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STATE OF MICHIGAN COURT OF APPEALS

JOANNE LONG, Plaintiff-Appellee, v PIONEER STATE MUTUAL INSURANCE COMPANY, Defendant-Appellant, and WILLIAM LOWRY, Defendant.

UNPUBLISHED November 30, 2010

No. 293556 Montcalm Circuit Court LC No. 06-008233-NI

PATRICK MALONEY, Plaintiff-Appellee, v PIONEER STATE MUTUAL INSURANCE COMPANY, Defendant-Appellant, and WILLIAM LOWRY, Defendant. No. 293569 Montcalm Circuit Court LC No. 06-008234-NI

Before: CAVANAGH, P.J., and HOEKSTRA and GLEICHER, JJ. PER CURIAM.

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In this insurance coverage dispute, defendant Pioneer State Mutual Insurance Company appeals as of right circuit court orders denying summary disposition in its favor. We affirm. I. UNDERLYING FACTS AND PROCEEDINGS On September 23, 2003, defendant William Lowry's car pulled out onto a highway in front of a pickup truck driven by plaintiff Patrick Maloney, and the vehicles collided. Maloney and plaintiff Joanne Long, a passenger in Maloney's truck, sustained personal injuries in the accident. Auto-Owners Insurance Company insured Lowry's vehicle. The Auto-Owners policy set forth a single limit for accidental bodily injury liability insurance of $100,000. Maloney maintained a no-fault insurance policy issued by Pioneer, which included an endorsement for underinsured motorist (UM) benefits in the amounts of $100,000 per person and $300,000 per occurrence. In 2006, Maloney and Long filed separate lawsuits against Lowry and Pioneer in the Montcalm Circuit Court, which consolidated the actions. Plaintiffs' complaints asserted thirdparty no-fault claims against Lowry and averred that Maloney's Pioneer policy entitled them to UM benefits. In 2007, Lowry and Pioneer moved for summary disposition of Maloney's case, contending that his injuries fell short of the statutory threshold described in MCL 500.3135(7). The circuit court denied defendants' motion. Pioneer then filed a second motion for summary disposition, asserting that under the terms of its policy it bore no responsibility to pay any UM benefits to Maloney and Long as a matter of law. In a 2008 bench opinion, the circuit court denied Pioneer's summary disposition motion concerning UM benefits. Maloney and Long settled with Lowry for $100,000, the full amount of Lowry's policy limit, and agreed to share this amount equally. Pioneer approved this settlement. After dismissing Lowry from the case, the parties stipulated that Pioneer would pay Maloney and Long UM benefits of $45,000 each while preserving its right to appeal the circuit court's denial of both summary disposition motions. II. ANALYSIS Pioneer now challenges the circuit court's summary disposition rulings, which we review de novo. Walsh v Taylor, 263 Mich App 618, 621; 689 NW2d 506 (2004). Both of Pioneer's motions invoked MCR 2.116(C)(10). "In reviewing a motion under MCR 2.116(C)(10), this Court considers the pleadings, admissions, affidavits, and other relevant documentary evidence of record in the light most favorable to the nonmoving party to determine whether any genuine issue of material fact exists to warrant a trial." Id. Pioneer initially submits that Lowry's vehicle does not qualify as "underinsured" according to the language of Maloney's policy, and that Pioneer thus has no liability to pay any UM benefits to Maloney and Long. When reviewing an insurance coverage dispute, wellestablished principles of contract construction guide this Court's interpretation of policy terms. Besic v Citizens Ins Co of the Midwest, ____ Mich App ____; ____ NW2d ____ (Docket No. 291051, issued 9/14/10), slip op at 3. "First, an insurance contract must be enforced in accordance with its terms. A court must not hold an insurance company liable for a risk that it did not -2-

assume. Second, a court should not create ambiguity in an insurance policy where the terms of the contract are clear and precise. Thus, the terms of a contract must be enforced as written where there is no ambiguity." [Citizens Ins Co v Pro-Seal Service Group, Inc, 477 Mich 75, 82; 730 NW2d 682 (2007), quoting Henderson v State Farm Firm & Cas Co, 460 Mich 348, 354; 596 NW2d 190 (1999).] In Rory v Continental Ins Co, 473 Mich 457, 465-466; 703 NW2d 23 (2005), the Supreme Court provided further guidance concerning the interpretation of UM provisions:
Uninsured motorist insurance permits an injured motorist to obtain coverage from his or her own insurance company to the extent that a third-party claim would be permitted against the uninsured at-fault driver. Uninsured motorist coverage is optional--it is not compulsory coverage mandated by the no-fault act. Accordingly, the rights and limitations of such coverage are purely contractual and are construed without reference to the no-fault act. [Footnotes omitted.]

The Pioneer UM endorsement defines an "underinsured motor vehicle" as a vehicle "to which a bodily injury liability ... policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage." According to Pioneer, Lowry's no-fault policy's accidental bodily injury liability single limit of $100,000 is not less than Maloney's accidental bodily injury liability policy limits of $100,000 per person and $300,000 per occurrence. Pioneer theorizes that the policies are "equal" because both "provide $100,000 coverage per person." Pioneer's argument ignores the $300,000 per occurrence limit of Maloney's accidental bodily injury liability policy. As Pioneer acknowledges, Long qualified as an insured under Maloney's policy, and "could potentially receive coverage." Consequently, Maloney's policy afforded Maloney and Long each $100,000 in UM coverage for their bodily injuries, totaling $200,000, while Lowry's policy allowed them to jointly recover no more than $100,000. Because Maloney's coverage plainly exceeded that available under Lowry's policy, the circuit court correctly denied Pioneer's motion for summary disposition on this ground. Pioneer next asserts that any UM coverage potentially available to plaintiffs must be reduced by $100,000, the total amount of their settlement with Lowry. Pioneer calculates that, after reducing its policy's $100,000 limit on UM coverage for each person by the $100,000 Maloney and Long obtained from Lowry, no UM benefits remain owing under the policy. In support of this argument, Pioneer relies on the "Limit of Liability" provision of its UM endorsement, which states: A. The limit of liability shown in the Schedule or in the Declarations for each person for Underinsured Motorists Coverage is our maximum limit of liability for all damages ... arising out of "bodily injury" sustained by any one person in any one accident. Subject to this limit for each person, the limit of liability shown in the Schedule or in the Declarations for each accident for Underinsured Motorists Coverage is our maximum limit of liability for all damages for "bodily injury" resulting from any one accident. -3-

*** B. The limit of liability shall be reduced by all sums paid because of the "bodily injury" by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under Part A of this policy. Pioneer insists that this limiting policy language is directly analogous to the UM policy interpreted in Wilkie v Auto-Owners Ins Co, 469 Mich 41; 664, NW2d 776 (2003), which governs the outcome of this case. In Wilkie, a car driven by Stephen Ward crossed the center line of a roadway and collided with a vehicle occupied by Janna Frank and Paul Wilkie. 469 Mich at 43-44. Wilkie died in the accident, and Frank sustained injuries. Ward's insurance company paid his bodily injury liability insurance limit of $50,000, which Frank and Wilkie's estate shared equally. Id. at 44. Wilkie's estate then sought UM benefits from Auto-Owners, which had issued him UM coverage with limits of "$100,000 for each person to a total of $300,000 for each occurrence." Id. The relevant portion of Wilkie's UM policy read: 4. LIMIT OF LIABILITY a. Our Limit of Liability for Underinsured Motorists Coverage shall not exceed the lowest of: (1) The amount by which the Underinsured Motorist Coverage limits stated in the Declarations exceed the total limits of all bodily injury liability bonds and policies available to the owner or operator of the underinsured automobile; or (2) the amount by which compensatory damages for bodily injury exceed the total limits of those bodily injury liability bonds and policies. b. The Limit of Liability is not increased because of the number of: (1) automobiles shown or premiums charged in the Declarations; (2) claims made or suits brought; (3) persons injured; or (4) automobiles involved in the occurrence. [Id. at 44-45 n 3.] Auto-Owners argued that because its policy limited UM benefits to an amount in excess of coverage "available" to the underinsured vehicle and Ward's policy made available $50,000 in coverage, the plaintiffs could recover $50,000 each. 469 Mich at 45. Wilkie and Frank contended that Auto-Owners owed them each $75,000, reasoning that "having equally split the Ward policy limits of $50,000, only the $25,000 they received should have been subtracted from the $100,000 policy limit to determine the amount each was due." Id. The Supreme Court held that under the plain language of the Auto-Owners policy, the amount of coverage "available to the owner or operator of the underinsured automobile" dictated the extent of the reduction. Id. at -4-

49-51. In light of Ward's $50,000 policy limits, the Supreme Court concluded that Wilkie and Frank were each entitled to UM benefits of $50,000, rather than $75,000, explaining in pertinent part as follows: Paragraph 4(a)(1) states that the limit of liability for underinsured-motorist coverage shall not exceed "the amount by which the Underinsured Motorist Coverage limits stated in the Declarations exceeds the total limits of all bodily injury liability bonds and policies available to the owner or operator of the underinsured automobile . . . ." In this case, the underinsured-motorist coverage limit stated in Auto-Owner's declaration is $100,000. The total limit of all bodily-injury liability policies available to the owner of the underinsured automobile, i.e., Ward, is $50,000. Therefore, the amount by which the underinsured-motorist-coverage limits stated in the declarations exceeds the total limits of all bodily-injury policies available to the owner of the underinsured automobile is clearly $50,000, not $75,000. Contrary to the contention of the Court of Appeals, this provision cannot be "reasonably understood" to be referring to the amount actually received by the claimant because the provision specifically refers to the total available to the owner. . . . [Id. at 49-50 (emphasis in original).] To be sure, the instant case and Wilkie share factual similarities. The applicable policies afforded UM coverage with limits of $100,000 for each person and $300,000 for each occurrence. Both cases involve two injured claimants who shared equally in the negligent driver's bodily injury liability policy limit. However, the instant UM policy limitation language differs significantly from that of the policy in Wilkie. Furthermore, to the extent that Wilkie applies, it supports the circuit court's denial of Pioneer's summary disposition motion. The Supreme Court emphasized in Wilkie that the operative language of the Auto-Owners policy capped UM coverage at "the lowest of" two alternatives: (1) "the amount by which the" UM coverage limits "exceed[] the total limits of all bodily injury" policies "available to the owner . . . of the underinsured automobile," or (2) "the amount by which" the claimant's bodily injury damages "exceed the total limits of" all available bodily injury liability policies. Id. at 49 n 9, 50 (emphasis in original). The total limit of the defendant's policy in Wilkie was $50,000. Therefore, $50,000 represented the amount to be subtracted from any third-party no-fault recovery, given that this $50,000 policy limit was "available" to the plaintiffs. Here, Pioneer's policy describes a two-step process for ascertaining the limit of available UM coverage. First,

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