Court Opinion

ID: 4548973
Source: CourtListenerOpinion
Date Created: 2020-07-17 09:07:04.136303+00
Date Added: 2024-06-11T08:33:31.358753
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                            STATE OF MICHIGAN

                            COURT OF APPEALS

ESTATE OF EMANUEL MALAJ, by Personal                                 UNPUBLISHED
Representatives TOM MALAJ and ROLANT                                 July 16, 2020
MALAJ,

               Plaintiff-Appellant,

v                                                                    No. 348408
                                                                     Macomb Circuit Court
CITIZENS INSURANCE COMPANY OF                                        LC No. 2017-002167-NI
AMERICA,

               Defendant-Appellee,
and

JOSEPH NARRA,

               Defendant.

Before: GLEICHER, P.J., and SAWYER and METER, JJ.

PER CURIAM.

        Plaintiff, the Estate of Emanuel Malaj by its personal representatives, appeals by right
orders of the circuit court granting summary disposition to defendant Citizens Insurance Company
of America of plaintiff’s first-party claim for uninsured motorist (UM) benefits and underinsurance
motorist (UIM) benefits under the automobile insurance policy that Citizens issued to the Malaj
family. In its order of June 11, 2018, the circuit court dismissed plaintiff’s claim for UM benefits
because the only vehicle involved in the fatal crash, a 2008 Jaguar, was insured by the Jaguar’s
constructive owners, Gregory and Dawn Bobchick (the Bobchicks). In its order of June 18, 2018,
the circuit court dismissed plaintiff’s claim for UIM benefits. We affirm.

                       I. SUMMARY OF FACTS AND PROCEEDINGS

       This case is one of several lawsuits arising out of a single-vehicle crash that occurred on
May 8, 2015, involving a 2008 Jaguar titled in the name of Robert Cerrito, but possessed, used,
and insured by the Bobchicks. The Jaguar was occupied by teenage high-school friends, including

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plaintiff’s decedent, Emanuel Malaj, along with Michael Wells, and Jonathan Manolios, who were
also killed, and defendant Joseph Narra and Gregory Bobchick, Jr., who survived. The instant
lawsuit was filed on June 13, 2017, setting forth claims of automobile negligence against defendant
Narra as the alleged operator of the Jaguar, and for UM and UIM benefits against defendant
Citizens. Plaintiff asserted that, although the subject insurance policy set forth limits of UM and
UIM coverage of “$250,000 Each Person, $500,000 Each Occurrence,” the estate should be paid
the full $500,000 because there was a $250,000 UM claim and a $250,000 UIM claim. In support,
plaintiff alleged that the Jaguar’s owner, Robert Cerrito, was uninsured, and that other legally
responsible persons, defendant Narra, Manolios, Bobchick, Sr., and Bobchick, Jr., were
underinsured.

        In another case, plaintiff entered a default against Robert Cerrito, the registered title holder
of the Jaguar. Plaintiff also entered into settlement agreements with other potentially responsible
parties in other lawsuits, and received a settlement of $100,000 from the Bobchicks’ insurer
Grange Insurance Company of Michigan, and a settlement of $166,666.67 from the Estate of
Jonathon Manolios. After summary disposition was granted to defendant Citizens, plaintiff
received a $100,000 settlement from Joseph Narra’s insurer, Auto-Owners Insurance Company.
This latter settlement resulted in the entry of the final order engendering the instant claim of appeal,
on March 25, 2019.

        In this case, plaintiff filed a motion for summary disposition under MCR 2.116(C)(10)
regarding its claims against defendant1 for UM and UIM benefits, asserting that each was
separately covered by the policy. Plaintiff’s theory was that it should recover $250,000 because
Cerrito was an uninsured owner, and also $250,000, less the $100,000 settlement, because other
responsible persons were underinsured.

        In response, defendant asserted that the plain terms of its insurance policy precluded
payment of both UM and UIM benefits under these facts. Defendant emphasized the policy
provision that “[n]o one will be entitled to receive duplicate payments for the same elements of
loss under any Uninsured Motorists coverage or loss under any Underinsured Motorists coverage
provided by this endorsement,” and argued that there could be no claim of UM benefits with
respect to Cerrito, the uninsured title holder, because the Jaguar was not an uninsured motor
vehicle for purposes of the policy because there was no dispute that the Bobchicks had insured the
Jaguar at the time of the accident through Grange Insurance.

        With respect to plaintiff’s claim regarding UIM benefits, defendant argued that plaintiff
had already received a settlement of $100,000 on behalf of the Bobchicks, and another settlement
with regard to its claim against the Estate of Jonathon Manolios, which together exceeded the total
per-person underinsurance policy limit of $250,000. Defendant additionally noted that plaintiff’s
claim against defendant Narra was still pending and that Narra had liability insurance with a policy
limit of $100,000. Defendant argued that the terms of its policy specially precluded duplicate

1
  Because Citizens Insurance Company is the only defendant participating in this appeal,
hereinafter in this opinion the unqualified use of the designation “defendant” will refer exclusively
to Citizens.

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recovery “for any element of loss for which payment had been made.” Defendant requested that
the trial court grant it, not plaintiff, summary disposition on the basis of the undisputed facts.

        In its reply to defendant’s response, plaintiff argued that the “or” between “Uninsured
Motorist coverage” and “Underinsured Motorist coverage” in the duplicate payment exclusion,
like the “or” between “uninsured motor vehicle” and “underinsured motor vehicle” in the pertinent
coverage paragraph, meant that plaintiff could properly collect both UM benefits in connection
with Cerrito and UIM benefits in connection with other responsible parties. Thus, plaintiff argued,
the claims for up to $250,000 for each type of coverage were within the policy limits.

         At the June 11, 2018 hearing on plaintiff’s motion, the trial court ruled that plaintiff was
not entitled to collect both UM and UIM benefits, stating, “if it’s underinsured, it’s underinsured.
If it’s uninsured, it’s uninsured. It is not both.” The trial court elaborated that the Bobchicks “were
an owner, and the insurance that they maintained on the vehicle applied, and the Court is satisfied
that we have an insured vehicle. There is no uninsured claim because we have an insured vehicle
with an owner and that is all that is required.” The trial court entered its order dismissing plaintiff’s
claim for UM benefits, and scheduled a hearing in one week to consider the claim for UIM benefits.

        After the June 18, 2018 hearing, the trial court entered an order denying plaintiff’s motion
for summary disposition “for the reasons stated on the record” and granting defendant summary
disposition pursuant to MCR 2.116(I)(2). Although no transcript of that proceeding is available,
the parties agree that the trial court concluded that the limits of the defendant’s policy coverage
for UIM benefits had been exceeded by the total of settlements plaintiff had received from
potentially responsible parties.

                                   II. STANDARDS OF REVIEW

        A trial court’s decision on a motion for summary disposition is reviewed de novo. El-
Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 159; 934 NW2d 665 (2019). A motion under
MCR 2.116(C)(10) tests the factual sufficiency of a claim and must be supported by affidavits,
depositions, admissions, or other documentary evidence. Corley v Detroit Bd of Ed, 470 Mich.
274, 278; 681 NW2d 342 (2004). When considering a fact-based motion, a trial court must view
the proffered evidence in the light most favorable to the party opposing the motion. Maiden v
Rozwood, 461 Mich. 109, 120; 597 NW2d 817 (1999). “Summary disposition is proper if the
evidence, affidavits, pleadings, and admissions viewed in a light most favorable to the other party
demonstrate that there is no genuine issue of any material fact and the moving party is entitled to
judgment as a matter of law.” Auto-Owners Ins Co v Seils, 310 Mich. App. 132, 145; 871 NW2d
530 (2015). “A genuine issue of material fact exists when the record, giving the benefit of
reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might
differ.” West v Gen Motors Corp, 469 Mich. 177, 183; 665 NW2d 468 (2003).

        Where “it appears to the court that the opposing party, rather than the moving party, is
entitled to judgment, the court may render judgment in favor of the opposing party.” MCR
2.116(I)(2). See also Burkhardt v Bailey, 260 Mich. App. 636, 661; 680 NW2d 453 (2004); Reed
v Reed, 265 Mich. App. 131, 141; 693 NW2d 825 (2005).

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       The proper interpretation of a contract and the legal effect of its provisions are questions
of law reviewed de novo. Rory v Continental Ins Co, 473 Mich. 457, 461, 464; 703 NW2d 23
(2005). Insurance contracts are construed in the same manner as other contracts. Seils, 310 Mich
App at 145. When determining the meaning of a contract, a court must assign the words in the
contract their “plain and ordinary meaning that would be apparent to a reader of the instrument.”
Rory, 473 Mich. at 464. Courts must apply the unambiguous terms of a contract as written. Id. at
461; Group Ins Co of Mich v Czopek, 440 Mich. 590, 596-597; 489 NW2d 444 (1992).

         A contract is ambiguous only when, after considering the entire contract, its words may
reasonably be understood in different ways. Farm Bureau Mut Ins Co v Nikkel, 460 Mich. 558,
566-568; 596 NW2d 915 (1999). “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
. . . .” Raska v Farm Bureau Mut Ins Co of Mich, 412 Mich. 355, 362; 314 NW2d 440 (1982).
“Ambiguous provisions in an insurance contract are construed against the insurer and in favor of
coverage.” Heniser v Frankenmuth Mut Ins Co, 449 Mich. 155, 160; 534 NW2d 502 (1995).
“However, this rule is only to be applied if all conventional means of contract interpretation,
including the consideration of relevant extrinsic evidence, have left the [factfinder] unable to
determine what the parties intended their contract to mean.” Klapp v United Ins Group Agency,
Inc, 468 Mich. 459, 471; 663 NW2d 447 (2003).

        When interpreting an insurance policy a two-step analysis is employed: first, whether the
insurance agreement generally provides coverage for the occurrence, and, if so, whether coverage
is negated by an exclusion. Auto-Owners Ins Co v Harrington, 455 Mich. 377, 382; 565 NW2d
839 (1997). The insured bears the burden to prove coverage, while the insurer bears the burden of
proving the applicability of an exclusion. Heniser, 449 Mich. at 172; Seils, 310 Mich. App. at 146.
“Exclusionary clauses in insurance policies are strictly construed in favor of the insured.” Auto-
Owners Ins Co v Churchman, 440 Mich. 560, 567; 489 NW2d 431 (1992). But clear and specific
exclusions must be enforced as written so that the insurance company is not held liable for a risk
it did not assume. Id.; Czopek, 440 Mich. at 597.

                                          III. ANALYSIS

        We conclude that the trial court correctly held that UM benefits were not available under
the plain terms of the insurance policy on the ground that the only vehicle involved in the accident
was insured. We further conclude that the trial court properly granted defendant summary
disposition on the ground that there was no dispute that plaintiff received personal injury
settlements arising from the single-vehicle accident that were greater than the insurance policy’s
applicable per-person coverage limit.

        The automobile insurance policy that the Malaj family purchased from defendant and that
was in effect at the time of the accident provided coverage for “Underinsured/Uninsured Motorist:
$250,000 Each Person, $500,000 Each Occurrence.” “Uninsured motorist insurance permits an
injured motorist to obtain coverage from his or her own insurance company to the extent that a
third-party claim would be permitted against the uninsured at-fault driver.” Rory, 473 Mich. at
465. “Neither uninsured motorist (UM) coverage nor UIM coverage is required by Michigan law,
and therefore “the terms of coverage are controlled by the language of the contract itself, not by

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statute.” Andreson v Progressive Marathon Ins Co, 322 Mich. App. 76, 84; 910 NW2d 691 (2017).
Although the insurance industry has included the word “motorist” in the short-hand labeling of
such coverage, the focus of standard UM or UIM language is on motor vehicles involved in
accidents and whether they are covered at all, or only inadequately covered, by liability insurance.
See Scott v Farmers Ins Exchange, 266 Mich. App. 557, 562-563; 702 NW2d 681 (2005) (“The
provision’s title, ‘Uninsured Motorist,’ suggests that the section deals with the actions of an
‘uninsured motorist.’     Nevertheless, the substantive language focuses exclusively and
unambiguously on whether the vehicle was insured at the time of the accident.”).

       The policy in this case provided as follows:
       We will pay compensatory damages which an “insured” is legally entitled to
       recover from the owner or operator of an “uninsured motor vehicle” or
       “underinsured motor vehicle” because of “bodily injury”:

       1. Sustained by an “insured”; and

       2. Caused by an accident.

       The owner’s or operator’s liability for these damages must arise out of the
       ownership, maintenance or use of the “uninsured motor vehicle” or “underinsured
       motor vehicle.” [Emphasis added.]

        These coverage terms plainly set forth several requirements for a UM or UIM claim.
Plaintiff must be legally entitled to recover damages that its decedent sustained (1) from the owner
or operator (2) of an “uninsured motor vehicle” or “underinsured motor vehicle” (3) caused by an
accident (4) arising out of the ownership, maintenance or use of the “uninsured motor vehicle” or
“underinsured motor vehicle.” Accordingly, UM or UIM coverage arises from an owner’s or
operator’s ownership or use of a motor vehicle that is either uninsured or underinsured. “[T]he
term ‘or’ is ‘used as a function word to indicate an alternative.’ ” NL Ventures VI Farmington,
LLC v Livonia, 314 Mich. App. 222, 230; 886 NW2d 772 (2015), quoting Merriam-Webster’s
Collegiate Dictionary (11th ed).

        In this case, there is no dispute that plaintiff’s decedent was killed in a single-vehicle crash
of a 2008 Jaguar titled to Robert Cerrito but possessed and used by the Bobchicks and their son.
It is also undisputed that before the accident the Bobchicks insured the Jaguar with Grange
Insurance Company of Michigan, providing for liability coverage for personal injury up to
$100,000 per person and $300,000 per accident, and that Grange settled plaintiff’s liability claim
against the Bobchicks for its policy limit of $100,000. The Jaguar was thus not an uninsured motor
vehicle for purposes of defendant’s UM coverage. Consequently, under the undisputed facts and
the plain terms of defendant’s insurance policy, the trial court correctly ruled that no UM coverage
was available.

        The trial court also properly granted defendant summary disposition of plaintiff’s UIM
claim on the basis that under the plain terms of the insurance policy the per-person limit of the
UIM benefits available in connection with plaintiff’s decedent, $250,000, had been exceeded by
the total of the personal injury settlements plaintiff had received from potentially responsible

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parties. It is undisputed that before the June 18, 2018 summary disposition hearing plaintiff settled
the personal injury claim against the Bobchicks for $100,000, and also received a settlement of
$166,666.67 from the Estate of Jonathon Manolios. Together, these two settlements exceeded the
per-person limit of defendant’s UIM coverage. Further, after the trial court’s ruling, plaintiff
received a $100,000 settlement from defendant Narra’s insurer.

        Contrary to plaintiff’s argument, the policy’s language stating that the “coverage limit for
Uninsured/Underinsured Motorists Coverage applies separately to damages caused by an accident
with an ‘uninsured motor vehicle’ and an ‘underinsured motor vehicle’ ” is not material to this
case because only one vehicle was involved in the accident. And because that vehicle was not
uninsured, plaintiff could properly claim against defendant’s policy only to the extent that the
vehicle triggered the policy’s coverage for “a land motor vehicle or trailer . . . to which a bodily
injury bond or policy applies at the time of the accident but its limit for bodily injury liability is
less than the limit of liability for this coverage.”

       The subject insurance policy includes the following provision:
               The limit of Bodily Injury Liability shown in the Schedule or in the
       Declarations for each person for Uninsured/Underinsured Motorists Coverage is
       our maximum limit of liability for all damages, including damages for care, loss of
       services or death, arising out of “bodily injury” sustained by any one person in any
       one accident. Subject to this limit for each person, the limit of Bodily Injury
       Liability shown in the Schedule or in the Declarations for each accident for
       Uninsured/Underinsured Motorists Coverage is our maximum limit of liability for
       all damages for “bodily injury” resulting from any one accident.

In other words, under the policy’s plain terms, defendant’s maximum liability to plaintiff for all
bodily injury damages under the UM and UIM coverage was $250,000.

        Moreover, contrary to plaintiff’s argument, the policy also clearly allowed defendant to
offset against its UIM liability sums that plaintiff was able to collect from others who were
potentially liable to plaintiff as a result of the motor vehicle accident. Indeed, the purpose of UM
and UIM coverage is to make the insured whole, at least up to policy limits, for damages that the
insured is unable to collect from responsible parties because they lack sufficient insurance
coverage. See Rory, 473 Mich. at 465; Andreson, 322 Mich. App. at 85-86. Again, in this case, at
the time of the motion hearing, plaintiff had collected in settlement of personal injury claims
arising out of the accident $266,666.67 from potentially responsible parties.

         The subject insurance policy, in setting forth the limits of its UM and UIM coverage, states
that “[t]he limit of liability for this coverage shall be reduced by all sums paid or payable because
of the ‘bodily injury’ by or on behalf of persons or organizations who may be legally
responsible. . . .” Those clear terms provide for a setoff of defendant’s UIM liability of all sums
that plaintiff was paid for bodily injury “by or on behalf of persons or organizations who may be
legally responsible.” Plaintiff’s decedent obviously sustained bodily injury when he was killed in
the accident, and the payments were made on behalf of persons “who may be legally responsible,”
the Bobchicks, Manolios, and eventually defendant Narra, even though the settlement agreements
did not attribute legal responsibility to those persons. Because there was no dispute that plaintiff

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received settlements arising from the single-vehicle accident for “bodily injury” that were greater
than the insurance policy’s limit of liability for UM and UIM benefits of $250,000 per person,
defendant’s liability was satisfied. See, e.g., Andreson, 322 Mich. App. at 85 (“All parties agree on
appeal that plaintiffs’ earlier settlement of $100,000 with the at-fault driver’s insurance company
entitled defendant to a $50,000 offset with respect to each plaintiff, limiting defendant’s liability
to $200,000 per plaintiff under plaintiffs’ UIM policy provision.”).

       In sum, the trial court properly granted defendant summary disposition where there was no
dispute that plaintiff received settlements for “bodily injury” that were greater than the subject
policy’s limit of UIM coverage, and the plain terms of the policy provided for reduction of
defendant’s liability by the amounts of such payments.

        Because we conclude that the trial court properly dismissed plaintiff’s claims against
defendant for UM and UIM benefits for the reasons stated, we need not consider the parties’
argument concerning whether plaintiff complied with notice-of-settlement provisions in the
subject insurance policy. See B P 7 v Bureau of State Lottery, 231 Mich. App. 356, 359; 586 NW2d
117 (1998) (“As a general rule, an appellate court will not decide moot issues.”).

       Affirmed.

                                                              /s/ Elizabeth L. Gleicher
                                                              /s/ David H. Sawyer
                                                              /s/ Patrick M. Meter

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