Court Opinion

ID: 9689404
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:30:22.943566+00
Date Added: 2024-06-11T18:18:47.772446
License: Public Domain

*349D. B. Leiber, J.
(dissenting). I respectfully dissent.
I agree that the State of Michigan is a “person” for purposes of the Michigan Insurance Code, MCL 500.114; MSA 24.1114.
However, in the absence of any legislative history addressing whether the Legislature intended to include governmental entities within the scope of the “net worth exception” of the Property and Casualty Guaranty Association Act, MCL 500.7925(3); MSA 24.17925(3), I would hold this exception inapplicable to the Department of Natural Resources and would determine defendant liable for the amounts of the bonds, because the claims are “covered claims” under MCL 500.7925; MSA 24.17925.
Reliance on Georgia — the only other state having a “net worth exception” in their insurance guaranty act — is unavailing. The Georgia Supreme Court did not address the application of “net worth” to a governmental entity. Rather, that court summarily assumed that “net worth” had relevance because the parties there stipulated its existence. Georgia Insurers Insolvency Pool v Elbert Co, 258 Ga 317; 368 SE2d 500 (1988).
So too, in United States v Rutland, Inc, 849 F Supp 806 (SD Ga, 1994), aff'd 46 F3d 71 (CA 11, 1995), the federal district court merely took judicial notice of the existence of a net worth for the United States at the time of the insured event.
In City of Brunswick v United States, 849 F2d 501 (CA 11, 1988), unlike the legislative silence here, Congress made the term “net worth” applicable to local governments by an explicit statutory provision.
Clearly, the purpose of the “net worth exception” is to prevent payment of guaranty association funds to *350those relatively able to bear the loss when an insurer becomes insolvent. Borman’s, Inc v Michigan Property & Casualty Guaranty Ass’n, 925 F2d 160 (CA 6, 1991). In the context of this case the question is clear: who will absorb the .loss created by the insolvency of the surety for several oil prospectors.
The answer is likewise plain. Given the rule of statutory construction that insurance laws are to be construed in favor of the insured and the public, Yetzke v Fausak, 194 Mich App 414; 488 NW2d 222 (1992), legislative silence here is not a mandate for the public to pick up the tab. The burden justifiably falls to the defendant, an association of insurers created for the public benefit.
In the face of obvious ambiguity regarding the application of the term “net worth” to a governmental entity, I would hold that the term was not intended to apply to the State of Michigan. Accordingly, I would reverse the grant of summary disposition in favor of defendant and grant summary disposition in favor of plaintiff.