HENDERSON v STATE FARM FIRE AND CASUALTY COMPANY
Docket No. 110822
Supreme Court of Michigan
Decided July 8, 1999
460 Mich 348
Argued March 10, 1999 (Calendar No. 10)
In an opinion by Justice TAYLOR, joined by Chief Justice WEAVER, and Justices BRICKLEY, CORRIGAN, and YOUNG, the Supreme Court held:
A question of fact clеarly exists that can only be resolved by a trier of fact. Neither party is entitled to judgment as a matter of law under
1. The phrase “in the care of” is not ambiguous. It is a colloquial or idiomatic phrase that is peculiar to itself and readily understood as a phrase by speakers and readers of American English. Use of
2. In this case, both the trial court and the Court of Appeals erred. The trial court should not have granted summary disposition for State Farm when there was deposition testimony suggesting that Mysierowicz was “in the care of” Mrs. Twitchell at the time in question. The Court of Appeals likewise erred in concluding as a matter of law that Mysierowicz was “in the care of” Mrs. Twitchell at the time of the incident, given the evidence suggesting that she was not. Viewing аll the facts in the light most favorable to the plaintiff forecloses a ruling, as a matter of law, that Mysierowicz was not “in the care of” Mrs. Twitchell. Similarly, viewing all the facts in a light most favorable to State Farm forecloses a ruling as a matter of law that Mysierowicz was “in the care of” Mrs. Twitchell.
Reversed and remanded.
Justice KELLY, joined by Justice CAVANAGH, dissenting, stated that the phrase “in the care of” is ambiguous, and the contract provision should be construed against the defendant, as its drafter. The plaintiff is entitled to judgment as a matter of law under
Sarvis & Herrmann, P.C. (by J. Steven Sarvis), for plaintiff-appellee.
Draugelis & Ashton, L.L.P. (by Floyd C. Virant), for defendant-appellant.
Amici Curiae:
Dykema, Gossett, P.L.L.C. (by Lori M. Silsbury), for Insurance Information Association of Michigan.
TAYLOR, J. We granted leave to appeal in this case to review the Court of Appeals first impression construction of the phrase “in the care of” in a homeowner‘s insurance policy. The Court of Appeals determined that the phrase was ambiguous and that there was no genuine issue of material fact that Dawn Mysierowicz, plaintiff‘s assignor, came within the definition of an insured1 under defendant‘s insurance policy because she was “in the care of” the named insured. We find that the Court of Appeals erred in reaching this holding. Because we conclude that neither plaintiff nor defendant was entitled to summary disposition, we reverse and remand to the trial court for further proceedings.
BACKGROUND FACTS AND PROCEEDINGS BELOW
In early 1993, Mysierowicz’ mother was in the process of divorcing her father and was unable to providе a home for her. Bonnie Twitchell, the mother of Mysierowicz’ boyfriend Travis Twitchell, agreed that Mysierowicz could stay at the Twitchell home on a
The lawsuit was tendered to State Farm Fire and Casualty Company. State Farm assumed a defense for Travis Twitchell, but declined to provide a defense for Mysierowicz on the basis that she was not an “insured” within the meaning of the insurance policy. Plaintiff obtained a default judgment for $75,000 against Mysierowicz. In consideration of a promise by Henderson not to proceed against her personal assets, Mysierowicz assigned all rights, benefits and claims she had against State Farm to Henderson.
Henderson subsequently filed a complaint, as Mysierowicz’ assignee, against State Farm alleging that it had breached its obligations when it did not defend and provide coverage to Mysierowicz under the Twitchell homeowner‘s policy. Plaintiff alleged that he was entitled to a judgment of $75,000 against defendant. State Farm filed an answer denying liability on the basis that Mysierowicz was not an “insured” as the term was defined in the insurance policy.
After depositions of Mysierowicz and the Twitchells were taken, plaintiff filed a motion for summary disposition under
The trial court denied plaintiff‘s motion and granted defendant‘s motion. The court explained:
This Court finds that Dawn Mysierowicz was at the age of 18, [a] legal adult suffering from no physical or mental disabilities. She resided with the Twitchel[ls] and was not under the[ir] control, guidance, supervision, management or custody. As such it is clear to this Court that State Farm‘s policy of insurance did not provide coverage to her because she was not, “In the care of,” the insureds. Thus, this Court finds no genuine issue as to any material fact.
Plaintiff filed a claim of appeal. After consulting dictionary definitions of the word “care” and some out-of-state cases, the Court of Appeals determined that “care” had many meanings and thus the phrase “in the care of” was ambiguous because it could also reasonably be understood to have different meanings. The Court ultimately reversed the order granting summary disposition for defendant and further found that there was no genuine issue of material fact that Mysierowicz came within the definition of “insured” because she was “in the care of” Bonnie Twitchell, the named insured under defendant‘s homеowner‘s policy. 225 Mich App 703; 572 NW2d 216 (1997). We
STANDARD OF REVIEW
We review the grant or denial of a motion for summary disposition de novo. Groncki v Detroit Edison Co, 453 Mich 644, 649; 557 NW2d 289 (1996). Further, the construction and interpretation of an insurance contract is a question of law for a court to determine that this Court likewise reviews de novo. Morley v Automobile Club of Michigan, 458 Mich 459, 465; 581 NW2d 237 (1998). Whether contract language is ambiguous is also a question of law which we review de novo. Port Huron Ed Ass‘n v Port Huron Area School Dist, 452 Mich 309, 323; 550 NW2d 228 (1996). It is axiomatic that if a word or phrase is unambiguous and no reasonable person could differ with respect to application of the term or phrase to undisputed material facts, then the cоurt should grant summary disposition to the proper party pursuant to
PRINCIPLES UTILIZED IN INTERPRETING INSURANCE CONTRACTS
Initially, in reviewing an insurance policy dispute we must look to the language of the insurance policy and interpret the terms therein in accordance with Michigan‘s well-established principles of contract con-
First, an insurance contract must be enforced in accordance with its terms. Upjohn Co v New Hampshire Ins Co, 438 Mich 197, 207; 476 NW2d 392 (1991). A court must not hold an insurance company liable for a risk that it did not assume. Auto-Owners Ins Co v Churchman, 440 Mich 560, 567; 489 NW2d 431 (1992). Second, a court should not create ambiguity in an insurance policy where the terms of the contract are clear and precise. Id. Thus, the terms of a contract must be enforced as written where there is no ambiguity. Stine v Continental Casualty Co, 419 Mich 89, 114; 349 NW2d 127 (1984).
While we construe the contract in favor of the insured if an ambiguity is found, Auto Club Ins Ass‘n v DeLaGarza, 433 Mich 208, 214; 444 NW2d 803 (1989), this does not mean that the plain meaning of a word or phrase should be perverted, or that a word or phrase, the meaning of which is specific and well recognized, should be given some alien construction merely for the purpose of benefitting an insured. Upjohn Co, supra at 208, n 8. The fact that a policy does not define a relevant term does not render the policy ambiguous. Auto Club Group Ins Co v Marzonie, 447 Mich 624, 631; 527 NW2d 760 (1994). Rather, reviewing courts must interpret the terms of the contract in accordance with their commonly used meanings. Group Ins Co of Michigan v Czopek, 440 Mich 590, 596; 489 NW2d 444 (1992). Indeed, we do not ascribe ambiguity to words simply because dictionary publishers are obliged to define words differently to avoid possible plagiarism. Upjohn Co, supra at 209, n 8.
The Court of Appeals erred in concluding that the phrase “in the care of” was ambiguous. It is not.3 The Court of Appeals failed to recognize that this phrase is a colloquial or idiomatic phrase that is peculiar to itself and readily understood as a phrase by speakers and readers of our language.4
An example of a court recognizing that parsing phrases word by word may lead to an inaccurate interpretation is informative. In Nat‘l Security Archive v United States Dep‘t of Defense, 279 US App DC 308, 310; 880 F2d 1381 (1989), the United States Court of Appeals for the District of Columbia, in analyzing the phrase “educational institution,” stated:
It is often the case that words, used in conjunction, convey a meaning different from that which they would bear if interpreted separately.5
The tools available to a court in seeking to establish the meaning of such phrases include common understandings of which the court can take notice, as well as other sources such as specialized dictionaries8 or publications.9 Furthermore, it must not be forgotten that the goal of the court in this endeavor is to construe the phrase so as to preserve the parties’ agreement.
While the meaning of the phrase “in the care of” is not ambiguous,10 this is not to say that application of the phrase to a given set of facts will always be easy. This is the case here. While the facts are not in dispute here, reasonable pеrsons could disagree about the conclusions to which they lead. Said another way, individual factfinders could reasonably give different weight to the same facts, causing them to reach opposite conclusions regarding whether Mysierowicz was “in the care of” Mrs. Twitchell at the time of the stab-
THE GENERAL MEANING OF THE PHRASE
Given that the contract does not define the phrase “in the care of,” and because interpretation of an insurance contract is a question of law, it falls to us to provide some guidance regarding the meaning of the phrase. In our view, the following nonexclusive common-sense factors are relevant for the factfinder to consider in answering whеn someone is “in the care of” someone else:
- is there a legal responsibility to care for the person;
- is there some form of dependency;
- is there a supervisory or disciplinary responsibility;
- is the person providing the care providing substantial essential financial support;
- is the living arrangement temporary or permanent, including how long it has been in existence and is expected to continue;
- what is the age of the person alleged to be “in the care of” another (generally, the younger a person the more likely they are to be “in the care” of another);
- what is the physical or mental health status of the person alleged to be “in the care of” another (a person with health problems is more likely to be “in the care” of another); and
- is the person allegedly “in the care of” another gainfully employed (a person so employed is less likely to be truly dependent on another)?
The Court of Appeals relied on deposition testimony establishing the following in concluding there was no genuine issue of material fact that Mysierowicz was “in the care of” Bonnie Twitchell: (1) Mysierowicz paid no rent and contributed nothing in terms of the monthly mortgage payments, property taxes and utilities; (2) Mrs. Twitchell performed all household chores including meals when she was home; (3) Travis hoped that everyone regarded Mysierowicz as a member of the family and considered the three of them to be living as one family unit;11 (4) Mrs. Twitchell had assumed responsibility for Mysierowicz’ well-being;12 (5) Mysierowicz was primarily dependent on Mrs. Twitchell for food and shelter;13 and (6) Mrs. Twitchell provided virtually total14 financial support for Mysierowicz.
FACTS OF RECORD SUGGESTING MYSIEROWICZ WAS NOT “IN THE CARE” OF BONNIE TWITCHELL
The Court of Appeals reachеd its conclusion that there was no genuine issue of material fact that Mysierowicz was “in the care of” Mrs. Twitchell, while acknowledging: (1) Mysierowicz was eighteen years old; (2) the living arrangement was temporary;
Those factors cited by the Court of Appeals in support of its ruling, which are supported by the record, would allow a reasonable factfinder to conclude that Mysierowicz was “in the care of” Mrs. Twitchell at the time Henderson was stabbed. However, the eight other factors cited immediately above would similarly allow a reasonable factfinder to conclude that Mysierowicz was not “in the care of” Mrs. Twitchell at the time of the stabbing.15
In our judgment, both the trial court and the Court of Appeals erred. The trial court should not have granted summary disposition to defendant because there was depоsition testimony from which a reasonable person could conclude that Mysierowicz was “in the care of” Mrs. Twitchell at the time of the stabbing. The Court of Appeals likewise erred in concluding as a matter of law that Mysierowicz was “in the care of”
CONCLUSION
Each side cited deposition testimony supporting its position. Viewing all the facts in the light most favorable to plaintiff forecloses a ruling, as a matter of law, that Mysierowicz was not “in the care of” Mrs. Twitchell. Similarly, viewing all the facts in a light most favorable to defendant forecloses a ruling as a matter of law that Mysierowicz was “in thе care of” Mrs. Twitchell. We are satisfied that a question of fact clearly exists in this case that can only be resolved by a trier of fact. Neither party is entitled to judgment as a matter of law under
Reversed and remanded for further proceedings.
WEAVER, C.J., and BRICKLEY, CORRIGAN, and YOUNG, JJ., concurred with TAYLOR, J.
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
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 thе 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
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.
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
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 рhysical 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 Bоnnie Twitchell‘s policy.
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 оther 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
for 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, 118 NC App 92; 453 SE2d 542 (1995), 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-
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. Statе 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
It is undisputed that Bonnie Twitchell permitted Mysierowicz to stay in her home without requiring Mysierowicz to рay for either the maintenance of the home or substantial household expenses. Bonnie Twitchell, not Mysierowicz’ mother, provided for Mysierowicz during the approximately six months
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 dependеnt upon Bonnie Twitchell to provide her with food and shelter.9 Mysierowicz moved from her mother‘s home to Bonnie Twitchell‘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
By construing the phrase “in the care of” in fаvor 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
CAVANAGH, J., concurred with KELLY, J.
Notes
799 F2d 247 (CA 6, 1986).4. “insured” means you and, if residents of your household: a. your relatives; and b. any other person under the age of 21 who is in the care of a person described above. [Emphasis added.]
[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.
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.The trend in the insurance industry is toward drafting policies using “plain English.” As a result, many of the words and phrases that have created difficulty in interpretation and have required judicial intervention have been deleted or redefined, leaving the courts with new words and phrases to interpret.