                       STATE OF MICHIGAN

                         COURT OF APPEALS



FARM BUREAU GENERAL INSURANCE                       UNPUBLISHED
COMPANY OF MICHIGAN,                                August 20, 2015

             Plaintiff/Counter-Defendant-
             Appellee,

v                                                   No. 320710
                                                    Oakland Circuit Court
YVONNE J. HARE, Individually and as Next            LC No. 2013-133979-CK
Friend of OLIVIA HARE and JACK HARE,
Minors,

             Defendants/Counter-Plaintiffs-
             Appellants,

and

DUANE PAUL ALEXANDER and CARL
ALEXANDER, Individually and as Personal
Representative of the Estate of PATRICIA
ALEXANDER,

             Defendants/Counter-Plaintiffs.


FARM BUREAU GENERAL INSURANCE
COMPANY OF MICHIGAN,

             Plaintiff/Counter-Defendant-
             Appellee,

v                                                   No. 320771
                                                    Oakland Circuit Court
DUANE PAUL ALEXANDER and CARL                       LC No. 2013-133979-CK
ALEXANDER, Individually and as Personal
Representative of the Estate of PATRICIA
ALEXANDER,

             Defendants/Counter-Plaintiffs-
             Appellants,

                                              -1-
and

YVONNE J. HARE, Individually and as Next
Friend of OLIVIA HARE and JACK HARE,
Minors,

              Defendants/Counter-Plaintiffs.


Before: OWENS, P.J., and SAAD and GADOLA, JJ.

PER CURIAM.

        In these consolidated appeals, defendants, Duane Paul Alexander, Carl Alexander, Olivia
Hare, and Jack Hare, appeal as of right from an order granting summary disposition in favor of
plaintiff, Farm Bureau General Insurance Company of Michigan, pursuant to MCR 2.116(C)(10)
in this action to determine Farm Bureau’s liability for underinsured motorist (UIM) coverage.
Because the total amount payable by the at-fault driver exceeded the UIM coverage offered by
Farm Bureau, the trial court did not err in finding that Farm Bureau was entitled to summary
disposition pursuant to the setoff provision of its insurance policy. Therefore, we affirm.

                                           I. FACTS

        On September 1, 2012, a vehicle driven by Andrea Diamond crossed the center line of
US-70 in Tennessee and struck a vehicle owned and operated by defendant Duane Paul
Alexander. Carl Alexander, Patricia Alexander, Yvonne Hare, Olivia Hare, and Jack Hare were
all passengers in the vehicle driven by Duane.1 Patricia died from injuries sustained in the
accident. The other occupants were severely injured.

         At the time of the foregoing events, Duane was the named insured on a no-fault policy
issued by Farm Bureau. The UIM provisions of the policy provided for UIM coverage limits of
$100,000 per person and $300,000 per occurrence. Diamond, the tortfeasor, was insured by
GEICO. The liability limits of the GEICO insurance policy were $250,000 per person and
$500,000 per occurrence. Defendants sought UIM coverage from Farm Bureau, which denied
their claims and thereafter filed this action seeking a declaratory judgment that it did not owe
UIM benefits to the six passengers injured in the accident. At or about the time Farm Bureau
filed its declaratory judgment action, GEICO tendered the limits of the tortfeasor’s policy to
defendants. On May 28, 2013, the Hares requested permission from Farm Bureau to settle
Yvonne’s claims against the tortfeasor in the amount of $250,000. Farm Bureau refused to
consent to the settlement. Notwithstanding this refusal, on August 14, 2013, Yvonne agreed to
settle her claims against GEICO and its insured in the amount of $250,000. Similarly, on August


1
 Yvonne Hare is the mother of the minor children Olivia Hare and Jack Hare. Carl Alexander
was the husband of Patricia Alexander.


                                               -2-
28, 2013, Patricia’s estate settled its claims against GEICO and its insured, again, in the amount
of $250,000, thus exhausting the GEICO policy limits.

        In Farm Bureau’s motion for summary disposition, it asserted that, pursuant to
MCR 2.116(C)(10), there existed no genuine issue of any material fact. Farm Bureau argued that
under the terms of the no-fault policy issued to Duane, it did not owe UIM benefits because the
tortfeasor’s policy limits were greater than the limits under Farm Bureau’s policy. Farm Bureau
relied on the provision in its policy that provided that any amount payable for its UIM coverage
would “be reduced by any amounts paid or payable for the same bodily injury.” It then reasoned
that because the GEICO policy had limits of $250,000/$500,000, any amounts possibly owed
under its UIM coverage, which had policy limits of $100,000/$300,000, would be fully set off.
In addition, Farm Bureau argued that because “an insured” settled with the tortfeasor without its
consent, the provisions of its policy providing for UIM coverage were void.

        In response, defendants argued that Farm Bureau’s obligation to pay UIM benefits was
not simply “reduced by the amount of total insurance coverage available to the vehicle of the
negligent driver,” but rather, “Farm Bureau’s per person UIM limits for any particular insured
person are only reduced by payments made to that insured person.” Defendants then reasoned
that because the settlements with Yvonne and Patricia’s estate exhausted GEICO’s policy limits,
and because Jack, Olivia, Carl, and Duane had not received any benefits from those settlements
with the tortfeasor, there were no funds paid or payable for them that would act to reduce the
amount of UIM benefits available under the Farm Bureau policy. Defendants further challenged
Farm Bureau’s claim that the UIM coverage was void because of the settlements reached by
Yvonne and Patricia’s estate.

        The trial court granted summary disposition in favor of Farm Bureau on the basis of the
setoff provision in the UIM coverage endorsement and on the consent to settle clause in the
endorsement. On appeal, defendants contend that the trial court erred. We disagree.

                                II. STANDARDS OF REVIEW

         We review de novo a trial court’s decision on a motion for summary disposition. Spiek v
Dep’t of Transp, 456 Mich 331, 337; 572 NW2d 201 (1998). Farm Bureau moved for summary
disposition pursuant to MCR 2.116(C)(10). “Summary disposition is appropriate under
MCR 2.116(C)(10) if there is no genuine issue regarding any material fact and the moving party
is entitled to judgment as a matter of law.” West v Gen Motors Corp, 469 Mich 177, 183; 665
NW2d 468 (2003).           When considering a motion for summary disposition under
MCR 2.116(C)(10), courts view the evidence submitted in a light most favorable to the
nonmoving party. Id. “A genuine issue of material fact exists when reasonable minds could
differ on a material issue.” Braverman v Granger, 303 Mich App 587, 596; 844 NW2d 485
(2014).

      Further, the interpretation of an insurance contract is a question of law that we review de
novo. Corwin v DaimlerChrysler Ins Co, 296 Mich App 242, 253; 819 NW2d 68 (2012).




                                               -3-
                                            III. ANALYSIS

        UIM coverage is not required by Michigan’s no-fault act, MCL 500.3101 et seq. Rory v
Continental Ins Co, 473 Mich 457, 465; 703 NW2d 23 (2005). Consequently, “the scope,
coverage, and limitations of underinsurance protection are governed by the insurance contract
and the law pertaining to contracts.” Mate v Wolverine Mut Ins Co, 233 Mich App 14, 19; 592
NW2d 379 (1998). An insurance policy must be read as a whole, and the language of the policy
“is to be given its ordinary, plain meaning and technical, constrained constructions should be
avoided.” Singer v American States Ins, 245 Mich App 370, 374; 631 NW2d 34 (2001). “An
insurance policy that is clear and unambiguous must be enforced in accordance with its terms.”
Stoddard v Citizens Ins Co of America, 249 Mich App 457, 460; 643 NW2d 265 (2002).

        The analysis in this case must start with a review of the provisions of the Farm Bureau
policy governing UIM coverage. The declarations page of the Farm Bureau policy provides for
uninsured/underinsured motorist coverage in the amount of $100,000 per person and $300,000
per occurrence. Pursuant to the UIM endorsement, the definition of an uninsured motor vehicle
was amended to include an underinsured automobile. Further, an underinsured automobile is
defined as “an auto to which a bodily injury liability policy or bond applies at the time of the
accident” and “in which the limits are less than the amount of damages the injured person is
legally entitled to recover for bodily injury.” Considering the fatality, nature of the injuries, and
number of persons injured in this case, it cannot seriously be disputed that Diamond’s vehicle
fell within the definition of an underinsured automobile under the insurance policy.

       The limits of liability for UIM coverage are governed by Part IV(C) of the Farm Bureau
policy. Part IV also addresses available setoffs, and provides the following:

               C.      Limit of Liability

               We will pay for compensatory damages up to the Limit of Liability stated
       in the Declarations as follows:

               1. The limit of liability shown in the Declarations “per person” for
       Uninsured Motorist is our maximum limit of liability for all damages for bodily
       injury sustained by any one person in any one auto accident. Subject to this “per
       person” limit, the limit of liability shown in the Declarations “per occurrence” for
       Uninsured Motorist is our maximum limit of liability for all damages for bodily
       injury resulting from any one auto accident.

               2.      This is the most we will pay regardless of the number of:

               a.      autos or premiums shown in the Declarations;

               b.      claims made or suits brought;

               c.      persons injured;

               d.      autos involved in the accident; or


                                                 -4-
               e.      insureds.

              3.     The amount payable for this Uninsured Motorist Coverage will be
       reduced by any amounts paid or payable for the same bodily injury:

             a.      under Part I—Liability Coverage or Part II—Michigan No-Fault
       Coverages of this policy;

               b.      under any worker’s compensation, disability benefits law, or
       similar law; or

               c.     by or on behalf of any person or organization who may be legally
       liable for the bodily injury to the extent of any insurance applicable, and any
       assets not exempt from legal process. [Emphasis added.]

Based on the plain language of this setoff provision, Farm Bureau’s UIM coverage was subject
to reduction by “any amounts paid or payable for the same bodily injury.”

        Defendants argue that because GEICO’s settlements with Yvonne and Patricia’s estate
exhausted the tortfeasor’s policy limits, there was no amount “paid or payable” to the remaining
occupants of the vehicle. Accordingly, defendants reason, there is nothing available to reduce
the UIM benefits owed by Farm Bureau to the remaining vehicle occupants. Defendants also
focus on the phrase “for the same bodily injury,” and argue that because the GEICO limits were
paid to Yvonne and Patricia’s estate, they would not be payments for “the same bodily injury,”
and therefore, could not be used to reduce the UIM benefits owed by Farm Buerau. Defendants’
position is not supported by the plain language of the policy.

         Defendants’ focus on the phrase “for the same bodily injury” is misplaced. Rather, the
critical phrase in the policy is “paid or payable.” The term “payable” is not defined in the policy.
This Court may consult a dictionary to aid in the interpretation of an undefined contractual term.
Vushaj v Farm Bureau Gen Ins Co, 284 Mich App 513, 515; 773 NW2d 758 (2009). Merriam-
Webster’s Collegiate Dictionary (2014) defines the word “payable” as “that may, can, or must be
paid.” (Emphasis added.) In this case, the benefits from the GEICO insurance policy could have
been paid to all of the occupants of the Alexander/Hare vehicle. Indeed, before the settlements
with Yvonne and Patricia’s estate, GEICO, on behalf of its insured, admitted that there was no
defense available, and agreed to tender up to the entire policy limits to the occupants of the
Alexander/Hare vehicle. Thus, the GEICO policy limits were “payable” to defendants Jack
Hare, Olivia Hare, Duane Alexander, and Carl Alexander. As such, the GEICO policy limits
were available to reduce the amount payable by Farm Bureau for UIM coverage to these
individuals. Further, because the amounts payable under the GEICO policy were greater than the
policy limits of the Farm Bureau UIM coverage, a complete setoff occurred. This analysis is
consistent with the plain and unambiguous language of the Farm Bureau policy.

        The fact that the GEICO policy limits were exhausted in the settlements with Yvonne and
Patricia’s estate is of no moment. At several points in time, the benefits from the GEICO policy
were “payable” to the remaining occupants of the vehicle. They were only rendered unavailable
after the families, their attorneys, and GEICO structured a settlement allocating all of the policy
limits to the two occupants who suffered the most catastrophic injuries. Moreover, rights created
                                                -5-
under an insurance policy become fixed as of the date of the accident. Madar v League Gen Ins
Co, 152 Mich App 734, 742; 394 NW2d 90 (1986). In this case, on the date of the accident, the
amounts payable to each individual occupant of the Alexander/Hare vehicle from the GEICO
policy were $250,000 per person and $500,000 per occurrence. The fact that settlements were
reached with only two of the occupants, which exhausted the GEICO policy limits, does not
change the fact that the GEICO policy’s UIM coverage limits were payable to the other four
insureds in the vehicle.

        The parties have not cited any published authority directly on point. However, our
Supreme Court’s decision in Wilke v Auto-Owners Ins Co, 469 Mich 41; 664 NW2d 776 (2003),
is instructive. In that case, two injured plaintiffs settled with an at-fault driver by splitting the
driver’s $50,000 insurance policy limit. Id. at 44. Subsequently, the plaintiffs sought UIM
coverage from another insurer. Id. The available UIM coverage had limits of $100,000 per
person and $300,000 per occurrence. Id. The UIM coverage was also subject to setoff. Id. The
insurer argued that the UIM coverage for each plaintiff should be set off by $50,000, while each
plaintiff argued that “having equally split the [tortfeasor’s] policy limits of $50,000, only the
$25,000 they received should have been subtracted from the $100,000 policy limit.” Id. at 45.
The Supreme Court ultimately found that each individual’s $100,000 UIM coverage limit would
be set off by $50,000, not the $25,000 each received, explaining as follows:

       Paragraph 4(a)(1) states that the limit of liability for underinsured motorist
       coverage shall not exceed “the amount by which the Underinsured Motorist
       Coverage limits stated in the Declarations exceeds the total limits of all bodily
       injury liability bonds and policies available to the owner or operator of the
       underinsured automobile . . . .” (Emphasis added.) In this case, the underinsured-
       motorist coverage limit stated in Auto Owner’s declaration is $100,000. The total
       limit of all bodily-injury liability polices available to the owner of the
       underinsured automobile . . . is $50,000. Therefore, the amount by which the
       underinsured-motorist coverage limit stated in the declarations exceeds the total
       limits of all bodily-injury policies available to the owner of the underinsured
       automobile is clearly $50,000, not $75,000. Contrary to the contention of [the]
       Court of Appeals, this provision cannot be “reasonably understood” to be
       referring to the amount actually received by the claimant because the provision
       specifically refers to the total available to the owner. [Id. at 49-50.]

Thus, the Supreme Court held in Wilkie that UIM benefits could be reduced not by what was
actually paid by the tortfeasor to each individual plaintiff, but by what could have been received
on the basis of the tortfeasor’s policy limits.

       The analysis in Wilkie is instructive by analogy. In Wilkie, the provision stating “policies
available to the owner or operator of the underinsured automobile” is the functional equivalent of
“amounts paid or payable for the same bodily injury . . . by or on behalf of any person . . . who
may be legally liable for the bodily injury to the extent of any insurance applicable.” Here, the
amount payable by the tortfeasor was $250,000 per person and $500,000 per occurrence.
Therefore, this was the amount that the trial court properly considered when it set off the Farm
Bureau UIM coverage available to the four remaining vehicle occupants who did not receive any


                                                -6-
compensation from the tortfeasor’s GEICO policy. Hence, we conclude that the trial court did
not err in finding that Farm Bureau was entitled to summary disposition.

        As an alternative basis for granting Farm Bureau’s motion for summary disposition, the
trial court also found that GEICO’s settlement with two of the insureds without Farm Bureau’s
consent voided the UIM coverage under the Farm Bureau policy. Because we have concluded
that Farm Bureau was not obligated to pay UIM benefits, it is unnecessary to address this
alternative ruling. In any event, we would further conclude that the trial court did not err when it
determined that the conduct of two of the insureds voided the UIM provisions of the Farm
Bureau policy.

       The Farm Bureau policy’s endorsement providing UIM coverage specifically addresses
the impact of settlements with responsible parties. The endorsement states the following:

                 b. Coverage under this endorsement shall be void if:

              (1) an insured agrees to settle a bodily injury claim without our
       permission; or

              (2) an insured agrees to settle with the person(s) responsible for the
       accident for an amount which does not exhaust both:

                 (a) the sum of the limits of liability under all bodily injury liability bonds;
       and

                 (b) insurance policies applicable at the time of the accident. [Emphasis
       added.]

The trial court found that the foregoing provisions were violated and, as a result, Farm Bureau’s
UIM coverage for all of the insureds was rendered void. The trial court’s holding is consistent
with the plain and unambiguous language of the policy, stating that UIM coverage is void if “an
insured” agrees to a settlement without Farm Bureau’s consent. This Court has held that “an
insured” is the grammatical equivalent of “any insured.” See, e.g., Vanguard Ins Co v
McKinney, 184 Mich App 799, 809; 459 NW2d 316 (1990). Thus, Yvonne and Patricia’s estate
both constituted “an insured.” Further, it is undisputed that these parties settled without Farm
Bureau’s consent. There is nothing in the plain language of Farm Bureau’s policy to support
defendants’ interpretation that only the settling party’s claim for UIM benefits would be void.
Had Farm Bureau intended this interpretation, it could have provided that UIM benefits would be
void or unavailable only as to “the insured” who settled without Farm Bureau’s consent.

        In sum, the trial court did not err in granting Farm Bureau’s motion for summary
disposition under MCR 2.116(C)(10).

       Affirmed.
                                                                /s/ Donald S. Owens
                                                                /s/ Henry William Saad
                                                                /s/ Michael F. Gadola

                                                   -7-
