Court Opinion

ID: 3199160
Source: CourtListenerOpinion
Date Created: 2016-04-29 16:05:17.770184+00
Date Added: 2024-06-11T12:33:05.672435
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

HALLIE L. WILSON,                                                      UNPUBLISHED
                                                                       April 28, 2016
               Plaintiff-Appellee,

v                                                                      No. 326295
                                                                       Washtenaw Circuit Court
TITAN INSURANCE COMPANY,                                               LC No. 13-000025-NF

               Defendant-Appellant.

Before: SAWYER, P.J., and MURPHY and RONAYNE KRAUSE, JJ.

PER CURIAM.

        Defendant Titan Insurance Company (Titan) appeals as of right the trial court’s orders
denying its motion for summary disposition and granting summary disposition in favor of
plaintiff. This case arises out of plaintiff’s claim for first-party no-fault benefits for injuries she
sustained in a motor vehicle accident. The dispute between the parties primarily concerned
whether plaintiff’s insurance policy with Titan had been cancelled before the accident occurred.
The trial court determined as a matter of law that the policy remained in effect at the time of the
accident. After the trial court rendered its summary disposition ruling, the parties stipulated that
plaintiff’s damages totaled $250,000, with the stipulation being subject to Titan’s appeal of the
court’s summary disposition decision. We affirm.

                                             I. FACTS

        On January 20, 2012, plaintiff purchased a no-fault automobile insurance policy from
Titan that provided for a six-month term of coverage. The total premium was $726. Plaintiff
made an initial installment payment of $143. In a “Premium Payment Notice” (PPN) dated
February 7, 2012, that was allegedly mailed to plaintiff, Titan indicated that it required, at a
minimum, a payment of $125 by February 22, 2012. The PPN provided that timely payment of
the amount due would “continue [plaintiff’s] coverage in force without lapse.” The PPN further
stated, “Please see the other side of this form for an important notice about late payment
cancellation provisions of your policy.” On the reverse side of the PPN, and in a box with the
heading “IMPORTANT NOTICE,” was the following provision:

              If the premium payment is not postmarked or received before the due date
       shown, your insurance will be cancelled for nonpayment of premium.

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              A check which is not honored for any reason will not constitute payment
       and will not extend coverage. [Emphasis added.]

On the face of the PPN, it listed a cancellation-effective date of February 25, 2012, ostensibly
applicable in conjunction with the conditional cancellation notice on the back of the PPN should
the minimum premium payment not be made by the due date of February 22, 2012.

       In the “TERMINATION” section of the underlying insurance policy itself, Titan
provided:

              Cancellation – This policy may be canceled during the policy period as
       follows:

                                               ...

              2.      We may cancel by mailing you at the address last known by us or
       our agent:

                       a.     At least ten (10) days notice by first class mail, if
       cancellation is for nonpayment of premium.

        Plaintiff never made any additional insurance premium payments, and in a “Confirmation
of Cancellation” dated February 27, 2012, Titan informed plaintiff that her policy had been
cancelled on February 25, 2012, for nonpayment of the premium, and that the policy was no
longer in force. On March 5, 2012, plaintiff was seriously injured in a motor vehicle accident.
Titan declined coverage relative to plaintiff’s claim for no-fault personal protection insurance
benefits, commonly referred to as “PIP” benefits, maintaining that coverage had been cancelled
prior to the accident.

       Plaintiff proceeded to file a breach of contract action against Titan, and the litigation
focused on the construction of MCL 500.3020, which provides, in pertinent part:

               (1) A policy of casualty insurance, except worker's compensation and
       mortgage guaranty insurance, including all classes of motor vehicle coverage,
       shall not be issued or delivered in this state by an insurer authorized to do
       business in this state for which a premium or advance assessment is charged,
       unless the policy contains the following provisions:

                                               ...

               (b) Except as otherwise provided in subdivision (d) [inapplicable], that the
       policy may be canceled at any time by the insurer by mailing to the insured at the
       insured's address last known to the insurer or an authorized agent of the insurer,
       with postage fully prepaid, a not less than 10 days' written notice of cancellation
       with or without tender of the excess of paid premium or assessment above the pro
       rata premium for the expired time.

                                               -2-
         Titan’s position was that the cancellation provision in the insurance policy, quoted
earlier, complied with the requirements of MCL 500.3020(1)(b) and that Titan had satisfied the
statute and the terms of the insurance policy by mailing plaintiff a notice of cancellation, as
embedded in the PPN, more than 10 days before the effective date of the cancellation on
February 25, 2012. Therefore, according to Titan, plaintiff had no insurance coverage through
Titan when the accident occurred on March 5, 2012. Plaintiff’s position was that the 10-day
notice period in MCL 500.3020(1)(b) and the insurance policy did not start running when Titan
purportedly mailed the PPN containing the cancellation language, given that there was no basis
to cancel for nonpayment when the notice was sent. Rather, according to plaintiff, Titan was
required to await plaintiff’s default for nonpayment, which occurred on February 22, 2012,
before it mailed a notice of cancellation and started the clock on the 10-day notice period.

        Titan filed a motion for summary disposition under MCR 2.116(C)(10), arguing that
there was no insurance policy in place and effective when plaintiff was injured in the motor
vehicle accident in light of the earlier cancellation. The trial court denied Titan’s motion for
summary disposition essentially on the basis of plaintiff’s position in the case, emphasizing from
the bench that “the notice is supposed to be a notice of cancellation.” Subsequently, plaintiff
filed a motion for summary disposition under MCR 2.116(C)(10), arguing that given the trial
court’s previous ruling concerning cancellation, Titan had no defense to liability under the
insurance policy and that she was entitled to PIP benefits with respect to all of her alleged
allowable expenses. Titan filed a response to plaintiff’s motion for summary disposition, along
with requesting summary disposition in its favor under MCR 2.116(I)(2). Titan challenged
plaintiff’s claimed allowable expenses and also reargued the cancellation issue, contending that
the policy was not in effect at the time of plaintiff’s accident. The trial court denied plaintiff’s
motion for summary disposition on the issue regarding whether she was entitled to all of the PIP
benefits being claimed, considering that she had to establish that the claimed benefits were for
reasonable and allowable expenses arising out of the accident. However, on the issue regarding
cancellation of the policy, the trial court clarified that its previous ruling was intended to not only
deny Titan’s motion for summary disposition on the subject, but to also grant summary
disposition in favor of plaintiff on the matter under MCR 2.116(I)(2). Thereafter, a stipulated
order of damages in the amount of $250,000 was entered, subject to Titan’s appeal concerning
the cancellation issue, thereby clearing the way for this appeal by Titan as of right.

                                          II. ANALYSIS

                    A. STANDARD OF REVIEW AND MCR 2.116(C)(10)

        This Court reviews de novo a trial court’s decision on a motion for summary disposition,
Loweke v Ann Arbor Ceiling & Partition Co, LLC, 489 Mich 157, 162; 809 NW2d 553 (2011),
issues of statutory construction, Estes v Titus, 481 Mich 573, 578-579; 751 NW2d 493 (2008),
and matters concerning the interpretation and legal effect of a contract, Rory v Continental Ins
Co, 473 Mich 457, 464; 703 NW2d 23 (2005). With respect to the well-established principles
governing the analysis of a motion for summary disposition brought pursuant to MCR
2.116(C)(10), this Court in Pioneer State Mut Ins Co v Dells, 301 Mich App 368, 377; 836
NW2d 257 (2013), stated:

                                                 -3-
               In general, MCR 2.116(C)(10) provides for summary disposition when
       there is no genuine issue regarding any material fact and the moving party is
       entitled to judgment or partial judgment as a matter of law. A motion brought
       under MCR 2.116(C)(10) tests the factual support for a party's claim. A trial court
       may grant a motion for summary disposition under MCR 2.116(C)(10) if the
       pleadings, affidavits, and other documentary evidence, when viewed in a light
       most favorable to the nonmovant, show that there is no genuine issue with respect
       to any material fact. 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. The trial court is not permitted to
       assess credibility, weigh the evidence, or resolve factual disputes, and if material
       evidence conflicts, it is not appropriate to grant a motion for summary disposition
       under MCR 2.116(C)(10). A court may only consider substantively admissible
       evidence actually proffered relative to a motion for summary disposition under
       MCR 2.116(C)(10). [Citations and quotation marks omitted.]

           B. CONTRACT AND STATUTORY CONSTRUCTION PRINCIPLES

        “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.” Rory, 473
Mich at 464. “If the language of [a] contract is unambiguous, we construe and enforce the
contract as written.” Quality Prod & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375;
666 NW2d 251 (2003). A contract is ambiguous if its provisions are capable of conflicting
interpretations. Klapp v United Ins Group Agency, Inc, 468 Mich 459, 467; 663 NW2d 447
(2003). If the contract language is ambiguous, “the ambiguous language presents a question of
fact to be decided by a” trier of fact. Cole v Auto-Owners Ins Co, 272 Mich App 50, 53; 723
NW2d 922 (2006).

      In Whitman v City of Burton, 493 Mich 303, 311-312; 831 NW2d 223 (2013), the
Michigan Supreme Court articulated the principles applicable to statutory interpretation:

               When interpreting a statute, we follow the established rules of
       statutory construction, the foremost of which is to discern and give effect to the
       intent of the Legislature. To do so, we begin by examining the most reliable
       evidence of that intent, the language of the statute itself. If the language of a
       statute is clear and unambiguous, the statute must be enforced as written and no
       further judicial construction is permitted. Effect should be given to every phrase,
       clause, and word in the statute and, whenever possible, no word should be treated
       as surplusage or rendered nugatory. Only when an ambiguity exists in the
       language of the statute is it proper for a court to go beyond the statutory text to
       ascertain legislative intent. [Citations omitted.]

                           C. DISCUSSION AND RESOLUTION

       We conclude that this case is ultimately controlled by the cancellation-notice provision
contained in the insurance policy regarding nonpayment of a premium. Again, MCL
500.3020(1)(b) provides, in abbreviated form, that “[a] policy of casualty insurance, . . .

                                               -4-
including all classes of motor vehicle coverage,” must include a provision “that the policy may
be canceled at any time by the insurer by mailing to the insured . . . a not less than 10 days’
written notice of cancellation . . . .” As reflected and nicely summarized in the following
discussion in Grable v Farmers Ins Exch, 129 Mich App 370, 372-374; 341 NW2d 147 (1983),
our Supreme Court has examined the language in MCL 500.3020(1)(b), or similar earlier
versions of the statute, dating back many years:

               Eghotz v Creech, 365 Mich 527; 113 NW2d 815 (1962), and Bek v
       Zimmerman, 285 Mich 224; 280 NW 741 (1938), are controlling in this case.
       In Eghotz, the defendant paid his insurance company $10 on May 14, 1956, and
       agreed to make monthly payments after that until the total premium of $50 was
       paid. The policy stated that if he did not pay the installments when due, it would
       expire. The defendant paid only one $10 payment and on July 18, 1956, he was
       injured. The Supreme Court held that the policy had lapsed before the injury
       because the defendant had not kept his premiums current under the contract. It
       rejected the claim that § 3020 was the exclusive remedy for cancellation. Because
       the contract had an automatic lapse clause § 3020 did not apply.

               In Bek,[1] the parties entered into a policy that ran from March 25, 1936,
       through March 25, 1937. The policy specifically stated that if the insured did not
       pay it would automatically terminate. It also required the plaintiff to pay on April
       25, 1936, May 25, 1936, and June 25, 1936. Although the plaintiff did pay the
       first premium on time, he paid the second premium on June 16 and did not pay
       the third premium. He was injured on June 27. The Supreme Court held that the
       statute then in effect, the predecessor to § 3020, did not apply where the policy
       automatically ends when the insured fails to pay the premiums. . . . .

               [In] . . . DeHaan v Marvin, 331 Mich 231; 49 NW2d 148 (1951)[,] . . . the
       insurance company was found to be liable on the contract, even though the
       defendant did not pay anything at all, because the contract contained
       no cancellation provision. Therefore, that insurance policy was effective until the
       insurance company gave the insured notice of cancellation as required by the
       statute then in effect. In the present case, the contracts did have a cancellation
       provision. The parties may contract to whatever they wish as long as it does not
       violate the law or public policy[.]

1
  At the time of Bek in 1938, our Supreme Court examined a predecessor statute to MCL
500.3020, that being 3 Comp Laws 1929, § 12461, which, with respect to policies of casualty
insurance, “including all classes of automobile coverage,” required inclusion of a provision
“whereby the policy may be cancelled at any time by the [insurance] company by giving to the
insured a five days’ written notice of cancellation with or without tender . . . .” See Bek, 285
Mich at 227.

                                               -5-
      In Bek, the insurance policy provided for automatic termination of coverage if a premium
payment was not made on its due date. Bek, 285 Mich at 226. With respect to the statute, the
Bek Court observed:

              The quoted statute applies where either the insurer or the insured seeks to
       terminate the insurance by cancellation; it cannot be stretched to cover a situation
       where, as here, liability under the contract has become automatically suspended
       by reason of the precise terms of the insurance agreement.

              The statute covers those situations where termination of the policy is not
       automatic but is optional with the insurer and, therefore, cannot be anticipated and
       provided against by the insured unless he is given ample notice of the intended
       exercise of that option. [Id. at 227-228.]

        In Eghotz, the insurance policy indicated that the failure to pay an installment when due
would cause the policy to expire when coverage lapsed under payments actually made. Eghotz,
365 Mich at 533. Our Supreme Court rejected the argument that a “policy may be canceled by
the insurer only by mailing to the insured a 10-day written notice of cancellation[.]” Id. at 529-
530.

        The authorities discussed above indicate that if a premium installment under an insurance
policy is not made when due and the policy contains language reflecting that coverage will lapse,
expire, or terminate for nonpayment of a premium, a notice of cancellation under MCL
500.3020(1)(b) need not be pursued. Titan does not suggest that such a provision was contained
in the insurance policy and has certainly not urged that the policy automatically expired on its
own terms due to nonpayment. Instead, Titan has all along placed reliance on the language in
the insurance policy allowing it to cancel a policy upon “[a]t least ten (10) days notice by first
class mail, if cancellation is for nonpayment of premium.” See Grable, 129 Mich App at 374
(policies had cancellation provisions and parties may contract to whatever they wish absent a
violation of law). Because Titan’s insurance policy had a cancellation provision for nonpayment
of a premium and not an automatic lapse or termination clause, the cancellation provision
governed, and we will assume the validity of Titan’s contention that the provision complied with
MCL 500.3020(1)(b).2 The contractual language, plainly and unambiguously, spoke in terms of
a notice of cancellation “for nonpayment of premium.” However, plaintiff was not in default or
breach of the policy with respect to premium payments at the time the PPN was sent. It was
impossible for Titan to comply with the insurance policy’s 10-day notice provision by mailing a
cancellation notice for nonpayment of a premium before the occurrence of that contingency or
event. Instead, the notice mailed to plaintiff merely concerned the future possibility of
nonpayment. It was not until plaintiff actually missed the due date for making the premium
payment that it became feasible for Titan to send a true notice of cancellation for “nonpayment
of premium.” Titan’s February 27, 2012 so-called “Confirmation of Cancellation” actually
served as the proper cancellation notice for purposes of the 10-day notice requirement contained

2
  This includes an assumption that MCL 500.3020(1)(b) does not require the mailing of a
separate, discreet notice of cancellation.

                                               -6-
in the insurance policy. In sum, the trial court did not err in granting summary disposition in
favor of plaintiff in regard to the issue of whether the insurance policy remained in effect at the
time of the motor vehicle accident; plaintiff remained covered by the policy when she was
injured in the accident.

      Affirmed. Having fully prevailed on appeal, plaintiff is awarded taxable costs pursuant
to MCR 7.219.

                                                            /s/ David H. Sawyer
                                                            /s/ William B. Murphy
                                                            /s/ Amy Ronayne Krause

                                                -7-