Pinckney Community Schools v. Continental Casualty Co.

213 Mich. App. 521 (1995) 540 N.W.2d 748

PINCKNEY COMMUNITY SCHOOLS
v.
CONTINENTAL CASUALTY COMPANY

Docket No. 163986.

Michigan Court of Appeals.

Submitted January 18, 1995, at Lansing. Decided September 22, 1995, at 9:10 A.M.

Thrun, Maatsch & Nordberg, P.C. (by Martha J. Marcero and Timothy R. Winship), for the plaintiff.

Meagher & Geer (by Christian A. Preus) and Kerr, Russell & Weber (by Roy H. Christiansen), for the defendant.

Before: CAVANAGH, P.J., and HOLBROOK, JR., and MARKEY, JJ.

MARKEY, J.

Plaintiff appeals as of right from an order granting summary disposition for defendant Continental Casualty Company (hereinafter defendant) pursuant to MCR 2.116(C)(10). We reverse and remand for further proceedings.

On March 16, 1979, plaintiff renewed its insurance policy with defendant. The policy, in effect from April 1, 1979, to April 1, 1982, provided coverage for claims against plaintiff for "Wrongful Acts," defined as "any actual or alleged errors ... or act or omission or neglect or breach of duty by the Assureds in the discharge of their duties."

In 1978, plaintiff hired Douglas Rutherford as a physical education instructor. In August 1981, Rutherford was laid off from his full-time job because of financial problems in the school district. Rutherford was assigned a part-time position teaching physical education at a district middle school. However, at the same time, plaintiff hired a full-time female instructor to teach a physical education class for girls at the same school where Rutherford had been employed full-time.

On December 18, 1981, Rutherford filed a charge of discrimination with the Department of Civil Rights (DCR), alleging that he was discriminated against on the basis of his sex in violation of the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq.

The DCR notified plaintiff of Rutherford's charge. In March 1982, plaintiff in turn notified defendant, which acknowledged receipt of the information in a letter and informed plaintiff that it had assigned a claim number to the case. Defendant also stated that if Rutherford were to file a lawsuit, defendant would review the complaint and make a coverage determination at that time.

Between 1981 and 1988, Rutherford's claim languished at the DCR. The delay was due in part to the illness of the investigator and to budget cuts at the DCR; in addition, the file may have been misplaced for a time. Eventually, the DCR investigated Rutherford's claim. On May 10, 1989, the DCR issued a formal complaint against plaintiff. In an opinion and order dated October 29, 1989, the DCR concluded that plaintiff had discriminated against Rutherford on the basis of his sex and awarded Rutherford monetary damages for lost wages for the 1981-82, 1982-83, 1983-84, and 1985-86 school years.

Plaintiff informed defendant of the award to Rutherford, but in a letter dated July 16, 1990, defendant declined coverage. On June 17, 1991, plaintiff satisfied the judgment by paying $67,737.46 to Rutherford.

On February 5, 1992, plaintiff filed a complaint against defendant and three other insurance companies. Plaintiff sought indemnification for the liability payment to Rutherford and for attorney fees and costs incurred in defending the action. Plaintiff and defendant both filed motions for summary disposition pursuant to MCR 2.116(C)(10). The trial court denied plaintiff's motion and granted defendant's motion on the basis that Rutherford's 1981 charge filed with the DCR did not constitute a claim but was merely an allegation of sex discrimination and notice of an impending investigation. Plaintiff's claims against the other three insurance companies were also dismissed. Plaintiff appeals only the trial court's grant of summary disposition for defendant.

Because plaintiff timely notified defendant in writing of Rutherford's DCR complaint (and the concurrent complaint filed with the Equal Employment Opportunity Commission [EEOC]) filed against plaintiff and because the DCR complaint constituted a "claim" under defendant's "claims-made" insurance policy, we believe that the trial court erred in granting defendant's motion for summary disposition brought pursuant to MCR 2.116(C)(10).

On appeal, an order granting or denying summary disposition is reviewed de novo. A motion for summary disposition may be granted pursuant to MCR 2.116(C)(10) when, except with regard to the amount of damages, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Giving the benefit of reasonable doubt to the nonmoving party, the trial court must determine whether a record might be developed that would leave open an issue upon which reasonable minds might differ. Michigan Mutual Ins Co v Dowell, 204 Mich. App. 81, 85-86; 514 NW2d 185 (1994).

Defendant's policy provided coverage only for claims made "during the policy period." Thus, the policy is a "claims-made" policy. In general, a "claims-made" policy provides coverage no matter when the alleged error, omission, or act of negligence occurred as long as the misdeed is discovered and the claim for indemnity is made within the policy period. Stine v Continental Casualty Co, 419 Mich. 89, 97; 349 NW2d 127 (1984). Defendant's insurance policy provided coverage for plaintiff in accordance with the following liability insurance provisions:

I. The Insurer designated in the declarations ... in consideration of the payment of the premium and subject to all of the terms, conditions and limitations of this policy agrees as follows:

* * *

(c) With the School District that if during the policy period any claim or claims are made against it as a result of any Wrongful Act occurring during the policy period, the insurer will pay on behalf of, in accordance with the terms of this policy, all loss which the School District shall become legally obligated to pay.

* * *

III. Definitions:

* * *

(c) Wrongful Act shall mean any actual or alleged errors or misstatement or misleading statement or act or omission or neglect or breach of duty by the Assureds in the discharge of their duties, individually or collectively, or any matter claimed against them solely by reason of their being or having been Assureds during this policy period.

(d) Loss shall mean any amount which the Assured or School District are [sic] legally obligated to pay, including, but not limited to, any amounts which the School District may be required or permitted to pay as indemnity to an Assured, for a claim or claims made against an Assured for a Wrongful Act and shall include but not be limited to damages, judgments, settlements and costs, cost of investigation and defense of legal actions ... claims or proceedings and appeals therefrom, costs of attachment or similar bonds....[^[1]]

* * *

VII. Notice of Claim:

(a) If the School District or any Assureds shall receive written or oral notice from any party that it is the intention of such party to hold the Assureds responsible for a Wrongful Act which occurred during the policy period, they shall give written notice within one year to the Insurer of the receipt of such written or oral notice, then any claim made within the space of two years following the termination of this policy ... against the Assureds arising out of such Wrongful Act shall, for the purpose of this policy, be treated as a claim made during the policy year in which the Wrongful Act occurred.

* * *

(c) The School District, or the Assureds shall, as a condition precedent to their rights under this policy, give the Insurer notice in writing of any claim made and shall give the Insurer such information and cooperation as it may reasonably require. [Emphasis added.]

Courts must enforce the terms of an insurance contract as written. Courts may not read into an insurance policy an ambiguity that does not exist. When the terms of a policy are plain and unambiguous, their plain meaning should be given effect. Upjohn Co v New Hampshire Ins Co, 438 Mich. 197, 206-207; 476 NW2d 392 (1991).

This appeal presents an issue of first impression for this Court: Whether a sex discrimination complaint filed with the DCR or the EEOC constitutes a "claim" within the meaning of an insurance policy that provides coverage where a wrongful act is discovered and a claim for indemnity is made within the policy period or two years after its termination. Stine, supra. Because defendant's insurance policy at issue does not define the term "claim," this term should be given its commonly used meaning, taking into account the reasonable expectations of the parties. Resort to dictionary definitions is helpful in this endeavor. Michigan Millers Mutual Ins Co v Bronson Plating Co, 445 Mich. 558, 567-568; 519 NW2d 864 (1994). Although an insurance policy's failure to define a term does not render the term ambiguous, ambiguities that remain after determining a word's commonly used meaning should be construed favorably to the insured. Id.

In resolving whether Rutherford's 1981 complaint to the DCR alleging discrimination constituted a claim for a "wrongful act" within the meaning of defendant's policy, we must first ask whether "claim" is ambiguous in the context of the insurance policy. Id. at 567. Second, if "claim" is ambiguous and capable of a broad definition, we must determine whether it reasonably may be understood to encompass Rutherford's DCR complaint against plaintiff. Id.

Black's Law Dictionary (6th ed), p 247, defines the term "claim" as follows:

To demand as one's own or as one's right; to assert; to urge; to insist. A cause of action. Means by or through which claimant obtains possession or enjoyment of privilege or thing. Demand for money or property as of right, e.g., insurance claim. [Emphasis added.]

The Random House Webster's College Dictionary, p 249, defines "claim" as follows:

[A] demand[^[2]] for something as due; as assertion of a right or an alleged right ... an assertion of something as a fact ... a right to claim or demand; a just title to something ... a request or demand for payment in accordance with an insurance policy, a workers' compensation law, etc.

Michigan courts have also defined the word "claim" as "`a demand of a right or alleged right; a calling on another for something due or asserted to be due,'" Central Wholesale Co v Chesapeake & O R Co, 366 Mich. 138, 149; 114 NW2d 221 (1962), quoting Allen v Bd of State Auditors, 122 Mich. 324, 328; 81 N.W. 113 (1899), and "more than a notice of loss; it must include a demand for payment of damages," Dawlen Corp v New York Central R Co, 328 Mich. 360, 362; 43 NW2d 887 (1950). Nonetheless, in Continental Casualty Co v Enco Associates, Inc, 66 Mich. App. 46, 50-51; 238 NW2d 198 (1975), this Court refused to "split hairs" over whether a telephone call constituted a "demand for payment" or assertion of a right. Instead, this Court held that when the construction company's architect told the insured that structural faults had been discovered in a parking ramp the insured had designed and that the insured would be held responsible, "a `claim' was made in the ordinary sense of the word." Id. Any subsequent correspondence reiterating the construction company's intention did not alter the status of the earlier claim for purposes of Continental's claims-made policy. Id. at 48-51.

These definitions of the word "claim" are unambiguous, they are consistent with the policy language, and they certainly encompass complaints filed with the DCR and the EEOC. In the case at bar, the trial court more narrowly defined "claim" as "a demand for something due or believed to be due," on the basis of Webster's Ninth New Collegiate Dictionary and the decision in Bensalem Twp v Western World Ins Co, 609 F Supp 1343 (ED Pa, 1985). According to the trial court, the DCR charge that Rutherford filed against plaintiff did not make any demand for something due or believed to be due; instead, "[i]t merely alleged gender discrimination and gave notice that the charge would be investigated by the Civil Rights Department." In view of the broad policy language and the common definition of "claim," such a narrow interpretation is simply inaccurate and ignores the ramification of these filings.

The recent case of Michigan Millers Mutual Ins Co, supra, addressed an analogous issue and, therefore, is instructive. In Michigan Millers, our Supreme Court determined that a letter from the Environmental Protection Agency notifying the defendant of its potential liability for alleged environmental contamination constituted a "suit" that gave rise to the insurers' duties to defend under the terms of the applicable insurance contracts. Id. at 566. Like the trial court in the instant case, our Supreme Court in Michigan Millers first went through the exercise of deciding whether the term "suit" was ambiguous, i.e., "whether the term may refer to some legal action other than a court proceeding initiated by a complaint." Id. at 567. Then, after concluding that indeed it was ambiguous, our Supreme Court went on to decide whether "suit" reasonably could be understood to encompass the receipt of a letter from the United States Environmental Protection Agency informing the defendant of its potential liability for a contaminated site. Id.

In its determination that the letter received by the defendant could be construed as a "suit," i.e., that "a typical lay person might reasonably expect the term to apply to legal proceedings other than a court action initiated by a complaint" thereby triggering a duty to defend, the Supreme Court noted that the statutory scheme known as the CERCLA^[3] allowed the EPA to conduct investigations, to perform removal or remedial actions, to assess costs, to require Bronson to submit documents regarding the site, and, ultimately, to take civil action and assess fines against the defendant. Therefore, the letter constituted the "functional equivalent of a suit brought in a court of law." Id. at 568-569, 572-573. Furthermore, the Michigan Millers Court noted that the EPA could create an administrative record that could play an important role in future litigation. Id. at 573.

Similarly, a person alleging that an employer is guilty of sex discrimination as prohibited by the Civil Rights Act, MCL 37.2101 et seq.; MSA 3.548(101) et seq., does not file a DCR complaint merely to give the employer notice that discrimination is occurring or that an investigation will ensue. Rather, by filing the complaint, the employee is, whether explicitly or implicitly, (1) requesting that the employer end its discriminatory practices or face statutory penalties and (2) seeking the DCR'S and the EEOC'S assistance in order either (a) to be reinstated to the position held before the discrimination occurred or (b) to be compensated financially as a result of the employer's discriminatory practices or both. Indeed, the DCR is enabled statutorily to issue charges, hold hearings, correct past discriminatory practices, issue cease and desist orders, order the hiring, reinstatement, or upgrading of employees, order payment of compensation for the discrimination including back pay and reasonable attorney fees, and order payment of civil fines. MCL 37.2605; MSA 3.548(605). All these proceedings and sanctions are possible absent the filing of a formal civil complaint, which defendant implies is necessary in order for Rutherford's discrimination allegations to constitute a claim under its policy.^[4] Moreover, allegations of sex discrimination and civil rights violations are often first brought to the DCR and must be brought to the EEOC if the claim involves federal violations; thus, such "claims" usually will be addressed first in a non-court forum.

In light of the practical import of filing a DCR complaint and the potential ramifications of such a complaint, we believe that the trial court "split hairs" and incorrectly concluded that Rutherford's DCR complaint against plaintiff did not constitute a "claim" because it did not expressly declare that Rutherford "demanded" reinstatement or money damages. Such demands are, indeed, implicit. These demands are the obvious reason for the very filing of the DCR complaint, and, in the instant case, they resulted in the award of money to Rutherford. See Continental Casualty, supra, 66 Mich. App. 50-51. Consequently, we do not agree with the dissent or the trial court that the DCR charge is only a notice of Rutherford's intent to hold plaintiff liable. Bensalem Twp, supra at 1348.^[5] Where, as here, this Court must interpret an undefined term according to its commonly used meaning, taking into account the reasonable expectations of the parties, we will not adopt the trial court's restrictive, narrow definition of "claim," which is clearly contrary to the broad policy language, the common definition, and plaintiff's reasonable expectations. Michigan Millers, supra at 567, 569.

Finally, defendant's own actions support the conclusion that, originally, defendant considered the allegations in the DCR and the EEOC complaints as possible wrongful acts giving rise to a compensable claim — a claim as contemplated by both parties. Both plaintiff and defendant understood that Rutherford's filing of charges of discrimination with the DCR and the EEOC was essentially the beginning point of a claim against plaintiff, and for that reason, plaintiff immediately notified defendant of Rutherford's charges. Both parties originally believed that the claim was covered under defendant's policy. Moreover, both parties certainly knew that the EEOC complaint was the sole way to initiate a federal claim of employment discrimination, i.e., Rutherford had no right to file a lawsuit before raising the claim with the EEOC and obtaining a right-to-sue letter. 42 USC 2000e-5.

In acknowledging receipt of the charge of discrimination before April 1, 1982, defendant responded to plaintiff by letter. Defendant not only advised plaintiff that it had established a claim number for Rutherford's DCR complaint, it went on to state: "[B]ased on the information we have received thus far, we do not foresee any coverage problems." Then, approximately one year later, defendant requested plaintiff to provide information regarding the status of the "claim." Certainly defendant's acknowledgment and follow-up letters evidence the reasonable expectation of both parties that the allegation of sexual discrimination was, in fact, a covered claim that triggered insurance coverage. Importantly, when defendant finally denied coverage on July 16, 1990, it did so because it believed Rutherford's award of lost wages was excluded under the policy, not because it believed an untimely or improper claim had been made. Moreover, the same letter expressly stated, "however, there is coverage for indemnification for defense costs incurred." Certainly these communications are most reflective of defendant's state of mind and undermine the rationale for the trial court's conclusions.

On appeal, defendant also argues that even if a timely claim were filed, it is excluded under paragraph IV(b)(6) of the Liberalization Endorsement, which provides in relevant part: "[T]he insurer shall not be liable to make any payments for loss in connection with any claim made against the Assureds for any amounts due under terms of any contractual obligation." Defendant's argument that there is no coverage because plaintiff's payment to Rutherford was a loss arising from the breach of a contractual obligation is without merit. Although Rutherford stated in his charges of discrimination with the DCR and the EEOC that "he was unfairly denied a contractually provided bumping right" under the collective bargaining agreement, clearly the gravamen of the charge was sex discrimination. The DCR found that plaintiff had engaged in prohibited sex discrimination. An exclusion of liability insurance coverage for contractually assured obligations to third parties is operative only where the insured would not have been liable to the third party absent the insured's agreement to pay. Royal Oak School Dist v Continental Casualty Co, 912 F2d 844, 847 (CA 6, 1990).

Additionally, although the issue of equitable estoppel was not fully raised or addressed in the trial court and it is not necessary for proper determination of this case, Swartz v Dow Chemical Co, 414 Mich. 433; 326 NW2d 804 (1982), the evidence in the record regarding that issue is also relevant to show the parties' reasonable expectations. Again, defendant's letters and conduct as previously described led plaintiff justifiably to believe that a claim under the policy had been made and that insurance coverage both for its defense and the loss was available. As a practical matter, had plaintiff not so believed, it certainly would have maintained the policy instead of allowing it to lapse; that is, had plaintiff known that defendant would not consider Rutherford's claims with the DCR and EEOC as "claims" under the insurance policy until the DCR either decided the matter or the EEOC issued a "right-to-sue" letter, it likely would have continued the policy in effect until such time as the matter was resolved. Allowing defendant to deny that the concurrent DCR and EEOC filings constituted a claim severely prejudiced plaintiff, because it has already paid all its premiums, its defense costs, and the award made by the DCR to Rutherford. Here, the record contains evidence of the essential elements of estoppel. This same evidence simultaneously reflects the parties' reasonable expectations concerning the insurance coverage issue. See Industro Motive Corp v Morris Agency, Inc, 76 Mich. App. 390, 395; 256 NW2d 607 (1977).

Accordingly, we find that the trial court erred in granting defendant's motion for summary disposition pursuant to MCR 2.116(C)(10), because plaintiff properly submitted Rutherford's discrimination claim to defendant during the period when defendant's claims-made policy was in effect and the policy appears to cover both the claim and the costs of defense. Thus, genuine issues of material fact exist, and defendant is not entitled to judgment as a matter of law. Michigan Mutual, supra. We, therefore, reverse the order of the trial court and remand for further proceedings consistent with this opinion. We do not retain jurisdiction.

Reversed and remanded.

HOLBROOK, JR., J., concurred.

CAVANAGH, P.J. (dissenting).

I respectfully dissent. Defendant's policy provided coverage only for claims made "during the policy period." Thus, the policy is a "claims-made" policy. In general, a claims-made policy provides coverage no matter when the alleged error, omission, or act of negligence occurred, as long as the misdeed is discovered and the claim for indemnity is made within the policy period. Stine v Continental Casualty Co, 419 Mich. 89, 97; 349 NW2d 127 (1984). The issue presented therefore is whether Rutherford's allegation of discrimination in 1981 constituted a claim for a wrongful act within the meaning of defendant's policy.

Defendant's insurance policy does not define the word "claim." However, that fact alone is not conclusive evidence of the existence of an ambiguity. A term that is undefined in an insurance policy should be given its commonly used meaning. Group Ins Co of Michigan v Czopek, 440 Mich. 590, 596; 489 NW2d 444 (1992).

The Supreme Court has defined "claim" as "`a demand of a right or alleged right; a calling on another for something due or asserted to be due.'" Central Wholesale Co v Chesapeake & O R Co, 366 Mich. 138, 149; 114 NW2d 221 (1962), quoting Allen v Bd of State Auditors, 122 Mich. 324, 328; 81 N.W. 113 (1899). The Court further stated that the very essence of a claim is "a demand for payment, formal or informal." Central Wholesale, supra at 150.

A review of the case law of other jurisdictions indicates that, for the purpose of determining coverage under a claims-made policy, a "claim" is defined as "a demand for something as a right" or "a demand for payment of some amount of money." See, e.g., MGIC Indemnity Corp v Home State Savings Ass'n, 797 F2d 285, 287 (CA 6, 1986); Ins Corp of America v Dillon, Hardamon & Cohen, 725 F Supp 1461, 1468 (ND Ind, 1988); Mt Hawley Ins Co v Federal Savings & Loan Ins Corp, 695 F Supp 469, 479 (CD Cal, 1987); Bensalem Twp v Western World Ins Co, 609 F Supp 1343, 1348 (ED Pa, 1985); Safeco Title Ins Co v Gannon, 54 Wash App 330, 334-335; 774 P2d 30 (1989).

In reaching its decision, the trial court relied on Bensalem Twp, supra. The facts of Bensalem Twp are similar to the present case, but the insurer and its insured were aligned on the opposite sides. The Equal Employment Opportunity Commission (EEOC) notified the township of the claimant's charge of age discrimination before the claims-made policy took effect, but did not file a lawsuit until after the policy was in force. The insurer argued that the claim was first made when the township was notified that the claimant had filed a charge with the EEOC. Bensalem Twp, supra at 1344-1346.

The Bensalem Twp court held that the initial letter notifying the township of the claimant's charge of age discrimination did not constitute a claim. The court noted that case law generally supports the proposition that, for purposes of determining coverage under a claims-made policy, a "claim" is "a demand for something as a right." Id. at 1348. The court then reasoned that the letter merely notified the township of the charge and the EEOC'S intent to attempt to resolve the matter informally. While the letter informed the township that a demand for relief, based on a legal right, might ensue, neither the letter nor the initial claim purported to be such a demand. Id.

The majority concludes that the Bensalem Twp court's conclusion that the EEOC complaint was merely a notice of the employee's intent to hold the insurer responsible for a wrongful act constituted dicta. However, whether the court's discussion constituted dicta is immaterial in this case because this Court is not bound to follow the decision of a federal court in Pennsylvania. In addition, a court is not prohibited from finding the dicta of another court to be persuasive. See, e.g., Eyde Bros Development Co v Eaton Co Drain Comm'r, 427 Mich. 271, 286; 398 NW2d 297 (1986); Dykstra v Dep't of Transportation, 208 Mich. App. 390, 392; 528 NW2d 754 (1995). The proper question is whether the reasoning of the dicta is sound.

In fact, other courts have adopted the reasoning in Bensalem Twp and held that notification of a potential liability does not constitute a claim. See Winkler v Nat'l Union Fire Ins Co of Pittsburgh, 930 F2d 1364, 1366-1367 (CA 9, 1991); Ins Corp of America v Dillon, Hardamon & Cohen, supra at 1470; Gibraltar Casualty Co v A Epstein & Sons Int'l, Inc, 206 Ill App 3d 272, 279-280; 150 Ill Dec 236; 562 NE2d 1039 (1990); Kenefick v Hitchcock, 187 Wis App 2d 218; 522 NW2d 261 (1994). As the court in Ins Corp of America, supra at 1470, explained:

Simply becoming aware of an alleged injury is not enough to amount to a claim. Awareness is not a demand and the use of the word claim, unless modified by other language, requires that a demand be made.

Defendant's policy contains the following language:

VII. Notice of Claim

(a) If the School District or any Assureds shall receive written or oral notice from any party that it is the intention of such party to hold the Assureds responsible for a Wrongful Act which occurred during the policy period, they shall give written notice within one year to the Insurer of the receipt of such written or oral notice, then any claim made within the space of two years following the termination of this policy ... shall, for the purposes of this policy, be treated as a claim made during the policy year in which the Wrongful Act occurred.

* * *

(c) The School District, or the Assureds shall, as a condition precedent to their rights under this policy, give the Insurer notice in writing of any claim made and shall give the Insurer such information and cooperation as it may reasonably require.

Thus, the policy appears to distinguish between a "claim" and "notice from any party that it is the intention of such party to hold the Assureds responsible for a Wrongful Act." An insurance contract should be read as a whole and meaning given to all terms. Auto-Owners Ins Co v Churchman, 440 Mich. 560, 566; 489 NW2d 431 (1992). The contractual language is to be given its ordinary and plain meaning, and technical and strained constructions should be avoided. Hawkeye-Security Ins Co v Vector Construction Co, 185 Mich. App. 369, 380-381; 460 NW2d 329 (1990).

The majority asserts that Rutherford sought relief pursuant to the Civil Rights Act through his complaint filed with the Department of Civil Rights (DCR). The majority reasons that because the DCR had the authority to award damages to Rutherford in the event that he prevailed, Rutherford's charge of discrimination constitutes a "claim" against plaintiff.

However, the notice sent by the DCR to plaintiff in April 1982 merely informed plaintiff that it intended to investigate Rutherford's allegation of sex discrimination and requested plaintiff's cooperation in that investigation. I would find that Rutherford's charge of discrimination was not an actual claim, but rather notice of an alleged injury from which a claim could subsequently arise. An actual claim is distinguished from an "event" that could give rise to an actual claim in the future. Employers Ins of Wausau v Bodi-Wachs Aviation Ins Agency, Inc, 39 F3d 138, 143 (CA 7, 1994).

Under paragraph VII(a) of defendant's policy, plaintiff had three years following the termination of the policy to make the actual claim. It is undisputed that the policy expired on April 1, 1982, and that the actual claim, that is, a demand for something due as a right, was not made until May 10, 1989, when the DCR filed a formal complaint against plaintiff. Because the claim was not made within three years of the termination of the policy, I would conclude that plaintiff is not covered under defendant's policy.

The majority relies on Continental Casualty Co v Enco Associates, Inc, 66 Mich. App. 46; 238 NW2d 198 (1975), for the proposition that this Court should not "split hairs" when determining whether the insured had submitted a claim. However, the majority misapplies Enco to the facts of this case. Enco merely stands for the proposition that oral notice of an insured's liability for a defect during the policy period is sufficient to constitute a claim. Id. at 51. There was no question in Enco that the insured was making a demand for payment in his telephone call.

I am aware that the Supreme Court recently held that a letter from the Environmental Protection Agency to an insured that it was potentially liable for environmental contamination constituted the initiation of a "suit" under the terms of the insurance policy at issue, thus triggering the insurer's duty to defend. Michigan Millers Mutual Ins Co v Bronson Plating Co, 445 Mich. 558, 575; 519 NW2d 864 (1994). However, Bronson was decided within the particular context of environmental litigation. Moreover, it is well-settled that an insurer's duty to defend is broader than its duty to indemnify. Auto-Owners Ins Co v City of Clare, 446 Mich. 1, 15; 521 NW2d 480 (1994); Allstate Ins Co v Freeman, 432 Mich. 656, 662; 443 NW2d 734 (1989) (RILEY, J.). I would therefore decline to reach an analogous result.

NOTES

[1] This presentation of the pertinent insurance provisions is compiled from the original policy language and an addendum to that policy entitled "Liberalization Endorsement."

[2] The term "demand" is defined as "to ask for with proper authority; claim as a right ... to ask for peremptorily or urgently ... to call for or require as just, proper, or necessary." Id. at 359.

[3] Comprehensive Environmental Response, Compensation and Liability Act, 42 USC 9601 et seq.

[4] Compare Michigan Millers, supra at 574:

The significant authority given to the EPA in such matters allows it essentially to usurp the traditional role of a court of law in determining and apportioning liability. Such matters are concluded by the EPA before the action is ever brought to court. [Emphasis in original.]

[5] We believe that the court's discussion and conclusion in Bensalem Twp that the EEOC complaint was merely a notice of an employee's intent to hold the insured responsible for a wrongful act constituted dicta. See, e.g., People v Green, 205 Mich. App. 342, 346; 517 NW2d 782 (1994). After engaging in a lengthy dissertation about this topic, the court opined that it was "unnecessary for me to determine precisely when a `claim' was `first made' in this case." Bensalem Twp, supra at 1349. Rather, the court decided that after the plaintiff received the EEOC complaint, "all communications between plaintiff and the EEOC, as well as the filing of the [federal court] complaint [pursuant to an EEOC right-to-sue letter] took place during the period covered by the policy." Id. (Emphasis added.) Thus, the dissent relies on statements in Bensalem Twp that were not essential to the determination of the material issue and therefore carry no precedential or instructive weight. Green, supra.