Facts – This case involved a dispute between Auto-Owners Insurance Company and its insureds regarding underinsured-motorist coverage. Defendant argued that Plaintiffs’ recoveries were limited under the terms of the policy, to $50,000 each. Plaintiffs argued that they were each owed $75,000.

In reversing the lower court, the Michigan Supreme Court stated that the wording of the insurance contract was not ambiguous. Therefore, the doctrine of construing a contract against the drafter was found to be inappropriate.

Likewise, the court pointed out that parties are free to contract as they see fit. The role of the courts is to enforce the agreement as written, absent some highly unusual circumstances, such as a contract in violation of law or public policy. The rule of "reasonable expectations" is antagonistic to this understanding of the rule of law, and accordingly is invalid as an approach to contract interpretation. In essence, the rule of reasonable expectations has no application to unambiguous contracts. A policyholder cannot be said to have reasonably expected something different from the clear language of the contract. Wilkie v Auto-Owners Insurance Company, Michigan Supreme Court Decision dated July 16, 2003, Docket Number 119295.

Recommendation - The court clearly stated that the rule of reasonable expectations has no application in Michigan. Those cases which recognized this doctrine are to that extent, overruled. This decision does not abolish the general rule that an ambiguous contract should be interpreted against its drafter. As with any claim, a review of the policy as well as applicable endorsements in effect on the date of loss should be made as quickly as possible during the investigative process.

Facts – Plaintiff reportedly learned of the cancellation of his auto insurance policy after having been involved in an accident. Coverage was refused based on the cancellation of the policy due to nonpayment of premium installments. Defendant alleged that a ten day notice of intent to cancel the account was mailed. The notice identified Plaintiff’s correct name and address. It was not returned to the Defendant. After Plaintiff did not respond, Defendant sent a notice of cancellation. That mailing was not returned as undeliverable. The trial court granted Defendant’s Motion for Summary Disposition, concluding that Plaintiff’s "bold assertion" denying receipt did not create a question of fact regarding mailing. The Court of Appeals agreed. MCL 500.1511 provides for cancellation of an insurance contract based on a mailing of a notice of cancellation with not less than 10 days notice. Defendant had submitted evidence of compliance with the mailing requirements in support of its Motion for Summary Disposition. Mockerman v North Pointe Insurance Company, et al., Michigan Court of Appeals Unpublished Decision dated July 8, 2003, Docket Number 237354.

Recommendation – In dealing with a situation where the policy has been canceled for nonpayment of premium, one must fully document the steps which were taken by the insurer to forward the required notices. The cancellation statute is very specific with respect to its requirements. As in this case, you may also need one or more affidavits indicating that appropriate mailing procedures were in fact taken.

Facts – Plaintiff was a member of his high school’s varsity ski team. While participating in a competition, he "caught an edge", lost his balance and collided with the shack which housed the race timing equipment (suffering fairly significant injuries). Plaintiff sued, alleging negligence on behalf of the Defendant. The defense filed a Motion for Summary Disposition based upon Michigan’s Ski Area Safety Act (SASA). The trial court denied Defendant’s motion, ruling that these claims fell outside of the immunity granted by SASA and that questions of fact existed as to common law premises liability issues. The Court of Appeals affirmed.

In reversing the lower court rulings, the Supreme Court went through a fairly comprehensive analysis of the SASA, including legislative intent. The court refused to adopt the position taken by the dissenting judges which was felt to be tantamount to a strict liability standard. Anderson v Pine Knob Ski Resort, Inc., Michigan Supreme Court Decision filed July 16, 2003, Docket Number 121587.

Recommendation – According to this decision, the Supreme Court has determined that the legislature’s clear goal was to protect ski-area operators with respect to tort litigation. Any claim involving the operation of a ski area should be closely examined in an attempt to determine whether a Motion for Summary Disposition is appropriate.

Facts – While using Defendant’s car wash, Plaintiff slipped and fell on ice that had formed on a sidewalk. The trial court granted Defendant’s Motion for Summary Disposition, finding that the hazard was open and obvious. The test to determine if a danger is open and obvious is whether an average user with ordinary intelligence would have been able to discover the danger and the risk presented on casual inspection. The test is objective and looks to whether a reasonable person would foresee the danger. In her deposition, Plaintiff stated that she did not see the ice because she was looking at two men in front of her. The focus of the doctrine is on the objective nature of the condition, and not the subjective degree of care used by the Plaintiff. Furstenberg v Bubbles Galore, et al., Unpublished Michigan Court of Appeals Decision dated June 26, 2003, Docket Number 239228.

Should you have any questions or comments regarding this or any of our newsletters, please feel free to contact us by voice 989.799.3033, e-mail jtc@saginaw-law.com or write to Collison & Collison, P.C., 5811 Colony Drive, North, P.O. Box 6010, Saginaw, MI 48608-6010.

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