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James v. State Farm Fire & Casualty Co.11/8/2005
UNPUBLISHED
Before: Cooper, P.J., and Fort Hood and Borrello, JJ.
State Farm Fire & Casualty Co. (State Farm) appeals as of right the order granting Safeco Insurance Co. (Safeco) and David Gasowski summary disposition. We affirm.
On August 31, 2002, Gasowski, Mario Sylvestri, and Richard James were jet skiing on the Middle Channel near Harson's Island. James and Gasowski took a ride on Sylvestri's jet ski, and after losing control, they collided with a bridge. State Farm insured Sylvestri at the time of the accident.
Gasowski brought a tort action against James and Sylvestri. James submitted the claim to State Farm for tender of a defense and for indemnification. While State Farm initially agreed to provide coverage to James under a reservation of rights, it later retracted its coverage, citing the fact that James was not the driver of the jet ski and, therefore, was not an "insured" covered by its policy. The trial court heard cross-motions for summary disposition and concluded, based on an admission by James, that there was no question of fact that he was the driver of the jet ski at the time of the accident. Accordingly, the trial court granted Gasowski's motion for summary disposition with respect to the issue of negligence. Shortly before the matter was set for trial, the parties agreed on a settlement, and the action was dismissed with prejudice.
James then filed this declaratory action against State Farm, Sylvestri, and Gasowski, seeking a judgment that, as the driver of the jet ski, he was an insured under the subject insurance policy and that State Farm was contractually obligated to defend and indemnify him in the first tort action. Following a grant of leave to intervene, Safeco, James' insurer, filed its complaint, alleging that State Farm wrongfully rescinded its coverage because James, as the driver of the jet ski, was insured under the State Farm policy. Auto Club Group Insurance Co. (Auto Club Group), which issued a homeowners policy of insurance to James, was brought into the action as a named defendant in Safeco's complaint. Auto Club Group filed an answer, agreeing with all the substantive allegations of Safeco's complaint.
Gasowski moved for summary disposition under MCR 2.116(C)(7) and (C)(10), arguing that the essential question in both the first tort action and the present declaratory action centered on who was the driver of the jet ski at the time of the accident. Pointing out that the court resolved that issue in the previous case by finding that James was the driver, Gasowski argued that the doctrine of collateral estoppel prohibited relitigation of that question.
State Farm responded to Gasowski and Safeco's motions, admitting that the preeminent issue in the litigation was the identity of the driver of the jet ski, but denying that consideration of the issue was collaterally estopped because it was not a party to the underlying action. State Farm also asserted that it would be prejudiced if denied the opportunity to litigate the issue because it was likely that James' admission in the previous action was the result of collusion between James, Gasowski, and Sylvestri, who had been friends since elementary school.
In ruling on the motion, the trial court noted that despite its claim that it was not party to the first tort action, State Farm provided a defense to both Sylvestri and James in that action. Furthermore, the trial court noted that State Farm was a party to the settlement agreement, indicating that they had a direct interest in the outcome of the underlying action. The court then concluded, based on its prior ruling, that because James was the driver of the jet ski in t
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