Song Yu v. Farm Bureau General Insurance Company of Michigan
331570
Mich. Ct. App.Apr 11, 2017Background
- Plaintiffs owned a Forest Drive house insured by Farm Bureau; insurer issued a cancellation notice on Dec 16, 2013, effective Jan 18, 2014, stating the dwelling “has been unoccupied for more than 60 days or is vacant.”
- Farm Bureau issued a prorated refund check on Jan 1, 2014, returning most of the premium through the cancellation date.
- Plaintiffs reported water damage occurring Dec 22–25, 2013; Farm Bureau acknowledged a claim on Feb 3, 2014, and requested a sworn proof of loss.
- In a sworn proof of loss dated Apr 2, 2014, plaintiffs stated they moved to Lansing in 2010 and used the Forest Drive home for leisure time, i.e., it was not their primary residence.
- On Jun 20, 2014, Farm Bureau denied the Dec 2013 claim, relying on the policy’s definition of “residence premises” and vacancy/unoccupancy exclusions.
- The dissent (Judge Servitto) would affirm denial, finding the policy unambiguous and equitable estoppel inapplicable given the facts (adjuster’s statements, refund, and plaintiffs’ sworn admission).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the damaged home qualified as the policy’s “residence premises” | Yu: home remained a covered residence despite living in Lansing; insurer’s prior handling implied coverage | Farm Bureau: “reside” means live permanently/extended period; plaintiffs moved in 2010 so Forest Drive was not residence premises | Court (dissent): Policy unambiguous; plaintiffs’ sworn statement that they moved in 2010 means no residence-premises coverage |
| Whether vacancy/unoccupancy exclusions preclude coverage | Yu: insurer’s prior conduct (payment and communications) estops denial | Farm Bureau: policy language excludes losses to dwellings unoccupied >60 days or vacant; exclusion applies | Court (dissent): Exclusion applies; denial proper under clear policy terms |
| Whether equitable estoppel prevents insurer from denying coverage | Yu: adjuster’s investigation and past payment induced belief policy remained effective | Farm Bureau: adjuster’s comments and past payment did not induce reasonable belief; plaintiffs later admitted nonresidence | Court (dissent): Equitable estoppel not shown—no justifiable reliance or prejudice to bar denial |
| Effect of insurer’s prorated premium refund and timing of denial | Yu: refund and insurer’s actions created ambiguity/estoppel | Farm Bureau: refund reflected cancellation; denial followed plaintiffs’ sworn admission and appropriate underwriting conclusion | Court (dissent): Refund and prior payment do not override clear policy terms; insurer acted consistently once facts were established |
Key Cases Cited
- McKusick v. Travelers Indemnity Co., 246 Mich. App. 329 (2001) (policy must be read as a whole to effectuate parties’ intent)
- Hastings Mut. Ins. Co. v. Safety King, Inc., 286 Mich. App. 287 (2009) (policy terms given plain and ordinary meaning)
- Raska v. Farm Bureau Mut. Ins. Co. of Mich., 412 Mich. 355 (1982) (contract ambiguous when words reasonably understood in different ways)
- Hellebuyck v. Farm Bureau Gen. Ins. Co. of Mich., 262 Mich. App. 250 (2004) (policy that fairly admits of only one interpretation is not ambiguous)
- Vushaj v. Farm Bureau Gen. Ins. Co. of Mich., 284 Mich. App. 513 (2009) (absence of a definition in a policy does not render a term ambiguous)
- Morales v. Auto-Owners Ins. Co., 458 Mich. 288 (1998) (elements for equitable estoppel in insurance context: acts or representations, justifiable reliance, and prejudice)
- AFSCME v. Bank One, 267 Mich. App. 281 (2005) (equitable estoppel elements explained)