claim of negligent infliction of emotional distress, see Wargelin v. Sisters of Mercy Health Corp., 149 Mich.App. 75, 385 N.W.2d 732 (1986), or, if so, whether her claim is either subject to or meets the threshold requirements for tort liability under the no-fault act. M.C.L. § 500.3135; M.S.A. § 24.13135.