Title: SHIRLEY RORY V CONTINENTAL INSURANCE COMPANY
Citation: N/A
Docket Number: 126747
State: Michigan
Issuer: Michigan Supreme Court
Date: July 28, 2005

Michigan Supreme Court 
Lansing, Michigan 
Chief Justice:  
Justices: 
Clifford W. Taylor  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Opinion 
Maura D. Corrigan 
Robert P. Young, Jr. 
Stephen J. Markman 
JULY 28, 2005 
SHIRLEY RORY and ETHEL WOODS, 
Plaintiffs-Appellees, 
v 
No. 126747 
CONTINENTAL INSURANCE COMPANY,
a/k/a CNA INSURANCE COMPANY 
Defendant-Appellant. 
_______________________________ 
BEFORE THE ENTIRE BENCH 
YOUNG, J.  
In this case, the trial court refused to enforce the 
one-year contractual limitations period contained in the 
insurance policy issued to plaintiffs. The trial court did 
so because it concluded that the one-year limitations 
provision was “unfair,” unreasonable, and an unenforceable 
adhesion clause. The Court of Appeals affirmed, and 
defendant 
Continental 
Insurance 
Company 
(Continental) 
appeals. 
This case raises two fundamental questions of contract 
law: (1) are insurance contracts subject to a standard of 
 
 
 
enforcement 
different 
from 
that 
applicable 
to 
other 
contracts, and (2) under what conditions may a court 
disregard and refuse to enforce unambiguous contract terms? 
We hold, first, that insurance policies are subject to 
the same contract construction principles that apply to any 
other species of contract. 
Second, unless a contract 
provision violates law or one of the traditional defenses 
to the enforceability of a contract applies, a court must 
construe and apply unambiguous contract provisions as 
written. We reiterate that the judiciary is without 
authority to modify unambiguous contracts or rebalance the 
contractual equities struck by the contracting parties 
because fundamental principles of contract law preclude 
such 
subjective 
post 
hoc 
judicial 
determinations 
of 
“reasonableness” as a basis upon which courts may refuse to 
enforce unambiguous contractual provisions. 
Finally, in addition to these traditional contract 
principles, in this case involving an insurance contract, 
the 
Legislature 
has 
enacted 
a 
statute 
that 
permits 
insurance contract provisions to be evaluated and rejected 
on the basis of “reasonableness.” The Legislature has 
explicitly assigned this task to the Commissioner of the 
Office of Financial and Insurance Services (Commissioner) 
rather than the judiciary. The Commissioner has allowed the 
2  
 
 
 
 
 
Continental insurance policy form to be issued and used in 
Michigan. No party here has challenged the Commissioner’s 
action to allow the Continental policy to be issued or used 
in this state. 
Accordingly, we reverse the Court of Appeals decision 
and remand the case to the circuit court for entry of an 
order of summary disposition in favor of defendant. 
I. 
Facts and Procedural History 
Plaintiffs maintained an automobile insurance policy 
with defendant, which included optional coverage for 
uninsured motorist benefits. 
On May 15, 1998, plaintiffs 
were injured in an automobile accident. The police report 
filed at the time of the collision did not indicate whether 
either party was insured. 
More than a year later, in 
September 1999, plaintiffs filed a first-party no-fault 
suit 
against 
defendant 
and 
a 
third-party 
suit 
for 
noneconomic damages against Charlene Haynes, the driver of 
the other vehicle. Only after the suit was commenced was it 
discovered that Haynes was uninsured. On March 14, 2000, 
plaintiffs 
submitted 
a 
claim 
for 
uninsured 
motorist 
benefits to Continental. 
Defendant denied the claim 
because it was not filed within one year after the 
accident, as required by the insurance policy. 
3  
 
 
 
 
 
 
                                                 
  
  
In August 2000, plaintiffs filed the present action, 
contesting 
Continental’s 
denial 
of 
uninsured 
motorist 
benefits. 
Defendant 
filed 
a 
motion 
for 
summary 
disposition, relying on a limitations provision in the 
insurance contract that required that a claim or suit for 
uninsured motorist coverage “must be brought within 1 year 
from the date of the accident.” 
The trial court denied defendant’s motion, holding 
that the one-year limitations period contained in the 
contract was unreasonable. 
After the Court of Appeals 
issued an opinion in an unrelated case, 
1 defendant renewed 
its motion for summary disposition. 
The trial court again denied defendant’s motion for 
summary disposition, holding that the one-year limitation 
was 
an 
unenforceable 
adhesion 
clause. 
Because 
the 
limitation was not highlighted in the contract, was not 
bargained 
for 
by 
the 
purchaser, 
and 
constituted 
a 
“significant reduction” in the time plaintiffs would 
otherwise have to file suit against defendant, the trial 
Williams v Continental Ins Co, unpublished opinion per
curiam of the Court of Appeals, issued April 23, 2002
(Docket No. 229183). In Williams, the panel considered
identical policy language and concluded that the one-year
limitation was “not so unreasonable as to be unenforceable” 
because the policy required that a claim be filed within a
year, rather than a lawsuit. 
4  
1 
 
 
 
 
                                                 
  
court held that it would be “totally and patently unfair” 
to enforce the limitation contained in the policy. 
On appeal, the Court of Appeals affirmed the trial 
court’s decision to deny defendant’s motion for summary 
disposition.2
 The Court of Appeals agreed with the trial 
court 
that 
a 
one-year 
period 
of 
limitations 
was 
unreasonable. The panel instead imposed a three-year period 
of limitations, holding: 
An insured may not have sufficient time to
ascertain whether an impairment will affect his
ability to lead a normal life within one year of
an accident. Indeed, three of the factors to be
considered 
in 
determining 
whether 
a 
serious 
impairment 
exists 
are 
the 
duration 
of 
the 
disability, the extent of residual impairment,
and the prognosis for eventual recovery. Further,
unless the police report indicates otherwise, the
insured will not know that the other driver is 
uninsured until suit is filed, and the other
driver 
fails 
to 
tender 
the 
defense 
to 
an 
insurance company. The insured, thus, must file
suit well before the one-year period in order to
assure that the information is known in time to 
make a claim or file suit against the insurance
company within one year of the accident. Applying
the standard set forth in Camelot, . . . we
conclude 
that 
the 
limitation 
here 
is 
not 
reasonable 
because, 
in 
most 
instances, 
the 
insured (1) does not have “sufficient opportunity
to investigate and file an action,” where the
insured may not have sufficient information about
his own physical condition to warrant filing a 
claim, and will likely not know if the other
driver 
is 
insured 
until 
legal 
process 
is 
commenced, (2) under these circumstances, the 
time will often be “so short as to work a 
262 Mich App 679; 687 NW2d 304 (2004). 
5  
2 
 
 
 
 
 
 
 
  
 
                                                 
  
  
  
  
  
 
practical abrogation of the right of action,” and
(3) the action may be barred before the loss can
be ascertained.  
* * *  
Here, the Legislature has provided a three­
year 
limitations 
period 
for 
personal 
injury
claims. The insured must sue the other driver 
within three years of the injury, whether or not
the insured has sufficient information to know if 
a serious impairment has been sustained, and 
whether or not the other driver is insured. 
Application of the three-year period would not
deprive the insured of a sufficient opportunity
to investigate and file a claim and does not work
a practical abrogation of the right. [Id. at 686­
687 (internal citations omitted).][3] 
Subsequently, we granted defendant’s application for 
leave to appeal.4 
II. Standard of Review 
This Court reviews de novo the trial court’s decision 
to grant or deny summary disposition.5 In reviewing the 
motion, the pleadings, affidavits, depositions, admissions, 
and any other admissible evidence are viewed in the light 
3 
Relying on Herweyer v Clark Hwy Services, Inc, 455 
Mich 14; 564 NW2d 857 (1997), the Court of Appeals agreed
with the trial court that the insurance policy was adhesive
and “should receive close judicial scrutiny.” 262 Mich App
at 687. 
4 
471 Mich 904 (2004). 
5 
Van v Zahorik, 460 Mich 320; 597 NW2d 15 (1999). 
6  
 
 
  
 
 
 
                                                 
  
 
  
 
 
  
   
most favorable to the nonmoving party.6 Moreover, questions 
involving the proper interpretation of a contract or the 
legal effect of a contractual clause are also reviewed de 
novo.7 In ascertaining the meaning of a contract, we give 
the words used in the contract their plain and ordinary 
meaning that would be apparent to a reader of the 
instrument.8 
III. Analysis 
A. THE “REASONABLENESS DOCTRINE” IN MICHIGAN 
Under the language of the insurance policy at issue, 
an insured is required to file a claim or lawsuit for 
uninsured motorist benefits “within 1 year from the date of 
the accident.” Plaintiff asks this Court to refuse to 
enforce that provision of the insurance contract because 
the limitations period is not “reasonable.” This action, 
being a claim arising under the insurance policy, is a 
first-party claim against the insurer. Therefore, contrary 
to the Court of Appeals conclusion that a three-year period 
6 
Radtke v Everett, 442 Mich 368, 374; 501 NW2d 155
(1993). 
7 
Archambo v Lawyers Title Ins Corp, 466 Mich 402, 408;
646 NW2d 170 (2002); Bandit Industries, Inc v Hobbs Int'l, 
Inc (After Remand), 463 Mich 504, 511; 620 NW2d 531 (2001). 
8 
Wilkie v Auto-Owners Ins Co, 469 Mich 41, 47; 664 NW2d
776 (2003). 
7  
 
 
  
 
   
                                                 
  
 
  
 
  
 
  
 
of limitations applies to this lawsuit, plaintiff’s suit 
against Continental—in the absence of the limitations 
provision contained in the policy—would be governed by the 
general six-year period of limitations applicable to 
contract actions.9 
Uninsured 
motorist 
insurance 
permits 
an 
injured 
motorist to obtain coverage from his own insurance company 
to the extent that a third-party claim would be permitted 
against the uninsured at-fault driver.10 Uninsured motorist 
coverage is optional—it is not compulsory coverage mandated 
by 
the 
no-fault 
act.11 
Accordingly, 
the 
rights 
and 
limitations of such coverage are purely contractual and are 
construed without reference to the no-fault act.12 
9 
MCL 600.5807(8). If plaintiffs brought suit against
the at-fault driver instead of their own insurance carrier,
such a third-party claim would be limited to being brought
within three years pursuant to former MCL 600.5805(9), now
MCL 600.5805(10), which governs claims for injury to person
or property. 
10 
The owner or operator of a vehicle is subject to tort
liability for noneconomic loss only if the injured motorist
has suffered death, serious impairment of a body function,
or 
permanent 
serious 
disfigurement. 
MCL 
500.3135(1);
Kreiner v Fischer, 471 Mich 109; 683 NW2d 611 (2004); Auto 
Club Ins Ass'n v Hill, 431 Mich 449; 430 NW2d 636 (1988). 
11 
Twichel v MIC Gen Ins Corp, 469 Mich 524, 533; 676
NW2d 616 (2004). 
12 
Id. 
8  
 
 
 
 
 
 
  
                                                 
  
 
  
 
  
 
In 
support 
of 
their 
claim 
that 
a 
contractual 
limitations provision may be disregarded on the basis of an 
assessment of “reasonableness,” plaintiffs rely on Tom 
Thomas Org, Inc v Reliance Ins Co.13 In Tom Thomas, the 
plaintiff filed suit fifteen months after the loss to 
recover for property damage under an insurance policy. The 
policy contained a one-year limitation on filing suit. 
Even a cursory reading of Tom Thomas reveals that the 
holding of the case was premised on “judicial tolling” 
rather than reasonableness. In fact, the majority in Tom 
Thomas specifically declined to address the reasonableness 
of the one-year limitation; instead, it predicated its 
holding on “reconciliation of the provisions of the policy” 
by the imposition of judicial tolling.14
 In dicta, the 
Court noted the “general rule” that a shortened contractual 
period of limitations was “valid if reasonable even though 
the period is less than that prescribed by otherwise 
applicable statutes of limitation.”15 
13 
396 Mich 588; 242 NW2d 396 (1976). 
14 
The Tom Thomas Court held that the contractual period
of limitations was judicially tolled “from the time the
insured gives notice until the insurer formally denied
liability.” Id. at 597. 
15 
Id. at 592 (emphasis added). In support of the 
“general rule,” the Tom Thomas Court cited a secondary
(continued…) 
9  
 
 
                                                 
 
 
  
 
 
In Camelot Excavating Co, Inc v St Paul Fire & Marine 
Ins Co,16 this Court expanded upon the “reasonableness” 
dicta articulated in Tom Thomas. In Camelot, the plaintiff 
sought payment on a labor and material bond from the 
defendant. The defendant moved for summary disposition on 
the basis of the one-year limitations period contained in 
the bond contract. 
Citing Tom Thomas for the proposition 
(…continued)
source rather than Michigan authority. However, the opinion
subsequently noted that prior Michigan case law had 
enforced shortened contractual limitations periods without
resort to a “reasonableness” analysis. Id. at 592 n 4. 
In fact, prior case law had consistently upheld the
validity of contractually shortened limitations periods;
such provisions could be avoided only where the insured
could establish waiver on the part of the insurer or
estoppel. See 
McIntyre v Michigan State Ins Co, 52 Mich
188; 17 NW 781 (1883); Law v New England Mut Accident
Ass'n, 94 Mich 266; 53 NW 1104 (1892); Turner v Fidelity &
Cas Co, 112 Mich 425; 70 NW 898 (1897) (insurance company
waived one-year limitation by conduct); Harris v Phoenix 
Accident & Sick Benefit Ass’n, 149 Mich 285; 112 NW 935
(1907)(failure of the insured to sue within six months was
not waived); Friedberg v Ins Co of North America, 257 Mich
291; 241 NW 183 (1932)(where settlement negotiations are 
broken off by the insurer near the end of the contractual
limitations period, the provision was deemed waived); Hall 
v Metro Life Ins Co, 274 Mich 196; 264 NW 340 (1936); Barza 
v Metro Life Ins Co, 281 Mich 532; 275 NW 238 (1937)(the
plaintiff was bound by two-year limitations clause where 
there was no evidence of waiver or estoppel); Bashans v 
Metro Mut Ins Co, 369 Mich 141; 119 NW2d 622 (1963)
(insurer did not waive two-year “binding” limitations 
clause); Better Valu Homes, Inc v Preferred Mut Ins Co, 60
Mich App 315; 230 NW2d 412 (1975). 
410 Mich 118; 301 NW2d 275 (1981). 
10 
16 
 
 
 
 
                                                 
  
 
 
  
 
that a shortened period of limitations is acceptable “where 
the limitation is reasonable,”17 Camelot relied on case law 
from foreign jurisdictions in articulating a three-part 
test for evaluating the reasonableness of a contractually 
shortened limitations period.18  Ultimately, the Court held 
that the one-year period of limitations was reasonable, and 
that no public policy considerations precluded enforcement 
of the contractual provision. 
In 
the 
end, 
Camelot 
enforced 
the 
contractually 
shortened limitations period at issue. However, rather than 
simply enforcing the contract as written, the decision in 
Camelot 
was 
premised 
upon 
the 
adoption 
of 
a 
“reasonableness” test found in the dicta of Tom Thomas. In 
17 
Camelot also cited Barza v Metro Life and Turner v 
Fidelity, n 15 supra, in support of the “rule” that a
contractual 
limitations 
provision 
may 
be 
upheld 
if 
reasonable. Camelot, supra at 126. However, neither Barza 
nor Turner may be properly read as requiring reasonableness
before a contractual provision may be deemed valid. In both
cases, the analysis focused on whether the insurer waived
the otherwise binding limitations provision. 
18 
Camelot 
held 
that 
a 
contractually 
shortened 
limitations period is reasonable if (1) the claimant has
sufficient opportunity to investigate and file an action,
(2) the time is not so short as to work a practical
abrogation of the right of action, and (3) the action is
not barred before the loss or damage can be ascertained.
Id. at 127. 
11  
 
 
 
 
 
                                                 
  
 
 
  
 
failing to employ the plain language of the contract, the 
Camelot Court erred. 
A fundamental tenet of our jurisprudence is that 
unambiguous contracts are not open to judicial construction 
and must be enforced as written.19 Courts enforce contracts 
according to their unambiguous terms because doing so 
respects the freedom of individuals freely to arrange their 
affairs via contract. This Court has previously noted that 
“‘[t]he general rule [of contracts] is that competent 
persons shall have the utmost liberty of contracting and 
that their agreements voluntarily and fairly made shall be 
held valid and enforced in the courts.’”20 
When 
a 
court 
abrogates 
unambiguous 
contractual 
provisions based on its own independent assessment of 
19 
Harrington 
v 
Inter-State 
Business 
Men's 
Accident 
Ass'n, 210 Mich 327; 178 NW 19 (1920); Indemnity Ins Co of 
North America v Geist, 270 Mich 510; 259 NW 143 (1935);
Cottrill v Michigan Hosp Service, 359 Mich 472; 102 NW2d
179 (1960); Henderson v State Farm Fire & Cas Co, 460 Mich
348; 596 NW2d 190 (1999); Cruz v State Farm Mut Automobile 
Ins Co, 466 Mich 588; 648 NW2d 591 (2002). 
20 
Terrien v Zwit, 467 Mich 56, 71; 648 NW2d 602 (2002),
quoting Twin City Pipe Line Co v Harding Glass Co, 283 US
353, 356; 51 S Ct 476; 75 L Ed 1112 (1931). 
12  
 
 
 
 
                                                 
  
 
“reasonableness,” the court undermines the parties’ freedom 
of contract.21 As this Court previously observed: 
This approach, where judges . . . rewrite
the contract . . . is contrary to the bedrock
principle of American contract law that parties
are free to contract as they see fit, and the
courts are to enforce the agreement as written
absent some highly unusual circumstance such as a
contract in violation of law or public policy. 
This 
Court 
has 
recently 
discussed, 
and 
reinforced, its fidelity to this understanding of
contract law in Terrien v Zwit, 467 Mich 56, 71;
648 NW2d 602 (2002). The notion, that free men
and women may reach agreements regarding their
affairs without government interference and that
courts will enforce those agreements, is ancient
and irrefutable. It draws strength from common­
law roots and can be seen in our fundamental 
charter, the United States Constitution, where
government 
is 
forbidden 
from 
impairing 
the 
contracts of citizens, art I, § 10, cl 1. Our own
state constitutions over the years of statehood
have 
similarly 
echoed 
this 
limitation 
on 
government 
power. 
It 
is, 
in 
short, 
an 
unmistakable and ineradicable part of the legal
fabric of our society. Few have expressed the
force of this venerable axiom better than the 
late Professor Arthur Corbin, of Yale Law School, 
21 
Justice 
Kelly 
maintains 
that 
reviewing 
contract 
provisions for “reasonableness” is “essential in order to
accurately 
implement 
the 
intent 
of 
the 
contracting
parties.” Post at 6. 
However, it is difficult to 
rationalize implementing the intent of the parties by 
imposing 
contractual 
provisions 
that 
are 
completely
antithetic to the provisions contained in the contract.
Rather, the intent of the contracting parties is best
discerned by the language actually used in the contract. As
this Court noted in Quality Products & Concepts Co v Nagel
Precision, Inc, 469 Mich 362, 375; 666 NW2d 251 (2003), “an
unambiguous contractual provision is reflective of the 
parties’ intent as a matter of law.” 
13  
 
 
 
  
 
 
    
                                                 
  
 
  
   
  
who wrote on this topic in his definitive study
of contract law, Corbin on Contracts, as follows: 
“One does not have ‘liberty of contract’
unless 
organized 
society 
both 
forbears 
and 
enforces, forbears to penalize him for making his
bargain and enforces it for him after it is made.
[15 Corbin, Contracts (Interim ed), ch 79, §
1376, p 17.]”[22] 
Accordingly, we hold that an unambiguous contractual 
provision providing for a shortened period of limitations 
is to be enforced as written unless the provision would 
violate law or public policy. A mere judicial assessment of 
“reasonableness” is an invalid basis upon which to refuse 
to 
enforce 
contractual 
provisions. 
Only 
recognized 
traditional contract defenses may be used to avoid the 
enforcement of the contract provision.23 To the degree that 
Tom Thomas, Camelot, and their progeny abrogate unambiguous 
contractual 
terms 
on 
the 
basis 
of 
reasonableness 
determinations, they are overruled.24 
22 
Wilkie, supra at 51-52. 
23 
Examples 
of 
traditional 
defenses 
include 
duress,
waiver, estoppel, fraud, or unconscionability. See Quality
Products & Concepts Co, supra (waiver); Beloskursky v 
Jozwiak, 221 Mich 316; 191 NW 16 (1922) (estoppel); Hackley 
v Headley, 45 Mich 569; 8 NW 511 (1881) (duress); Witham v 
Walsh, 156 Mich 582; 121 NW 309 (1909) (fraud); Gillam v 
Michigan Mortgage-Investment Corp, 224 Mich 405; 194 NW 981
(1923) (unconscionability). 
24 
Justice 
Kelly 
maintains 
that 
the 
Camelot 
Court 
“applied a very old and well tested legal rule” when it
(continued…) 
14  
 
 
 
 
 
  
 
                                                 
 
 
   
  
 
  
 
B. THE PROVISION IS NOT CONTRARY TO LAW OR PUBLIC POLICY 
We next consider whether the contractually shortened 
period of limitations violates law or public policy. As 
noted by this Court, the determination of Michigan’s public 
policy “is not merely the equivalent of the personal 
preferences of a majority of this Court; rather, such a 
policy must ultimately be clearly rooted in the law.”25 In 
ascertaining the parameters of our public policy, we must 
look to “policies that, in fact, have been adopted by the 
public through our various legal processes, and are 
reflected in our state and federal constitutions, our 
statutes, and the common law.”26 
As an initial matter, we note that this Court has 
previously held that Michigan has “no general policy or 
statutory enactment . . . which would prohibit private 
(…continued)
adopted the so-called “reasonableness doctrine.” Post at 7. 
However, as even the Tom Thomas Court recognized, Michigan
jurisprudence enforced contractually shortened limitations
provisions without regard to the “reasonableness” of the
provisions. See n 15 of this opinion. Citation of case law 
from other jurisdictions simply does not alter the fact
that the “very old and well tested legal rule” of Michigan
eschewed using “reasonableness” as a basis for abrogating
contractually shortened limitations provisions. 
25 
Terrien, supra at 67. 
26 
Id. at 66-67. 
15  
 
 
 
   
                                                 
  
 
  
 
 
 
parties from contracting for shorter limitations periods 
than those specified by general statutes.”27 This is 
consistent 
with 
our 
case 
law, 
which 
had 
held 
that 
contractually shortened periods of limitations were valid, 
and were to be disregarded only where the insured could 
establish estoppel or prove that the insurer waived the 
contractual provision.28 
27 
Camelot, supra at 139. 
28 
See n 15 of this opinion. 
Amicus cites Price v 
Hopkin, 13 Mich 318 (1865), and Lukazewski v Sovereign Camp
of the Woodmen of the World, 270 Mich 415; 259 NW 307
(1935), in support of the claim that Michigan case law has
a “long-standing policy” of disregarding “unreasonable” 
contractual limitations periods. However, both cases are
distinguishable. 
In Price, the Legislature shortened a statute of 
limitations from twenty to fifteen years, giving the 
amendment retroactive effect. The plaintiff’s grantor “was
entitled by the existing statutes to bring her action
within 
twenty 
years,” 
but 
the 
statutory 
amendment 
immediately severed her cause of action. Price, supra at 
323-324. 
Justice 
Cooley 
held 
that 
the 
retroactive 
statutory amendment was unconstitutional as violative of
due process because it annihilated a vested right without
permitting a “reasonable time” to bring the lawsuit. 
Id. 
at 324-328. 
Likewise, Lukazewski is also distinguishable. There,
the plaintiff was the beneficiary of a life insurance
policy that required “proof of the insured’s actual death.”
The policy also required that all lawsuits be commenced
within one year from the date of death. The insured 
disappeared in 1925, but proof of his death was not 
established until 1932. The defendant “denied liability on
the 
ground 
that 
both 
the 
contractual 
and 
statutory
limitations” had expired. Lukazewski, supra at 417-418. 
(continued…) 
16  
 
 
 
  
                                                 
  
  
 
29 
Likewise, there is no Michigan statute explicitly 
prohibiting 
contractual 
provisions 
that 
reduce 
the 
limitations period in uninsured motorist policies. The 
Legislature has proscribed shortened limitations periods in 
only one specific context: life insurance policies. MCL 
500.4046(2).29 
(…continued)
The Lukazewski Court held that, because the policy
required affirmative proof of the decedent’s death, the
one-year limitations period would not begin to run until
the death was discovered. The Lukazewski Court utilized the 
doctrine of judicial tolling, which is not at issue in the
present case, to suspend the running of the contractual
limitations 
period. 
However, 
it 
is 
unclear 
why 
the 
contractual limitations period was considered at all, as
the contract provision violated the law. 1917 PA 256 was
enacted four years before the issuance of the life 
insurance policy. 1917 PA 256, part 3, ch 2, § 4, contains
a provision that is substantively identical to our current
MCL 500.4046(2), see n 29 of this opinion. 
Thus, because
the policy required actual proof of death, the cause of
action did not accrue until death could be proven. The
plain language of the statute provided the plaintiff six
years from the time the cause of action accrued to file 
suit. 
MCL 500.4046 states in pertinent part: 
No policy of life insurance other than 
industrial life insurance shall be issued or 
delivered in this state if it contain [sic] any
of the following provisions:
* * * 
(2) A provision limiting the time within
which any action at law or in equity may be
commenced to less than 6 years after the cause of
action shall accrue[.] 
17  
 
 
 
 
 
 
                                                 
  
 
  
Notwithstanding 
the 
fact 
that 
the 
Commissioner 
approved for use the contract at issue in this case, the 
Commissioner now argues to this Court that MCL 500.2254 
precludes contractual periods of limitations that are less 
than six years. The statute provides in part: 
No article, bylaw, resolution or policy
provision 
adopted 
by 
any 
life, 
disability,
surety, 
or 
casualty 
insurance 
company 
doing
business in this state prohibiting a member or
beneficiary from commencing and maintaining suits
at law or in equity against such company shall be
valid and no such article, bylaw, provision or 
resolution shall hereafter be a bar to any suit
in any court in this state: Provided, however,
That 
any 
reasonable 
remedy 
for 
adjudicating
claims established by such company or companies
shall first be exhausted by the claimant before
commencing suit: Provided further, however, That
the company shall finally pass upon any claim
submitted to it within a period of 6 months from
and after final proofs of loss or death shall
have been furnished any such company by the 
claimant. 
The plain language of the statute states that “[n]o 
. . . policy provision  . . . prohibiting a member or 
beneficiary from commencing and maintaining [a lawsuit] 
against [the insurer] 
. . . shall be valid . . . .” 
(Emphasis added.) 
The common definition of “prohibit” is 
“to forbid by authority or command.”30  Clearly, the statute 
proscribes contractual provisions that forbid or preclude 
New International Dictionary of the English Language
(1954), p 1978. 
18  
30 
 
 
 
 
 
                                                 
  
the commencement or maintenance of a lawsuit. The statute 
does not, however, bar the imposition of conditions that 
may be placed on the commencement and maintenance of a 
lawsuit.31 
While nothing in our statutes explicitly addresses 
contractually shortened limitations periods outside the 
context of life insurance policies, we note that the 
Legislature 
has 
provided 
a 
mechanism 
to 
ensure 
the 
reasonableness of insurance policies issued in the state of 
Michigan. 
MCL 500.2236(1) requires that all “basic insurance 
policy” forms be filed with the Commissioner's office and 
be approved by the Commissioner before a policy may be 
issued by an insurance company. If the Commissioner fails 
to act within thirty days after the policy form is 
submitted, the form is deemed approved. MCL 500.2236(1). 
One of the factors that the Commissioner may consider in 
determining whether to approve an insurance policy is the 
reasonableness of the conditions and exceptions contained 
therein. MCL 500.2236(5) and (6) provide: 
We note that Justice Kelly’s construction of this
provision would render invalid any contractual limitations
provision 
in 
an 
insurance 
contract, 
even 
one 
that 
paralleled the applicable statutory limitations period.
Post at 15-16. 
19  
31 
 
 
 
 
 
                                                 
  
 
 
(5) Upon written notice to the insurer, the
commissioner may disapprove, withdraw approval or
prohibit the issuance, advertising, or delivery
of any form to any person in this state if it
violates any provisions of this act, or contains
inconsistent, ambiguous, or misleading clauses,
or 
contains 
exceptions 
and 
conditions 
that 
unreasonably 
or 
deceptively 
affect 
the 
risk 
purported to be assumed in the general coverage
of the policy. The notice shall specify the 
objectionable provisions or conditions and state
the reasons for the commissioner’s decision. If 
the form is legally in use by the insurer in this
state, the notice shall give the effective date
of the commissioner’s disapproval, which shall
not be less than 30 days subsequent to the 
mailing or delivery of the notice to the insurer.
If 
the 
form 
is 
not 
legally 
in 
use, 
then 
disapproval shall be effective immediately. 
(6) If a form is disapproved or approval is
withdrawn under the provisions of this act, the
insurer is entitled upon demand to a hearing
before the commissioner or a deputy commissioner
within 30 days after the notice of disapproval or
of withdrawal of approval. After the hearing, the
commissioner shall make findings of fact and law,
and either affirm, modify, or withdraw his or her
original order or decision. [Emphasis added.] 
Clearly, 
the 
Legislature 
has 
assigned 
the 
responsibility of evaluating the “reasonableness” of an 
insurance contract to the person within the executive 
branch charged with reviewing and approving insurance 
policies: the Commissioner of Insurance.32 The statute 
In other contexts, the Legislature has explicitly
assigned the responsibility of assessing the reasonableness
of private contracts to the judiciary. See, for example,
MCL 
445.774a, 
which 
governs 
noncompetition 
covenants 
between an employer and an employee. 
(continued…) 
20  
32 
 
 
 
   
 
                                                 
   
  
permits, 
but 
does 
not 
require, 
the 
Commissioner 
to 
disapprove or withdraw an insurance contract if the 
Commissioner determines that a condition or exception is 
unreasonable 
or 
deceptive. 
The 
decision 
to 
approve, 
disapprove, or withdraw an insurance policy form is within 
the sound discretion of the Commissioner. In this instance, 
the Commissioner has approved the Continental policy form 
containing the shortened limitations provision for issuance 
and use in the state of Michigan.33 
Our courts have a very limited scope of review 
concerning the decisions made by the Commissioner. 
MCL 
500.244(1) provides that an aggrieved person may seek 
judicial review of an “order, decision, finding, ruling, 
opinion, rule, action, or inaction” of the Commissioner as 
provided by the Administrative Procedures Act, MCL 24.201 
et seq. MCL 24.306 provides: 
(1) 
Except 
when 
a 
statute 
or 
the 
constitution provides for a different scope of
review, the court shall hold unlawful and set
aside a decision or order of an agency if 
substantial rights of the petitioner have been 
(…continued) 
Justice Kelly erroneously reads MCL 500.2236(5) as
rendering the Commissioner’s review of a policy form 
discretionary. 
Post 
at 
18-19. 
However, 
under 
that 
statutory subsection, the Commissioner’s discretion extends
only to the ability to “disapprove, withdraw approval or
prohibit the issuance” of a policy form. 
21  
33 
 
 
 
 
 
 
 
 
 
 
 
                                                 
  
  
prejudiced because the decision or order is any
of the following: 
(a) In violation of the constitution or a 
statute. 
(b) In excess of the statutory authority or
jurisdiction of the agency. 
(c) Made upon unlawful procedure resulting
in material prejudice to a party. 
(d) Not supported by competent, material and
substantial evidence on the whole record. 
(e) Arbitrary, capricious or clearly an 
abuse or unwarranted exercise of discretion. 
(f) 
Affected 
by 
other 
substantial 
and 
material error of law. 
Here, plaintiffs have not challenged the decision of 
the Commissioner to allow issuance of the Continental 
policy, much less shown that the Commissioner’s decision 
was arbitrary, capricious, or a clear abuse of discretion.34 
Accordingly, the explicit “public policy” of Michigan is 
that the reasonableness of insurance contracts is a matter 
for the executive, not judicial, branch of government. 
As 
such, the lower courts were not free to invade the 
Certainly, if the Commissioner were to determine 
subsequently that the provision at issue unreasonably
affected the risk assumed in the policy, MCL 500.2236(5)
and (6) provide the appropriate mechanism for withdrawing
approval of the policy condition. 
22  
34 
 
 
 
 
 
 
 
 
 
                                                 
  
 
 
jurisdiction of the Commissioner and determine de novo 
whether Continental’s policy was reasonable. 
C. ADHESION CONTRACTS 
We turn finally to the trial court’s conclusion that 
the policy was an “adhesion contract” and was therefore 
unenforceable. The trial court’s ruling rested on the 
assumption that “adhesion contracts” are subject to a 
greater level of judicial scrutiny than other contracts— 
and, indeed, that so-called adhesion contracts need not be 
enforced if the court views them as unfair. The Court of 
Appeals reached a similar conclusion: 
We further note that the concern the Court 
expressed in Herweyer is present here as well.
The insured had the option of accepting uninsured
motorist coverage or rejecting it, but could not
have bargained for a longer limitations period.
Accordingly, the policy should receive close 
judicial scrutiny. [262 Mich App at 687][35] 
35 
Justice Kelly charges that, in addressing the Herweyer
adhesion contract issue, we are “engag[ing] in judicial
activism”. Post at 28. This is a strange accusation given
that both the trial court and the Court of Appeals relied
on the adhesion contract principles announced in Herweyer
as a basis for invalidating the contractual limitations
provision at issue. We think it unremarkable for this Court
to address an issue that all the lower courts addressed. 
Moreover, because it was Herweyer that literally ignored
nearly a century of contrary precedent in adopting a new
rule of contractual construction (see n 15 of this 
(continued…) 
23  
 
 
 
 
 
                                                 
 
 
The contract construction approach of the lower courts 
is inconsistent with traditional contract principles. 
An 
“adhesion contract” is simply that: a contract.36  It must 
be enforced according to its plain terms unless one of the 
traditional contract defenses applies. 
Indeed, 
a 
careful 
examination 
of 
our 
contract 
jurisprudence reveals that the “adhesion contract doctrine” 
existed in Michigan solely in dicta until it was implicitly 
adopted by this Court in Herweyer v Clark Hwy Services, 
Inc. 
Moreover, 
it 
was 
adopted 
in 
Herweyer 
without 
substantive analysis, and without reference to and in 
contravention of more than one hundred years of contrary 
case law from this Court. 
Before turning to the state of the “adhesion contract 
doctrine” in our jurisprudence, it is important to begin 
(…continued) 
opinion), the claim of “judicial activism” would seem most 
accurately applied to the Herweyer majority.  
36
 There are many descriptive labels that are used to
categorize species of contracts: 
“unilateral,” see, e.g.,
Sniecinski v Blue Cross & Blue Shield of Michigan, 469 Mich
124, 138 n 9; 666 NW2d 186 (2003), “executory,” see, e.g.,
Kolton v Nassar, 358 Mich 154, 156; 99 NW2d 362 (1959),
“installment,” Twichel v MIC Gen Ins Corp, 469 Mich 524,
532 n 5; 676 NW2d 616 (2004), etc. 
The fact that a 
particular label is attached to a contract does not exempt
the contract from the application of standard contract law
principles. 
24  
 
 
                                                 
  
 
  
 
  
 
with a sense of how the notion of an “adhesive” contract 
arose in the first place. The term “adhesion contract” was 
originally coined simply as a descriptive label for a 
common contract practice in the insurance industry. 
The 
term was introduced in a 1919 law review article by 
University of Colorado Law School professor Edwin W. 
Patterson 
to 
describe 
a 
life 
insurance 
policy 
term 
requiring “delivery of the policy to the applicant” before 
the policy became effective.37 Professor Patterson made the 
observation that “[l]ife-insurance contracts are contracts 
of ‘adhesion.’ The contract is drawn up by the insurer and 
the insured, who merely ‘adheres’ to it, has little choice 
as to its terms.”38 Patterson noted that “a majority of the 
courts 
have 
strictly 
enforced” 
such 
contractual 
stipulations, although some courts had “executed successful 
flanking movements” to find either that the insurer had 
waived the requirement, or that the policy had been 
delivered.39 Thus, the original designation of “adhesion 
contract” described a type of contract, but did not suggest 
37 
Patterson, The delivery of a life-insurance policy, 33  
Harv L R 198 (1919).  
38 
Id. at 222.  
39 
Id. at 221.  
25  
 
 
 
                                                 
  
 
  
 
that such a description rendered the contract or its 
provisions unenforceable. 
It 
was 
not 
until 
a 
quarter-century 
later 
that 
Patterson’s label for life insurance contracts evolved into 
something resembling a “doctrine.” 
In 1943, Yale Law 
School Professor Friedrich Kessler expanded on Patterson’s 
description of practices in the life insurance industry to 
argue that courts should simply refuse to enforce unfair 
provisions of “adhesion contracts” rather than utilize 
traditional contract law principles.40 While conceding that 
“society as a whole ultimately benefits from the use of 
standard 
contracts,” 
Professor 
Kessler 
nonetheless 
maintained that such contracts were typically used by 
enterprises with “strong bargaining power,” and that the 
“weaker party” frequently could not “shop around for better 
terms, either because the author of the standard contract 
[had] a monopoly” or because all competitors used the same 
clauses.41 
Kessler 
expressed 
concern 
that 
“powerful 
industrial and commercial overlords” would impose “a new 
40 
Kessler, Contracts of adhesion—some thoughts about 
freedom of contract, 43 Colum L R 629 (1943). Kessler
advocated that the “task of adjusting” contract law as it
applied to adhesion contracts had to “be faced squarely and
not indirectly.” Id. at 637. 
41 
Id. at 632. 
26  
 
 
  
 
                                                 
  
 
  
 
  
 
  
 
feudal order of their own making upon a vast host of 
vassals.”42 
While noting that “freedom of contract has remained 
one of the firmest axioms in the whole fabric of the social 
philosophy of our culture,”43 Kessler asserted that the 
meaning of “freedom of contract” varied with “the social 
importance of the type of contract and with the degree of 
monopoly 
enjoyed 
by 
the 
author 
of 
the 
standardized 
contract.”44 Thus, Kessler advocated nonenforcement of 
clauses contained in standardized contracts, but only where 
the type of contract was of sufficient “social importance” 
and where the author of the contract enjoyed a monopoly 
over the socially important good or service. 
The groundwork for the “adhesion contract doctrine” 
was thus laid in academia, first in Patterson’s positive 
analysis and then in Kessler’s normative article. 
In 
Michigan, the notion was first imported into our case law 
in 1970. 
In Zurich Ins Co v Rombough,45 the issue to be 
determined was whether an insurer had a duty to defend when 
42 
Id. at 640. 
43 
Id. at 641. 
44 
Id. at 642. 
45 
384 Mich 228; 180 NW2d 775 (1970). 
27  
 
 
 
 
 
 
                                                 
  
 
  
 
its 
policy 
contained 
two 
apparently 
conflicting 
provisions.46 The opinion noted that “[i]t is elemental 
insurance law that ambiguous policy provisions must be 
construed against the insurance company and most favorably 
to the premium-paying insured.”47
 After noting this legal 
principle, the Rombough Court cited the following language 
from a California Supreme Court case to further support its 
rule of construction: 
Justice Tobriner, writing for the California
Supreme Court in the case of Gray v. Zurich 
Insurance Company (1966), 65 Cal 2d 263 (54 Cal
Rptr 104, 419 P2d 168), construing similar 
provisions, said: 
“In interpreting an insurance policy we 
apply the general principle that doubts as to
meaning must be resolved against the insurer and
that any exception to the performance of the
basic underlying obligation must be so stated as
clearly to apprise the insured of its effect. 
“These 
principles 
of 
interpretation 
of 
insurance contracts have found new and vivid 
restatement in the doctrine of the adhesion 
contract. As this court has held, a contract
entered into between two parties of unequal
bargaining strength, expressed in the language of
a standardized contract, written by the more 
46 
The policy contained an exclusion clause, indicating
that the policy did not apply if insured vehicles were
“used to carry property in any business.” Id. at 230. The 
policy also contained a provision indicating that the 
company would provide a defense for any lawsuit even if the
suit was “groundless, false or fraudulent.” Id. at 231. 
47 
Id. at 232. 
28  
 
 
 
 
  
 
  
                                                 
  
  
  
 
  
 
powerful bargainer to meet its own needs, and
offered to the weaker party on a ‘take it or
leave it basis’ carries some consequences that
extend beyond orthodox implications. Obligations
arising from such a contract inure not alone from
the 
consensual 
transaction 
but 
from 
the 
relationship of the parties. 
“Although courts have long followed the 
basic precept that they would look to the words
of the contract to find the meaning which the
parties expected from them, they have also 
applied the doctrine of the adhesion contract to
insurance policies, holding that in view of the
disparate bargaining status of the parties we
must ascertain that meaning of the contract which
the insured would reasonably expect.”[48] 
The Rombough Court concluded by purporting to “adopt” the 
reasoning of Gray v Zurich, holding that the policy 
language was “sufficiently ambiguous” to require plaintiff 
to provide a defense.49 
Thus, 
the 
term 
“adhesion 
contract” 
was 
first 
introduced in Michigan jurisprudence in support of the rule 
of 
contra 
proferentem,50 
wherein 
contract 
terms 
are 
48 
Id. at 232-233. The practice of interpreting contracts
on the basis of reasonable expectations rather that the
plain language of the contract was repudiated by this Court
in Wilkie, supra at 63. 
49 
Rombough, supra at 234. 
50 
See also Klapp v United Ins Group Agency, Inc, 468 
Mich 
459; 
663 
NW2d 
447 
(2003) 
(discussing 
contra 
proferentem as a rule of legal effect, to be utilized only
after all conventional means of contract interpretation
have been applied). 
29  
 
 
 
 
        
  
                                                 
 
 
  
 
  
construed against the drafter in the event of an ambiguity 
to meet the “reasonable expectations” of the insured. 
However, because Rombough was decided on the basis of 
contra proferentem—a rule of interpretation providing that 
truly ambiguous contractual language is to be construed 
against 
the 
drafter51—its 
language 
regarding 
adhesion 
contracts is, as we stated in Wilkie,52 properly classified 
as obiter dicta. 
 
Subsequently, in Cree Coaches, Inc v Panel Suppliers, 
Inc,53 this Court referred again to the “adhesion contract” 
concept. The defendant in Cree Coaches had constructed a 
building for the plaintiff pursuant to a contract that 
limited the warranty to one year after the contract was 
completed. Six years later, the building collapsed from the 
weight of snow. In upholding the provisions limiting the 
plaintiff’s warranty claims and the warranty period, the 
Court noted in dicta—and without analysis—that the Court 
did not regard the construction contract “as a contract of 
adhesion from which public policy would grant relief.”54 
51 
See, e.g., Twichel, supra at 535 n 6. 
52 
Wilkie, supra at 55-56. 
53 
384 Mich 646; 186 NW2d 335 (1971). 
54 
Id. at 649. 
(continued…) 
30  
 
 
 
 
 
 
 
 
                                                 
 
  
 
  
 
This digression was cryptic at best, because this Court had 
never before declined to enforce an “adhesion contract.” 
The term “adhesion contract” was discussed again a 
decade later in Camelot Excavating Co, Inc v St Paul Fire & 
Marine Ins Co.55 In his concurring opinion, Justice Levin 
agreed with the majority that a clause in a construction 
insurance bond limiting the time within which the insured 
could bring suit to one year was enforceable. 
He stated, 
however, 
that 
“[a]n 
adhesion 
contract–such 
as 
most 
contracts of insurance–in which the shortened period has 
not actually been bargained for, or which operates to 
defeat the claim of an intended beneficiary not involved in 
the bargaining process,” would “present a different case.”56 
Again, the basis for Justice Levin’s assertion is unclear, 
because characterization of an agreement as an adhesive 
contract had never before been pivotal in the Court’s 
analysis or enforcement of a contract. 
The development of the notion that adhesion contracts 
were subject to different standards of enforcement was 
dealt a significant blow in Raska v Farm Bureau Mut Ins Co 
(…continued)  
55 
410 Mich 118; 301 NW2d 275 (1981).  
56 
Id. at 142-143.  
31  
 
 
 
 
 
                                                 
  
 
  
  
  
 
of Michigan.57 There, the plaintiff brought suit for breach 
of an automobile policy and for a declaratory judgment that 
an “owned automobile” exclusion was ambiguous and should be 
construed against the insurer, and was void as contrary to 
public policy. This Court not only enforced the contractual 
policy exclusion, but held that “[a]ny clause in an 
insurance policy is valid as long as it is clear, 
unambiguous and not in contravention of public policy.”58 In 
dissent, Justice Williams stated that he would have 
declined to enforce the contractual exclusion because “an 
insurance contract, as a contract of adhesion, is construed 
in favor of the insured,” as well as because of the 
“reasonable 
expectations” 
of 
the 
insured.59 
Raska, 
therefore, stands for the proposition that an insurance 
contract must be interpreted like any other contract: 
according to its plain unambiguous terms. 
This Court’s first attempt at describing the elements 
of the adhesion contract doctrine—a doctrine the Court had 
yet to adopt—was the plurality opinion in Morris v 
57 
412 Mich 355; 314 NW2d 440 (1982). 
58 
Id. at 361-362 (emphasis added). 
59 
Id. at 364. 
32  
 
 
 
 
 
  
                                                 
  
 
  
 
  
Metriyakool.60 There, the plaintiff signed an arbitration 
agreement upon admission to the hospital for medical 
treatment. The hospital presented the arbitration agreement 
pursuant to the former medical malpractice arbitration act 
(MMAA).61 At issue was the question whether the MMAA was 
unconstitutional as violative of the plaintiff’s due 
process rights. 
After determining that the act did not 
implicate due process concerns, Justice Kavanagh, joined by 
Justice Levin, rejected the plaintiff’s assertion that the 
contract was one of adhesion, holding: 
Contracts of adhesion are characterized by 
standardized forms prepared by one party which
are offered for rejection or acceptance without
opportunity 
for 
bargaining 
and 
under 
the 
circumstances that the second party cannot obtain
the 
desired 
product 
or 
service 
except 
by
acquiescing in the form agreement. Regardless of
any possible perception among patients that the
provision of optimal medical care is conditioned
on their signing the arbitration agreement, we
believe that the sixty-day rescission period, of
which patients must be informed, fully protects
those who sign the agreement. The patients’
ability to rescind the agreement after leaving
the hospital allows them to obtain the desired 
service without binding them to its terms. As a 
result, the agreement cannot be considered a 
[62]
contract of adhesion. 
60 
418 Mich 423; 344 NW2d 736 (1984). 
61 
Former MCL 600.5040 et seq. 
62 
Id. at 440 (citations omitted; emphasis added). 
Justices Kavanagh and Levin further determined that the
arbitration agreement was not “unconscionable” because it
(continued…) 
33  
 
 
 
 
 
 
 
 
   
                                                 
 
  
 
  
Writing separately, Justice Ryan, joined by Justice 
Brickley, held that the MMAA did not violate due process 
concerns because there was no state action. In addressing 
the plaintiff’s claim that the arbitration agreement was an 
adhesion contract, Justice Ryan stated: 
A contract of adhesion is a contract which 
has some or all of the following characteristics:
the parties to the contract were of unequal
bargaining strength; the contract is expressed in
standardized language prepared by the stronger
party to meet his needs; and the contract is
offered by the stronger party to the weaker party
on a “take it or leave it” basis. Therefore, the 
essence 
of 
a 
contract 
of 
adhesion 
is 
a 
nonconsensual 
agreement 
forced 
upon 
a 
party
against his will. [63] 
Justice Ryan agreed with the majority, however, that the 
contracts at issue in Morris were not adhesion contracts. 
Thus, while a majority of the Morris Court agreed that the 
contracts at issue were not contracts of adhesion, a 
majority could not agree on what, in fact, made a contract 
one of adhesion.64 
(…continued)
was “not a long contract” and because arbitration was “the
essential and singular nature of the agreement.” Id. at 
441. 
63 
Id. at 471-473 (citation omitted). 
64 
Justice Williams concurred with Justice Kavanagh on
the 
ground 
of 
constitutionality 
only, 
while 
Justice 
(continued…) 
34  
 
 
 
 
 
                                                 
 
  
 
  
 
  
 
The plurality opinion of Powers v Detroit Automobile 
Inter-Ins Exch65 asserted that all insurance contracts are 
adhesion 
contracts: 
nonnegotiated, 
take-it-or-leave-it, 
standardized forms, drafted by “insurance and legal experts 
of a state, national, or international organization, 
hundreds and maybe thousands of miles away.”66
 The 
plurality opinion utilized the now-repudiated doctrine of 
reasonable expectations to resolve the case,67 noting that 
an ambiguity was not a necessary precondition for invoking 
that doctrine. Thus, rather than assessing whether the 
contract was indeed adhesive, the Powers plurality opinion 
decreed that all insurance contracts were contracts of 
adhesion, applying the reasonable expectations doctrine 
without regard to ambiguity. 
(…continued) 
Cavanagh 
issued 
a 
dissent 
addressing 
only 
the 
 
constitutional issue. Justice Boyle did not participate in 
the resolution of the case.  
65 
427 Mich 602; 398 NW2d 411 (1986), overruled by
Wilkie, supra at 63. 
66 
Id. at 608. 
Only Justice Archer joined Justice 
Willams’s opinion. Justices Brickley and Cavanagh concurred
in the result only. 
67 
See Wilkie, supra. 
35  
 
 
 
 
  
   
                                                 
  
 
 
  
 
 
The concept of “adhesion contracts” took yet another 
turn in Auto Club Ins Ass’n v DeLaGarza.68
 The DeLaGarza 
majority concluded that the insurance policy at issue was 
ambiguous and was therefore to be construed “against the 
drafter of the provision and in favor of coverage.”69 
Again, in dicta, the Court endorsed the notion that certain 
contracts are adhesive and are therefore to be construed in 
favor of the insured.70 
toward the insured,” and quoting 7 Williston, Contracts (3d 
68 
433 Mich 208; 444 NW2d 803 (1989). 
69 
Id. at 218. 
70 
Id. at 215 n 7, noting the “judicial predisposition 
ed), § 900, pp 19-20: 
“The fundamental reason which explains this
and other examples of judicial predisposition 
toward the insured is the deep-seated, often 
unconscious but justified feeling or belief that
the powerful underwriter, having drafted its 
several 
types 
of 
insurance 
‘contracts 
of 
adhesion’ with the aid of skillful and highly
paid legal talent, from which no deviation 
desired by an applicant will be permitted, is
almost certain to overreach the other party to 
the contract. 
The established underwriter is 
magnificently qualified to understand and protect
its own selfish interests. 
In contrast, the
applicant is a shorn lamb driven to accept
whatever contract may be offered on a ‘take-it­
or-leave-it’ 
basis 
if 
he 
wishes 
insurance 
protection.” 
36  
 
 
 
 
 
 
 
 
 
                                                 
  
 
  
 
 
Finally, in Herweyer v Clark Hwy Services, Inc,71 this 
Court declined to enforce the plain language of a contract 
arguably because the contract at issue was adhesive. 
Herweyer concerned the validity of a shortened limitations 
provision in an employment contract and the application of 
a saving clause that required enforcement of the contract 
“as far as legally possible.” In concluding that the six­
month limitations period in the contract at issue was 
unenforceable, Herweyer cited Justice Levin’s concurring 
opinion in Camelot: 
In Camelot, Justice Levin expressed concerns
about the development of a rule authorizing
contractually shortened periods of limitation. He
reasoned: 
“The rationale of the rule allowing parties
to contractually shorten statutory periods of 
limitation is that the shortened period is a
bargained-for term of the contract. Allowing such
bargained-for terms may in some cases be a useful
and proper means of allowing parties to structure
their business dealings. 
“In the case of an adhesion contract,
however, where the party ostensibly agreeing to
the shortened period has no real alternative,
this rationale is inapplicable.”[72] 
Solely on the basis of Justice Levin’s concurring opinion 
in Camelot, the Herweyer Court indicated—for the first time 
71 
455 Mich 14; 564 NW2d 857 (1997). 
72 
Herweyer, supra at 20-21 (citation omitted). 
37 
 
 
 
 
  
 
       
 
                                                 
  
 
 
 
in 
this 
Court’s 
history—that 
a 
so-called 
“adhesion 
contract” was unenforceable simply because of the disparity 
in the contracting parties’ “bargaining power”: 
We 
share 
Justice 
Levin's 
concerns. 
Employment contracts differ from bond contracts.
An employer and employee often do not deal at
arms length when negotiating contract terms. An
employee in the position of plaintiff has only
two options: (1) sign the employment contract as
drafted by the employer or (2) lose the job.
Therefore, unlike in Camelot where two businesses 
negotiated the contract’s terms essentially on
equal footing, here plaintiff had little or no
negotiating leverage. Where one party has less 
bargaining 
power 
than 
another, 
the 
contract 
agreed upon might be, but is not necessarily, one
of adhesion, and at the least deserves close 
judicial scrutiny.[73] 
The Herweyer Court did not cite a single majority opinion 
of 
this 
Court 
to 
support 
its 
conclusion. 
More 
astonishingly, the majority failed to recognize—much less 
distinguish or overrule—more than a century of contrary 
case 
law 
belying 
its 
conclusion 
that 
a 
shortened 
limitations period was unenforceable.74 
The preceding analysis shares many similarities with 
our decision in Wilkie, in which we also sought to clarify 
this state’s contract jurisprudence. 
As in Wilkie, 
73 
Id. at 21 (emphasis added). 
74 
See n 15 of this opinion; see also Tom Thomas, supra
at 592 n 4. 
38  
 
 
    
 
 
                                                 
  
  
  
 
  
analyzing 
the 
concept 
of 
adhesive 
contracts 
in 
our 
jurisprudence requires that we confront “a confused jumble 
of ignored precedent, silently acquiesced to plurality 
opinions, and dicta, all of which, with little scrutiny, 
have been piled on each other to establish authority.”75 
Here, 
this 
“confused 
jumble” 
is 
exemplified 
by 
Herweyer, which held for the first time in our contract 
jurisprudence that an adhesion contract is subject to 
“close judicial scrutiny” and may be voided if the contract 
fails to meet the court’s satisfaction. This holding was 
inconsistent not only with a century of case law to the 
contrary,76 but with the very principles upon which that 
jurisprudence is based—namely, freedom of contract and the 
liberty of each person to order his or her own affairs by 
agreement. 
Today we are faced with a choice. 
We may follow 
Herweyer and its summary conclusion that “[w]here one party 
has less bargaining power than another, the contract agreed 
upon might be, but is not necessarily, one of adhesion, and 
at the least deserves close judicial scrutiny.”77
 Or we 
75 
Wilkie, supra at 60. 
76 
See n 15 of this opinion. 
77 
Herweyer, supra at 21. 
(continued…) 
39  
 
 
 
 
 
  
 
                                                 
 
  
 
 
 
 
 
 
may, consistently with the many cases that Herweyer 
presumptively displaced without overruling them, hold that 
an adhesion contract is simply a type of contract and is to 
be enforced according to its plain terms just as any other 
contract. 
We choose the latter course because it is most 
consonant with traditional contract principles our state 
has historically honored. 
As with any contract, the “rights and duties” of a 
party to an adhesion contract are “derived from the terms 
of the agreement.”78 A party may avoid enforcement of an 
“adhesive” contract only by establishing one of the 
traditional contract defenses, such as fraud, duress, 
unconscionability, or waiver.79  As we stated in Raska,80 and 
reaffirmed in Wilkie:81 
The expectation that a contract will be 
enforceable other than according to its terms
surely may not be said to be reasonable. If a
person signs a contract without reading all of it
or 
without 
understanding 
it, 
under 
some 
circumstances 
that 
person 
can 
avoid 
its 
obligations on the theory that there was no 
(…continued) 
78 
Wilkie, supra at 62. 
79 
See n 23 of this opinion. 
80 
Raska, supra at 362-363. 
81 
Wilkie, supra at 63. 
40  
 
 
 
 
 
 
   
                                                 
  
 
82 
contract at all for there was no meeting of the
minds. 
But to allow such a person to bind another
to an obligation not covered by the contract as
written because the first person thought the 
other was bound to such an obligation is neither
reasonable nor just. 
Therefore, we hold that it is of no legal relevance 
that a contract is or is not described as “adhesive.” 
In 
either case, the contract is to be enforced according to 
its plain language. 
Regardless of whether a contract is 
adhesive, a court may not revise or void the unambiguous 
language of the agreement to achieve a result that it views 
as fairer or more reasonable.82 
In dissent, Justice Kelly 
opines that adhesion 
contracts should be viewed “with skepticism” because 
“[m]ost people simply do not have the opportunity, time, or
special ability to read the policy before agreeing to it.”
Post at 23, 25. 
However, an insured’s failure to read his
or her insurance contract has never been considered a valid 
defense. This Court has historically held an insured to
have knowledge of the contents of the policy, in the
absence of fraud, even though the insured did not read it.
See Cleaver v Traders' Ins Co, 65 Mich 527; 32 NW 660
(1887); Wierengo v American Fire Ins Co, 98 Mich 621; 57 NW
833 (1894); Snyder v Wolverine Mut Motor Ins Co, 231 Mich
692; 204 NW 706 (1925); Serbinoff v Wolverine Mut Motor Ins 
Co, 242 Mich 394; 218 NW 776 (1928); House v Billman, 340
Mich 
621; 
66 
NW2d 
213 
(1954). 
Additionally, 
the 
Commissioner is precluded from approving an insurance 
policy that fails to obtain a prescribed “readability 
score” as set forth in MCL 500.2236(3). 
41  
 
 
   
 
                                                 
  
 
  
  
 
The 
term 
“adhesion 
contract” 
may, 
as 
Professor 
Patterson originally intended, be used to describe a 
contract for goods or services offered on a take-it-or­
leave-it basis. 
But it may not be used as a justification 
for creating any adverse presumptions or for failing to 
enforce a contract as written. To the extent that Herweyer 
held to the contrary, it is overruled.83 
In this case, plaintiffs do not argue that they were 
fraudulently 
induced 
to 
sign 
their 
agreement 
with 
defendant, that they entered into the contract under 
duress, or that any other traditional contract defense 
applies.84
 
Therefore, 
irrespective 
of 
whether 
their 
contract is labeled “adhesive” under Kessler’s standard, 
the competing Morris standards, or any other definition of 
83 
Justice 
Kelly 
believes 
that 
overruling 
Herweyer
represents a “radical change of the law,” and that this
Court should continue to “right the wrongs of adhesion
contracts.” Post at 27. However, as stated previously, the
dissent overlooks the fact that Herweyer created a “radical 
change of the law” in Michigan. 
84 
Justice Kelly suggests that there is never a meeting
of the minds with a standardized form contract “[i]f the
consumer does not read and comprehend the individual 
clauses of the contract . . . .” Post at 23. 
If this is 
indeed the case, then no contract exists at all. See 
Quality Products, supra at 372 (“Where mutual assent does
not exist, a contract does not exist.”) If the contract
does not exist, there is nothing for a court to “revise.” 
42  
 
 
 
 
 
 
 
                                                 
  
 
the term, we must enforce the plain language of that 
agreement.85 
IV. CONCLUSION 
Consistent with our prior jurisprudence, unambiguous 
contracts, including insurance policies, are to be enforced 
as written unless a contractual provision violates law or 
public policy. Judicial determinations of “reasonableness” 
are an invalid basis upon which to refuse to enforce 
unambiguous contractual provisions. Traditional defenses to 
enforcement of the contract at issue, such as waiver, 
fraud, or unconscionability, have neither been pled nor 
proven. Moreover, nothing in our law or public policy 
precludes the enforcement of the contractual provision at 
issue. 
Finally, 
in 
the 
specific 
arena 
of 
insurance 
contracts, the Legislature has enacted a mechanism whereby 
policy provisions may be scrutinized and rejected on the 
basis of reasonableness. This responsibility, however, has 
been 
explicitly 
assigned 
to 
the 
Commissioner. 
The 
Commissioner has approved the policy form at issue. 
We are at a loss to understand Justice Weaver’s 
dissent. Nothing in this opinion breaks new ground. Justice
Weaver’s objection to the proposition that an insurance
contract be enforced in accordance with its plain terms,
just as any other contract, is a proposition found in
Raska, Wilkie, and Klapp, supra. We do not purport to
address the laundry list of issues raised in her dissent. 
43  
85 
 
 
 
Plaintiffs have not challenged in the appropriate forum 
that this action was an abuse of discretion. 
Accordingly, we reverse the Court of Appeals decision 
and remand for entry of summary disposition in favor of 
defendant. 
Robert P. Young, Jr.
Clifford W. Taylor
Maura D. Corrigan
Stephen J. Markman 
44  
 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
SHIRLEY RORY and ETHEL WOODS, 
Plaintiffs-Appellees, 
No. 126747 
CONTINENTAL INSURANCE COMPANY,
also known as CNA INSURANCE COMPANY, 
Defendant-Appellant. 
KELLY, J. (dissenting). 
I dissent today because the majority has come to what 
I believe to be the incorrect conclusion on nearly every 
count. 
Not only does it reach the wrong result in this 
case, it takes a drastic step in the wrong direction with 
respect to contract law in general. 
The majority’s 
decision constitutes a serious regression in Michigan law, 
and it gives new meaning to the term “judicial activism.” 
Therefore, I cannot let it pass without comment. 
It is a legitimate exercise for courts to review the 
reasonableness of contractual clauses that limit the period 
during which legal actions can be brought. 
Courts have 
conducted reviews of this type for well over a century. 
These reviews constitute a necessary step in ensuring 
 
 
 
 
  
 
 
accurate enforcement of the intent of parties to a 
contract. 
Moreover, in deciding this case, it is unnecessary to 
reach the issue of adhesion contracts. 
Yet the majority 
does so, apparently using this dispute as a vehicle to 
reshape the law on adhesion contracts more closely to its 
own desires. 
I believe that the scrutiny and protections 
offered 
by 
traditional 
adhesion 
contract 
law 
offer 
appropriate safeguards for the people of this state. 
Therefore, I would leave that law unmolested and would 
affirm the decision of the Court of Appeals. 
I. THE LONG HISTORY OF JUDGING LIMITATIONS PERIODS FOR 
REASONABLENESS 
The majority opinion includes an extensive discussion 
of what its author believes to be the history of the 
“reasonableness doctrine” in Michigan. 
It effectively 
concludes that this Court created new law when it evaluated 
a shortened limitations period for reasonableness in 
Herweyer v Clark Hwy Services, 455 Mich 14, 20; 564 NW2d 
857 (1997), Armand v Territorial Constr, Inc, 414 Mich 21, 
27-28; 322 NW2d 924 (1982), Camelot Excavating Co, Inc v St 
Paul Fire & Marine Ins Co, 410 Mich 118; 301 NW2d 275 
(1981), and Tom Thomas Org, Inc v Reliance Ins Co, 396 Mich 
588, 592; 242 NW2d 396 (1976). This is not accurate. 
2  
 
 
 
It has long been the law that all limitations periods 
are 
subject 
to 
judicial 
review 
for 
reasonableness. 
Statutes of limitations enacted by the Legislature must be 
subject to such review. 
“Generally speaking, the time 
determined by the legislature within which an action may be 
brought is constitutional where it is reasonable.” 54 CJS, 
Limitations of Actions, § 5, p 23. (Emphasis added.) This 
Court recognized and applied this rule more than 140 years 
ago when it wrote: 
[T]he 
legislative 
authority 
is 
not 
so 
entirely unlimited that, under the name of a
statute limiting the time within which a party 
shall resort to his legal remedy, all remedy
whatsoever may be taken away. . . . It is of the 
essence of a law of limitation that it shall 
afford a reasonable time within which suit may be
brought[,] and a statute that fails to do this
cannot 
possibly 
be 
sustained 
as 
a 
law 
of 
limitations . . . . [Price v Hopkin, 13 Mich 318,
324-325 (1865) (citations omitted).] 
The essential reasoning behind this rule is that an 
unreasonable limitations period offers an aggrieved party 
no recourse to the courts. 
And it unfairly divests that 
party of a right that it supposedly provided. 
54 CJS, 
Limitations of Actions, § 5, p 24. 
For almost 140 years, this same rule and reasoning 
were applied to limitations periods created both by a 
contract and by a statute. 
3  
 
 
 
                                                 
 
[P]arties to a contract may, by an express
provision therein, provide another and different
period of limitation from the provided statute,
and . . . such limitation, if reasonable, will be
binding and obligatory upon the parties. 
[1
Wood, Limitation of Actions (4th ed, 1916), § 42,
p 145.] 
This rule of law was generally accepted and widely cited by 
courts throughout the country. 
See Longhurst v Star Ins 
Co, 19 Iowa 364, 370-371 (1865), Gulf, C & S F R Co v 
Trawick, 68 Tex 314, 319-320; 4 SW 567 (1887), Gulf, C & S 
F R Co v Gatewood, 79 Tex 89, 94; 14 SW 913 (1890), Sheard 
v United States Fidelity & Guaranty Co, 58 Wash 29, 33-34; 
107 P 1024 (1910), Pacific Mut Life Ins Co v Adams, 27 Okla 
496, 503; 112 P 1026 (1910), Fitger Brewing Co v American 
Bonding Co of Baltimore, 127 Minn 330; 149 NW 539 (1914), 
Gintjee v Knieling, 35 Cal App 563, 565-566; 170 P 641 
(1917), Columbia Security Co v Aetna Accident & Liability 
Co, 108 Wash 116, 120; 183 P 137 (1919), and Page Co v 
Fidelity & Deposit Co of Maryland, 205 Iowa 798; 216 NW 957 
(1927). 
The United States Supreme Court discussed a similar 
topic well over a century ago. 
In Express Co v Caldwell,1 
the Court considered a common carrier’s right to enter into 
1 88 US (21 Wall) 264; 22 L Ed 556 (1875). 
4  
 
 
 
                                                 
 
a contract to limit its liability.2  It held that, while a 
common carrier could enter into such a contract, courts 
could review the contract provision for reasonableness. 
This review was deemed essential because carriers were in a 
position of advantage over members of the public requiring 
their service. Express Co, supra at 267. 
In 1865, the Iowa Supreme Court used similar reasoning 
when it subjected contractual limitations periods to a 
reasonableness review. 
The court was asked to enforce a 
twelve-month limitations period under circumstances in 
which the necessary facts to bring a claim could not 
reasonably have been ascertained in twelve months. 
It 
refused, saying that to do so would impute a dishonest 
purpose to the company. Longhurst, supra at 371. 
By 
putting 
this 
construction 
upon 
the 
contract of insurance, you preserve the upright
intent of the company intact. Whereas if you put
the 
other 
construction 
upon 
it, 
you, 
by
implication, charge, or perhaps it would be 
better to say, judicially determine, that the
company 
granted 
a 
policy 
for 
a 
valuable 
consideration paid, which at the time, they had
reason to believe, would be no risk to them and 
no 
protection 
to 
the 
insured, 
and 
thereby
obtained 
money 
for 
themselves 
under 
false 
pretenses. 
True charity thinketh no evil. It is
therefore right for us to presume, that it was
the honest intent of the company, to insure the 
2 Under common law, a common carrier would act as an
insurer against all loss or damage except that stemming
from an act of God or “the public enemy.” Id. at 266. 
5  
 
 
 
 
 
  
                                                 
 
plaintiff’s mechanic’s lien upon the premises
specified, against loss by fire, and, upon the 
other hand, that it was the expectation of the
insured, in paying the required premium, that his
policy would cover the loss and give him the
requisite protection. [Id.] 
From these cases, one can see that the reasonableness 
doctrine is far from a novel legal idea. 
It has a solid 
foundation well recognized by the courts of this country, 
most notably the United States Supreme Court. 
Also from these cases, the necessity of having such a 
review becomes apparent. 
Courts have recognized that 
insurers are in a position of power and control over the 
people purchasing their product. 
Careful judicial review 
is imperative so that the power is not abused. Express Co, 
supra; 
Longhurst, 
supra. 
Moreover, 
this 
review 
is 
essential in order to accurately implement the intent of 
the contracting parties. 
Because the overriding intent of 
a contract of insurance is to provide protection, the 
contract should not be read so as to eliminate that 
protection unreasonably.3 
Id.; Spaulding v Morse, 322 Mass 
3 The majority argues that the best way to discern the
intent of the parties is by using the language contained in
the contract. 
But in truth, the majority’s decision today
indicates that this is the only way to discern their
intent. 
I simply disagree, as does the majority of modern
courts. 
As the great Learned Hand stated, “There is no
more likely way to misapprehend the meaning of language—be
it in a constitution, a statute, a will or a contract—than
(continued…) 
6  
 
 
   
  
 
                                                 
 
 
149, 152-153; 76 NE2d 137 (1947). 
Otherwise, the insurer 
would collect money without providing coverage. 
Hence, application of the reasonableness rule of 
contractual construction is well founded and reasoned. And 
Michigan courts following this rule have wisely joined the 
general trend of all courts in this country. 
Rather than 
creating new law or diverting from established contractual 
interpretation principles, our Court in Camelot applied a 
very old and well tested legal rule.4 
II. MODERN COURTS DISCUSSION OF THE ISSUE AT HAND 
The 
long-established 
rule 
that 
courts 
review 
contractual limitations periods for their reasonableness 
has not been abandoned in modern times. 
In fact, several 
state courts have faced the very issue presented in this 
(…continued)
to read the words literally, forgetting the object which
the document as a whole is meant to secure.” 
Central 
Hanover Bank & Trust Co v Comm’r of Internal Revenue, 159
F2d 167, 169 (CA 2, 1947). 
I believe that courts should 
give effect to the actual intent of the parties as 
expressed through the document as a whole. The protections
contracted for should not be unreasonably eliminated. 
4 It is true that cases decided before Tom Thomas and 
Camelot upheld contractual limitations periods without 
discussing reasonableness. 
But this does not mean that 
Michigan courts “eschewed” the principle. 
Likely, the
issue was not raised in those cases. 
When Michigan courts
had the issue actually before them, they followed the well­
tested legal rule established by courts throughout the
United States legal system, including by the Supreme Court. 
7  
 
 
 
 
                                                 
 
case. 
Nearly every court that has considered an uninsured 
motorist insurance contract that limits the applicable 
statutory period of limitations has found the limitation 
unreasonable. 
For example, in Elkins v Kentucky Farm Bureau Mut Ins 
Co,5 the insurance contract limited an uninsured motorist 
claim to one year following the accident. 
This conflicted 
with the two-year statutory period of limitations for 
claims against a motorist. 
Id. 
The Kentucky court found 
the one-year limitations period unreasonable and refused to 
enforce it. It stated: 
[I]t makes no sense to allow two years (or
more) to file a suit against an uninsured or
underinsured 
tort-feasor 
and 
yet 
permit 
the 
insurer to escape liability if the suit involving
it is not filed within one year. Such would not
only be an unreasonably short time, but it would
completely frustrate 
the no-fault insurance 
scheme. [Id. at 424.] 
The Kentucky court noted that it was following the 
majority of courts that have ruled on the issue. See Scalf 
v Globe American Cas Co, 442 NE2d 8 (Ind App, 1982); 
Sandoval v Valdez, 91 NM 705; 580 P2d 131 (1978); Signal 
Ins Co v Walden, 10 Wash App 350; 517 P2d 611 (1973); Burgo 
v Illinois Farmers Ins Co, 8 Ill App 3d 259; 290 NE2d 371 
5 844 SW2d 423 (Ky App, 1992). 
8  
 
 
 
 
  
 
(1972); Nixon v Farmers Ins Exch, 56 Wis 2d 1; 201 NW2d 543 
(1972). 
Therefore, the majority today has not only rejected 
the 
long-established 
rule 
regarding 
review 
for 
reasonableness, but it has also broken company with the 
majority of courts addressing the issue. 
This fact 
strongly suggests that the majority is not on the firm 
legal ground it claims. Rather, it is pushing Michigan law 
out on a tenuous ledge, distancing it from the law of our 
sister states. 
III. THE LIMITATIONS PROVISION UNDER REVIEW WAS UNREASONABLE 
Given that the “reasonableness doctrine” has been so 
well established, it should be applied without hesitation 
to the facts of this case. 
A review of the facts 
demonstrates 
the 
shocking 
inequity 
of 
the 
one-year 
limitations provision in defendant’s uninsured motorist 
insurances contract. 
The section of the contract in question provides: 
We will pay compensatory damages which any
covered person is legally entitled to recover
from the owner or operator of an uninsured motor 
vehicle because of bodily injury: 
1. Sustained by any covered person; and 
2. Caused by an accident arising out of the
ownership, maintenance or use of an uninsured 
motor vehicle; 
9  
 
 
 
Claim or suit must be brought within 1 year
from the date of the accident. 
[Emphasis in
original.] 
This Court in Herweyer articulated the three-pronged 
test for determining if a limitations clause is reasonable: 
It is reasonable if (1) the claimant has
sufficient opportunity to investigate and file an
action, (2) the time is not so short as to work a
practical abrogation of the right of action, and
(3) the action is not barred before the loss or 
damage can be ascertained. 
[Herweyer, supra at 
20, citing Camelot, supra.] 
All prongs of the test outlined in Camelot and Herweyer 
weigh against allowing a shortened limitations period in 
this case. 
Plaintiffs did not have sufficient time to investigate 
and file an action. 
Under the contract, the liability for 
uninsured motorist coverage is triggered only once an 
uninsured motorist becomes liable for noneconomic loss 
pursuant to MCL 500.3135(1). 
Liability for noneconomic 
loss occurs only if the plaintiffs suffered “death, serious 
impairment 
of 
body 
function, 
or 
permanent 
serious 
disfigurement.” 
MCL 500.3135(1). 
While death may be 
ascertainable at the time of the accident, the other two 
injuries are less readily identifiable. 
A party may not know that his injury is permanent 
until considerable time elapses. 
During this time, he 
attends physical therapy and attempts to heal. 
This may 
10  
 
 
 
 
 
 
well take longer than a year. 
Quite often, an injured 
individual will do everything in his power to escape the 
label 
“permanently 
impaired.” 
I 
believe 
that 
most 
individuals are willing to work for a living and will exert 
considerable effort to recover from an injury in order to 
return to work. 
The contractual limitation contained in 
defendant’s 
insurance 
form 
discourages 
attempts 
at 
recovery. For these reasons, it is unreasonable and should 
be held to be against public policy. 
Also, a party may not learn that he has a serious 
impairment until after one year has passed. Some injuries, 
especially soft tissue injuries, are difficult to diagnose. 
And proper diagnosis and determination of permanency may 
take a long time. The Legislature seems to have recognized 
this fact by enacting a three-year statutory period of 
limitations for bringing suits for noneconomic damages. 
Given these considerations, the first prong of the Herweyer 
test weighs against finding this limitation reasonable. 
The one-year limitation also works as a practical 
abrogation of the right created by the insurance agreement. 
This is the second consideration under the Herweyer test. 
Herweyer, supra at 20. 
The best way that a plaintiff can 
find out if a party is uninsured is to sue him. 
If an 
insurance company presents a defense, then the party is 
11  
 
 
 
 
 
insured. 
However, the time required to reach this point 
can easily exceed one year. 
Under a one-year period of limitations, an insured 
injured in an automobile accident would be forced to 
immediately ascertain whether a serious impairment exists. 
He then would be obliged to file suit against the other 
motorist well before one year has elapsed. This is because 
the case might have to progress through at least part of 
the discovery process for the injured person to determine 
if the other motorist is uninsured. 
Then, the insured 
would have to make a claim with his insurance company. 
In 
many instances, all this cannot be accomplished within one 
year. 
The clause providing the one-year limitations period 
mandates that injured insureds bring suit immediately after 
their automobile accident. 
This might be even before they 
determine if they have a permanent impairment. 
In effect, 
the clause requires that baseless lawsuits be filed. 
Filing such a lawsuit might be the only way a party could 
claim the uninsured motorist coverage that he paid for. 
But this early filing still might not move the case along 
quickly enough to satisfy the one-year limitation. 
This is exactly what happened to plaintiffs, Shirley 
Rory and Ethel Woods. 
They did not know that the other 
12  
 
 
 
 
 
                                                 
 
party to the accident was uninsured until suit had been 
brought and discovery was underway. 
They did not delay in 
the least in making their claim with defendant. They filed 
well 
within 
the 
limitations 
period 
for 
claims 
of 
noneconomic damages. 
But the majority would still leave 
them without the uninsured motorist coverage they paid for. 
Clearly, this is a practical abrogation of plaintiffs’ 
rights. 
That 
the 
one-year 
limitations 
clause 
abrogates 
plaintiffs’ 
rights 
becomes 
even 
clearer 
when 
one 
contemplates that an insurer for the third party might deny 
coverage well into the suit. 
That insurer could determine 
that its insured should not receive coverage only after 
defending him for many months. 
This delayed notice would 
be outside the control of the injured motorist. 
But it 
could deny him the uninsured motorist coverage he paid for 
from his own insurer. If a third-party insurer waits for a 
year to deny coverage, the clause would absolutely bar the 
injured motorist from the benefit of his insurance. 
The 
majority simply ignores this inequity.6 
Also, after one year, the injured party may still be 
receiving medical treatment. 
A permanent injury may not 
6 Some would see this ruling as an open invitation for
insurance company gamesmanship. 
13  
 
 
 
  
 
 
yet have been diagnosed. 
A third-party insurance company 
could deny coverage at that point. 
The injured motorist 
would have done everything in his power to bring suit 
against the third party. 
But he would not be able to 
sustain a claim under his uninsured motorist insurance 
policy because the third-party insurer did not deny 
coverage until too late. 
The contractual limitations 
clause simply fails to give an adequate period in which to 
ascertain the loss or damage. Id. 
Given that the clause providing a one-year limitations 
period is found wanting under all three prongs of the 
Herweyer test, it must be adjudged to be unreasonable. Id. 
Therefore, 
the 
trial 
court 
correctly 
denied 
summary 
disposition 
in 
this 
case 
and 
the 
Court 
of 
Appeals 
appropriately affirmed that decision. 
IV. THE ONE-YEAR LIMITATIONS PERIOD AND MCL 500.2254 
The majority concludes that the one-year limitations 
clause is not contrary to the law or to public policy. But 
to reach this conclusion, it relies on a strained reading 
of MCL 500.2254. 
I agree with the Commissioner of the 
Office of Financial and Insurance Services who filed an 
amicus curiae brief concluding that MCL 500.2254 forbids a 
one-year limitations clause. 
14  
 
 
 
 
MCL 500.2254 provides: 
Suits 
at 
law 
may 
be 
prosecuted 
and 
maintained by any member against a domestic 
insurance corporation for claims which may have
accrued if payments are withheld more than 60
days after such claims shall have become due. No 
article, bylaw, resolution or policy provision
adopted by any life, disability, surety, or 
casualty insurance company doing business in this 
state prohibiting a member or beneficiary from
commencing and maintaining suits at law or in
equity against such company shall be valid and no
such article, bylaw, provision or resolution 
shall hereafter be a bar to any suit in any court
in this state: Provided, however, That any
reasonable 
remedy 
for 
adjudicating 
claims 
established by such company or companies shall
first 
be 
exhausted 
by 
the 
claimant 
before 
commencing suit: Provided further, however, That
the company shall finally pass upon any claim
submitted to it within a period of 6 months from
and after final proofs of loss or death shall
have been furnished any such company by the 
claimant. [Emphasis added.] 
Under the language of this statute, a policy provision 
may 
not 
prohibit 
a 
beneficiary 
from 
commencing 
and 
maintaining a suit. 
MCL 500.2254. 
But this is exactly 
what 
the 
one-year 
limitations 
clause 
does. 
After 
expiration of the one-year period, the beneficiary no 
longer is entitled to maintain a suit for uninsured 
motorist coverage, even though his claim is allowable by 
statute for another two years. 
The limitations clause 
contravenes the statute. 
This means it is contrary to 
Michigan law and Michigan public policy. 
15  
 
 
 
  
                                                 
 
 
In order to support its position, the majority argues 
that nothing in the statute forbids conditions being placed 
on the commencement and maintenance of a lawsuit. But such 
conditions are exactly what the statute speaks of. 
It 
forbids a policy provision “prohibiting a member or 
beneficiary from commencing and maintaining suits[.]” 
MCL 
500.2254. 
Any “condition” in a policy would be a policy 
provision. 
Changing its label does not change what it is. 
Therefore, any condition prohibiting a beneficiary from 
commencing and maintaining a suit would equally violate the 
statute.7 
In addition, the Legislature explicitly lists two 
“conditions” that are exceptions to the general rule in MCL 
500.2254. 
Insurance companies may include in their policy 
provisions these two “conditions”: 
(1) the claimant must 
exhaust any alternative remedies mandated by the policy, 
such as arbitration, and (2) the claimant must give the 
insurer six months to decide whether to honor the claim 
before the claimant may bring suit. 
MCL 500.2254. 
The 
7 The majority claims that my interpretation would
render invalid a contractual limitations period that 
paralleled the applicable statutory limitations period.
This is not true. 
In such a situation, the contractual
provision would not limit the commencement and maintenance
of a lawsuit, but instead, the statute of limitations
would. 
16  
 
 
  
 
                                                 
 
inclusion of these two conditions indicates that the 
Legislature did not intend to allow any others. 
This Court has long relied on the legal maxim 
expressio unius est exlusio alterius.8  The maxim is a rule 
of construction that is a product of logic and common 
sense. Feld v Robert & Charles Beauty Salon, 435 Mich 352, 
362; 459 NW2d 279 (1990), quoting 2A Sands, Sutherland 
Statutory Construction (4th ed), § 47.24, p 203. 
In fact, 
this Court long ago stated that no maxim is more uniformly 
used to properly construe statutes. 
Taylor v Michigan Pub 
Utilities Comm, 217 Mich 400, 403; 186 NW 485 (1922). 
If exceptions such as the one-year limitations clause 
were permissible, it would be pointless for the Legislature 
to have listed only two exceptions in the statute. 
It 
would contravene the well established maxim of expressio 
unius est exlusio alterius. 
And it would write into the 
statute what the Legislature chose to omit. 
Therefore, I 
cannot agree with the majority’s interpretation of MCL 
500.2254. 
V. APPROVAL OF INSURANCE FORMS BY THE COMMISSIONER 
The majority argues that the Legislature assigned the 
task of evaluating an insurance provision’s reasonableness 
8 This translates as “the expression of one thing is
the exclusion of another.” 
17  
 
 
 
 
 
                                                 
 
 
to the Commissioner of the Office of Financial and 
Insurance Services. 
It relies on MCL 500.2236(5), which 
provides: 
Upon written notice to the insurer, the 
commissioner may disapprove, withdraw approval or
prohibit the issuance, advertising, or delivery
of any form to any person in this state if it
violates any provisions of this act, or contains
inconsistent, ambiguous, or misleading clauses,
or 
contains 
exceptions 
and 
conditions 
that 
unreasonably 
or 
deceptively 
affect 
the 
risk 
purported to be assumed in the general coverage
of the policy. 
The notice shall specify the
objectionable provisions or conditions and state
the reasons for the commissioner’s decision. If 
the form is legally in use by the insurer in this
state, the notice shall give the effective date
of the commissioner’s disapproval, which shall
not be less than 30 days subsequent to the 
mailing or delivery of the notice to the insurer.
If 
the 
form 
is 
not 
legally 
in 
use, 
then 
disapproval 
shall 
be 
effective 
immediately.
[Emphasis added.] 
By using the term “may,” the Legislature has signaled 
that what follows “may” is a discretionary act. 
This 
contrasts with the use of the term “shall,” which signals a 
mandatory act. Murphy v Michigan Bell Tel Co, 447 Mich 93, 
100; 523 NW2d 310 (1994). 
Nothing in this statute 
indicates 
that, 
in 
granting 
this 
discretion 
to 
the 
commissioner, the Legislature intended to rob the courts of 
review of the same matter.9
 Moreover, it could be argued 
9 The majority accuses me of reading the review of
policy forms as discretionary. 
That is not my argument.
(continued…) 
18  
 
 
 
 
                                                 
that, by not making the commissioner’s review mandatory, 
the Legislature acknowledged that a court’s exercise of 
similar review is well-founded and appropriate. 
The majority ignores the discretionary nature of the 
commissioner’s review when it concludes that plaintiffs can 
challenge 
the 
one-year 
limitations 
clause 
only 
by 
challenging the approval of the insurance form. 
But the 
commissioner is not required to review “conditions that 
unreasonably or deceptively affect the risk purported to be 
assumed in the general coverage of the policy.” 
MCL 
500.2236(5). 
The majority’s argument amounts to little more than a 
red herring. 
It is an attempt to distract from the patent 
inequity of its ruling today. 
Because the commissioner’s 
review is discretionary, reference to MCL 500.2236(5) adds 
little to this discussion. 
And it does not justify the 
majority’s decision to radically change existing law. 
(…continued)
While the commissioner is required to review all forms, the
discretionary nature of his disapproval means that his
review for reasonableness is also discretionary. 
The 
statute would allow the commissioner to let a form enter 
into use even if he found terms within it to be 
unreasonable. 
The statute does not mandate disapproval
when a portion of the form is unreasonable. Therefore, the
review for reasonableness is discretionary. 
19  
 
 
 
  
 
 
 
 
                                                 
 
 
VI. ADHESION CONTRACTS 
Not 
content 
with 
overturning 
just 
one 
line 
of 
precedent used to protect the people of Michigan, the 
majority goes on to discuss the tangentially related topic 
of adhesion contracts. 
It overrules the line of cases 
offering protection to Michiganians from such contracts and 
departs from well-established precedent and from the 
majority of other courts that have addressed the issue. 
Its decision also defies common sense. 
A.  THE HISTORY OF ADHESION CONTRACTS AND BALANCING THE INEQUITIES 
OF THESE CONTRACTS 
In discussing the history of adhesion contracts, the 
majority misses one important point. Before courts applied 
protections from adhesion contracts, they struggled to deal 
with the problems presented by form contracts.10
 Although 
they did not always explicitly state what they were doing, 
they often acted in a way to balance out the inequities 
presented by such contracts. 
10 I would note that form contracts came into use only
toward the end of the eighteenth century. 
Meyerson, The 
reunification of contract law: 
The objective theory of
consumer form contracts, 47 U Miami L R 1263 (1993).
Relatively speaking, it was a short time before there was
discussion of treating them as contracts of adhesion. 
During the intervening time, courts found other ways to
counterbalance the inequities of these one-sided contracts. 
20  
 
 
 
 
 
 
                                                 
 
In his early work in the field, Professor Karl N. 
Llewellyn noted: 
[W]e have developed a whole series of semi­
covert techniques for somewhat balancing these
[form-contract] bargains. A court can “construe” 
language into patently not meaning what the 
language is patently trying to say. 
It can find 
inconsistencies between clauses and throw out the 
troublesome one. 
It can even reject a clause as
counter to the whole purpose of the transaction.
It can reject enforcement by one side for want of
“mutuality,” though allowing enforcement by the
weaker side because “consideration” in some other 
sense 
is 
present. 
[Book 
review, 
The 
standardization 
of 
commercial 
contracts 
in 
English and Continental Law, by O. Prausnitz, 52
Harv L R 700, 702 (1939).][11] 
Courts have long recognized the inherent problems of 
form contracts and attempted through various methods to 
compensate for their inequities. 
The great legal minds of 
the early twentieth century began to see the drawbacks of 
this “semi-covert” action, and they called for uniformity 
in the field. 
From this developed the concept and 
protections of the adhesion contract theory. Meyerson, The 
reunification of contract law: 
The objective theory of 
consumer form contracts, 47 U Miami L R 1263, 1277-1278 
(1993). 
Despite the majority’s argument, the idea of balancing 
the inequities of form contracts (or what are now more 
11 See also Keeton, Insurance law rights at variance
with policy provisions, 83 Harv L R 961, 968-973 (1970). 
21  
 
 
 
 
 
 
commonly known as “adhesion contracts”) has been long 
recognized. And there is good reason for this longstanding 
recognition. 
Namely, 
the 
bargained-for 
exchange 
fundamental to traditional contracts simply does not exist 
in adhesion contracts. 
As 
the 
Pennsylvania 
Supreme 
Court 
noted 
when 
abandoning the strict construction approach to which the 
majority regresses today: 
The 
rationale 
underlying 
the 
strict 
contractual 
approach 
reflected 
in 
our 
past
decisions is that courts should not presume to
interfere with the freedom of private contracts
and redraft insurance policy provisions where the
intent of the parties is expressed by clear and
unambiguous language. 
We are of the opinion,
however, that this argument, based on the view
that insurance policies are private contracts in
the traditional sense, is no longer persuasive.
Such a position fails to recognize the true 
nature of the relationship between insurance 
companies 
and 
their 
insureds. 
An 
insurance 
contract is not a negotiated agreement; rather
its conditions are by and large dictated by the
insurance company to the insured. The only aspect
of the contract over which the insured can 
“bargain” is the monetary amount of coverage.
[Brakeman v Potomac Ins Co, 472 Pa 66, 72; 371
A2d 193 (1977).] 
The average person does not sit down and bargain for 
each of the terms in his insurance contract. 
Quite the 
opposite is true. 
He may never read his insurance 
policies. 
Most are long and contain nuanced subclauses 
virtually indecipherable to people not experienced in 
22  
 
 
 
 
contractual interpretation or insurance law. 
This is true 
despite the increased use of plain English in such 
policies. 
In most situations, the individual pays his 
insurance premiums and then receives the contract in the 
mail days or weeks later. 
Most people simply do not have 
the opportunity, time, or special ability to read the 
policy before agreeing to it. 
And what incentive does the insurance industry have to 
assure that their insureds read their polices? 
If people 
were to read all the language in their insurance contracts, 
the insurance providers would be flooded with questions and 
requests to change clauses. 
It has been observed that 
“[i]f it is both unreasonable and undesirable to have 
consumers read these terms, courts should not fashion legal 
rules in a futile attempt to force consumers to read these 
terms[.]” Meyerson, supra at 1270-1271. 
If the consumer does not read and comprehend the 
individual clauses of the contract, there can be no 
agreement on the particular terms in them. There can be no 
meeting of the minds. 
Moreover, when one side presents a 
contract on a take-it-or-leave-it basis and is in a place 
of considerable power over the other, there can be no 
bargained-for 
exchange. 
Hence, 
an 
outdated 
strict 
23  
 
 
 
 
   
                                                 
 
 
 
 
 
construction policy of construing these agreements is 
utterly unworkable.12 
It is for that reason that the majority of the courts 
in this country has disavowed the strict construction 
policy in construing contracts of adhesion.13  Instead, they 
12 The majority contends that consumers should be
assumed to know all the contents of their insurance 
policies. But it notes that without a meeting of the minds
no contract exists. 
The purpose of modern judicial review
of adhesion contracts is to balance the inequity that they
present. 
Instead of either forcing a consumer to abide by
a term that he never knew of or rejecting the entire
contract, the court balances the inequities of the contract
to enforce its overriding intent. 
Therefore, what was
fairly bargained for is enforced and what the parties minds
truly met on remains. 
But the majority, instead of 
continuing to balance these inequities, returns to the
generally unworkable strict construction approach. 
In 
doing so, it ignores the true nature of adhesion contracts.
Brakeman, supra. 
13 For but a few examples, see Lechmere Tire & Sales Co 
v Burwick, 360 Mass 718; 277 NE2d 503 (1972), State Farm 
Mut Automobile Ins Co v Johnson, 320 A2d 345 (Del, 1974),
Dairy Farm Leasing Co, Inc v Hartley, 395 A2d 1135 (Me,
1978), Jarvis v Aetna Cas & Surety Co, 633 P2d 1359 (Alas,
1981), State Farm Mut Automobile Ins Co v Khoe, 884 F2d 401
(CA 9, 1989), Jones v Bituminous Cas Corp, 821 SW2d 798
(Ky, 1991), Nieves v Intercontinental Life Ins Co, 964 F2d
60 (CA 1, 1992), Broemmer v Abortion Services of Phoenix, 
Ltd, 173 Ariz 148; 840 P2d 1013 (1992), Grimes v Swaim, 971
F2d 622 (CA 10, 1992), United States Fidelity & Guaranty Co
v Sandt, 854 P2d 519 (Utah, 1993), Buraczynski v Eyring,
919 SW2d 314 (Tenn, 1996), Coop Fire Ins Ass’n v White
Caps, Inc, 166 Vt 355; 694 A2d 34 (1997), Alcazar v Hayes,
982 SW2d 845 (Tenn, 1998), Andry v New Orleans Saints, 820
So 2d 602 (La App, 2002), Parilla v IAP Worldwide Services 
VI, Inc, 368 F3d 269 (CA 3, 2004), and Iberia Credit 
Bureau, Inc v Cingular Wireless LLC, 379 F3d 159 (CA 5,
2004). 
24  
 
 
 
   
 
                                                 
 
 
follow the more equitable and balanced modern trend of 
viewing adhesion contracts with skepticism. 
I believe it 
is a serious mistake for the majority to regress Michigan 
law away from this well-accepted modern trend that has been 
created to protect individuals.14 
The majority contends that it bases its decision on 
the “freedom of contract and the liberty of each person to 
order his or her own affairs by agreement.” 
Ante at 39. 
It also states that contracts “voluntarily and fairly made” 
should be enforced. 
Ante at 12. 
In making these 
statements, the majority either ignores or intentionally 
obfuscates the fact that adhesion contracts are not fairly 
made or bargained for by individuals managing their own 
affairs. 
Instead, the majority is creating a rule that permits 
insurance companies to bargain unfairly so that they can 
maximize their financial profit. 
The burden of this rule 
14 The majority accuses the Herweyer Court of being the
true judicial activists. 
It claims that Herweyer rejected
“a century” of precedent. 
As noted, earlier in this
opinion, this truly is not the case. 
Courts had been 
balancing the inequities of form contracts nearly since
their inception. 
This Court in Herweyer merely followed
that trend. 
It is only this majority that is reshaping
Michigan law and clearly reversing longstanding precedent.
In doing so, it is ignoring the current state of contract
law and breaking away from the well-established modern
trend 
of 
adhesion 
contract 
interpretation 
recognized
throughout this country. 
25  
 
 
 
 
 
 
is carried by the average individual who has little, if 
any, bargaining power when purchasing insurance. 
The 
choice made by the majority regresses our judicial system 
by decades, if not centuries. 
It places the state back 
into the era when courts either used covert means of 
interpreting contracts or ignored equity altogether. 
B. THE CONTINUED ATTACK ON INSURANCE CONTRACT PROTECTIONS 
Today, the majority continues its attack on the well­
developed protections created in insurance law that it 
started in Wilkie v Auto-Owners Ins Co 469 Mich 41; 664 
NW2d 776 (2003). 
In Wilkie, the majority struck down, 
erroneously 
I 
believe, 
the 
doctrine 
of 
reasonable 
expectations. Adding this decision to Wilkie, the majority 
has now struck down all reasonable means of objectively 
interpreting 
insurance 
contracts. 
Without 
objective 
standards, courts cannot be expected to accurately discern 
the intent of the parties. 
An objective standard produces an essential
degree of certainty and predictability about 
legal rights, as well as a method of achieving
equity not only between insurer and insured but
also among different insureds whose contributions
through premiums create the funds that are tapped
to pay judgments against insurers. 
[Keeton, 
Insurance law rights at variance with policy 
provisions, 83 Harv L R 961, 968 (1970).] 
The 
abandonment 
of 
these 
important 
equitable 
considerations destabilizes the system. 
The only ones 
26  
 
 
 
  
 
benefited are the insurance companies. 
Those that are 
unscrupulous can now more easily create deliberately 
confusing insurance forms with hidden clauses that change 
the meaning of the policy. 
They may thereby collect 
payments for coverage that is wholly illusory without worry 
of interference from Michigan courts. 
I cannot agree with 
this position. As Justice Cavanagh once wisely stated: 
I object to [the majority’s] attempt to 
distance itself from the policy choices inherent
in its decision today. 
Simply put, the majority
and I differ with regard to the policies that
should guide the interpretation of insurance law.
I would prefer not to disregard the manner in
which the insurance industry operates. Though an
adhesion contract may be a necessary ingredient
in the trade, I cannot condone a doctrine of
interpretation 
that 
all 
but 
ignores 
the 
potentially precarious effect on the bound party.
[Wilkie, supra at 70 (Cavanagh, J., dissenting).] 
This Court should not abandon the protections created 
to right the wrongs of adhesion contracts. 
I must dissent 
from its radical change of the law. 
VII. CONCLUSION 
The reasonableness doctrine is well-established in the 
law. 
Judicial review constitutes a necessary step to 
ensure that the actual intent of parties to a contract is 
enforced. 
Therefore, it is inappropriate to overturn the 
various decisions that support the ability of courts to 
27  
 
 
 
 
review for reasonableness the shortening of limitations 
periods. 
In this case, the one-year time limit was so short 
that it acted as a practical abrogation of the right to 
bring a lawsuit. 
Therefore, plaintiffs paid for coverage 
from which they could never benefit. 
In such a situation, 
the only proper action by the Court is to find the 
limitations period unreasonable. 
In deciding this case, it is unnecessary to reach the 
issue of adhesion contracts. 
The majority, by venturing 
into this area of the law and using this case as a vehicle, 
subjects itself to claims that it engages in judicial 
activism. 
The 
scrutiny 
and 
protections 
offered 
by 
traditional adhesion contract law offer a necessary aegis 
for the people of this state. 
I see no reason to attack 
this fundamental tenet of our law. 
Therefore, I would affirm the decision of the Court of 
Appeals. 
Marilyn Kelly 
28  
 
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
SHIRLEY RORY AND ETHEL WOODS, 
Plaintiffs-Appellees, 
No. 126747 
CONTINENTAL INSURANCE COMPANY,
also known as CNA INSURANCE COMPANY, 
Defendant-Appellant. 
CAVANAGH, J. (dissenting). 
As the majority accurately observes, this Court is 
faced with a choice today. 
See ante at 39. 
This Court 
could continue to acknowledge the unique character of 
insurance agreements and follow well-reasoned precedent 
examining contractually shortened limitations periods for 
reasonableness. 
Or this Court could disregard the manner 
in which insurance agreements come into existence and 
abrogate the “reasonableness doctrine.” 
Because the 
majority makes the wrong choice, I must respectfully 
dissent from today’s decision and concur in the result 
reached by Justice Kelly’s dissent. 
As a general proposition, “[a]n insurance policy is 
much the same as any other contract.” Auto-Owners Ins Co v 
Churchman, 440 Mich 560, 566; 489 NW2d 431 (1992). 
 
 
Accordingly, a clear and unambiguous insurance policy is 
usually applied as written. 
New Amsterdam Cas Co v 
Sokolowski, 374 Mich 340, 342; 132 NW2d 66 (1965); 
Frankenmuth Mut Ins Co v Masters, 460 Mich 105, 111; 595 
NW2d 832 (1999). 
This general principle, however, is 
subject to numerous caveats that are deeply rooted in our 
jurisprudence, including the following: where a contractual 
limitations provision shortens the otherwise applicable 
period of limitations, the provision must be reasonable to 
be enforceable. 
Herweyer v Clark Hwy Services, Inc, 455 
Mich 14, 20; 564 NW2d 857 (1997). See also 44A Am Jur 2d, 
Insurance, § 1909, p 370; anno: Validity of contractual 
time period, shorter than statute of limitations, for 
bringing action, 6 ALR3d 1197. 
As noted by the majority, there is little doubt that 
parties may generally contract for shorter periods of 
limitations, and this Court has enforced such provisions 
where they have been reasonable. 
To this end, this Court 
in Herweyer, supra at 20, rearticulated the following 
factors to assist our courts in determining whether a 
contractual limitations provision is reasonable: 
It is reasonable if (1) the claimant has
sufficient opportunity to investigate and file an
action, (2) the time is not so short as to work a
practical abrogation of the right of action, and 
2  
 
 
 
 
 
(3) the action is not barred before the loss or 
damage can be ascertained. 
In 
my 
view, 
this 
reasonableness 
inquiry 
is 
particularly fitting when insurance policies purport to 
shorten the otherwise applicable period of limitations. As 
Justice Levin once observed: 
The rationale of the rule allowing parties
to contractually shorten statutory periods of 
limitation is that the shortened period is a
bargained-for term of the contract. 
Allowing
such bargained-for terms may in some cases be a
useful and proper means of allowing parties to 
structure their business dealings. 
In 
the 
case 
of 
an 
adhesion 
contract,
however, where the party ostensibly agreeing to
the shortened period has no real alternative,
this 
rationale 
is 
inapplicable. 
[Camelot 
Excavating Co, Inc v St Paul Fire & Marine Ins
Co, 410 Mich 118, 141; 301 NW2d 275 (1981)
(Levin, J., concurring).] 
Nonetheless, 
the 
majority 
posits 
that 
the 
reasonableness inquiry no longer has any place in our 
jurisprudence because this inquiry undermines the parties’ 
freedom of contract. In my view, however, such an approach 
ignores 
the 
manner 
in 
which 
the 
insurance 
industry 
operates. 
In this regard, I believe that the majority’s 
approach is based on the fiction that the shortened 
3  
 
 
                                                 
 
 
limitations period was a truly bargained-for term.1
 In 
other words, I believe that the majority’s entire premise 
must fail because it ignores the unique character of 
insurance 
agreements 
and 
disregards 
the 
notion 
that 
adhesion contracts inherently tend to “be a necessary 
ingredient in the trade . . . .” 
Wilkie v Auto-Owners Ins 
Co, 469 Mich 41, 70; 664 NW2d 776 (2003) (Cavanagh, J., 
1 In the typical insurance agreement, Justice Levin
prudently noted, 
[t]here is no meeting of the minds except
regarding the broad outlines of the transaction,
the insurer’s desire to sell a policy and the
insured’s desire to buy a policy of insurance for
a designated price and period of insurance to
cover loss arising from particular perils (death,
illness, 
fire, 
theft, 
auto 
accident,
“comprehensive”). 
The 
details 
(definitions,
exceptions, exclusions, conditions) are generally
not discussed and rarely negotiated. 
The policyholder can, of course, be said to
have agreed to whatever the policy says—in that
sense his mind met with that of the insurer. Such 
an analysis may not violate the letter of the
concept that a written contract expresses the
substance of a meeting of minds, but it does
violate the spirit of that concept. 
To be sure, contract law principles are not
confined by the concept of a “meeting of the
minds.” 
Nevertheless, a point is reached when
the 
label 
“contract” 
ceases 
to 
fully 
and 
accurately 
describe 
the 
relationship 
of 
the 
parties and the nature of the transaction between
insurer and insured. 
[Lotoszinski v State Farm 
Mut Automobile Ins Co, 417 Mich 1, 14 n 1; 331
NW2d 467 (1982) (Levin, J., dissenting).] 
4  
 
 
 
                                                 
 
dissenting).2
 Accordingly, I would not torture the term 
“adhesion contract” and turn a blind eye to the manner in 
which these adhesion contracts are made simply to bolster 
what is perceived as a preferred result. 
Instead, I would 
embrace, rather than divorce, reality and acknowledge how 
insurance 
policies 
typically 
come 
into 
existence. 
Therefore, I would affirm the decision of the Court of 
2 I must additionally note that, contrary to the
majority’s rationale, decisions such as Camelot Excavating,
Herweyer, and Tom Thomas Org, Inc v Reliance Ins Co, 396 
Mich 
588, 
592; 
242 
NW2d 
396 
(1976), 
were 
not 
groundbreaking. 
For example, 44A Am Jur 2d, Insurance, §
1909, pp 370-371 provides: 
In the absence of statutory regulation to
the contrary, an insurance contract may validly
provide for a limitation period shorter than that
provided in the general statute of limitations,
provided 
that 
the 
interval 
allowed 
is 
not 
unreasonably short. [Emphasis added.] 
Section 1909 cites the following cases in support of this
view: 
Thomas v Allstate Ins Co, 974 F2d 706 (CA 6, 1992)
(applying Ohio law); Doe v Blue Cross & Blue Shield United 
of Wisconsin, 112 F3d 869 (CA 7, 1997); Wesselman v 
Travelers Indemnity Co, 345 A2d 423 (Del, 1975); Phoenix 
Ins Co v Aetna Cas & Surety Co, 120 Ga App 122; 169 SE2d
645 (1969); Nicodemus v Milwaukee Mut Ins Co, 612 NW2d 785
(Iowa, 2000) (contractual limitations provision in an 
insurance policy is enforceable if it is reasonable); Webb 
v Kentucky Farm Bureau Ins Co, 577 SW2d 17 (Ky App, 1978);
Suire v Combined Ins Co of America, 290 So 2d 271 (La,
1974); L & A United Grocers, Inc v Safeguard Ins Co, 460
A2d 587 (Me, 1983) (in property insurance, a limit of one
year from the time of loss is not unreasonably short);
O'Reilly v Allstate Ins Co, 474 NW2d 221 (Minn App, 1991);
Commonwealth v Transamerica Ins Co, 462 Pa 268; 341 A2d 74
(1975); Donahue v Hartford Fire Ins Co, 110 RI 603; 295 A2d
693 (1972); Hebert v Jarvis & Rice & White Ins, Inc, 134 Vt
472; 365 A2d 271 (1976). 
5  
 
 
 
 
 
Appeals and conclude that the shortened limitations period 
in this insurance policy is unreasonable and, thus, 
unenforceable. 
I must also observe that my disagreement with the 
current majority with respect to the principles governing 
the interpretation of insurance policies is nothing new. 
See Wilkie, supra. I recognize that the majority’s view in 
this case and others is theoretically consistent with the 
notion of freedom of contract. 
In the abstract, the 
majority’s approach could arguably have some appeal. 
Nonetheless, 
while 
today’s 
decision 
may 
placate 
the 
majority’s own desire to demonstrate its self-described 
fidelity, I believe that the majority’s position ignores 
how the insurance industry functions and discounts the 
effects 
today’s 
decision 
will 
have 
on 
this 
state’s 
citizens. 
Therefore, I must respectfully dissent from 
today’s decision and concur in the result reached by 
Justice Kelly’s dissent. 
Michael F. Cavanagh 
6  
 
 
 
 
 
 
 
 
 
 
_______________________________ 
 
 
 
 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
SHIRLEY RORY and ETHEL WOODS, 
Plaintiffs-Appellees, 
No. 126747 
CONTINENTAL INSURANCE COMPANY,
also known as CNA INSURANCE COMPANY, 
Defendant-Appellant. 
WEAVER, J. (dissenting). 
I respectfully dissent from the majority opinion’s 
holdings that the “insurance policies are subject to the 
same contract construction principles that apply to any 
other species of contract,” and that “unless a contract 
provision violates law or one of the traditional defenses 
to the enforceability of a contract applies, a court must 
construe and apply unambiguous contract provisions as 
written.” Ante at 2. 
In so holding, the majority is eliminating over five 
decades’ worth of precedent that created specialized rules 
of interpretation and enforcement for insurance contracts. 
These specialized rules recognize that an insured is not 
able to bargain over the terms of an insurance policy; 
indeed, it is common practice for the insured to receive 
 
 
 
 
                                                 
 
the actual terms of the contract, the insurance policy 
itself, 
only 
after 
having 
purchased 
the 
insurance. 
Further, in most cases the average consumer will not read 
the 
policy; 
the 
consumer 
will 
rely 
on 
the 
agent’s 
representations of what is covered in the policy. 
Even if 
the insured were to read the policy, insurance policies are 
not easy to understand and contain obscure provisions, the 
meaning of which requires legal education to grasp. 
The longstanding rules that the majority does away 
with by stating that insurance contracts are to be 
interpreted in the same way as any other contract include: 
●Courts must interpret insurance policies from the 
perspective of an average consumer. 
The contract must be 
read using the ordinary language of the layperson, not 
using technical medical, legal, or insurance terms.1
 By 
contrast, the usual rule of contract interpretation is that 
“technical terms and words of art are given their technical 
meaning when used in a transaction within their technical 
field.” 
2 Restatement Contracts, 2d, ch 9, § 202, p 86. 
See also Moraine Products, Inc v Parke, Davis & Co, 43 Mich 
App 210, 213; 203 NW2d 917 (1972). 
1 “Insurance policies should be read with the meaning
which ordinary layman would give their words.” 
Bowman v 
Preferred Risk Mut Ins Co, 348 Mich 531, 547; 83 NW2d 434
(1957). 
2  
 
 
                                                 
 
 
 
 
 
●If reading the contract one way provides that there 
is coverage, but reading it another way provides that there 
is not coverage under the same circumstances, then the 
contract is ambiguous and must be construed against its 
drafter and in favor of coverage.2  This is different from 
general contract law, which finds a contract ambiguous “if 
its provisions may reasonably be understood in different 
ways.” 
Universal Underwriters Ins Co v Kneeland, 464 Mich 
491, 496; 628 NW2d 491 (2001). 
(Emphasis added.) 
The 
“reasonableness” requirement can be a severe limitation on 
finding an ambiguity. 
●If a limitation on coverage is not expressed clearly 
enough to inform the insured of the extent of coverage 
2 An ambiguity in an insurance policy is broadly
defined 
to 
include 
contract 
provisions 
capable 
of 
conflicting interpretations.  Auto Club Ins Ass’n v 
DeLaGarza, 433 Mich 208, 214; 444 NW2d 803 (1989). 
“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 Michigan, 412 Mich 355,
362; 314 NW2d 440 (1982). 
3  
 
 
 
 
                                                 
 
 
 
purchased, the provision is construed against the drafter, 
the insurance company.3 
●In interpreting a policy, exceptions to general 
liability are to be strictly construed against the insurer.4 
●The contract of insurance may include not only the 
written 
policy, 
but 
also 
the 
advertising 
and 
the 
application.5  The general rule of contract interpretation, 
3 When an insurer “has failed to clearly express a
limitation on coverage so as to fairly apprise the insured
of the extent of the coverage purchased, it is appropriate
to construe the provision under consideration against its
drafter.” 
Auto Club Ins Ass’n v DeLaGarza, 433 Mich 208,
214-215; 444 NW2d 803 (1989). 
4 Technical constructions of insurance policies are not
favored and exceptions to the general liability provided 
for in an insurance policy are to be strictly construed
against the insurer. Francis v Scheper, 326 Mich 441, 448;
40 NW2d 214 (1949). Exclusion clauses in insurance policies
are construed strictly against the insurer. 
Century
Indemnity Co v Schmick, 351 Mich 622, 626-627; 88 NW2d 622
(1958). 
5 Where the advertising and the application stated that
the policy would be in force as soon as the application and
$1 for the first month’s premium was received, but the
policy was not issued until 18 days later, the Court held
that the advertising and the application created an 
ambiguity about when the policy should go into effect. The 
Court construed this ambiguity in favor of the insured,
stating: 
If there is any doubt or ambiguity with
reference to a contract of insurance which has 
been drafted by the insurer, it should be 
construed most favorably to the insured. 
Under 
that rule the application and advertising in the
case before us must be construed most favorably
(continued…) 
4  
 
 
 
 
 
                                                 
 
in contrast, is that “[a]bsent an ambiguity or internal 
inconsistency, contractual interpretation begins and ends 
with the actual words of a written agreement.” 
Universal 
Underwriters, supra at 496. 
These specialized rules of interpretation protect the 
consumer buying insurance, especially no-fault insurance, 
which every automobile owner is required by law to 
purchase; they should not be so lightly swept aside with no 
discussion 
and 
without 
regard 
for 
five 
decades 
of 
precedent. 
For these reasons, I dissent and concur in the 
result of Justice Kelly’s dissent. 
Elizabeth A. Weaver 
(…continued)
to the insured. 
We construe this to mean the 
policy would be in effect without delay. [Gorham 
v Peerless Life Ins Co, 368 Mich 335, 343-344;
118 NW2d 306 (1962) (citation omitted).] 
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