                          STATE OF MICHIGAN

                           COURT OF APPEALS



JAMES V. TODER,                                                     UNPUBLISHED
                                                                    August 3, 2017
               Plaintiff-Appellant,

v                                                                   No. 332786
                                                                    Macomb Circuit Court
PROGRESSIVE MICHIGAN INSURANCE                                      LC No. 2014-001817-NF
COMPANY,

               Defendant-Appellee.


Before: SHAPIRO, P.J., and GLEICHER and O’BRIEN, JJ.

PER CURIAM.

       Plaintiff has insurance policies for both his motorcycle and automobile. He was injured
in an accident with an uninsured automobile while riding his motorcycle and received his UIM
limit under his motorcycle policy. Is he also entitled to UIM coverage under his automobile
insurance policy? Pursuant to the contractual language in this case, the answer is clearly no.
Accordingly, we affirm the circuit court’s summary dismissal of plaintiff’s bid for UIM coverage
under the automobile insurance policy.

                                       I. BACKGROUND

       James Toder was riding his motorcycle along Gratiot Avenue on May 8, 2013, when a
Chevrolet Lumina pulled away from the curb and into oncoming traffic. Unable to stop, Toder
clipped the Lumina’s “right rear panel.” Toder was injured and was taken by ambulance to St.
John’s Hospital. He ultimately required “three major surgeries” as a result of his injuries.

        Although the Lumina’s driver provided proof of insurance at the accident site, it was later
discovered that she was in fact uninsured. Toder successfully sought his policy limit of $20,000
in uninsured/underinsured motorist (UIM) coverage under his Progressive motorcycle insurance
policy. Toder also owned a Ford van, which he covered with a Progressive auto insurance
policy. Toder filed a claim for UIM coverage under that policy as well.

      Toder had secured $50,000 in UIM coverage under the auto policy. The UIM “insuring
agreement” within the auto policy provides:




                                                -1-
       If you pay the premium for this coverage, we will pay for damages that an
       insured person is legally entitled to recover from the owner or operator of an
       uninsured motor vehicle because of bodily injury:

       1. sustained by an insured person;

       2. caused by an accident; and

       3. arising out of the ownership, maintenance, or use of an uninsured motor
       vehicle. [Emphasis in original.]

Coverage is excluded under the UIM provision under certain circumstances:

       Coverage under this Part III will not apply:

       1. to bodily injury sustained by any person while using or occupying:

                                               * * *

              b. a motor vehicle that is owned by or available for the regular use of you
       or a relative. This exclusion does not apply to a covered auto that is insured
       under this Part III[.] [Emphasis in original.]

Of import to this appeal, the Progressive policy defines “auto,” in relevant part, as “a land motor
vehicle . . . with at least four wheels[.]” A “covered auto,” in turn, is defined to include any auto
listed on the particular policy’s declarations page as well as other “autos” that the insured owns
temporarily.

        Progressive did not deny Toder’s claim for coverage under the auto policy, but did not
provide the requested benefits either. As a result, Toder filed suit on May 2, 2014. Toder sought
payment of the $50,000 UIM coverage under the auto policy. He also sought first-party no-fault
benefits.

       On October 1, 2014, counsel for Progressive wrote to Toder and his counsel, iterating:

       Following our review of our client’s discovery responses, you are of the
       impression that UIM benefits are available through both the motorcycle and
       automobile policies. We, respectfully, disagree.

Regarding the insuring agreement of the UIM coverage section, Progressive’s counsel asserted:

       The bolded sections . . . are inherently important because they signify that there
       are policy-based definitions. To this end, as addressed under the “Additional
       Definitions” section, an “Insured person” is found under subpart b as, “any person
       while operating a covered auto with the permission of you or a relative.” The
       definition of a “covered auto” is found on page one (1) of the policy and, in
       relevant part, means “any auto or trailer shown on the declarations page for the


                                                 -2-
       coverages applicable to that auto or trailer”. Further, the definition of an “auto”
       is found on the same page to be defined as:

          2. “Auto” means a land motor vehicle:

                                                 ***

          c. with at least four wheels . . . .

                                                 ***

       Here, it is our understanding that this accident arose out of the use of a
       motorcycle. A motorcycle is not an automobile under the aforementioned policy
       which requires, among other things, for it to have at least four wheels. Nor is a
       motorcycle an automobile under the statutory definition provided by the Michigan
       No-Fault Act (see: MCL 500.3101), which reads as follows:

          (c) “Motorcycle” means a vehicle having a saddle or seat for the use of the
          rider, designed to travel on not more than 3 wheels in contact with the
          ground, which is equipped with a motor that exceeds 50 cubic centimeters
          piston displacement. The wheels on any attachment to the vehicle shall not
          be considered as wheels in contact with the ground. Motorcycle does not
          include a moped, as defined in . . . MCL 257.32b. Motorcycle does not
          include an ORV.

                                                 * * *

          (e) “Motor vehicle” means a vehicle, including a trailer, operated or
          designed for operation upon a public highway by power other than muscular
          power which has more than 2 wheels. Motor vehicle does not include a
          motorcycle or a moped, as defined in . . . MCL 257.32b. . . .

       My client’s position is quite simple. The Underinsured Motorist (UIM) policy for
       the occupied motorcycle clearly applies (and has been tendered). The . . . UIM[]
       policy for the automobile cannot apply because an automobile was not occupied
       by the Plaintiff at the time of this accident and both the policy and the Michigan
       No-Fault Act do not allow for the Plaintiff’s motorcycle to be interpreted as an
       automobile. [Emphasis in original.]

Essentially, Progressive contended that Toder was not an insured person under the auto policy
because at the time of the accident he was not using a covered auto.

       Progressive requested that Toder voluntarily dismiss his lawsuit. Toder declined to do so
and the parties filed cross-motions for partial summary disposition pertaining to the UIM
coverage under the auto policy.

       In Progressive’s summary disposition motion, the insurer changed gears from its October
2014 letter. Progressive continued to argue that a motorcycle is not a “covered auto” under the

                                                  -3-
policy because it does not have four wheels. Progressive now conceded, however, that a
motorcycle is a “motor vehicle” under “the common sense and dictionary sense of the term.”
Progressive therefore contended that Toder was excluded from UIM coverage under the auto
policy as he was “using or occupying a motor vehicle” owned by him, other than a covered auto.

        Toder responded with his own motion for summary disposition and subsequently
responded to defendant’s motion on the same grounds. Toder noted that Progressive now
“admits that there is coverage in the first instance” because Toder was an insured person injured
in an accident with an uninsured vehicle. Progressive initially “denied the claim” on October 1,
2014, based on its determination that no coverage existed in the first instance and “abandoned
that basis of denial” when seeking summary disposition. Toder described Progressive’s reliance
on the policy exclusion as a “new reason[]” to deny coverage. And that new reason
“contradict[ed]” that originally stated. Specifically, Progressive initially posited that a
motorcycle is not a “motor vehicle” and therefore UIM coverage under the auto policy was not
applicable. Progressive could not “move the goal posts” and change its position following its
denial of coverage, requiring its insured to jump through ever-shifting hurdles. This is the
essence of the “mend the hold doctrine” in Michigan, Toder asserted. Under this doctrine, once
an insurer denies liability on specific grounds, it waives any additional defenses to contract
coverage.

        Progressive retorted that the “mend the hold doctrine” applies only to fire loss and has
not been applied to no-fault cases. Progressive further contended that in order for the doctrine to
apply in any case, the insurer has to deny benefits before the litigation commences, which did not
occur here. The October 1 letter was not a denial in Progressive’s estimation, but rather an
attempt “to open dialog with Plaintiff’s Counsel before the manifestation of the pending
dispositive motions.”1 Progressive further argued that the “mend the hold doctrine” could not be
used to create coverage where none existed. The doctrine would allow insureds to preclude
enforcement of insurance contract provisions based on “the insurer’s acts or representations
induc[ing] the insured to believe that coverage would be provided,” i.e., estoppel. But,
Progressive contended, Michigan law does not allow for the creation of contract rights on
estoppel principles.

         The circuit court heard the parties’ arguments on March 30, 2015. Toder’s counsel
contended that Progressive denied his claim for UIM coverage under the auto policy in the
October 1, 2014 letter, declaring “that plaintiff was not an insured person under the initial
coverage language on the [UIM] policy.” According to Toder, during her deposition,
Progressive’s adjuster “admitted . . . that that was a denial in writing” and that she later realized
“that that position was wrong.” Toder continued, “Michigan law has said for a very long time
that when [an] insurer tells a policy holder the reason it’s denying a claim, it has waived,
intentionally waived any other defenses that it might have.” When Progressive realized that its
initial ground for denying coverage was incorrect, it could not then reformulate and raise a new



1
  Toder deposed Progressive PIP litigation adjuster Kristin Myszenski who repeatedly denied
that Progressive had formally denied Toder’s claim.


                                                -4-
defense based on a policy exclusion. Toder denied that his claim was based on estoppel
principles or that he was trying to expand coverage beyond the contract. Rather, he insisted he
only sought the application of a longstanding legal principle of waiver.

        Progressive reiterated that Toder possessed a motorcycle policy and had already received
the UIM coverage limit under that policy. Progressive further clarified that this was not a no-
fault case, but rather a contract case for UIM benefits that are not required under the no-fault act.
Progressive continued to assert that its October 1 letter was not a coverage denial. Rather,
discovery was ongoing at the time and the letter merely memorialized Progressive’s position at
that stage. Just because Progressive later concluded that Toder was an insured under the policy,
did not mean that no exclusion could apply. Exclusion (1)(b) under the UIM coverage provision
indicates that UIM coverage “will not apply to bodily injury sustained by any person while using
or occupying a motor vehicle that is owned by or available for regular use by you or [a] relative.
This exclusion does not apply to a covered auto insured under this part.” The covered auto under
the policy was a Ford van.

        Progressive admitted that “motor vehicle” was not defined in the policy. The court
interjected that the motorcycle was not a motor vehicle because it has only two wheels.
Consistent with its October 1 letter, but not its position in the summary disposition debate,
Progressive’s counsel first agreed with the court’s statement, but then reiterated that under
dictionary definitions and common sense, “the motor cycle would be considered a motor vehicle
and the exclusions would apply.” Progressive then clarified for the court that although the
motorcycle was a motor vehicle, it was “not a covered auto” because it had only two wheels.

        The circuit court issued its opinion granting Progressive’s motion for summary
disposition on May 21, 2015. The court correctly characterized the question at issue: “whether a
motorcyclist, who was involved in an accident with an uninsured motorist, is entitled to
overlapping [UIM] coverage under his automobile policy when an exclusion with this policy
does not permit these types of claims to proceed.” (Emphasis in original.) The court determined
that Toder’s motorcycle was not an “auto” under the policy definition because it did not have
four wheels. The definition of motorcycle in the no-fault act, MCL 500.3101(c), also excludes it
as an auto. The court then cited MCL 500.3101(e), which specifically excludes a “motorcycle”
from the definition of “motor vehicle.” The October 1, 2014 letter, the court determined, was a
denial of coverage but was a proper denial. The rationale cited in the letter “plainly corroborates
not only [with] the policy provisions, but also the statutory provisions under Michigan’s No-
Fault Act.” The court also rejected Toder’s claim that the statutory language was ambiguous.

        Toder sought reconsideration of the court’s ruling, contending that although the court
“concludes that the policy language is ‘straight forward and direct,’ . . . the Court’s reasoning
contradicts the Defendant’s present interpretation of the contract, and mandates the opposite
result.” Specifically, Toder took issue with the court’s determination that a motorcycle is not a
motor vehicle under the contract. If that finding was accurate, Toder asserted, “no contractual
exclusion applies” and Progressive’s motion should have been denied.

       Five months later, the circuit court finally resolved Toder’s reconsideration motion. The
court determined, “it did reach the correct result, albeit with the incorrect analysis.” The court
“agree[d] with plaintiff that defendant claims that plaintiff’s motorcycle is a motor vehicle,

                                                -5-
contrary to earlier assertions in correspondence that maintained that a motorcycle was not a
motor vehicle. This created confusion as to what coverage was available to plaintiff.” “But,” the
court insisted, it found “no ambiguity in the policy language.” The court acknowledged that as
this is a contract action, the contractual language controls. The policy does not define “motor
vehicle,” and the court referred to dictionary definitions, under which a motorcycle “is
commonly considered a motor vehicle.” Looking to the language of the subject policy exclusion,
the court concluded:

               A clear distinction is made between “motor vehicle” (not emphasized) and
       “covered auto” (emphasized); use of such emphasis in the policy means the policy
       provides definitions for the term or word. Using the common definition of a
       motor vehicle, plaintiff’s motorcycle is specifically excluded for [UIM] coverage
       under his automobile insurance policy. Hence, although the analysis is dissimilar
       to the Court’s previous ruling, the result is the same.

       Toder now appeals.2

                                          II. ANALYSIS

        Toder contends that the UIM provision in the Progressive automobile insurance policy
must be ambiguous as Progressive’s agents and the circuit court first construed the contract to
exclude a motorcycle from the definition of motor vehicle and then, upon further review, to
include motorcycle as a motor vehicle. He also insists that Progressive was bound by the reasons
cited in its October 1, 2014 “denial” letter and could not expand its contractual defenses
thereafter.

        “We review a trial court’s decision on a motion for summary disposition de novo.”
Zaher v Miotke, 300 Mich App 132, 139; 832 NW2d 266 (2013). “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). We must consider “the pleadings, admissions, affidavits, and
other relevant documentary evidence of record in the light most favorable to the nonmoving
party to determine whether any genuine issue of material fact exists to warrant a trial.” Walsh v
Taylor, 263 Mich App 618, 621; 689 NW2d 506 (2004).

       Our Supreme Court long ago held that, under certain circumstances, an insurer should be
estopped from asserting a defense to an insurance claim that the insurer did not assert earlier:

       This court has many times held, and it must be accepted as the settled law of this
       state, that, when a loss under an insurance policy has occurred and payment
       refused for reasons stated, good faith requires that the company shall fully apprise


2
  We note that the circuit court initially ruled that its orders resolved all issues in the case and
dismissed Toder’s complaint in full. It later vacated its November 2015 order in part and
reinstated Toder’s first-party no-fault claim.


                                                -6-
       the insured of all the defenses it intends to rely upon, and its failure to do so is, in
       legal effect, a waiver, and estops it from maintaining any defenses to an action on
       the policy other than those of which it has thus given notice. [Smith v Grange
       Mut Fire Ins Co of Mich, 234 Mich 119, 122-123; 208 NW 145 (1926).]

See also Castner v Farmers’ Mut Fire Ins Co, 50 Mich 273; 15 NW 452 (1883). In practice, this
is an equitable doctrine that courts should only apply when it would be unfair to allow an insurer
to assert an additional ground for denial after inducing the insured to rely on a different denial
ground to the insured’s detriment. See Reimold v Farmers Mut Ins Co, 162 Mich 69, 73; 127
NW 17 (1910) (applying the doctrine where the plaintiff relied on the insurer’s assertions in
good faith and at his great expense; under the circumstances, the insurer had a duty to promptly
repudiate the policy when “knowledge of these claimed breaches of the policy came to them”).
And contrary to Progressive’s protestations, the doctrine has been applied to all types of
insurance policies and contracts, although not always referred to by name. See Ruddock v
Detroit Life Ins Co, 209 Mich 638; 177 NW 242 (1920) (life insurance); Reimold, 162 Mich 69
(fire insurance); Gividen v Bristol West Ins Co, 305 Mich App 639; 854 NW2d 200 (2014) (no-
fault policy); Lee v Evergreen Regency Coop & Mgt Systems, Inc, 151 Mich App 281; 390
NW2d 183 (1986) (professional liability insurance).

        The doctrine precluding an insurer from changing its defense to insurance coverage is not
unlimited. “[W]aiver and estoppel are not available to broaden the coverage of a policy so as to
protect the insured against risks not included therein or expressly excluded therefrom.” Gividen,
305 Mich App at 646-647 (quotation marks and citations omitted). “ ‘The theory underlying this
rule seems to be that the company should not be required by waiver and estoppel to pay a loss for
which it charged no premium. . . .” Lee, 151 Mich App at 285, quoting 1 ALR3d 1139, 1144.
Application of the doctrine has generally been limited to two classes of cases: “The first class
involves companies which have rejected claims of coverage and declined to defend their insureds
in the underlying litigation. In these instances, the Court has held that the insurance company
cannot later raise issues that were or should have been raised in the underlying action.” Lee, 151
Mich App at 286-287. The second

       involves instances where the inequity of forcing the insurer to pay on a risk for
       which it never collected premiums is outweighed by the inequity suffered by the
       insured because of the insurance company’s actions. The insurance company has
       either misrepresented the terms of the policy to the insured or defended the
       insured without reserving the right to deny coverage. [Id. at 287 (citations
       omitted).]

         Here, Toder filed suit before Progressive actually denied coverage. During the course of
litigation discovery, Progressive communicated its belief that coverage did not exist (hence its
defense against Toder’s lawsuit) pursuant to the UIM insuring agreement. Specifically, Toder
had not “pa[id] the premium” for “coverage” for the specific accident because Toder was not an
“insured person” as contemplated in the policy. An “insured person” must be operating a
“covered auto.” Toder’s motorcycle was not a “covered auto” under the UIM policy because the
policy defined an auto has having “at least four wheels.” Although unnecessary to its resolution,
Progressive also opined that the motorcycle was not an auto because it did not fit within the
definition of “motor vehicle” in the no-fault act.

                                                 -7-
        Toder did not rely on the defenses stated in this letter to its detriment. After all, Toder
had already filed suit. Following two more months of discovery, Progressive amended its
position regarding coverage, relying on the (1)(b) exclusion instead. Although Progressive
continued to contend that Toder was not operating a “covered auto,” the accident was excluded
from coverage under the policy because Toder’s bodily injury was sustained while occupying “a
motor vehicle that is owned by or available for” Toder’s regular use, other than the specific
“auto” covered by the policy. Progressive abandoned its reliance on definitions in the no-fault
act. As the policy differentiated between “auto” and “motor vehicle,” they must mean different
things. The insurer changed its position and declared that the motorcycle was a “motor vehicle”
for purposes of the exclusion.

        Moreover, estopping Progressive from raising the exclusion would force the insurer to
cover an event for which it collected no premium. Progressive issued two policies to Toder, one
for his van and one for his motorcycle. Toder had already collected UIM benefits under the
motorcycle policy. Toder paid no premium for motorcycle coverage under his auto policy
covering the van. The “mend the hold doctrine” or estoppel of insurance defense does not apply
under the circumstances.

        And contrary to the confusion of Progressive’s adjuster and the circuit court, the language
of Progressive’s UIM policy is plain and clear, not ambiguous. “The primary goal in the
construction or interpretation of a contract is to honor the intent of the parties. The language of
the parties’ contract is the best way to determine what the parties intended.” Royal Prop Group,
LLC v Prime Ins Syndicate, Inc, 267 Mich App 708, 714; 706 NW2d 426 (2005). “The
contractual language is to be given its ordinary and plain meaning. An insurance contract must
be construed so as to give effect to every word, clause, and phrase, and a construction should be
avoided that would render any part of the contract surplusage or nugatory.” Id. at 715. A
contract provision is ambiguous only if it “irreconcilably conflict[s]” with another contract
provision, Klapp v United Ins Group Agency, Inc, 468 Mich 459, 467; 663 NW2d 447 (2003), or
“is equally susceptible to more than a single meaning.” Barton-Spencer v Farm Bureau Life Ins
Co, 500 Mich 32, 40; 892 NW2d 794 (2017).

         Exclusion (1)(b) provides that UIM coverage “will not apply . . . to bodily injury
sustained by any person while using or occupying . . . a motor vehicle that is owned by or
available for the regular use of” Toder other than “a covered auto.” Toder owned the motorcycle
and it was available for his regular use. He sustained bodily injury while using the motorcycle.
The motorcycle was not “a covered auto” because the policy defined “covered auto[s]” as having
at least four wheels. It also was not listed on the auto policy’s declarations page.

        The motorcycle was, however, a “motor vehicle” subject to exclusion. The policy does
not define “motor vehicle.” The definition must be more inclusive than “auto” as defined in the
policy or the drafter would have simply reused “auto” in subsection (1)(b). See Mason v
Telefunken Semiconductors America, LLC, 797 F3d 33, 42 (CA 1, 2015) (“Where the same word
or phrase might have been used . . . in different portions of a [contract] but a different word or
phrase having different meaning is used instead, the construction employing that different
meaning is to be favored.”) (quotation marks and citation omitted).



                                                -8-
        The Michigan Supreme Court has already found motorcycles to fall within the common-
sense definition of “motor vehicle.” In Bianchi v Auto Club of Mich, 437 Mich 65, 68; 467
NW2d 17 (1991), the Court interpreted an exclusion to UIM coverage for “bodily injury
sustained by an insured person: while occupying a motor vehicle which is owned by you or a
relative unless that motor vehicle” is the subject of the insurance policy. Unlike the policy in this
case, the Auto Club policy defined “motor vehicle,” although minimally. Specifically, a “motor
vehicle” was defined as “a land motor vehicle or trailer, requiring vehicle registration.” Id. The
policy excluded various motorized vehicles from the definition, but did not mention motorcycles.
Id. at 68-69. The Court determined that a motorcycle was a motor vehicle under the policy:

       The question thus becomes whether a motorcycle fits within the broad definition.
       Plainly, it does. A motorcycle is a motor vehicle in both the common sense and
       the dictionary sense of the term, it is operated on land, and it is required to be
       registered. MCL 257.216 . . . .

                                               ***

       The broader definition of the term in the uninsured motorist section, on the other
       hand, is more akin to the use of the term in the Motor Vehicle Code, which
       includes motorcycles. MCL 257.33. . . . [Id. at 71.]

        Webster’s New World College Dictionary (5th ed), p 955, defines “motor vehicle” as “a
vehicle on wheels, having its own motor and not running on rails or tracks, for use on streets or
highways. . . .” A motorcycle is the type of vehicle contemplated in the dictionary; it is a
motorized transport with wheels operated on roadways. It is also a “motor vehicle” for purposes
of the subsection (1)(b) exclusion. Accordingly, we discern no error in the circuit court’s grant
of summary disposition in Progressive’s favor.

       We affirm.




                                                              /s/ Douglas B. Shapiro
                                                              /s/ Elizabeth L. Gleicher
                                                              /s/ Colleen A. O'Brien




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