HUNT v DRIELICK; HUBER v DRIELICK; LUCZAK v DRIELICK
Docket Nos. 146433, 146434, and 146435
Supreme Court of Michigan
Argued March 5, 2014. Decided June 26, 2014.
496 MICH 366
Marie Hunt, as personal representative of the estate of Eugene Hunt; Brandon Huber; and Thomas and Noreen Luczak brought separate actions in the Bay Circuit Court against Roger Drielick, the owner of Roger Drielick Trucking; Corey Drielick, a truck driver employed by Drielick Trucking; Great Lakes Carriers Corporation (GLC); Great Lakes Logistics & Services, Inc. (GLLS); Sargent Trucking, Inc.; and others following a multivehicle accident in which Eugene Hunt died and Noreen Luczak and Brandon Huber were seriously injured. Drielick Trucking had generally leased its semi-tractors to Sargent, but in October 1995, Rogеr orally terminated the lease agreement with Sargent and began doing business with Bill Bateson, one of the owners of GLC. In January 1996, Bateson had dispatched Corey to pick up and deliver a trailer of goods stored on GLC‘s property. Driving the semi-tractor without an attached trailer, Corey proceeded to GLC‘s truck yard, but less than two miles away from the yard, he was involved in the accident. The court, William J. Caprathe, J., consolidated the actions. Empire Fire and Marine Insurance Company, which insured Drielick Trucking‘s semi-tractors under a non-trucking-use policy (also called a bobtail policy), denied coverage and refused to defend under the policy‘s business-use and named-driver exclusions. Plaintiffs settled with Sargent and GLC and later entered into consent judgments with the Drielicks and Drielick Trucking. The parties also entered into an agreement in which they agreed that Roger would assign the rights under the Empire insurance policy to plaintiffs, Sargent, and GLC. Sargent and GLC agreed to help plaintiffs’ collection efforts from Empire in exchange for a portion of any proceeds received from Empire. Sargent and GLC filed writs of garnishment against Empire. In response, Empire moved to quash. The court denied Empire‘s motion and entered an order to execute the consent judgments, reasoning that the business-use exclusion did not apply and that the named-driver exclusion was invalid under
In a unanimous opinion by Justice CAVANAGH, the Supreme Court held:
A clause in an automobile insurance policy excluding coverage while a covered vehicle is used to carry property in any business excludes coverage with respect to a semi-tractor only when the accident occurred during the time that property was attached to the semi-tractor that was used in any business.
1. The parties agreed that the policy provided coverage at the time of the accident, but the business-use exclusion in the policy contained two separate clauses that potentially eliminated Empire‘s liability under the policy. Under the first clause, the policy did not apply while a covered vehicle was used to carry property in any business. Under the commonly used meanings of the terms in the clause, there would be no coverage if the accident occurred while the semi-tractor was engaged in conveying property from one place to another in any business, that is, while the semi-tractor was physically attached to property and the property was carried in a business. The Court of Appeals erred by placing too great an emphasis on the definition of the phrase “is used” in the clause while overlooking the import of the phrase “carry property.” The Court of Appeals interpretation of the first clause, which essentially defines the clause by whether a semi-tractor is driven in the business of carrying property, is too broad because in the commercial-trucking industry, semi-tractors are intended and designed precisely to carry property and, therefore, would аlways be used for the purpose of carrying property when used in any business. Because it was undisputed that at the time of the accident, the semi-tractor was driven without attached property, the first clause of the business-use exclusion did not preclude coverage in this case.
2. Under the second clause of the business-use exclusion, the policy did not apply while a covered vehicle was used in the business of anyone to whom the vehicle was leased or rented. To determine that issue, further findings of fact by the trial court were necessary. There was no written lease regarding the use of Drielick Trucking‘s semi-tractors, as required by federal regulations. While an oral arrangement or course of conduct might have existed between GLC and Drielick Trucking, however, whether that agreement constituted a lease for purposes of the policy was a threshold factual determination that had not yet been fully considered.
Reversed and remanded.
INSURANCE — MOTOR VEHICLES — EXCLUSIONS — SEMI-TRACTORS — USE WITHOUT SEMI-TRAILER (BOBTAIL USE).
A clause in an automobile insurance policy excluding coverage while a covered vehicle is used to carry property in any business excludes coverage with respect to a semi-tractor only when the accident occurred during the time that property was attached to the semi-tractor that was used
O‘Neill Wallace & Doyle PC (by David Carbajal and Robert Andrew Jordan) for Marie Hunt, Brandon J. Huber, Thomas and Noreen Luczak, and Great Lakes Carriers Corporation.
Hickey, Ciancialo, Fishman & Finn, PC (by Steven M. Hickey and Andrew L. Finn), for Sargent Trucking, Inc.
David S. Anderson and Nicolette S. Zachary for Empire Fire and Marine Insurance Company.
CAVANAGH, J. This appeal involves Empire Fire and Marine Insurance Company‘s obligations under an “Insurance for Non-Trucking Use” policy issued to Drielick Trucking. The policy contains a business-use exclusion, which includes two clauses that Empire argues preclude coverage in this case. The Court of Appeals agreed that the first сlause precludes coverage when the covered vehicle is not carrying property at the time of the accident, as in this case. Thus, the Court of Appeals expressly declined to address the second clause relating to leased covered vehicles. Hunt v Drielick, 298 Mich App 548, 553 n 2; 828 NW2d 441 (2012). We hold that the Court of Appeals erred for the reasons explained in this opinion and reverse the judgment of the Court of Appeals. Additionally, we remand this case to the trial court for further fact-finding to determine whether Drielick Trucking and Great Lakes Carriers Corporation (GLC) entered into a leasing agreement for the use of Drielick Trucking‘s semi-tractors as contemplated under the policy‘s clause related to a leased covered vehicle.
I. FACTS AND PROCEDURAL HISTORY
Roger Drielick owns Drielick Trucking, a commercial trucking company. It seems
On January 12, 1996, Bill Batesоn dispatched Corey Drielick, a truck driver employed by Drielick Trucking, to pick up and deliver a trailer of goods stored on GLC‘s property. While driving the semi-tractor without an attached trailer, Corey picked up his girlfriend and proceeded to GLC‘s truck yard.1 When he was less than two miles away from the yard, Corey was involved in a multivehicle accident. Eugene Hunt died, and Noreen Luczak and Brandon Huber were seriously injured.
Marie Hunt (on behalf of her deceased husband), Thomas and Noreen Luczak, and Huber filed suits against Corey and Roger Drielick, Drielick Trucking, Sargent, and GLC. Empirе, which insured Drielick Trucking‘s semi-tractors under a non-trucking-use, or bobtail, policy, denied coverage and refused to defend under the policy‘s business-use and named-driver exclusions. Plaintiffs settled with Sargent and GLC. Plaintiffs later entered into consent judgments with the Drielicks and Drielick Trucking. The parties also entered into an “Assignment, Trust, and Indemnification Agreement,” wherein they agreed that Roger Drielick would assign the rights under the insurance policy with Empire to plaintiffs, Sargent, and GLC. Sargent and GLC agreed to help plaintiffs’ collection efforts from Empire in exchange for a portion of any proceeds received from Empire.
Sargent and GLC filed writs of garnishment against Empire. In response, Empire filed a motion to quash, arguing again that the policy exclusions apply, among other things. The trial court denied Empire‘s motion and entered an order to execute the consent judgments, reasoning that the business-use exclusion does not apply and the named-driver exclusion is invalid under
On remand, the trial court concluded that, “even if there was a lease between Drielick and [GLC],” the business-use exclusion does not preclude coverage. On appeal, the Court of Appeals reversed, holding that the first clause of the business-use exclusion—precluding coverage if injury or damage occurred “while a covered ‘auto’ is used to carry property in any business”4—applies, despite the fact that the truck was not actually carrying property at the moment of the accident. Hunt, 298 Mich App at 555-557, citing Carriers Ins Co v Griffie, 357 F Supp 441, 442 (WD Pa, 1973).
Plaintiffs sоught leave to appeal, which this Court granted.5
II. STANDARD OF REVIEW
This case involves the interpretation and application of an insurance policy, which is a question of law reviewed de novo. Cohen v Auto Club Ins Ass‘n, 463 Mich 525, 528; 620 NW2d 840 (2001).
III. ANALYSIS
An insurance policy is similar to any other contractual agreement, and, thus, the court‘s role is to “determine what the agreement was and effectuate the intent of the parties.” Auto-Owners Ins Co v Churchman, 440 Mich 560, 566; 489 NW2d 431 (1992). “[W]e employ a two-part analysis” to determine the parties’ intent. Heniser v Frankenmuth Mut Ins Co, 449 Mich 155, 172; 534 NW2d 502 (1995). First, it must be determined whether “the policy provides coverage to the insured,” and, second, the court must “ascertain whеther that coverage is negated by an exclusion.” Id. (citation and quotation marks omitted). While “[i]t is the insured‘s burden to establish that his claim falls within the terms of the policy,” id., “[t]he insurer should bear the burden of proving an absence of coverage,” Fresard v Mich Millers Mut Ins Co, 414 Mich 686, 694; 327 NW2d 286 (1982) (opinion by FITZGERALD, C.J.). See, also, Ramon v Farm Bureau Ins Co, 184 Mich App 54, 61; 457 NW2d 90 (1990). Additionally, “[e]xclusionary clauses in insurance policies are strictly construed in favor of the insured.” Churchman, 440 Mich at 567. See, also, Group Ins Co of Mich v Czopek, 440 Mich 590, 597; 489 NW2d 444 (1992) (stating that “the exclusions to the general
A. THE POLICY
At issue is the proper interpretation of the bobtail insurance policy. ” ‘Bob-tail’ in trucking parlance is the operation of a tractor without an attached trailer,” and “[f]or insurance purposes, . . . it typically means coverage ‘only when the tractor is being used without a trailer or with an empty trailer, and is not being operated in the business of an authorized carrier.’ ” Prestige Cas Co v Mich Mut Ins Co, 99 F3d 1340, 1343 (CA 6, 1996) (citations omitted). The relevant portions of the bobtail insurance policy in this case state:
A. COVERAGE:
We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “prоperty damage” to which this insurance applies, caused by an “accident” and resulting from ownership, maintenance or use of a covered auto . . . .
* * *
B. EXCLUSIONS:
This insurance does not apply to any of the following:
* * *
13. BUSINESS USE:
“Bodily injury” or “property damage” while a covered “auto” is used to carry property in any business or while a covered “auto” is used in the business of anyone to whom the “auto” is leased or rented.
B. THE BUSINESS-USE EXCLUSION
Because the parties agree that the policy provided coverage at the time of the accident,6 we must decide whether the business-use exclusion applies to preclude coverage. Churchman, 440 Mich at 567 (stating that “coverage under a policy is lost if any exclusion within the policy applies to an insured‘s particular claims“). The business-use exclusion includes two separate clauses that could apply to a covered vehicle that may prevent Empire‘s liability under the policy. Specifically, the policy does not apply “[1] while a covered ‘auto’ is used to carry property in any business or [2] while a covered ‘auto’ is used in the business of anyone to whom the ‘auto’ is leased or rented.” Mich Pub Serv Co v City of Cheboygan, 324 Mich 309, 341; 37 NW2d 116 (1949) (stating that the word “or” is used as “used tо indicate a disunion, a separation, an alternative“). See, also, GC Timmis & Co v Guardian Alarm Co, 468 Mich 416, 421; 662 NW2d 710 (2003) (stating that words and clauses must be read in context of the preceding and following words and phrases).
1. THE FIRST CLAUSE
The business-use exclusion‘s first clause states that there is no coverage under the policy “while a covered ‘auto’ is used to carry property in any business.” Considering the commonly used meaning of the undefined terms of the clause to
More specifically, we conclude that coverage under the first clause is precludеd only during the time that a semi-tractor is physically attached to property and the property is carried in a business. “[W]e must enforce the language of this contract as it is written.” Czopek, 440 Mich 596-597. It follows that the parties intended the phrase “carry property” to mean just that—coverage can only be precluded during the time that the semi-tractor is used to actually transport property in a business. (Emphasis added.) See generally Prestige, 99 F3d at 1343 (explaining that bobtail policies typically provide coverage “when the tractor is being used with-out a trailer“) (emphasis added). Similarly, we must give meaning to all terms of the contract in order to effectuate the parties’ intent. Churchman, 440 Mich at 566. If the parties had intended to preclude coverage irrespective of whether property was actually attached to the semi-tractor at the time of the accident, there would have been no need to include the phrase “carry property” in the clause. The Court of Appeals’ analysis, which reached the opposite conclusion, highlights this point.
The Court of Appeals held that the property does not have to be attached to the semi-tractor at the time of the accident for the clause to apply; rather, the Court held that the clause applies “during an interval of time when the truck was employed for the purpose of carrying property in the trucking business.” Hunt, 298 Mich App at 556 (emphasis added). The Court of Appeals reasoned that its conclusion is compelled by the definition of the phrase “is used” in the clause. Hunt, 298 Mich App at 557 (explaining that to interpret the clause to require that the property must be attached in order for the clause to apply would “disregard the word ‘while’ or the phrаse ‘is used’ “).
However, the Court of Appeals erred by placing too great an emphasis on the definition of the phrase “is used,” while overlooking the import of the phrase “carry property.” In the commercial-trucking industry, semi-tractors are intended and designed precisely to carry property and, therefore, would always be used “for the purpose of carrying property,” id. at 556, when used in any business. Thus, under the Court of Appeals’ broad interpretation, the clause is essentially defined by whether a semi-tractor is driven in the business of carrying property. If the parties had intended that the clause‘s scope be defined solely by whether the semi-tractor was driven in a business, the policy could have simply stated that there is no coverage “while the covered auto is used in any business.”
In concluding that the first clause does not require the semi-tractor to actually be carrying property at the time of thе accident, the Court of Appeals relied on Griffie, 357 F Supp at 442, which interpreted a similar exclusionary clause under a bobtail insurance policy and stated, in dicta, that the clause applied to preclude coverage because “[t]he mere fact that no cargo was being handled at the particular moment when the accident occurred does not mean that the equipment was not ‘used to carry property in any business.’ ” Griffie reasoned that the equipment “was regularly so used to carry property in the carrier‘s business“; thus, “[i]f the intent had bеen to extend coverage except when the equipment was actually hauling a load, it would not have been difficult to express such an intention clearly.” Id. at 442.
Griffie, like the Court of Appeals in this case, conflated whether the policy‘s clause requires that a semi-tractor be physically carrying attached property at the time of the accident with the additional requirement that the property also be carried “in any business.” The question is not whether the semi-tractor itself was used in a business for the purpose of carrying property at the time of the accident; rather, the question is whether the accident occurred while the semi-tractor is actually carrying property in any business. Notably, decades after Griffie was decided, Conn Indemnity Co v Stringfellow, 956 F Supp 553, 557 (MD Pa, 1997), considered an exclusionary clause that was practically identical to the clause at issue and expressly disagreed with Griffie. Stringfellow explained that “if the covered vehicle or vehicles are not being used to carry property, the exclusion does not apply and cannot be relied upon to deny coverage.” Id. at 558 (emphasis added). Stringfellow also concluded that Griffie “significant[ly] al-ter[ed] . . . the actual language” of the exclusion. Id.7
In this case, it is undisputed that at the time of the accident, the semi-tractor was driven without attached property. Accordingly, in light of our conclusion that the business-use exclusion‘s first clause precludes coverage as long as the covered vehicle is carrying attached property in any business, we hold that the first clause does not preclude coverage in this case.
2. THE SECOND CLAUSE
Because we hold that the first clause of the business-use exclusion does not preclude coverage, it is necessary to
It is clear that Drielick Trucking and the Batesons did not enter a written lease regarding the use of Drielick Trucking‘s semi-tractors, contrary to federal regulations.8 Because Drielick Trucking‘s and the Batesons’ business relationship was in direct contravention of applicable federal regulations, our order granting leave to appeal focused primarily on the potential lease agreement and whеther the Court of Appeals should have, instead, resolved this case under the policy‘s leasing clause.
Apparently considering that clause, the trial court previously explained that the parties had agreed that there are no material issues of fact in dispute; however, that does not appear to be the case. Bill and Jamie Bateson operated Great Lakes Logistics & Services (GLLS), in addition to the carrier company, GLC. GLLS was a brokerage company that connected semi-tractor owners, such as Roger Drielick, with сarriers that are federally authorized to transport goods interstate, such as GLC. The parties dispute whether Bill Bateson dispatched Corey under GLC‘s authority or merely brokered the deal under GLLS‘s authority. Furthermore, the trial court considered the parties’ “verbal agreement and course of conduct,” concluding that the payment terms and the fact that Corey was not bound by a strict pick-up deadline meant that the business relationship was not triggered until Corey actually picked up for delivery the trailer of goods. Yet it remains uncertain whether the partiеs entered into a leasing agreement as contemplated by the terms of the insurance policy. Barring GLLS‘s alleged involvement, an oral arrangement or course of conduct might have existed between GLC and Drielick Trucking, but whether that agreement constituted a lease for the purposes of the policy is a threshold factual determination that has not yet been fully considered.
Accordingly, we direct the trial court on remand to consider the parties’ agreement to decide whether there was, in fact, a leasing agreement between Drielick Trucking and GLC as contemplated by the business-use exclusion‘s leasing clause. If so, the precise terms of that agreement must be determined, and the trial court should reconsider whether Corey was acting in furtherance of a particular term of the leasing agreement at the time of the accident.
IV. CONCLUSION
We hold that the first clause of the business-use exclusion precluding coverage “while a covered ‘auto’ is used to carry property in any business” is properly construed as excluding coverage with respect to a semi-tractor only when the aсcident
We do not retain jurisdiction.
YOUNG, C.J., and MARKMAN, KELLY, ZAHRA, MCCORMACK, and VIVIANO, JJ., concurred with CAVANAGH, J.
Notes
If authorized by the insured, automobile liability or motor vehicle liability coverage may be excluded when a vehicle is operated by a nаmed person. Such exclusion shall not be valid unless the following notice is on the face of the policy or the declaration page or certificate of the policy and on the certificate of insurance: Warning—when a named excluded person operates a vehicle all liability coverage is void no one is insured. Owners of the vehicle and others legally responsible for the acts of the named excluded person remain fully personally liable.
(1) whether a lease agreement is legally implied between Roger Drielick Trucking and Great Lakes Carriers Corporation under the facts of the case and under applicable federal regulation of the motor carrier industry; and (2) if so, whether the Court of Appeals erred in resolving this case on the basis of the first clause of the business use exclusion in the non-trucking (bobtail) policy issuеd by Empire Fire and Marine Insurance Company, instead of on the basis of the second clause, which excludes coverage for ” ‘[b]odily injury’ or ‘property damage’ . . . while a covered ‘auto’ is used in the business of anyone to whom the ‘auto’ is leased or rented.” [Hunt v Drielick, 495 Mich 857 (2013).]