January 07, 2013
The Michigan Supreme Court’s recent Order in Ile v Foremost, __ Mich __ (2012), docket no. 143627, clarifies that underinsured motorist coverage is not illusory even if, under the policy limits selected by the insured, there are no circumstances in which an insured could recover underinsured motorist benefits.
In Ile, the insured decedent was killed in a motor vehicle accident. His estate recovered the liability policy limit of $20,000 from Titan Insurance Co., the insurer of the other vehicle. The estate then sought to recover an additional $20,000 from Foremost Insurance Co. under the decedent’s own uninsured/underinsured motorist coverage, which had limits of $20,000/$40,000. These are the minimum liability coverage limits permitted under Michigan law. MCL 500.3009(1). Foremost denied the claim because the estate had already received from Titan the maximum amount payable under the decedent’s UM/UIM coverage. The estate brought a lawsuit, alleging breach of contract and misrepresentation.
Both parties filed motions for summary disposition. The trial court denied Foremost’s motion and granted the estate’s motion, ruling that Foremost’s UIM coverage was illusory. In light of the decedent’s UM/UIM coverage limits, the minimum liability coverage limits prescribed by MCL 500.3009(1), and the UM/UIM coverage’s definition of “underinsured motor vehicle,” the trial court reasoned there were no circumstances under which Foremost would be required to pay UIM benefits under the decedent’s policy. Thus, the trial court ruled that the UIM coverage was unenforceable as written and that the estate could recover up to $20,000 of UIM benefits for damages exceeding the $20,000 already paid by Titan. Foremost appealed the trial court’s decision, but the Michigan Court of Appeals affirmed the trial court.
Foremost appealed to the Michigan Supreme Court. The Supreme Court entered an Order reversing the judgment of the Court of Appeals and remanding the case to the trial court for entry of summary disposition in favor of Foremost. The Supreme Court reiterated that the expectations of a party cannot override the clear language of a contract, citing Wilkie v Auto-Owners, 469 Mich 41 (2003). The Court also noted that, if the other vehicle had liability coverage greater than zero, but less than $20,000/$40,000, the estate would have been able to recover under the Foremost policy. Although such coverage would have been labeled “uninsured” rather than “underinsured” under the definitions in the Foremost policy, the Supreme Court ruled that this does not render the UIM coverage illusory.
Thus, UIM coverage is enforceable as written even if there are no circumstances in which an insured could technically recover UIM benefits
SUPREME COURT DEALS WITH TPIS IN UIM CASE
CONTRIBUTOR – GREGORY BOKOTA
Inman v State Farm Mutual Automobile Insurance Company, 2012 WL 618 9014 Ind. December 12, 2012.
This case arises out of a car accident when the Inman’s vehicle was rear-ended by Shinnamon. Inman sued Shinnamon and settled with Shinnamon’s insurer for $50,000, Shinnamon’s policy limits. Inman then filed a UIM claim against Inman’s own Carrier, State Farm, seeking an additional $50,000 under his UIM policy with State Farm. On March 11, 2009, State Farm answered the Complaint. State Farm denied that Shinnamon was at fault and denied that Inman’s damages exceeded $50,000. On June 14, 2009, Inman offered to settle her UIM claim against State Farm for $50,000 pursuant to I.C. 34-51-4-6 of the Tort Pre-Judgment Interest Statute (“TPIS”). State Farm did not respond to Inman’s offer and did not make its own offer to settle. The case went to trial and on March 17, 2010, the jury returned a verdict in the favor of Inman in the amount of $50,000. Judgment was entered. Inman then moved for pre-judgment interest in the amount of $3,616.44 pursuant to the “TPIS.” The Trial Court denied his Motion without explaining its reasoning.
On appeal, there were two issues: First, whether the “TPIS” applies to an action by an insured against an insurer to recover benefits under the insured’s UIM policy. Second, whether pre-judgment interest can be awarded in excess of the policy limits set forth in an insured’s UIM policy. In summary, the Supreme Court of Indiana held that 1) the “TPIS” does apply to UIM coverage disputes because they are probably considered civil actions arising out of tortious conduct; 2) the Supreme Court held that because pre-judgment interest is a collateral litigation expense, it can be awarded in excess of an insured’s UIM policy limits. However, the Supreme Court concluded that Inman was not entitled to pre-judgment interest because the Trial Court acted within its discretion when it denied Inman’s request for prejudgment interest.
The Supreme Court went on to note that the “TPIS” only makes prejudgment interest available when the Plaintiff makes, and the Defendant fails to make, a Qualified Settlement Offer (“QSO”) pursuant to the conditions of the “TPIS” at I.C. 34-51-4-5, and I.C. 34-51-4-6. Second, the “TPIS” grants the Trial Court broad discretion to determine when an award of prejudgment interest is warranted even when Qualified Settlement Offers have been made. I.C. 34-51-4-7, -8, -9. The Supreme Court also noted the “TPIS” enables the Defendant to avoid prejudgment interest by making a Qualified Settlement Offer. The “TPIS” does not apply if within nine months after a claim is filed in the court or any longer period determined by the Court to be necessary upon a showing of your cause, one or more of the parties against whom the claim is filed makes a written offer of settlement to the party receiving a judgment, the terms of that offer include payment within 60 days after the offer is accepted and the amount of the offer is at least 2/3 of the amount of the judgment award. The Court again noted that the “TPIS” does not require an award of prejudgment interest, only that the Trial Court has the discretion to award such interest
In a companion case handed down on the same day, Kosarko v Padula, 2012 WL 618 9136 Ind., the Supreme Court also noted that the “TPIS” “abrogates and supplants the common law rules governing the ability of prejudgment interest in cases covered by the statute.” Thus, in cases where prejudgment interest is requested under the “TPIS,” the common law standard requiring damages to be complete and readily ascertainable and offer prejudgment interest to be awarded is now irrelevant to the Trial Court’s determination.
EVEN THE UNINSURED MAY SEEK NONECONOMIC DAMAGES ARISING OUT OF A “ROAD RAGE” INCIDENT
CONTRIBUTOR – EMILY L. PARTRIDGE
In Gray v Chrostowski, ___ Mich App ___ (2012), Docket #303636, rel’d 12/6/12, the Court of Appeals held that MCL 500.3135(2)(c) did not preclude an uninsured motorist from recovering noneconomic damages arising from intentionally caused harm under MCL 500.3135(3)(a).
In Gray, on January 2, 2009, plaintiff was driving a Honda Civic northbound on US-23 in Livingston County. Plaintiff claimed that the defendant drove his vehicle parallel to her vehicle and glared angrily at her. She also averred that defendant made an aggressive, threatening gesture. Plaintiff further alleged that the defendant then “intentionally” turned his vehicle directly into the path of plaintiff’s vehicle and “purposefully” collided with her in a fit of “road rage.”
An eyewitness stated in an affidavit that he saw the driver of a black Kia Spectra operating his vehicle at a high rate of speed in an “extremely hazardous manner” and that the Kia then collided with the Honda Civic, causing the Civic to violently crash into the median. Another witness stated in an affidavit that he observed the driver of a black Kia Spectra pull into a gas station, and that the driver smelled of alcohol, had glassy eyes and slurred speech, and was not fully coherent.
After plaintiff admitted in her response to an interrogatory that her vehicle was uninsured at the time of the incident, defendant moved for partial summary disposition, which the trial court granted, stating that one could not bring any type of action involving the operation of a motor vehicle without having security in place.
The defendant argued that MCL 500.3135(2)(c) precluded an uninsured motorist from recovering noneconomic damages arising from an automobile accident irrespective of whether the plaintiff’s action arises under the threshold exception contained in MCL 500.3135(1) or the intentional act exception contained in MCL 500.3135(3)(a). The plaintiff argued that the uninsured motorist restriction in MCL 500.3135(2)(c) was limited to claims that arise under the threshold exception contained in MCL 500.3135(1), and that claims to recover damages for intentionally caused harm involve tort claims that arise outside of the No-Fault Act and are not limited by the uninsured motorist restriction.
The Court of Appeals agreed with the plaintiff and reversed the trial court’s ruling, remanding it for further proceedings. The court analyzed the plain language of the statute and concluded that the phrase “notwithstanding any other provision of law” in MCL 500.3135(3) trumped the uninsured motorist preclusion language in MCL 500.3135(2)(c) because the plaintiff’s cause of action involved an intentional tort assault and battery.