Order Michigan Supreme Court
Lansing, Michigan
December 19, 2008 Clifford W. Taylor,
Chief Justice
136069 Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
RENEE ELLIS, Robert P. Young, Jr.
Plaintiff-Appellee, Stephen J. Markman,
Justices
v SC: 136069
COA: 275240
Wayne CC: 05-508314-CK
FARM BUREAU INSURANCE COMPANY,
Defendant-Appellant.
_________________________________________/
On December 3, 2008, the Court heard oral argument on the application for leave
to appeal the February 12, 2008 judgment of the Court of Appeals. On order of the
Court, the application is again considered. MCR 7.302(G)(1). In lieu of granting leave
to appeal, we REVERSE the judgment of the Court of Appeals and we REMAND this
case to the Wayne Circuit Court for entry of judgment in favor of the defendant.
Contracts are enforced according to their unambiguous terms. Rory v Continental Ins Co,
473 Mich 457, 468 (2005). The defendant is not liable, under the terms of the insurance
policy, because, under the facts of this case, the insured premises were vacant or
unoccupied for more than 60 consecutive days before the damage occurred. Smith v
Lumbermen’s Mutual Ins Co, 101 Mich App 78 (1980), did not involve a vacancy of 60
days or more or policy language, such as that here, that limits coverage when the insured
premises are vacant or unoccupied for more than 60 consecutive days.
YOUNG, J. (concurring).
I concur in the order reversing the judgment of the Court of Appeals and write
solely to respond to the disturbing dissenting statement of Justice Kelly. This is a simple
case that illustrates why judicial philosophy matters.
The insurance contract at issue disclaimed coverage for losses related to the
insured home if it was “vacant and unoccupied beyond a period of 60 consecutive days.”
I wager that not one in a thousand native speakers of English would have difficulty in
understanding this simple and straightforward contractual term. Notwithstanding, the
premise of Justice Kelly’s dissent is that these contractual terms are ambiguous because
2
they are not defined in the insurance contract.1 Only in a “judicial world” would two
commonplace terms like “vacant” and “unoccupied” be deemed ambiguous, and only
those who share Justice Kelly’s philosophy of contract construction would make
contracts containing those terms essentially unenforceable.
Unfortunately, I believe that Justice Kelly’s view of contract construction in this
case foreshadows the future. I predict that we will see again the ascendency of a
Michigan jurisprudence in which no contract will be enforced according to its plain
meaning and the meaning given to such commonplace terms will be derived entirely from
the imaginations of judges who share Justice Kelly’s judicial philosophy.
MARKMAN, J. (concurring).
I concur in the decision to reverse the judgment of the Court of Appeals. I
respond separately only to address Justice Kelly’s dissent. That dissent contends that our
reliance on Rory v Continental Ins Co, 473 Mich 457 (2005), is “sadly misplaced”
because defendant admits that the insurance policy at issue here does not define the word
“vacant” or “unoccupied,” and, thus, “did not rely on Rory in its most recent brief.” To
begin with, defendant did rely on Rory in its brief in support of its application for leave to
appeal,2 and defendant very likely did not rely on Rory in its “most recent brief,” i.e., its
supplemental brief, only because this Court specifically directed the parties to “not
submit mere restatements of their application papers” in their supplemental briefs. 482
Mich ___ (Docket No. 136069, order entered October 24, 2008) (emphasis added).
Further, although defendant acknowledges that the dispositive terms of the policy are not
defined in the policy, contrary to the dissent’s suggestion, this by no means constitutes a
concession that these terms are “ambiguous.” “As this Court has repeatedly stated, the
fact that a contract does not define a relevant term does not render the contract
ambiguous.” Terrien v Zwit, 467 Mich 56, 76 (2002). “Rather, if a term is not defined in
a contract, we will interpret such term in accordance with its ‘commonly used meaning.’”
Id. at 76-77, quoting Frankenmuth Mutual Ins Co v Masters, 460 Mich 105, 114 (1999).
Finally, contrary to the dissent’s intimation, a “term is not rendered ambiguous merely
because resort to a dictionary reveals more than one definition.” Lash v Traverse City,
479 Mich 180, 189 n 12 (2007).3 “If that were the test for determining whether a term is
1
If this were the prevailing rule of “ambiguity,” then the so-called “plain language”
movement of contract drafting is a cruel farce and insurance contracts would have to be
accompanied by a “glossary” of everyday terms the size of the Unabridged Oxford
English Dictionary.
2
See defendant’s brief in support of its application for leave to appeal, at 5, 7-8, 25.
3
Even plaintiff’s counsel admitted that the dispositive terms here are unambiguous, when
he stated, “I guess I would have to concede that in the abstract vacant and unoccupied is
not ambiguous.” Oral argument transcript at 10. Contrary to the dissent’s intimation, I
3
ambiguous, then virtually all contracts would be rife with ambiguity and, therefore,
subject to what the dissent in ‘words mean whatever I say they mean’ fashion describes
as ‘judicial interpretation.’” Terrien, supra at 76. For these reasons, I fully share Justice
Young’s concerns about Justice Kelly’s understanding of contract interpretation.
CAVANAGH, J. (dissenting).
I respectfully dissent from the majority’s order reversing the Court of Appeals
judgment and concur with Justice Kelly’s dissent.
Further, I note that if plaintiff had pleaded the issue of estoppel in her complaint, I
would support granting plaintiff relief on that basis. At the time the insurance policy was
issued, defendant’s agent knew that no one was living in the house and that plaintiff
intended to conduct extensive renovations before leasing it to a tenant. This Court has
long held that “an insurance company is estopped from asserting a forfeiture for a
condition of the premises existing at the time of the fire, which existed to the knowledge
of the company at the making of the contract . . . .” Gordon v St Paul Fire & Marine Ins
Co, 197 Mich 226, 234 (1917), relying on Aurora Fire & Marine Ins Co v Kranich, 36
Mich 289 (1877). See also Johnson v American Fidelity Fire Ins Co, 351 Mich 515, 521-
522 (1958). Gordon and Kranich are factually and legally similar to this case, and would
govern here if plaintiff had pleaded estoppel.
WEAVER, J. (dissenting).
I dissent and would deny leave to appeal because I am not persuaded that the
Court of Appeals judgment in this matter should be peremptorily reversed.
KELLY, J. (dissenting).
I dissent from the Court’s order peremptorily reversing the judgment of the Court
of Appeals. The Court’s reliance on Rory v Continental Ins Co4 for the proposition that
contracts are enforced according to their terms if the terms are unambiguous is sadly
do acknowledge that plaintiff’s counsel proceeded to argue that the contract becomes
ambiguous only when one considers that defendant’s agent knew that the property was
vacant, and, thus, it was reasonable for plaintiff to believe that the policy covered vacant
properties. However, even if this was true, it is well established that “‘a court should not
create ambiguity in an insurance policy where the terms of the contract are clear and
precise,’” Citizens Ins Co v Pro-Seal Service Group, Inc, 477 Mich 75, 82 (2007)
(citation omitted), and “one’s alleged ‘reasonable expectations’ cannot supersede the
clear language of a contract.” Wilkie v Auto Owners Ins Co, 469 Mich 41, 60 (2003).
4
Rory v Continental Ins Co, 473 Mich 457, 468 (2005).
4
misplaced. In this case, the insurance policy admittedly did not define the terms
“vacant” or “unoccupied.” Both caselaw and the fact that numerous common definitions
of the terms exist suggest that the terms are ambiguous.5 Accordingly, they are subject
to judicial interpretation, and Rory is inapplicable.6 It is noteworthy that
5
See, e.g., Smith v Lumbermen’s Mut Ins Co, 101 Mich App 78 (1980); Krajenke v
Preferred Mut Ins Co, 68 Mich App 211 (1976); Shackelton v Sunfire Office, 55 Mich
288 (1884).
Language is not rendered ambiguous merely because it is undefined in the contract
in which it appears. But, ambiguity is more easily avoided if a contractual definition is
provided. And the lack of a definition can contribute to the likelihood of ambiguity.
Also, language is not ambiguous merely because a dictionary gives it more than one
meaning. But where a dictionary shows that multiple commonly used meanings exist for
the language, it signals that the language, if used without definition in a contract, risks
being ambiguous.
Justice Young’s assertion that “only in a ‘judicial world’ would two commonplace
terms like ‘vacant’ and ‘unoccupied’ be deemed ambiguous” is puzzling. In Liberty Hill
Housing Corp v City of Livonia, 480 Mich 44 (2008), Justices Young and Markman
joined the majority opinion that explicitly examined the meaning of the term “occupy”
and recognized that, in Webster’s College Dictionary alone, there are six definitions for
the term. Notwithstanding what I believe to be the majority’s erroneous determination
that “occupy” was unambiguous in that case, Liberty Hill demonstrates that the term is
subject to differing interpretations. Liberty Hill represents but the tip of an iceberg of
cases interpreting the very terms Justices Young and Markman believe to be
unambiguous to “native speakers of English.” For a fervent discussion of over 100 pages
of the myriad of cases that have interpreted “vacant” and “unoccupied” as they relate to
insurance policies, I refer Justices Young and Markman to 47 ALR3d 398; 36 ALR3d
505. Furthermore, it appears that Justices Young and Markman would treat the terms
“vacant” and “unoccupied” as one and the same. However, they are not synonymous,
which may be why the policy used two terms instead of one. Each has meanings
independent of the other.
Moreover, Justice Markman distorts plaintiff’s counsel’s “admission” of a lack of
ambiguity. The oral argument transcript shows that plaintiff’s counsel admitted that the
terms are not ambiguous “in the abstract” in response to Justice Young’s invitation to
him to “[p]retend this is not an insurance contract; pretend this is some other contract.”
Oral argument transcript at 10. In fact, immediately following this so-called
“admission,” plaintiff’s counsel stated, “It’s when you put [the terms] into [an insurance
contract] context that the ambiguity arises.” Id.
6
Notwithstanding this analysis, I continue to believe that Rory was wrongly decided for
the reasons stated in my dissenting opinion in that case.
5
defendant did not rely on Rory in its most recent brief, likely because it admitted that the
policy did not define the dispositive terms.
I believe that the Court of Appeals properly held that plaintiff’s property was not
vacant or unoccupied within the meaning of the terms of the parties’ insurance policy. I
would leave its decision intact and deny defendant’s application for leave to appeal.
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.
December 19, 2008 _________________________________________
1215 Clerk