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Michigan Court Of Appeals Affirms Summary Disposition Enforcing Auto Liability Notice Clause In Appeal Handled By Michael F. Schmidt

Integon National Insurance Company v Vincent Lecari Berry and Patricia Carol Berry, Michigan Court of Appeals docket number 289320 (2009), appeal by the underlying plaintiff Coze Elissa Long and by the uninsured motorist carrier, Bristol West Insurance Company, of summary disposition granted by the trial court to Integon National Insurance Company. Integon’s insureds were involved in an auto accident but failed to provide notice to Integon of the auto accident, the fact that they were served with a suit, that the fact that the suit was filed or that they had been defaulted.

When Integon received notice from the uninsured motorist carrier after the entry of the default it hired defense counsel to represent the insureds in the underlying action who filed a motion to set aside the default, which the trial court denied. We then filed a declaratory judgment action to have the court rule that since the insureds had failed to provide Integon with notice of the accident and the suit there had been a violation of the notice condition of the policy and pursuant to the Michigan Financial Responsibility Act, MCL 257.520(f)(6), Integon did not owe coverage or a defense. The trial court agreed and granted summary disposition to Integon that it had no duty to defend or provide coverage including it had no duty to even provide the minimum Financial Responsibility limits of $20,000/$40,000 to the innocent third party who had been involved in the accident. The underlying plaintiff and Bristol West, the uninsured motorist carrier, appealed to the Court of Appeals. The Court of Appeals has now issued its decision affirming the summary disposition we obtained for Integon and rejecting all of the arguments raised by the underlying plaintiff and Bristol West.

This is an important decision, because the Court of Appeals held that per MCL 257.520(f) of the Michigan Financial Responsibility Act, an insurer has no duty to provide coverage if the insured has failed to provide notice of the accident and suit and the insurer has been prejudiced. Further, that the issue of prejudice is an issue of fact, but where the insured has been defaulted and the insurer has no ability to contest liability, prejudice is established. The court further held that MCL 257.520(f)(6) relieves the insurer of any liability, not just of liability over the minimum required limits of $20,000/$40,000 and that there is no conflict with the provisions of the No Fault Law. The court further held that in determining the applicable uninsured motorist coverage, such coverage applies per the terms of the policy if there is not a liability policy which was applicable at the time of the accident. Applicable at the time of the accident does not mean that there is an insurance policy in existence, rather there is an insurance policy that actually provides protection for the accident. The Integon policy was in existence, but it did not provide protection because of the violation of the notice condition and MCL 257.520(f)(6), the vehicle was uninsured and thus the uninsured motorist coverage applied.