State Farm Mutual Automobile Insurance v. Roe

Michael J. Kelly, J.

(dissenting). Because I believe that the trial court correctly interpreted the insurance contract, I respectfully dissent.

Ordinarily, this Court reviews a trial court’s factual findings for clear error. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire record is left with a def-*271mite and firm conviction that a mistake was made. MCR 2.613; Andrews v Pentwater Twp, 222 Mich App 491, 493; 563 NW2d 713 (1997). In this case, the trial court found that Michael Roe’s injury “did not occur within the scope of [his] employment” and “[t]hus the plaintiff would have a duty to indemnify Wilbur and Maureen Roe.” I fully agree with this determination, and I would not disturb it. When the language in the parties’ contract for insurance is examined in light of existing case law, there is little basis upon which this Court could be left with a definite and firm conviction that the trial court was mistaken in granting judgment for defendants.

Plaintiff has successfully convinced the majority that the following contractual exclusion shields it from its obligations to defendants, primarily “because the exclusionary language ... is identical to that used in § 301 of the worker’s compensation act”:

There is no coverage under coverage a:
1. FOR ANY BODILY INJURY to:
* * *
B. ANY EMPLOYEE OF AN INSURED ARISING OUT OF HIS OR HER employment. This does not apply to a household employee who is not covered or required to be covered under any worker’s compensation insurance.

When interpreting a contract of insurance, we construe exclusionary clauses strictly against the insurer. Fire Ins Exchange v Diehl, 450 Mich 678, 687; 545 NW2d 602 (1996). Moreover, we interpret exclusionary clauses in isolation, reading them with the insuring agreement and independently of every other exclusion. Hawkeye-Security Ins Co v Vector Const Co, 185 Mich App 369, 384; 460 NW2d 329 (1990). *272The majority opinion, I think, dilutes these principles of construction.

The majority inteiprets the exclusionary language in a manner consistent with the worker’s compensation act because it finds that the exclusion contains language “identical” to the worker’s compensation law. This is plainly not so. The worker’s compensation act covers injuries “arising out of and in the course of employment,” MCL 418.301(1); MSA 17.237(301)(1), not just injuries “arising out of employment.” By adding the phrase “and in the course of employment” into the exclusionary clause contained in the contract, the majority has reformed the contract. This is unfortunate, because this revisionary act completely ignores that our courts have treated the phrase “arising out of employment” differently from the phrase “in the course of employment” for the purposes of the worker’s disability compensation law, and whether the two phrases require separate tests remains an open question under Michigan law. See Simkins v General Motors Corp, 453 Mich 703, 712-713, n 14, 724-725; 556 NW2d 839 (1997). Here, the insurer, a sophisticated business entity, purposefully chose not to employ the phrase “arising out of and in the course of employment,” the words “generally used ... to refer to the connection between the injury and employment,” id., and yet contends that it intended to disclaim liability for injuries compensable under the worker’s compensation law. This puiposeful omission of the phrase “in the course of employment” shows that plaintiff intended only to disclaim liability for injuries arising directly from the circumstances and conditions of employment:

*273“It is sufficient to say that an injury is received ‘in the course of the employment when it comes while the workman is doing the duty which he is employed to perform. It ‘arises out of the employment, when there is apparent to the rational mind, upon consideration of all the circumstances, a causal connection between the conditions under which the work is required to be performed, and the resulting injury. Under this test, if the injury can be seen to have followed as a natural incident of the work and to have been contemplated by a reasonable person familiar with the whole situation as a result of the exposure occasioned by the nature of the employment, then it arises ‘out of the employment. But it excludes an injury which cannot fairly be traced to the employment as a contributing proximate cause and which comes from a hazard to which the workman would have been equally exposed apart from the employment. The causative danger must be peculiar to the work and not common to the neighborhood. It must be incidental to the character of the business and not independent of the relation of master and servant. It need not have been foreseen or expected, but after the event it must appear to have had its origins in a risk connected with the employment, and to have flowed from that source as a rational consequence.” [Appleford v Kimmel, 297 Mich 8, 12-13; 296 NW 861 (1941), quoting McNicol’s Case, 215 Mass 497; 102 NE 697 (1916); see also Pearce v Michigan Home & Training School, 231 Mich 536, 537-538; 204 NW 699 (1925). 1]

By no stretch of the imagination can the injuries Michael Roe incurred in an automobile accident be considered “peculiar to the work” he performed at his family’s logging and sawmill business. Therefore, his injuries cannot be said to have arisen from his *274employment, although it may be fair to say that they arose from the more comprehensive “course” of his employment. See Konopka v Jackson Co Rd Comm, 270 Mich 174, 176-177; 258 NW 429 (1935).

Unlike the majority, I find the case of Francis v Scheper, 326 Mich 441; 40 NW2d 214 (1949), to be instructive. I believe that Francis is helpful not because the exclusionary language in the instant insurance contract tracks that of the exclusionary clause considered by the Supreme Court in Francis, which disclaimed liability for injuries incurred while the employee was “engaged in the employment... of the insured,” id. at 445, but because the Supreme Court stated the following, which should be the lodestar here:

The phrase, “engaged in the employment,” can fairly be construed as meaning, active in the work plaintiff was employed and paid to do. It was incumbent on defendant casualty company, who drafted the policy, in order to escape liability under the circumstances of this case, so to draft the policy as to make clear the extent of nonliability under the exclusion clause. [Id. at 447-448 (emphasis added).]

In this case, if, as it argues, plaintiff intended to disclaim liability for injuries covered by the worker’s compensation disability law, it could have and should have made that intent clear. At the very least, plaintiff should have used language that actually is identical or comparable to the language used in the worker’s compensation law. Because it did not do so, I would hold the insurer to the definition of the phrase “arising out of employment” that prior case law sets forth. Further, it should be of no consequence that, in a separate provision, the insurance policy “also excludes *275coverage for obligations of an insured or his insurer under any type of worker’s compensation, disability, or similar law.” After all, and as the majority correctly states, exclusionary clauses are to be read in isolation and independently of every other exclusion. Hawkeye-Security, supra. Lastly, I fail to see why this case has become a vehicle for advancing the policy considerations underlying the worker’s compensation disability law. This case involves an inartfully drafted private contract between an insurer and an insured; it does not concern the employer’s liability for disability payments. The majority states that the employer “should not be rewarded by having his no-fault insurer bear the costs of his decision to drop worker’s compensation insurance.” Ante at 265, n 2. I do not consider the employer’s attempt to hold the insurer to the terms of the insurance contract and gain the benefits for which the employer bargained and paid as a quest for an unjustified “reward.” Quite the contrary. The majority has rewarded the insurer’s ineptitude at the expense of the blue-collar logger who paid for coverage.

In light of these considerations, I would affirm.

The Supreme Court has found that Whetro v Awkerman, 383 Mich 235; 174 NW2d 783 (1970), a case in which that Court stated, “Michigan ... no longer requires the establishment of a proximately causal connection between the employment and the ipjury to entitle a claimant to compensation,” id. at 242, has no precedential effect. Dean v Chrysler Corp, 434 Mich 655, 660-661; 455 NW2d 699 (1990).