Esurance Property and Casualty Insurance Company v. Johnson et al
OPINION and ORDER Denying Plaintiff's 44 Motion for Summary Judgment. Signed by District Judge Judith E. Levy. (SBur)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Esurance Property and Casualty
Case No. 16-cv-11880
Judith E. Levy
United States District Judge
Samuel Johnson, Lavelle
Whitaker, Clora Funeral &
Cremation Services, LLC,
Selective Insurance Company of
America, Will Wright, Jamaal
Wright, and Jasmine Gary,
Mag. Judge Elizabeth A. Stafford
OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT 
This case arises out of a car accident that occurred during a
Plaintiff Esurance Property and Casualty
Insurance Company (“Esurance”) insured defendant Lavelle Whitaker
and a car involved in the accident. It now brings this action seeking a
declaratory judgment that the present facts trigger an exception to the
Esurance’s obligation to provide a legal defense in this case. Esurance
now moves for summary judgment on that question. For the reasons
set forth below, the motion is denied.
Defendants Will Wright, Jamaal Wright, and Jasmine Gary filed
suit in Wayne County Circuit Court on January 7, 2016, seeking
remedy for injuries sustained in a car accident that occurred on
January 10, 2015. (Dkt. 44 at 78-93.) Plaintiff alleges here, and Gary,
Will Wright, and Jamaal Wright allege in the state court action, that
defendant Lavelle Whitaker allowed defendant Samuel Johnson to
drive his “covered vehicle” in a funeral procession put on by defendant
Clora Funeral Homes (“Clora”) as part of Johnson’s employment with
Clora. (Dkt. 1 at 4; Dkt. 44 at 80.) While driving Whitaker’s vehicle,
Johnson allegedly caused a car accident, injuring Gary, Will Wright,
and Jamaal Wright. (Id.) The state court complaint includes claims for
negligence against the driver of the car, Johnson, owner’s liability and
negligence against the owner of the car, Whitaker, (Id. at 80-84), and
first party benefits under Whitaker’s insurance policy on the car, issued
by plaintiff.1 (Id. at 90-93.)
Plaintiff further alleges that because defendant Johnson drove
Whitaker’s car in the course of his employment, an exclusion to
Whitaker’s car insurance policy with plaintiff applies in this case to
exempt it from any obligations owed to Johnson and Whitaker. (Dkt. 1
According to plaintiff, the insurance policy it sold Whitaker,
PAMI-005014372 (Dkt. 44 at 95-135), does not apply when the “covered
vehicle” is used for business purposes. (Dkt. 1 at 4.) Specifically, the
insurance policy at issue states:
EXCLUSIONS FOR PART I: LIABILITY COVERAGE
1. “We” have no duty to defend and do not provide Liability
Coverage for an “insured”:
H. Maintaining or using any vehicle while that “insured” is
employed or otherwise engaged in any “business” (other than
fishing or ranching). This Exclusion 1.H. does not apply to
business use of a “covered auto” by an “insured” that has
been disclosed to “us” and for which all applicable premiums
have been paid.
(Dkt. 44 at 105-6.) (emphasis added) (“Exclusion 1.H”)
Defendants Whitaker and Johnson have both failed to appear in this case, and
default judgments have been entered against both. (Dkts. 18, 33).
Plaintiff filed this declaratory judgment action on May 25, 2016.
(Dkt. 1.) The Court denied defendants Gary, Jamaal Wright, and Will
Wright’s motion to abstain from exercising jurisdiction, and issued an
order retaining jurisdiction over the action on April 20, 2017. (Dkt. 37.)
Plaintiff now files this motion for summary judgment to obtain a
declaratory judgment that it is not obligated to provide liability
coverage nor a defense to Johnson in the state case.
Selective Insurance Company of America (“Selective”) is the only
defendant to have filed a brief in opposition to plaintiff’s motion for
summary judgment. (Dkt. 49.) Clora also submitted a brief opposing
plaintiff’s motion, but did so more than five weeks after the deadline to
respond. (Dkt. 51). That brief was stricken from the record and the
Court denied a subsequent motion for leave to file a brief opposing
plaintiff’s motion for summary judgment.
determines that oral argument is not necessary pursuant to E.D. Mich.
Local R. 7.1(f)(2).
Summary judgment is proper when “the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court may
not grant summary judgment if “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court “views the
evidence, all facts, and any inferences that may be drawn from the facts
in the light most favorable to the nonmoving party.” Pure Tech Sys.,
Inc. v. Mt. Hawley Ins. Co., 95 F. App’x 132, 135 (6th Cir. 2004) (citing
Skousen v. Brighton High Sch., 305 F.3d 520, 526 (6th Cir. 2002)).
A. The Contract Term is Ambiguous
Plaintiff’s motion turns on whether the text of Exclusion 1.H is
“clear [and] unambiguous.” See Anderson v. Liberty Ins. Co., No. 1611356, 2016 WL 4089216, at *2 (E.D. Mich. August 2, 2016). It is not,
and, accordingly, a declaratory judgment that Exclusion 1.H applies on
these facts is inappropriate at this stage of the litigation.
Michigan law controls this dispute. See Whitehouse Condo. Grp.,
LLC v. Cincinnati Ins. Co., 569 Fed. Appx. 413, 416 (6th Cir. 2014)
(applying Michigan law in federal litigation regarding an insurance
contract entered into and performed in Michigan).
law, a clause in an insurance policy is valid “as long as it is clear,
unambiguous and not in contravention of public policy.”
2016 WL 4089216 at *2 (citing Raska v. Farm Bureau Mut. Ins. Co. of
Michigan, 412 Mich. 355, 361-62 (1982)). An insurance policy clause is
ambiguous when “its words may reasonably be understood in different
ways.” Leonor v. Provident Life and Acc. Co., 790 F.3d 682, 687 (6th
Cir. 2015) (citing Raska, 412 Mich. at 361-62).
whether the “terms used in an insurance policy” can be read in more
than one way, courts give the terms “their commonly used meanings.”
Group Ins. Co. of Mich. v. Czopek, 440 Mich. 590, 596 (1992) (citing
Fireman’s Fund Ins. Cos. v. Ex-Cell-O Corp., 702 F. Supp. 1317, 1323
n.7 (E.D. Mich. 1988)). Courts “construe the contract in favor of the
insured if an ambiguity is found.” Henderson v. State Farm Fire and
Cas. Co., 460 Mich. 348, 354 (1999).
But, courts must be careful not to “hold an insurance company
liable for a risk it did not assume.” Hunt v. Drielick, 496 Mich. 366, 373
(2014). That said, the insurer “bear[s] the burden of proving an absence
“Whether a contract's terms are ambiguous is a
question of law for the court to decide.” Scott v. State Farm Fire and
Cas. Co., 86 F. Supp. 3d 727, 733 (E.D. Mich. 2015) (citing Whitehouse
Condo. Grp., 569 Fed. Appx. at 416)).
Plaintiff argues there is only one way to read Exclusion 1.H and,
therefore, it is unambiguous. (Dkt. 44 at 15-16.) According to plaintiff,
Exclusion 1.H is meant to exclude coverage when the person insured
uses the insured vehicle for business purposes without first informing
plaintiff of the business purpose for which the vehicle is to be used.
This is a plausible reading of the language in Exclusion 1.H.
Plaintiff has “no duty to defend and do[es] not provide liability coverage
for any insured” who is “maintaining or using any vehicle while that
insured is employed or otherwise engaged in any business.”
However, the exclusion does not apply “to business use of a covered auto
by an insured that has been disclosed to [plaintiff] and for which all
applicable premiums have been paid.” (Id.) This language disclaims
coverage when the insured is using “any vehicle” while “engaged in any
business” unless the insured first discloses the “business use of a
In other words, this exception excludes
coverage when the insured uses a vehicle for business purposes without
first informing plaintiff of the intent to do so.
Here, Johnson drove Whitaker’s insured vehicle, with permission
from Whitaker, while “engaged in  business.” (Dkt. 44 at 11.) Under
this construction and these facts, coverage would be excluded if
Whitaker failed to notify plaintiff of the commercial use of the vehicle.
However, this is not the only reasonable reading of Exclusion 1.H.
Selective offers an equally plausible construction of Exclusion 1.H.
(Dkt. 49 at 18.)
It is reasonable to read Exclusion 1.H to exclude
coverage when the insured is driving any car for business purposes
unless that car is covered under the insurance policy and the business
use has been disclosed to plaintiff. The first sentence of Exclusion 1.H
refers to “[m]aintaining or using any vehicle” for business purposes
while the exception to the exclusion contained in the next sentence
applies when the “business use [is] of a covered auto.” (Dkt. 44 at 105-6
Thus, instead of excluding coverage when the
insured car has a driver other than the insured in a business context,
Exclusion 1.H could apply to the insured person specifically and prevent
plaintiff from providing coverage when the insured is driving a car not
covered by the policy. In other words, by referring to “any vehicle” in
the first sentence, Exclusion 1.H could disclaim coverage in situations
where the insured causes damage while driving his or her employer’s
car, not in situations where the covered vehicle is being used for
business purposes by a driver other than the insured.
In fact, the
exception to the exclusion specifically allows coverage to continue if the
car being used for business purposes is a “covered auto.” (Dkt. 44 at
106.) If the drafters of Exclusion 1.H had intended to disclaim coverage
when a “covered auto” was being used for business purposes, they would
have used the phrase “covered auto” in the first clause of the exclusion
rather than the phrase “any auto.”
Under this construction of the language in Exclusion 1.H,
Whitaker would be entitled to indemnification and a defense provided
by plaintiff. Here, Whitaker’s car was involved in an accident, but he
was not the driver.
Nor was Whitaker driving “any vehicle” for
business purposes when the accident occurred.
Since, under this
construction, Exclusion 1.H only applies when the insured is driving a
vehicle for business purposes not covered by the policy, it would have no
applicability to Johnson, or otherwise, on these facts.
Because the plain language of Exclusion 1.H can “reasonably be
understood in different ways,” the language at issue is ambiguous. See
Raska, 412 Mich. at 361-62. Accordingly, a reasonable juror could find
that plaintiff either is or is not obligated to provide coverage to Johnson,
and therefore summary judgment is not appropriate.
B. Plaintiff Failed to Carry Its Evidentiary Burden
Even if plaintiff is correct that its interpretation of Exclusion 1.H
is the only possible interpretation, plaintiff failed to provide the court
with sufficient evidence to demonstrate that the exclusion applies.
Summary judgment is proper when “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed R. Civ. P. 56(a). To demonstrate the absence of a
genuine dispute, the moving party must “support the assertion by:
citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits or
declarations, stipulations (including those made for purposes of the
motion only), admissions, interrogatory answers, or other materials.”
Fed R. Civ. P. 56(c)(1). Thus, the inquiry is “whether there is [evidence]
upon which a jury can properly proceed to find a verdict for the party
producing it, upon whom the onus of proof is imposed.” Anderson, 477
U.S. at 252.
Plaintiff’s construction of Exclusion 1.H disclaims coverage when
the insured vehicle is used for business purposes and the insured fails
to inform plaintiff of the business use. The insured’s failure to inform
plaintiff of the business use of the vehicle is a necessary condition for
triggering Exclusion 1.H. Thus, to obtain summary judgment, plaintiff
was obligated to provide the Court with evidence indicating that the
insured, Whitaker, failed to inform plaintiff of the business use of the
Plaintiff’s brief in support of its motion for summary
judgment provides no such evidence, nor does it allege that Whitaker
failed to inform it of the business use of the covered auto. (Dkt. 44 at
15-17.) Plaintiff failed to carry its evidentiary burden, and summary
judgment is denied.
Exclusion 1.H in the insurance contract at issue is ambiguous,
and, even if it were not ambiguous, plaintiff failed to carry its
evidentiary burden on summary judgment. Accordingly, and for the
reasons set forth above, it is hereby ordered that:
Plaintiff’s motion for summary judgment (Dkt. 44) is denied.
IT IS SO ORDERED.
Dated: September 22, 2017
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on September 22, 2017.
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