Court Opinion

ID: 9729881
Source: CourtListenerOpinion
Date Created: 2023-08-26 14:51:24.532539+00
Date Added: 2024-06-11T18:26:01.925128
License: Public Domain

*694Corrigan, J.
I respectfully dissent from the majority’s conclusion that the power of attorney and undertaking (PAU) does not apply to this case. I would affirm the decision of the Court of Appeals because defendant insurer waived its policy limits and agreed to provide the greater residual liability coverage.
I. THE PAU
Under the PAU, defendant insurer agreed to,
with respect to an action or proceeding against it or its insured, or its insured and another or others, arising out of a motor-vehicle accident in any of the respective Provinces or Territories, appoint[] severally the Superintendents of Insurance of British Columbia, Alberta, Saskatchewan, and Manitoba, the Registrars of Motor Vehicles of Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland, the Director of the Motor Vehicle Bureau of Quebec, the Commissioners of Yukon Territory and the Northwest Territories, or such official as may from time to time be designated by the Provinces or Territories concerned, to do and execute all or any of the following acts, deeds, and things, that is to say: To accept service of notice or process on its behalf.
Defendant further agreed to the following:
A. To appear in any action or proceeding against it or its insured in any Province or Territory in which such action has been instituted and of which it has knowledge:
B. That upon receipt from any of the officials aforesaid of such notice or process in respect of its insured, or in respect of its insured and another or others, it will forthwith cause the notice or process to be personally served upon the insured:
C. Not to set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up if the contract *695had been entered into in, and in accordance with the law relating to motor-vehicle liability insurance contracts of the Province or Territory of Canada in which such action or proceeding may be instituted, and to satisfy any final judgment rendered against it or its insured by a Court in such Province or Territory, in the claim, action, or proceeding, up to
(1) the limit or limits of liability provided in the contract; but
(2) in any event an amount not less than the limit or limits fixed as the minimum for which a contract of motor-vehicle liability insurance may be entered into in such Province or Territory of Canada, exclusive of interest and costs and subject to any priorities as to bodily injury or property damage with respect to such minimum limit or limits as may be fixed by the Province or Territory.
D. That it will not issue motor-vehicle liability insurance cards supplied to it by the Superintendent of Insurance of British Columbia, except to persons who are non-residents of Canada and who are insured with it under a contract of motor-vehicle liability insurance.
Power of attorney and undertakings are part of a “reciprocal scheme” designed to provide “a uniform basis for the enforcement of motor vehicle insurance claims in Canada.” Potts v Gluckstein, 8 OR3d 556, 558 (Ont Ct App, 1992). That scheme “ensures that a person who has entered into a motor vehicle insurance contract in one province is recognized as insured in other provinces.” Id. The scheme is, however, also open to participation by United States insurers who do not insure Canadian residents and their automobiles. M; Schrader v United States Fidelity & Guaranty Co, 59 OR2d 178 (1987), modified 59 OR2d 797 (1987). Those insurers file a PAU with the Canadian government to ensure that their *696insureds have the required coverage when driving in Canada.
H. RESIDUAL LIABILITY COVERAGE
The instant case sounds in contract, not tort. I agree with defendant that Michigan law governs construction of its contract to determine the amount of residual liability coverage afforded because defendant contracted with its insured in this state and the underlying accident involved Michigan residents. See Chrysler Corp v Skyline Industrial Services, Inc, 448 Mich 113; 528 NW2d 698 (1995); see generally Sutherland v Kennington Truck Service, Ltd, 454 Mich 274; 562 NW2d 466 (1997). I conclude, however, that defendant explicitly waived the $20,000 limit stated in the policy and agreed to provide up to $200,000 in Canadian funds in residual liability coverage in this case.
A
I agree with the Court of Appeals that the PAU applies to this case. Concededly, the policy that the insured purchased limits defendant’s liability for bodily injury to each injured person to $20,000. Nonetheless, under the PAU, defendant intentionally relinquished its right to assert defenses that it could not assert if it had entered into the policy in, and in accordance with the law of, Ontario. Accordingly, defendant expressly waived the policy limits by entering into the PAU with the Canadian government. See Book Furniture Co v Chance, 352 Mich 521, 526; 90 NW2d 651 (1958) (“[w]aiver is the intentional relinquishment of a known right”); see also Dahrooge v *697Rochester German Ins Co, 177 Mich 442, 451-452; 143 NW 608 (1913).
Under the pau, defendant agreed that it would
[n]ot ... set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up ¿/the contract had been entered into in, and in accordance with the law relating to motor-vehicle liability insurance contracts of the Province or Territory of Canada in which such action or proceeding may be instituted .... [Emphasis added.]
I cannot join the majority’s construction of this provision. Where no ambiguity exists, the terms of the contract control. Hank v Lamb, 310 Mich 81, 88; 16 NW2d 671 (1944). We interpret the language used in the contract in accordance with its usual and ordinary meaning. Ginsberg v Reliable Linen Service Co, 292 Mich 70, 75; 290 NW 331 (1940). In this case, the plain language of the pau precludes defendant from raising “any” defense to “any claim, action, or proceeding” under its automobile insurance contract that it could not assert if it had entered into the contract in accordance with the law of the province in which the action “may be instituted.” The verb “may” expresses possibility or permission. Random House Webster’s College Dictionary, p 838. Therefore, the clear language of the pau dictates that it applies not only to actions actually brought in an Ontario court, but to actions that could have been brought in that court.
I disagree with the majority’s determination that, instead of its common meaning, “use of ‘may’ in this context implies that the pau applies in whatever province or territory the suit is brought . . . .” Ante at 689. Although this Court construes a contract as a *698whole,1 it will not make a new contract for the parties. Ginsberg, supra at 75. “A contract cannot be made by construction because it later appears that a different agreement should have been consummated in the first instance.” Id. The majority’s interpretation of the term “may” essentially inserts the Canadian province limitation contained in the satisfaction of judgment clause into the waiver of defenses clause. Unlike the majority, I would not remake the PAU through the addition of that limitation. See Klever v Klever, 333 Mich 179, 187; 52 NW2d 653 (1952).
By its terms, the PAU applies to “an action or proceeding against it or its insured, or its insured and another or others, arising out of a motor-vehicle accident in any of the respective Provinces or Territories . . . .” This action clearly arises out of an Ontario accident, and thus, falls within the scope of the pau. Construing the term “may” in accordance with its plain meaning furthers the underlying purpose of the pau—to provide “a uniform basis for the enforcement of motor vehicle insurance claims in Canada.” Potts v Gluckstein, supra at 558. The majority’s construction results in the opposite because different coverage levels apply, depending on the forum of the lawsuit.
The majority’s approval of the result in ACIA v Lozanis, 215 Mich App 415; 546 NW2d 648 (1996), illustrates the problematic nature of its construction. In Lozanis, the insured brought an action in Ontario despite an arbitration clause in his insurance policy. Under the majority’s view, the filing of the Ontario action is dispositive for purposes of determining coverage, even though a Michigan court subsequently *699enjoined the insured from pursuing his claim in the Ontario court. The majority’s holding will simply encourage Michigan residents to file suit against their Michigan insurers and other Michigan residents in a foreign jurisdiction. Henceforth, few Michigan insureds will bring actions arising out of an Ontario accident in a Michigan court.
In my view, the Court of Appeals adopted the correct construction of the PAU in Lozanis, supra at 421. Lozanis considered whether the pau precluded defendant insurer from asserting uninsured motorist policy limits of lower than $200,000 in Canadian funds in an action by its insured arising from an Ontario accident. The Court rejected defendant’s argument that the forum of the action determines whether the pau applies, reasoning that defendant submitted to Ontario law by agreeing to the pau and that its execution of that document negated its contention that it did not intend to provide insurance coverage for its insureds who traveled in Canada.
In Motorists Mut Ins Co v Howard, 110 Ohio App 3d 709, 713-714; 675 NE2d 51 (1996), the Court of Appeals of Ohio reached the same conclusion when construing identical language in a pau between another insurer and the Canadian government. That court explained:
Clearly, this provision precludes [the insurer] from asserting “any defence” to “any claim” that it would not be allowed to assert if the insurance policy were entered into “in accordance with the law relating to motor-vehicle liability insurance contracts” of Ontario, Canada. . . . Further, it is not necessary for [the insured and his passenger] to file an action in Canada to enforce the power of attorney agreement. This agreement does not state as a condition precedent to enforcement that an individual must institute an *700action in Canada, and, indeed, the plain language states that an action may be instituted in Canada We believe that the proper construction of [the insurer’s] power of attorney agreement with Canada is that when one of [the insurer’s] insureds is involved in a collision in Canada, [the insurer] is bound by the applicable laws of Canada relating to compensation of person injured in that collision.
I agree with Lozanis and Howard. By entering into the pau, defendant effectively submitted to Ontario law in this case.
B
I would decline, however, defendant’s invitation to construe the pau as simply incorporating the restrictions placed on insurers licensed “to carry on automobile insurance in Ontario” under Ontario law. Ont Rev Stat 1980, ch 218, § 25(1), provides in part:
A licence to carry on automobile insurance in Ontario is subject to the following conditions:
1. In any action in Ontario against the licensed insurer or its insured arising out of an automobile accident in Ontario, the insurer shall appear and shall not set up any defence to a claim under a contract made outside Ontario, including any defence as to the limit or limits of liability under the contract, that might not be set up if the contract were evidenced by a motor vehicle liability policy issued in Ontario and such contract made outside Ontario shall be deemed to include the benefits set forth in Schedule C.
Ont Rev Stat 1980, ch 218, § 25(1) effectively creates an exception to the general rule that the Ontario Insurance Act does not apply to policies covering *701automobiles that need not be registered in Ontario.2 Ont Rev Stat 1980, ch 218, § 202(2). The insurer must provide the coverage required by Ont Rev Stat 1980, ch 218, § 219(1), which provides:
Every contract evidenced by a motor vehicle liability policy insures, in respect of any one accident, to the limit of at least $200,000, exclusive of interest and costs, against liability resulting from bodily injury to or the death of one or more persons and loss of or damage to property.
In Schrader v United States Fidelity & Guaranty Co, 59 OR2d 178 (1987), modified 59 OR2d 797 (1987), the Ontario Divisional Court concluded that § 25 precludes insurers who carry automobile insurance in Ontario from asserting the defense that their United States policies do not include coverages or limits mandated by the Ontario Insurance Act. The court, however, subsequently learned that the insurer involved in Schrader, supra, was not licensed to do business in Ontario, but rather had filed a power of attorney and undertaking with the provincial superintendent of insurance. The court accepted the insurer’s concession that the “same result would have been reached by reason of the filing of the power of attorney and undertaking in Ontario by a foreign insurer.” Id. at 797.
I recognize that Ont Rev Stat 1980, ch 218, § 25(1) only applies to an “action in Ontario.” Unlike the stat*702ute, however, the pau does not limit its application to actions brought in Ontario and other provinces. Instead, its plain language precludes defendant from raising “any” defense to “any claim, action, or proceeding” under its automobile insurance contract that it could not assert if it had entered into the contract in accordance with the law of the province in which the action “may be instituted.”
In this case, defendant expressly waived its policy limits and agreed to application of the Ontario coverage limits under the PAU. The pau applies because this action could have been instituted in Ontario3 and defendant’s assertion of its policy limits constitutes a defense. See Potts, supra at 560 (the term “defence” includes any defense that the policy does not include coverages or limits mandated by the Ontario insurance act). I would therefore conclude that defendant must provide coverage of $200,000 in Canadian funds.
m. CONCLUSION
I conclude that defendant insurer waived its policy limits and must provide up to $200,000 in Canadian funds in residual liability coverage for bodily injuries sustained in the Ontario automobile accident involving its Michigan insured and plaintiff. I would therefore affirm the decision of the Court of Appeals. Accordingly, I dissent.
Weaver, C.J., concurred with Corrigan, J.
Young, J., took no part in the decision of this case.

 Singer v Goff, 334 Mich 163, 168; 54 NW2d 290 (1952).

 Under Ontario law, an owner of a motor vehicle who does not reside or carry on business in Ontario for more than three months in any one year need not register the vehicle if (1) the country or state of residence grants a similar exemption for vehicles owned by residents of Ontario and registered therein, and (2) the vehicle is registered in that country or state and displays registration plates. Ontario Highway Traffic Act, Ont Rev Stat 1980, ch 198, § 15(3). Michigan grants a similar exemption for a nonresident’s vehicle that is properly registered in the place of residence and displays a valid registration certificate and plate. MCL 257.243; MSA 9.1943.

 Under the pau, defendant appointed the registrar of motor vehicles of Ontario to accept service of process or notice on its behalf of an action or proceeding against it or its insured arising out of a motor vehicle accident in Ontario. Defendant further agreed to appear in any Ontario action against it or its insured and to personally serve the notice or process on its insured.