MICHIGAN CROP IMPROVEMENT ASSN V COLONIA INS CO
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STATE OF MICHIGAN
COURT OF APPEALS
MICHIGAN CROP IMPROVEMENT
ASSOCIATION,
UNPUBLISHED
October 29, 1999
Plaintiff-Appellee,
v
No. 206668
Ostego Circuit Court
LC No. 95-006555 CK
COLONIA INSURANCE COMPANY,
Defendant-Appellant.
Before: Holbrook, Jr., P.J., and O’Connell and Zahra, JJ.
PER CURIAM.
Defendant appeals as of right from an order granting summary disposition in favor of plaintiff
and entering judgment against defendant in the amount of $127,351.95. We affirm.
This case arises from an insurance contract in which defendant Colonia Insurance Company
agreed to insure the directors, officers and employees of plaintiff Michigan Crop Improvement
Association (MCIA) for any wrongful act they might commit in performance of their duties for MCIA.
The insurance contract excluded from coverage “ . . . any actual or alleged damage to or destruction of
any tangible property including loss of use thereof. . . ”
In 1991, plaintiff’s employee failed to detect the presence of bacterial ring rot, a serious potato
disease, in a crop of potatoes that was eventually sold for use as potato seed. Three civil actions arose
from this failure. In the first two actions, the buyers of the diseased potatoes sued the seller, defendant
and plaintiff. These actions were consolidated and resulted in a consent judgment in which all of the
parties except defendant agreed to collect on the judgment directly from defendant, the insurer.
In a third related action which is the subject of the instant appeal, plaintiff sued defendant for the
costs associated with defending itself against the lawsuits brought by the buyers and seller of the
diseased potato crop. The trial court consolidated this action with the post judgment garnishment
proceedings from the two prior actions because they involved the same issue: whether the damages
sustained by the farmers as a result of plaintiff’s negligence were covered under the insurance contract.
The trial court held that the property damage exclusion did not apply in these cases and that defendant
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was liable for the damages in the garnishment proceedings and for plaintiff’s costs in defending itself.
Defendant appealed both decisions separately. In Krueger Seed Farms, Inc v Szlarczyk, unpublished
opinion per curiam of the Court of Appeals, issued March 9, 1999 (Docket No. 200249), this Court
found that the trial court did not err in finding that the property exclusion did not apply and upheld the
trial court’s decision to issue a writ of garnishment directing defendant to pay the buyers and the seller of
the diseased crop for their damages. Id. at 5.
The instant action involves defendant’s appeal from an order granting summary disposition to
plaintiff and entering judgment against defendant in the amount of $127,351.95 for attorney fees and
costs incurred by plaintiff in the farmers’ lawsuits. Defendant’s argument in this appeal is identical to the
argument it made in Krueger Seed Farms, supra. Notably, defendant does not argue on appeal that
the policy language would not require it to reimburse plaintiff were this Court to find that the farmers’
damages were covered by the policy. Rather, defendant argues that the trial court erroneously ordered
it to reimburse plaintiff because the trial court should not have held that the farmers’ damages were
covered in the first place.
Because the issue of whether the farmers’ damages were covered under the contract was
previously determined by this Court in Krueger Seed Farms, supra, we decline to reconsider the issue
in the instant appeal. The doctrine of collateral estoppel precludes relitigation of an issue in a different,
subsequent action between the same parties or their privies when the earlier proceeding resulted in a
valid final judgment and the issue in question was actually and necessarily determined in that prior
proceeding. Dearborn Heights School Dist. No. 7 v. Wayne County MEA/NEA, 233 Mich App
120, 124; 592 NW2d 408 (1998). Collateral estoppel bars relitigation of issues where the parties had a
full and fair opportunity to litigate those issues in an earlier action. Id.
In this case, the issue of coverage under the insurance contract was actually and necessarily
determined in Krueger Seed Farms, supra, and cannot be considered anew by this Court when the
same parties are involved and defendant already had a full and fair opportunity to argue the issue in the
earlier appeal. Therefore, we find that the doctrine of collateral estoppel bars reconsideration of the
coverage issue in the instant appeal.
We now examine the language of the insurance contract to determine whether the trial court
erred in requiring defendant to reimburse plaintiff for litigation costs in defense of the farmers’ claims.
The interpretation of the language of an insurance contract is an issue of law to be reviewed de novo on
appeal. Morley v Automobile Club of Michigan, 458 Mich 459, 465; 581 NW2d 237 (1998). The
language of an insurance contract is to be given its ordinary and plain meaning, and technical and
constrained constructions should be avoided. Royce v Citizens Ins Co, 219 Mich App 537, 542; 557
NW2d 144 (1996).
The insurance contract provides that the term “loss” includes “damages, settlements and Costs,
Charges and Expenses . . .” The contract further provides that “‘Costs, Charges and Expenses’ shall
mean reasonable and necessary legal fees and expenses incurred by the Directors and Officers in
defense of any Claim and appeals therefrom . . .” The insurance contract also states:
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It shall be the duty of [plaintiff] Directors and Officers and not the duty of the
Company [defendant] to defend Claims made against the Directors and Officers,
provided that no Costs, Charges or Expenses shall be incurred without the Company’s
consent, such consent not to be unreasonable withheld. In the event of such consent
being given, the Company shall reimburse Costs, Charges and Expenses only upon
the final disposition of any Claim made against the Directors and Officers. (Emphasis
added).
The plain language of the insurance contract clearly required defendant to reimburse plaintiff for
all costs reasonably incurred by plaintiff in defending against lawsuits involving a covered loss.
Defendant does not contend that the attorney fees and litigation costs were unreasonable or unnecessary
and does not dispute that plaintiff repeatedly notified defendant of the litigation costs in accordance with
the insurance contract. Therefore, we cannot find that the trial court erred in granting summary
disposition to plaintiff and entering judgment against defendant for the attorney fees and costs incurred
by plaintiff in defense of claims that this Court previously found to be covered under the insurance
contract.
Affirmed.
/s/ Joel P. Hoekstra
/s/ Peter D. O’Connell
/s/ Brian K. Zahra
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