In a recent, unpublished decision, Payton v Meemic Insurance Company and Willie King (Unpub COA No. 357736, 07/28/22), the Court of Appeals analyzed coverage for an insured driver, who was not operating an insured vehicle, under theories of first and third party benefits. Garan Lucow Miller’s own Dan Saylor handled the matter on behalf of Meemic in the Court of Appeals.
On September 15, 2018, Willie King was riding a bicycle when he was struck by Johnnie Payton who was driving his 2005 Chrysler Pacifica. Payton had purchased his Pacifica approximately three months before the crash but had never added it to his policy of insurance with Meemic. Instead, Meemic only had Payton’s 2002 Dodge Caravan listed as a covered vehicle on his policy. King filed suit against Payton and Meemic, and sought both PIP coverage and third party benefits from Meemic. Meemic paid King’s PIP benefits, but declined bodily injury liability coverage. Payton filed a declaratory judgment action regarding coverage and the trial court consolidated the cases. The trial court denied Meemic’s motion for summary disposition in the dec action, and granted summary disposition in favor of Payton.
In the trial court, and on appeal, Meemic argued that the Pacifica was not a covered vehicle under the plain language of Payton’s policy for the purpose of third party benefits. The Court of Appeals agreed with Meemic. The Court first noted 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.” Auto–Owners Ins Co v Harrington, 455 Mich 377, 382; 565 NW2d 839 (1997). Meemic contended both circumstances applied. An insurance policy is like any other contract: the policy must be read as a whole to determine the parties’ intent, those terms are given their plain and ordinary meaning, and if the language is unambiguous the court must enforce the contract and its exclusions because those reflect the intent of the parties when unambiguous. Hastings Mut Ins Co v Safety King, Inc, 286 Mich App 287, 291; 778 NW2d 275 (2009).
Payton argued that the Pacifica was covered for bodily injury liability as a “replacement” or “temporary” car. The Court of Appeals analyzed the plain and unambiguous language from Payton’s policy which provides “bodily injury” coverage for “an insured car”, which includes the vehicle identified on the declarations page by VIN, as well as a replacement car, a temporary substitute car, or an additional car. The policy also excluded coverage if a person was using a vehicle that was owned by Payton unless it was described on the declarations page and identified by VIN, a replacement car, a temporary substitute car, or an additional car. It was undisputed that Payton did own the Pacifica at the time of the accident. Therefore, the Pacifica could only be covered if it was a replacement car, a temporary or substitute car, [or] an additional car.
The policy defined a replacement car and an additional car, but also noted that for each circumstance, “[Meemic] must be told about [the replacement car] within 30 days after acquisition or no coverage is afforded under this Policy for any accident or loss.” Similarly it defined a “temporary substitute car” as one which is used only because of the insured’s vehicle breakdown, repair or servicing, not one that the insured owned as in the present case.
It is noteworthy that Payton attempted to argue that the adjuster’s log notes demonstrated that Meemic agreed it was in the order of priority for payment of PIP, that it insured the Pacifica, and indeed owed PIP coverage on this accident. However, the Court of Appeals disagreed. It found that even though Meemic owed PIP coverage under MCL 500.3115(1)(a) to King, the third party claims regarding the same accident turned on the language of the policy which plainly and unambiguously did not provide bodily injury liability coverage to the Pacifica.
Check out our News & Events page to see what’s happening at GLM and find out about our upcoming seminars.
Sarah Nadeau, Editor of The Garan Report Publication, is a Shareholder in our Detroit Office. Sarah can be reached at 313.446.1530 or snadeau@garanlucow.com