                           STATE OF MICHIGAN

                           COURT OF APPEALS



CLARENCE WALKER,                                                   UNPUBLISHED
                                                                   July 12, 2016
              Plaintiff-Appellant,

and

CLARENCE WALKER INSURANCE AGENCY,
LLC,

              Plaintiff,

v                                                                  No. 326354
                                                                   Wayne Circuit Court
ALERITAS CAPITAL CORPORATION,                                      LC No. 12-015390-CZ

              Defendant,

and

THOSE CERTAIN UNDERWRITERS AT
LLOYD’S OF LONDON,

              Garnishee Defendant-Appellee.


Before: JANSEN, P.J., and FORT HOOD and BOONSTRA, JJ.

PER CURIAM.

        In this garnishment action to recover insurance proceeds to satisfy an underlying
judgment, plaintiff Clarence Walker (Mr. Walker) appeals by right the trial court’s order denying
plaintiffs’ motion for summary disposition and granting summary disposition in favor of
garnishee-defendant, Those Certain Underwriters at Lloyd’s of London (Underwriters). We
affirm.

                  I. PERTINENT FACTS AND PROCEDURAL HISTORY

        In 2008, plaintiffs filed suit in federal court against Brooke Corporation, defendant
Aleritas Capital Corporation (Aleritas), and Brooke Capital Corporation, asserting claims of
misrepresentation, fraud, privacy torts, breach of contract, unjust enrichment, and violation of

                                               -1-
state franchise law.1 Mr. Walker alleged that he quit his employment to purchase an insurance
agency, but that the named defendants’ agents and representatives misrepresented the value of
the agency and Aleritas breached its agreement to fund the purchase. Id. at pp 1-2. The parties
do not dispute the federal court’s recitation of plaintiffs’ efforts to serve Aleritas with the federal
lawsuit:

                Walker2 attempted to serve Aleritas with process by sending the summons
       and complaint by registered mail, return receipt requested, to the Corporation
       Trust Co., the registered agent of Aleritas. The return receipt indicates that the
       documents were received by Corporation Trust on November 4, 2008, but do not
       indicate by whom they were received. On November 26, 2008, Walker requested
       a clerk’s entry of default, which was entered that day. On December 9, 2008
       Walker moved for default judgment, and that motion was also sent to Corporation
       Trust in its capacity as agent of Aleritas. Corporation Trust then notified the court
       that it was unable to reach Aleritas to forward the papers. Corporation Trust did
       not state whether the original service of process had ever reached Aleritas. In its
       letter to the Court, Corporation Trust returned the motion for summary judgment
       and stated that it would officially file the paperwork to resign as Aleritas’s agent.
       No defendant has answered or otherwise appeared in this action as of the date of
       this order.

               On May 1, 2009, Walker moved for a hearing on his motion for a default
       judgment stating that at the time Corporation Trust was served it was the
       registered agent of Aleritas, and that it (Corporation Trust) does not take issue
       with the service. . . . The Court will not grant a default judgment against Aleritas
       because Aleritas was never properly served with the summons and
       complaint. . . . Neither the federal, nor the state rules for service of process
       explicitly allow for service by registered mail to a corporation. [Walker v Brooke
       Corp, unpublished opinion of the United States District Court for the Eastern
       District of Michigan, issued June 17, 2009 (Docket No. 08-CV-14574), slip op at
       2-3.]

         The federal court concluded that service of process on a corporation by mail is not
permitted by the Federal Rules of Civil Procedure, and that service of process by registered mail
on an agent is permitted by MCR 2.105 only if the agent is an individual. Because Aleritas and
its registered agent, Corporation Trust Company, were corporations, service or process could not,
under either the federal or state court rules, be accomplished by mail; plaintiffs’ attempted
service on November 4, 2008 was thus ineffective. However, in lieu of dismissing the federal
action for failure of service, the court allowed plaintiffs to attempt alternate service. After


1
 Walker v Brooke Corp, unpublished opinion of the United States District Court for the Eastern
District of Michigan, issued June 17, 2009 (Docket No. 08-CV-14574).
2
 The federal court defined the term “Walker” to include plaintiffs collectively. Only Mr.
Walker is an appellant in this action, however.


                                                 -2-
plaintiffs achieved alternate service on June 30, 2009, and Aleritas failed to respond, plaintiffs
obtained a default judgment against Aleritas in the amount of $182,770.01. Walker v Brooke
Corp, unpublished opinion of the United States District Court for the Eastern District of
Michigan, issued March 30, 2010 (Docket No. 08-CV-14574).

        Plaintiffs thereafter brought this garnishment action to recover the federal court judgment
amount from Underwriters, Aleritas’s insurer under a professional liability insurance policy.
Underwriters filed a motion for summary disposition, arguing that the insurance policy it issued
to Aleritas was a “claims-made” policy that expired on December 1, 2008, and therefore it was
not liable for coverage related to plaintiff’s judgment against Aleritas because plaintiffs did not
make a claim against Aleritas until June 30, 2009 (the date service of process was successfully
accomplished on Aleritas in the underlying federal lawsuit). Plaintiffs filed a cross-motion for
summary disposition, arguing that their claim against Aleritas was timely made on November 4,
2008, when they initially served process upon Aleritas’s resident agent. Plaintiffs also argued
that Underwriters could not deny coverage because of late notice of a claim against Aleritas
because Underwriters was not prejudiced by the delay. The trial court held that plaintiffs did not
serve Aleritas until June 30, 2009, after the policy period had expired, and accordingly, there was
no insurance coverage because the claim was not made within the policy period. The court
therefore granted Underwriters’ motion for summary disposition and denied plaintiffs’ motion.

       This appeal followed.

                                 II. STANDARD OF REVIEW

        We review de novo a trial court’s ruling on a motion for summary disposition.
Frankenmuth Ins Co v Poll, 311 Mich App 442, 445; 875 NW2d 250 (2015). Summary
disposition is proper under MCR 2.116(C)(10) if “there is no genuine issue as to any material
fact, and the moving party is entitled to judgment . . . as a matter of law.” “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 v Gen Motors Corp, 469
Mich 177, 183; 665 NW2d 468 (2003). We consider the affidavits, pleadings, depositions,
admissions, and other documentary evidence in the light most favorable to the nonmoving party.
Liparoto Constr, Inc v Gen Shale Brick, Inc, 284 Mich App 25, 29; 772 NW2d 801 (2009). All
reasonable inferences are to be drawn in favor of the nonmovant. Dextrom v Wexford County,
287 Mich App 406, 415; 789 NW2d 211 (2010). 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 could differ. Allison v AEW Capital Mgt, LLP, 481 Mich 419,
425; 751 NW2d 8 (2008).

      We review de novo the interpretation of court rules and statutes. Bint v Doe, 274 Mich
App 232, 234; 732 NW2d 156 (2007).

                                         III. ANALYSIS

     Mr. Walker argues that the trial court erred in granting Underwriters’ motion for
summary disposition. We disagree.


                                                -3-
        An insurance policy is a contract, and therefore, the rules of contract interpretation apply.
Fuller v GEICO Indemnity Co, 309 Mich App 495, 498; 872 NW2d 504 (2015). An
unambiguous insurance policy is governed by its plain language. See Wilkie v Auto-Owners Ins
Co, 469 Mich 41, 62; 664 NW2d 776 (2003). A “claims made” policy, also known as a
discovery policy, generally provides for indemnity of an insured3 regardless of when the alleged
error or omission or negligent act occurred as long as the misdeed complained of is discovered
and the claim for indemnity is made against the insurer during the policy period. St Paul Fire &
Marine Ins Co v American Home Assurance Co, 444 Mich 560, 568; 514 NW2d 113 (1994). A
“claims made” policy differs from an “occurrence” policy, which provides indemnity regardless
of when the claim is raised as long as the misdeed complained of occurred during the policy
period. Id. at 569.

          The policy at issue provides, in relevant part:

                  NOTICE

                  THIS IS A CLAIMS MADE POLICY

               EXCEPT TO SUCH EXTENT AS MAY BE PROVIDED OTHERWISE
          HEREIN, THIS POLICY IS LIMITED TO INDEMNITY FOR ONLY THOSE
          CLAIMS THAT ARE FIRST MADE AGAINST THE ASSURED DURING
          THE POLICY PERIOD. PLEASE REVIEW THE POLICY CAREFULLY.

                  1. COVERAGE: CLAIMS MADE PROVISION:

                 The Underwriters will indemnify the Assured for all sums which the
          Assured shall become legally obligated to pay as damages by reason of any
          negligent act, error or omission committed or alleged to have been committed by
          the Assured or by any person for whose negligent acts, errors or omissions the
          Assured is legally responsible which arise out of the conduct of the Assured’s
          professional activities as Insurance Brokers, Insurance Agents or General
          Insurance Agents, provided always that:

                 (a) a claim is first made against the Assured during the Policy Period by
          reason of such negligent act, error or omission, and

                  (b) the Assured has no knowledge, on or prior to the effective date of this
          Policy, that such negligent act, error or omission may give rise to a claim against
          the Assured, or, there are no prior policy or policies which provide insurance for
          such liability or claims resulting from such negligent act, error or omission
          whether or not the deductible provisions and amount of such prior policy or
          policies are different from this Policy.



3
    Referred to as an “assured” in the policy at issue.


                                                   -4-
               2. DISCOVERY CLAUSE:

               If during the Policy Period the Assured shall first become aware of any
       facts or circumstances which may subsequently give rise to a claim against the
       Assured by reason of any negligent act, error or omission for which coverage
       would be afforded hereunder, and if the Assured shall DURING THE POLICY
       PERIOD stated in the Schedule give written notice to Underwriters of such facts
       or circumstances, any such claim subsequently made against the Assured arising
       out of such negligent act, error or omission shall be deemed for the purpose of this
       Insurance to have been first made during the Policy Period stated in the Schedule.
       The Assured shall co-operate fully with Underwriters or its representatives as
       provided in Condition 1 and any investigation conducted by Underwriters or its
       representatives shall be subject to the terms set forth in this Insurance.

        The plain language of the policy provides that the claim must be made against the assured
during the policy period. The term “claim” is defined as “a written demand received by the
Assured for money or services, including the service of suit or demand for arbitration against the
Assured.” (Emphasis added). Further, the mere “filing of suit, or the filing of demand for
arbitration, shall not constitute a claim within the meaning of the policy.” The policy period ran
from March 31, 2008 to December 1, 2008. It is undisputed that Aleritas did not provide written
notice to Underwriters during the policy period. Therefore, Underwriters is liable for coverage
only if plaintiffs made a claim against Aleritas within policy period. Mr. Walker contends that
he made such a claim during the policy period because Aleritas was served on November 4,
2008, when the registered agent for Aleritas received a copy of the summons and complaint. We
disagree. The language of the policy requires that a claim that consists of a suit or demand for
arbitration must be served on the assured during the policy period in order to be a valid claim.
Here, plaintiffs did not effect valid service on Aleritas until June 30, 2009.

        Although Mr. Walker contends that he complied with MCR 2.104, which addresses
process and proof of service, MCR 2.105(D) specifically addresses process and the manner of
service upon private corporations. The rule provides, in relevant part:

             (D) Private Corporations, Domestic and Foreign. Service of process on a
       domestic or foreign corporation may be made by

              (1) serving a summons and a copy of the complaint on an officer or the
       resident agent;

               (2) serving a summons and a copy of the complaint on a director, trustee,
       or person in charge of an office or business establishment of the corporation and
       sending a summons and a copy of the complaint by registered mail, addressed to
       the principal office of the corporation;

               (3) serving a summons and a copy of the complaint on the last presiding
       officer, president, cashier, secretary, or treasurer of a corporation that has ceased
       to do business by failing to keep up its organization by the appointment of officers
       or otherwise, or whose term of existence has expired;

                                               -5-
              (4) sending a summons and a copy of the complaint by registered mail to
       the corporation or an appropriate corporation officer and to the Michigan Bureau
       of Commercial Services, Corporation Division if . . . .

The court rules require personal service on an officer, registered agent, director, trustee, or
person in charge of an office or business establishment. Bullington v Corbell, 293 Mich App
549, 557; 809 NW2d 657 (2011); MCR 2.105(D)(1) and (2). Here, plaintiffs initially employed
registered mail to serve Aleritas’s resident agent, a corporation. However, because the resident
agent was a corporation, personal service was necessary to effect service. Id. The language of
MCR 2.105(D)(1) provides for personal service of the summons and a copy of the complaint on
an individual officer or resident agent, not service by mail. Acorn Investment Co v Mich Basic
Prop Ins Ass’n, 495 Mich 338, 350; 852 NW2d 22 (2014); Bullington, 293 Mich App at 558
(“The court rules simply do not contemplate that a plaintiff may use certified mail as an initial
form of service on corporate entities of any kind.”).

        Mr. Walker contends that he achieved service on the resident agent, Corporation Trust
Company, as evidenced by the signature receipt dated November 4, 2008. Mr. Walker asserts
that the fact that the resident agent later returned the summons and complaint4 is irrelevant.
However, as the federal court held, plaintiffs’ initial attempt to effect service of process, by
registered mail, on Aleritas’s registered agent, on November 4, 2008, was ineffective under both
the federal and state court rules.5 Therefore, Mr. Walker’s reliance on the initial, ineffective
service in arguing that he effectively made a claim within the policy period is without merit.

        Because the policy is a “claims-made” policy, the policy period expired on December 1,
2008, the attempted service of process November 8, 2008 was ineffective, and the return of
service on the properly served summons and complaint is dated June 30, 2009 (after the
expiration of the policy period), plaintiffs did not timely make a claim within the policy period.
Therefore, the trial court properly granted summary disposition in favor of Underwriters.

        Mr. Walker further argues that, even if service of process was ineffective, Underwriters
must demonstrate prejudice to avoid liability under the policy. However, our Supreme Court has
stated that unambiguous notice provisions in an insurance policy are enforceable “without a
showing that the failure to comply with the provision prejudiced the insurer.” DeFrain v State
Farm Mut Auto Ins Co, 491 Mich 359, 362; 817 NW2d 504 (2012).

        Because the trial court did not err in granting Underwriters’ motion for summary
disposition, it is unnecessary to address its proposed alternate grounds for affirmance.



4
 It is unclear whether the registered agent actually returned the summons and complaint, or
merely returned, as the federal court noted, the motion for summary judgment. It matters not to
our analysis, however.
5
 The Federal Rules of Civil Procedure, like the Michigan Court Rules, do not provide for service
of process on a corporation to be accomplished by mail. See FR Civ P 4(h).


                                               -6-
Affirmed.



                  /s/ Kathleen Jansen
                  /s/ Karen M. Fort Hood
                  /s/ Mark T. Boonstra




            -7-
