Opinion
No. 212066.
Submitted November 10, 1999, at Grand Rapids.
Decided May 26, 2000, at 9:15 a.m.
Appeal from Kent Circuit Court, Michigan, LC No. 97-001790-CK.
Visser Bolhouse, P.C. (by Stephen J. De Haan), for the plaintiff. Grandville
Bremer Nelson LLP (by Phillip J. Nelson and Ann M. Byrne), for the defendant. Grand Rapids
Before: ZAHRA, P.J., and KELLY and McDONALD, JJ.
Defendant Citizens Insurance Company of America appeals as of right from an order granting judgment in favor of plaintiff David E. Wert, Jr., in the amount of $65,000. We affirm.
The basic facts of this case are not in dispute. While operating his motorcycle, plaintiff was involved in an accident with an uninsured automobile driven by Richard Roach. The Barry County Sheriff's Department issued Roach a ticket for failure to yield the right of way. Plaintiff was not issued a ticket and was not in any way at fault in the accident. As a result of the accident, plaintiff sustained serious injuries to his right arm.
At the time of the accident, plaintiff's motorcycle was insured under a policy issued by Midwest Mutual Insurance Company. This policy included $20,000 of uninsured motorist coverage. Plaintiff made a claim for and recovered $20,000 in uninsured motorist benefits from Midwest Mutual Insurance Company.
At the time of the accident, plaintiff also owned a Jeep Cherokee. Plaintiff insured the Jeep with defendant under an insurance policy that included $100,000 of uninsured motorist coverage. Plaintiff also presented a claim against defendant under the uninsured motorist provisions contained in defendant's policy. However, defendant denied coverage, claiming that an "other owned vehicle" exclusion in the uninsured motorist section of the policy applied. Defendant refused to submit to arbitration as required under the policy provisions pertaining to uninsured motorist claims.
Plaintiff filed this lawsuit against defendant, seeking a determination that his uninsured motorist coverage applied to the injuries he received in the accident. Plaintiff later filed a motion to compel arbitration. Defendant responded by filing a motion for summary disposition. The trial court heard the motion and held that plaintiff was entitled to uninsured motorist coverage under the insurance policy issued by defendant. Pursuant to the court's order, the case was arbitrated before an arbitration panel. The panel determined that plaintiff was entitled to recover damages in the amount of $85,000. The trial court later held that defendant was entitled to an offset of $20,000 because of plaintiff's recovery under another insurance policy and entered judgment against defendant in the amount of $65,000. Defendant now appeals.
Defendant argues that plaintiff's claim for uninsured motorist benefits is barred by the "other owned vehicle" exclusion contained in the policy. The interpretation of contractual language is an issue of law that we review de novo on appeal. Morley v. Automobile Club of Michigan, 458 Mich. 459, 465; 581 N.W.2d 237 (1998).
In the instant case the insuring agreement contained in the policy provides broad-based uninsured motorist coverage to plaintiff. The insuring agreement specifically states as follows:
We will pay compensatory damages which an "insured" or the "insured's" legal representative is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury":
1. Sustained by an "insured"; and
2. Caused by an accident.
The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle." Any judgment for damages arising out of a suit brought without our written consent is not binding on us.
The policy defines the term "uninsured motor vehicle" in part by stating:
However, "uninsured motor vehicle" does not include any vehicle, trailer or equipment:
* * *
7. Which is a motorcycle.
The policy also contains an "other owned vehicle" exclusion, which provides in pertinent part:
A. We do not provide Uninsured Motorist Coverage for "bodily injury" sustained by any insured:
1. While "occupying", or when struck by, any motor vehicle owned by you or any "family member" which is not insured for this coverage under this policy. This includes a trailer of any type used with that vehicle.
The sole issue in this case is whether the term "motor vehicle" in the "other owned vehicle" exclusion includes motorcycles. Defendant argues that the classic definitions of motorcycle and dispositive Michigan case law compel the conclusion that plaintiff's motorcycle was a motor vehicle for purposes of this exclusion. We disagree.
"An insurance policy is much the same as any other contract. It is an agreement between the parties in which a court will determine what the agreement was and effectuate the intent of the parties." Auto-Owners Ins Co v. Churchman, 440 Mich. 560, 566; 489 N.W.2d 431 (1992); Moore v. First Security Casualty Co, 224 Mich. App. 370, 375; 568 N.W.2d 841 (1997). The terms of an insurance policy are given their commonly used meanings, in context, unless clearly defined in the policy. Henderson v. State Farm Fire Casualty Co, 460 Mich. 348, 354; 596 N.W.2d 190 (1999).
An insurance contract is ambiguous if, after reading the entire contract, its language can be reasonably understood in differing ways. Bianchi v. Automobile Club of Michigan, 437 Mich. 65, 70; 467 N.W.2d 17 (1991); Royce v. Citizens Ins Co, 219 Mich. App. 537, 542; 557 N.W.2d 144 (1996). Ambiguities are to be construed against the insurer, who is the drafter of the contract. State Farm Mut Automobile Ins Co v. Enterprise Leasing Co, 452 Mich. 25, 38; 549 N.W.2d 345 (1996). Further, exclusionary clauses are to be strictly construed in favor of the insured. Churchman, supra at 567.
Defendant cites dictionary and statutory definitions of "motorcycle" in an attempt to support its position that a motorcycle is a "motor vehicle" for purposes of the exclusion at issue in this case. However, in the policy defendant chose to define "uninsured motor vehicle" for a purpose that limits liability and is contrary to common usage; but failed to redefine the term "motor vehicle" in its exclusionary section. If an insurance contract sets forth definitions, the policy language must be interpreted according to those definitions. Century Surety Co v. Charron, 230 Mich. App. 79, 82; 583 N.W.2d 486 (1998). Under the definition in the policy, a motorcycle is clearly not an "uninsured motor vehicle." Despite this fact, defendant argues that "motor vehicle," although not defined separately in the policy, includes motorcycles.
In support of its contention, defendant cites Bianchi, supra. In Bianchi, the plaintiff was injured when he collided with an uninsured automobile while riding his wife's motorcycle. The insurance policy covering the wife's motorcycle did not provide uninsured motorist coverage. The insurance policy covering the plaintiff's wife's automobile, however, did provide such coverage, and the plaintiff applied for benefits under that policy. The "defendant denied the claim on the basis of the policy's `other owned vehicle' exclusion, which stated that injuries suffered while occupying a motor vehicle owned by the plaintiff's wife, other than the vehicle specifically named in the policy, were not covered by the policy." Bianchi, supra at 67.
The Supreme Court initially noted that because uninsured motorist coverage was not mandatory in Michigan, the terms of the no-fault act, MCL 500.3101 et seq.; MSA 24.13101 et seq., were not at issue in the case. Bianchi, supra at 68. The Court went on to hold that in the specific instance of the Bianchi case, a motorcycle was a motor vehicle and thus the "other owned vehicle" exclusion in the plaintiff's wife's automobile policy applied. Id. at 73. However, the Court explained that its decision was a matter of contractual interpretation that was "based on the language of the policy" involved in the case. Id. at 73. The language of the policy involved in Bianchi is distinguishable from the language of the policy involved in this case. Most importantly, while in Bianchi the policy's definition of the relevant term, "motor vehicle," excluded types of vehicles that might otherwise fit the broad definition of the term, motorcycles were not among the stated exceptions. Id. at 71. As we have explained above, the policy's definition of the term "uninsured motor vehicle" in this case does exclude motorcycles. Accordingly, we agree with plaintiff that Bianchi does not support defendant's position in this case.
Under the circumstances of this case, defendant's policy is less than clear. The question remains whether the policy is legally ambiguous so that it should be interpreted in favor of plaintiff. In Raska v. Farm Bureau Mut Ins Co, 412 Mich. 355, 362; 314 N.W.2d 440 (1982), the Supreme Court held:
A contract is said to be ambiguous when its words may reasonably be understood in different ways.
If a fair reading of the entire contract of insurance leads one to understand that there is coverage under particular circumstances and another fair reading of it leads one to understand there is no coverage under the same circumstances the contract is ambiguous and should be construed against its drafter and in favor of coverage.
Yet if a contract, however inartfully worded or clumsily arranged, fairly admits of but one interpretation it may not be said to be ambiguous or, indeed, fatally unclear.
We find that both defendant's and plaintiff's interpretations of this policy are fair, and thus, under the circumstances of this case, the policy is ambiguous. Given that ambiguities are to be construed against the insurer, State Farm Mut, supra at 38, and exclusionary clauses are to be strictly construed against the insurer, Churchman, supra at 567, we hold that the trial court correctly entered judgment in favor of plaintiff.
Affirmed.
Kelly, J., concurred.
I respectfully dissent from the majority's conclusion that the policy's "other owned vehicle" exclusion does not bar recovery of uninsured motorist coverage under the circumstances of the present case. I conclude that the policy is unambiguous and that a motorcycle is included within the meaning of the term "motor vehicle" as that term is used throughout the policy. The majority has read ambiguity into the policy by improperly relying on the policy's definition of "uninsured motor vehicle" to define the term "motor vehicle." In doing so, the majority has overstepped its duty to interpret the policy under its ordinary and plain meaning. Bianchi v. Auto Club of Michigan, 437 Mich. 65, 71, n 1; 467 N.W.2d 17 (1991); Royce v. Citizens Ins Co, 219 Mich. App. 537, 542; 557 N.W.2d 144 (1996). The express exclusion of motorcycles from the definition of "uninsured motor vehicle" is not dispositive or relevant to the meaning of the term "motor vehicle." Nothing within the definition of the term "uninsured motor vehicle" supports the conclusion that it was also intended to define the meaning of "motor vehicle" as that term is used throughout the policy. I would, therefore, reverse the trial court's judgment entered in favor of plaintiff and grant summary disposition for defendant.
The "other owned vehicle" exclusion directly at issue in this case states:
A. We do not provide Uninsured Motorist Coverage for "bodily injury" sustained by any insured:
1. While "occupying", or when struck by, any motor vehicle owned by you or any "family member" which is not insured for this coverage under this policy. This includes a trailer of any type used with that vehicle.
This policy language unambiguously excludes coverage in the present case. At the time of the collision with the uninsured motorist, plaintiff was driving a motorcycle that he owned that was not insured under the policy issued by defendant. The dispositive issue in this case is whether a motorcycle is a "motor vehicle." The term "motor vehicle" is not defined in the policy. In the absence of a specific policy definition, the terms of an insurance policy are given their commonly used meanings, in context. Henderson v. State Farm Fire Casualty Co, 460 Mich. 348, 354; 596 N.W.2d 190 (1999); Farm Bureau Mut Ins Co v. Nikkel, 460 Mich. 558, 568; 596 N.W.2d 915 (1999). Our Supreme Court has stated, "[a] motorcycle is a motor vehicle in both the common sense and the dictionary sense of the term, it is operated on land, and it is required to be registered." Bianchi, supra at 71, citing MCL 257.216; MSA 9. 1916. "Motorcycle" is commonly defined as, " a motor vehicle resembling a bicycle but larger and heavier. . . ." Random House Webster's College Dictionary (1997) (emphasis added). The conclusion that a motorcycle is a "motor vehicle" under the policy is further supported by the policy's general definition of the term "occupying." That term is defined as, "in, upon, or while getting into or getting out of." The fact that the policy envisioned that an individual may be "occupying" a motor vehicle by sitting "upon" it strongly suggests that a motorcycle is to be construed as a "motor vehicle."
I recognize Bianchi's holding, that the other owned vehicle exclusion within the automobile insurance policy at issue applied to preclude the plaintiff's recovery of uninsured motorist benefits, was limited to the specific policy language at issue in that case, Bianchi, supra at 73, and I do not rely on Bianchi as wholly dispositive of the present issue on appeal.
The majority contends that the exclusion of motorcycles from the definition of "uninsured motor vehicle," without indication regarding whether a motorcycle is to be considered a "motor vehicle," causes ambiguity that must be strictly construed against defendant. However, the limits placed on the meaning of "uninsured motor vehicle" within the policy do not have any bearing on the determination of the meaning of "motor vehicle" as that term is used in the policy. No Michigan case interpreting insurance contracts has held that is permissible or appropriate to parse the words of a specifically defined phrase and use the policy definition of the phrase to provide meaning to the parsed words. A court "may not read ambiguity into a policy where none exists." Farm Bureau, supra at 568, citing Michigan Millers Mut Ins Co v. Bronson Plating Co, 445 Mich. 558, 567; 519 N.W.2d 864 (1994). In my opinion, even strictly construing the "other owned vehicle" exclusionary language against defendant, Fire Ins Exchange v. Diehl, 450 Mich. 678, 687; 545 N.W.2d 602 (1996), the policy fairly admits of only one interpretation, under which plaintiff is barred from recovering uninsured motorist benefits, see Bianchi, supra at 70.
Plaintiff concedes that the policy's exclusion of motorcycles from its definition of "uninsured motor vehicle" was intended to limit the coverage provided by the broad-based uninsured motorist coverage, depending on the type of uninsured motor vehicle involved in the collision. Clearly, had the uninsured motorist been operating a motorcycle, plaintiff would have been precluded recovery of uninsured motorist benefits.
For these reasons, I would reverse the judgment of the trial court.