RONALD SCHMALFELDT V NORTH POINTE INSURANCE CO
Annotate this Case
Download PDF
Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
Chief Justice
Maura D. Corrigan
Opinion
Justices
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
___________________________________________________________________________________________________________________________
FILED NOVEMBER 4, 2003
RONALD SCHMALFELDT,
Plaintiff-Appellant,
v
No. 122634
NORTH POINTE INSURANCE COMPANY,
Defendant-Appellee.
_______________________________
PER CURIAM
Plaintiff Ronald Schmalfeldt, injured in a fight at
the
Elite
Bar
in
Watervliet,
directly
sued
the
bar=s
insurer, North Pointe Insurance Company, to secure payment
for $1,921 in dental bills.
At issue is whether he can sue
as a third-party beneficiary of the Elite Bar-North Pointe
insurance policy.
We affirm the judgment of the Court of
Appeals, albeit on other grounds, and hold that he is not a
third-party beneficiary of the contract.
I.
Background
On August 24, 1997, Schmalfeldt was at the Elite Bar
playing a game of pool with another bar patron.
The game
led to an argument.
Schmalfeldt tried to walk away, but
was struck in the face by the other player, who then fled.
Schmalfeldt needed extensive dental work to repair the
damage to his mouth and incurred dental expenses totaling
$1,921.
He asked the owner of the Elite Bar to pay his
dental expenses, but the owner refused.
Schmalfeldt sought payment directly from North Pointe,
which had issued a commercial liability insurance policy to
the owner of the Elite Bar.
He claimed a right to benefits
under the medical payments provision of the policy.
In
this provision, North Pointe agreed to pay up to $5,000 for
medical
expenses
for
Abodily
a
injury@
caused
by
an
Aaccident,@ provided the injury occurred on or next to the
insured=s premises or because of the insured=s operations.
Payments are made Aregardless of fault.@
North Pointe refused to pay benefits without a request
from its insured to do so.
When the bar owner told North
Pointe that the bar did not want to invoke the medical
benefits
provision
in
this
case,
North
Pointe
denied
Schmalfeldt=s request.
Schmalfeldt
responded
by
filing
a
lawsuit
against
North Pointe in the civil division of the Berrien County
Trial Court, claiming to be a third-party beneficiary of
the insurance contract.1
He moved for summary disposition
1
Schmalfeldt did not sue his assailant because he
could not identify that person.
He also did not sue the
Elite Bar, apparently conceding that it had not breached
any duty to him.
2
on
the
theory
that
the
medical
benefits
provision
authorized him to sue North Pointe to enforce the terms of
the
contract.
The
court
denied
Schmalfeldt=s
motion,
finding that the medical benefits provision did not support
Schmalfeldt=s
claim
that
North
something directly for him.
Schmalfeldt
was
not
a
Pointe
undertook
to
do
Thus, the court held that
third-party
beneficiary
of
the
insurance contract and granted summary disposition in North
Pointe=s favor.
Schmalfeldt
successfully
appealed
within
the
civil
division of the trial court,2 which held that the medical
benefits provision Adirectly benefited@ people situated like
plaintiff,
who
are
patrons
the
premises
on
members
of
of
the
the
general
Elite
Bar,
public
and
and
ordered
summary disposition in Schmalfeldt=s favor.
The Court of Appeals granted North Pointe=s application
for
leave
to
appeal
and
reversed.3
It
decided
that
Schmalfeldt was merely an incidental beneficiary and was
not entitled to enforce the insurance contract.
of
Appeals
cited
the
statute
governing
The Court
third-party
beneficiaries, MCL 600.1405, and examined Allstate Ins Co v
2
Under Supreme Court Administrative Order Nos. 1996-5
and 1997-12, the Berrien County circuit, district, and
probate courts participated in a court consolidation
demonstration project in which the above courts fully
merged into one consolidated trial court. Because of this
project, Schmalfeldt appealed within the civil division of
the Berrien County Trial Court. See AO 1996-5 and 1997-12.
3
252 Mich App 556; 652 NW2d 683 (2002).
3
Keillor,
190
Mich
App
499;
476
NW2d
453
(1991),4
for
guidance in determining whether Schmalfeldt was a direct or
incidental beneficiary of the medical payment provision.
In its opinion, the Court of Appeals stated:
While the medical payment provision at issue
in the instant case differs from the provision at
issue in Keillor and Hayes because the instant
provision does not refer to liability, we
nonetheless find Keillor and Hayes instructive.
Indeed, like the provision in Keillor and Hayes,
the purpose of the provision in the instant case
is essentially to Ashield the insured@ from having
eventually to pay out-of-pocket expenses.
We
conclude that the contract at issue in the
instant case benefits the insured and that
plaintiff was merely an incidental beneficiary
who was not entitled to enforce the contract.
[252 Mich App 563-564.]
On the basis of its review of Keillor and Hayes, the Court
of
Appeals
held
that
North
Pointe=s
insurance
contract
benefitted the insured, and that Schmalfeldt was merely an
incidental beneficiary who was not entitled to enforce the
contract.
The Court of Appeals added that this conclusion
was supported by case law from other jurisdictions.
Schmalfeldt has sought leave to appeal in this Court.
4
Reversed on other grounds sub nom Allstate Ins Co v
Hayes, 442 Mich 56; 499 NW2d 743 (1993).
4
II.
We
review
de
disposition motions.
Standard of Review
novo
decisions
regarding
summary
First Public Corp v Parfet, 468 Mich
101, 104; 658 NW2d 477 (2003).
This case involves the
proper interpretation of a contract, which is a question of
law that is also reviewed de novo.
Archambo v Lawyers
Title Ins Corp, 466 Mich 402, 408; 646 NW2d 170 (2002).
III.
In
states:
relevant
part,
Discussion
the
medical
payments
provision
COVERAGE C. MEDICAL PAYMENTS
1. Insuring Agreement.
a. We will pay medical expenses as described
below for Abodily injury@ caused by an accident:
(1) On premises you own or rent;
(2)
rent; or
On
ways
next
to
premises
you
own
or
(3) Because of your operations;
provided that:
(1) The accident takes place in the Acoverage
territory@ and during the policy period;
(2) The expenses are incurred and reported
to us within one year of the date of the
accident; and
(3)
The
injured
person
submits
to
examination, at our expense, by physicians of our
choice as often as we reasonably require.
b. We will make these payments regardless of
fault.
These payments will not exceed the
applicable limit of insurance. . . .
5
Michigan=s
third-party
beneficiary
statute,
MCL
600.1405, states in pertinent part:
Any person for whose benefit a promise is
made by way of contract, as hereinafter defined,
has the same right to enforce said promise that
he would have had if the said promise had been
made directly to him as the promisee.
(1) A promise shall be construed to have
been made for the benefit of a person whenever
the promisor of said promise has undertaken to
give or to do or refrain from doing something
directly to or for said person.
As we recently said in Brunsell v Zeeland, 467 Mich 293,
296;
651
statute
NW2d
388
reflects
Athe
(2002),
that
not
plain
every
language
person
of
this
incidentally
benefitted by a contractual promise has a right to sue for
breach of that promise . . . .@
Thus, only intended, not
incidental, third-party beneficiaries may sue for a breach
of a contractual promise in their favor.
Id.
A person is a third-party beneficiary of a contract
only when that contract establishes that a promisor has
undertaken a promise Adirectly@ to or for that person.
MCL
600.1405; Koenig v South Haven, 460 Mich 667, 677; 597 NW2d
99
(1999).
By
using
the
Adirectly,@
modifier
the
Legislature intended Ato assure that contracting parties are
clearly
aware
that
the
scope
of
their
contractual
undertakings encompasses a third party, directly referred
to
in
the
contract,
before
enforce the contract.@
used
to
determine,
Id.
Afrom
the
third
party
is
able
to
An objective standard is to be
the
form
and
meaning
of
the
contract itself,@ Kammer Asphalt v East China Twp, 443 Mich
6
176, 189; 504 NW2d 635 (1993) (citation omitted), whether
the promisor undertook Ato give or to do or to refrain from
doing
something
directly
to
or
for@
the
person
claiming
third-party beneficiary status, Brunsell, supra at 298.
As Brunsell, Koenig, and Kammer Asphalt make clear, a
court should look no further than the Aform and meaning@ of
the contract itself to determine whether a party is an
intended third-party beneficiary within the meaning of '
1405.
Here, the Court of Appeals correctly began with the
proposition that third-party beneficiary status is defined
by ' 1405.
But, without the benefit of our decision in
Brunsell,e the Court then turned to case law for resolution
of Athe issue of direct versus incidental beneficiaries in
the context of a medical payment provision such as that at
issue in the instant case.@ 252 Mich 562.
The focus of the inquiry, however, should be whether
North Pointe, by its agreement to cover medical expenses
for bodily injuries caused by accidents, Ahad undertaken to
give or to do or refrain from doing something directly to
or for@ Schmalfeldt pursuant to the third-party beneficiary
statute, MCL 600.1405(1).
Thus, as Brunsell clarifies, we
must turn to the contract itself to see whether it granted
Schmalfeldt third-party beneficiary status.
We affirm the decision of the Court of Appeals because
the
contract
contains
no
promise
e
to
directly
benefit
The Court of Appeals decided this case on August 23, 2002,
approximately one month before we issued our decision in
Brunsell on September 24, 2002.
7
Schmalfeldt within the meaning of ' 1405.
insurance
policy
specifically
Nothing in the
designates
Schmalfeldt,
or
the class of business patrons of the insured of which he
was
one,
as
an
intended
third-party
medical benefits provision.
beneficiary
of
the
At best, the policy recognizes
the possibility of some incidental benefit to members of
the public at large, but such a class is too broad to
qualify
for
third-party
status
under
the
statute.
Brunsell, supra at 297; Koenig, supra at 680.
Only
intended
beneficiaries,
not
incidental
beneficiaries, may enforce a contract under ' 1405.
supra at 680.
contracting
Here, the contract primarily benefits the
parties
circumstances
Koenig,
under
because
which
it
the
defines
policy
and
will
limits
cover
the
medical
expenses without a determination of fault. This agreement
is between the contracting parties, and Schmalfeldt is only
an
incidental
beneficiary
contract
benefits.
entitled
to
judgment
in
summary
favor
For
without
this
right
reason,
disposition.
of
a
defendant
The
is
to
North
Court
sue
for
Pointe
is
of
affirmed.
7.302(G)(1).
Maura D. Corrigan
Elizabeth A. Weaver
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
Appeals
MCR
S T A T E
O F
M I C H I G A N
SUPREME COURT
RONALD SCHMALFELDT,
Plaintiff-Appellant,
v
No. 122634
NORTH POINTE INSURANCE COMPANY,
Defendant-Appellee.
_______________________________
KELLY, J. (dissenting).
I would not dispose of this case by an opinion per
curiam, but would grant leave to appeal to better analyze
two issues:
whether, given the ambiguity in the contract
regarding the scope of individuals covered, the parties to
the
Elite
Bar-North
Pointe
insurance
policy
intended
direct benefit to an identifiable class of persons.
when
insurance
contract
language
is
ambiguous,
a
Also,
should
a
reviewing court be free to look further than the "form and
meaning" of the language to determine if a third party is
contemplated? See, e.g., Klapp v United Ins Group Agency,
468 Mich 459; 663 NW2d 447 (2003).
Marilyn Kelly
Michael F. Cavanagh
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
