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Bosco v. Bauermeister12/23/1997
BEFORE THE ENTIRE BENCH (except Taylor, J.).
I.
In this case, we are called upon to determine the priority of coverage of several insurance policies, all of which admittedly provided coverage for the automobile accident that is the subject matter of the underlying lawsuit. We conclude that a distinct difference exists between "true" excess insurance coverage and excess "other insurance" on the basis of the difference in policy types within the insurance industry, the premiums charged for and risks assumed by the policies, the language of the policies, and the reasonable expectations of all the contracting parties. This difference requires an excess "other insurance" policy to be exhausted before "true" excess insurance policies are required to contribute to a loss. Thus, we reverse the decision of the Court of Appeals and reinstate the judgment of the trial court.
II.
The underlying suit, upon which this matter is based, began as a wrongful death action arising from a truck-bicycle accident in which fifteen-year-old Eric John Bosco was killed. Primary defendant Chris Bauermeister was driving the truck, which was owned by primary defendant Kenneth Cook. At the time of the accident, Bauermeister was acting in the course of his employment with Flint Canvas Company and Flint Tent & Awning, Inc. The case was tried before a jury, which found in favor of the Bosco estate and the eight persons entitled to recover for the death of the decedent. Damages of $1,044,903.25 were assessed in favor of the Bosco estate, with setoffs of $556,000 from no-fault funeral benefits and two prior settlements. The net verdict was $613,569.08.
This appeal involves five insurance policies covering the various defendants in this matter: (1) Continental Insurance Company issued an automobile policy to Kenneth Cook, the owner of the truck, with a $500,000 limit; (2) USAA Casualty Company, Inc., issued an automobile policy to Chris Bauermeister's father, which covered his son, with a $100,000 limit; (3) USAA also issued a $1,000,000 personal umbrella policy to Chris Bauermeister's father that covered his son; (4) Frankenmuth Mutual Insurance Company, Inc., issued an automobile policy to Flint Canvas with a $250,000 limit; and (5) Auto-Owners Insurance Company, Inc., issued a $1,000,000 executive umbrella policy to Kenneth Cook.
The Continental policy was previously determined to be primary by this Court in Frankenmuth Mut Ins Co, Inc v Continental Ins Co, 450 Mich 429; 537 NW2d 879 (1995), and is not directly involved in the present controversy. Frankenmuth filed that declaratory action to determine which insurance company was primary and, thus, responsible for the primary defendants' defense. Continental already paid plaintiff the $500,000 policy limit before trial, which was approved by the trial court. Frankenmuth settled with plaintiff for $55,000 of the $250,000 policy limit and, in exchange, plaintiff executed a covenant not to enforce judgment, which extinguished Frankenmuth's potential liability for the remaining $195,000. This settlement was also approved by the trial court. In this covenant, it was stated that no representations were made regarding the insurance coverages of the various companies involved and that the layers of coverages were undetermined at that time.
After judgment was entered, plaintiff filed affidavits and writs of garnishment against Auto-Owners and USAA. USAA voluntarily paid the $100,000 primary policy limit, and plaintiff's garnishment action continued with regard to Auto-Owners' and USAA's liability under their umbrella policies.
USAA asserted that it was entitled to a credit against the judg
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