Rahannie Tackoor v. Duncan William Wheelock ( 2020 )

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
RAHANNIE TACKOOR, UNPUBLISHED
March 3, 2020
Plaintiff-Appellee,
v No. 345854
Wayne Circuit Court
LC No. 17-017445-NI
DUNCAN WILLIAM WHEELOCK and
WILLIAM H. WHEELOCK,
Defendants,
and
ESURANCE PROPERTY AND CASUALTY
INSURANCE COMPANY, also known as
ESSURANCE PROPERTY AND CASUALTY
INSURANCE COMPANY,
Defendant-Appellant.
Before: METER, P.J., and FORT HOOD and REDFORD, JJ.
PER CURIAM.
Defendant, Esurance Property and Casualty Insurance Company (Esurance), appeals by
leave granted1 the trial court’s order denying its motion for summary disposition brought under
MCR 2.116(C)(10).2 We reverse.
1
Tackoor v Wheelock, unpublished order of the Court of Appeals, entered February 21, 2019
(Docket No. 345854).
2
The trial court dismissed defendants Duncan William Wheelock and William H. Wheelock by
stipulated order.
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I. FACTS
This no-fault action arose from a November 17, 2017 motor vehicle accident in which
defendant Duncan Wheelock collided with plaintiff causing her injuries as she drove her recently
acquired 2007 Ford Fusion, a gift from her paternal grandfather, Ted Williams, on October 31,
2017. The day Williams gave her his car, plaintiff filed an application for title with the Michigan
Secretary of State and transferred the license plate. Williams and plaintiff validly executed an
assignment of title for the subject vehicle naming plaintiff as the owner and registrant on October
31, 2017. Plaintiff resided alone in Lansing, Michigan and Williams resided in Macomb,
Michigan.
Williams purchased the vehicle during March 2017, and he insured it with a no-fault
insurance policy issued by Esurance. Williams obtained a six-month renewal of his insurance
policy with an October 28, 2017 effective date. His policy listed three motor vehicles including
the one he gave to plaintiff three days later. At the time of her accident, plaintiff had not obtained
her own insurance on the vehicle despite being the sole owner for over two weeks. She testified
that she simply had not gotten around to it. Neither she nor Williams notified Esurance of the
change of ownership and registration of the vehicle.
Williams’s insurance policy contained standard terms and conditions. The policy covered
Williams and his household as defined under the terms of the policy. The policy defined the terms
“you” and “your” as the named insured on the Declarations page and his spouse if a resident of
Williams’s “household.” The policy defined “Family member” as, “Any person related to ‘you’
by blood, marriage, or adoption who is a resident of ‘your’ ‘household’;” and “ ‘Your’ ward or
foster child who resides in ‘your’ ‘household’.” Williams’s policy defined the term “Household”
as follows:
“Household” consists of “you”, a “family member”, and any domestic partners,
unrelated roomers, boarders, live-in employees, and other people who are not
related to “you”, who live together in the same housing unit. A housing unit
includes a house . . . located at the address listed in “your” Declarations page.
The policy also defined the term “covered auto” as, “Any vehicle identified on ‘your’ Declarations
page.” Williams’s policy’s declaration page identified him as the named insured, his Macomb
home address, and identified the Ford Focus as one of three insured vehicles. The policy defined
the term “Owner” as a person who “Holds the legal title to the motor vehicle . . .” and “Has the
immediate right of possession of the motor vehicle under an installment sales contract; or” rents
the vehicle under a lease for more than 30 days. The policy defined the term “Insured” as, “ ‘You’
or any ‘family member’ . . . .”
The policy’s termination provision permitted Esurance to cancel the policy by giving notice
of cancellation by first-class mail or delivery to the named insured. The policy, however,
specifically provided that it automatically terminated:
If a “covered auto” is sold, assigned, gifted or transferred to anyone other than a
“family member”, the insurance “we” provide for that “auto” shall automatically
terminate at the time it is sold, assigned, gifted or transferred.
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Plaintiff never lived with Williams so she did not qualify as a family member or a member
of his household as defined by the policy. She was single and lived alone on the date of the
accident and did not own any other vehicle. Plaintiff never paid any money to defendant and the
Esurance policy on the vehicle named only Williams as the insured. Nonetheless, plaintiff
believed herself insured under Williams’s policy. Plaintiff admitted at her deposition, however,
that she never personally procured insurance for the vehicle through defendant or any other
insurance carrier.
Esurance denied plaintiff’s claims for personal protection insurance (PIP) benefits and
uninsured motorist benefits. Plaintiff sued. The parties conducted discovery and Esurance filed a
motion for summary disposition under MCR 2.116(C)(10) on the grounds that Williams’s gift of
the car to plaintiff automatically terminated the insurance policy coverage for that vehicle under
the terms of the policy, he had no insurable interest in the vehicle at the time of the accident, and
MCL 500.3113(b) barred plaintiff from recovering no-fault benefits as an uninsured owner of the
vehicle. Plaintiff argued that defendant failed to cancel the policy because it did not provide notice
as required under MCL 500.3224, resulting in the policy on the vehicle being in force at the time
of her accident. She contended that she was not an uninsured motorist because Williams insured
the vehicle through his policy, and even though he lacked an insurable interest in the vehicle,
Esurance could not cancel the policy on that basis. The trial court denied the motion because:
[Williams] did have an ownership interest when he insured the vehicle and the only
way that could’ve ceased was when he either notified [Esurance] or within the
timeframe—
* * *
. . . even if he notified [Esurance] on the 31st, that policy still would’ve been
in fact [sic] for 20 days. The fact of the matter remains that, taking the evidence in
a light most favorable to the nonmoving party, the Court feels that there is a
question of fact here. So, I’m going to deny the summary disposition on those basis
[sic].
II. STANDARD OF REVIEW
We review de novo a trial court’s decision regarding a motion for summary disposition.
Old Kent Bank v Kal Kustom, Inc, 255 Mich. App. 524, 528; 660 NW2d 384 (2003). We also
review de novo issues of statutory interpretation. Titan Ins Co v Hyten, 491 Mich. 547, 553; 817
NW2d 562 (2012). We review de novo the interpretation of an insurance contract just like any
other contract. Healing Place at North Oakland Med Ctr v Allstate Ins Co, 277 Mich. App. 51, 55;
744 NW2d 174 (2007). We “look at the language of the insurance policy and interpret its terms
in accordance with the principles of contract construction. Where there is no ambiguity, an
insurance contract must be enforced as written in accordance with its terms.” Allstate Ins Co v
Muszynski, 253 Mich. App. 138, 141; 655 NW2d 260 (2002) (citation omitted). A motion for
summary disposition pursuant to MCR 2.116(C)(10) tests the factual support of a claim and
summary disposition is appropriate when no genuine issue concerning any material fact exists.
Universal Underwriters Group v Allstate Ins Co, 246 Mich. App. 713, 720; 635 NW2d 52 (2001).
When deciding a motion for summary disposition pursuant to MCR 2.116(C)(10), we consider all
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pleadings, affidavits, depositions, and other documentary evidence in the light most favorable to
the nonmoving party. Cowles v Bank West, 476 Mich. 1, 32; 719 NW2d 94 (2006).
III. ANALYSIS
Esurance argues that the trial court erred in denying its motion for summary disposition
because coverage on plaintiff’s vehicle automatically terminated on the date that Williams gifted
it to plaintiff pursuant to the policy’s express language. We agree.
“[I]nsurance policies are subject to the same contract construction principles that apply to
any other species of contract.” Rory v Continental Ins Co, 473 Mich. 457, 461; 703 NW2d 23
(2005). “[U]nless a contract provision violates law or one of the traditional defenses to the
enforceability of a contract applies, a court must construe and apply unambiguous contract
provisions as written.” Id. When interpreting a contract, words are to be given their “plain and
ordinary meaning.” Id. at 464. Similarly, “[a]ny terms not defined in the contract should be given
their plain and ordinary meaning, which may be determined by consulting dictionaries.” McGrath
v Allstate Ins Co, 290 Mich. App. 434, 439; 802 NW2d 619 (2010) (citation omitted). If an
ambiguity exists in an insurance contract, then it should be construed against the insurer. Id. “An
insurance contract is ambiguous if its provisions are subject to more than one meaning.” Id. “An
insurance contract is not ambiguous merely because a term is not defined in the contract.” Id.
(citation omitted). Courts may not hold liable an insurance company for a risk that it did not
assume. Auto-Owners Ins Co v Churchman, 440 Mich. 560, 567; 489 NW2d 431 (1992).
Michigan’s Insurance Code of 1956, MCL 500.100 et seq., prescribes in Chapter 30,
respecting casualty insurance contracts, the manner in which an insured or an insurer may cancel
an insurance policy. MCL 500.3020 provides in relevant part:
(1) A policy of casualty 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:
(a) That the policy may be canceled at any time at the request of the insured,
in which case the insurer shall refund the excess of paid premium or assessment
above the pro rata rates for the expired time . . . .
(b) Except as otherwise provided in subdivision (d), 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.
* * *
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(5) Cancellation as prescribed in this section is without prejudice to any
claim originating before the cancellation. The mailing of notice is prima facie proof
of notice. Delivery of written notice is equivalent to mailing.
(6) A notice of cancellation, including a cancellation notice under section
3224, shall be accompanied by a statement that the insured shall not operate or
permit the operation of the vehicle to which notice of cancellation is applicable, or
operate any other vehicle, unless the vehicle is insured as required by law.
Chapter 32 of the Insurance Code of 1956, MCL 500.3204 through MCL 500.3262, limits
the circumstances in which an insurer may cancel an automobile insurance policy, including
nonpayment of premiums, the insurer’s determination that the risk is unacceptable, or suspension
of an insured’s, operator’s, or household member’s driver’s license. MCL 500.3224 specifies
notice requirements for an insurer’s cancellation as follows:
(1) The cancellation of a policy of insurance within the 55-day period
enumerated in subdivision (a) of section 3220 shall not be subject to appeal by the
insured. Failure to disclose the cancellation by any insured upon any application
for insurance shall not be grounds to deny coverage on the basis of fraud by an
insurer who may have accepted the risk thereafter.
(2) For the provisions of this chapter only, no cancellation shall be effective
unless a written notice of cancellation is mailed by certified mail, return receipt
requested, to the insured at the last address known to the insurer either through its
records, the personal records of the agent who wrote the policy, or as supplied by
the insured.
(3) The notice shall be mailed at least 20 days prior to the effective date of
cancellation. For the purpose of this chapter only, delivery of such written notice
by the insurer shall be the equivalent of mailing. The notice shall contain the
reasons for the cancellation and shall state in bold type that the insured has the
statutory right within 7 days from the date of mailing to appeal to the department.
The commissioner shall approve the form of the cancellation notice.
MCL 500.3020 does not preclude parties from contractually agreeing to the automatic
termination of an automobile insurance policy upon the sale, assignment, gifting, or transfer of an
insured vehicle. The statute applies to situations in which termination is not automatic but optional
and done by the insured or the insurer. See Wynn v Farmers Ins Group, 98 Mich. App. 93, 97; 296
NW2d 197 (1980) (concluding that MCL 500.3020 did not apply in the circumstance of an
automobile policy that automatically terminated); see also Bek v Zimmerman, 285 Mich. 224; 280
N.W. 741 (1938) (holding inapplicable the predecessor statute to MCL 500.3020, which had similar
cancellation notice requirement, because the statute could not be stretched to cover a situation
where liability under the policy automatically suspended pursuant to the terms of the insurance
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contract). Similarly, MCL 500.3224 does not preclude parties from contractually agreeing to the
automatic termination of an automobile insurance policy upon the sale, assignment, gifting, or
transfer of an insured vehicle.
In McCormic v Auto Club Ins Ass’n, 202 Mich. App. 233, 239-240; 507 NW2d 741 (1993),
this Court reversed the trial court’s denial of summary disposition for the insurer because the policy
at issue terminated automatically pursuant to the terms of the insurance contract. This Court
concluded that, under the circumstances, because the policy automatically terminated, the insurer
had no obligation to provide the insured notice of cancellation. Id. at 240. This Court held that
no issue of fact existed entitling the defendant to summary disposition as a matter of law. Id.3
In this case, the policy provision on which Esurance relies unambiguously provided for
automatic termination upon the insured’s sale, assignment, gifting, or transfer of a vehicle covered
under the policy. That provision did not require Esurance to do anything. Rather, upon the
occurrence of any of the specified events by the insured, the policy automatically terminated. The
specified events that could trigger automatic termination were acts which Williams alone
controlled and in which he alone could engage. When Williams contracted with Esurance, he
agreed to the unambiguous contract terms that specified the automatic consequence of termination
of the coverage for the vehicle covered under the policy if he chose to sell, assign, gift, or transfer
a covered vehicle. Automatic termination under the terms of the subject policy is not the same as
cancellation by the insured or the insurer. Consequently, neither MCL 500.3020 nor MCL
500.3224 applied in this case because Williams chose to gift the car to plaintiff and he transferred
title and registration of the covered vehicle to her which triggered the automatic termination.
Plaintiff lacked family member and household member status as unambiguously defined by the
policy. The insurance coverage on plaintiff’s car under the Esurance policy issued to Williams
terminated upon Williams’s gift of it to her. Esurance cannot be held liable for a risk that it did
not assume, i.e., insuring a vehicle that its insured sold, assigned, gifted, or transferred. Moreover,
Esurance had no obligation to provide notice of the automatic termination.
3
The issue presented in this case is analogous to the insuring of employees under group policies
and the automatic termination of such insurance coverage when an employee leaves employment
with the employer. Our Supreme Court explained long ago in Hawthorne v Metropolitan Life Ins
Co, 285 Mich. 329, 335-336; 280 N.W. 777 (1938):
Group insurance policies are issued to the employer to insure employees. One who
is not an employee is not insurable. The employee is entitled to coverage under the
certificate issued to him only while he remains in the employ of the employer and
upon payment at the beginning of each month of the premium upon the insurance
policy. No recovery may be had upon an insurance policy for the death of one who
has been an employee of the insured under a group policy after the termination of
his employment, except in strict compliance with the terms of the policy. The very
purpose of the group insurance is to safeguard or provide for employees. It would
be unreasonable to conclude the policy would inure to the benefit of those who have
ceased to be employees. The courts have repeatedly given effect to provisions in
policies providing for automatic discontinuance. [Citations omitted.]
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Plaintiff’s argument that Iqbal v Bristol West Ins Group, 278 Mich. App. 31; 748 NW2d 574
(2008), supports the trial court’s ruling lacks merit. In Iqbal, an insurance policy had been
procured for the vehicle by the plaintiff’s brother and the policy had not terminated automatically
as here. The insurance coverage was in effect on the vehicle for purposes of MCL 500.3113(b).
Here, Williams’s policy’s coverage for the subject vehicle terminated under the express terms of
the policy. Therefore, the security required by MCL 500.3101(1) was not in effect for purposes
of MCL 500.3113(b).
This case is also distinguishable from Dye v Esurance, 504 Mich. 167; 934 NW2d 674
(2019). In Dye, our Supreme Court held that an owner or registrant is not required to personally
obtain no-fault insurance for his or her motor vehicle to avoid the statutory bar to PIP benefits
under MCL 500.3101(1) and MCL 500.3113(b) if someone else has insured the motor vehicle so
that a no-fault policy has been maintained and remained “in effect” on the motor vehicle at the
time of the accident. Id. at 172-174. In Dye, after registering his son’s motor vehicle in his son’s
name pursuant to a power of attorney to act on his behalf at the secretary of state, a father procured
insurance for the motor vehicle. His son had been deployed as a member of the National Guard to
Afghanistan. Esurance issued a policy on the motor vehicle. The policy remained in effect and
insured the vehicle after the son returned from his overseas deployment. Dye suffered personal
injury in an accident involving the insured vehicle which occurred after his return to Michigan.
Id. at 174-175. Unlike this case, in Dye, the policy had not terminated because the insured sold,
assigned, gifted, or transferred the subject motor vehicle. Rather, the policy insuring the vehicle
remained in full force and effect. In this case, Williams’s gift terminated the policy and plaintiff’s
vehicle lacked the security required under MCL 500.3101(1), and therefore, the statutory bar to
PIP benefits under MCL 500.3113(b) applied to plaintiff precluding her from receiving benefits
from Esurance.
As in McCormic, no genuine issue of material fact exists and Esurance is entitled to
summary disposition as a matter of law. The trial court erred by ruling that an issue of fact
precluded granting Esurance summary disposition. Because our ruling in this regard is dispositive
of this appeal, we decline to consider Esurance’s additional issues on appeal.
Reversed and remanded for entry of summary disposition in favor of Esurance. We do not
retain jurisdiction.
/s/ Patrick M. Meter
/s/ Karen M. Fort Hood
/s/ James Robert Redford
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