Supreme Court issues rare rebuff to over-reaching insurer; rejects broad interpretation of policy exclusion in multiple injury and death case
When a driver for Drielick Trucking caused one death and multiple serious injuries, it looked to its "bobtail" insurer, Empire Fire and Marine Insurance Company, to compensate the victims. When Empire argued the truck wasn't covered by the "bobtail" policy, even though it was being operated without a trailer, the victims' families and the Defendants pursued garnishment of Empire's policy limits.
Empire argued that it's "bobtail" policy (written to insure semi-tractors when not hauling a trailer) did not apply to the Drielick incident because the injuries resulted while the bobtail truck was en route to pick up a load. Empire asked the Court to rule that coverage should be excluded both because it was operating under an [unwritten] lease with a third-party, and because "it was being used to carry property"--because it would eventually be picking up a trailer.
The trial judge rejected these exclusion arguments, but the insurer appealed and the Court of Appeals reversed. It gave the "carrying property" exclusion such broad reach that it virtually wiped out the bobtail coverage. When the case reached the Michigan Supreme Court, this outcome was too arrogant of an insurance-reach even for the very insurance-oriented Republican majority. They joined a unanimous opinion written by Justice Cavanaugh, holding that the strained interpretation of the policy exclusion sought by Empire was inconsistent with long-standing Michigan law. An exclusion of insurance must be strictly and narrowly construed, and the Court of Appeals had strained the language of the exclusion to the breaking point in attempting to help Empire exclude coverage.
Nevertheless, the Supreme Court did not reinstate the trial judge's decision that Empire owed coverage. It held that the insurer would still be allowed to argue that the bobtailed truck was operating as a leased vehicle--excluded from coverage--despite the fact that the parties adknowledged that there was no written lease as required by federal law, and the operator testified that the truck was simply sent on a negotiated one-time contract.