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Allstate Insurance Co. v. Muszynski9/24/2002
FOR PUBLICATION
Plaintiff Allstate Insurance Company appeals as of right from a circuit court order denying its motion for summary disposition and granting summary disposition in favor of defendants pursuant to MCR 2.116(C)(10) in this declaratory judgment insurance action. Plaintiff commenced this lawsuit requesting a determination whether it is obligated to defend and indemnify defendants Walter, Charlotte, and Michael Muszynski in regard to a wrongful death action brought against them by defendant Ursula Hall, as personal representative for the estates of Michael James and Daniel Muszynski. We reverse and remand.
This action arises from the deaths of Michael James and Daniel due to a fire at the home where they lived with their father, Michael, and grandparents, Walter and Charlotte. Walter and Charlotte owned the home, and were the named insureds of a homeowners' insurance policy issued by plaintiff. There is no dispute that, at the time of the fire, Michael and the deceased children were "insured persons" as defined in the policy.
Plaintiff argues that it has no duty to defend or indemnify the insured Muszynskis in the wrongful death action because of the following exclusion in the homeowners policy:
We do not cover bodily injury to an insured person or property damage to property owned by an insured person whenever any benefit of this coverage would accrue directly or indirectly to an insured person. [Emphasis in original.]
Plaintiff maintains that this exclusion is applicable because the deceased children were "insured persons" under the policy and the benefit of the coverage would accrue to their estates. Accordingly, because there is no coverage for the claims of the estates, there is no coverage for Hall's claim as a recipient of the proceeds of the estate, even though Hall herself is not an insured person under the policy.
The trial court rejected plaintiff's argument that liability coverage for a wrongful death action that would benefit the estates would benefit the deceased children. The court ruled that coverage does not benefit a deceased person and any benefit to an insured person's estate is not the same as benefit to an insured person.
Plaintiff asserts that the phrase "whenever any benefit of this coverage would accrue directly or indirectly to an insured person," is not a limitation on the applicability of the exclusion, but rather, was added to clarify that the exclusion applies when the benefit to the insured is indirect, such as when an insured seeks coverage for a contribution claim. See, e.g., Whirlpool v Ziebert, 197 Wis 2d 144, 152-154; 539 NW2d 883 (1995), and 9 Couch, Insurance 3d, ยง 128:4, pp 128-9 - 128-10 (both interpreting exact policy language at issue).
The construction and interpretation of an insurance contract is a preliminary question of law for a court to determine. Henderson v State Farm Fire & Casualty Co, 460 Mich 348, 353; 596 NW2d 190 (1999). On appellate review, we employ the de novo standard. Id. We look at the language of the insurance policy and interpret its terms in accordance with the principles of contract construction. Id. at 353-354. Where there is no ambiguity, an insurance contract must be enforced as written in accordance with its terms. Id. at 354.
Regardless of whether the "whenever" phrase in this policy is a limitation on or a clarification of an exclusion, we agree with plaintiff's position that the exclusion also applies to exclude an insured person's estate from coverage. Plaintiff correctly argues that coverage is excluded in the present case because the benefit of the coverage would accrue directly or indirectly to an insure
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