FARM BUREAU GENERAL INS CO OF MICH V STEVEN JACOB NIKKEL
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STATE OF MICHIGAN
COURT OF APPEALS
FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN,
UNPUBLISHED
December 30, 1997
Plaintiff-Appellant,
v
ELEX CAGLE, as Personal Representative of the
Estate of FRANCES ARLENE CAGLE and WAYNE
FITZGERALD, as Personal Representative of the
Estate of SHERRY LEE FITZGERALD,
No. 195936
Macomb Circuit Court
LC No. 95-001423
Defendants-Appellees,
and
STEVEN JACOB NIKKEL, STEVEN JOHN NIKKEL
and BLUE WATER CONTRACTING, INC.,
Defendants.
Before: White, P.J, and Bandstra and Smolenski, JJ.
PER CURIAM.
Plaintiff appeals the trial court’s opinion and order denying plaintiff’s motion for summary
disposition and granting defendants’ motion for summary disposition, which determined that defendant
Steven John Nikkel’s personal family automobile insurance policy provided coverage for his son Steven
Jacob Nikkel in the underlying action. We affirm.
On October 1, 1993 Steven Jacob Nikkel (“Steven Jacob”) was involved in a serious
automobile accident while driving a 1988 Chevrolet pick-up truck owned by Blue Water Contracting,
Inc. (“Blue Water”). Steven John Nikkel (“Steven John”) was the president and sole shareholder of
Blue Water, and is Steven Jacob’s father. The truck was insured by plaintiff under a commercial
automobile insurance policy. While driving the truck, Steven Jacob lost control and rear-ended an
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automobile in which decedents Frances Cagle and Sherry Fitzgerald were riding. The automobile was
forced into oncoming traffic. Decedents were struck by an oncoming car, resulting in their deaths. At
the time of the accident, Steven Jacob was sixteen years old and living with his parents. Steven Jacob’s
parents owned two automobiles insured by plaintiff under a family automobile insurance policy.
Plaintiff filed the present action seeking a declaration that the truck driven by Steven Jacob was
neither “owned” nor “non-owned” under the terms of the family automobile insurance policy, because it
was “furnished for the regular use of either the named insured or any relative,” and, thus, plaintiff was
not required to provide coverage in the underlying wrongful death action filed by the personal
representatives of the decedents’ estate. The policy provisions at issue are as follows:
Persons Insured: The following are insureds under Part I:
(a) with respect to the owned automobile,
(1) the named insured and any resident of the same household,
(2) any other person using such automobile with the permission of the
named insured, provided his actual operation or (if he is not
operating) his other actual use thereof is within the scope of such
permission, and
(3) any other person or organization but only with respect to his or its
liability because of acts or omissions of an insured under (a) (1) or
(2) above;
(b) with respect to a non-owned automobile,
(1) the named insured,
(2) any relative, but only with respect to a private passenger
automobile or trailer, provided his actual operation or (if he is not
operating) the other actual use thereof is with the permission, or
reasonably believed to be with the permission, of the owner and is
within the scope of such permission, and
(3) any other person or organization not owning or hiring the
automobile, but only with respect to his or its liability because of
acts or omissions of an insured under (b)(1) or (2) above.
* * *
Definitions: Under Part 1:
* * *
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“owned automobile” means
(a)
a private passenger, farm or utility automobile described in this policy
for which a specific premium charge indicates that coverage is afforded,
(b)
a trailer owned by the named insured,
(c)
a private passenger, farm or utility automobile ownership of which is
acquired by the named insured during the policy period, provided
(1)
(d)
it replaces an owned automobile as defined in (a)
above, or the company insures all private passenger,
farm and utility automobiles owned by the named
insured on the date of such acquisition and (2) the
named insured notifies the company within 30 days after
the date of such acquisition of his election to make this
and no other policy issued by the company applicable
to such automobile, or
a temporary substitute automobile;
* * *
“non-owned automobile” means an automobile or trailer not owned by or furnished for
the regular use of either the named insured or any relative, other than a temporary
substitute automobile.
Both plaintiff and defendants sought summary disposition. The trial court denied plaintiff’s motion and
granted defendants’ motion, ruling that the pertinent policy language was ambiguous and, thus, the family
automobile insurance policy provided coverage for the wrongful death actions without regard to whether
the truck was furnished for the regular use of Steven John or Steven Jacob.1
We review a trial court’s grant or denial of summary disposition de novo. Industrial Machinery
& Equipment Co, Inc v Lapeer Co Bank & Trust, 213 Mich App 676, 678; 540 NW2d 781
(1995). The party moving for summary disposition pursuant to MCR 2.116(C)(10) is entitled to
judgment as a matter of law only if there is no genuine issue of any material fact. Bourne v Farmers Ins
Exchange, 449 Mich 193, 196-197; 534 NW2d 491 (1995). When reviewing a motion pursuant to
MCR 2.116(C)(10), this Court considers all the pleadings, affidavits and admissions, granting the
benefit of the doubt to the non-moving party. Id. at 197.
We conclude that the trial court did not err in finding that the family automobile policy provisions
at issue are unenforceable in the instant case.
The validity of substantially identical insurance contract provisions defining “non-owned
automobile”2 in the definition section of various insurance policies was addressed in Powers v DAIIE,
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427 Mich 602, 623; 398 NW2d 411 (1986). The plurality opinion in Powers stated that it would hold
that while the owned automobile exclusion was not repugnant per se to the no-fault act, in the cases
before it:
the insurers’ method of exclusion—by the definition of terms at variance with their
common meaning, which most policyholders would consider clear without definition—
renders it invalid as (a) ambiguous, (b) not made clear, (c) a technical construction, and
(d) contrary to the reasonable expectations of the insured reading the insurance
contract. [427 Mich at 611.]
Because the Powers plurality opinion was signed by only two justices, it is not binding precedent.
VanDyke v League General Ins Co, 184 Mich App 271, 274; 457 NW2d 141 (1990); DeMaria v
Auto Club Ins Ass’n (On Remand), 165 Mich App 251; 418 NW2d 398 (1987). Nevertheless, two
additional justices concurred in the result only, thus agreeing with the outcome, and a fifth justice,
focusing on the doctrines of unconscionability and reasonable expectations, filed a separate opinion
concurring in part and dissenting in part, concluding the provision was unenforceable under the specific
facts presented in three of the five consolidated cases.3
The plurality opinion focused on six essential rules of insurance contract interpretation:
1) “[E]xceptions in an insurance policy to the general liability provided for are to
be strictly construed against the insurer.”
2) An insurer may not “escape liability by taking advantage of an ambiguity. . .
.” ‘“[W]herever there are two constructions that can be placed upon the policy, the
construction most favorable to the policyholder will be adopted.’”
3) An insurer must “so . . . draft the policy as to make clear the extent of
nonliability under the exclusion clause.”
4) An insurer may not “escape liability by taking advantage of ... a forced
construction of the language in a policy. . . .” . . . “[T]echnical constructions of policies
of insurance are not favored. . . .”
5) “The courts have no patience with attempts by a paid insurer to escape
liability by taking advantage of an ambiguity, a hidden meaning, or a forced construction
of the language in a policy, when all question might have been avoided by a more
generous or plainer use of words.”
6) “[N]ot only ambiguous but deceptive.” “[T]he policyholder must be
protected against confusing statements in policies. . . .” [Mich at 623-624 (citations
omitted).]
The plurality opinion concluded that, between the insured’s construction that “owned
automobile” and “nonowned automobile” were terms in common use with unambiguous meanings, and
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the insurer’s construction that a proper reading of the policy would reveal a meaning to these terms
which differed from the popular understanding of them, there was an ambiguity and the insured’s
construction should prevail. Id. at 625-626. The plurality opinion also concluded that the policy
language constituted a forced, technical construction, and that this hidden and forced construction
should not be adopted because the discrepancy could have been avoided by a more generous or plainer
use of words, e.g., by merely placing a notice to see the definition section in the policy to alert the
insured that the definition of “owned” and “non-owned” was different from the common understanding.
Id. at 628-629.
The plurality further noted that the definition of a “non-owned” automobile constituted an
impermissible attempt to deny coverage. Id. at 629-630. Exclusionary clauses limit the scope of
coverage provided under an insurance contract. Hawkeye Security Ins v Vector Construction Co,
185 Mich App 369, 384; 460 NW2d 329 (1990). If an insurer intends to exclude coverage under
certain circumstances, it should clearly state those circumstances in the section of its policy entitled
“Exclusions.” Fragner v American Community Mutual Ins Co, 199 Mich App 537, 540; 502
NW2d 350 (1993). Because the attempted exclusion was not made clear under the “Exclusions”
section of the policy, the Powers plurality opinion concluded the insurer was attempting to exclude
coverage based on a technical reading of a paragraph located in the definition section of the policy,
which was not sufficient to eliminate coverage. 427 Mich at 627-628.
Additionally, the Powers plurality opinion concluded that the “non-owned” automobile
exception violates the rule of reasonable expectations. Id. at 631-634. The rule of reasonable
expectations is an adjunct to the rules of construction for insurance contracts. Vanguard Ins Co v
Clarke, 438 Mich 463, 472; 475 NW2d 48 (1991). When applying the rule of reasonable
expectations, a court looks at the policy language from an objective standpoint and determines whether
an insured could have reasonably expected coverage. Allstate Ins Co v Keillor, 450 Mich 412, 417;
537 NW2d 589 (1995). The Powers plurality concluded that, as drafted, the policies defeated the
insureds’ reasonable expectations. 427 Mich at 631-634.
The separate opinion focused less on the language of the exclusion and more on the reasonable
expectations of the insureds, concluding that, in three of the five consolidated cases, the insureds would
reasonably expect coverage; in a fourth case, no coverage could reasonably be expected by the plaintiff
insured, although it could probably be reasonably expected by the non-plaintiff driver; and that remand
was necessary in the fifth case.
Guided by Powers, but recognizing its non-binding status, and placing primary importance on
the facts of the instant case, we conclude that the trial court did not err. The truck driven by Steven
Jacob was insured, so that plaintiff was not being asked to assume the risk on an uninsured vehicle for a
single premium. Powers, 427 Mich at 610; Van Dyke v League General Insurance, 184 Mich App
271; 454 NW2d 141 (1990). Further, the limits of liability on the accident vehicle exceeded the limits
of the instant policy, so that it cannot be said that the insured was attempting to obtain higher limits for a
lesser premium. Nor is this a case where an insured who chose the level of coverage on the accident
vehicle seeks to obtain coverage under a relative’s policy as well. See d
iscussion of one of the
consolidated cases in Powers, Deyarmond v Community Services Ins Co Powers, 427 Mich at 654
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656 (Levin, J., concurring in part, dissenting in part). Further, the driver was not the owner of the
accident vehicle, thus there were two possible bases of liability, the owner’s liability and the driver’s
liability.
Accordingly, we conclude that under the facts of this case the trial court did not err in denying
plaintiff’s motion for summary disposition and in granting defendants’ motion.
Affirmed.
/s/ Helene N. White
/s/ Richard A. Bandstra
/s/ Michael R. Smolenski
1
The court did not reach the question whether there was a genuine issue of material fact regarding
whether the truck was furnished for the regular use of Steven John of Steven Jacob.
2
The definitions in the policies at issue in the five consolidated cases were substantially identical to the
instant policy’s definition. Some did not include the last phrase, e.g., “other than a temporary substitute
automobile.” Id. at 609 n 2, 626; see also id. at 653, 655 (Levin, J., concurring in part, dissenting in
part).
3
The instant case is most analogous to one of the consolidated cases in Powers, Auto Club Ins Assn v
Nicholson, discussed at 427 Mich 602, 656-657 (Levin, J. concurring in part and dissenting in part), or
the situation of William, the driver in Deyarmond, id. at 654-656.
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