Facts - Case Evaluation proceedings were held in a medical malpractice claim which produced an Evaluation exceeding Defendants' insurance coverage. The Plaintiffs filed a Motion asking for an Order requiring Defendants to disclose their assets. Defendants responded that they would neither accept the Case Evaluation or agree to pay any money towards settlement. As such, their financial status was irrelevant.

The Supreme Court ultimately relied upon MCR 2.302(B)(1) which allows discovery of matters which are relevant or which appear reasonably calculated to lead to the discovery of admissible evidence. Under the circumstances of this case, the financial information sought by Plaintiffs satisfied neither branch of the Court Rule. (Bauroth vHemmoud, 465 Mich 375 [2001]).

Recommendation - This case has effectively reversed the "good cause" requirement previously stated in McLaren v Zeilinger, 103 Mich App 22 [1981]). It is suggested that defense counsel continue to resist disclosure of their clients' personal financial information unless of course same is authorized by the client for purposes of settlement negotiations, etc.

Facts – Plaintiff (a minor) was struck by a car in 1992 when he was three years old. After Mediation, the parties entered into a Consent Judgment for $1,000,000.00 which was the coverage limit for bodily injury claims under the homeowners insurance policy from Auto Club. Auto Club denied the claim because it contended that the policy excluded coverage for bodily injury to any resident relative.

The evidence contained within the Court record indicated that the original policy did not contain the exclusion upon which Auto Club was relying upon to deny the claim. However, prior to the accident, a new policy form was issued that included language excluding coverage for intra-household liability. When it was time to renew the policy, Auto Club sent a renewal policy package which included the new basic policy form, declaration certificate and policyholders' notice. The notice advised the insured that important changes adding or clarifying coverage limitations or exclusions had been added. The notice further instructed policy holders to take a few minutes to review a summary of the more important changes on the reverse side of the form.

In reversing the Trial Court's ruling, this Court held that if a policy is renewed without actual notice to the insured that the policy has been altered, then the insured's failure to read the renewed policy and raise any questions in a reasonable time is excusable. However, the notice letter in the case at hand was found to be adequate. As such, Judgment was entered in favor of the Auto Club. (Kung v Kung, et al, Michigan Court of Appeals (Unpublished Decision) November 27, 2001, Docket #225412)

Recommendations –When determining whether any particular claim is covered under an existing policy of insurance, one should always review all endorsements in effect on the date of loss. Endorsements modify the basic policy language and, quite often, contain exclusions or conditions which are relevant to your analysis.

Facts –This action arose by virtue of injuries sustained by Plaintiff while riding an off road recreational vehicle (ORV). Plaintiffs filed a negligence action against the driver of a second ORV. The Trial Court granted Defendant's Motion For Summary Disposition, holding that the standard of care for claims arising out of recreational activity is "recklessness" and that Plaintiffs' allegations as well as the evidence only supported a claim of ordinary negligence.

In reversing the Trial Court, the Michigan Court of Appeals held that an ORV is a motor vehicle under the Michigan Vehicle Code. As such, by statute, there exists a negligence (rather than a recklessness) standard of care. (VanGuilder v Collier, Michigan Court of Appeals (Published) December 11, 2001, Docket #223987).

Recommendation –In attempting to analyze liability (whether it be from a non-party fault perspective or otherwise), one should always determine whether the alleged wrongful conduct is governed by statute. At least under the circumstances present in this case, persons who engage in recreational activities will be held to a "reasonable person" standard.

Facts – Plaintiffs had removed the gasoline tank from an automobile because the recently replaced fuel pump was not working properly. The tank was taken indoors, into a first floor laundry room. Plaintiffs turned on the hot water in the laundry sink to clean the tank which allowed gasoline fumes to accumulate. The pilot light or burner of the water heater (also located in the laundry room) caused the gas fumes to ignite and explode.

The Court of Appeals held that the connection between the water heater and the maintenance of the vehicle was not sufficiently "close and direct" to impose liability. Though Plaintiffs turned on the hot water, it was the location of the water heater not the maintenance of the vehicle that caused the explosion. Further, the fact that the burner of the water heater triggered and ignited gas fumes, was found to be too attenuated from Plaintiffs' work on the gas tank to establish a sufficiently close connection. (Hasan v Auto Club, Michigan Court of Appeals (Unpublished Decision) December 7, 2001, Docket #221815).

Recommendation –While an automobile need not be the proximate cause of the injury, there still must be a causal connection between the injury sustained and the ownership, maintenance or use of the automobile. The causal connection must be more than incidental, fortuitous or "but for". Each first-party claim must be analyzed according to its own specific facts.

Facts – Plaintiff filed suit against the Auto Club for benefits pursuant to Section 3107(1)(a) of the Michigan No-Fault Insurance Act. The charges ultimately in dispute involved reimbursement for Plaintiff's basic telephone and television charges while hospitalized.

In reversing the Trial Court, the Michigan Court of Appeals held that televisions and telephones are not always reasonably necessary items. Those types of services are more properly seen as personal comfort items that have no relation to a person's health care, recovery or rehabilitation. Something more, such as the specific prescription by a physician or medical professional, is required to establish the causal relationship required under the No-Fault Act. The underlying purpose of our No-Fault Statute is to provide assured, adequate and prompt reparation for certain economic losses at the lowest cost for both the individual and the no-fault insurance system.

Ultimately, the Court held that the issue of whether access to basic television and telephone services for hospitalized insureds is an allowable expense under Section 3107(1)(a), depends on a case by case analysis of the facts and circumstances of each claimant. (Hamilton v AAA Michigan, Michigan Court of Appeals (Published Decision), December 4, 2001, Docket #217618).

Recommendation – When reviewing a first-party claim, it is very important that one examine all aspects of items to be paid. As the above decision illustrates, there may be various items for which compensation is not owing. The insured has the burden of proof to show that expenses were reasonably necessary for the injured person's care, recovery or rehabilitation. If warranted, verification of that fact should be obtained from treating and/or examining medical personnel.

Facts: Plaintiff apparently injured himself while using a wooden walkway at the Lansing Country Club. Plaintiff argued that the walkway was unreasonably dangerous because it became slippery when wet, particularly when golf shoes with soft spikes were worn.

The Court of Appeals held that golf courses obviously are exposed to the elements, including rain, which may naturally accumulate on a course's landscape. A reasonably prudent person would be aware of these conditions and would take appropriate care of his or her own safety. No reasonable Juror could accept Plaintiffs' argument that the wooden walkway was unreasonably dangerous in light of the fact that most outdoor surfaces become slippery when wet. People generally approach wet surfaces cautiously, regardless of the type of shoes they are wearing (Canady v Country Club of Lansing, Michigan Court of Appeals [Unpublished], November 16, 2001, Docket #224699).

Recommendation - This decision illustrates the obvious. When analyzing liability from a premises standpoint, one must use a common sense approach. The defense in this case was apparently able to show that this walkway had been used by patrons wearing soft spikes without incident for approximately two years. Plaintiff himself had also used the walkway on numerous damp or rainy occasions while wearing golf shoes with soft spikes.

Facts – Plaintiff's Decedent was struck and killed by a trailer which became disconnected from a passing vehicle. A settlement was reached with the at fault driver, which was approved by the Probate Court as required. The released individuals included "all other persons . . . who might be claimed to be liable" in connection with the automobile accident.

Subsequently, Plaintiff filed suit against the owner of the trailer. The Defendant moved for Summary Disposition under MCR 2.116(C)(7), arguing that the Release barred the suit. The Trial Court agreed.

In upholding the lower Court decision, the Court of Appeals held, in part, that a Plaintiff's mistake as to the legal effect of a written instrument is not grounds for abrogation. Reformation was non-applicable given lack of fraud or mutual mistake as to the terms of the Release (Beck v McKinzie, Michigan Court of Appeals (Unpublished Decision) November 20, 2001, Docket #223680).

Recommendations –When a new suit is received, every effort should be made to determine whether a prior settlement has occurred. If so, a copy of the Release and other documents regarding settlement/dismissal should be immediately obtained so as to determine whether a Motion For Summary Disposition based upon Release is appropriate.

Facts – Defendant was sued solely on a theory of vicarious liability with respect to an automobile negligence claim. Because Defendant was not a joint tort feasor, and the alleged agent was released from liability through the Mediation Judgment, Summary Disposition was proper for Defendant, pursuant to MCR 2.116(C)(7) on the automobile negligence claim. A principal sued solely on the theory of vicarious liability for the negligence of its agent under the Doctrine of Respondeat Superior is not a joint tort feasor. (Moore v Detroit Newspaper Agency, Michigan Court of Appeals (Unpublished Decision) November 27, 2001, Docket #221599.

Recommendation – One should always be on the lookout for these types of defenses. Surprisingly, the situation mentioned above does occur with some regularity.

Facts – Plaintiff's Decedent was killed in an automobile accident. Plaintiff sued the at fault driver who had insurance and later amended his Complaint to add Auto Owners, claiming underinsured motorist benefits under an insurance policy issued to Decedent's grandparents. Auto Owners filed a Motion For Summary Disposition claiming that because Decedent did not reside with his grandparents at the time of his death, and because Decedent owned two cars, not insured under the Auto Owners policy, he was excluded from benefits under the policy. A Jury later determined that Decedent "resided with" his grandparents when he died.

Defendant argued that the Trial Court erred by instructing the Jury that an adult could be a resident of two households. The Michigan Court of Appeals disagreed. It held that the word "resides" may have different meanings. In its popular sense, "resides" means no more than actual physical presence, the place where one eats and sleeps, regardless of whether one intends to make that place a permanent residence. In its legal or technical sense "resides" means legal residence, legal domicile or the home of person in contemplation of law.

In this case, because the term "resides with" could be interpreted in more than one manner, the term was found to be ambiguous and was construed against the Defendant. Therefore, it was possible for Decedent to "reside with" both his sister and his grandparents. (Zulakis v Auto Owners, Michigan Court of Appeals (Unpublished Decision) November 20, 2001, Docket #221948).

Recommendations –This case contains a very good synopsis of Michigan case law regarding the issue of residency. It also reviews a significant number of the "factors" which can be used to analyze residency. Where appropriate, a list of such factors should be utilized in connection with the initial interview of an insured.

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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