Order Michigan Supreme Court
Lansing, Michigan
July 7, 2009 Marilyn Kelly,
Chief Justice
138689 Michael F. Cavanagh
Elizabeth A. Weaver
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
DEBORAH L. ARNOLD and Diane M. Hathaway,
FREDERICK E. ARNOLD, Justices
Plaintiffs-Appellees,
v SC: 138689
COA: 288456
Oakland CC: 2006-075278-CK
FARM BUREAU GENERAL INSURANCE
COMPANY and FARM BUREAU MUTUAL
INSURANCE COMPANY,
Defendants-Appellants.
_________________________________________/
By order of May 27, 2009, this Court granted immediate consideration and a stay
of trial court proceedings. On order of the Court, the application for leave to appeal the
March 20, 2009 order of the Court of Appeals is considered, and it is DENIED, because
we are not persuaded that the questions presented should now be reviewed by this Court.
The stay of trial court proceedings, ordered on May 27, 2009, is DISSOLVED.
KELLY, C.J. (concurring).
I concur in the order denying defendant’s application for leave to file an
interlocutory appeal. Plaintiffs presented testimony that defendant’s claims specialist
specifically told them that they had fully complied with the requirements of their
insurance contract. They said she told them that there was nothing more they needed to
do to preserve their rights. Such testimony is sufficient to create genuine issues of
material fact about whether the statements were made and whether plaintiffs reasonably
relied on them. Plaintiffs asserted that they relied on the statements by forgoing a suit
against the underlying tortfeasors for three years. The insurance policy required plaintiffs
to sue the tortfeasors before the expiration of the three-year statutory period.
If plaintiffs reasonably relied on defendant’s statements, defendant may
appropriately be equitably estopped from asserting a statute of limitations defense as a
basis for denying coverage. Moreover, defendant conceded that no provision in the
contract explicitly required plaintiffs personally to sue the tortfeasors. Therefore, viewed
2
in the light most favorable to the plaintiffs, they may have been justified in relying on the
claims specialist’s alleged statements.
Equitable estoppel originated “in moral duty and public policy; and its chief
purpose is the promotion of common honesty, and the prevention of fraud.”1 The alleged
facts raise questions about whether defendant’s behavior toward its insured here was
honest. Defendant delayed its decision on plaintiffs’ claim, telling them that it would
settle the claim when plaintiff Deborah Arnold’s condition “has reached maximum
improvement verified by medical records.” However, defendant never did settle the
claim, and plaintiffs brought suit. As soon as the limitations period expired, defendant
moved for summary disposition of the lawsuit based on the statute of limitations defense.
I agree with the trial court that a jury reasonably could conclude that equitable
estoppel should apply here. Therefore, I concur in the order denying leave to appeal.
YOUNG, J. (dissenting).
I respectfully dissent from the order denying defendant’s application for leave to
appeal. I would remand to the Court of Appeals for consideration as on leave granted
because defendant raises a meritorious argument that may dispose of this case without the
expense of trial.
On July 25, 2003, plaintiff Deborah Arnold was driving her daughter’s car when
she was hit by an uninsured motorist. Deborah was insured by defendant Farm Bureau
General Insurance Company and gave defendant notice of the accident and requested
uninsured motorist benefits on August 18, 2003.2 In June 2004, plaintiff Frederick
Arnold, Deborah’s husband, spoke with defendant’s casualty claims specialist Doris
Keefer. At his deposition, Frederick recounted his conversation with Ms. Keefer: “I
asked her . . . did I need to pursue anything else, and was there any statute of limitations
that I had to be concerned with, and do I need to do anything with this other person at all
because she was uninsured? And the answer was no.” Defendant sent plaintiffs a letter
on November 3, 2004, which stated in pertinent part:
This is a follow up to the recent conversation with Mr. Arnold
wherein he was inquiring as to whether there is any time limit involved per
this claim. I advised him that due to the fact that you have complied with
1
Hassberger v General Builders’ Supply Co, 213 Mich 489, 491 (1921).
2
The car was insured under a policy issued by defendant and Deborah was insured under
her own policy issued by defendant. The claim was made under both policies, which
contained identical provisions.
3
the conditions of this policy to date, the one year limitation regarding
initiating legal action would not apply.[3] . . . .
I have enclosed copies of the portion of your daughter’s policy
which applies to your claim Part V – Unisured Motorist Coverage. I ask
that you read this portion carefully. The uninsured motorist coverage of
Farm Bureau requires that the insured preserve all of Farm Bureau’s
potential subrogation rights as we deem these rights to be very important
and are not willing to waive them. You must also comply with all
conditions and provisions of this policy.
As indicated in the letter, and significant to the issue raised by defendant, the
policy provided:
b. Coverage under this endorsement shall be void if:
***
(3) the insured does not pursue the assets that are not exempt from
legal process of all persons or organizations legally responsible for
the accident.
The period of limitations for an action brought by plaintiffs’ against the uninsured
driver expired on July 25, 2006.4 The policy additionally provided that uninsured
motorist “coverage does not apply to . . . any person whose claim against the owner or
operator of an uninsured automobile is barred by applicable statutes of limitation.”
Defendant sought summary disposition, arguing that plaintiffs’ claim was
prohibited by the above policy provisions because plaintiffs did not pursue, and were then
barred by the statute of limitations from pursuing, the assets of the uninsured driver.
Plaintiffs responded that defendant was equitably estopped from relying on the above
provisions because defendant’s agent told them that there was nothing more they need do
3
The policies contained the following time limitation:
Any person seeking Uninsured Motorist Coverage must:
a. present the claim for compensatory damages in compliance with
the terms and conditions of this coverage and policy; and
b. present to us a written notice of the claim for Uninsured Motorist
Coverage within one year after the accident occurs.
A suit against us for Uninsured Motorist Coverage may not be
commenced later than one year after the accident that caused the injuries
being claimed, unless there has been full compliance with all of the
conditions of this coverage and the policy.
4
See MCL 600.5805(10).
4
to make a claim for uninsured motorist benefits. The trial court denied defendant’s
motion, concluding that there was a question of fact whether “it was justifiable for the
plaintiffs to rely on the claim’s [sic] adjuster’s direction that the plaintiffs did not need to
do anything more.” The Court of Appeals denied defendant’s application for leave to
appeal.
I believe that defendant’s argument may have merit. This Court has long held that
it is essential to the application of the principle of equitable estoppel that
the party claiming to have been influenced by the conduct or declarations of
another, to his injury, was himself not only destitute of knowledge of the
state of the facts, but was also destitute of any convenient and available
means of acquiring such knowledge; and that, where the facts are known to
both parties, or both have the same means of ascertaining the truth, there
can be no estoppel.[5]
The declaration that plaintiffs claim influenced them was defendant’s agent’s
statement that there was nothing more they need do to make a claim for uninsured
motorist benefits. Plaintiffs, however, were not “destitute of any convenient and
available means of” determining whether they needed to do anything more. Indeed, both
parties “ha[d] the same means of ascertaining the truth”—reading the policy—and the
plaintiffs received a copy of the policy and were advised by letter dated November 3,
2004, to read it carefully and “comply with all conditions and provisions of this policy”
to perfect their claim. The policy unambiguously provides that unless plaintiff
“pursue[d] the assets that are not exempt from legal process of all persons or
organizations legally responsible for the accident,” uninsured motorist coverage would be
void.
Accordingly, I believe that defendant has a strong argument that equitable estoppel
does not apply and the coverage was voided by plaintiffs’ failure to pursue the assets of
the uninsured driver as they had been instructed in writing almost two years before the
5
Sheffield Car Co v Constantine Hydraulic Co, 171 Mich 423, 450 (1912); Rix v O’Neil,
366 Mich 35, 42 (1962). See also Cooper v Auto Club Ins Ass’n, 481 Mich 399, 415
(2008), discussing reasonable reliance on misrepresentations for fraud claims:
One is presumed to have read the terms of his or her insurance
policy, see Van Buren v St Joseph Co Village Fire Ins Co, 28 Mich 398,
408 (1874); therefore, when an insurer has made a statement that clearly
conflicts with the terms of the insurance policy, an insured cannot argue
that he or she reasonably relied on that statement without questioning it in
light of the provisions of the policy. See also McIntyre v Lyon, 325 Mich
167, 174, 37 NW2d 903 (1949); Phillips v Smeekens, 50 Mich App 693,
697; 213 NW2d 862 (1973).
5
period of limitations expired for the claim against the uninsured driver. I would remand
the case to the Court of Appeals for consideration of this issue as on leave granted and,
therefore, respectfully dissent.
CORRIGAN and MARKMAN, JJ., join the statement of YOUNG, J.
I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
July 7, 2009 _________________________________________
p0630 Clerk