High court rejects insurer's leave; PIP claim returns to trial court

By Kelly Caplan
BridgeTower Media Newswires
DETROIT—The Michigan Supreme Court has denied a defendant insurance company’s application for leave to appeal in a matter where it limited a quadriplegic plaintiff’s no-fault benefits under MCL 500.3163, claiming the plaintiff was no longer a resident of Michigan because she had gone to North Carolina where her husband was stationed at a military base.

The plaintiff, Kaitlin Hahn, was a passenger in a truck driven by her husband, Zachary Waller, who drove into a ditch after falling asleep at the wheel. As a result, the plaintiff suffered catastrophic injuries.
At the time of the accident, Waller was a Michigan resident and active-duty Marine who had obtained a North Carolina auto insurance policy from defendant Geico Indemnity Company (GEICO) while he was stationed at Camp Lejeune.

The high court asked the parties for supplemental briefing to address: (1) whether MCL 500.3012 permits the reformation of a non-Michigan insurance contract to comply with the requirements of the Michigan No-Fault Act; and (2) whether Farm Bureau v. Allstate Ins Co (1998) was correctly decided and, if not, whether it should be overruled.

In an order, the court denied the application, saying it was “not persuaded that the questions presented should be reviewed by this Court.”

The case, Hahn v. Geico Indemnity Company, now returns to the Oakland County Circuit Court for further proceedings.

Justice Stephen J. Markman concurred with the court’s denial of leave to appeal on the two questions but, in a partial dissent, he said he would grant leave to appeal on “the narrower and preserved question of whether the insurance policy issued by Geico purported to be a Michigan insurance policy.”

The Farm Bureau case, he explained, held that “the basic purpose of [MCL 500.3012] is to treat an insurance policy that an insurer issues purporting to be a Michigan policy that complies with Michigan law as such even if the written terms of the policy are inconsistent with Michigan law.”

Therefore, “if an insurance policy purports to be a Michigan policy but neither disclaims nor provides no-fault coverage in accordance with MCL 500.3101 et seq., a court should reform the policy by reading no-fault coverage into the policy,” he wrote.

Markman said it was “regrettable” that the high court passed up the opportunity to provide lower courts with some clarification and guidance.

“Thus, in my opinion, when the trial court embarks upon determining whether a policy ‘purports’ to be a Michigan policy, it must, in addition to assessing the insured’s residency, further consider: (1) the representations and interactions between the insured and the insurer when forming the policy, (2) the language of the policy, and (3) any other circumstance that reasonably bears upon the intentions of the insured and the insurer in purchasing and delivering the policy,” he stated. “Such an analysis would provide a more complete and accurate framework than does Farm Bureau and its progeny for determining whether the parties intended to form a Michigan insurance policy subject to reformation under MCL 500.3012.”

Nicholas Andrews, a partner with Liss, Seder, & Andrews in Bloomfield Hills, represented plaintiff Kaitlin Hahn. He sees this case as one that supports military families stationed away from home, and also as one that establishes that insurance companies can’t ignore their responsibilities and must remain aware of the true residency of the insured.

“I’m very happy with the result, and I think when we go down to the lower court we’ll be able to show what Justice Markman was talking about,” Andrews said.

He noted that, in a sense, the justice offered guidance for how the record could be developed.

“I think perhaps one of the things he was thinking was, if we’re going to answer this question it would be nice for the lower court to know what questions it needs to answer,” he explained. “In a way, had we not had Justice Markman’s concurrence it may have left the lower court with a little bit less guidance.”

Additionally, Andrews said that while he initially didn’t think the matter would have broad implications because of the unique factual circumstances, he realized its significance as it proceeded.

The plaintiff’s husband, being a member of the military, filled out a DD2058 form where he listed his legal residence as Grass Lake, and he’s only at Camp Lejeune because he’s on active duty.

“As he’s ordered from place to place — either somewhere else in the United States or overseas — his residence doesn’t become some new place every time he gets deployed. His residence remains Michigan,” Andrews said. “That’s what I thought was most important about this, especially since GEICO knew that. They knew what his residence was at the time they issued the policy.”

Finally, Andrews said the parties have been given a status conference notice in Oakland County Circuit Court. He’s hopeful that the matter will resolve in the plaintiff’s favor.

“Kaitlin is a remarkable person. Having a result after all these years that at least keeps it in the running for her to get the benefits that I think she’s entitled to is important on a personal level,” he said. “A lot of times, an insurance contract seems like it’s just words on a page that everybody has to abide by. But in my practice, they aren’t just words on a page. They are people and have become much more than just the contract.”

Counsel for GEICO, Daniel Saylor of Garan Lucow Miller PC in Detroit, could not provide comment before deadline.

After the 2015 accident, the plaintiff filed a claim with GEICO, which paid benefits to plaintiff as a nonresident spouse under MCL 500.3163.

Later, the plaintiff filed a complaint for declaratory relief seeking to determine whether GEICO, Automobile Club Insurance Association (ACIA), or both companies were liable to pay personal protection insurance benefits (PIP) under Michigan’s No-Fault Act, MCL 500.3101.

In her complaint, the plaintiff asserted she was domiciled with her father, who maintained a Michigan no-fault policy with ACIA.

The parties agreed to limited discovery to address only the issue of Waller’s and plaintiff’s residency.

Each of the defendants moved for summary disposition. GEICO argued that the plaintiff and Waller both resided in Michigan at the time of the accident and, therefore, benefits were not allowable under MCL 500.3163.

Meanwhile, ACIA argued that the North Carolina policy was subject to reformation under MCL 500.3012.

The Oakland County Circuit Court granted summary disposition to ACIA, but denied summary disposition to GEICO, holding that there was a genuine issue of material fact whether GEICO knew or should have known that Waller was a Michigan resident, and that the North Carolina policy was subject to reformation under MCL 500.3012.

GEICO appealed by leave granted, arguing that Farm Bureau was wrongly decided and should be overturned or, alternatively, that even if Farm Bureau were permitted to stand, there is no genuine issue of material fact.

The Court of Appeals affirmed in an unpublished opinion.


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