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STATE OF MICHIGAN COURT OF APPEALS

KEVIN T. BLASER, TAMARA A. BLASER, LAURIE SIMMONS JEWELL, ARTHUR R. LENAGHAN, ANDREW LENAGHAN, KAREN LENAGHAN, DONALD WILLIAMS, BARBARA WILLIAMS, JOHN MUSCARI and MILDRED MUSCARI, Trustees of the JOHN MUSCARI and MILDRED B. MUSCARI REVOCABLE TRUST dated March 8, 2002, Plaintiffs, v DALE M. DEVRIES and PERNELLA M. FOWLER, Defendants/Third Party PlaintiffsAppellees, and RICHARD G. BRISTOL and SANDRA L. BRISTOL, Third Party Defendants, and FIRST AMERICAN TITLE INSURANCE COMPANY, Third Party Defendant-Appellant.

UNPUBLISHED November 29, 2011

No. 297555 Kalkaska Circuit Court LC No. 08-009831-CH

Before: JANSEN, P.J., and SAWYER and SHAPIRO, JJ. PER CURIAM. Third party defendant First American Title Insurance Company (American) appeals as of right from the trial court's March 22, 2010, order granting third party plaintiffs-appellees Dale Devries's and Pernella Fowler's (appellees) motion for reimbursement of attorney fees, but American is primarily challenging the trial court's denial of its motion for summary disposition, -1-

which dictated the trial court's decision on the attorney fee issue. We reverse and remand for further proceedings consistent with this opinion. I. FACTS Third party defendants Richard and Sandra Bristol created seven lots in Rapid River Township, five of which they sold to plaintiffs. The deeds to those five parcels contained four restrictions: (1) no manufactured housing, (2) no cellular towers, (3) no sale of mineral rights, and (4) all homes built must be a minimum of 1,200 feet on the first level. These four restrictions were not placed on the deeds to the two other lots. One of the lots that did not contain the restrictions was sold to appellees. Appellees subsequently obtained a special use permit from the Kalkaska County Planning Commission, which permitted them to build a second dwelling on their lot. Thereafter, plaintiffs filed a complaint for declaratory relief, seeking to impose the four restrictions on appellees' lot under a reciprocal negative easement theory. Appellees then filed a third-party complaint against American, alleging that American breached a title insurance contract and asking that a declaratory judgment be issued requiring American to defend appellees in the underlying lawsuit. American and appellees moved for summary disposition on the third party complaint pursuant to MCR 2.116(C)(10). American argued that there was no coverage under the title insurance policy, because it contained an "exception" for restrictions that did not appear in the chain of title and an "exclusion" for title risks that did not arise until after the policy was in effect. Appellees responded that the restrictive covenant at issue was specifically defined as a covered risk, that the exclusions American referenced were inapplicable, and that even if the exclusions were applicable, American had a broader, separate duty under the policy to defend appellees in the underlying lawsuit. On April 24, 2009, the circuit court issued an opinion denying American's motion for summary disposition and granting in part appellees' motion for summary disposition. The court first found that the portion of the title insurance policy excluding "[r]estrictions upon the use of the premises not appearing in the chain of title" was ambiguous, because it was unclear whether the 1,200 square foot "building restriction" at issue was a restriction upon the use of the premises. Because of this ambiguity, the circuit court found that there was a genuine issue of material fact whether the exception applied, and therefore summary disposition was inappropriate. The circuit court also rejected American's argument that the restriction did not affect the property until after the policy date, finding that if the 1,200 foot building restriction applied to appellees, it must have been applicable at the time they purchased the lot, or it would not affect the property at all. Finally, the circuit court found that American had a duty to defend appellees in the principal case until the factual issues were decided and it was determined whether the exclusions apply. American moved for reconsideration, and on June 1, 2009, the circuit court issued an opinion and order clarifying its prior opinion and order. The circuit court noted the disparity between its ruling that genuine issues of material fact existed, while at the same time granting appellees summary disposition regarding American's duty to defend. The trial court then -2-

acknowledged that it had failed to apply the rule that in a contract for insurance ambiguities are to be construed in favor of coverage and against the drafter, which in this case was American. It observed that when the ambiguous language is construed against American, there is no longer a question of fact regarding it, and therefore its decision that the ambiguities created questions of fact was in error. After construing the ambiguities against American, the trial court concluded that "American is obligated to defend and indemnify, if necessary [appellees] from the underlying suit, and this court finds as a matter of law that the claims asserted against [appellees] are covered by the applicable insurance policy and not within any of the exclusions and/or exceptions with that policy." As a result of this ruling, the trial court ordered American to pay appellees $28,997.84, which represented the amount of attorney fees appellees had paid through May 15, 2009, in defending the underlying lawsuit that sought to impose the reciprocal negative easement and in pursuing appellees' claim that American was required to defend them in the underlying lawsuit.1 The trial court also subsequently ordered American to pay appellees an additional $8,385.75, which represented the amount of attorney fees appellees paid from May 15, 2009, to October 16, 2009. Of this amount, $6,166.19 was related to the defense of the underlying lawsuit and $2,219.56 was related to appellees' claim that American was required to defend them in the underlying lawsuit. American now appeals. II. STANDARD OF REVIEW On appeal, a trial court's decision whether to grant a motion for summary disposition is a question of law that is reviewed de novo. Brown v Brown, 478 Mich 545, 551; 739 NW2d 313 (2007). The motion is properly granted when the proffered evidence fails to establish a genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. Id. at 552. A genuine issue of material fact is found to exist "when reasonable minds could differ on an issue after viewing the record in the light most favorable to the nonmoving party." Allison v AEW Capital Mgt, LLP, 481 Mich 419, 425; 751 NW2d 8 (2008). The interpretation of an insurance contract and whether an ambiguity exists in the contract are questions of law that are reviewed de novo on appeal. Wilkie v Auto

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