Court Opinion

ID: 9694733
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:53:13.807092+00
Date Added: 2024-06-11T18:20:04.866353
License: Public Domain

Cavanagh, P.J.
(dissenting). I respectfully dissent. Defendant’s policy provided coverage only for claims made "during the policy period.” Thus, the policy is a "claims-made” policy. In general, a claims-made policy provides coverage no matter when the alleged error, omission, or act of negligence occurred, as long as the misdeed is discovered and the claim for indemnity is made within the policy period. Stine v Continental Casualty Co, 419 Mich 89, 97; 349 NW2d 127 (1984). The issue presented therefore is whether Rutherford’s allegation of discrimination in 1981 constituted a claim for a wrongful act within the meaning of defendant’s policy.
Defendant’s insurance policy does not define the word "claim.” However, that fact alone is not conclusive evidence of the existence of an ambigú*537ity. A term that is undefined in an insurance policy should be given its commonly used meaning. Group Ins Co of Michigan v Czopek, 440 Mich 590, 596; 489 NW2d 444 (1992).
The Supreme Court has defined "claim” as " 'a demand of a right or alleged right; a calling on another for something due or asserted to be due.’ ” Central Wholesale Co v Chesapeake & O R Co, 366 Mich 138, 149; 114 NW2d 221 (1962), quoting Allen v Bd of State Auditors, 122 Mich 324, 328; 81 NW 113 (1899). The Court further stated that the very essence of a claim is "a demand for payment, formal or informal.” Central Wholesale, supra at 150.
A review of the case law of other jurisdictions indicates that, for the purpose of determining coverage under a claims-made policy, a "claim” is defined as "a demand for something as a right” or "a demand for payment of some amount of money.” See, e.g., MGIC Indemnity Corp v Home State Savings Ass’n, 797 F2d 285, 287 (CA 6, 1986); Ins Corp of America v Dillon, Hardamon & Cohen, 725 F Supp 1461, 1468 (ND Ind, 1988); Mt Hawley Ins Co v Federal Savings & Loan Ins Corp, 695 F Supp 469, 479 (CD Cal, 1987); Bensalem Twp v Western World Ins Co, 609 F Supp 1343, 1348 (ED Pa, 1985); Safeco Title Ins Co v Gannon, 54 Wash App 330, 334-335; 774 P2d 30 (1989).
In reaching its decision, the trial court relied on Bensalem Twp, supra. The facts of Bensalem Twp are similar to the present case, but the insurer and its insured were aligned on the opposite sides. The Equal Employment Opportunity Commission (eeoc) notified the township of the claimant’s charge of age discrimination before the claims-made policy took effect, but did not file a lawsuit until after the policy was in force. The insurer argued that the claim was first made when the *538township was notified that the claimant had filed a charge with the eeoc. Bensalem Twp, supra at 1344-1346.
The Bensalem Twp court held that the initial letter notifying the township of the claimant’s charge of age discrimination did not constitute a claim. The court noted that case law generally supports the proposition that, for purposes of determining coverage under a claims-made policy, a "claim” is "a demand for something as a right.” Id. at 1348. The court then reasoned that the letter merely notified the township of the charge and the eeoc’s intent to attempt to resolve the matter informally. While the letter informed the township that a demand for relief, based on a legal right, might ensue, neither the letter nor the initial claim purported to be such a demand. Id.
The majority concludes that the Bensalem Twp court’s conclusion that the eeoc complaint was merely a notice of the employee’s intent to hold the insurer responsible for a wrongful act constituted dicta. However, whether the court’s discussion constituted dicta is immaterial in this case because this Court is not bound to follow the decision of a federal court in Pennsylvania. In addition, a court is not prohibited from finding the dicta of another court to be persuasive. See, e.g., Eyde Bros Development Co v Eaton Co Drain Comm’r, 427 Mich 271, 286; 398 NW2d 297 (1986); Dykstra v Dep’t of Transportation, 208 Mich App 390, 392; 528 NW2d 754 (1995). The proper question is whether the reasoning of the dicta is sound.
In fact, other courts have adopted the reasoning in Bensalem Twp and held that notification of a potential liability does not constitute a claim. See Winkler v Natl Union Fire Ins Co of Pittsburgh, 930 F2d 1364, 1366-1367 (CA 9, 1991); Ins Corp of America v Dillon, Hardamon & Cohen, supra at *5391470; Gibraltar Casualty Co v A Epstein & Sons Int’l, Inc, 206 Ill App 3d 272, 279-280; 150 Ill Dec 236; 562 NE2d 1039 (1990); Kenefick v Hitchcook, 187 Wis App 2d 218; 522 NW2d 261 (1994). As the court in Ins Corp of America, supra at 1470, explained:
Simply becoming aware of an alleged injury is not enough to amount to a claim. Awareness is not a demand and the use of the word claim, unless modified by other language, requires that a demand be made.
Defendant’s policy contains the following language:
VII. Notice of Claim
(a) If the School District or any Assureds shall receive written or oral notice from any party that it is the intention of such party to hold the Assureds responsible for a Wrongful Act which occurred during the policy period, they shall give written notice within one year to the Insurer of the receipt of such written or oral notice, then any claim made within the space of two years following the termination of this policy . . . shall, for the purposes of this policy, be treated as a claim made during the policy year in which the Wrongful Act occurred.
(c) The School District, or the Assureds shall, as a condition precedent to their rights under this policy, give the Insurer notice in writing of any claim made and shall give the Insurer such information and cooperation as it may reasonably require.
Thus, the policy appears to distinguish between a "claim” and "notice from any party that it is the intention of such party to hold the Assureds re*540sponsible for a Wrongful Act.” An insurance contract should be read as a whole and meaning given to all terms. Auto-Owners Ins Co v Churchman, 440 Mich 560, 566; 489 NW2d 431 (1992). The contractual language is to be given its ordinary and plain meaning, and technical and strained constructions should be avoided. Hawkeye-Security Ins Co v Vector Construction Co, 185 Mich App 369, 380-381; 460 NW2d 329 (1990).
The majority asserts that Rutherford sought relief pursuant to the Civil Rights Act through his complaint filed with the Department of Civil Rights (dcr). The majority reasons that because the dcr had the authority to award damages to Rutherford in the event that he prevailed, Rutherford’s charge of discrimination constitutes a "claim” against plaintiff.
However, the notice sent by the dcr to plaintiff in April 1982 merely informed plaintiff that it intended to investigate Rutherford’s allegation of sex discrimination and requested plaintiff’s cooperation in that investigation. I would find that Rutherford’s charge of discrimination was not an actual claim, but rather notice of an alleged injury from which a claim could subsequently arise. An actual claim is distinguished from an "event” that could give rise to an actual claim in the future. Employers Ins of Wausau v Bodi-Wachs Aviation Ins Agency, Inc, 39 F3d 138, 143 (CA 7, 1994).
Under paragraph VII(a) of defendant’s policy, plaintiff had three years following the termination of the policy to make the actual claim. It is undisputed that the policy expired on April 1, 1982, and that the actual claim, that is, a demand for something due as a right, was not made until May 10, 1989, when the dcr filed a formal complaint against plaintiff. Because the claim was not made within three years of the termination of the policy, *541I would conclude that plaintiff is not covered under defendant’s policy.
The majority relies on Continental Casualty Co v Enco Associates, Inc, 66 Mich App 46; 238 NW2d 198 (1975), for the proposition that this Court should not "split hairs” when determining whether the insured had submitted a claim. However, the majority misapplies Eneo to the facts of this case. Eneo merely stands for the proposition that oral notice of an insured’s liability for a defect during the policy period is sufficient to constitute a claim. Id. at 51. There was no question in Eneo that the insured was making a demand for payment in his telephone call.
I am aware that the Supreme Court recently held that a letter from the Environmental Protection Agency to an insured that it was potentially liable for environmental contamination constituted the initiation of a "suit” under the terms of the insurance policy at issue, thus triggering the insurer’s duty to defend. Michigan Millers Mutual Ins Co v Bronson Plating Co, 445 Mich 558, 575; 519 NW2d 864 (1994). However, Bronson was decided within the particular context of environmental litigation. Moreover, it is well-settled that an insurer’s duty to defend is broader than its duty to indemnify. Auto-Owners Ins Co v City of Clare, 446 Mich 1, 15; 521 NW2d 480 (1994); Allstate Ins Co v Freeman, 432 Mich 656, 662; 443 NW2d 734 (1989) (Riley, J.). I would therefore decline to reach an analogous result.