STATE FARM MUTUAL AUTOMOBILE INS CO V STEVEN JAMES SMITH
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STATE OF MICHIGAN
COURT OF APPEALS
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
UNPUBLISHED
March 6, 2001
Plaintiff-Appellant,
v
STEVEN JAMES SMITH, VALERIE L. SMITH,
LINDA VAITAS and RIMANTAS VAITAS,
No. 216918
Oakland Circuit Court
LC No. 96-532475-CZ
Defendants-Appellees.
Before: Markey, P.J., and Whitbeck and J. L. Martlew*, JJ.
PER CURIAM.
Plaintiff State Farm Mutual Automobile Insurance Company appeals as of right from a
circuit court order granting defendants’ motion for a directed verdict and dismissing State Farm’s
complaint. We reverse and remand. We decide this appeal without oral argument pursuant to
MCR 7.214(E).
I. Basic Facts And Procedural History
State Farm sought a declaration that it did not have a duty to defend or indemnify
defendants Smith in an underlying automobile negligence action brought against them by
defendants Vaitas because Steven Smith, who was involved in the accident, was a named
excluded driver on Valerie Smith’s policy and therefore coverage was not available pursuant to
MCL 500.3009(2); MSA 24.13009(2).
The case was tried before the court without a jury. Mark Wagenschutz, a State Farm
representative, provided the key testimony, explaining that Valerie Smith applied for insurance
on October 24, 1994, seeking coverage for herself and Steven Smith as the drivers. The
company discovered that Steven Smith had sixteen points on his driving record and refused to
insure him. The Smiths then signed a driver exclusion agreement, which stated that various
forms of coverage provided under the policy did not apply while Steven Smith was driving the
car. The company then issued a policy for the period October 24, 1994, through April 24, 1995.
The declarations page identified Valerie Smith as the named insured and the vehicle as a 1992
* Circuit judge, sitting on the Court of Appeals by assignment.
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LeBaron. At the bottom of the page and continuing onto the second page were the applicable
exceptions and endorsements, one of which provided:
6023FF.1 DRIVER EXCLUSION—STEVEN SMITH.
WARNING—WHEN A NAMED EXCLUDED PERSON OPERATES A
VEHICLE ALL LIABILITY COVERAGE IS VOID—NO ONE IS INSURED.
OWNERS OF THE VEHICLE AND OTHERS LEGALLY RESPONSIBLE FOR
THE ACTS OF THE NAMED EXCLUDED PERSON REMAIN FULLY
PERSONALLY LIABLE.
Wagenschutz testified that the declarations page is issued with and is part of the initial
policy. A new declarations page is not created when the policy is renewed unless and until there
is a significant change in the policy. There was such a change in 1995 when the policy was
renewed. A 1995 Camaro was substituted for the LeBaron and the driver exclusion endorsement
was updated and thus a new declarations page was issued for the policy period April 24, 1995
through October 24, 1995. It contained the same driver exclusion warning as the original
declarations page.
Wagenschutz testified that on September 19, 1995, State Farm sent Valerie Smith a
renewal notice for the policy. It gave the standard information contained in such notices: the
vehicle, the types of coverages and premiums, the amount due, the due date, etc. Under the
“Additional Information” section, it stated, “DRIVER EXCLUDED: STEVEN SMITH.”
Because there were no significant changes since the last renewal, a new declarations page was
not issued. Valerie Smith renewed the policy, which was in effect at the time of the accident. A
new declarations page was issued for the policy period September 25, 1996, through April 24,
1997, because of an update to the lease endorsement. Like the prior declarations pages, it
contained the driver exclusion warning.
Wagenschutz testified that whenever a renewal notice is sent out, it is accompanied by a
certificate of insurance. The certificate, as most drivers know, comes with two parts: one for the
secretary of state and one to keep in the vehicle. Because the company only maintains copies of
those certificates for one year, according to Wagenschutz a copy of the certificate for the October
1995/April 1996 policy period was not available. The most recent copy in the company records
was for the period from September 25, 1996, through April 24, 1997. Both parts of the
certificate issued for that period stated on the face “DR EXCL—STEVEN SMITH.” The
declarations page warning was reprinted, along with other information, on the reverse side of
Valerie Smith’s copy; it was not reprinted on the secretary of state’s copy. Wagenschutz stated
that because the certificate of insurance “basically mirrors what would be on the declarations
page” in effect for the policy period, the same driver exclusion would have been noted on earlier
certificates. He admitted that at the time State Farm filed this action, the certificate of insurance
for the October 1995/April 1996 policy period would have been available in the company’s
records and a copy could have been obtained if someone had thought to print it.
State Farm moved for a directed verdict. It argued that subsection 3009(2) requires the
driver exclusion warning to appear on the face of the declarations page and on the certificate of
insurance. State Farm asserted that the driver exclusion warning appeared as required on each
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declarations page that was issued and also appeared on the most recent certificate. According to
State Farm, given Wagenschutz’s testimony, there was no reason to believe that driver exclusion
warning did not appear on previous certificates. Moreover, according to State Farm, the statute
did not say the warning had to be on the certificate in effect at the time of the accident, only that
it had to appear on the certificate and it did appear on the most recent certificate. Given that plus
the fact that the Smiths admitted in their answers to the complaint that Steven Smith was a
named excluded driver on the policy, State Farm argued that coverage was not available.
Valerie Smith also moved for a directed verdict. She argued that State Farm had failed to
prove that it complied with the statute by writing the excluded driver notice on the certificate of
insurance. Because State Farm could have obtained the relevant certificate at the time it filed this
action but did not do so, according to Valerie Smith, the failure to produce the certificate created
a presumption against the company. Defendants Vaitas joined in Valerie Smith’s motion.
The trial court ruled in favor of defendants. It reasoned that because State Farm filed this
action, it had the burden of proof. According to the trial court, State Farm knew at the time it
filed this action that it was required to prove that the excluded driver notice was on the certificate
of insurance, but failed to maintain a copy of the relevant certificate in order to prove its claim.
Therefore, the trial court concluded that State Farm had failed to meet its burden of proof.
II. Legal Standard and Standard Of Review
A motion for a directed verdict in a bench trial is treated as a motion for an involuntary
dismissal.1 Granting such a motion is appropriate when the trial court determines that, given the
facts and the law, the plaintiff failed to show a right to relief.2 We review the trial court’s rulings
on questions of law de novo,3 while we review its factual findings for clear error.4
III. Statutory Provisions
Subsection 3009(2) provides:
If authorized by the insured, automobile liability or motor vehicle liability
coverage may be excluded when a vehicle is operated by a named person. Such
exclusion shall not be valid unless the following notice is on the face of the policy
or the declaration page or certificate of the policy and on the certificate of
insurance: Warning—when a named excluded person operates a vehicle all
liability coverage is void—no one is insured. Owners of the vehicle and others
legally responsible for the acts of the named excluded person remain fully
personally liable. [MCL 500.3009(2); MSA 24.13009(2).]
1
MCR 2.504(B)(2); Samuel D Begola Services, Inc v Wild Bros, 210 Mich App 636, 639; 534
NW2d 217 (1995).
2
Samuel D Begola Services, Inc, supra at 639.
3
Stajos v City of Lansing, 221 Mich App 223, 226; 561 NW2d 116 (1997).
4
Auto-Owners Ins Co v Harvey, 219 Mich App 466, 469; 556 NW2d 517 (1996).
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This “Court has explicitly held that subsection 3009(2) presents ‘no room for judicial
construction or interpretation.’”5 The purpose of the prescribed warning is to notify the insured
owner of the vehicle of the consequences of allowing the named excluded driver to operate the
insured vehicle.6 Subsection 3009(2) “sets out the Legislature’s approved method of excluding a
person from a policy’s coverage, and must be deemed the only way in which such an exclusion
may be accomplished.”7
IV. The Best Evidence Rule
Under the best evidence rule, the original document or a duplicate thereof is necessary to
prove the content of a writing.8 Secondary evidence, such as parol evidence, is admissible if all
originals have been lost or destroyed unless they were lost or destroyed in bad faith.9 In this case,
the trial court admitted secondary evidence in the form of the Wagenschutz’s testimony.
Therefore, to the extent the trial court ruled that, absent the document itself, State Farm could not
prove its case as a matter of law, the trial court was incorrect. The evidence showed that the
statutory warning was on the declarations page of the policy. Wagenschutz testified that the
same language also appeared on the insured’s copy of the certificate of insurance. Although
State Farm did not have the certificate for the policy period in issue, Wagenschutz testified that
the certificates were basically form documents that contained the same language as found on the
declarations page, which was demonstrated by the fact that the requisite language appeared on
the most recently issued certificate. Therefore, we conclude the trial court erred in finding that
the absence of the certificate was fatal to State Farm’s case.
Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.
/s/ Jane E. Markey
/s/ William C. Whitbeck
/s/ Jeffrey L. Martlew
5
Verbison v Auto Club Ins Ass’n, 201 Mich App 635, 640; 506 NW2d 920 (1993), quoting
Allstate Ins Co v DAIIE, 142 Mich App 436, 442; 369 NW2d 908 (1985).
6
Allstate Ins Co v DAIIE, 73 Mich App 112, 115; 251 NW2d 266 (1976).
7
DAIIE v Felder, 94 Mich App 40, 44; 287 NW2d 364 (1979).
8
MRE 1002; MRE 1003.
9
MRE 1004(1).
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