Auto-Owners Insurance v. Leefers

P. J. Clulo, J. In Docket No. 152342, defendant Keysha Cash appeals an April 30, 1992, order of summary disposition for the plaintiff in its action for declaratory relief whereby plaintiff’s complaint for interpleader was granted and plaintiff was ordered to remit the sum of $250,000 to the court for disbursement to defendants as compensation for injuries they suffered in an automobile accident. The order further enjoined Cash from pursuing a suit for coverage under her grandfather’s insurance policy. In Docket No. 152648, defendant Brenton Leefers appeals from the same order. We affirm. On January 27, 1990, Phyllis Leefers, now deceased, was operating her motor vehicle in which defendants Jauron Leefers and Keysha Cash were passengers. The vehicle was struck by an automobile owned and operated by Josh Prather. Phyllis Leefers died as a result of injuries she sustained in the accident, while both Jauron Leefers and Keysha Cash sustained serious injuries. It is undisputed that the sole cause of the accident was Prather’s negligence. Prather had a policy of liability insurance with State Farm Insurance Company that limited coverage to $50,000 a person and $100,000 an occurrence. The proceeds from the policy were distributed as follows: the estate of Phyllis Leefers received $50,000, Jauron Leefers received $10,000, and Keysha Cash received $40,000. It is undisputed that the Prather policy was inadequate to cover the damages of each defendant, requiring defendants to make claims under other insurance policies. Phyllis Leefers’ policy (hereinafter the *8 Leefers policy), issued by plaintiff, contained an underinsurance clause that limited coverage to $300,000 a person and an occurrence. 1 Similarly, Keysha Cash’s grandfather, Arthur L. Hall, had a policy (hereinafter the Hall policy) issued by plaintiff containing an identical clause for underinsured motorist coverage. 2 On October 15, 1991, plaintiff filed a complaint for interpleader on the basis that defendants had made conflicting claims for underinsured motorist coverage under the Leefers and Hall policies and were unable to agree upon a division of the benefits. Plaintiff offered to submit $250,000 to the court (representing the coverage of $300,000 an occurrence under the Leefers policy less the coverage of $50,000 a person paid under the Prather policy) and walk away from further liability for any damage that arose out of the accident. Plaintiff denied any liability under the Hall policy on the basis of a clause in the Hall policy that provides: This coverage shall not apply: (a) to bodily injury to an insured sustained while in, upon, entering or alighting from, any motor vehicle not owned by the insured if the owner has insurance similar to that afforded by this coverage and such coverage is available to the insured .... On the basis of this exclusion and our Supreme Court’s decision in Rowland v DAIIE, 388 Mich *9 476; 201 NW2d 792 (1972), the trial court concluded that Cash was precluded from seeking underinsured motorist benefits under the Hall policy. Thereafter, the parties entered into a conditional consent decree whereby the $250,000 in underinsured motorist benefits available under the Leefers policy were distributed to defendants in prorated shares. 3 On appeal, defendants 4 claim that because it is agreed that the aggregate amount of their injuries exceeds the adjusted $250,000 limitation of under-insured motorist coverage available under the Leefers policy, the underinsured motorist coverage that would otherwise be available to Cash is, in fact, not available and that, therefore, the identical exclusion in the Hall policy does not operate to preclude Cash’s recovery of underinsured motorist benefits under the Hall policy. In response, plaintiff claims that because defendants have equal rights to the underinsured motorist coverage under the Leefers policy, the benefits are equally available to all and the clause in the Hall policy operates to exclude Cash’s recovery of underinsured motorist benefits from the Hall policy. We resolve this issue of first impression in favor of plaintiff and affirm the decision of the trial court. In determining that the aforementioned clause prevented Cash from availing herself of the under-insurance coverage under the Hall policy, the trial court relied upon our Supreme Court’s decision in Rowland. On appeal, defendants seek to distin *10 guish the holding of Rowland, while plaintiff argues that the case is controlling. In Rowland, the claimant was a guest passenger who was injured when the host driver had an accident caused solely by the negligent acts of an uninsured motorist. The host driver and the guest passenger had policies of insurance with identical uninsured motorist coverage of up to $10,000 for each passenger. The guest passenger recovered $10,000 from the host driver’s policy, which was admittedly insufficient to compensate her for the injuries she sustained. She then turned to her own policy of insurance and sought uninsured motorist benefits, which the trial court denied on the basis of an exclusion similar to the one in the Hall policy. In affirming the decision of the trial court, our Supreme Court concluded that the policies provided identical uninsured motorist coverage and that the guest passenger was limited to recovery under the host policy. Rowland, supra at 481. The Court found it significant that the host and guest were insured by the same company. Id. In the present case, defendants argue that .Rowland is distinguishable on two separate grounds. First, defendants claim that the $10,000 a person guarantee in the policies at issue in Rowland assured the policyholder that the funds articulated would be "available” to an insured, whereas in this case there was no such guarantee. Second, defendants argue that different purposes are served by uninsured motorist benefits than are served by the underinsurance benefits at issue here. While it is true that the Rowland case is factually distinguishable, we cannot agree with defendants that the differences warrant coverage under both the Leefers and Hall policies. Because underinsured motorist benefits are not statutorily mandated, we must look to policy inter *11 pretation to determine under what circumstances benefits are to be provided. Rohlman v HawkeyeSecurity Ins Co, 442 Mich 520, 525; 502 NW2d 310 (1993). In interpreting a policy of insurance, we are obligated to construe clear and unambiguous provisions according to the plain and ordinary meaning of the terms as used in the provision. Clevenger v Allstate Ins Co, 443 Mich 646, 654; 505 NW2d 553 (1993). A provision is said to be ambiguous when its words may reasonably be understood in different ways. Id., quoting Raska v Farm Bureau Ins Co, 412 Mich 355, 362; 314 NW2d 400 (1982). An ambiguous contract is to be construed against its drafter and in favor of coverage. Id. at 9. In the instant case, we are faced with the task of construing an exclusion containing the term "available.” While no court in this state has specifically construed that term, courts of foreign jurisdictions have done so. See Hoffman v United Services Auto Ass’n, 671 F Supp 922 (D Conn, 1987); Kraft v Allstate Ins Co, 6 Ariz App 276, 279; 431 P2d 917 (1967); Gordon v Maupin, 469 SW2d 848, 850 (Mo App, 1971). Each of those courts concluded that the term is ambiguous and is to be construed against the insurer. Hoffman, supra at 924; Kraft, supra at 279; Gordon, supra at 849-850. Each of the courts also concluded that the term "available,” when construed in favor of the insured, meant "actually available” or "accessible,” or that which is reasonably available, as opposed to that which is theoretically or hypothetically available. Hoffman, supra at 925; Kraft, supra at 279; Gordon, supra at 850. In the instant case, we agree that the term "available” is ambiguous, inasmuch as it is capable of being defined in different ways. Clevenger, supra at 654. Moreover, we agree with those juris *12 dictions cited above that have construed the term to mean that which is "actually” or "reasonably” available to the insured. However, we are persuaded that defendant Cash has failed to establish that the underinsured motorist benefits under the Leefers policy were not "actually” or "reasonably” available to her under the facts of this case, such that the exclusion under the Hall policy would be inapplicable. Thus, even though we believe an ambiguity is present and construe the ambiguity in favor of coverage, we are persuaded that defendants were provided the coverage intended under the Hall policy through recovery of benefits under the Leefers policy. Part of the difficulty with this case is that neither policy contains a priority provision that fixes the order of liability for the payment of underinsured motorist benefits to each of the insureds. 5 In other terms, there is nothing in either policy or in the statutory framework that designates that any one of the insureds has primary coverage, such that one insured has a greater right to full compensation of injuries before any other insured may recover. Defendants make the argument that because the Leefers policy was purchased by the Leefers, the estate of Phyllis Leefers and Jauron Leefers should be entitled to recover underinsured benefits for their injuries before Cash can recover under the policy. However, as plaintiff points out, there is no contractual or legal support for such an argument. Unlike those cases upon which defendants rely, there is nothing in this case to prevent defendant Cash from recovering her prorated portion of the *13 $250,000 in underinsurance benefits available under the Leefers policy. In fact, neither of the Leefers has shown a right to complete satisfaction before benefits are paid to defendant Cash. Moreover, neither of the Leefers has settled with, or obtained a judgment against, plaintiff for an amount of benefits that would render them "actually” or "reasonably” unavailable to Cash. Contrary to what defendants suggest, there is nothing in the policies that guarantees each insured full availability of the $300,000 in underinsured motorist benefits. Rather, the policies guarantee that in the event of an accident $300,000 in underinsured motorist benefits will be available to those insureds who have sustained injury. Defendants also seek to distinguish this case from Rowland on the ground that a different type of insurance is at issue. In Rowland, the Court was faced with an "other insurance” clause as it pertained to uninsured motorist benefits, while in this case the "other insurance” clause applies to under-insured motorist benefits. Although we recognize the distinctions between the purposes of uninsured and underinsured motorist benefits, see Keeton & Widiss, Insurance Law, § 4.9(e)(3), pp 406-407, we believe that Rowland still controls where the identical coverage of one policy is available to an insured under another policy. Our decision today is supported by our Supreme Court’s statements in Bradley v Mid-Century Ins Co, 409 Mich 1; 294 NW2d 141 (1980). In construing an other-insurance clause that arose in the context of uninsured motorist coverage, Justice Levin stated: In a policy with an other insurance clause, the insurer makes no promise to provide coverage in the stated amounts without regard to the insured’s *14 having available from other sources similar insurance benefits or protection. The insurer promises only that the insured will have insurance coverage in the stated policy limits from some source. [Id. at 49. Emphasis added.] Justice Levin further stated: Since there is presently no requirement that the premium charged for voluntarily provided and purchased automobile insurance accurately reflect the risk covered by such insurance [referring to uninsured motorist benefits], and there is no evidence that the insurer reaps a windfall, we cannot say that other insurance clauses are unconscionable because they limit the coverage applicable to a single accident to that provided by a single policy. [Id. at 57.] We believe these statements to be particularly persuasive with respect to the coverage dispute involved in this case. When plaintiff issued the Hall and Leefers policies, it specifically stated on the declarations page that underinsured motorist benefits were to be provided up to $300,000 a person or an occurrence subject to the setoffs clearly articulated in the policy. Were we to construe the policy as defendants ask, plaintiff would have to provide up to $300,000 in underinsured motorist benefits for each insured, notwithstanding the $300,000 an occurrence limitation. This construction would render the limitation of $300,000 in benefits an occurrence meaningless and would subject the insurer to liability above that which it agreed to provide. Such a result is contrary to the principles of contract interpretation. See Group Ins Co of America v Czopek, 440 Mich 590, 596-597; 489 NW2d 444 (1992). For the reasons expressed herein, the order of the trial court granting summary disposition for plaintiff is affirmed. Footnotes [1] The underinsured motorist coverage was actually a separate endorsement for which Leefers and Hall paid an additional premium. However, the underinsured motorist clause expressly incorporates those terms of the policy that apply to the uninsured motorist coverage. [2] For purposes of the motion for summary disposition only, plaintiff conceded that Cash resided with her grandfather and was a legitimate insured under that policy. We will make the same assumption for purposes of this appeal. [3] The consent decree was conditioned on this Court’s resolution of the issue at hand. Under the order, the estate of Phyllis Leefers was to retain $170,000 less attorney fees, while Cash was to retain $80,000 less fees. [4] Throughout this opinion, we will use "defendants” to refer to the Leefers and Cash collectively. The majority of arguments made on appeal were presented in a brief filed by counsel for the Leefers. Cash merely filed a brief adopting the analysis of that brief as its position on appeal. [5] In fact, the conditional consent decree provides for a prorated split of the $250,000 between the victims and suggests that none of the defendants had priority over another to the underinsured motorist benefits.