                     STATE OF MICHIGAN

                        COURT OF APPEALS



SECURA INSURANCE,                              UNPUBLISHED
                                               August 13, 2015
          Plaintiff-Appellee/Cross-Appellee,

v                                              No. 320943
                                               Oakland Circuit Court
ALAN HUGHES and ELON HUGHES,                   LC No. 2012-125894-CK

          Defendants-Appellants,
and

DELBERT ROSENBERRY and LAND ESCAPE
OUTDOOR MAINTENANCE d/b/a OUTDOOR
CREATIONS,

          Defendants,
and

CITIZENS INSURANCE COMPANY,

          Defendant-Appellee/Cross-
          Appellant.


SECURA INSURANCE,

          Plaintiff-Appellee,

v                                              No. 321190
                                               Oakland Circuit Court
ALAN HUGHES, ELON HUGHES, DELBERT              LC No. 2012-125894-CK
ROSENBERRY, LAND ESCAPE OUTDOOR
MAINTENANCE d/b/a OUTDOOR
CREATIONS,

          Defendants,
and

CITIZENS INSURANCE COMPANY,


                                         -1-
               Defendant-Appellant.


SECURA INSURANCE,

               Plaintiff-Appellee,

v                                                                   No. 321856
                                                                    Oakland Circuit Court
ALAN HUGHES, ELON HUGHES, and                                       LC No. 2012-125894-CK
DELBERT ROSENBERRY,

               Defendants,
and

LAND ESCAPE OUTDOOR MAINTENANCE
d/b/a OUTDOOR CREATIONS,

               Defendant-Appellant,
and

CITIZENS INSURANCE COMPANY,

               Defendant-Appellee.


Before: RONAYNE KRAUSE, P.J., and GLEICHER and STEPHENS, JJ.

PER CURIAM.

         Secura Insurance Company filed a declaratory judgment action to determine its duty to
defend and indemnify its insured, Land Escape Outdoor Maintenance (LEOM), in a third-party
liability suit filed by Alan and Elon Hughes after a motor vehicle accident involving a dump
truck owned by LEOM. Citizens Insurance Company, which covered the Hughes’ vehicle,
intervened in the suit and argued in favor of coverage under the Secura policy to avoid its duty to
pay uninsured motorist coverage to its insureds.

        The circuit court ruled that under the plain language of the Secura commercial
automobile policy, LEOM did not have liability coverage for the dump truck. Accordingly, the
circuit court granted summary disposition in favor of Secura and against LEOM and Citizens.

       The circuit court erred in its reasoning. The Secura policy is clearly ambiguous as the
General Change Endorsement indicates that liability coverage is available, while other
documents within the policy state that liability coverage does not apply. However, the
unrebutted evidence establishes that the parties intended at the time of contract execution to
eliminate liability coverage and maintain only comprehensive coverage. Given the lack of any
genuine issue of material fact, we affirm the circuit court’s summary disposition order.

                                                -2-
                                       I. BACKGROUND

        In approximately 2000, LEOM contacted an independent insurance agency, Insurance
Advisors, Inc. (IA), seeking advice on the proper insurance coverage to meet its needs. The
landscape company wished to save insurance costs by procuring a policy that would allow it to
reduce coverage in the winter months when it placed vehicles in storage. IA recommended
Secura and LEOM purchased various policies through the company, including a commercial
automobile policy. Over the next decade, LEOM’s owner, Chris Yatooma, or a member of his
staff would contact IA in the fall and request that specified vehicles be placed “in storage.” IA
would then instruct Secura to reduce coverage on those vehicles to comprehensive only. In the
spring, LEOM would contact IA again and request that full coverage be replaced on the vehicles.
It appears that IA instructed Secura to reinstate all coverage for certain vehicles (including
personal protection insurance) and only liability coverage for others.

        On November 24, 2010, LEOM office manager Megan McKeogh sent an email to
Jennifer Medwid at IA, directing IA to “put . . . the ’96 F800 in storage” because it “has been in
the shop.” On December 9, 2010, Medwid forwarded a policy change request to Secura,
instructing the company to “[d]elete all liability coverages” and “ADD Comprehensive” for the
vehicle in question. Secura processed the request on December 22, 2010, and mailed various
insurance documents directly to LEOM. The first page of the packet, entitled “General Change
Endorsement” listed the dump truck and indicated that the insurer was “amending the following
unit[] to liability only coverage,” contrary to the instructions from IA and the expressed wishes
of LEOM. (Emphasis added.) The endorsement indicated that it did not stand alone as a
description of the coverage available to the insured, directing the insured to refer to “the common
policy conditions, coverage form(s) and forms and endorsements.” (Emphasis omitted.) The
second page, entitled “Endorsement Schedule,” directed the insured to “refer to coverage part for
full explanation.” (Emphasis omitted.) A “Coverage Change Endorsement” included in the
materials provided on December 22, assigned a $0 limit for liability, uninsured, underinsured,
property damage, and medical pay coverage, and described that the vehicle was covered for
comprehensive with a $1,000 deductible. A “Schedule of Autos” detailed various sums credited
to LEOM’s account for coverage that had been eliminated, including $422 for liability coverage.

        In Spring 2011, as Yatooma and McKeogh prepared to return the LEOM fleet to
employment, the pair reviewed the registration status and insurance coverage applicable to each
vehicle. After reading only the General Change Endorsement from the December 22, 2010
Secura packet, they determined that liability coverage had been maintained on the dump truck
over the winter months and no further action was required to make the vehicle “road legal.”
LEOM renewed the dump truck’s vehicle registration with the Secretary of State and began
using the vehicle in the landscape business.




                                                -3-
        On June 20, 2011, the dump truck was involved in a motor vehicle accident with Alan
Hughes.1 As noted, the Hughes filed suit against LEOM,2 which requested a defense and
coverage from its insurer. Secura apparently recompensed LEOM for the physical damage to the
dump truck through the comprehensive coverage applicable to the vehicle. Secura also provided
a defense in the Hughes lawsuit although with a reservation of rights. Secura asserted its belief
that the dump truck did not have liability coverage because LEOM had not paid for such
coverage since November 24, 2010, as noted in the Schedule of Autos. Secura insisted that the
General Change Endorsement’s notation that the vehicle possessed “liability only” coverage was
a scrivener’s error.

        To resolve the coverage dispute, Secura filed a declaratory judgment action. The Hughes
thereafter filed suit against their insurer, Citizens Insurance Company, seeking uninsured
motorist coverage. Citizens in turn, intervened in the current lawsuit, seeking to prove Secura’s
duty and avoid any liability on its part for uninsured motorist benefits. In a separate action,
LEOM sued IA for negligence and negligent and fraudulent misrepresentation in the
procurement of LEOM’s insurance coverage from Secura.3

      The circuit court ultimately granted summary disposition in Secura’s favor and denied
motions for summary disposition filed by LEOM and Citizens. The court ruled, in relevant part:

         [A]fter reviewing all of the policy documents, the Court finds that there was no
         liability coverage for the 1996 Ford F800 on the date of the accident. Both the
         “Coverage Change Endorsement” and [“]Schedule of Autos” clearly demonstrate
         that, consistent with [LEOM]’s request, the policy was amended to delete liability
         coverage on the 1996 Ford. In addition, the “General Change Endorsement”
         indicates a premium refund consistent with the deleted coverage. The evidence
         shows that [LEOM] would routinely remove liability coverage for its vehicles
         during the winter and would call when it wanted to reinstate the coverage. The
         policy was changed more than 20 times since January 2009 pursuant to these
         change requests by [LEOM]. Each time a policy change request was processed,
         Secura would issue a “General Change Endorsement” and a “Coverage Change
         Endorsement.” There is no evidence that [LEOM] paid the premium associated
         with liability coverage for the 1996 Ford after it requested the policy change or
         returned the premium refund. The Court finds that any reliance by Yatooma on
         only the “General Change Endorsement” was not reasonable under the
         circumstances presented. Therefore, Secura is entitled to summary disposition
         because the clear, unambiguous language of the policy provides that the 1996


1
  Delbert Rosenberry was driving the dump truck at the time of the accident. LEOM contends
that Rosenberry was a former independent contractor and did not have permission to drive the
vehicle at that time.
2
    Elon Hughes raised derivative claims in the lawsuit against LEOM.
3
 LEOM’s appeal in its action against IA is submitted with the current consolidated appeals in
Docket No. 321859.


                                                -4-
       Ford F800 was not a covered auto for purposes of liability coverage at the time of
       the accident. For the reasons above, in addition to the earlier Summary
       Disposition Opinion that found a question of fact as to whether Rosenberry had
       permission to operate the vehicle at the time of the accident, the Court finds that
       Citizens is not entitled to summary disposition. [Emphasis added.]

The current appeals followed and this Court consolidated the matters for review.

                                II. STANDARDS OF REVIEW

       We review de novo a circuit court’s resolution of a summary disposition motion. Zaher v
Miotke, 300 Mich App 132, 139; 832 NW2d 266 (2013).

               A motion under MCR 2.116(C)(10) “tests the factual support of a
       plaintiff’s claim.” Walsh v Taylor, 263 Mich App 618, 621; 689 NW2d 506
       (2004). “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). “In reviewing a motion under MCR 2.116(C)(10), this Court
       considers 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, 263 Mich App at 621. “A genuine issue of material fact exists when the
       record, giving the benefit of reasonable doubt to the opposing party, leaves open
       an issue upon which reasonable minds might differ.” West, 469 Mich at 183.
       [Zaher, 300 Mich App at 139-140.]

      The interpretation of an insurance policy is a question of law that we also review de
novo. Hunt v Drielick, 496 Mich 366, 372; 852 NW2d 562 (2014).

               An insurance policy is similar to any other contractual agreement, and,
       thus, the court’s role is to “determine what the agreement was and effectuate the
       intent of the parties.” Auto-Owners Ins Co v Churchman, 440 Mich 560, 566; 489
       NW2d 431 (1992). “[W]e employ a two-part analysis” to determine the parties’
       intent. Heniser v Frankenmuth Mut Ins Co, 449 Mich 155, 172; 534 NW2d 502
       (1995). First, it must be determined whether “the policy provides coverage to the
       insured,” and, second, the court must “ascertain whether that coverage is negated
       by an exclusion.” Id. (citation and quotation marks omitted). [Hunt, 496 Mich at
       372-373.]

In interpreting an insurance policy, we must give “its terms their ordinary and plain meaning if
such would be apparent to a reader of the instrument.” DeFrain v State Farm Mut Auto Ins Co,
491 Mich 359, 367; 817 NW2d 504 (2012) (quotation marks and citation omitted).

                                        III. ANALYSIS

    The circuit court correctly granted summary disposition in Secura’s favor, and denied
LEOM’s and Citizens’ motions for judgment in their favors, albeit for the wrong reasons. The

                                               -5-
Secura policy was ambiguous because it contained irreconcilable internal inconsistencies. The
ambiguity could be resolved at the summary disposition phase, however, because unrebutted
evidence established that the parties shared the intent to reduce coverage to comprehensive only
at the time of contract execution.

                                 A. POLICY IS AMBIGUOUS

        The documents provided to LEOM by Secura were internally inconsistent. The General
Change Endorsement stated that the coverage for the F800 was amended “to liability only
coverage.” The General Change Endorsement directed LEOM to look to coverage forms, other
forms, and endorsements to complete the insurance agreement. See Forge v Smith, 458 Mich
198, 207; 580 NW2d 876 (1998) (“Where one writing references another instrument for
additional contract terms, the two writings should be read together.”). One such endorsement
was the Coverage Change Endorsement. It indicated that LEOM had comprehensive coverage
for the F800 with a $1,000 deductible. It also provided that LEOM had a “$0” policy limit for
several categories, including liability. Moreover, the Schedule of Autos showed a blank space
next to the liability insurance limit. Within the policy itself is “Item Two-Schedule of Coverages
and Covered Autos,” which states:

              This policy provides only those coverages where a charge is shown in the
       premium column below. Each of these coverages will apply only to those “autos”
       shown as covered “autos.” “Autos” are shown as covered “autos” for a particular
       coverage by the entry of one or more symbols from the COVERED AUTO
       Section of the Business Auto Coverage Form next to the name of the coverage.

The Schedule of Autos is therefore part and parcel of the insurance contract and coverage
description.

       Contrary to the conclusion of the circuit court, this internal inconsistency rendered the
policy ambiguous. “Whether contract language is ambiguous is a question of law, which this
Court reviews de novo.” Farm Bureau Mut Ins Co of Mich v Nikkel, 460 Mich 558, 563; 596
NW2d 915 (1999).

               An insurance contract is ambiguous when its provisions are capable of
       conflicting interpretations. Accordingly, if two provisions of the same contract
       irreconcilably conflict with each other, the language of the contract is ambiguous.
       Further, courts cannot simply ignore portions of a contract in order to avoid a
       finding of ambiguity or in order to declare an ambiguity. Instead, contracts must
       be construed so as to give effect to every word or phrase as far as practicable.
       [Klapp v United Ins Group Agency, Inc, 468 Mich 459, 467; 663 NW2d 447
       (2003) (emphasis added) (quotation marks and citations omitted).]

Two provisions of this policy irreconcilably conflict. The General Change Endorsement
indicates that only liability coverage had been maintained for the vehicle, while the Coverage
Change Endorsement and Schedule of Autos indicate a $0 liability coverage limit in relation to
the F800.



                                               -6-
        There are two types of ambiguities that may exist in a contract; patent or latent. Shay v
Aldrich, 487 Mich 648, 667; 790 NW2d 629 (2010). The ambiguity before us is patent as it
“appears from the face of the document.” Id. As a patent ambiguity is clear from the language
of the document itself, “extrinsic evidence may not be used to identify” it. Id. To avoid finding
an ambiguity on the face of the document, we would have to ignore either the General Change
Endorsement or the Coverage Change Endorsement and Schedule of Autos. This is not
permitted. See Klapp, 468 Mich at 467. The only way the circuit court could consider extrinsic
evidence to determine whether the policy was ambiguous is if the contract was latently
ambiguous. As that is not the case here, the court could not consider LEOM’s email to IA, IA’s
policy change request to Secura, the parties’ history of transactions, or testimony regarding the
parties’ beliefs when deciding whether the contract was ambiguous. Shay, 487 Mich at 667-668.
Rather, this evidence would bear no relevance until it was time to interpret the policy.

        Secura contends that the language of Item Two-Schedule of Coverages and Covered
Autos removes any ambiguity from the contract. The language instructs that coverage only
exists for a particular auto if “one or more symbols” are entered on the “covered auto section.”
Secura accurately notes that the Schedule of Autos has a blank space next to the liability limit.
Although this information is useful in interpreting the parties’ intents, it does not change the fact
that the General Change Endorsement is also part of the parties’ contract and is inconsistent with
other contractual provisions.

       Accordingly, the circuit court erred in ruling that the insurance policy was unambiguous.

                                   B. CONTRACT MEANING

       We now turn to whether the evidence presented by Secura establishes the parties’ intents,
such that the case could be summarily resolved, or whether LEOM’s contradictory evidence left
a genuine issue of material fact precluding summary disposition. “[C]onsideration of extrinsic
evidence generally depends on some finding of contractual ambiguity.” City of Grosse Pointe
Park v Mich Muni Liability & Prop Pool, 473 Mich 188, 198; 702 NW2d 106 (2005). “Where
the contract language is unclear or susceptible to multiple meanings, interpretation becomes a
question of fact.” Port Huron Ed Ass’n v Port Huron Area Sch Dist, 452 Mich 309, 323; 550
NW2d 228 (1996).

        The extrinsic evidence relevant to determining the parties’ intents in entering this policy
comes first from McKeogh’s November 24, 2010 email to Medwid at IA. That message
indicated LEOM’s intent to place the F800 “in storage.” The message does not describe what
storage coverage means, however. Medwid interpreted McKeogh’s message to mean that
LEOM wanted to reduce coverage on the F800 to comprehensive only, and submitted a “policy
change request” to Secura seeking that level of coverage on December 9, 2010. Medwid’s
interpretation of McKeogh’s email is not definitive evidence of LEOM’s intent.

        Yatooma testified at his deposition regarding his understanding of the coverage available
to a vehicle placed “in storage.” Yatooma claimed, “when I initiated insurance with [IA], I
specifically discussed the elements of the storage insurance, what we refer to as storage
insurance. And it was my understanding very clearly that I would be covered from liability
resulting of [sic] a claim.” Yet, throughout his deposition, Yatooma explained his understanding

                                                -7-
that a vehicle placed in storage would not be covered if he or his employees decided to drive the
vehicle on the road. Rather, the vehicle was covered for the types of damage contemplated in the
comprehensive section of the Secura policy, which provides:

       1. We will pay for “loss” to a covered “auto” or its equipment under:

              a. Comprehensive Coverage

                      From any cause except:

                      (1) The covered “auto’s” collision with another object; or

                      (2) The covered “auto’s” overturn.

To that end, Yatooma described that LEOM would be covered if the vehicle caught fire,
exploded, was vandalized, or was stolen while in storage. Yatooma mistakenly believed,
however, based on an earlier conversation with an IA representative that comprehensive
coverage included some level of liability coverage. Therefore, he was under the incorrect
impression that if a vehicle exploded in the storage yard and caused damage to third parties,
LEOM would have liability coverage. Liability coverage is completely separate under the
policy:

       We will pay all sums an “insured” legally must pay as damages because of
       “bodily injury” or “property damage” to which this insurance applies, caused by
       an “accident” and resulting from the ownership, maintenance or use of a covered
       “auto”.

What is clear is that comprehensive and liability are two separate categories of coverage and
must both be purchased if liability coverage will apply to a comprehensive-covered event.

         Yatooma’s misunderstanding does not change the fact that he intended to secure only
comprehensive coverage when his employee asked IA to place the vehicle in storage. That
Yatooma thought comprehensive coverage included a subset of liability coverage does not make
it so, especially as such belief contravened the policy language. Ultimately, when the insurance
contract was made in November and December of 2010, LEOM intended to purchase
comprehensive coverage as evidenced by McKeogh’s email, IA’s policy change request, and
Yatooma’s deposition testimony. Secura intended to provide only comprehensive coverage as
evidenced by the Coverage Change Endorsement and the Schedule of Autos. The parties’ intents
at the time of contract execution were the same despite the error on the General Change
Endorsement.

       Further evidence of the parties’ understanding of storage coverage is supplied by General
Change Endorsements and accompanying documents issued on earlier dates. Secura provided
copies of these various change orders from 2010. On July 23, 2010, for example, Secura
changed the coverage on the F800 and on a Ford F700 upon LEOM’s request. The change
removed “comprehensive” coverage and added “liability, PIP, uninsured, property damage buy
back, and hired and non-owned” coverage. The accompanying Schedule of Autos and Coverage
Change Endorsement stated a $1,000,000 liability policy limit. In September 29, 2010, Secura

                                               -8-
amended the coverage on a 1995 Ford F700 to comprehensive only, and the attached Schedule of
Autos included a blank space in the liability limit section and an account credit for liability
coverage. And on January 21, 2011, LEOM changed the coverage on a 2001 Ford vehicle to
delete comprehensive and add liability in order to bring the vehicle back into service. Secura
also presented a table created to show LEOM’s policy changes since January 5, 2009. The
various transactions revealed a pattern of reducing coverage in the fall to comprehensive only
and reinstating liability, and sometimes other coverages, in the spring. Overall, the table and
insurance change documents establish that LEOM and Secura limited a vehicle’s coverage to
comprehensive only whenever it was placed in storage.

         Secura also contends that it can have no duty to defend or indemnify because LEOM did
not pay for liability coverage. In this regard, Secura relies upon Lee v Evergreen Regency Coop,
151 Mich App 281; 390 NW2d 183 (1986), which in turn relied upon Ruddock v Detroit Life Ins
Co, 209 Mich 638; 117 NW 242 (1920). In Lee and Ruddock, the insurers denied their clients’
requests for coverage. When the clients filed suit, the insurers raised additional grounds
supporting their denial decisions. The clients retorted that the insurers were estopped from
raising these new arguments and had waived them. The Supreme Court rejected use of the
estoppel and waiver doctrines because to do so “ ‘would make this contract of insurance cover a
loss it never covered by its terms, to create a liability not created by the contract . . . .’ ” Lee, 151
Mich App at 286, quoting Ruddock, 209 Mich at 654.

        These cases are inapposite of the issue before us. LEOM is not seeking to prevent Secura
from raising any exclusion to coverage; it has raised neither waiver nor estoppel as a defense.
(The Hughes did raise estoppel, but they are not the insureds.) Rather, the question is the proper
interpretation of the insurance policy. That LEOM may or may not have paid for the disputed
coverage is one piece of the puzzle in determining what the parties intended. As noted, it is clear
that the parties intended to delete liability coverage and add comprehensive on November 24,
2010. Consistent with that intent, the Schedule of Autos shows that partial premiums were
credited to LEOM for liability and other coverages.

        Given the plethora of unrebutted evidence that the parties intended in November and
December 2010 to remove all coverage except comprehensive for the F800, the circuit court
could have granted summary disposition on the alternate ground that there existed no question of
fact regarding the true meaning of the ambiguous insurance policy. We therefore affirm the
circuit court’s declaration that Secura had no duty to defend or indemnify LEOM in the lawsuit
filed by the Hughes and that the F800 was an uninsured vehicle for purposes of Citizens’ duty to
its insureds.

            C. CIRCUIT COURT DID NOT NEED TO WEIGH CREDIBILITY OR
                           RESOLVE FACTUAL ISSUES

         LEOM complains that the circuit court had to resolve factual disputes and weigh witness
credibility to resolve this matter. However, the conflicting evidence revolves around Yatooma’s
belief, formed in the spring of 2011, that he had liability insurance. Yatooma’s testimony clearly
supports his intent at the time of entering the contract to secure only comprehensive coverage for
the F800. Although the circuit court made comments about the reasonableness of Yatooma’s
Spring 2011 beliefs, those beliefs had no effect on the contract’s meaning. While the meaning of

                                                  -9-
an ambiguous contract is a question of fact, the unrebutted evidence supports that the parties
intended to enter a contract for comprehensive-only coverage. Accordingly, the court was not
required to resolve any factual issues either.

                                    D. UMBRELLA POLICY

        LEOM contends that even if coverage did not exist under the primary policy, it could
exist under the umbrella policy also purchased through Secura, making summary disposition
inappropriate. However, “umbrella policies require the existence of a primary policy as a
condition of coverage.” 15 Couch, Insurance § 220.32, p 220-37. “The purpose of . . . umbrella
coverage is to protect the insured in the event of a catastrophic loss in which liability exceeds the
available primary coverage.” Id. An umbrella policy may “provide primary coverage for risks
that the underlying policy does not cover.” Id., pp 220-38 – 220-39. This will depend on the
language of the policy.

         The Secura Umbrella Policy provided to LEOM details the types of “primary coverages
and limits” for which the insured must obtain separate primary insurance. The umbrella policy
“will only provide excess coverage after the limits of such other policies have been exhausted.”
Schedule A includes among the mandatory primary coverages “commercial automobile
liability.” LEOM makes no argument beyond a mere statement that the umbrella policy might
apply. It has not explained how this incident does not fall within the ambit of the commercial
automobile policy. And, as noted, as of November 24, 2010, the commercial automobile policy
no longer included liability coverage for the subject vehicle. Accordingly, the circuit court did
not err by summarily rejecting any claim based on the umbrella policy.

       We affirm.




                                                              /s/ Amy Ronayne Krause
                                                              /s/ Elizabeth L. Gleicher
                                                              /s/ Cynthia Diane Stephens




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