STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY V ROE (ON REHEARING)
Docket No. 186031
Court of Appeals of Michigan
Submitted June 3, 1997. Decided October 31, 1997.
226 MICH APP 258
On rehearing, the Court of Appeals held:
1. The trial court erred in ruling that the policy exclusion did not apply. “Arising out of his or her employment,” as used in the insurance policy exclusion, should be construed in the same way “arising out of and in the course of employment,” as used in worker‘s compensation law, is construed. Under worker‘s compensation law, an accident arising out of transportation provided by an employer is an accident that arises out of and in the course of employment. Thus, because Michael Roe‘s injury arose out of transportation provided by his employer, the injury arose out of his employment and coverage under the State Farm policy is excluded.
3. A provision in the State Farm policy stating that “[y]ou and your spouse are covered for” injury to “A FELLOW EMPLOYEE WHILE ON THE JOB AND ARISING FROM THE MAINTENANCE OR USE OF A VEHICLE BY ANOTHER EMPLOYEE IN THE EMPLOYER‘S BUSINESS” does not apply because Michael Roe‘s injuries were not caused by another employee, but by his employer.
4. The exception to the exclusion for household employees not covered or required to be covered for worker‘s compensation does not apply because Michael Roe was not a household employee and was required to be covered for worker‘s compensation.
5. No merit lies in the claim that coverage under the policy applies through Maureеn Roe under the automobile owner‘s liability statute,
6. A worker‘s compensation magistrate‘s decision to deny Michael Roe‘s claim for worker‘s compensation benefits on the ground that his injuries did not arise out of and in the course of employment is not binding on the Court of Appeals.
Reversed and remanded for entry of a judgment for State Farm.
MICHAEL J. KELLY, J., dissenting, stated that “arising out of his or her employment” should not be construed as being synonymous with “arising out of and in the course of employment” because the latter has two elements that are distinct and for which separate tests might be required. The omission of “in the course of employment” in the State Farm policy shows that State Farm intended only to disclaim liability for injuries arising directly from the circumstances and conditions of employment. Here, it cannot be said that Michael Roe‘s injuries in an automobile accident were peculiar to the work he performed in his family‘s logging and sawmill business. If it was State Farm‘s intent to disclaim liability for injuries covered by worker‘s compensation, it could have and should have made that clear.
INSURANCE — AUTOMOBILES — LIABILITY — PERSONAL INJURY — EXCLUSION FOR INJURY TO EMPLOYEES — EMPLOYER-PROVIDED TRANSPORTATION.
Smith & Brooker, P.C. (by Francis B. Drinan), for State Farm Mutual Automobile Insurance Company.
Patterson, Gruber, Kennedy, Gill & Milster (by Brian M. Kennedy), for Michael D. Roe.
Thomas E. Bock, for Wilbur D. Roe and Maureen L. Roe.
ON REHEARING
Before: CORRIGAN, C.J., and MICHAEL J. KELLY and HOEKSTRA, JJ.
HOEKSTRA, J. Plaintiff appeals as of right an order granting judgment in favor of defendants in this action for a declaratory judgment. Plaintiff claimеd that an exclusion in the automobile policy issued to defendants Wilbur and Maureen Roe relieved it of the duty to defend the Roes and pay damages on their behalf or indemnify them for the injuries suffered by their son, Michael Roe, in a vehicular accident. After entering an order reversing the trial court‘s order and opinion and remanding the case for entry of a judgment in plaintiff‘s favor, this Court granted a rehearing. We again reverse and remand for entry of a judgment in plaintiff‘s favor.
A
Wilbur operated a logging and sawmill business, W. D. Roe Lumber Company, a sole proprietorship, which involved cutting and milling lumbеr at various
Wilbur paid his employees at varying hourly rates, but did not provide any benefits, although he provided transportation to and from the job sites for employees who wanted to ride with him. The employees did not pay for the gasoline used in transporting them. For several weeks before the accident, Wilbur and four employees, including Michael, worked at a job site that involved a drive of approximаtely one hour. As was his usual custom, Wilbur provided optional transportation to and from this job site to Michael and others.
On the day of the accident, Wilbur drove himself and his employees, including Michael, to the work site in an Oldsmobile that was titled in the names of both Wilbur and Maureen, insured by plaintiff under a no-fault policy, and primarily used by Maureen. While driving home from work, Wilbur was involved in a collision with another vehicle, causing extensive injuries to Michael. Plaintiff then paid statutory personal protection insurance benefits to Michael pursuant to the priorities set forth in
Eventually, Michael sued Wilbur and Mаureen, claiming that his injuries were caused by negligent driving. In response, plaintiff brought this declaratory judgment action, claiming that the following exclusion in the liability section of the insurance policy relieved it of the duty to defend Wilbur and Maureen and pay damages on their behalf for the injuries suffered by Michael as a result of this accident:
THERE IS NO COVERAGE UNDER COVERAGE A:
1. FOR ANY BODILY INJURY TO:
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B. ANY EMPLOYEE OF AN INSURED arising out of his or her EMPLOYMENT. This does not apply to a household employee who is not covered or required to be covered under any worker‘s compensation insurance.
Subsequently, pursuant to a consent judgment, the parties agreed that Michаel would have a judgment against Wilbur and Maureen, jointly and severally, in the amount of $100,000. The parties also agreed that Michael would limit the recovery of this judgment to the proceeds of plaintiff‘s automobile liability policy issued to his parents, and plaintiff agreed to pay Michael the amount of $100,000 in the event of an adverse decision in its declaratory judgment action. Following a bench trial, the trial court found that the injury did not occur within the scope of Michael‘s employment and that plaintiff had a duty to indemnify Wilbur and Maureen. Thereafter, the trial court denied plaintiff‘s motion fоr judgment notwithstanding the verdict or a new trial.
B
On appeal, plaintiff argues that the trial court erred in ruling that Michael‘s injuries did not arise out of his employment, and, therefore, that the policy exclusion did not apply. An insurance policy is much the same as any other contract; it is an agreement between the parties. Auto-Owners Ins Co v Churchman, 440 Mich 560, 566; 489 NW2d 431 (1992). When presented with a dispute, a court must determine what the parties’ agreement is and enforce it. Fragner v American Community Mut Ins Co, 199 Mich App 537, 542-543;
Plaintiff argues that the “arising out of his or her employment” language of the exclusion should be construed in the same way as worker‘s compensation cases interpreting similar language found in the Worker‘s Disability Compensation Act.
(1) An employee, who receives a personal injury arising out of and in the course of employment by an employer who is subject to this act at the time of the injury, shall be paid compensation as provided in this act . . . .
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(3) An employee going to or from his or her work, while on the premises where his work is to be performed, and within a reasonable time before and after his or her working hours, is presumed to be in the course of his or her employment. [Emphasis provided.]
In support of its position, plaintiff primarily relies upon Konopka v Jackson Co Rd Comm, 270 Mich 174; 258 NW 429 (1935), a worker‘s compensation case in which the Supreme Court held that the accident resulting in the death of a highway commission employee while he was being transported from his place of work to his home in a truck belonging to another employee arose out of and in the course of such employment and was compensable. In determin-
We agree with plaintiff that the exclusionary language “arising out of his or her employment” should
Second, we believe that construing the exclusionary language in accordance with worker‘s compensation case law supports the policy considerations underlying the worker‘s compensation act. Generally, the right to recover benefits for personal injury or occupational disease under the worker‘s compensation act is the exclusive remedy of an employee against an employer who has complied with the act.
In light of the foregoing, we conclude that the exclusionary clause barred coverage for Michael‘s injuries because they arose out of his employment. Similar to Konopka, it was customary for Wilbur to furnish employee transportation to and from the job site, even though employees could provide their own transportation. As in Konopka, the manner of going to and from the jоb site was not compulsory, but it was “the general method” that Wilbur would provide the employees with transportation. Further, similar to Konopka, the transportation arrangement was for the “mutual advantage” of employer and employees because Wilbur was assured a full crew of workers each day to assist him in conducting the sawmilling operations and the employees received free transportation. Moreover, unlike in Konopka, the transportation here was provided in a vehicle owned and operated by the employer, and not merely another employee. Thus, although transportation was not expressly made part of the employment contract and employees were not paid for their travel time, transportation became “an essential incident of the employment as to be a part of it.” Id. Given that there was “an expressed or implied undertaking by the employer to provide the transportation” in light of all the attendant circumstances, we believe that the exclusion applied because the injuries that Michael
Contrary to defendants’ claim, this case is not controlled by Francis v Scheper, 326 Mich 441; 40 NW2d 214 (1949). In Francis, our Supreme Court concluded that a phrase in an insurance policy excluding coverage for employees while “engaged in the employment . . . of the insured” did not apply because the employee who was injured while being transported home from work had ceased the day‘s рroductive work for which he was being paid. We believe the exclusion in this case, excepting coverage for injury “arising out of his or her employment” to be broader than the phrase “while engaged in the employment of the insured,” used in Francis. As noted by our Supreme Court in Nemeth v Michigan Building Components, 390 Mich 734, 736; 213 NW2d 144 (1973), “the concept of course of employment is more comprehensive than the assigned work.” Similarly, we find the phrase “arising out of his or her employment” refers to a course of employment that is more expansive than merely the assigned work and more comprehensive than “engaged in the employment of the insured,” which under Francis refers only to the performance of assigned work that an employee is paid to do.
Defendants further contend that the exclusion is contrary to public policy because it is broader than that permitted by chapter five of the Vehicle Code,
Michael also argues that even if his injuries arose out of his emрloyment, the exclusion in § 1(a) of the policy excepts Wilbur and Maureen from any course or scope of employment exclusion by providing:
A FELLOW EMPLOYEE WHILE ON THE JOB AND ARISING FROM THE MAINTENANCE OR USE OF A VEHICLE BY ANOTHER EMPLOYEE IN THE EMPLOYER‘S BUSINESS. You and your spouse are covered for such injury to a fellow employee.
Here, Wilbur and Maureen are the referenced “you and your spouse,” and what they would be covered for are, among other things, vehicular injuries to
Michael further asserts that even if his injuries arose out of his employment, the sentence in the exclusion stating that “[t]his [exclusion] does not apply to a household employee who is not covered or required to be covered under any worker‘s compensation insurance” defeats the claimed exclusion because he was a member of the same household and was not covered under worker‘s compensation insurance. However, this exception to the exclusion is not applicable because Michael was not а household employee and was required to be covered under worker‘s compensation insurance.
There is likewise no merit to Michael‘s claim that the exclusion at issue does not apply to Maureen on the ground that she was liable to her son under the owners liability statute,
Likewise, there is no merit to Michael‘s claim that even if coverage did not apply to Wilbur, it would still apply to Maureen because plaintiff had a separate and distinct duty to cover each of the insureds individually. As plaintiff points out, defendants’ reliance on Shelby Mut Ins Co v United States Fire Ins Co, 12 Mich App 145; 162 NW2d 676 (1968), is misplaced
Finally, we note that even though the worker‘s disability compensation magistrate denied Michael‘s claim for compensation, finding that his injuries did not arise out of and in the course of his employment under § 301 of the worker‘s compensation act, this Court is not bound by the magistrate‘s ruling in determining whether the exclusionary clause in plaintiff‘s insurance policy is applicable in this action.3 See Integral Ins Co v Maersk Container Service Co, Inc, 206 Mich App 325, 330; 520 NW2d 656 (1994).
Reversed and remanded for entry of judgment for plaintiff.
CORRIGAN, C.J., concurred.
MICHAEL J. KELLY, J. (dissenting). Because I believe that the trial court correctly interpreted the insurance contract, I respectfully dissent.
Ordinarily, this Court reviews a trial court‘s factual findings for clear error. A finding is clearly erroneous when, although therе is evidence to support it, the reviewing court on the entire record is left with a def-
Plaintiff has successfully convinced the majority that the following contractual exclusion shields it from its obligations to defendants, primarily “because the exclusionary language . . . is identical to that used in § 301 of the worker‘s compensation act“:
THERE IS NO COVERAGE UNDER COVERAGE A:
1. FOR ANY BODILY INJURY TO:
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B. ANY EMPLOYEE OF AN INSURED ARISING OUT OF HIS OR HER EMPLOYMENT. This does not apply to a household employee who is not covered or required to be covered under any worker‘s compensation insurance.
When interpreting a contract of insurance, we construe exclusionary clauses strictly against the insurer. Fire Ins Exchange v Diehl, 450 Mich 678, 687; 545 NW2d 602 (1996). Moreover, we interpret exclusionary clauses in isolation, reading them with the insuring agreement and independеntly of every other exclusion. Hawkeye-Security Ins Co v Vector Const Co, 185 Mich App 369, 384; 460 NW2d 329 (1990).
The majority interprets the exclusionary language in a manner consistent with the worker‘s compensation act because it finds that the exclusion contains language “identical” to the worker‘s compensation law. This is plainly not so. The worker‘s compensation act covers injuries “arising out of and in the course of employment,”
“It is sufficient to say that an injury is received ‘in the course of’ the employment when it comes while the workman is doing the duty which he is employed to perform. It ‘arises out of’ the employment, when there is apparent to the rational mind, upon considerаtion of all the circumstances, a causal connection between the conditions under which the work is required to be performed, and the resulting injury. Under this test, if the injury can be seen to have followed as a natural incident of the work and to have been contemplated by a reasonable person familiar with the whole situation as a result of the exposure occasioned by the nature of the employment, then it arises ‘out of’ the employment. But it excludes an injury which cannot fairly be traced to the employment as a contributing proximate cause and which comes from a hazard to which the workman would have been equally exposed apart from the employment. The causative danger must be peculiar to the work and not common to the neighborhood. It must be incidental to the character of the business and not independent of the relation of master and servant. It need not have been foreseen or expected, but after the event it must appear to have had its origins in a risk connected with the employment, and to have flowed from that source as a rational consequence.” [Appleford v Kimmel, 297 Mich 8, 12-13; 296 NW 861 (1941), quoting McNicol‘s Case, 215 Mass 497; 102 NE 697 (1916); see also Pearce v Michigan Home & Training School, 231 Mich 536, 537-538; 204 NW 699 (1925).1]
By no stretch of the imagination can the injuries Michael Roe incurred in an automobile accident be considered “peculiar to the work” he performed at his family‘s logging and sawmill business. Therefore, his injuries cannot be said to have arisen from his
Unlike the majority, I find the case of Francis v Scheper, 326 Mich 441; 40 NW2d 214 (1949), to be instructive. I believe that Francis is helpful not because the exclusionary language in the instant insurance contract tracks that of the exclusionary clause considered by the Supreme Court in Francis, which disclaimed liability for injuries incurred while the employеe was “engaged in the employment . . . of the insured,” id. at 445, but because the Supreme Court stated the following, which should be the lodestar here:
The phrase, “engaged in the employment,” can fairly be construed as meaning, active in the work plaintiff was employed and paid to do. It was incumbent on defendant casualty company, who drafted the policy, in order to escape liability under the circumstances of this case, so to draft the policy as to make clear the extent of nonliability under the exclusion clause. [Id. at 447-448 (emphasis added).]
In this case, if, as it argues, plaintiff intended to disclаim liability for injuries covered by the worker‘s compensation disability law, it could have and should have made that intent clear. At the very least, plaintiff should have used language that actually is identical or comparable to the language used in the worker‘s compensation law. Because it did not do so, I would hold the insurer to the definition of the phrase “arising out of employment” that prior case law sets forth. Further, it should be of no consequence that, in a separate provision, the insurance policy “also excludes
In light of these considerations, I would affirm.