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MATERIAL MISREPRESENTATIONS IN INSURANCE POLICY APPLICATION LEAD U.S. DISTRICT COURT TO ACCEPT MIKE SCHMIDT'S ARGUMENT THAT COVERAGE SHOULD BE RESCINDED IN CASE INVOLVING CATASTROPHIC INJURIES INCLUDNG LOSS OF AN EYE

Mohammed Huda v. Integon National Insurance Company, United States District Court for the Eastern District of Michigan, claim for no-fault benefits and uninsured motorist benefits by the plaintiff arising from a motor vehicle accident in which the insured sustained catastrophic injuries including loss of  his right eye.  We defended the case on the basis that the plaintiff/insured made a material misrepresentation in the application for the policy by failing to disclose all of the household members who were of driving age including his son Mohammed Huda, Jr.  We argued that this served as the basis for rescission of the policy.  The Detroit Medical Center intervened as a plaintiff to support the plaintiff’s claim.  On cross-motions for summary judgment filed by all of the parties, the court agreed with our motion and ruled that the policy was properly rescinded from its inception based on the material misrepresentation in the application. 

CHRIS SCOTT WINS WRONGFUL DEATH RENTAL CAR EXCLUSION INSURANCE COVERAGE DISPUTE IN THE MICHIGAN COURT OF APPEALS

In Farm Bureau v GMAC, Farm Bureau filed a declaratory judgment action asserting no coverage in an underlying wrongful death case due to its insured not having proper permission from the owner of the vehicle.  The Farm Bureau insured was driving a vehicle that had been rented by another relative so that the family could go down south for a funeral.  During the trip, the family member that signed the rental agreement became ill and the Farm Bureau insured took over driving the rental vehicle with permission from the renter.  While driving, he had a heart attack and the vehicle rolled over.  Farm Bureau filed a declaratory action denying coverage while asserting reliance on the car rental agreement indicating there was no permissive use to any person not authorized as a driver under the rental agreement.  The trial court granted summary disposition in favor of Farm Bureau relying upon an unpublished case where different insurance policy language was at issue.  The Court of Appeals reversed, holding that the Farm Bureau exclusion was ambiguous and not enforceable, thereby effectively saving our client its policy limits.

MICHAEL SCHMIDT WINS WORKER'S COMPENSATION INSURANCE DISPUTE

AM Polis, Inc. and Polis Audish v Jeffrey H. Kaplan Agency, Inc. and Amanda M. Stephen, Wayne County Circuit Court, claim by the plaintiff and the plaintiff’s corporation for workers’ compensation insurance.  Plaintiffs alleged that they applied for and requested a policy of workers’ compensation insurance from the defendant insurance agency.  They further argued that they cancelled existing coverage in reliance upon obtaining such coverage.  Following discovery we moved for summary disposition on the basis that the defendants were direct agents of Nationwide, that none of the exceptions to the general rule of no liability as set forth by the Supreme Court decision in Hartes v Farmers Insurance Exchange, 461 Mich 1 (1999) applied, that the plaintiff had a duty to read his policy and raise any questions regarding coverage within a reasonable time, that discovery disclosed that the plaintiff did not cancel any other coverage in reliance on the Nationwide policy and that the plaintiff never requested workers’ compensation coverage.  The court granted our motion for summary disposition dismissing the plaintiffs’ complaint with prejudice.

COLLEEN JOLICOEUR EARNS LL.M. IN LABOR AND EMPLOYMENT LAW

Harvey Kruse, P.C. would like to congratulate Colleen T. Jolicoeur for earning her LL.M. in Labor and Employment Law from Wayne State University Law School in May 2008.  Ms. Jolicoeur is an associate in the firm’s Troy branch.  Ms. Jolicoeur focuses her practice in the areas of Employee Benefits, Employment Law, Environmental Law, Insurance Defense, and Products Liability. 

CRIMINAL ACT EXCLUSION SUCCESSFULLY ARGUED BY MIKE SCHMIDT IN INSURANCE COVERAGE LITIGATION

Schomer v MIC General Insurance Corporation, Oakland County Circuit Court. This case was a declaratory action filed by the MIC insured and joined by the underlying plaintiff against MIC to determine whether the criminal act exclusion in the MIC policy excluded coverage and to determine whether the motor vehicle’s operator had permissive use. The MIC insured, Jean Schomer, allowed her granddaughter to use her vehicle. Her granddaughter in turn allowed her boyfriend, who did not have a valid operator’s license, to use the vehicle, contrary to the grandmother’s instructions. While on the way to see his parole officer, the boyfriend decided to stop at a grocery store parking lot to attempt to steal a purse from a customer. He failed in the attempt and then fled the scene. The attempted theft was reported, and as he was driving eastbound on 696 he was spotted by a police officer who began chasing him. He fled eastbound on 696 and then exited onto southbound I-75 and was driving on the shoulder to avoid traffic when he struck the underlying plaintiff’s vehicle causing it to turn over and injuring its occupants. He then continued driving over a hill, down an embankment, over a cement wall and onto southbound I-75 where he continued fleeing until his car failed and he ran from the scene. He turned himself in the next day. He then pled nolo contendre to third-degree fleeing and eluding. He was sentenced and imprisoned. The policy excluded coverage for bodily injury or property damage which may reasonably be expected to result from the intentional act of an insured or which is in fact intended by an insured or which is a criminal act. The exclusion only applied to damages in excess of the minimum limits provided by the Financial Responsibility Law. We deposed the boyfriend in prison and he admitted all of the elements of third degree fleeing and eluding. We then filed a motion for summary disposition to enforce the policy exclusion in excess of the Financial Responsibility limits. The insured and the underlying plaintiff argued that the exclusion was contrary to public policy as held by several recent Michigan Court of Appeals decisions and was also ambiguous and unenforceable. We argued that the exclusion was not ambiguous, that there was no issue of fact, that the vehicle’s operator admitted all of the elements of third-degree fleeing and eluding at the time of the accident, that the accident occurred during the course of the fleeing and eluding, and that the exclusion was not contrary to public policy or the No Fault Act or Financial Responsibility Act because it was only enforceable in excess of the Financial Responsibility limits. We also argued that regardless of whether coverage for any criminal act in the use of a motor vehicle was excluded, this was not a valid public policy defense because normal traffic offenses are only civil infractions and are not criminal acts, and moreover, the legislature has determined that the only necessary liability coverage is $20,000/$40,000 and that any coverage in excess of this amount is subject to contract limitation. The court agreed with our argument and granted summary disposition enforcing the exclusion which reduced the available coverage from $100,000/$300,000 to $20,000/$40,000.

MIKE SCHMIDT PREVAILS IN FIRST PARTY INSURANCE COVERAGE DISPUTE AMONG CARRIERS OVER A FIRE ON PROPERTY OWNED BY GM GRAND

Northland Insurance Co. as Subrogee of GM Grand v Century Surety Company and Adel Abbas Hashim, Wayne County Circuit Court, claim for $148,000 in property damage from a fire to property owned by GM Grand and insured by Northland Insurance Co. Northland filed suit as subrogee of GM Grand against Century Surety Company and Adel Abbas Hashim seeking coverage for the loss under the policy of insurance issued by Century Surety Company to the tenant Hashim and seeking recovery against Hashim for the damages pursuant to the lease. We were successful in obtaining summary disposition from Judge Wendy Baxter for both Century Surety and Hashim, on the basis that the Century Surety policy did not provide first party property coverage to GM Grand and that although GM Grand was an additional insured on the Century Surety policy, the policy did not provide any property coverage for GM Grand’s loss and also did not provide any liability coverage to Adel Abbas Hashim for the claims made by Northland. The court further ruled that Adel Abbas Hashim had no liability to GM Grand under the lease, because although the lease stated that the tenant assumed the entire risk of loss for damage to all or any part of the property, a separate lease provision required the landlord to insure the property. There had been a case evaluation award in favor of the plaintiff in the amount of $25,000.

MICHAEL SCHMIDT WINS COLLAPSING WALL INSURANCE COVERAGE LITIGATION

Northstar Petroleum, Inc. v L & M Masonry Enterprises and Allied Insurance, Oakland County Circuit Court. The plaintiffs, Northstar Petroleum, Inc., Atlantis Development Corporation and Atlantis Management Co., brought suit against L & M Masonry Enterprises, Inc. and Allied Insurance seeking to recover approximately $300,000 in damages for the collapse of a wall which was part of a construction project for a shopping center. The wall collapsed due to high winds and as a result adjacent walls also had to be torn down and replaced. The plaintiffs were the owners and general contractor for the project and brought suit against L & M, the masonry subcontractor, and Allied Insurance. The claims against Allied were based on the contract documents which required L & M to obtain a policy of insurance naming the plaintiffs as insureds and also to obtain insurance providing liability coverage for L & M. We filed a motion for summary disposition on behalf of Allied arguing that the plaintiffs were not insureds under the policy issued by Allied to L & M, and even if they were insureds, the policy was a commercial general liability policy which did not provide any first party coverage. We also argued that there was no coverage available to L & M for any of the claims made by the plaintiffs because all of the damage was to L & M’s own work or was incurred in repair and replacement of L & M’s work, and thus there was no "occurrence", no "property damage" and coverage was also excluded by the business risk exclusions. The plaintiffs entered a default against L & M in the amount of $288,000 and we obtained an order of dismissal as to any and all claims against Allied determining that Allied provided no coverage to the plaintiffs, and also had no duty to provide any coverage or defense to L & M for any of the claims made by the plaintiffs.

MEL KARFIS AND BARRY SUTTON OBTAIN 25 MINUTE DEFENSE JURY VERDICT IN MARYLAND TREESTAND PRODUCT LIABILITY TRIAL

In Frank v. Summit Treestands, LLC., Frederick County, Maryland, Mel Karfis and Barry Sutton recently obtained a lightning fast defense verdict on behalf of their treestand manufacturing client.  Plaintiff sought over $750,000.00 for serious spinal, chest and lung injury suffered when he fell 20 to 25 feet from his treestand.  He maintained that the cause was the result of a failure of the metal frame of the treestand and that his failure to use his harness in the matter intended was a foreseeable misuse of the product.  In a case which stressed the importance of warnings and safety videos, Barry and Mel, together with engineer-designer and safety pioneer Ron Woller, their experts, George Saunders (mechanical engineering) and L.J. Smith (renowned hunting safety expert), established that the metal deformation was the result of and not the cause of the fall, and that the plaintiff’s injuries were solely caused by his own decision to disregard repeated warnings to always wear his full body safety harness.  Deliberating only 25 minutes, the jury found that the product was not defective and was reasonably safe for its intended uses.  The case is important for the entire treestand industry because it pioneered the importance of safety videos (now co-packaged with every treestand) in the courtroom.  Mel and Barry, and another partner, John Prew, have developed a national practice defending treestand manufacturers throughout the United States.

FRANK PORRETTA WINS INSURANCE CANCELLATION CASE BEFORE JUDGE COLOMBO IN WAYNE COUNTY CIRCUIT COURT

In E & O Taxi v Insurance Services of Detroit, a taxicab company, which had financed the $150,000 annual premium on its commercial insurance policy, alleged that it had made all installment payments to its agent, which had failed to convey the payments to the premium finance company or to our client, the insurance carrier.  The premium finance company sent out a “Notice of Intent to Cancel” and then sent out a “Notice of Cancellation” as required by statute, and requested that the carrier cancel the policy.  The taxicab company claimed the carrier had breached duties to notify it that the premium had not been received and to notify it of the cancellation.  The Court disagreed and granted Frank Porretta’s motion for summary disposition, finding that the cancellation and notices complied with MCL §500.1511, and the carrier owed no additional duties to the insured, relying on Doshi v Michigan Basic Property Ins Ass'n,  229 Mich App 595, 603, 582 NW2d 542, 546 (1998).

MICHIGAN COURT OF APPEALS OVERTURNS TRIAL COURT AND RULES FOR MICHAEL SCHMIDT IN CONTRACTUAL INDEMNITY CASE

In Empire Fire & Marine Insurance Co. v Minuteman International, Empire Fire filed suit as subrogee of General RV Center, Inc. to recover in excess of $5.5 million in damages as a result of a fire at the General RV Center, Inc. facility in Wixom, Michigan.  Empire Fire alleged that a floor scrubber manufactured by Minuteman International, Inc. caused the fire.  We represented Minuteman and filed a third party complaint against Lester Electrical, the manufacturer of a battery charger which was a component part of the floor scrubber, on the basis that the defect which the plaintiff alleged in the floor scrubber was in the battery charger.  The plaintiff’s complaint was eventually dismissed for a $12,000 settlement, and we then sought contractual indemnity for all of the defense costs and attorney fees incurred in defending the claim from Lester Electrical pursuant to an indemnity contract.  The trial court denied our motion for summary disposition and granted summary disposition to Lester Electrical.  In Empire Fire & Marine Insurance Co. as Subrogee of General RV Center, Inc. v Minuteman International, Inc., unpublished per curiam decision of the Michigan Court of Appeals docket number 274660 (2008), the Court of Appeals reversed the trial court and ordered summary disposition in favor of Minuteman for full contractual indemnity from Lester Electrical.  The court held that the plaintiff did not have to make allegations against Lester Electrical in order for Minuteman to obtain contractual indemnity, because the evidence established factual support to enforce the contractual indemnity agreement.

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