February 11, 2013
In Michigan Insurance Company v National Liability and Fire Insurance Company ___ Mich ___ (rel’d 1/18/13), the Michigan Supreme Court reversed the Court of Appeals, holding that an adult foster care resident was not a “relative” of the adult foster care corporation pursuant to MCL 500.3114 (1) as a matter of law.
Lawrence Stubbe, a pedestrian, was struck by a motor vehicle. The motor vehicle was insured by Michigan Insurance Company (Michigan). Michigan accepted PIP coverage for Mr. Stubbe as a non-occupant with no higher priority coverage (MCL 500.3115).
Mr. Stubbe was not a Named Insured, nor was he the spouse of a Named Insured on any automobile insurance policy. However, he resided at Quality AFC Homes, Inc (Quality), an adult foster care corporation.
Quality was insured for no-fault by National Liability and Fire Insurance Company (National). National’s policy extended coverage to their Named Insured and family members. ” Family member” was defined under the policy to include a “Ward.”
The trial court granted summary disposition in favor of Michigan, finding that National covered Stubbe as a “ward.” The Court of Appeals reversed and remanded to the Circuit Court for a trial on the question of whether or not Stubbe was a “ward” of Quality. The Michigan Supreme Court reversed the Court of Appeals, holding that an adult foster care resident was not a “relative” of the adult foster care corporation.
ANALYSIS
The Michigan Supreme Court may have missed an issue that the Court of Appeals identified. They may also be departing from a previously broad interpretation of ” resident relative.”
We have to analyze both the statutory basis for priority and the contractual basis. An insurer can create a broader obligation than that which is imposed upon it by statute.
First the statute. Mr Stubbe was a pedestrian. He takes priority coverage from the insurer of the owner of the motor vehicle or operator of the motor vehicle involved (MCL 500.3115 (a) or (b)) unless there is higher priority coverage as a Named Insured, spouse or resident relative. MCL 500.3114(1).
Mr. Stubbe was not a Named Insured nor spouse of a Named Insured. The Court clearly held that he was not and could not be a resident relative of the corporate adult foster care facility. Thus, they held that coverage under the statute rested with Michigan, the insurer of the owner of the motor vehicle that hit Mr. Stubbe.
The Court of Appeals addressed a different issue, an issue the Michigan Supreme Court did not address. The National policy extended coverage beyond the limits of MCL 500.3114 (1) when they defined a family member to include a “ward.” Arguably, National expanded their priority and the Court did not enforce the policy language.
In addition, this opinion is a departure from an earlier decision of the Court of Appeals, that a “foster parent” may be a resident “relative”. Hartman v INA 106 Mich App 731 lv den 413 Mich 915 (1982).
Recommendation
Read all policy language closely. The Court of Appeals probably had that issue right. National appears to have accepted priority beyond the statute.
More importantly, the Michigan Supreme Court seems to be departing from a historically broad interpretation of “family”. This case may implicate any number of “presumed” family relationships.
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Did the Insurer unreasonably delay payment of an uninsured motorist arbitration award, thus committing bad faith?
Pryor v. United Equitable Insurance Company
963 N.E.2d 299 (Ill.App.2011)
CONTRIBUTOR – GREGORY BOKOTA
Pryor brought suit against the Defendant to confirm an uninsured motorist arbitration award to judgment, and also alleged bad faith under §155 of the Illinois Insurance Code (215 ILCS 5/155)(West 2008). After being served with the Complaint, United paid the arbitration award. United then brought a Motion to Dismiss Count I as to the arbitration award, Count II as to bad faith, and filed a Motion for Sanctions against the Plaintiff’s Counsel.
Pryor had been injured on January 21, 2009, in a collision with an uninsured motorist. He made an uninsured motorist claim. On January 21, 2010, the parties arbitrated the matter resulting in an award of $9,775.46. In a letter dated January 27, 2010, Pryor gave United an executed Release and Trust Agreement. On the same date, United asked Pryor to provide a Release of a Physician’s Lien and stated the award would be paid. On February 5, 2010, Pryor faxed United an executed Release of Physician’s Lien and requested payment. Pryor brought suit on March 2, 2010, seeking to confirm the uninsured motorist arbitration award and also alleged bad faith. United paid the arbitration award on March 12, 2010.
Pryor alleged that the trial court erred in dismissing Count II of the Complaint, pursuant to §2-619 of the Illinois Code of Civil Procedure (735 ILCS 5/2-619 (a) (9)(West 2010). Pryor claimed that United acted vexatiously and in bad faith by unreasonably delaying the payment of the arbitration award in several ways, including refusing to pay the arbitration award. Pryor noted that §919.50(a) of Title 50 of the Administrative Code required the insurance company to affirm or deny liability on claims within a reasonable time and shall offer payment within 30 days after affirmation of liability if the amount of the claim is determined and not in dispute.
However, the Court of Appeals found the Complaint had not set forth sufficient facts to indicate United violated the Administrative Code. Further, the Illinois Supreme Court has held that a private right of action is not necessarily available based on a violation of the Administrative Code rules. However, a violation of the Administration Code can allow a Court to award attorneys fees and other costs in certain situations, particularly where there has been an unreasonable delay in the settlement of the claim. The Court noted that United did not refuse to participate in arbitration or refuse to pay the arbitration award. The Court further noted that although United did not pay the award as fast as Pryor wished, Pryor alleged no facts which indicate United had an attitude suggesting a vexatious delay of payment. Further, the Court noted that under the Illinois Uniform Arbitration Act, United actually had 90 days from the date of the arbitration award to move to vacate or modify the award.
Because Pryor’s suit was filed within the time period allotted to United to appeal, Pryor was not forced to file suit to recover damages. The Court, therefore, found that United had not vexatiously delayed payment. Finally, the Court noted the arbitration award was paid 35 days after Pryor faxed United an executed Release of the Physician’s Lien and then requested payment. From the time he faxed the Release of the Physician’s Lien and requested payment to the time of the lawsuit was only 25 days and that did not demonstrate vexatious delay of payment.
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Was an insurer equitably estopped from asserting a statute of limitations defense?
Davis v. Shelter Insurance Companies
957 N.E.2d 995 (Ind. App. 2011)
Decided November 21, 2011
CONTRIBUTOR – GREGORY BOKOTA
Davis was involved in an auto accident on January 3, 2008. Her carrier, Shelter, paid her initial medical bills and notified the tortfeasor’s carrier, State Farm, of its subro lien. State Farm called Davis and told her not to contact them until she was done treating and ready to settle. On June 6, 2008, after receipt of proof of Shelter’s med payments, State Farm paid Shelter and closed its file. In November, 2008, Shelter advised State Farm that Davis had resumed treatment. Shelter also erroneously told Davis the statute of limitation was three years instead of two.
On January 8, 2009, State Farm called Davis, who said she would call State Farm when she was ready to settle her claim. She said she understood she was responsible for proving her claim, stating further that she was a case manager and was familiar with the law. There was no discussion of the statute of limitations.
In February, 2009, Shelter told State Farm that Davis was still treating and would send a final notice when she was done. Significantly, Shelter also told State Farm to stop calling Davis, because Davis felt she was being harassed by State Farm. Her wish was State Farm’s command; no further action was taken. The statute of limitations ran on January 3, 2010, and Davis did not file suit before her claim expired.
Was State Farm estopped from asserting a statute of limitations defense?
No. Estoppel is a judicial doctrine by which one’s own acts or conduct prevent the claiming of a right to the detriment of another who was entitled to and did rely on the conduct. To apply the doctrine against an insurer, the conduct of the insurer must be of such affirmative character to prevent inquiry or to elude investigation or to mislead and hinder. In an insurance context, telling a claimant to “delay filing a lawsuit so the carrier could settle the case without the expense and publicity of litigation” will trigger estoppel. Likewise, while a claimant is in the hospital, telling the claimant’s father “you don’t need no lawyer in that case at all because the company is a reliable company, and they will pay all the damages and suffering” is also a bad idea. Not responding to an insured’s questions about coverage until after the statute expires will also support an estoppel argument.
In Davis’ case, the Court of Appeal held estoppel was not applicable. State Farm did not 1) make a promise to settle; 2) discourage Davis from suing; 3) discourage Davis from hiring a lawyer; 4) did not engage in otherwise egregious conduct. On the contrary, State Farm tried to maintain contact with Davis while she was treating. Furthermore, it was Davis who told State Farm to stop contacting her! State Farm only told her to contact them when she was done treating and ready to discuss possible settlement. The Court decided that there was no egregious conduct by State Farm here and Davis thus failed the first prong of the test.
Davis also failed the second prong. First, there was no conduct by the insurer to induce delay by Davis in bringing an action and protecting her rights. Second, the Court said that Davis’ reliance on the statements by State Farm was viewed by the Court as unreasonable, and that common sense should have led Davis to pursue her claims. Thus, State Farm was entitled to summary judgment.
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Garan Lucow Miller, P.C., is offering a traveling Deposition and Trial Boot Camp.
The Deposition and Trial Boot Camps would be presented to a group of 10 or more in your office, half day sessions. If interested in scheduling this informative in-house seminar, please contact Eileen Carty at ecarty@garanlucow.com or 248-641-7600.
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GARAN LUCOW MILLER
GRAND RAPIDS SPRING BREAKFAST SEMINAR
April 18, 2013 at Frederik Meijer Gardens and Sculpture Park
The Grand Rapids office of Garan Lucow Miller P.C. is pleased to present its Annual Spring Breakfast Seminar on April 18, 2013 at the Frederik Meijer Gardens and Sculpture Park, located at 1000 East Beltline, NE in Grand Rapids (616) 957-1580. Comprehensive written materials will be distributed to all who attend. After the seminar, feel free to enjoy all of the open indoor and outdoor garden areas as our guest, including the exciting Butterfly Exhibit!
If you are able to attend this complimentary annual event, please register via e-mail to: lbeatty@garanlucow.com or phone Lynn Beatty at (616) 742-5500 or (800) 494-6312 for reservations. We look forward to seeing you!
8:00 – 8:25 am Registration and Continental Breakfast
8:25 – 8:30 am Welcome and Introduction
David N. Campos, Moderator
8:30 – 9:00 am Trial Technology – Using the CSI Factor To Your Advantage
Speaker: John J. Gillooly
9:00 – 9:30 am Premises Liability Update
Recent extension of the Open and Obvious Doctrine beyond cases involving premises owners and invitees as well as other updates on how to successfully defend a premises liability claim that a plaintiff calls “negligence” in an effort to avoid Lugo v Ameritech.
Speaker: David A. Couch
9:30 – 10:00 am Update on Catastrophic Claims Cases
Housing Transportation Attendant Care
Speaker: Tara L. Velting
10:00 – 10:15 am Break
10:15 – 10:45 am Third-Party Auto Threshold & Renewed Importance of Surveillance
Life After “McCormick” Surveillance and “The Pay Off”
Speaker: L. Ladd Culbertson
10:45 – 11:15 am Handling Assigned Claims Cases
Speaker: David N. Campos
11:15 – 11:25 am Housekeeping of a Claims File
Discoverability Strategy for Including Information
Speaker: Timothy M. Swan
11:25 – 12:00 noon Michigan Auto No-Fault Update
Case Law Update Year in Review and Anticipated
Future Case Law Development
Speaker: Emily L. Partridge
12:00 – 12:15 pm Questions and Answers