STEPHANIE MARIE BRADLEY V STATE FARM MUTUAL AUTOMOBILE INS CO
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STATE OF MICHIGAN
COURT OF APPEALS
STEPHANIE MARIE BRADLEY,
FOR PUBLICATION
September 28, 2010
Plaintiff-Appellant,
V
No. 292716
St. Clair Circuit Court
LC No. 08-002220-NF
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant-Appellee.
Before: MURPHY, P.J., and HOEKSTRA and STEPHENS, JJ.
HOEKSTRA, J. (dissenting).
Because I disagree with the majority’s conclusion that defendant is required to show
prejudice from plaintiff’s failure to join defendant in a lawsuit with Sandra Bowen and William
Bowen, III, I respectfully dissent.
This Court is obligated to follow the most recent pronouncement of the Supreme Court
on a principle of law. Washington Mut Bank, FA v Shorebank Corp, 267 Mich App 111, 119;
783 NW2d 486 (2005). The Supreme Court’s most recent pronouncement on how an insurance
policy is to be construed is found in Rory v Continental Ins Co, 473 Mich 457; 703 NW2d 23
(2005). Pursuant to Rory, 473 Mich at 461, an insurance policy is subject to the same rules of
contract construction that apply to other species of contracts. The rules of contract construction
provide that an unambiguous contract provision is to be enforced as written unless the provision
violates law or public policy or one of the traditional contract defenses apply. Id. at 461, 468,
470.
Plaintiff’s insurance policy includes uninsured motor vehicle coverage. Because such
coverage is not required by the no-fault act, MCL 500.3101 et seq., the rights and limitations of
such coverage are purely contractual. Rory, 473 Mich at 465-466. The provision for uninsured
motor vehicle coverage in plaintiff’s insurance policy requires that if the parties are unable to
agree whether plaintiff is legally entitled to collect compensatory damages from the owner or
driver of an uninsured motor vehicle, and the amount of those damages, plaintiff “shall . . . file a
lawsuit” against defendant, the owner or driver of the uninsured motor vehicle, and any third
party who may be liable for plaintiff’s injuries. The term “shall” denotes mandatory conduct.
Nuculovic v Hill, 287 Mich App 58, 62; 783 NW2d 124 (2010). This joinder provision is
unambiguous; it required plaintiff to join defendant, Sandra Bowen, and William Bowen, III, in a
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lawsuit seeking uninsured motor vehicle benefits.
Because the joinder provision is
unambiguous, it must be enforced as written. Rory, 473 Mich at 461.1
I agree with the majority that Rory did not overrule the specific legal principle stated in
Koski v Allstate Ins Co, 456 Mich 439, 444; 572 NW2d 636 (1998), that “an insurer who seeks to
cut off responsibility on the ground that its insured did not comply with a contract provision
requiring notice immediately or within a reasonable time must establish actual prejudice to its
position.” “[T]o overrule is to declare that a rule of law no longer has precedential value.”
Sumner v Gen Motors Corp (On Remand), 245 Mich App 653, 665; 633 NW2d 1 (2001); see
also Black’s Law Dictionary (7th ed) (defining overrule as “to overturn or set aside (a precedent)
by expressly deciding that it should no longer be controlling law”). In Rory, the Supreme Court
did not address, and consequently, did not declare that the prejudice principle stated in Koski was
no longer a controlling legal principle.
Nonetheless, I disagree with the majority’s decision to require defendant to show
prejudice from plaintiff’s failure to comply with the joinder provision. Prejudice is not a
traditional contract defense. See Rory, 473 Mich at 470 n 23 (“Examples of traditional defenses
include duress, waiver, estoppel, fraud, or unconscionability.”). Moreover, this Court is
mandated to enforce an unambiguous contract provision as written. Id. at 461. The majority, by
requiring defendant to show prejudice from plaintiff’s failure to comply with the joinder
provision, fails to enforce the joinder provision as written. The joinder provision contains no
prejudice exception. With its decision to apply the prejudice principle stated in Koski to the
joinder provision, the majority fails to follow the Supreme Court’s most recent pronouncement
on how to construe an insurance policy.2
1
I find no merit to plaintiff’s argument that certain elements of the provision for uninsured motor
vehicle coverage violate public policy. First, the provision does not strip plaintiff of her right to
a jury trial, as it expressly provides that if the parties are unable to reach an agreement regarding
uninsured motor vehicle benefits, plaintiff shall file a lawsuit. Second, while the provision states
that defendant is not bound by any judgment obtained without its written consent, this would
clearly not pertain to a judgment obtained directly against defendant itself as a party to a lawsuit.
I also find no merit to plaintiff’s argument that the insurance policy is an unconscionable
contract of adhesion.
2
I acknowledge that in Tenneco Inc v Amerisure Mut Ins Co, 281 Mich App 429; 761 NW2d
846 (2008), this Court applied the prejudice principle of Koski. Ultimately, however, the Court
concluded that the defendant insurance company was prejudiced by the plaintiff’s failure to
provide prompt notice of suits, claims, or demands. Thus, there was no reason for the Court to
address whether Koski and its prejudice principle remained binding precedent. Indeed, the Court
never cited Rory, and it did not address the effect of Rory on the prejudice principle stated in
Koski. In this context, while Tenneco is binding precedent, MCR 7.215(C)(2), Tenneco is not
controlling on the question presented in this case.
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Because plaintiff did not join defendant in a lawsuit with Sandra Bowen and William
Bowen, III, plaintiff failed to comply with the unambiguous terms of her insurance policy. For
this reason, I would affirm the trial court’s order granting summary disposition to defendant.
/s/ Joel P. Hoekstra
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