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 Unpublished Decisions (or those which have not been published as of the date of newsletter distribution) will be cited by Appellate Slip Opinion number.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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Facts – Defendant fatally shot decedent during a hunting trip on Defendant’s property. Defendant maintained that he believed that he was shooting a deer that he had just observed. He pled nolo contendre to hunting while intoxicated in exchange for dismissal of the charge of careless, reckless, or negligent discharge of a firearm causing injury or death.

Decedent’s Personal Representative filed a wrongful death suit. Defendant’s homeowner’s insurance policy, issued by Plaintiff, provided that benefits were payable for an "accident". The policy defined "accident" as "a fortuitous event or change happening which is neither reasonably anticipated nor reasonably foreseen …" The policy excluded coverage for bodily injury resulting from a criminal act committed by an insured person, regardless of whether the person intended to commit a criminal act or was charged with or convicted of a crime.

Plaintiff filed suit seeking a declaration that it had no duty to defend or indemnify Defendant in the wrongful death suit. The Trial Court granted Defendant’s Motion for Summary Disposition, concluding that the criminal acts exclusion worked to relieve Plaintiff of the obligation to pay benefits.

In upholding the Trial Court’s decision, the Court of Appeals held that an insurance contract is only ambiguous if, after reading the entire contract, its language can reasonably be understood in different ways. Exclusions are strictly construed in favor of the insured, but an insurer will not be held responsible for a risk that it did not assume.

The language of Plaintiff’s criminal conduct exclusion was clear and unambiguous. An intent to cause injury was not an element of the offense of careless, reckless, or negligent discharge of a firearm. In considering whether a policy exclusion for criminal conduct bars coverage, the relevant inquiry is whether criminal conduct occurred, not whether it was charged.

Plaintiff’s policy excluded coverage for bodily injury resulting from a criminal act by an insured person, even if the insured person lacked the mental capacity to form the requisite intent under the law, and also provided that the exclusion applied regardless of whether the insured person was convicted of a crime. Auto Club Group Insurance Company v. Weitzel, et al., Michigan Court of Appeals Unpublished Decision Dated February 1, 2005, Docket Number 250819.

Recommendation – Defendants’ emphasis on the accidental nature of the incident was found to be misplaced. The criminal act exclusion at issue in this case was very broad and excluded all criminal acts, regardless of whether the resulting injury was accidental or unintended. The first step in determining whether coverage may be excluded, is to obtain the full policy (with applicable endorsements) for review.

Facts – Plaintiff filed this action to reform an automobile insurance policy issued to Defendant Wilson. Plaintiff sought to reduce Wilson’s residual tort liability coverage from the policy limits of $100,000 a person, and $300,000 an accident, to the statutory minimums of $20,000 a person and $40,000 an accident. Plaintiff alleged that reformation was warranted because Wilson misrepresented information on her insurance application. Specifically, in response to the question whether there were other drivers in her household, Wilson failed to disclose that Defendant Drinkwine (an un-insurable driver with a lengthy history of traffic offenses) lived in her household.

After Plaintiff issued its policy to Wilson, Defendant Drinkwine was involved in an automobile accident while driving Wilson’s vehicle. Defendant Hernandez (a passenger in the vehicle) was injured in the accident. Hernandez maintained that reformation of the policy was not warranted because Wilson’s misrepresentation was easily ascertainable by Plaintiff. The Trial Court agreed and entered judgment in favor of Hernandez.

In reversing the Trial Court’s decision, the Michigan Court of Appeals held that a No-Fault insurance carrier is entitled to reform a policy to revoke non-mandatory coverage if the insured made a material misrepresentation in the application and the fraud could not have been ascertained easily by the insurer at the time the contract of insurance became effective. As such, the insurance policy at issue was reformed to provide liability coverage only for the statutory minimums. State Farm v. Wilson, et al., Michigan Court of Appeals Unpublished Decision Dated February 15, 2005, Docket Number 250735.

Recommendation – In making the above ruling, the Court of Appeals seemed to give credence to the fact that an insurer does have a fairly significant duty to investigate information given before issuing a policy. It is recommended that all reasonable leads be followed and that decisions on issuance of the policy be made only after a reasonable review of all database information has been made.

Facts – At the time of the accident, Plaintiff turned into an on-coming lane of traffic and attempted to pass Defendant who was making a left-hand turn. In upholding the Trial Court’s grant of summary disposition in favor of Defendant, the Court of Appeals held that a party need not anticipate a negligent or unlawful act on the part of another. Defendant fulfilled his duty to ensure that the turn could be made safely, by activating his turn signal, decreasing his speed and checking his mirrors. As such, the Trial Court properly determined that Defendant had not breached any duty. Peterson v. Corder, et al., Michigan Court of Appeals Unpublished Decision Dated February 1, 2005, Docket Number 251127.

Recommendations – When evaluating a potential claim, one should make a determination as to whether the insured violated any standard of care. If not, a denial of Plaintiff’s claim is appropriate.

Facts – Defendant appealed as of right, a jury verdict finding that Plaintiff’s medical charges were reasonable and customary. Defendant first argued that the Trial Court erred in failing to grant a directed verdict on Plaintiff’s claim based on No-Fault insurance coverage. That argument was premised on the fact that the Court had found that the injured party’s injury did not arise out of the use of a motor vehicle as a motor vehicle. The Trial Court found that Plaintiff’s action survived, based on equitable estoppel because Plaintiff presented sufficient evidence that Defendant represented and admitted that coverage existed. In fact, Defendant had actually paid some of the bills for Plaintiff’s treatment. The insured specifically testified that he relied on these representations before starting treatment. Viewing this evidence in the light most favorable to Plaintiff, a reasonable juror could find that Defendant, by its representations, admissions, or silence, intentionally or negligently induced Plaintiff to believe that coverage existed, and that Plaintiff justifiably relied and acted upon that belief. Plaintiff would be prejudiced if Defendant could now change its position and deny coverage. Therefore, the Court felt that Plaintiff adequately presented evidence to support the theory of equitable estoppel. This theory precluded Defendant from arguing that coverage did not exist. Ruben v. Auto Club Group Insurance Company, Michigan Court of Appeals Unpublished Decision Dated February 15, 2005, Docket Number 250895.

Recommendation – This case involved a very unusual set of circumstances which developed because of the mistaken belief that coverage existed. Should such a situation arise, every attempt should be made to bring the issue to a head as quickly as possible so that the insured is put on notice that future treatment will be at his/her own personal expense.

Facts – A vehicle driven by Defendant, collided with a vehicle driven by Plaintiff. There was some question as to whether Plaintiff had sustained a fracture at C7. Plaintiff wore a cervical collar for several months. His orthopedist returned him to work without restrictions six months after the accident occurred.

The Trial Court granted Defendant’s Motion for Summary Disposition, finding that although an issue of fact existed as to whether Plaintiff sustained an objectively manifested injury as a result of the accident, no evidence showed that any such injury affected his general ability to lead his normal life. The Court of Appeals agreed. It found that although Plaintiff asserted that physical difficulties (particularly pain in his neck) prevented him from holding steady employment and engaging in recreational activities as he had prior to the accident, there were no physician imposed restrictions on employment or recreational activities. Pain, in and of itself, is not an objectively manifested condition and cannot be relied upon to establish the existence of a serious impairment of body function. Osborne v. Gorniak, Michigan Court of Appeals Unpublished Decision Dated February 22, 2005, Docket Number 251473.

Recommendation – As this Court observed, there is a distinct difference between an individual simply stating that he/she is restricted, versus physician-imposed restrictions which presumably would indicate some objective basis for the restriction. As always, a complete review of Plaintiff’s medical file should be made so as to assist in the determination of whether a serious impairment of body function can be properly documented.

Facts – This case revolves around a shipping shack, or a small office, located inside Defendant’s plant. The shack was elevated approximately eleven inches above the concrete plant floor. A single metal step with a grated surface led up to the door of the shack, which was the primary entrance.

Plaintiff had entered the shack on several occasions without incident. On the date in question, as he turned to leave, Plaintiff fell down the steps to the floor, sustaining a serious permanent back injury which required surgery.

The Court of Appeals held that no genuine issue of material fact existed regarding whether the fact that Plaintiff’s attention was drawn away from the hazard constituted a special aspect that would render the open and obvious risk of the steps unreasonably dangerous. It found that the steps at issue were open, obvious, and had no such special aspects. Because steps are the type of everyday occurrence that people encounter, under most circumstances, a reasonably prudent person will look where he/she is going, will observe the steps, and will take appropriate care for his/her own safety. In fact, Plaintiff had successfully negotiated these very same steps on his prior visits to Defendant’s plant.

Plaintiff also argued that building code violations constituted special aspects, rendering the steps unreasonably dangerous. Again, the Court disagreed, holding that building code violations are insufficient to impose a legal duty of care on an invitor. Although a building code violation may be some evidence of negligence, it is insufficient to impose a legal duty cognizable in negligence. Williamson v. Ford Motor Company, Michigan Court of Appeals Unpublished Decision Dated February 10, 2005, Docket Number 250218.

Recommendation – Although the existence of building code violations may be important from a background standpoint, a reviewing court should make a determination as to whether the alleged violations were sufficient to impose a legal duty on the Defendant. Given the foregoing, a thorough investigation (and documentation) of the alleged defect is imperative so as to demonstrate a lack of "special aspects", "unavoidability", and lack of uniquely high likelihood of harm or severity of harm.

Facts – At a hearing, the parties informed the Court that they had settled their lawsuit. The terms of the settlement were placed on the record. Plaintiff subsequently moved to set aside the agreement on the basis that there was no meeting of the minds, or that a mutual mistake of fact had occurred, with respect to the ownership of the annuity contract and the validity of the Social Security set-off provision.

The Court of Appeals held that a settlement agreement is binding when it is made in open court. An agreement to settle a pending lawsuit is a contract governed by the legal principles applicable to the construction and interpretation of contracts. There must be a meeting of the minds on all the material facts in order to form a valid agreement. Whether such a meeting of the minds occurred, is judged by the express words of the parties and their visible acts. A mistake of law does not justify rescission. Schuster v. DaimlerChrysler Corporation, Michigan Court of Appeals Unpublished Decision Dated March 1, 2005, Docket Number 250713.

Recommendation – It is extremely important that all terms of a settlement agreement be agreed upon, and that the settlement be placed upon the record or in writing. Unfortunately, in this day and age, a "gentleman’s agreement" cannot be relied upon to necessarily conclude all aspects of a litigated issue.

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