McGrath v. Allstate Insurance
290 Mich. App. 434
| Mich. Ct. App. | 2010Background
- Mary McGrath owned and insured the Gaylord, Michigan home with Allstate; a keep-full propane service with Gaylord Gas could affect heating; McGrath later moved to Farmington Hills due to dementia/alzheimer’s; Cathy McGrath notified Allstate of a billing address change but did not notify occupancy changes; the Gaylord home became unoccupied and its winter damage (frozen pipes) occurred after propane ran out; Allstate denied coverage and plaintiff sued for breach of contract while also pursuing a negligence claim against Gaylord Gas; the trial court denied Allstate’s summary disposition motions, a jury awarded $100,000 to plaintiff, and post-judgment relief was denied; the appellate court reverses on summary disposition grounds and vacates the jury verdict
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy covers loss when insured did not reside there | McGrath resided there historically; occupancy not required for all periods | Reside at the dwelling at the time of loss; unoccupied means no coverage | Policy does not cover; she did not reside at the Gaylord property at loss |
| Whether change in occupancy notification was adequate | Billing address change should have sufficed to update occupancy | Policy requires notice of any change in title, use or occupancy; billing change insufficient | Billing-change notice did not put Allstate on notice of occupancy change; denial proper |
| Whether strict interpretation of 'where you reside' is ambiguous | Phrase describes property, not a continuous occupancy condition | 'Where you reside' requires actual residence at loss; unambiguous | Court adopts strict interpretation; 'where you reside' requires residence at loss |
| Whether summary disposition was proper given policy terms | Evidence creates factual questions about occupancy and notice | No genuine issue; undisputed lack of residing and notice | Trial court erred; Allstate entitled to summary disposition |
Key Cases Cited
- Heniser v Frankenmuth Mut Ins Co, 449 Mich 155, 449 Mich 155 (1995) (reside meaning requires actual residence; rejects sophisticated readings)
- Reid v Hardware Mut Ins Co of the Carolinas, Inc, 252 SC 339, 252 S.C. 339 (1969) (occupancy description not a guarantee of ongoing occupation)
- Luster Estate v Allstate Ins Co, 598 F3d 903, 598 F.3d 903 (7th Cir. 2010) (billing-address change does not establish occupancy notice)
- Citizens Ins Co v Pro-Seal Serv Group, Inc, 477 Mich 75, 477 Mich 75 (2007) (contract interpretation: read entire policy; ambiguous terms construed against insurer)
- Klapp v United Ins Group Agency, Inc, 468 Mich 459, 468 Mich 459 (2003) (construction of insurance contracts; words must be given plain meaning)