This newsletter has been compiled utilizing the latest reported Michigan Court of Appeals and Supreme Court Decisions. Case citations (if published at the time this newsletter is distributed) will reference the specific reporter, volume and page number. Unpublished Decisions (or those which have not been published as of the date of newsletter distribution) will be cited by Appellate Slip Opinion number. Copies of all Decisions summarized within this newsletter are available for your review upon request. Questions and comments are welcomed.

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On June 17, 2005, the Michigan Supreme Court peremptorily reversed the Michigan Court of Appeals Decision in Kenny v. Kaatz, 264 Mich App 99 (2004) for reasons as stated in the dissenting opinion.

In that case, the Court of Appeals held that a question of fact existed as to whether snow covered ice in a funeral home parking lot was an open and obvious danger. Further, because others also fell in the parking lot, the condition may have been unreasonably dangerous, even if the snow covered ice were determined by a jury to be open and obvious.

The dissenting opinion felt that as a life-long resident of Michigan, Plaintiff should have been aware that ice frequently forms beneath snow during snowy December nights. In addition, Judge Griffin did not feel that Plaintiff had presented any evidence that the condition created a "uniquely high likelihood of harm or severity of harm".

This is an important decision given the fact that Kenny is frequently cited by the Plaintiff’s Bar in an attempt to create a question of fact for jury determination.

Facts – Damages in this case were caused by faulty back-filling performed by a subcontractor hired by Defendant. The subcontractor’s faulty work caused the basement walls of the manufactured home sold and delivered by Defendant, to crack and settle. An arbitrator found Defendant responsible as the general contractor for the installation of the manufactured home. Plaintiff insurer filed a motion for summary disposition, asserting that Defendant’s claim was not a covered loss under the terms of the commercial general liability insurance policy. The trial court agreed.

In analyzing this case, the Michigan Court of Appeals held that interpretation of an insurance policy ultimately requires a two-step inquiry: First, a determination of coverage according to the general insurance agreement and, second, a decision regarding whether an exclusion applies to negate coverage. An insurance policy is an agreement between parties that a court interprets much the same as any other contract to best effectuate the intent of the parties and pursuant to clear, unambiguous language of the policy. It is the insured’s burden to prove that coverage exists.

The policy in question provided coverage for property damage which was caused by an occurrence. "Occurrence" was defined by the policy as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The Supreme Court has defined "accident" as an undesigned contingency, a casualty, a happening by chance, something out of the usual course of things, unusual, fortuitous, not anticipated, and not naturally to be expected.

In this case, the subcontractor’s faulty work caused the basement walls of the home to crack and settle. Defective workmanship of a subcontractor is not an unforeseeable event and therefore could not be considered an occurrence under Plaintiff’s policy. Auto Owners Insurance Company v. Long’s Tri County Mobile Home Inc., et al, Michigan Court of Appeals Unpublished Decision Dated June 28, 2005, Docket Number 252580.

Recommendation – Any doubt regarding insurance coverage must be resolved in the insured’s favor. If the insurance contract contains definitions, they must be used when interpreting the policy language. If (as here) damages were not an unforeseeable event, there may be no coverage. A thorough and accurate reading of all terms and definitions should be done before a final determination as to coverage is made.

Facts – Plaintiff’s 63 year old husband suffered a severe brain injury as a result of a motor vehicle accident. He received treatment at in-patient facilities and hospitals. He eventually transferred to a residence where he then received 24 hour nursing and attendant care. Thereafter, Plaintiff’s husband returned home. He remains confined to a wheel chair and continues to require assistance with basic tasks such as eating and bathing.

After the accident, Defendant provided coverage as the No-Fault insurer. Until the time that the insured returned home, the expenses that Defendant covered included food. After his return home, Defendant denied Plaintiff’s claim for the insured’s food expenses and Plaintiff sued to recoup those amounts.

In reversing the Michigan Court of Appeals, the Supreme Court held that food (in this case) was neither "for accidental bodily injury" under MCL 500.3105(1) nor "for an injured person’s care, recovery, or rehabilitation" under MCL 500.3107(1)(a). Griffith v. State Farm Mutual Automobile Insurance Company, 472 Mich 521 (2005).

Recommendations – The majority opinion made it clear that Plaintiff’s interpretation of MCL 500.3107(1)(a), stretched the language of the Act too far and would largely obliterate cost containment for this mandatory coverage. The same rationale should be applied to all first party claims submitted.

Facts – Plaintiff’s slip and fall occurred outside an office that was located in a mall. The mall was owned by Defendant who leased the office to Plaintiff’s employer. In the course of providing service support to customers, Plaintiff and other technicians routinely traveled to the office to obtain supplies. The lone entrance to the office was located at the back of the shopping center.

On the morning in question, Plaintiff went to the office to obtain supplies. According to Plaintiff, the area was unlit and dark. He parked near the entrance but did not leave his automobile running or lights on. There was no snow on the ground. He approached the office door, placed his key in the lock and tried to open it, but could not do so. He shoved the door with his left shoulder. It flew open. His feet went out from under him and caused Plaintiff to fall. As a result, Plaintiff claimed to have injured his left shoulder. Once inside the building, Plaintiff turned on the light and was able to observe ice outside of the door. He salted the area. Subsequent inspection revealed that ice had formed on the inside of the door jamb.

Plaintiff claimed that an ineffective drainage system caused water to collect around the door frame and puddle on the ground. Plaintiff was aware that on occasion, the lock would freeze. Under the terms of the lease, Defendant was obligated to maintain and repair the exterior portions of the building. Plaintiff and his co-employees had complained to Defendant about the drainage problem. Several unsuccessful attempts had been made to fix the gutter. Plaintiff and his co-employees were aware of the possibility of icing in front of the door. The employer provided salt and other tools to remove ice which were kept inside the office.

The trial court granted summary disposition for Defendants with respect to the premises liability claim as well as to allegations of public nuisance. The trial court refused to allow Plaintiff to amend his Complaint to add a claim for damages as a third-party beneficiary of the lease agreement, finding that such an amendment would be futile.

In affirming the trial court’s grant of summary disposition, the Michigan Court of Appeals held that because Plaintiff knew that icing was a possibility, and as a life-long resident of Michigan, he should have been aware that ice frequently forms during cold January nights, the condition at issue, was open and obvious. The condition did not create a uniquely high likelihood of harm or severity of harm. Ice in an outdoor doorway in Michigan, in January, is a common, not unique, occurrence. Plaintiff’s claim that the icy condition was unavoidable because he had to enter the building to obtain supplies for a service call, was also found to be without merit. Likewise, Plaintiff was not on Defendant’s premises as a member of the general public. As such, he did not present a claim which would be protected by a public nuisance theory.

Finally, the court determined that the lease did not indicate an intent to benefit Plaintiff or any of G-Tech’s (the lessee’s) employees. As such, Plaintiff could not show that the contract intended to benefit any particular class of which of he was a member and he was not allowed to maintain a claim for damages under a third-party beneficiary theory. Amendment of the Complaint to add such a claim would have been futile. Slater v. Brandle, et al., Michigan Court of Appeals Unpublished Decision Dated June 23, 2005, Docket Number 260867.

Recommendation – This particular case was handled by our office. It is significant from the standpoint that:

(1) The Court recognized that where a Plaintiff knows or has reason to know of a    hazardous condition, there may be no duty by the property owner to warn of or remove the hazard;

(2) Where the allegedly defective condition does not interfere with a right common to the general public, there may be no protection by virtue of a claim for public nuisance;

(3) Where Plaintiff cannot show that a contract was intended to benefit any particular class of which he is a member, there may be no claim for damages under a third party beneficiary theory.

All of the foregoing theories should be fully explored during the initial investigation of similar claims.

Facts – Plaintiff brought a steer to Defendant’s facility for processing. A heifer belonging to another customer began running loose in a fenced area on Defendant’s premises. Several persons, including Plaintiff, entered the fenced area in an attempt to bring the heifer under control. The animal charged and struck him, causing him to sustain serious injuries.

Plaintiffs premises liability claim against Defendant was dismissed by the trial court on Motion for Summary Disposition. It held that the loose animal was not a condition on the land, rather, it was an activity conducted on the land. The Court of Appeals affirmed. Boehmer v. North Branch Food Lockers Inc., et al., Michigan Court of Appeals Unpublished Decision Dated June 23, 2005, Docket Number 260945.

Recommendation – When analyzing a newly filed claim, one must specifically determine under what theory the claim is being made. As in this case, Plaintiffs failed to assert a proper premises liability argument.

Facts – The parents of a minor who set fire to the Howell High School, appealed an order of the Family Court, directing that they pay $715,581.49 in restitution to the school district’s insurer. This is a case of first impression under the juvenile code, to determine the extent to which a court may order restitution for offenses committed by a juvenile.

The Court held that the Juvenile Code employs the same statutory scheme for restitution found in the Crime Victim’s Rights Act (MCL 780.766 and MCL 780.767). Michigan law has long recognized and protected the rights of crime victims. Restitution which may be ordered under the Juvenile Code is unlimited in amount. Restitution must be based on the value of the property damaged (that is, the victim’s actual loss). People of the State of Michigan v. Sean McEvoy, et al., 267 Mich App 55 (2005).

Recommendation – This decision obviously gives a big boost to an insurer’s ability to recover damages caused by or at the direction of a minor. The statute imposes liability on the parent responsible for supervising the child. As such, some investigation will need to be conducted with respect to custody and living arrangements.

Plaintiffs were injured in a collision with an uninsured motorist. They eventually filed suit against State Farm. Defendant moved for summary disposition arguing that Plaintiffs failed to follow the procedures set forth in the insurance policy because they failed to join the uninsured driver as a defendant. In the meantime, Plaintiff’s filed a separate action against the uninsured motorist and obtained a default judgment. This was done after the three year personal injury statute of limitations had expired.

The question in this case involved whether the time barred action against the driver, or the failure to timely sue the driver, resulted in the proper dismissal of Plaintiffs’ action.

The Court of Appeals found that case law provides that a contractual claim for uninsured motorist benefits is subject to the six year limitations period applicable to contracts in general. Plaintiffs suit against Defendant was timely. It also found that Defendant’s claim that the insured was not "legally entitled to collect damages" from the uninsured motorist because such litigation was not commenced within the three year period of limitations, was without merit because Defendant could have claimed against the uninsured motorist on a theory of equitable subrogation, arising out of any uninsured motorist benefits which might be paid. Elser v. State Farm Mutual Automobile Insurance Company, Michigan Court of Appeals Unpublished Decision Dated May 24, 2005, Docket Number 260351.

Recommendation – This decision appears to ignore the fact that uninsured motorist benefits are contractual in nature. The contract called for specific procedures to be followed. Those procedures were ignored. This panel of the Court of Appeals essentially based its decision on whether there was actual prejudice to the Defendant. We will keep you apprised of any developments should further appellate proceedings be instituted.