Opinion
360846
03-30-2023
RANDALL SHAW and HILLARY SHAW, Plaintiff-Appellees, v. KAMIL MARCIN NOWAKOWSKI, Defendant/Cross-Defendant, and THE AUTO CLUB GROUP, doing business as AAA AUTO CLUB GROUP, Defendant-Appellant, and CRISPELLI'S LLC, Defendant/Cross-Plaintiff.
UNPUBLISHED
Oakland Circuit Court LC No. 2020-180321-NI
Before: CAVANAGH, P.J., and MARKEY and BORRELLO, JJ.
PER CURIAM.
Defendant, The Auto Club Group (defendant), appeals by leave granted an order denying its motion for summary disposition in this case concerning underinsured motorist (UIM) benefits. Shaw v Nowakowski, unpublished order of the Court of Appeals, entered May 27, 2022 (Docket No. 360846). We affirm.
I. BACKGROUND
Plaintiffs were driving westbound when defendant/cross-defendant, Kamil Nowakowski, crossed the center line and struck plaintiffs' vehicle head-on. Nowakowski, who before the crash consumed alcohol at defendant/cross-plaintiff's, Crispelli's LLC's, restaurant, was intoxicated at the time of the crash. At all relevant times, plaintiffs' vehicle was insured by defendant. In their first amended complaint, plaintiffs sued Nowakowski and claimed he was liable under the Michigan Motor Vehicle Code, MCL 257.1, et seq., and owner liability under MCL 257.401.
In their second amended complaint, plaintiffs added defendant and claimed defendant wrongfully denied them underinsured motorist (UIM) benefits. Plaintiffs noted that their UIM policy contained two limits of liability: (1) a $250,000 per-person limit, and (2) a $500,000 peraccident limit. Nowakowski had a $300,000 combined single-limit policy of insurance. Plaintiffs alleged that defendant improperly determined that Nowakowski's vehicle was not "underinsured" since his policy limit was greater than the $250,000 per-person limit of plaintiffs' policy and denied their claims for UIM benefits. Plaintiffs requested the trial court to declare they were entitled to UIM benefits and determine the proper calculation of UIM benefits.
Plaintiffs filed their third amended complaint, adding Crispelli's as a party. Plaintiffs claimed Crispelli's was liable for furnishing alcohol to Nowakowski while visibly intoxicated. Crispelli's answered and filed a cross-claim against Nowakowski asserting that Crispelli's was entitled to full indemnification from Nowakowski if a jury determined Nowakowski was served alcohol while visibly intoxicated.
Plaintiffs' claims against defendants Nowakowski and Crispelli's were ultimately dismissed by stipulated order, as was Crispelli's cross-claim against defendant Nowakowski.
Defendant moved for summary disposition under MCR 2.116(C)(10), arguing that plaintiffs were not entitled to UIM benefits because, under the terms of plaintiffs' insurance policy, Nowakowski's motor vehicle was not an underinsured vehicle; his $300,000 policy limit was greater than plaintiffs' $250,000 per-person policy limit. Defendant claimed that the $250,000 per-person limit in plaintiffs' policy applied rather than the $500,000 per-accident limit. Further, citing Wilkie v Auto-Owners Ins Co, 469 Mich. 41; 664 N.W.2d 776 (2003), defendant argued that the UIM benefit limit should be reduced by the limit of Nowakowski's policy, not by the amount plaintiffs actually received from Nowakowski's policy. Defendant also claimed that plaintiffs were not entitled to UIM benefits because Crispelli's $2 million liability limit exceeded plaintiffs' $250,000 per-person liability limit. Defendant argued that, under provision 4(a) of the "Limits of Liability" subsection in plaintiffs' UIM policy, Crispelli's qualifies as an "organization which may be legally liable," therefore, Crispelli's $2 million policy limit relieved defendant's obligation of paying UIM benefits to plaintiffs.
In the trial court defendant asserted Crispelli's policy had a $2 million limit, but on appeal suggests it is a $1 million limit.
Plaintiffs responded, arguing that the terms of plaintiffs' policy were ambiguous because the policy did not clearly articulate which of the two limits of liability apply: the $250,000 perperson limit or the $500,000 per-accident limit. Plaintiffs, citing Bogi v Citizens Ins Co of the Midwest, 427 F.Supp.3d 954, 960-961 (WD Mich, 2019), argued that because the insurance policy did not specify which of the two liability limits applied, there were multiple reasonable interpretations of the insurance policy rendering it ambiguous. And, because ambiguous policies must be construed in favor of plaintiffs, as the insureds, the $500,000 per-accident liability limit should apply with respect to the determination whether Nowakowski's vehicle was an underinsured vehicle. Plaintiffs also argued that Wilkie was distinguishable because in Wilkie the plaintiff's coverage was reduced by "available" limits whereas, in this case, provision 4 of the "Limits of Liability" subsection reduced plaintiffs' coverage based on the "sums paid or payable" to plaintiffs as the insureds. Therefore, it is not the policy limit that is relevant to a reduction; rather, it is the amount actually paid or payable. Finally, plaintiffs argued that Crispelli's $2 million policy limit was not applicable because-when reading provisions 3 and 4 of the "Limits of Liability" subsection together, only the limits of liability from organizations legally responsible for the underinsured motor vehicle reduce UIM benefits. Because Crispelli's is not an organization legally responsible for Nowakowski's motor vehicle, Crispelli's $2 million policy limit could not be used to reduce plaintiffs' recovery of UIM benefits.
Defendant replied, reasserting that the policy unambiguously states the $250,000 perperson liability limit applies. Defendant argued that the insurance policy's repeated use of the phrase "insured person," read together with the definition of underinsured motor vehicle, and the provisions in the "Limits of Liability" subsection, clearly show that the most plaintiffs could recover is $250,000 per person. However, because Nowakowski's $300,000 policy limit is greater than plaintiffs' $250,000 per-person limit, Nowakowski's motor vehicle is not considered an underinsured vehicle and plaintiffs are not entitled to UIM benefits.
The trial court denied defendant's motion for summary disposition, finding that defendant failed to explain why the $500,000 per-accident limit amount was not relevant or applicable when the "Limits of Liability" subsection expressly referenced plaintiffs' Insurance Policy Declaration Certificate, which lists both the $250,000 per-person and $500,000 per-accident limitations. In other words, the court noted, "plaintiffs are two individuals who would, ostensibly, be eligible for up to $250,000 in UIM benefits each for personal injury." The court noted that Nowakowski's policy limit was $300,000. But if both plaintiff's proved $250,000 in bodily injury damages, then they would theoretically be entitled to $500,000 in UIM benefits, which would exceed the limits of Nowakowski's policy but not plaintiffs' UIM policy. Thus, the court held, because defendant's policy is ambiguous, and ambiguities must be construed against defendant as the drafter of the UIM policy, plaintiffs' interpretation prevailed and the $500,000 per-accident policy limit was applicable. The trial court rejected defendant's argument that the holding in Wilkie applied here, noting that this case was not about whether the payment of a specific amount reduces the recovery under a UIM policy; rather, this case is about the applicable policy limits for purposes of determining whether there was an underinsured motor vehicle. Further, the trial court held, Crispelli's $2 million policy limit was not applicable because that policy was not a no-fault policy that applied to Nowakowski's motor vehicle under provision 4 of the "Limits of Liability" subsection. The court acknowledged that there were multiple possible interpretations of provision 4; thus, the insurance policy was ambiguous and such ambiguity must be resolved in favor of plaintiffs. Because provision 3 limits liability to organizations legally responsible for the underinsured motor vehicle, provision 4 should be applied the same way and Crispelli's policy limit would not reduce plaintiffs' recovery of UIM benefits. In summary, the court concluded, defendant was not entitled to summary disposition. Defendant's motion for reconsideration was denied and this appeal followed.
II. STANDARD OF REVIEW AND APPLICABLE LAW
A trial court's decision on a motion for summary disposition brought under MCR 2.116(C)(10), which tests the factual sufficiency of the complaint, is reviewed de novo. Joseph v Auto Club Ins Ass'n, 491 Mich. 200, 206; 815 N.W.2d 412 (2012). Documentary evidence submitted by the parties is reviewed in the light most favorable to the nonmoving party to determine whether a genuine issue of material fact exists for the jury to decide. Walsh v Taylor, 263 Mich.App. 618, 621; 689 N.W.2d 506 (2004). If reasonable minds could differ on an issue, a genuine issue of material fact exists. Allison v AEW Capital Mgt, LLP, 481 Mich. 419, 425; 751 N.W.2d 8 (2008).
This case involves the proper interpretation of an UIM insurance contract. "The construction and interpretation of an insurance policy and whether the policy language is ambiguous are questions of law, which we also review de novo on appeal." Dancey v Travelers Prop Cas Co of America, 288 Mich.App. 1, 7; 792 N.W.2d 372 (2010). More specifically, UIM coverage is not mandated by statute, and therefore, "the scope, coverage, and limitations of underinsurance protection are governed by the insurance contract and the law pertaining to contracts." Mate v Wolverine Mut Ins Co, 233 Mich.App. 14, 19; 592 N.W.2d 379 (1998). Accordingly, judicial construction is not permitted with regard to unambiguous contracts; the plain and ordinary meaning of the language controls and the contract must be enforced as written as reflective of the parties' intent as a matter of law. In re Smith Trust, 480 Mich. 19, 24; 745 N.W.2d 754 (2008); Rory v Continental Ins Co, 473 Mich. 457, 464, 468; 703 N.W.2d 23 (2005). However, when a contract's words may reasonably be understood in different ways after consideration of the entire contract, the contract is considered ambiguous. Auto-Owners Ins Co v Seils, 310 Mich.App. 132, 146; 871 N.W.2d 530 (2015). In other words:
If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand there is no coverage under the same circumstances the contract is ambiguous and should be construed against its drafter and in favor of coverage. [Raska v Farm Bureau Mut Ins Co of Mich, 412 Mich. 355, 362; 314 N.W.2d 440 (1982).]
III. UNDERINSURED MOTOR VEHICLE
Defendant argues that the trial court erroneously denied its motion for summary disposition because Nowakowski's motor vehicle is not considered an underinsured motor vehicle under the unambiguous terms of plaintiffs' UIM insurance policy. However, because the terms of plaintiffs' UIM policy are ambiguous, we conclude that the trial court did not err in denying defendant's motion for summary disposition.
A. ANALYSIS
Part III of plaintiffs' no-fault insurance policy addresses uninsured and underinsured motorists coverages and defines an "underinsured motor vehicle" as:
[A] motor vehicle whose ownership, maintenance or use has resulted in bodily injury of an insured person and for which the sum of the Limits of Liability under
all bodily injury liability insurance policies, bonds or other security required to be maintained under law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle is less than the limits of Underinsured Motorists Coverage provided the insured person at the time of the accident.
Thus, for plaintiffs to quality for UIM benefits, the sum of the limits of liability of Nowakowski's insurance policy must be less than the limits of liability provided to plaintiffs as the "insured person[s]." Under plaintiffs' insurance policy, "insured person(s)" are defined as: "you, if an individual, and a resident relative," "any other person occupying your car," the "principal named insured," the "assigned driver," "the spouse of the assigned driver," and "an Other Name Insured." Under this definition, both plaintiffs qualify as an "insured person," therefore, the limits of liability apply to both plaintiffs.
Plaintiffs' insurance policy explicitly states that there are two limits of liability for an insured person: a $250,000 per-person limit and a $500,000 per-accident limit. Because there are two stated limits, the determinative question is: which limit is considered when determining "the limits of Underinsured Motorists Coverage provided the insured person at the time of the accident" for purposes of the definition of an underinsured motor vehicle?
Defendant contends that the only reasonable interpretation of the policy is that the perperson limit rather than the per-accident limit applies. Specifically, defendant argues that because the definition of an underinsured motor vehicle and provision 1(a) under the "Limits of Liability" subsection both use the phrase "insured person," this definitively implicates the $250,000 perperson limit. The Limits of Liability subsection provides:
1. The Limits of Liability for UNINSURED MOTORS COVERAGE and the Limits of Liability for UNDERINSURED MOTORISTS COVERAGE are shown on the Declaration Certificate and apply as follows:
a. the Limit of Liability for each person is the maximum Limit of Liability for all damages due to bodily injury to any insured person in any one accident. This limit includes any claim of other persons for damages for care and loss of services and society, wrongful death and survivor actions and derivation damages arising out of bodily injury.
b. subject to this limit for each person, the Limit of Liability for each accident is the maximum Limit of Liability for all damages due to bodily injury resulting from any one accident. This limit also includes any claims of other persons for damages for care and loss of services and society, wrongful death and survivor actions and derivative damages arising out of bodily injury.
Defendant's argument, however, ignores that the definition of an "underinsured motor vehicle" explicitly uses the term "limits" in reference to UIM benefits coverage, which implies there is more than one applicable limit. And, the declarations page of plaintiffs' policy clearly states the $250,000 per-person and $500,000 per-accident limits are both available to plaintiffs as insured persons. That is, the definition of "underinsured motor vehicle" uses the plural of the word "limit" and states "the limits of Underinsured Motorists Coverage," leading to a reasonable interpretation that-when there is more than one "insured person" in the accident, the $500,000 per-accident limit applies when determining if the other vehicle involved in the accident was "underinsured." As the trial court noted, in this case, if both plaintiffs proved $250,000 in bodily injury damages, defendant would be liable for the per-accident limit of $500,000, which far exceeded Nowakowski's $300,000 policy limit. But if the definition of "underinsured motor vehicle" only referred to the per-person limit of $250,000-plaintiffs' UIM policy would not be triggered despite the fact that Nowakowski's policy would only cover $300,000 of those bodily injury damages. As the trial court also noted, defendant has failed to explain-even on appeal- "why is the $500,000 per occurrence limit not the applicable 'Limit of Liability,' especially in a situation involving two plaintiffs who are both seeking bodily injury benefits?" Therefore, because the insurance policy does not explicitly state which limit applies when two or more insured persons are injured in the same accident for purposes of the "underinsured motor vehicle" definition, and the terms of plaintiffs' insurance policy can reasonably be read to provide or deny coverage under the same set of circumstances, the policy is ambiguous, and ambiguous terms must be resolved in favor of plaintiffs as the insureds. See Seils, 310 Mich.App. at 146. Thus, the trial court properly rejected defendant's argument and denied defendant's motion for summary disposition.
IV. REDUCING THE LIMIT OF LIABILITY
Defendant next argues that the trial court erroneously found Crispelli's $2 million policy limit is inapplicable to reduce plaintiffs' UIM benefits. However, because it is reasonable to interpret the plain terms of plaintiffs' insurance policy to exclude Crispelli's as a qualifying organization or policy, the terms of plaintiffs' insurance policy are ambiguous and we conclude that the trial court properly denied defendant's motion for summary disposition.
A. ISSUE PRESERVATION
For the first time on appeal, defendant argues, under provision 4(b) of the "Limits of Liability" subsection, Crispelli's $2 million policy limit is considered "any other policy" and reduces plaintiffs' recovery to zero. "Michigan generally follows the 'raise or waive' rule of appellate review. Therefore, a litigant preserve[s] an issue for appellate review by raising it in the trial court." Wells v State Farm Fire &Cas Co, 509 Mich. 855, 856; 969 N.W.2d 67 (2022) (quotation marks and citations omitted). Because defendant's argument under provision 4(b) is an entirely separate argument raised for the first time on appeal, defendant has waived this argument for this Court's review and is not entitled to relief. Id. at 856 n 6.
B. ANALYSIS
When interpreting an insurance policy, a two-step analysis is employed: "[F]irst, a determination of coverage according to the general insurance agreement, and, second, a decision regarding whether an exclusion applies to negate coverage." Auto-Owners Ins Co v Harrington, 455 Mich. 377, 382; 565 N.W.2d 839 (1997). The insured bears the burden to prove coverage, while the insurer bears the burden of proving the applicability of an exclusion. Seils, 310 Mich.App. at 146. "Clear and specific exclusions contained in policy language must be given effect." Lee v Auto-Owners Ins Co, 218 Mich.App. 672, 676; 554 N.W.2d 610 (1996). "Exclusions are to be read with the insuring agreement and independent of other exclusions." Farm Bureau Mut Ins Co v Blood, 230 Mich.App. 58, 62; 583 N.W.2d 476 (1998).
Provision 3 under the "Limits of Liability" subsection of plaintiffs' insurance policy states:
3. If the damages are caused by an underinsured motor vehicle, the most we will pay will be the lesser of:
a. the difference between the Limits of Liability of this coverage and the sum of the Limits of Liability under all bodily injury liability insurance policies, bonds or other security required to be maintained under law applicable to the driver or to the person or organization legally responsible for the underinsured motor vehicle and applicable to the underinsured motor vehicle; or
b. the difference between the amount of the insured person's damages for bodily injury and the sum of the Limits of Liability under all bodily injury liability insurance policies, bonds or other security required to be maintained under law applicable to the driver or to the person or organization legally responsible for the underinsured motor vehicle and applicable to the underinsured motor vehicle. [Emphasis added.]
Provision 4 under the "Limits of Liability" subsection of plaintiffs' insurance policy states, in relevant part:
4. Any amount payable under this Part will be reduced by:
a. any amount paid or payable by or on behalf of the owner or operator of the uninsured motor vehicle or organization which may be legally liable;
b. any amount paid or payable under the Liability Insurance Coverage of this or any other policy; * * *
A reduction under b. and c. above does not apply unless the amounts paid under Liability Insurance Coverage and Medical Payments Coverage cover the same elements of loss for which the insured person would receive Uninsured and Underinsured Motorists benefits.
Defendant first argues the trial court erred in disregarding Crispelli's policy limit because it improperly found the terms of the provisions under the "Limits of Liability" subsection were ambiguous. Defendant claims under provision 4(a), Crispelli's qualifies as an "organization which may be legally liable" to plaintiffs. "The word 'or' is a disjunctive term used to express a choice between alternatives." Zwiker v Lake Superior State Univ, ___ Mich.App. ___, ___; ___ N.W.2d ___ (2022) (Docket Nos. 355128; 355377; 357275); slip op at 12. Thus, to satisfy the requirements of the policy, it is not necessary to meet all possible alternatives, rather, it is enough to only satisfy one alternative. See Jesperson v Auto Club Ins Ass'n, 499 Mich. 29, 35; 878 N.W.2d 799 (2016).
Provision 4(a) has four possible alternatives: (1) the amount payable will be reduced by any amount paid by or on behalf of the owner or operator of the uninsured motor vehicle; (2) the amount payable will be reduced by any amount payable by or on behalf of the owner or operator of the uninsured motor vehicle; (3) the amount payable will be reduced by any amount paid by or on behalf of the organization, which may be legally liable; and, (4) the amount payable will be reduced by any amount payable by or on behalf of the organization, which may be legally liable. Because alternatives one and two apply to uninsured motor vehicles, they are not relevant to this appeal. However, defendant asserts, under the fourth alternative, plaintiffs are precluded from recovery because Crispelli's is an organization which may be legally liable to plaintiffs for furnishing alcohol to Nowakowski. Crispelli's $2 million policy limit, the total amount payable on behalf of Crispelli's to plaintiffs, is greater than both of plaintiffs' limits of liability. Thus, applying defendant's logic, Crispelli's policy limit can preclude plaintiffs' recovery.
However, while defendant's contention that Crispelli's policy can reduce plaintiffs' recovery may be correct, provision 4(a) can also be read to exclude Crispelli's liability limit. Defendant contends the use of the word "or" in provision 4(a) is disjunctive. But this Court has stated:
The popular use of "or" and "and" is so loose and so frequently inaccurate that it has infected statutory enactments. While they are not treated as interchangeable, and should be followed when their accurate reading does not render the sense dubious, their strict meaning is more readily departed from than that of other words, and one read in place of the other in deference to the meaning of the context. [Nolan v Dep't of Licensing &Regulation, 151 Mich.App. 641, 649; 391 N.W.2d 424 (1986) (citations omitted).]
Therefore, depending on the context, it is reasonable to read the word "or" as the word "and." Id. Applying that principle here, provision 4(a) would reduce any amount payable by: "any amount paid or payable on behalf of the owner or operator of the uninsured motor vehicle and organization which may be legally liable." Under this interpretation, provision 4(a) would reduce defendant's liability by the amount paid or payable by Crispelli's, as an organization, for an uninsured motor vehicle. However, because Nowakowski's vehicle was not an uninsured motor vehicle, but an underinsured motor vehicle, this interpretation excludes Crispelli's insurance policy. As the definition section of the UIM policy states, an "uninsured" vehicle is not the same as an "underinsured" motor vehicle. Accordingly, the trial court properly rejected this argument.
Defendant additionally characterizes provisions 3 and 4 as exclusions, and claims the trial court erred in construing them together to find Crispelli's liability policy is inapplicable. But defendant offers no evidence to support its contention. Plaintiffs' insurance policy has a clearly labeled subsection titled "Exclusions" that immediately precedes, and is separate from, the "Limits of Liability" subsection. Based on the plain language of plaintiffs' insurance policy, provisions 3 and 4 are not exclusions as defendant claims, and do not need to be read independently. Further, defendant claims the trial court erred in reading provisions 3 and 4 together because they are unrelated and serve different purposes. But when determining coverage under an insurance policy, pertinent provisions should be read in pari materia. Skanska USA Bldg Inc v MAP Mech Contractors, Inc, 505 Mich. 368, 380 n 11; 952 N.W.2d 402 (2020). The Limits of Liability subsection determines the maximum amount of recovery plaintiffs may receive from defendant in any one accident. Provision 3 determines the maximum recovery for damages caused by an underinsured motor vehicle. Provision 4 reduces the amount recovered under provision 3. It is reasonable to conclude these provisions are related and serve the same purpose of determining the maximum amount of plaintiffs' recovery. Therefore, the trial court did not err in reading provisions 3 and 4 together.
"Statutes in pari materia are statutes sharing a common purpose or relating to the same subject. They are construed together as one law, regardless of whether they contain any reference to one another." Omne Fin, Inc v Shacks, Inc, 460 Mich. 305, 312; 596 N.W.2d 591 (1999). Although the in pari materia doctrine typically applies to the construction of statutes, our Supreme Court construed the doctrine to also apply to the construction of insurance contracts in Skanska USA Building.
Because provisions 3 and 4 should be read together, the trial court did not err in finding Crispelli's insurance policy cannot be used to preclude plaintiffs' recovery. Provision 3 explicitly references liability insurance policies for "organizations legally responsible for the underinsured motor vehicle and applicable to the underinsured motor vehicle." Provision 4(a) also references an "organization which may be legally liable." Further, the insurance policy's definition of an underinsured motor vehicle, which states, in relevant part: "[B]odily injury liability insurance policies. . . applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle." As such, provision 4(a) should be read to apply only to organizations legally responsible for the motor vehicle because all three provisions are used to determine coverage for an underinsured motor vehicle, and thus may be construed together even if they do not explicitly reference each other. See Omne Fin, Inc v Shacks, Inc, 460 Mich. 305, 312; 596 N.W.2d 591 (1999). And because Crispelli's is not an organization legally responsible for Nowakowski's motor vehicle, the trial court properly excluded Crispelli's insurance policy from provision 4(a).
In summary, the trial court did not err in denying defendant's motion for summary disposition.
Affirmed.
MARKEY, J. (dissenting).
I conclude that the trial court erred by denying the motion for summary disposition filed by defendant, The Auto Club Group (Auto Club), under MCR 2.116(C)(10). Accordingly, I respectfully dissent.
This Court reviews de novo a trial court's ruling on a motion for summary disposition. El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 159; 934 N.W.2d 665 (2019). Issues involving the proper interpretation and legal effect of a contract or contractual clause are likewise subject to de novo review. Rory v Continental Ins Co, 473 Mich. 457, 464; 703 N.W.2d 23 (2005).
MCR 2.116(C)(10) provides that summary disposition is appropriate when, "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law." A motion brought pursuant to MCR 2.116(C)(10) tests the factual support for a party's action. Pioneer State Mut Ins Co v Dells, 301 Mich.App. 368, 377; 836 N.W.2d 257 (2013). "Affidavits, depositions, admissions, or other documentary evidence in support of the grounds asserted in the motion are required . . . when judgment is sought based on subrule (C)(10)," MCR 2.116(G)(3)(b), and such evidence, along with the pleadings, must be considered by the court when ruling on the (C)(10) motion, MCR 2.116(G)(5). "When a motion under subrule (C)(10) is made and supported . . ., an adverse party may not rest upon the mere allegations or denials of his or her pleading, but must, by affidavits or as otherwise provided in this rule, set forth specific facts showing that there is a genuine issue for trial." MCR 2.116(G)(4). "A trial court may grant a motion for summary disposition under MCR 2.116(C)(10) if the pleadings, affidavits, and other documentary evidence, when viewed in a light most favorable to the nonmovant, show that there is no genuine issue with respect to any material fact." Pioneer State, 301 Mich.App. at 377. "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." West v Gen Motors Corp, 469 Mich. 177, 183; 665 N.W.2d 468 (2003). The trial court is not permitted to assess credibility, weigh the evidence, or resolve factual disputes, and if material evidence conflicts, it is not appropriate to grant a motion for summary disposition under MCR 2.116(C)(10). Pioneer State, 301 Mich.App. at 377. "Like the trial court's inquiry, when an appellate court reviews a motion for summary disposition, it makes all legitimate inferences in favor of the nonmoving party." Skinner v Square D Co, 445 Mich. 153, 162; 516 N.W.2d 475 (1994). "[S]peculation is insufficient to create an issue of fact." MEEMIC Ins Co v DTE Energy Co, 292 Mich.App. 278, 282; 807 N.W.2d 407 (2011). A court may only consider substantively admissible evidence actually proffered by the parties when ruling on the motion. Maiden v Rozwood, 461 Mich. 109, 121; 597 N.W.2d 817 (1999); see also MCR 2.116(G)(6).
"Underinsurance automobile insurance protection is not required by law and therefore is optional insurance offered by some, but not all, Michigan automobile insurance companies. Because such insurance is not mandated by statute, the scope, coverage, and limitations of underinsurance protection are governed by the insurance contract and the law pertaining to contracts." Mate v Wolverine Mut Ins Co, 233 Mich.App. 14, 19; 592 N.W.2d 379 (1998). And in Home-Owners Ins Co v Andriacchi, 320 Mich.App. 52, 62; 903 N.W.2d 197 (2017), this Court observed:
In reviewing an insurance policy dispute courts must look to the language of the insurance policy and interpret the terms therein in accordance with Michigan's well-established principles of contract construction, the predominant rule being that an insurance contract must be enforced in accordance with its terms. Courts will look to the plain language of the insurance policy in determining the scope of coverage. Although a court strictly construes exclusions in favor of an
insured, clear and specific exclusions must be given effect, and coverage under a policy is lost if any exclusion within the policy applies to an insured's particular claims. Respect for the freedom to contract entails that we enforce only those obligations actually assented to by the parties. A court cannot rewrite a contract if its terms are expressly stated. [Quotation marks, citations, brackets, and ellipses omitted.]
I start my analysis by assuming-consistent with plaintiffs' position-that the pertinent limit of liability under the Auto Club insurance policy for purposes of the policy's definition of "underinsured motor vehicle" is the $500,000 per-accident limit. Therefore, in light of the $300,000 automobile liability coverage for defendant, Kamil Nowakowski, under his policy with Berkshire Hathaway Guard Insurance (Berkshire), I will deem Nowakowski's vehicle an "underinsured motor vehicle."
Part III of the Auto Club policy addresses uninsured and underinsured motorist coverage and, relevant to this appeal, ¶ 3 of the "LIMITS OF LIABILITY" section of Part III provides:
3. If the damages are caused by an underinsured motor vehicle, the most we will pay will be the lesser of:
a. the difference between the Limits of Liability of this coverage and the sum of the Limits of Liability under all bodily injury liability insurance policies, bonds or other security required to be maintained under law applicable to the driver or to the person or organization legally responsible for the underinsured motor vehicle and applicable to the underinsured motor vehicle; or
b. the difference between the amount of the insured person's damages for bodily injury and the sum of the Limits of Liability under all bodily injury liability insurance policies, bonds or other security required to be maintained under law applicable to the driver or to the person or organization legally responsible for the underinsured motor vehicle and applicable to the underinsured motor vehicle. [Bold in original.]
Applying paragraph 3.a. above, the $300,000 liability limit under Nowakowski's Berkshire policy must be subtracted from the $500,000 per-accident limit under the Auto Club policy, resulting in $200,000 in available underinsured motorist (UIM) benefits before contemplation of any other potential reductions. Paragraph 3.b. would only apply if plaintiffs' damages for bodily injury were under $500,000, in which case Auto Club's liability limit for UIM benefits would be less than $200,000. Again making an assumption favorable to plaintiffs, I will apply ¶ 3.a., meaning that ¶ 3 limits Auto Club's total liability for UIM benefits to $200,000.
Next, the $200,000 amount calculated under ¶ 3 is subject to possible further reduction under ¶ 4 of the "LIMITS OF LIABILITY" section of Part III of the Auto Club policy, which provides, in pertinent part:
4. Any amount payable under this Part will be reduced by:
a. any amount paid or payable by or on behalf of the owner or operator of the uninsured motor vehicle or organization which may be legally liable;
b. any amount paid or payable under the Liability Insurance Coverage of this or any other policy .... [Bold in original.]
Paragraph 4.a. plainly does not apply to reduce the $200,000 amount in UIM benefits because Nowakowski's vehicle was not uninsured. But ¶ 4.b. clearly applies in light of the liability insurance coverage under the dramshop insurance policy issued by Fremont Insurance to defendant, Crispelli's LLC. See MCL 436.1803. That policy provides liability coverage and certainly qualifies as "any other policy." We cannot ignore the plain and unambiguous language of ¶ 4.b. Andriacchi, 320 Mich.App. at 62. Paragraph 4.b. does not state that the "other policy" must be one that is directly applicable to the underinsured motor vehicle or its operator. Indeed, consideration of all bodily injury liability insurance policies applicable to the underinsured motor vehicle and its driver is already required by ¶ 3 for purposes of limiting Auto Club's liability. Paragraph 4 provides for possible further reduction of Auto Club's liability, and if the term "policy" in ¶ 4.b. is construed in the same manner as the term is used in ¶ 3, we would effectively be rendering ¶ 4.b. meaningless and surplusage. And "courts must . . . give effect to every word, phrase, and clause in a contract and avoid an interpretation that would render any part of the contract surplusage or nugatory." Klapp v United Ins Group Agency, Inc, 468 Mich. 459, 468; 663 N.W.2d 447 (2003).
Therefore, moving forward, the $200,000 limit on Auto Club's liability for UIM benefits as derived from application of ¶ 3 must be reduced pursuant to ¶ 4.b. by "any amount paid or payable under" Crispelli's dramshop liability insurance policy. That policy has a $1 million peroccurrence liability limit, and there is no genuine issue of material fact that plaintiffs settled the dramshop claims against Crispelli's in the amounts of $325,000 with respect to Randall Shaw and $25,000 with regard to Hillary Shaw. Accordingly, the "paid" $350,000 amount must be subtracted from the $200,000 amount, leaving a negative dollar figure. Thus, Auto Club owes no UIM benefits to plaintiffs under the plain and unambiguous language of the insurance policy.
The majority concludes that Auto Club waived any appellate argument under ¶ 4.b. because the issue was never raised below in the trial court. In In re Conservatorship of Murray, 336 Mich.App. 234, 241; 970 N.W.2d 372 (2021), this Court explained:
This Court has discretion to review unpreserved issues in civil cases if review would prevent manifest injustice, if review is necessary for proper resolution of the case, or if the issue involves a question of law and the facts necessary for determination have been presented. This Court has reviewed forfeited issues when declining to do so would result in a miscarriage of justice. This Court,
however, exercises its discretion sparingly and only when exceptional circumstances warrant review. [Citations omitted; emphasis added.]
Here, all three of the reasons for reviewing an unpreserved issue are implicated. Taking into consideration ¶ 4.b. would prevent a potential manifest injustice, i.e., rewriting of the insurance policy and enforcing an obligation to which the parties did not assent. Taking into consideration ¶ 4.b. is also necessary for a proper resolution of the case. And, finally, taking into consideration ¶ 4.b. entails or involves a question of law, and the facts necessary to determine and resolve the issue were presented and are undisputed. In short, review of Auto Club's argument under ¶ 4.b. is warranted and in accord with applicable rules of contractual analysis of insurance policies.
The trial court's ruling denying Auto Club's motion for summary disposition is erroneous; consequently, it should be reversed. Accordingly, I respectfully dissent.