Michigan Court of Appeals; Docket # 349546; Unpublished
Judges O’Brien, Kelly, and Redford; per curiam
Official Michigan Reporter Citation: Not Applicable; Link to Opinion
Underinsured Motorist Coverage in General
In this unpublished per curiam opinion, the Court of Appeals reversed and remanded the trial court’s order granting Plaintiff’s motion to reinstate uninsured motorist coverage against Defendant Insurer because collateral estoppel barred Plaintiff from relitigating the amount of damages it was entitled to recover from Defendant Sandy.
This case arose from a motor vehicle accident in which Janet Parks was struck by a vehicle driven by Joe Sandy (hereinafter Defendant Sandy) while walking in a parking lot. Janet Parks died as a result of her injuries, and her estate brought a wrongful death suit against Defendant Sandy as well as a UIM claim against Pioneer (hereinafter Defendant Insurer) alleging that Plaintiff had a UIM policy with a $250,000 maximum limit and that Defendant Sandy was underinsured for residual tort liability. Defendant Sandy’s insurance policy’s maximum limit was $100,000. Accordingly, Plaintiff sought to recover any damages in excess of $100,000. Before trial, Plaintiff and Defendant Insurer stipulated to dismiss Plaintiffs UIM claim against Defendant Insurer. Thus, a jury trial of only Plaintiff’s wrongful death claim against Defendant Sandy ensued – following which the jury found that Defendant Sandy was negligent, that Plaintiff was 50% comparatively negligent, and that Plaintiff’s damages were $200,000, $100,000 of which to be paid by Defendant Sandy’s insurer in light of Parks’s comparative negligence.
As required by Plaintiff’s UIM policy, Plaintiff sent a letter to Defendant Insurer requesting that it “consent to accept the judgment.” Defendant Insurer replied that Plaintiff “had permission to accept payment . . . in the amount of the Judgment together with interests and costs.” Consequently, Plaintiff filed a motion to reinstate its UIM claim against Defendant Insurer, arguing that because the $100,000 judgment against Defendant Sandy exhausted his policy limits and because Defendant Insurer consented to the judgment, it was permissible for Plaintiff to pursue its claim for UIM benefits against Defendant Insurer. Defendant Insurer opposed the motion, arguing that Plaintiff’s claim for UIM benefits was barred by collateral estoppel. Specifically, Defendant Insurer argued that Plaintiff’s claims for compensation were fully and fairly litigated in a jury trial where it was determined that the recoverable sum would be fully paid by the insurance carrier for Defendant Sandy. Plaintiff argued that collateral estoppel did not bar reinstating its claim because Plaintiff was not seeking double recovery, but rather “excess damages owed to Plaintiff above and beyond Defendant Sandy’s liability policy limit.” The trial court granted Plaintiff’s motion. In its order, the trial court reasoned that collateral estoppel was inapplicable because the jury had found in favor of the plaintiff when it found Defendant Sandy negligent, and that Defendant Insurer’s attempt to bind Plaintiff to the same judgment that Defendant Insurer had no intention of being bound by was a means by which to use the law as “both a sword and shield.” Defendant Insurer appealed the trial court’s decision.
On appeal, the appellate court began its analysis by acknowledging that the terms of UIM coverage are controlled by the language of the contract as opposed to statute. In looking to the language of Plaintiff’s policy, the Court noted that the policy provided UIM benefits up to $250,000. Additionally, the Court noted that a number of prerequisites had to be satisfied under Plaintiff’s policy before any benefits became available, one such prerequisite being that “to quality as an underinsured motor vehicle, the vehicle involved in the crash must be ‘a land motor vehicle . . . to which a Bodily Injury Liability . . . policy applies at the time of the accident but its limit for Bodily Injury Liability is less than the limit of liability for this coverage.’” The court reasoned that in this case, Defendant Sandy’s vehicle qualified as an underinsured motor vehicle because Defendant Sandy’s bodily injury liability policy limit was $100,000 and the UIM policy had a limit of $250,000. However, the court also noted that because plaintiff’s recovery was limited to the compensatory damages it was entitled to recover from Defendant Sandy, “a determination of the amount owed under the policy is inextricably linked to a determination of the amount of damages plaintiff is ‘legally entitled to recover’ from Sandy.” The Court reasoned that the jury’s verdict represented a finding that the compensatory damages Plaintiff was “legally entitled to recover” from Defendant Sandy was $100,000, and that Plaintiff had successfully recovered “the exact amount of compensatory damages that it was legally entitled to recover” against Defendant Sandy. Thus, the court turned its analysis to Defendant Insurer’s collateral estoppel claim.
In its analysis, the Court noted that collateral estoppel requires: 1) that a question of fact essential to the judgment was actual litigated and determined by a valid and final judgment, 2) that the same parties had a full and fair opportunity to litigate the issue, and 3) mutuality of estoppel – which requires the party “taking advantage of the earlier adjudication” to have been “bound by [the earlier action] had it gone against him.” Here, the appellate court held that the first two requirements of collateral estoppel had been met. Thus, the court turned its analysis to the third element – mutuality of estoppel – and whether it was required before collateral estoppel could apply in this case. In doing so, the Court noted that this question was governed by the Michigan Supreme Court’s decision in Monat in which the Court concluded that when “collateral estoppel is being asserted defensively against a party who already had a full and fair opportunity to litigate the issue, mutuality is not required.” The appellate court found that “[m]utuality of estoppel is not required in this case because [Defendant Insurer] is asserting it defensively against Plaintiff, who had a full and fair opportunity to litigate the issue of the amount of compensatory damages that it was legally entitled to recover from [Defendant] Sandy in the first trial.” Thus, the Michigan Court of Appeals held that “collateral estoppel bars Plaintiff from relitigating the amount of compensatory damages it is entitled to recover from [Defendant] Sandy. Because the amount of damages Plaintiff is entitled to recover from [Defendant] Sandy is not in excess of the amount of damages Plaintiff did, in fact, recover from [Defendant] Sandy as a result of the first action, no UIM benefits remain available to Plaintiff under the terms of Parks’s insurance policy.”