Yang v. Everest Nat'l Ins. Co.

507 Mich. 314

968 N.W.2d 390

Wesley Zoo YANG and Viengkham Moualor, Plaintiffs-Appellees,

v. EVEREST NATIONAL INSURANCE COMPANY, Defendant-Appellant,andMotorist Mutual Insurance Company, Defendant-Appellee.

No. 160578

Supreme Court of Michigan.

Argued on application for leave to appeal March 3, 2021

Decided June 10, 2021

Temrowski & Temrowski Law Office (by Lee Roy H. Temrowski, Jr. ) for Wesley Yang and Viengkham Moualor.

Zausmer, PC (by James C. Wright, East Lansing) for Everest National Insurance Company.

Garan Lucow Miller, PC, Detroit (by Christian C. Huffman and Christopher P. Jelinek ) for Motorist Mutual Insurance Company.

Nadia Ragheb-Gonzalez for the Michigan Association for Justice, amicus curiae.

BEFORE THE ENTIRE BENCH

Bernstein, J.

This case concerns whether MCL 500.3020(1)(b) of the Insurance Code, MCL 500.100 et seq. , allows an insurance company to cancel an insurance policy when the company mails its customer a letter purporting to be a notice of cancellation for nonpayment of insurance premiums before any nonpayment actually occurred. We hold that MCL 500.3020(1)(b) does not allow cancellation on these grounds. Accordingly, we affirm the judgment of the Court of Appeals.

I. FACTUAL BACKGROUND

Plaintiffs, Wesley Zoo Yang and Viengkham Moualor, are a married couple who purchased a six-month no-fault insurance policy from defendant Everest National Insurance Company (Everest). Yang was the primary insured party on the policy and was responsible for making the monthly premium payments. The policy went into effect on September 26, 2017, when he made the first premium payment. On October 9, 2017, approximately two weeks after Yang made the first payment, Everest mailed him a letter titled, "PREMIUM BILLING AND CANCELLATION NOTICE FOR NON-PAYMENT." The letter informed Yang that his next insurance premium payment was due October 26, 2017, and that Everest would cancel the policy if he failed to pay by the due date. Everest maintains that this letter was sent in accordance with the termination provisions in the no-fault insurance policy, which stated:

Cancellation - This Policy may be canceled during the policy period as follows:

* * *

2. We may cancel by mailing you at the address last known by us or our agent:

a. at least 10 days notice by first class mail, if cancellation is for non-payment of premium[.] [Emphasis omitted.]

At the time the cancellation notice was mailed, Yang had made all required payments. However, Yang failed to make the subsequent payment due on October 26, 2017, and Everest terminated the policy for nonpayment of the premium on October 27, 2017.

On October 30, 2017, Everest sent Yang a letter informing him that Everest would reinstate the policy with a lapse in coverage if he made a premium payment by November 27, 2017. At that time, Yang did not take any steps to reinstate the policy. On November 15, 2017, plaintiffs were struck by a car while walking down the street. Two days later, Yang made a payment to Everest to reinstate the policy. Plaintiffs then filed a claim for personal protection insurance (PIP) benefits through Everest. Everest denied the claim, explaining that it was not responsible for PIP benefits because Yang did not have a valid no-fault insurance policy when the accident occurred.

Following the denial of the claim for PIP benefits, plaintiffs sued Everest.¹ During litigation, Everest moved for summary disposition under MCR 2.116(C)(10), arguing that the policy was lawfully canceled before plaintiffs were injured and that no genuine issue of material fact existed to show that Everest was responsible for servicing the claim for PIP benefits. In response, plaintiffs argued that a genuine issue of material fact did exist as to whether Yang's payment to Everest on November 17, 2017, reinstated the policy. After hearing oral argument, the trial court denied Everest's motion, concluding that the cancellation notice had not complied with the terms of the no-fault insurance policy and therefore the policy had never actually been canceled, rendering Everest first in priority for payment of PIP benefits to plaintiffs.

Everest appealed in the Court of Appeals, which affirmed in a split published opinion. Yang v. Everest Nat'l Ins. Co. , 329 Mich. App. 461, 942 N.W.2d 653 (2019). The Court of Appeals majority ruled in plaintiffs’ favor, holding that the cancellation notice Everest mailed to Yang did not satisfy MCL 500.3020(1)(b) and, moreover, that it did not satisfy the terms of plaintiffs’ no-fault policy. Id. at 470-472, 942 N.W.2d 653. The majority explained that for a cancellation to be valid under MCL 500.3020(1)(b), "the event triggering the right to cancel must have taken place first." Id. at 470, 942 N.W.2d 653. Because Yang had not yet failed to pay his insurance premium when Everest mailed the cancellation notice for nonpayment of the premium, the majority ruled that the notice was invalid and did not satisfy MCL 500.3020(1)(b). Id. The concurrence provided a different rationale, concluding that the Court of Appeals could rule in plaintiffs’ favor without reaching the broader question of whether the cancellation notice failed to satisfy MCL 500.3020(1)(b). Id. at 472-473, 942 N.W.2d 653 ( SWARTZLE , J., concurring). The concurrence explained that a cancellation notice must be unconditional to be effective. Id. , citing American Fidelity Co. v. R. L. Ginsburg Sons’ Co. , 187 Mich. 264, 276, 153 N.W. 709 (1915). Thus, the concurrence reasoned, the cancellation notice Everest sent Yang was not an effective cancellation of the policy because it was conditioned on Yang's failure to pay his insurance premiums. Yang , 329 Mich. App. at 472, 942 N.W.2d 653 ( SWARTZLE , J., concurring).

Everest timely sought leave to appeal in this Court. On May 20, 2020, we directed the Clerk to schedule oral argument on the application. Yang v. Everest Nat'l Ins. Co. , 505 Mich. 1068, 943 N.W.2d 94 (2020).

II. STANDARD OF REVIEW

The trial court denied Everest's motion for summary disposition, which was brought under MCR 2.116(C)(10). We review de novo a trial court's decision on a motion for summary disposition under MCR 2.116(C)(10). Honigman Miller Schwartz & Cohn LLP v. Detroit , 505 Mich. 284, 294, 952 N.W.2d 358 (2020). When reviewing a motion brought under MCR 2.116(C)(10), "a trial court considers affidavits, pleadings, depositions, admissions, and documentary evidence filed in the action or submitted by the parties ... in the light most favorable to the party opposing the motion." Mich. Ass'n of Home Builders v. Troy , 504 Mich. 204, 211-212, 934 N.W.2d 713 (2019) (quotation marks and citations omitted). Summary disposition is appropriate when no genuine issue of material fact exists. El-Khalil v. Oakwood Healthcare, Inc. , 504 Mich. 152, 160, 934 N.W.2d 665 (2019). "A genuine issue of material fact exists when the record leaves open an issue upon which reasonable minds might differ." Id. (quotation marks and citation omitted).

III. ANALYSIS

Everest argues that MCL 500.3020(1)(b) did not preclude it from canceling Yang's policy after mailing a letter—which it characterizes as a notice of cancellation for nonpayment of premium—before he failed to pay his insurance premiums. We disagree and hold that Everest's letter was not a valid cancellation notice because it did not satisfy MCL 500.3020(1)(b).

When interpreting an insurance policy, " ‘[t]he policy and the statutes relating thereto must be read and construed together as though the statutes were a part of the contract,’ " because the parties are presumed to have contracted with the intention of executing a policy that complies with the related statutes. Rohlman v. Hawkeye-Security Ins. Co. , 442 Mich. 520, 525 n. 3, 502 N.W.2d 310 (1993), quoting 12A Couch, Insurance, 2d (rev. ed.), § 45:694, pp. 331-332. See also Bazzi v. Sentinel Ins. Co. , 502 Mich. 390, 399, 919 N.W.2d 20 (2018) ("When a provision in an insurance policy is mandated by a statute, the policy and the statute must be construed together as though the statute were part of the policy, and the rights and limitations of the coverage are governed by that statute.") (quotation marks and citation omitted). Therefore, the pertinent question here is what constitutes a valid cancellation notice under MCL 500.3020(1), which states:

A policy of casualty insurance ..., including all classes of motor vehicle coverage, shall not be issued or delivered in this state by an insurer ... for which a premium or advance assessment is charged, unless the policy contains the following provisions:

* * *

(b) ... [T]hat the policy may be canceled at any time by the insurer by mailing to the insured at the insured's address last known to the insurer or an authorized agent of the insurer, with postage fully prepaid, a not less than 10 days’ written notice of cancellation with or without tender of the excess of paid premium or assessment above the pro rata premium for the expired time. [Emphasis added.]

Our analysis of this issue is governed by the general principles of statutory interpretation. When interpreting a statute, courts must "ascertain the legislative intent that may reasonably be inferred from the words expressed in the statute." Andrie Inc. v. Dep't of Treasury , 496 Mich. 161, 167, 853 N.W.2d 310 (2014) (quotation marks and citation omitted). Undefined words are generally "presumed to have their ordinary meaning," but some words and phrases have a "peculiar and appropriate" meaning within the common law. Clam Lake Twp. v. Dep't of Licensing & Regulatory Affairs , 500 Mich. 362, 373, 902 N.W.2d 293 (2017). If a word or phrase has acquired a peculiar or appropriate meaning in the law, it must be "construed and understood according to such peculiar and appropriate meaning." MCL 8.3a.

When a word " ‘has been subject to judicial interpretation, the legislature is presumed to have used particular words in the sense in which they have been interpreted.’ " McCormick v. Carrier , 487 Mich....