Michigan Court of Appeals; Docket #357406; Unpublished
Judges Gadola, Cavanagh, and Kelly; Per Curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Underinsured Motorist Coverage in General
Setoffs Applicable to Underinsured Motorist Cases
In this unanimous, unpublished, per curiam decision, the Court of Appeals reversed in part, and affirmed in part, the trial court’s order granting partial summary disposition to Defendant Home-Owners Insurance Company (“Home-Owners”), in a lawsuit combining multiple claims for underinsured motorist (“UIM”) coverage arising out of a single car crash. The Court of Appeals held that two of the plaintiffs, Dennis Pierson and Gerald VanVleet—both of whom were traveling as passengers in a vehicle driven by Lloyd Pierson at the time of the crash—were entitled to UIM coverage under Lloyd’s Home-Owners policy and their own Home-Owners policies—all of which had UIM limits of $250,000 per person/$500,000 per occurrence—because their own policies contained “excess” other-insurance clauses, making UIM coverage under those policies excess over Lloyd’s. The Court of Appeals held, second, that given the language of the “excess” other-insurance clauses, the tortfeasor’s individual policy limits should be subtracted both from the coverage available to Dennis Pierson and VanVleet under Lloyd’s policy, as well as the coverage available to them under their own policies.
Lloyd Pierson was driving his pickup truck northbound on I-69, towing another pickup truck behind him, when a third pickup truck, driven by Amanda Force, rear-ended the truck Pierson was towing, causing all three vehicles to crash. Traveling with Pierson as passengers in his truck were Dennis Pierson and Gerald VanVleet, both of whom died in the crash, and traveling in the driver’s seat of the truck Pierson was towing was Thomas Reid.
At the time of the crash, Force had liability insurance coverage with limits of $20,000 per person/$40,000 per occurrence; Lloyd Pierson had a Home-Owners policy providing underinsured motorist coverage with limits of $250,000 per person/$500,000 per occurrence; Dennis Pierson had a Home-Owners policy providing underinsured motorist coverage with limits of $250,000 per person/$500,000 per occurrence; VanVleet had a Home-Owners policy providing underinsured motorist coverage with limits of $50,000 per person/$100,000 per occurrence; and Reid had a Home-Owners policy providing underinsured motorist coverage with $100,000 per person/$300,000 per occurrence.
Lloyd Pierson, Reid, and the Estates of Dennis Pierson and VanVleet filed a combined action against Home-Owners after the crash, each seeking underinsured motorist benefits under their own policies and, in the case of Dennis Pierson and VanVleet, under their own policies and Lloyd Pierson’s policy. Home-Owners moved for partial summary disposition, arguing that Dennis Pierson and VanVleet were not allowed to “stack” the UIM coverage available under Lloyd’s policy and their own policies, and that the total amount available to all three of the individuals traveling in Lloyd’s truck at the time of the crash was $460,000—Lloyd’s UIM limits, less Force’s liability limits. Dennis Pierson and VanVleet argued that their personal UIM policies were both excess over Lloyd’s policy, based on the following language in both policies:
‘If there is other Underinsured Motorist Coverage which applies, we will pay our share of the compensatory damages, including but not limited to loss of consortium. Our share will be the ratio of our limit of liability to the total of all limits which apply. Total damages payable for one occurrence shall be considered not to exceed the limit of liability of the applicable policy that has the highest limit of liability.
The coverage extended to automobiles you do not own will be excess over any other insurance available to you.’ (emphasis added)
Dennis Pierson and VanVleet argued that they were entitled to the $460,000 available under Lloyd’s policy, as well as the $250,000 available under their own policies. They also argued that Force’s limits should only be subtracted from Lloyd’s policy limits, not their excess recoveries under their own policies. The trial court disagreed on both accounts, granting Home-Owners motion and ruling that Dennis Pierson and VanVleet could not “stack” Lloyd’s UIM coverage with their own.
The Court of Appeals reversed the trial court summary disposition order regarding Dennis Pierson and VanVleet, holding that their policies provided excess UIM coverage that was recoverable above and beyond Lloyd’s policy limits. Home-Owners had argued that the “pro-rata” other-insurance clause—quoted above and found in both Dennis Pierson’s and VanVleet’s policies—made it clear that its policy was not excess over Lloyd’s, but the Court rejected this argument, because “such clauses clauses—which “purport to limit the insurer’s liability to a proportionate percentage of all insurance providing coverage”—are only triggered when there are multiple, “valid and collectible primary insurance policies.” Dennis Pierson’s and VanVleet’s policies were not primary policies with respect to the subject crash, because of the “excess” other-insurance clauses they each contained. In fact, the Supreme Court held in St Paul Fire & Marine Ins Co v American Home Assurance Co, 444 Mich 560 (1994) that in cases such as this, in which the policy at issue contains both a “pro-rata” clause and an “excess” clause, “the policy containing the excess clause is only considered ‘secondary coverage where there is another insurance policy covering the same risk.’ ”
“The UIM policies from Home-Owners at issue in this case state, in Paragraph 5, that when such ‘other Underinsured Motorist Coverage applies, we will pay our share of the compensatory damages . . . [which] will be the ratio of our limit of liability to the total of all limits which apply.’ It also states: ‘Total damages payable for one occurrence shall be considered not to exceed the limit of liability of the applicable policy that has the highest limit of liability.’ This is known as a pro-rata clause . . .
It is undisputed in this case that Lloyd’s UIM policy was the primary insurance available. Thus, with respect to claims made against Lloyd’s UIM policy, the total damages payable to Lloyd, Dennis, and VanVleet was $500,000—the ‘per occurrence’ limit of Lloyd’s UIM policy—less the ‘per occurrence’ limit of $40,000 of Force’s insurance policy, for a total of $460,000.
But Dennis and VanVleet also made claims against their own UIM policies. And in that regard, Dennis and VanVleet rely on the ‘excess’ clauses contained in their policies which state: ‘The coverage extended to automobiles you do not own will be excess over any other insurance available to you.’ In other words, their UIM policies did not provide primary insurance coverage under the facts of this case; rather, these policies only provided ‘excess’ insurance . . .
Our Supreme Court has held that, when considering disputes involving an insurance policy with a pro-rata clause and an insurance policy with an excess clause—and those clauses are not in conflict or mutually repugnant—the policy containing the excess clause is only considered “secondary coverage where there is another insurance policy covering the same risk.” Id. at 573. Thus, the policy with the excess clause ‘is not considered to be other valid and collectible primary insurance for the purpose of triggering the operation of the pro-rata clause.’ Id. at 575.2 And when a claim is made pursuant to the excess clause—this secondary insurance coverage—'the excess insurer is generally liable for the loss only to the extent that the insured’s claim exceeds the policy limits of the insurance policy containing the pro-rata ‘other insurance’ clause.’ Id. at 573. In other words, after the primary insurance provider has paid up to its policy limits, the secondary—excess—insurance provider becomes liable for losses that exceed that amount.”
The Court of Appeals then distinguished what Dennis Pierson and VanVleet were doing from policy “stacking”—which Home-Owners argued was not allowed under the policy (‘coverages cannot be stacked above the amount of the applicable policy with the highest limit of liability’)—because “stacking” “[g]enerally . . . refers to an insured attempting to combine coverage limits from a single policy that insures two or more of their vehicles or from other policies the insured has on different vehicles or from other policies in the insured’s household.” “Stacking” does not occur where an insured avails him- or herself of truly excess coverage only after exhausting the available primary coverage.
Lastly, the Court of Appeals held that because the “excess” other-insurance clauses in both Dennis Pierson’s and VanVleet’s policies included the phrase, “any other insurance available to you,” their respective recoveries under their own policies were to be set off by Force’s $20,000 individual liability limits, because those limits were “available to [both individuals.]”
“First, we address Dennis and VanVleet’s claims under their own UIM policies. They sought UIM benefits under the “excess” clauses of their personal policies, which state: ‘The coverage extended to automobiles you do not own will be excess over any other insurance available to you.’ The critical phrase here is ‘any other insurance available to you.’ The use of the word ‘any’ means ‘ ‘every,’ ‘each one of all,’ and is unlimited in its scope.’ Parker v Nationwide Mut Ins Co, 188 Mich App 354, 356; 470 NW2d 416 (1991). Further, Lloyd’s insurance and Force’s insurance were ‘available’ to Dennis and VanVleet. In Wilkie, 469 Mich at 50, our Supreme Court specifically rejected the argument that ‘available’ meant ‘actually received.’ It does not. Dennis and VanVleet filed claims for UIM coverage under their own policies and this provision in those policies applies to their claims. ‘The rights and duties of parties to a contract are derived from the terms of the agreement.’ Id. at 62. The fact that Force’s $40,000 ‘per occurrence’ limit was deducted from claims made against Lloyd’s UIM policy does not change the result. Accordingly, claims made under Dennis’s and VanVleet’s own UIM policies must be reduced by Force’s policy limits, i.e., the $20,000 ‘per person’ limit, as to each of their individual claims.”