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Auto-Owners' attempt to deny a day in court to injury victim is rejected

Gary Hayward was injured while engaged in construction activity, allegedly as a result of an equipment explosion.  He argued that Keizer-Morris negligently caused the explosion.  In an effort to fend off Hayward's claim, AutoOwners filed a declaratory judgment action against Keizer-Morris, which was undergoing corporate dissolution, alleging that it did not owe coverage for Keizer-Morris's negligence.  Of course, particularly with a soon-to-be-defunct corporation involved, Hayward's claim would be defeated if the at-fault's insurer could deny coverage.

Hayward moved to join in Auto Owner's dec action, but the trial court denied his request.  Keizer-Morris made the willful decision not to oppose AutoOwner's decision, thereby allowing Auto Owners to secure an unopposed holding that it did not owe Hayward coverage. 

The Court of Appeals ruled, unanimously, that the lower court had erred in refusing Hayward's request to join in the action determining Auto Owner's obligation to provide coverage.  It noted that Keizer-Morris was not motivated to zealously advocate its position, and if fact did not even choose to make an appearance in the litigation.  It is in the interests of justice, both from a substantive perspective and from the perspective of judicial economy, to allow Hayward standing to argue the coverage issue.  "[T]he default of one party, [Keitzer-Morris] does not deprive the trial court of its power to decide the rights and liabilities of the remaining parties..."

Thompson O’Neil, P.C.
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Traverse City, Michigan 49684
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