Michelle Wagner v. Farm Bureau Mutual Insurance Co of Michigan

STATE OF MICHIGAN
COURT OF APPEALS
MICHELLE WAGNER and JAMES WAGNER, FOR PUBLICATION
September 12, 2017
Plaintiffs-Appellees, 9:05 a.m.
v No. 332400
Kalamazoo Circuit Court
FARM BUREAU MUTUAL INSURANCE LC No. 2014-000452-CK
COMPANY OF MICHIGAN,
Defendant-Appellant,
and
CONOR LEWIS and GREG LEWIS,
Defendants.
Before: TALBOT, C.J., and O’CONNELL and CAMERON, JJ.
PER CURIAM.
Defendant Conor Lewis rear-ended plaintiff Michelle Wagner. Conor’s father, defendant
Greg Lewis, Michelle, and Michelle’s husband, plaintiff James Wagner, had automobile
insurance policies with defendant Farm Bureau Mutual Insurance Company of Michigan. The
accident spurred multiple lawsuits. The instant suit involves plaintiffs’ first-party claim for
uninsured motorist (UM) benefits.1 Farm Bureau moved for summary disposition pursuant to
MCR 2.116(C)(7), (C)(8), and (C)(10), arguing that plaintiffs’ UM claims were time barred
because plaintiffs failed to comply with the policy’s notice and filing provisions. The trial court
denied Farm Bureau’s motion, concluding that Farm Bureau’s policy was ambiguous. Farm
Bureau appeals as on leave granted.2 We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
1
The trial court entered an order dismissing all claims against Conor and Greg. All parties to
this litigation are insured by Farm Bureau.
2
Wagner v Farm Bureau Mut Ins Co of Mich, 500 Mich 945; 890 NW2d 359 (2017).
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On May 17, 2010, Michelle was driving and a car rear-ended her. Michelle sustained
injury. Michelle and Conor spoke at the scene. Michelle said that Conor stated that he was
delivering a pizza for his job at Pizza Hut and indicated that he was insured through Farm
Bureau. Greg reported the accident to Farm Bureau.
On May 2, 2013, plaintiffs filed a third-party automobile liability claim against Conor,
Greg, and Pizza Hut of Kalamazoo. Farm Bureau provided a defense under a reservation of
rights, citing language in Greg’s policy that Farm Bureau does not provide coverage “ ‘for
liability arising out of the . . . operation of a vehicle while it is being used to carry . . . property
for a fee.’ ” Farm Bureau later filed a declaratory action, seeking a declaration that it had no
duty to defend or indemnify Conor or Greg from plaintiffs’ third-party claim. Farm Bureau then
moved for summary disposition. On June 23, 2014, the trial court granted Farm Bureau’s
motion. This Court affirmed.3
On May 12, 2014, plaintiffs notified Farm Bureau of its potential UM or underinsured
motorist claim. Farm Bureau sent plaintiffs a letter asserting that the notice was not timely
pursuant to the parties’ policy, and, therefore, concluded that plaintiffs would not be eligible for
UM coverage.
The policy states that Farm Bureau will “pay compensatory damages which [plaintiffs
are] legally entitled to recover from the owner or operator of an uninsured automobile,” defines
an uninsured automobile, and requires an injured person making a claim to provide proof that the
automobile meets this definition. The policy contained a time limit for initiating an UM action,
specifically stating that the claimant had three years after the date of the accident to notify Farm
Bureau of its UM claim and file suit. However, the policy also stated that failure to perform a
duty or give notice would not invalidate a claim if it was not “reasonably possible” to do so and
the claimant performed “as soon as reasonably possible.”
On August 20, 2014, plaintiffs filed the instant suit. Plaintiffs sought a declaratory
judgment, seeking a declaration that plaintiffs’ UM claim did not accrue until the trial court’s
June 23, 2014 order declaring that Farm Bureau had no duty to defend or indemnify Conor or
Greg, that plaintiffs’ third-party action tolled the running of the UM notice and filing provisions,
and that plaintiffs’ appeal of the June 23, 2014 order further tolled the statute of limitations.
Additionally, plaintiffs brought a breach of contract claim, alleging that Farm Bureau’s letter
stating that plaintiffs would not be eligible for UM coverage constituted an anticipatory breach of
the policy.
Farm Bureau moved for summary disposition, arguing that plaintiffs’ UM claims were
time barred pursuant to the policy’s unambiguous, enforceable, notice and filing time limitations.
Under these provisions, the UM claim accrued on the date of the accident, May 17, 2010, and
plaintiffs needed to notify Farm Bureau of their UM claim and file their UM claim within three
years, by May 17, 2013. However, plaintiffs did not notify Farm Bureau of their UM claim until
3
Farm Bureau Mut Ins v Wagner, unpublished opinion per curiam of the Court of Appeals,
issued November 17, 2015 (Docket No. 322738).
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May 12, 2014, and did not file their UM claim until August 20, 2014. Further, it was reasonably
possible for plaintiffs to comply with the notice and filing provisions, and the limitations could
not be tolled.
Plaintiffs asked the trial court to deny Farm Bureau’s motion. Plaintiffs argued that the
determination of a vehicle’s uninsured status impacted the accrual date of a UM claim, that they
did not learn that Conor’s vehicle was uninsured until more than three years after the accident,
and that they complied with the policy as soon as reasonably possible.
The trial court denied Farm Bureau’s motion. The trial court found the policy to be
“inconsistent on its face,” and, therefore, ambiguous, because it “clearly states that a suit against
[Farm Bureau] may not be commenced later than three years after the accident” and “also clearly
states that the uninsured automobile here did not become an uninsured automobile until Farm
Bureau’s written denial of coverage had been sustained by final court action.” Farm Bureau
drafted the policy, and the trial court, therefore, construed the ambiguity against Farm Bureau.
Further, the trial court reasoned that the claim accrued and Conor’s vehicle became an uninsured
automobile on June 23, 2014.
II. STANDARDS OF REVIEW
A court must grant a motion for summary disposition pursuant to MCR 2.116(C)(7) if
“dismissal of the action” “is appropriate because of” a “statute of limitations.” A trial court must
grant a party’s motion for summary disposition pursuant to MCR 2.116(C)(8) if the “opposing
party has failed to state a claim on which relief can be granted.” This occurs “when the claims
are so unenforceable as a matter of law that no factual development could possibly justify
recovery.” Genesee Co Drain Comm’r v Genesee Co, 309 Mich App 317, 324; 869 NW2d 635
(2015) (quotations and citations omitted). A motion for summary disposition pursuant to MCR
2.116(C)(10) tests the factual sufficiency of a complaint. Maiden v Rozwood, 461 Mich 109,
120; 597 NW2d 817 (1999). A “trial court considers affidavits, pleadings, depositions,
admissions, and other evidence submitted by the parties . . . in the light most favorable to the
party opposing the motion.” Id. A trial court must grant the motion if it finds “no genuine issue
as to any material fact” and determines that “the moving party is entitled to judgment or partial
judgment as a matter of law.” MCR 2.116(C)(10).
We review de novo a trial court’s resolution of a motion for summary disposition,
conclusion whether an insurance contract is ambiguous, and interpretation of a contract.
Henderson v State Farm Fire & Cas Co, 460 Mich 348, 353; 596 NW2d 190 (1999).
III. ANALYSIS
Farm Bureau argues that the trial court erred when it determined that the parties’ UM
policy was ambiguous and denied its motion for summary disposition. We disagree.
UM “insurance permits an injured motorist to obtain coverage from his or her own
insurance company to the extent that a third-party claim would be permitted against the
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uninsured at-fault driver.” Rory v Continental Ins Co, 473 Mich 457, 465; 703 NW2d 23 (2005).
The UM “policy language governs the coverage.” Scott v Farmers Ins Exch, 266 Mich App 557,
561; 702 NW2d 681 (2005).4 We read the policy as a whole, giving meaning to each term and
giving each term its plain and ordinary meaning. Id. We enforce an unambiguous contract “as
written unless the provision would violate law or public policy.” Rory, 473 Mich at 470. A
contract is ambiguous if its words can be reasonably understood in different ways or when its
provisions irreconcilably conflict. Cole v Auto Owners Ins Co, 272 Mich App 50, 53; 723
NW2d 922 (2006). Any “ambiguous language presents a question of fact.” Id. If the parties’
intent cannot be determined after considering extrinsic evidence, the court should construe the
contract against the drafter. Id.In this case, the parties’ UM policy is ambiguous because its provisions irreconcilably
conflict. The policy contains a time limit for notifying Farm Bureau of a UM claim and filing
suit. It states that
Any person seeking Uninsured Motorist Coverage must:
***
b. present to [Farm Bureau] a written notice of the claim for Uninsured
Motorist Coverage within three years after the accident occurs.”
A suit against us for Uninsured Motorist Coverage may not be commenced later
than three years after the accident that caused the injuries being claimed.
[(Emphasis in original).]
The accident occurred on May 17, 2010. Therefore, the three year time limits expired on May
17, 2013.
However, plaintiffs did not have a UM claim within three years of the accident. The
policy states that Farm Bureau will “pay compensatory damages which the insured is legally
entitled to recover from the owner or operator of an uninsured automobile.” (Emphasis in
original). The policy defines an uninsured automobile as “an auto operated on a public
highway:”
(1) to which no bodily injury liability policy or bond applies:
(a) at the time of the accident; and
(b) in at least the minimum amounts required by the Financial
Responsibility Laws in the State of Michigan;[or]
4
Therefore, plaintiffs’ argument that MCL 600.5807’s six year statute of limitations applies to
their UM claim is incorrect.
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***
(3) insured by a company that has issued a written denial of coverage that
has been sustained by final court action, or to which we agree in writing.
[(Emphasis in original).]
The policy required plaintiffs, when making a claim, to either “provide proof(s) affirming that
the auto and operator were not covered by a liability policy or bond at the time of the accident”
or “provide a final declaratory judgment against the owner and operator of the uninsured
automobile establishing that the auto and operator were not covered by a liability policy or bond
at the time of the accident.” (Emphasis in original).
The automobile Conor drove did not become uninsured until June 23, 2014. Plaintiffs
filed a third-party claim against Conor and Greg.5 Farm Bureau made a reservation of rights,
sought a declaration that it had no duty to defend or indemnify Conor or Greg, and moved for
summary disposition. The trial court granted Farm Bureau’s motion on June 23, 2014. This
order made the vehicle Conor drove uninsured after the time to notify Farm Bureau of a UM
claim and file a UM claim had expired. Because plaintiffs could not notify Farm Bureau of, or
file, a UM claim that did not exist, the policy’s definition of an uninsured automobile,
requirement that plaintiffs provide proof that the automobile meets this definition, and UM
notice and filing time limitations, irreconcilably conflict. Therefore, the policy is ambiguous, a
question of fact existed, and the trial court correctly denied Farm Bureau’s motion for summary
disposition pursuant to MCR 2.116(C)(10).
An additional policy provision highlights this ambiguity and suggests that it is possible to
interpret the policy in a manner that would allow a factfinder to conclude that plaintiffs timely
provided notice and timely filed a UM claim. The policy states that
Failure to perform any duty or to give any notice required does not invalidate
[plaintiffs’] claim if [plaintiffs] show that it was not reasonably possible to
perform such duty or give such notice promptly or within such time otherwise
specified in this policy, and that [plaintiffs] performed the duty or submitted the
notice as soon as reasonably possible.
This provision applies “to all parts of this policy.” Plaintiffs notified Farm Bureau of their
potential UM claim while Farm Bureau’s declaratory action was pending. Further factual
development and consideration of extrinsic evidence could allow a factfinder to conclude that
plaintiffs submitted notice of their UM claim and filed their UM claim as soon as reasonably
5
Farm Bureau faults plaintiffs for waiting to file their third-party claim until May 2, 2013, 15
days before the UM notice and filing time limits expired. Appellants “may not merely announce
a position and leave it to this Court to discover and rationalize the basis for the claim.” Ambs v
Kalamazoo Co Rd Comm, 255 Mich App 637, 650; 662 NW2d 424 (2003). Farm Bureau cited
no authority requiring plaintiffs to file their third-party claim at an earlier date. Further, Farm
Bureau admits in reply that plaintiffs timely filed their third-party suit.
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possible. Therefore, the trial court correctly denied Farm Bureau’s MCR 2.116(C)(8) motion for
summary disposition.
Additionally, the trial court correctly denied Farm Bureau’s MCR 2.116(C)(7) motion
because the policy does not unambiguously state that plaintiffs’ UM action is time barred.
These provisions create an ambiguous accrual date. A policy sets the date of accrual for
an UM claim. See Sallee v Auto Club Ins Ass’n, 190 Mich App 305, 307-308; 475 NW2d 828
(1991). The policy’s time limit for notifying Farm Bureau of a UM claim and filing suit states
that the claim accrues on the date of the accident, but also requires plaintiffs to provide proof that
the automobile was uninsured, suggesting that the claim could accrue once an automobile is
determined to be uninsured. Therefore, the trial court incorrectly determined an accrual date for
plaintiffs’ UM claim at the summary disposition stage.
Additionally, the policy creates ambiguity as to whether the UM filing limitations can be
tolled. See Devillers v Auto Club Ins Ass’n, 473 Mich 562, 564, 582; 702 NW2d 539 (2005);
McDonald v Farm Bureau Ins Co, 480 Mich 191, 200-201; 747 NW2d 811 (2008). The policy
requires plaintiffs to provide proof that an automobile is uninsured, allows for an automobile to
become insured after the UM notice and filing deadlines, and states that the failure to perform a
duty will not invalidate a claim if it is not reasonably possible to do so and performance occurs
as soon as reasonably possible. Therefore, the policy may toll the UM filing limitation until an
automobile’s insured status is determined.
Farm Bureau did not cite case law to support its argument that courts have declared all
UM time limits to be unambiguous. Rather, some cited case law is inapplicable. The Court in
Rory, 473 Mich at 465-490, analyzed whether a court could disregard a contract provision as
unreasonable and whether a policy constituted an unenforceable adhesion contract. The Court in
Devillers, 473 Mich at 586-593, analyzed whether a statute could be judicially tolled. Neither
Court analyzed whether a UM policy was unambiguous. Other case law Farm Bureau cited is
distinguishable. The Court in McDonald, 480 Mich at 203, only analyzed whether the term
“legal action” as used in a UM claim was ambiguous. The Court in Morley v Auto Club of Mich,
458 Mich 459, 464, 468-469; 581 NW2d 237 (1998), analyzed whether a UM contract was
ambiguous when the trial court found an arbitration clause to be ambiguous. The Michigan
Supreme Court rejected the ambiguity argument “under these facts” because plaintiffs could
have preserved their UM claim by filing a timely demand for arbitration, and plaintiffs submitted
a letter demonstrating an understanding of the policy, suggesting it was not ambiguous. Id. at
469.
Because we agree with the trial court that Farm Bureau’s motion for summary disposition
should be denied because the policy is ambiguous, we do not consider plaintiffs’ alternate
arguments for denying summary disposition.
We affirm.
/s/ Michael J. Talbot
/s/ Peter D. O’Connell
/s/ Thomas C. Cameron
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