Henderson v. State Farm Fire & Casualty Co.

Kelly, J.

I respectfully dissent from the majority’s holding that the phrase “in the care of” is unambiguous. I dissent, also, from the remand for a jury determination of whether Dawn Mysierowicz was “in the care of” Mrs. Twitchell.

I would hold that the phrase is ambiguous, and as such, the contract provision should be construed against the defendant, as its drafter. Plaintiff is entitled to judgment as a matter of law under MCR 2.116(C)(10) because there was no genuine issue of *362material fact, given this Court’s de novo standard of review.

We review both the grant or denial of a motion for summary disposition and the interpretation of an insurance contract de novo. Groncki v Detroit Edison Co, 453 Mich 644, 649; 557 NW2d 289 (1996); Morley v Automobile Club of Michigan, 458 Mich 459, 465; 581 NW2d 237 (1998). Under Michigan law, general contract rules are followed when construing insurance contracts. Auto-Owners Ins Co v Harrington, 455 Mich 377; 565 NW2d 839 (1997). Whether the language is ambiguous is a question of law, which is likewise reviewed de novo. Port Huron Ed Ass’n v Port Huron Area School Dist, 452 Mich 309, 323; 550 NW2d 228 (1996). In construing insurance contracts, any ambiguities are strictly construed against the insurer, to maximize coverage. American Bumper & Mfg Co v Hartford Fire Ins Co, 452 Mich 440; 550 NW2d 475 (1996).

Concomitant to the rules of construction is the rule of reasonable expectation. It states that a court examines whether a policyholder was led to a reasonable expectation of coverage for the loss in question upon reading the contract. Vanguard Ins Co v Clarke, 438 Mich 463, 472; 475 NW2d 48 (1991). If so, coverage will be afforded. Fire Ins Exchange v Diehl, 450 Mich 678, 687; 545 NW2d 602 (1996).

In this case of first impression, the majority concludes that the phrase “in the care of” is unambiguous. The phrase is ambiguous, not because various dictionaries define the word “care” differently, but because both parties attached materially different meanings to the phrase. See Allstate Ins Co v Fick, 226 Mich App 197; 572 NW2d 265 (1997). See also *363Seaboard Surety Co v Bachinger, 313 Mich 174; 20 NW2d 854 (1945). I disagree with the majority’s statement in footnote 3. Ante at 355. In this case, the parties advocate completely distinct constructions of the phrase, “in the care of.” It is not a matter of ambiguity being asserted on the sole basis that each party offers a different definition for the puipose of supporting his desired outcome. If ambiguity could be grounded alone on differing definitions, then, as the majority suggests, any term would be ambiguous. What distinguishes this case is that, here, each party’s construction is equally plausible. When the language of a contract is subject to two or more reasonable inteipretations, then the contract is ambiguous. Petovello v Murray, 139 Mich App 639; 362 NW2d 857 (1984).

The words in an insurance policy are generally considered to be ambiguous when they may be reasonably understood in different ways. Fick, supra at 203. The defendant advocates a narrow construction, that is, the phrase should be construed to mean “legal care,” such as a nurse would render to a patient. The plaintiff construes the phrase much more broadly and would not limit its definition to such a narrow construction.

The majority states that “in the care of” was misinterpreted by the Court of Appeals because it was parsed, rather than being treated as an idiom or colloquialism. “In the care of” is not a colloquial or idiomatic phrase. It cannot be analogized to a phrase like “monkey business.” There is only one noun used in the expression “in the care of,” whereas, in “monkey business,” two nouns used together obliterate the meaning of each and form a whole new meaning.

*364When interpreting “in the care of,” the proper focus is on the parties’ intent. This is reviewed on an objective basis. See Allstate Ins Co v Keillor (After Remand), 450 Mich 412, 417; 537 NW2d 589 (1995). Materiality connotes objective reasonableness. See Rowe v Montgomery Ward & Co, Inc, 437 Mich 627; 473 NW2d 268 (1991). The cardinal rule in interpreting contracts is to effectuate the intent of the parties. Terry Barr Sales Agency, Inc v All-Lock Co, Inc, 96 F3d 174 (CA 6, 1996); Rasheed v Chrysler Corp, 445 Mich 109; 517 NW2d 19 (1994). Therefore, a reviewing court must necessarily examine the intent of the parties and the meanings attached by each on an objective basis when construing a contract term.

I agree, as the majority recites, that a term is not rendered ambiguous merely because its meaning varies with changed circumstances. Also, a term is not ambiguous because it is difficult to apply to certain factual situations. However, in either instance, the likelihood of ambiguity is greatly enhanced.

A fair reading of some insurance policy language leads one to understand that there is coverage under a particular set of circumstances. Another fair reading of the same language may lead another to understand that there is no coverage. Under those circumstances, the contract is ambiguous and should be construed against the drafter in favor of coverage. Michigan Mut Ins Co v Dowell, 204 Mich App 81; 514 NW2d 185 (1994), lv den 447 Mich 971 (1994).

In this case, defendant reads “in the care of” to connote only support, supervision, charge, custody, and responsibility. Courts in other jurisdictions have interpreted the phrase “in the care of” as used in homeowners’ insurance policies more broadly. Both *365plaintiff and defendant here have relied on State Farm Fire & Casualty Co v Odom,1 a case involving a State Farm policy containing language almost identical to the instant policy.2

In Odom, the Sixth Circuit Court of Appeals found that a child, who lived with her mother in the named insured’s house, but was unrelated to the insured, was “in the care of” the insured. The court relied on the fact that the insured provided the child with significant physical care, giving her housing, clothing, and food, and sharing in her care. Id. at 250.

While the insured was looking after her, the child was fatally injured. The mother sued the insured for wrongful death. The Sixth Circuit agreed with State Farm that (1) the child was an “insured” under the policy because she was “in the care of” the named insured, and (2) the policy excluded liability coverage for injuries suffered by an insured. Accordingly, State Farm was not obligated under the policy to provide coverage or defense arising out of the insured’s alleged liability for the child’s injuries and death. Id. at 249-250.

Notably, in Odom, State Farm sought to have the child deemed an “insured” under the policy because such a finding precluded coverage. In this case, State Farm seeks to prevent this Court from finding that Dawn Mysierowicz is an insured under Bonnie Twitchell’s policy.

*366The irony apparent here was commented on by contracts scholar, Allan Farnsworth: “[S]ometimes the drafter may have foreseen the [ambiguity] but deliberately refrained from raising it — the lawyer who ‘wakes these sleeping dogs’ by insisting that it be resolved may cost the client the bargain.” 2 Farnsworth, Contracts, § 7.8, p 243.

Also persuasive is the Louisiana Court of Appeals decision in United States Fidelity & Guaranty Co v Richardson, 486 So 2d 929, 930-931 (La App, 1986). There, the question whether the fourteen-year-old daughter of the insured’s girlfriend living in the insured’s home was “in the care of” the insured for purposes of coverage under the insured’s homeowner’s policy. The policy defined as insureds “residents of the named insured’s household, his spouse, the relatives of either, and any other person under the age of twenty-one in the care of any insured.” Id. at 931.

The court found that all three individuals lived together in the insured’s house under an unwritten agreement for sharing expenses. The insured paid the mortgage, bought his food, and took care of his vehicle. The insured’s girlfriend paid for utilities, telephone bills, her car, purchased food for her and her daughter, and occasionally contributed to the mortgage payment. Id. at 930-931. In concluding that the fourteen-year-old was “in the care of” the insured and was, therefore, an “insured” under the policy, the court observed:

It is clear that on the basis of the agreement between the parties, the payments made by James Richardson [the insured] did directly benefit Demetric Ayio. He was caring for the child by letting her stay in his home and by paying *367for both the maintenance of the home and his other agreed-upon expenses. Further, the bills and other expenses paid by James Richardson allowed Evelyn to devote more of her own income to Demetric’s needs. Even though he did not consider himself as having guardianship of Demetric, James was much more than a nameless, unseen benefactor. We conclude, therefore, that the trial court was correct in its finding that the child was “in the care of” James Richardson under the policy. [Id. at 931.]

Thus, the insured’s homeowner’s insurance company was required to provide insurance coverage for the girl and her mother when the girl injured her classmate. Id.

Similarly, in Nationwide Mut Ins Co v Anderson,3 a woman and her eighteen-year-old son lived with the named insured in his home. The son was sued for wrongful death when a shotgun he held discharged and killed Kevin Anderson. Subsequently, the plaintiff, who had issued a homeowner’s policy to the insured, sought a declaratory judgment to determine whether the son was an insured under the policy. Id. at 92. The policy defined “insured” as follows:

“insured” means you and residents of your household who are:
a. your relatives; or
b. other persons under the age of 21 and in the care of any person named above. [Id. at 93.]

The lower court granted summary judgment for the plaintiff. Id. The North Carolina Court of Appeals found that the son was an insured under the policy. The named insured, the mother, and the son had acted as a family for many years, the son even refer*368ring to the insured as his stepfather. Id. at 95. The son, although eighteen when the incident occurred, remained dependent on the insured and his mother for the basic necessities of life, including food, clothing, and shelter. Id. at 94-95. Also, it was irrelevant that the son provided for his own support to some degree. The policy language did not contain a distinction based on whether the person “in the care of” the insured could support himself. Id.

Giving the phrase “in the care of” a nonstrained, nontechnical reading, and in light of the reasoning in cases that construed nearly identical provisions, I find that Dawn Mysierowicz was “in the care of” defendant’s insured, Bonnie Twitchell. Therefore, she was an “insured” under defendant’s homeowner’s policy.

In accordance with established precedent, I would construe the phrase against defendant and in favor of plaintiff, as Mysierowicz’ assignee. State Farm Mut Automobile Ins Co v Enterprise Leasing Co, 452 Mich 25; 549 NW2d 345 (1996). The phrase “under the care of” has been interpreted to mean “guidance, supervision, control, management or custody of another.” Bruno v Hartford Accident & Indemnity Co, 337 So 2d 241 (La App, 1976). However, Odom, Richardson, and Anderson support plaintiff’s claim that the phrase is subject to broader meanings that include the provision of support to another.4

*369The majority opinion correctly states the applicable construction guidelines and this Court’s standard of review. However, it ignores its proper role in construing the phrase in question and erroneously delegates that responsibility to the jury.5 It lists eight “nonexclusive common-sense factors”6 for which it provides no authority.7 It then lists the undisputed facts and orders the jury to arrive at a legal conclusion.

It is undisputed that Bonnie Twitchell permitted Mysierowicz to stay in her home without requiring Mysierowicz to pay for either the maintenance of the home or substantial household expenses. Bonnie Twitchell, not Mysierowicz’ mother, provided for Mysierowicz during the approximately six months *370that Mysierowicz spent in the Twitchell home. As in Richardson, supra, Bonnie Twitchell took care of nearly all household expenses, enabling Mysierowicz to spend more of her income on herself. Moreover, unlike a “nameless benefactor,” Bonnie Twitchell provided Dawn Mysierowicz with food, shelter, and supplies without exercising control over her. Arguably, however, by doing so, she assumed responsibility for Mysierowicz’ well-being in a larger measure.

As in Anderson, Mysierowicz provided her own support by purchasing her own clothing and personal articles and maintaining her vehicle.8 However, as in Anderson, supra, she was primarily dependent upon Bonnie Twitchell to provide her with food and shelter.9 Mysierowicz moved from her mother’s home to Bonnie Twltchell’s home and remained with the Twitchells when they moved into a hotel after their house was damaged by fire. She then returned to her mother’s home when she left the Twitchells. She never lived by herself during this period. While residing in the Twitchell home, Mysierowicz was considered a member of the family, as in Odom, supra. Although not dispositive, this fact provides further support for the conclusion that she was “in the care of” Bonnie Twitchell.

Finally, as in Anderson, supra, Mysierowicz’ age did not preclude her from being dependent on Bonnie *371Twitchell for the basic necessities, even though she provided some of her own support.

By construing the phrase “in the care of” in favor of coverage and applying the law to the essentially uncontested material facts, I find that Dawn Mysierowicz came within the definition of an “insured” because she was “in the care of” Bonnie Twitchell, the named insured under defendant’s homeowner’s policy.

In conclusion, what the majority denominates an issue of fact is actually an issue of law that only a court should decide. Given that no genuine issue of material fact exists and given our rules of contract construction, plaintiff was entitled to judgment as a matter of law under MCR 2.116(C)(10). Therefore, I would affirm the judgment of the Court of Appeals.

Cavanagh, J., concurred with Kelly, J.

799 F2d 247 (CA 6, 1986).

In Odom, supra at 249, the insurance contract defined the term “insured” as “you and the following residents of your household: a. your relatives; b. any other person under the age of 21 who is in the care of any person named above.”

118 NC App 92; 453 SE2d 542 (1995).

The Sixth Circuit Court of Appeals in Odom, supra at 250, found that “in the care of” was unambiguous in the context of that case. However, it said that the phrase does not mean only “legal care” as opposed to “legal and physical care,” where the named insured furnishes housing, clothing, food, and security for a household resident. In so concluding, Odom indicates that the phrase “in the care of” would be ambiguous if the question were whether the phrase meant “legal care” versus “physical care.” Id.

Assuming that the majority correctly concluded that the phrase was unambiguous, its construction and legal conclusion from uncontested facts was a question of law for the court to decide. Vigil v Badger Mut Ins Co, 363 Mich 380; 109 NW2d 793 (1961); State Farm Fire & Casualty Co v Couvier, 227 Mich App 271; 575 NW2d 331 (1998). See also Moll v Abbott Laboratories, 444 Mich 1, 27-28; 506 NW2d 816 (1993).

[A] court . . . does not have to remain idle in the presence of undisputed, uncontroverted facts. In this situation, the only question remaining is what legal conclusion can be drawn from the facts. This question is to be decided as a matter of law by the trial judge.

Ante at 358.

The majority states that the “contract does not define the phrase ‘in the care of.’ ” Id. It also concludes that the phrase is unambiguous. Id. at 355. Despite these assertions, the majority, in effect, provides the jury with a list of possible definitions from which to choose. In essence, it permits the jury to choose a meaning or interpretation without regard to the intent of either party. Basic contract law requires courts to honor the intent of the parties. Rasheed v Chrysler Corp, supra. Furthermore, the majority compiles extrinsic factors to help the jury in construing the contract. Courts cannot supply material provisions that are absent from a clear and unambiguous writing. Purlo Corp v 3925 Woodward Ave, 341 Mich 483; 67 NW2d 684 (1955); Hy King Associates, Inc v Versatech Mfg Industries, Inc, 826 F Supp 231 (ED Mich, 1993). If the majority were correct in concluding that the phrase is unambiguous, then there would be no need for a jury to deal with it.

Travis Twitchell, son of Bonnie Twitchell testified that he maintained Dawn’s car by performing oil changes, tune-ups, and other activities.

While ordinary house guests are arguably provided with food and shelter, Dawn was different in that she was not free to return to another home. Bonnie Twitchell’s home was the only one Dawn had during the period in question.