RAYMOND THOMPSON V FARM BUREAU INS CO
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STATE OF MICHIGAN
COURT OF APPEALS
RAYMOND THOMPSON and JEAN
THOMPSON, Individually and as Next Friend to
LATAVIS A. THOMPSON,
UNPUBLISHED
July 10, 2008
Plaintiffs-Appellants,
v
No. 276291
Saginaw Circuit Court
LC No. 06-059567-CK
FARM BUREAU INSURANCE COMPANY,
Defendant-Appellee.
Before: Sawyer, P.J., and Jansen and Hoekstra, JJ.
PER CURIAM.
Plaintiffs appeal as of right from the trial court’s order granting defendant’s motion for
summary disposition under MCR 2.116(C)(10). We affirm.
Plaintiff Raymond Thompson and his grandson Latavis were involved in an automobile
accident in which another vehicle struck their vehicle. The driver of the other vehicle was
uninsured. Plaintiffs filed a separate action against the uninsured driver in which they alleged
that Raymond’s and Latavis’s injuries included a serious impairment of body function under
MCL 500.3135(1). Plaintiffs obtained a default against the driver in the other case.
Plaintiffs filed this action against defendant, their no-fault insurer, and asserted a claim
for uninsured motorist benefits under their policy. Plaintiff Jean Thompson brought a claim for
loss of consortium.
Defendant’s no-fault policy contains the following provision regarding the scope of
coverage for uninsured motorist benefits:
A. Insuring Agreement
1. If you pay a premium for Uninsured Motorist Coverage, we agree to
pay compensatory damages which an insured is legally entitled to recover from
the owner or operator of an uninsured automobile. The damages must result
from bodily injury sustained by an insured caused by an accident. The owner’s
or operator’s liability for these damages must arise from the ownership, operation,
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maintenance, or use of the uninsured automobile as an automobile. We have no
duty to pay punitive or exemplary damages.
2. If an injured person is legally entitled to recover damages, the amount
of those damages may be determined by agreement between the injured party and
us. We will not be bound by any judgments for damages or settlements made
without our written consent.
Defendant filed a motion for summary disposition under MCR 2.116(C)(10), alleging
that they were not bound by the default judgment plaintiffs obtained in their other case against
the uninsured driver, because they did not consent to the judgment, and further, that plaintiffs’
injuries could not meet the no-fault threshold in MCL 500.3135, thus precluding recovery for
uninsured motorist benefits. The trial court agreed that plaintiffs were unable to satisfy the nofault threshold in MCL 500.3135(1) and, therefore, were not entitled to uninsured motorist
benefits under the policy. Accordingly, it granted defendant’s motion.
This Court reviews a trial court’s decision on a motion for summary disposition de novo.
Spiek v Dep’t of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998). A motion under
MCR 2.116(C)(10) tests the factual support for a claim. Id. The court must consider the
pleadings, affidavits, depositions, admissions, and other documentary evidence. MCR
2.116(G)(5). Summary disposition should be granted if, except as to the amount of damages,
there is no genuine issue of material fact and the moving party is entitled to judgment as a matter
of law. Babula v Robertson, 212 Mich App 45, 48; 536 NW2d 834 (1995). “The interpretation
of clear contractual language is an issue of law that we also review de novo on appeal.”
McGraw v Farm Bureau Gen Ins Co of Michigan, 274 Mich App 298, 302; 731 NW2d 805
(2007).
On appeal, plaintiffs do not challenge the trial court’s determination that they are not able
to satisfy the no-fault threshold requirement in MCL 500.3135 of death, serious impairment of
body function, or permanent serious disfigurement. However, they argue that the phrase “legally
entitled to recover” in the uninsured motorist coverage section of defendant’s policy is
ambiguous and that the trial court erred in interpreting this phrase as requiring that they meet the
no-fault threshold in order to be entitled to uninsured motorist benefits. We disagree.
As this Court explained in Scott v Farmers Ins Exch, 266 Mich App 557, 561; 702 NW2d
681 (2005):
Uninsured motorist coverage is optional and is not mandated by the nofault act. Rohlman v Hawkeye-Security Ins Co, 442 Mich 520, 525; 502 NW2d
310 (1993). Accordingly, the policy language governs the coverage and is subject
to the rules of contract interpretation. Id. at 525. We read insurance contracts as
a whole and accord their terms their plain and ordinary meaning. Auto-Owners
Ins Co v Churchman, 440 Mich 560, 566; 489 NW2d 431 (1992). We will not
strain to find ambiguity, id. at 567, but we ultimately strive to enforce the
agreement intended by the parties. Engle v Zurich-American Ins Group (On
Remand), 230 Mich App 105, 107; 583 NW2d 484 (1998). A contract is
ambiguous when its words may be reasonably understood in different ways.
Raska v Farm Bureau Mut Ins Co of Michigan, 412 Mich 355, 362; 314 NW2d
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440 (1982) (opinion of COLEMAN, C.J.). If an ambiguous term exists in the
contract, courts should generally construe the term against the contract’s drafter,
unless the drafter presents persuasive extrinsic evidence that the parties intended a
contrary result. Id.; Klapp v United Ins Group Agency, Inc, 468 Mich 459, 470471; 663 NW2d 447 (2003).
In this case, defendant’s insurance policy provides, in pertinent part, that it will “pay
compensatory damages which an insured is legally entitled to recover from the owner or operator
of an uninsured automobile.” In Auto Club Ins Ass’n v Hill, 431 Mich 449; 430 NW2d 636
(1988), our Supreme Court considered a similar policy that limited an insurer’s obligation to pay
uninsured motorist benefits to damages for bodily injury that an insured person “is legally
entitled to recover” from the owner or operator of an uninsured vehicle. The Court held:
We hold that, pursuant to MCL 500.3135(1) . . . , uninsured motorists are
subject to tort liability for noneconomic loss only if the injured person has
suffered death, serious impairment of body function, or permanent serious
disfigurement. Our review of the terms of the insurance agreement upon which
the defendant’s claim was based compels us to hold that he is not entitled to
compensation for his noneconomic loss unless his loss meets the threshold
requirement. [Id. at 466.]
Plaintiffs argue that the rationale in Hill has been superceded by our Supreme Court’s
later decisions in Rohlman, supra, and Twichel v MIC Gen Ins Corp, 469 Mich 524, 533; 676
NW2d 616 (2004), and that Hill is no longer valid and should not be followed. We disagree.
In Rohlman, the Court addressed claims for both personal injury protection (PIP) benefits
under the no-fault act and uninsured motorist benefits. The Court stated that because PIP
benefits are mandated by the no-fault act, that statute is the “rule book” for deciding any
questions involving those benefits. Id. at 524-525. However, the Court explained that
the insurance policy itself, which is the contract between the insurer and the
insured, controls the interpretation of its own provisions providing benefits not
required by statute. Therefore, because uninsured motorist benefits are not
required by statute, interpretation of the policy dictates under what circumstances
those benefits will be awarded. [Id. at 525 (footnote omitted).]
The Court clarified that when dealing with uninsured motorist benefits, the policy definitions
control. Id. at 534.
In Twichel, the Court followed Rohlman and considered a claim for uninsured motorist
benefits based only on the policy, without reference to the no-fault act, because uninsured
motorist coverage is not required under the no-fault act. The issue in Twichel involved whether
an automobile was “owned” by the insured. The Court held that the meaning of the term
“owned” was to be determined from the policy language and the commonly understood meaning
of the term. Id. at 533-535. The Court further held that
[t]he Court of Appeals erred in importing the statutory definition of “owner” into
the policy language. There is nothing in the plain language of the policy
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supporting the application of the definition of “owner” in MCL 500.3101(2)(g) to
this independent, nonstatutory coverage. [Twichel, supra at 534.]
We disagree with plaintiff’s argument that Hill is no longer good law in light of Rohlman
and Twichel. The decisions in Rohlman and Twichel establish that uninsured motorists coverage
is a matter of contract, because such coverage is not mandated by the no-fault act. Thus, in
Twichel, it was improper to rely on the statutory definition of “owner” when there was nothing in
the plain language of the policy to support application of that statutory definition. In this case,
however, defendant’s policy expressly limits its liability for uninsured motorist benefits to
damages that an insured “is legally entitled to recover from the owner or operator of an
uninsured automobile.” The significance of this language is that it defines the scope of
defendant’s contractual liability for uninsured motorist benefits. In this respect, Hill is directly
on point. Under Hill, the policy language “legally entitled to recover” effectively incorporates
the threshold requirements of MCL 500.3135(1). Neither Rohlman nor Twichel undermine the
holding of Hill in this respect.
This conclusion is supported by our Supreme Court’s more recent decision in Rory v
Continental Ins Co, 473 Mich 457, 465-466; 703 NW2d 23 (2005), in which the Court
explained:
Uninsured motorist insurance permits an injured motorist to obtain
coverage from his or her own insurance company to the extent that a third-party
claim would be permitted against the uninsured at-fault driver. Uninsured
motorist coverage is optional—it is not compulsory coverage mandated by the nofault act. Accordingly, the rights and limitations of such coverage are purely
contractual and are construed without reference to the no-fault act. [Footnotes
omitted.]
In a footnote, the Court added:
The owner or operator of a vehicle is subject to tort liability for
noneconomic loss only if the injured motorist has suffered death, serious
impairment of a body function, or permanent serious disfigurement. MCL
500.3135(1); Kreiner v Fischer, 471 Mich 109; 683 NW2d 611 (2004); Auto Club
Ins Ass’n v Hill, 431 Mich 449; 430 NW2d 636 (1988). [Rory, supra at 465 n
10.]
Although Rory involved the enforceability of a one-year limitations period contained in
the parties’ policy, which was significantly less than the period of limitations set by statute, the
Court’s citation to Hill, in a case in which the Court emphasized that uninsured motorist benefits
are a matter of contract, reflects the Court’s continued adherence to the notion that the no-fault
threshold in MCL 500.3135(1) may continue to govern claims for uninsured motorist benefits,
particularly in a case as this where the policy expressly limits the insurer’s liability for uninsured
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motorist benefits to damages that an insured “is legally entitled to recover from the owner or
operator of an uninsured automobile.”
For these reasons, we conclude that Hill is controlling.1 Because plaintiffs do not dispute
that they could not prove a threshold injury, the trial court did not err in granting defendant’s
motion for summary disposition. Likewise, because Raymond Thompson cannot satisfy the nofault threshold, Jean Thompson’s loss of consortium claim also was properly dismissed.
Affirmed.
/s/ David H. Sawyer
/s/ Kathleen Jansen
/s/ Joel P. Hoekstra
1
Plaintiffs rely on Detroit Automobile Inter-Ins Exch v Hafendorfer, 38 Mich App 709, 717-718;
197 NW2d 155 (1972), for a definition of the term “legally entitled to recover” that is not based
on the no-fault act. However, Hafendorfer was decided before Hill. Therefore, to the extent that
Hafendorfer is inconsistent with Hill, the later decision controls.
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