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concluding that the terms "residents" and "regularly resides" in a homeowners policy are susceptible to different meanings and are therefore ambiguous
Summary of this case from Risk Management Div. v. Farmers Ins. Co.Opinion
Docket No. 189413.
Submitted February 5, 1997, at Grand Rapids.
Decided June 17, 1997, at 9:10 A.M. Leave to appeal sought.
G. W. Caravas Associates, P.C. (by Michael J. Schmidt), for Vanguard Insurance Company.
Goodman, Lister Peters, P.C. (by Thomas E. Kuhn), for Marcell Racine.
Butzbaugh and Ehrenberg (by Robert J. Ehrenberg), for Jeri Racine.
This case involves a dispute regarding whether plaintiff, as defendant Marcell Racine's homeowner's insurer, must provide coverage for the accidental death of defendants' three-year-old son. We affirm the trial court's order granting summary disposition in favor of defendants.
Defendants Marcell and Jeri Racine, husband and wife, were divorced in February 1994. At that time, legal custody of defendants' son, Vance, was awarded to defendants jointly, with physical custody granted to Jeri Racine. Separate households were established, with Marcell Racine enjoying visitation with Vance at least every other weekend and, on a more or less regular basis, one weeknight a week for a total of eight to ten days a month. There was evidence that Marcell Racine maintained a separate bedroom for Vance, where some clothes and toys were kept, and toiletries were available. Shortly before the accident underlying this action, Marcell Racine moved to a new home, where a bedroom was available for his son although it had not yet been furnished. Vance also had clothes and toiletries available, along with toys, at his father's new home.
Marcell Racine was mowing his lawn using a riding mower; Vance was riding with him. The mower tipped, a fire broke out, and Vance was killed. Jeri Racine, as personal representative of Vance's estate, brought suit against Marcell Racine for negligence. Marcell Racine asked his homeowner's insurer, plaintiff Vanguard Insurance Company, to undertake a defense and to indemnify him for any liability. Vanguard filed this declaratory action, contending that under certain terms of the insurance policy, it had no duty either to defend or indemnify Marcell Racine for such liability. Defendants brought a motion for summary disposition, which the trial court granted, concluding that the policy provides coverage.
The dispute regarding the policy primarily concerns the definition of "insured":
"Insured" means you and residents of your household who are: (a) your relatives; or (b) other persons under the age of 21 in the care of any person named above.
The liability coverage provisions of the policy do not apply to bodily injury sustained by any "insured." Coverage for medical payments is similarly excluded for bodily injury to any person "regularly residing" at the insured location.
There are a number of Michigan precedents addressing similar insurance policy language. E.g., Williams v State Farm Mutual Automobile Ins Co, 202 Mich. App. 491; 509 N.W.2d 821 (1993); Dobson v Maki, 184 Mich. App. 244; 457 N.W.2d 132 (1990); Dairyland Ins Co v Auto-Owners Ins Co, 123 Mich. App. 675; 333 N.W.2d 322 (1983). However, all these precedents concern situations in which, if the person in question was held to be a "resident" of the household of the insured, or "domiciled" there, insurance coverage was afforded. Here, the opposite result obtains; if decedent was a resident of his father's household, there is no coverage.
We find these decisions inapposite, considering the general rule that, unless the language of an insurance policy unambiguously so requires, a policy should not be construed to defeat coverage. Shumake v Travelers Ins Co, 147 Mich. App. 600, 608; 383 N.W.2d 259 (1985). Previous holdings regarding the "resident" question are not helpful, because in each case the Court properly strove to find that the individual in question was a resident and thus eligible for insurance benefits.
There are general rules applicable to the interpretation of insurance policies that do provide guidance for this case. An insurance policy is a contract, and the court must determine what the parties agreed to in the policy in order to determine if a policy covers a particular accident. Fire Ins Exchange v Diehl, 450 Mich. 678, 683; 545 N.W.2d 602 (1996). Where policy language is clear, courts are bound by the specific language set forth in the policy. Heniser v Frankenmuth Mutual Ins Co, 449 Mich. 155, 160; 534 N.W.2d 502 (1995). We must interpret the terms of the policy in accordance with their commonly used meaning if the terms are not defined in the policy or the meaning of the terms are not obvious from the policy language. Arco Industries Corp v American Motorists Ins Co, 448 Mich. 395, 404; 531 N.W.2d 168 (1995). The fact that the term in controversy is not defined in the policy does not alone establish that an ambiguity exists. Trierweiler v Frankenmuth Mutual Ins Co, 216 Mich. App. 653, 657; 550 N.W.2d 577 (1996). A provision is considered ambiguous when its words can reasonably be understood in different ways. Engle v Zurich-American Ins Group, 216 Mich. App. 482, 487; 549 N.W.2d 589 (1996). Whether the terms of an insurance policy are ambiguous is a question for the court. Jones v Farm Bureau Mutual Ins Co, 172 Mich. App. 24, 27; 431 N.W.2d 242 (1988). Any ambiguity in an insurance policy is construed against the insurer and in favor of coverage. Heniser, supra.
Applying these principles, we conclude that the policy in this case presents an ambiguous use of the terms "residents" and "regularly resides" under the facts of this case. See Montgomery v Hawkeye Security Ins Co, 52 Mich. App. 457; 217 N.W.2d 449 (1974). The policy does not define these terms, and they are susceptible to two different meanings. They could be interpreted as being synonymous with the term "domicile" or primary residence. See Workman v DAIIE, 404 Mich. 477, 495; 274 N.W.2d 373 (1979) (usually, the terms "residence" and "domicile" are legally synonymous). A party generally has only one legal residence or domicile. In this case, the one domicile would be defendant Jeri Racine's home, which was where Vance spent the majority of his time and where Jeri Racine had physical custody of Vance under the divorce judgment. Conversely, it is possible to interpret the policy in the manner that plaintiff contends is correct. Vance was physically present at his father's home on the day of the accident, and Vance intended to stay the weekend. Moreover, Vance intended to establish his own room in the new house in the near future. Vance also had his own room in his father's previous home. It is possible to interpret the term "residents" to include relatives who periodically stay in a home indefinitely, but maintain a legal domicile at some other location during the same period.
Because the policy terms are susceptible to two different meanings under the facts of this case, they must be construed against plaintiff as the drafter of the insurance contract and in favor of coverage for defendants. Summary disposition was properly granted to defendants. Accord Nat'l Automobile Casualty Ins Co v Underwood, 9 Cal.App.4th 31; 11 Cal.Rptr.2d 316 (1992).
We affirm.