Kaitlin Hahn v. Geico Indemnity Company ( 2020 )

Order Michigan Supreme Court
Lansing, Michigan
March 23, 2020 Bridget M. McCormack,
Chief Justice
158141 David F. Viviano,
Chief Justice Pro Tem
Stephen J. Markman
KAITLIN HAHN, Brian K. Zahra
Plaintiff-Appellee, Richard H. Bernstein
Elizabeth T. Clement
SC: 158141 Megan K. Cavanagh,
v COA: 336583 Justices
Oakland CC: 2016-152229-NF
GEICO INDEMNITY COMPANY,
Defendant-Appellant,
and
AUTOMOBILE CLUB INSURANCE
ASSOCIATION,
Defendant.
______________________________________/
On January 8, 2020, the Court heard oral argument on the application for leave to
appeal the June 12, 2018 judgment of the Court of Appeals. On order of the Court, the
application is again considered, and it is DENIED, because we are not persuaded that the
questions presented should be reviewed by this Court.
MARKMAN, J. (concurring in part and dissenting in part).
In an order directing the Clerk to schedule oral argument on Geico Indemnity
Company’s application for leave to appeal, this Court asked for supplemental briefing on
“(1) [whether] MCL 500.3012 permits the reformation of a non-Michigan insurance
contract to comply with the requirements of the Michigan no-fault act, MCL 500.3101 et
seq[.]; and (2) [whether] Farm Bureau Ins Co v Allstate Ins Co, 233 Mich. App. 38 (1998),
was correctly decided, and if not, whether it should be overruled.” I concur with the
Court’s denial of leave to appeal on these two questions. While Geico argues in its
application for leave in this Court that MCL 500.3012 does not require reformation and
that Farm Bureau was incorrectly decided, Geico did not raise these arguments in the trial
court or in its application for leave to appeal in the Court of Appeals. Under our
jurisprudence, a litigant must generally preserve an issue for appellate review by raising
it in the trial court. Walters v Nadell, 481 Mich. 377, 387 (2008). In discussing this
requirement, this Court has stated:
The principal rationale for the rule is based in the nature of the
adversarial process and judicial efficiency. By limiting appellate review to
those issues raised and argued in the trial court, and holding all other issues
waived, appellate courts require litigants to raise and frame their arguments
at a time when their opponents may respond to them factually. This practice
also avoids the untenable result of permitting an unsuccessful litigant to
prevail by avoiding its tactical decisions that proved unsuccessful. [Id. at
388 (citations omitted).]
2
Here, the rationale underlying preservation strongly favors not reaching the two
questions presented in this Court’s order because: (1) the parties, up through Hahn’s
supplemental briefing response, were still crafting their arguments regarding whether
MCL 500.3012 permits reformation; and (2) Geico affirmatively relied upon Farm Bureau
in the trial court. Finally, where Geico seeks leave to appeal from an interlocutory order
denying summary disposition before the close of discovery, Geico cannot establish that a
“miscarriage of justice,” “fundamental error,” or “egregious result” will follow from this
Court’s enforcing the preservation requirement. Napier v Jacobs, 429 Mich. 222, 233, 235
(2008).
However, I would grant leave to appeal on the narrower and preserved question of
whether the insurance policy issued by Geico purported to be a Michigan insurance policy.
Farm Bureau concluded that “the basic purpose of [MCL 500.3012] is to treat an insurance
policy that an insurer issues purporting to be a Michigan policy that complies with
Michigan law as such even if the written terms of the policy are inconsistent with Michigan
law.” 233 Mich. App. at 41 (emphasis altered). Under this conclusion, if an insurance
policy purports to be a Michigan policy but neither disclaims nor provides no-fault
coverage in accordance with MCL 500.3101 et seq., a court should reform the policy by
reading no-fault coverage into the policy. In determining whether a policy purports to be
a Michigan policy and thus is subject to reformation, the Court of Appeals focuses upon
whether the insurer knew or should have known that the insured was a Michigan resident.
See id. at 43-44 (policy did not purport to be Michigan policy where insurer had reason to
believe insured was Indiana resident); see also Auto-Owners Ins Co v Integon Nat’l Ins Co,
unpublished per curiam opinion of the Court of Appeals, issued September 17, 2015
(Docket No. 321396), pp 5-7 (declining to reform policy where evidence did not show
insureds were Michigan residents at time insurer issued the policy); Gordon v Geico Gen
Ins Co, unpublished per curiam opinion of the Court of Appeals, issued March 20, 2012
(Docket No. 301431), p 4 (policy purported to be Michigan policy where, given
representations by insured, insurer “knew, or should have known, that it was dealing with
a Michigan resident who would at least be traveling frequently to Michigan”); Williams v
Allstate Ins Co, unpublished per curiam opinion of the Court of Appeals, issued May 10,
2002 (Docket No. 229005), pp 2-3 (declining to reform policy where there was “no
evidence from which to conclude that [the insurer] reasonably should have known that [the
insureds] were Michigan residents”).
An insurer’s knowledge of the insured’s residency may well be a useful
consideration in determining whether a policy purports to be a Michigan policy. However,
I do not believe the insured’s residency constitutes a necessary or a sufficient condition in
determining whether a policy purports to be a Michigan policy. As is evident from the
facts of the instant case, some Michigan residents are required to obtain non-Michigan
policies. See NC Gen Stat 20-309 (requiring North Carolina insurance if vehicle is
registered in North Carolina). At the same time, some non-Michigan residents are required
to obtain policies providing Michigan no-fault coverage. See MCL 500.3102(1) (requiring
nonresident who operates a vehicle in Michigan for more than 30 days a year to procure
3
Michigan no-fault insurance). And the parties have not identified any law of this state that
requires an insurer to offer a person seeking insurance the complete range of in-state and
out-of-state policies that he or she must obtain under the laws of Michigan and all other
states. Cf. Johnson v USA Underwriters, 328 Mich. App. 223, 244-245 (2019) (allowing
insurer to sell optional or supplemental insurance coverage apart from required Michigan
no-fault coverage). Thus, in my opinion, when the trial court embarks upon determining
whether a policy “purports” to be a Michigan policy, it must, in addition to assessing the
insured’s residency, further consider: (1) the representations and interactions between the
insured and the insurer when forming the policy, (2) the language of the policy, and (3)
any other circumstance that reasonably bears upon the intentions of the insured and the
insurer in purchasing and delivering the policy. Such an analysis would provide a more
complete and accurate framework than does Farm Bureau and its progeny for determining
whether the parties intended to form a Michigan insurance policy subject to reformation
under MCL 500.3012.
Thus, while I concur with the denial of leave on the two questions identified in this
Court’s order directing the Clerk to schedule oral argument on Geico’s application for leave
to appeal, I respectfully dissent from our denial of leave on the more narrow and preserved
question of whether the policy issued by Geico “purports” to be a Michigan policy.
Furnishing a coherent framework for determining whether a policy purports to be a
Michigan policy would have provided lower courts with some much needed statutory
clarification and guidance. It is regrettable that we pass up the opportunity to do so after
having taken the time to hear oral argument on Geico’s application for leave to appeal.
BERNSTEIN, J., did not participate because he has a family member with an interest
that could be affected by the proceeding.
CAVANAGH, J., did not participate due to her prior relationship with Garan Lucow
Miller, P.C.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
March 23, 2020
b0303
Clerk