Court Opinion

ID: 3155786
Source: CourtListenerOpinion
Date Created: 2015-11-18 21:05:46.473396+00
Date Added: 2024-06-11T12:02:11.696130
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

SUSAN BAILEY,                                                      UNPUBLISHED
                                                                   November 17, 2015
               Plaintiff-Appellee,

v                                                                  No. 321655
                                                                   Ingham Circuit Court
GREAT LAKES MUTUAL INSURANCE                                       LC No. 13-000806-CK
COMPANY,

               Defendant-Appellant.

Before: GADOLA, P.J., and HOEKSTRA and M. J. KELLY, JJ.

PER CURIAM.

         In this insurance coverage dispute, which our Supreme Court remanded to this Court for
consideration as on leave granted, see Bailey v Great Lakes Mut Ins Co, 497 Mich. 1003; 861
NW2d 634 (2015), defendant, Great Lakes Mutual Insurance Company, appeals the trial court’s
order denying its motion for summary disposition and granting the motion for summary
disposition by plaintiff, Susan Bailey. On appeal, the primary issue is whether the trial court
erred when it determined that the statement of occupancy that Bailey executed when she applied
for insurance was not part of the policy that Great Lakes Mutual issued to her. We conclude that
the trial court did not err when it determined that the statement of occupancy was not part of the
policy. Accordingly, we affirm.

       Bailey owns a rental home in Lansing, Michigan. She applied to insure the rental home
with Great Lakes Mutual. The original application was dated June 29, 2011. On that same day,
she executed a “Statement of Occupancy.” In the statement, she agreed that the property she
wished to insure “is used for rental purposes and is tenant-occupied” at the time. She also agreed
that she would take certain actions if the property should become unoccupied: “I agree that
should this rental property be unoccupied for greater than 60 days, I will immediately notify my
agent or the Company.” She further acknowledged that her coverage on the property would be
“changed to a Form 1 policy to insure the vacated premises.” Finally, she agreed to “accept full
responsibility to comply with the notice requirement, and understand that failure to notify the
Company of a change in occupancy or use of said property could compromise the coverage
provided within the insurance policy.” Great Lakes Mutual agreed to insure the property and
issued her a Form 2 policy, which it made effective June 27, 2011 through June 27, 2012.

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       Bailey renewed the policy in 2012 with the policy period ending on June 27, 2013. In
February 2013, the rental home suffered damage resulting from a water leak inside the house.
Bailey submitted a claim to Great Lakes Mutual. After Bailey admitted that the house had been
without a tenant since October 1, 2012, Great Lakes Mutual changed Bailey’s policy from a
Form 2 policy to a Form 1 policy, which it asserted did not cover the damage at issue.
Accordingly, it denied her claim.

         In July 2013, Bailey sued Great Lakes Mutual for breach of the insurance contract. Great
Lakes Mutual moved for summary disposition under MCR 2.116(C)(10) in November 2013. In
its brief in support of its motion for summary disposition, Great Lakes Mutual asserted that the
statement of occupancy was a “condition precedent” and then discussed various authorities
stating that an insurer does not have to cover a loss if the insured fails to give notice to the
insurer, or if the property does not meet a residency requirement. Although it did not clearly
assert the issue in its brief, Great Lakes Mutual did state in its motion that it had no obligation to
cover Bailey’s loss because she failed to give notice that the rental property was unoccupied as
required under the statement of occupancy.

        In January 2014, Bailey responded to Great Lakes Mutual’s motion and argued that she
was entitled to summary disposition under MCR 2.116(I)(2). She maintained that the statement
of occupancy was not part of the policy because it was executed two days after the policy came
into effect and it was not otherwise incorporated into the policy as a rider or endorsement. She
also argued, in the alternative, that the property was not unoccupied because she visited the
property and was actively preparing it for lease.

       The trial court determined that the statement of occupancy was not part of the insurance
policy. It also agreed with Bailey’s alternative argument; relying on Smith v Lumbermen’s Mut
Ins Co, 101 Mich. App. 78; 300 NW2d 457 (1980), the trial court concluded that the undisputed
evidence showed that the property was not vacant or unoccupied because Bailey was renovating
the premises for a new tenant. For these reasons, the trial court denied Great Lakes Mutual’s
motion and granted Bailey’s motion.

        This Court reviews de novo a trial court’s decision on a motion for summary disposition
under MCR 2.116(C)(10). MEEMIC Ins Co v DTE Energy Co, 292 Mich. App. 278, 280; 807
NW2d 407 (2011). A motion for summary disposition under MCR 2.116(C)(10) tests the factual
sufficiency of the complaint. Joseph v Auto Club Ins Ass’n, 491 Mich. 200, 206; 815 NW2d 412
(2012). In deciding the motion, the trial court “must consider the 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.” Id. Summary disposition is warranted
when there is no genuine issue as to any material fact and the moving party is entitled to
judgment as a matter of law. Greene v AP Prod, Ltd, 475 Mich. 502, 507; 717 NW2d 855
(2006). Further, the construction and interpretation of an insurance contract is a question of law
that this Court reviews de novo. Morley v Automobile Club of Michigan, 458 Mich. 459, 465;
581 NW2d 237 (1998).

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       “[A]n insurance contract must be enforced in accordance with its terms.” Henderson v
State Farm Fire & Cas Co, 460 Mich. 348, 354; 596 NW2d 190 (1999). The policy application,
declarations page, and the policy itself construed together constitute the contract. Dancey v
Travelers Prop Cas Co, 288 Mich. App. 1, 8; 792 NW2d 372 (2010).

         In its motion for summary disposition, Great Lakes Mutual failed to show that the
statement of occupancy was part of the insurance policy and imposed a condition precedent to
coverage. The policy at issue does not incorporate the statement of occupancy and there is
otherwise no similar occupancy requirement in the policy. Additionally, Great Lakes Mutual
admitted in a request for admissions that the statement of occupancy was not an endorsement or
rider; it characterized it as a condition precedent. Great Lakes Mutual argues that application
forms are part of the insurance contract and can give rise to claims by the insurer. See Clark v
John Hancock Mut Life Ins Co, 180 Mich. App. 695; 447 NW2d 783 (1989). However, Clark is
distinguishable from the present case because the insurance application in Clark specifically
provided that it would be part of any policy issued. Id. at 702. In the present case, the statement
of occupancy is not identified as part of the application for insurance or otherwise incorporated
into the policy. Moreover, because Great Lakes Mutual did not argue or present evidence to the
trial court that the statement of occupancy was independently enforceable, we cannot consider
whether the statement might be enforceable under some alternate theory. See Barnard Mfg Co,
Inc v Gates Performance Eng, Inc, 285 Mich. App. 362, 380-381; 775 NW2d 618 (2009).

         In remanding for consideration as on leave granted, our Supreme Court directed this
Court’s attention to Ellis v Farm Bureau Ins Co, 482 Mich. 1119; 760 NW2d 212 (2008).
However, the decision in Ellis does not apply to the facts of this case because, unlike the case in
Ellis, there is no evidence that the statement of occupancy was part of the application or policy.
As such, even if the trial court erred when it determined that the rental home was occupied
during the period at issue, it nevertheless came to the correct result. See Rental Properties
Owners Assoc of Kent County v Kent County Treasurer, 308 Mich. App. 498, 533; 866 NW2d 817
(2014).

       Affirmed.

                                                            /s/ Michael F. Gadola
                                                            /s/ Joel P. Hoekstra
                                                            /s/ Michael J. Kelly

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