Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
Chief Justice Justices
Opinion
Maura D. Corrigan Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
___________________________________________________________________________________________________________________________
FILED NOVEMBER 4, 2003
RONALD SCHMALFELDT,
Plaintiff-Appellant,
v No. 122634
NORTH POINTE INSURANCE COMPANY,
Defendant-Appellee.
_______________________________
PER CURIAM
Plaintiff Ronald Schmalfeldt, injured in a fight at
the Elite Bar in Watervliet, directly sued the bar=s
insurer, North Pointe Insurance Company, to secure payment
for $1,921 in dental bills. At issue is whether he can sue
as a third-party beneficiary of the Elite Bar-North Pointe
insurance policy. We affirm the judgment of the Court of
Appeals, albeit on other grounds, and hold that he is not a
third-party beneficiary of the contract.
I. Background
On August 24, 1997, Schmalfeldt was at the Elite Bar
playing a game of pool with another bar patron. The game
led to an argument. Schmalfeldt tried to walk away, but
was struck in the face by the other player, who then fled.
Schmalfeldt needed extensive dental work to repair the
damage to his mouth and incurred dental expenses totaling
$1,921. He asked the owner of the Elite Bar to pay his
dental expenses, but the owner refused.
Schmalfeldt sought payment directly from North Pointe,
which had issued a commercial liability insurance policy to
the owner of the Elite Bar. He claimed a right to benefits
under the medical payments provision of the policy. In
this provision, North Pointe agreed to pay up to $5,000 for
medical expenses for a Abodily injury@ caused by an
Aaccident,@ provided the injury occurred on or next to the
insured=s premises or because of the insured=s operations.
Payments are made Aregardless of fault.@
North Pointe refused to pay benefits without a request
from its insured to do so. When the bar owner told North
Pointe that the bar did not want to invoke the medical
benefits provision in this case, North Pointe denied
Schmalfeldt=s request.
Schmalfeldt responded by filing a lawsuit against
North Pointe in the civil division of the Berrien County
Trial Court, claiming to be a third-party beneficiary of
the insurance contract.1 He moved for summary disposition
1
Schmalfeldt did not sue his assailant because he
could not identify that person. He also did not sue the
Elite Bar, apparently conceding that it had not breached
any duty to him.
2
on the theory that the medical benefits provision
authorized him to sue North Pointe to enforce the terms of
the contract. The court denied Schmalfeldt=s motion,
finding that the medical benefits provision did not support
Schmalfeldt=s claim that North Pointe undertook to do
something directly for him. Thus, the court held that
Schmalfeldt was not a third-party beneficiary of the
insurance contract and granted summary disposition in North
Pointe=s favor.
Schmalfeldt successfully appealed within the civil
division of the trial court,2 which held that the medical
benefits provision Adirectly benefited@ people situated like
plaintiff, who are members of the general public and
patrons on the premises of the Elite Bar, and ordered
summary disposition in Schmalfeldt=s favor.
The Court of Appeals granted North Pointe=s application
for leave to appeal and reversed.3 It decided that
Schmalfeldt was merely an incidental beneficiary and was
not entitled to enforce the insurance contract. The Court
of Appeals cited the statute governing third-party
beneficiaries, MCL 600.1405, and examined Allstate Ins Co v
2
Under Supreme Court Administrative Order Nos. 1996-5
and 1997-12, the Berrien County circuit, district, and
probate courts participated in a court consolidation
demonstration project in which the above courts fully
merged into one consolidated trial court. Because of this
project, Schmalfeldt appealed within the civil division of
the Berrien County Trial Court. See AO 1996-5 and 1997-12.
3
252 Mich App 556; 652 NW2d 683 (2002).
3
Keillor, 190 Mich App 499; 476 NW2d 453 (1991),4 for
guidance in determining whether Schmalfeldt was a direct or
incidental beneficiary of the medical payment provision.
In its opinion, the Court of Appeals stated:
While the medical payment provision at issue
in the instant case differs from the provision at
issue in Keillor and Hayes because the instant
provision does not refer to liability, we
nonetheless find Keillor and Hayes instructive.
Indeed, like the provision in Keillor and Hayes,
the purpose of the provision in the instant case
is essentially to Ashield the insured@ from having
eventually to pay out-of-pocket expenses. We
conclude that the contract at issue in the
instant case benefits the insured and that
plaintiff was merely an incidental beneficiary
who was not entitled to enforce the contract.
[252 Mich App 563-564.]
On the basis of its review of Keillor and Hayes, the Court
of Appeals held that North Pointe=s insurance contract
benefitted the insured, and that Schmalfeldt was merely an
incidental beneficiary who was not entitled to enforce the
contract. The Court of Appeals added that this conclusion
was supported by case law from other jurisdictions.
Schmalfeldt has sought leave to appeal in this Court.
4
Reversed on other grounds sub nom Allstate Ins Co v
Hayes, 442 Mich 56; 499 NW2d 743 (1993).
4
II. Standard of Review
We review de novo decisions regarding summary
disposition motions. First Public Corp v Parfet, 468 Mich
101, 104; 658 NW2d 477 (2003). This case involves the
proper interpretation of a contract, which is a question of
law that is also reviewed de novo. Archambo v Lawyers
Title Ins Corp, 466 Mich 402, 408; 646 NW2d 170 (2002).
III. Discussion
In relevant part, the medical payments provision
states:
COVERAGE C. MEDICAL PAYMENTS
1. Insuring Agreement.
a. We will pay medical expenses as described
below for Abodily injury@ caused by an accident:
(1) On premises you own or rent;
(2) On ways next to premises you own or
rent; or
(3) Because of your operations;
provided that:
(1) The accident takes place in the Acoverage
territory@ and during the policy period;
(2) The expenses are incurred and reported
to us within one year of the date of the
accident; and
(3) The injured person submits to
examination, at our expense, by physicians of our
choice as often as we reasonably require.
b. We will make these payments regardless of
fault. These payments will not exceed the
applicable limit of insurance. . . .
5
Michigan=s third-party beneficiary statute, MCL
600.1405, states in pertinent part:
Any person for whose benefit a promise is
made by way of contract, as hereinafter defined,
has the same right to enforce said promise that
he would have had if the said promise had been
made directly to him as the promisee.
(1) A promise shall be construed to have
been made for the benefit of a person whenever
the promisor of said promise has undertaken to
give or to do or refrain from doing something
directly to or for said person.
As we recently said in Brunsell v Zeeland, 467 Mich 293,
296; 651 NW2d 388 (2002), Athe plain language of this
statute reflects that not every person incidentally
benefitted by a contractual promise has a right to sue for
breach of that promise . . . .@ Thus, only intended, not
incidental, third-party beneficiaries may sue for a breach
of a contractual promise in their favor. Id.
A person is a third-party beneficiary of a contract
only when that contract establishes that a promisor has
undertaken a promise Adirectly@ to or for that person. MCL
600.1405; Koenig v South Haven, 460 Mich 667, 677; 597 NW2d
99 (1999). By using the modifier Adirectly,@ the
Legislature intended Ato assure that contracting parties are
clearly aware that the scope of their contractual
undertakings encompasses a third party, directly referred
to in the contract, before the third party is able to
enforce the contract.@ Id. An objective standard is to be
used to determine, Afrom the form and meaning of the
contract itself,@ Kammer Asphalt v East China Twp, 443 Mich
6
176, 189; 504 NW2d 635 (1993) (citation omitted), whether
the promisor undertook Ato give or to do or to refrain from
doing something directly to or for@ the person claiming
third-party beneficiary status, Brunsell, supra at 298.
As Brunsell, Koenig, and Kammer Asphalt make clear, a
court should look no further than the Aform and meaning@ of
the contract itself to determine whether a party is an
intended third-party beneficiary within the meaning of '
1405. Here, the Court of Appeals correctly began with the
proposition that third-party beneficiary status is defined
by ' 1405. But, without the benefit of our decision in
Brunsell,e the Court then turned to case law for resolution
of Athe issue of direct versus incidental beneficiaries in
the context of a medical payment provision such as that at
issue in the instant case.@ 252 Mich 562.
The focus of the inquiry, however, should be whether
North Pointe, by its agreement to cover medical expenses
for bodily injuries caused by accidents, Ahad undertaken to
give or to do or refrain from doing something directly to
or for@ Schmalfeldt pursuant to the third-party beneficiary
statute, MCL 600.1405(1). Thus, as Brunsell clarifies, we
must turn to the contract itself to see whether it granted
Schmalfeldt third-party beneficiary status.
We affirm the decision of the Court of Appeals because
the contract contains no promise to directly benefit
e
The Court of Appeals decided this case on August 23, 2002,
approximately one month before we issued our decision in
Brunsell on September 24, 2002.
7
Schmalfeldt within the meaning of ' 1405. Nothing in the
insurance policy specifically designates Schmalfeldt, or
the class of business patrons of the insured of which he
was one, as an intended third-party beneficiary of the
medical benefits provision. At best, the policy recognizes
the possibility of some incidental benefit to members of
the public at large, but such a class is too broad to
qualify for third-party status under the statute.
Brunsell, supra at 297; Koenig, supra at 680.
Only intended beneficiaries, not incidental
beneficiaries, may enforce a contract under ' 1405. Koenig,
supra at 680. Here, the contract primarily benefits the
contracting parties because it defines and limits the
circumstances under which the policy will cover medical
expenses without a determination of fault. This agreement
is between the contracting parties, and Schmalfeldt is only
an incidental beneficiary without a right to sue for
contract benefits. For this reason, North Pointe is
entitled to summary disposition. The Court of Appeals
judgment in favor of defendant is affirmed. MCR
7.302(G)(1).
Maura D. Corrigan
Elizabeth A. Weaver
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
S T A T E O F M I C H I G A N
SUPREME COURT
RONALD SCHMALFELDT,
Plaintiff-Appellant,
v No. 122634
NORTH POINTE INSURANCE COMPANY,
Defendant-Appellee.
_______________________________
KELLY, J. (dissenting).
I would not dispose of this case by an opinion per
curiam, but would grant leave to appeal to better analyze
two issues: whether, given the ambiguity in the contract
regarding the scope of individuals covered, the parties to
the Elite Bar-North Pointe insurance policy intended a
direct benefit to an identifiable class of persons. Also,
when insurance contract language is ambiguous, should a
reviewing court be free to look further than the "form and
meaning" of the language to determine if a third party is
contemplated? See, e.g., Klapp v United Ins Group Agency,
468 Mich 459; 663 NW2d 447 (2003).
Marilyn Kelly
Michael F. Cavanagh