Court Opinion

ID: 9929265
Source: CourtListenerOpinion
Date Created: 2024-02-02 06:05:48.391019+00
Date Added: 2024-06-11T10:06:29.896006
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

RAYCHEL BUTLER,                                                      UNPUBLISHED
                                                                     February 1, 2024
               Plaintiff-Appellee,
v                                                                    No. 363695
                                                                     Wayne Circuit Court
TERRELL GLENN LANE, GLENECIA LANE,                                   LC No. 21-004125-NI
JOHN DOE, PROGRESSIVE MARATHON
INSURANCE COMPANY, MICHIGAN
ASSIGNED CLAIMS PLAN, MICHIGAN
AUTOMOBILE INSURANCE PLACEMENT
FACILITY, and WESTFIELD INSURANCE
COMPANY,

               Defendants,
and

MEMBERSELECT INSURANCE COMPANY,

               Defendant-Appellant.

Before: CAVANAGH, P.J., and RICK and PATEL, JJ.

PER CURIAM.

       In this action to recover uninsured motorist benefits, defendant MemberSelect Insurance
Company appeals by leave granted1 an order denying its motion for partial summary disposition
premised on the ground that plaintiff failed to comply with a condition precedent. We reverse and
remand this matter for proceedings consistent with this opinion.

                 I. BACKGROUND FACTS AND PROCEDURAL HISTORY

        This case arose out of a motor vehicle accident that occurred on January 20, 2021. Plaintiff
was sitting in her parked vehicle when a vehicle driven by an unknown driver allegedly struck her
vehicle and fled. Plaintiff reported the accident to the police nine days later, on January 29, 2021.

1
 Butler v Lane, unpublished order of the Court of Appeals, entered April 25, 2023 (Docket No.
363695).
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Subsequently, plaintiff filed this lawsuit alleging that defendant wrongfully refused to pay
uninsured motorist (UM) benefits. Defendant responded that plaintiff was not entitled to coverage
because she breached the insurance policy by failing to perform a condition precedent, which was
that she makes a written report of the hit-and-run accident within 24 hours to local police.

         Defendant moved for partial summary disposition under MCR 2.116(C)(8) and (C)(10).
Plaintiff responded, claiming that the insurance policy was ambiguous because of the location of
the condition-precedent language in the policy and because it did not list any consequences for
failing to satisfy the 24-hour notice requirement. The trial court found in favor of plaintiff and
denied defendant’s motion for partial summary disposition, concluding that the terms of the
insurance policy were ambiguous and unreasonable. Defendant moved for reconsideration, which
the trial court denied. This appeal followed.

                                        II. DISCUSSION

        Defendant argues that the trial court erred when it denied its motion for partial summary
disposition because plaintiff failed to meet the insurance policy’s condition precedent, which
required her to report the hit-and-run accident to law enforcement within 24 hours to receive
insurance benefits. We agree.

                                 A. STANDARD OF REVIEW

       We review de novo a trial court’s decision on a motion for summary disposition to
determine if the moving party is entitled to judgment as a matter of law. Maiden v Rozwood, 461
Mich 109, 118; 597 NW2d 817 (1999). Because defendant relied on documents outside the
pleadings in support of its motion, we consider the motion as brought under MCR 2.116(C)(10).
See Spiek v Mich Dep’t of Transportation, 456 Mich 331, 338; 572 NW2d 201 (1998); Silberstein
v Pro-Golf of America, Inc, 278 Mich App 446, 457; 750 NW2d 615 (2008).
       A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint.
       In evaluating a motion for summary disposition brought under this subsection, a
       trial court considers affidavits, pleadings, depositions, admissions, and other
       evidence submitted by the parties, MCR 2.116(G)(5), in the light most favorable to
       the party opposing the motion. [Maiden, 461 Mich at 120.]

The moving party is entitled to judgment as a matter of law when the evidence submitted fails to
establish a genuine issue regarding any material fact. Id. “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.” Southfield Ed Ass’n v Bd of Ed of Southfield Pub Sch,
320 Mich App 353, 361-362; 909 NW2d 1 (2017) (quotation marks and citation omitted). We
also review de novo as questions of law the interpretation and construction of insurance contracts.
Citizens Ins Co v Secura Ins, 279 Mich App 69, 72; 755 NW2d 563 (2008).

                                   B. LAW AND ANALYSIS

        This case concerns UM benefits. Because UM benefits are not required by statute, and are
instead an optional coverage, “the rights and limitations of such coverage are purely contractual .
. . .” Rory v Continental Ins Co, 473 Mich 457, 465-466; 703 NW2d 23 (2005). This means that
the terms of the policy control whether such benefits are available. Andreson v Progressive

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Marathon Ins Co, 322 Mich App 76, 84-85; 910 NW2d 691 (2017) (citation omitted). In other
words, interpretation of the insurance policy, which is the contract between the insurer and the
insured, dictates the circumstances under which UM benefits will be provided. Dawson v Farm
Bureau Mut Ins Co of Mich, 293 Mich App 563, 568; 810 NW2d 106 (2011) (citation omitted).

         Contract construction principles apply to the interpretation of the insurance policy as it is
a contractual agreement between the parties. Hastings Mut Ins Co v Safety King, Inc, 286 Mich
App 287, 291; 778 NW2d 275 (2009). The insurance policy is read as a whole, according the
terms their plain and ordinary meaning, to determine and effectuate the intentions of the parties.
Id. at 292. An unambiguous contract must be enforced as written, without judicial construction,
because it reflects the parties’ intent as a matter of law. Id. A “ ‘mere judicial assessment of
‘reasonableness’ is an invalid basis upon which to refuse to enforce contractual provisions.’ ”
Dawson, 293 Mich App at 569, quoting Rory, 473 Mich at 470. “The reason [for this] is clear: It
is not the province of the judiciary to rewrite contracts to conform to the court’s liking, but instead
to enforce contracts as written and agreed to by the parties.” Dawson, 293 Mich App at 569.

        First, we consider whether the 24-hour reporting requirement is a condition precedent to
receiving UM benefits. “A condition precedent . . . is a fact or event that the parties intend must
take place before there is a right to performance.” Harbor Park Market, Inc v Gronda, 277 Mich
App 126, 131; 743 NW2d 585 (2007) (quotation marks and citation omitted). “If the condition is
not satisfied, there is no cause of action for a failure to perform the contract.” Id. “A condition
precedent is distinguished from a promise in that it creates no right or duty in itself, but is merely
a limiting or modifying factor.” Mikonczyk v Detroit Newspapers, Inc, 238 Mich App 347, 350;
605 NW2d 360 (1999) (quotation marks and citation omitted).

       The first page of the insurance policy states: “This policy is a legal contract between you
(the policyholder) and us (the company).” The insurance policy then instructs: “A person
claiming . . . Uninsured and Underinsured Motorists Bodily Injury Coverage . . . must
promptly . . . make a written report of a hit-and-run accident within 24 hours to local law
enforcement[.]” The policy continues: “[I]f it is shown that it is not reasonably possible to give
such notice within the prescribed time . . . notice must be given as soon as it is reasonably
possible.” This language plainly sets, as a condition precedent, an obligation that plaintiff must
meet to receive UM benefits. The condition requires the insured to report the accident to police
within 24-hours, or if that is not reasonably possible, as soon as it is reasonably possible. That is,
before plaintiff has a right to performance by defendant, this event must take place. See Harbor
Park Market, Inc, 277 Mich App at 131. Plaintiff does not dispute that she failed to report the
alleged hit-and-run accident to police within 24 hours.

        Next, we consider whether the condition precedent is ambiguous. “An insurance contract
is ambiguous when its provisions are capable of conflicting interpretations.” Klapp v United Ins
Group Agency, Inc, 468 Mich 459, 467; 663 NW2d 447 (2003) (quotation marks and citation
omitted). Similarly, “if two provisions of the same contract irreconcilably conflict with each other,
the language of the contract is ambiguous.” Id. “Courts may not impose an ambiguity on clear
contract language.” Coates v Bastian Bros, Inc, 276 Mich App 498, 503; 741 NW2d 539 (2007).
“Plain and unambiguous contract language cannot be rewritten by the Court under the guise of
interpretation, as the parties must live by the words of their agreement.” Harbor Park Market, 277
Mich App at 130-131 (quotation marks and citation omitted). “Whether a contract is ambiguous
is a question of law.” Coates, 276 Mich App at 504. It is only when the contractual language is
ambiguous that its meaning becomes a question of fact. Id.
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        Plaintiff contends that the condition precedent is ambiguous because the UM section of the
policy states: “Subject to the Definitions, Exclusions, Conditions and Limits of Liability of this
policy, we will pay compensatory damages which an insured person is legally entitled to recover
from the owner or operator of an uninsured motor vehicle because of bodily injury[.]” And,
plaintiff argues, the 24-hour-reporting-to-police requirement is not specifically stated in that
section of the policy. But the first page of the insurance policy, as discussed above, sets forth the
conditions that must be met to claim benefits under the insurance policy—one of which is the 24-
hour-reporting requirement. And the UM section of the policy specifically states, as plaintiff
acknowledges, that coverage is “[s]ubject to the . . . Conditions . . . of this policy . . . .” There are
no conflicting interpretations of this condition. See Klapp, 468 Mich at 467. Simply because the
condition precedent is not repeated in the text of the UM section does not make it ambiguous. Our
Supreme Court has held: “[A]n insurance policy must be read as a whole to determine and
effectuate the parties’ intent.” Hastings Mut Ins Co, 286 Mich App at 292. Reading the policy as
a whole shows the word “conditions” in the UM coverage section is an umbrella term—under
which are all conditions in the policy, including the 24-hour-reporting condition precedent. The
language of the contract establishes the conditions precedent, and binds plaintiff to all of them.
These sections of the policy are in harmony, and there is no ambiguity regarding the reporting
requirement.

        Plaintiff also claims that the policy was ambiguous because its language did not explicitly
exclude coverage as a consequence for not meeting the 24-hour reporting requirement. However,
the absence of a specified or identified consequence is immaterial and does not render the policy
ambiguous. The effect of failing to satisfy a “condition precedent” of a contract is clear—such
failure relieves defendant of the responsibility to perform its obligation under the contract. See
Harbor Park Market, Inc, 277 Mich App at 131. Therefore, the trial court erred in holding that
the terms of the policy were ambiguous.

        The trial court also erred by applying its own assessment of the condition precedent’s
reasonableness to deny defendant’s motion for partial summary disposition. At the motion
hearing, the trial court noted it would have enforced the policy’s provisions had plaintiff waited
six months to report the accident. The trial court opined that allowing plaintiff to report the
accident several months later would have been too long. At the same time, the trial court implied
that the 24-hour reporting requirement was too short. In its order denying defendant’s motion for
reconsideration, the trial court also stated: “[T]he reporting requirement in this case was 24 hours,
which the Court finds was unreasonable.” The trial court did not explain why the requirement was
unreasonable. Rather, it inserted its own assessment of the provision’s reasonableness. This was
error.
                This approach, where judges divine the parties’ reasonable expectations and
        then rewrite the contract accordingly, 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. [Wilkie v Auto-Owners Ins
        Co, 469 Mich 41, 51-52; 664 NW2d 776 (2003).]

       Plaintiff did not raise any contractual defenses, nor did she argue that the policy violated
law or public policy. The trial court simply determined sua sponte that the 24-hour reporting
provision was unreasonable because it was impliedly too short. The trial court lacked the authority
to make such a determination. “ ‘[T]he judiciary is without authority to modify unambiguous
                                                -4-
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.’ ” Holmes v Holmes, 281 Mich App 575, 594; 760 NW2d 300 (2008), quoting Rory,
473 Mich at 461. Simply stated, a “mere judicial assessment of ‘reasonableness’ is an invalid basis
upon which to refuse to enforce contractual provisions.” Dawson, 293 Mich App at 569 (quotation
marks and citation omitted). Consequently, the trial court erred when it substituted its own
assessment of the condition precedent’s reasonableness to deny defendant’s motion for partial
summary disposition.

        Plaintiff argues for the first time on appeal that defendant needed to establish actual
prejudice before denying plaintiff insurance benefits as our Supreme Court held in Koski v Allstate
Ins Co, 456 Mich 439, 444; 572 NW2d 636 (1998). Plaintiff’s argument is without merit. As our
Supreme Court held in DeFrain v State Farm Mut Auto Ins Co, 491 Mich 359, 362; 817 NW2d
504 (2012), “an unambiguous notice-of-claim provision setting forth a specified period within
which notice must be provided is enforceable without a showing that the failure to comply with
the provision prejudiced the insurer.” But, the DeFrain Court held, a prejudice requirement may
be imposed when the notice provision does not set forth a specific temporal requirement, i.e., when
a notice provision requires notice “immediately” or “within a reasonable time,” as was the
circumstance in Koski. Id. at 375. However, in this case, the provision at issue set forth a clear
and specific time period within which the insured was to make a written report of a hit-and-run
accident to local law enforcement—within 24 hours. As the DeFrain Court explained, “Because
providing UM coverage is optional and not statutorily mandated under the no-fault act, the policy
language alone controls the circumstances entitling a claimant to an award of benefits.” Id. at 367.
If we were to impose a prejudice requirement where none exists, as requested by plaintiff here, we
would be disregarding controlling legal authority of our Supreme Court and frustrating the parties’
right to contract freely—as the DeFrain Court cautioned against. Id. at 368. Therefore, we reject
plaintiff’s argument.

         In conclusion, the trial court erred when it denied defendant’s motion for partial summary
disposition because plaintiff failed to meet a condition precedent of the insurance policy. We
reverse the trial court’s order and remand with instructions to enter an order granting defendant
partial summary disposition consistent with this opinion.

       Reversed and remanded. We do not retain jurisdiction.

                                                             /s/ Mark J. Cavanagh
                                                             /s/ Michelle M. Rick
                                                             /s/ Sima G. Patel

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