Summary
denying accident victim's request to reform the liability limits of the insurance policy of negligent boat operator because "we can find no authority that would permit the plaintiff, who is a complete stranger to the contract, to sue for reformation so that the contract would be more beneficial to himself"
Summary of this case from Spectrum Health Hosps. v. Auto-Owners Ins. Co.Opinion
Docket No. 78830.
Decided May 30, 1985.
Collins, Einhorn Farrell, P.C. (by Brian Einhorn and Noreen L. Slank), for plaintiff.
Plunkett, Cooney, Rutt, Watters, Stanczyk Pedersen, P.C. (by Robert G. Kamenec), for St. Paul Fire and Marine Insurance Co.
Plaintiff appeals as of right from the order of summary judgment that fixed defendant St. Paul Fire and Marine Insurance Company's liability at a maximum of $10,000. This action arose from a boating accident. Thea Marie Sigmann was struck by a speedboat while waiting to water ski, resulting in the amputation of her left leg. She filed suit against the boat operator (Paul Nida), the boat retailer (James Klym, doing business as Custom Speed Marine, plaintiff herein), the boat manufacturer and St. Paul Fire and Marine Insurance Company. Ms. Sigmann obtained a mediation award of $500,000, Nida being liable for $300,000 and plaintiff being liable for $200,000. The insurance company obtained a summary judgment that it was only liable for $10,000 on its insurance contract with Nida.
Plaintiff then initiated this action in an attempt to receive a declaratory judgment that the insurance company was liable for $300,000. The trial court held otherwise. On appeal plaintiff contends that the court erred in holding that the special water skiing limitation language of the insurance policy issued to Nida was unambiguous, that the water skiing limitation is against public policy, that the insurance company's agent was negligent in providing the coverage requested by the insured and that the insurer was thereby liable for the full amount of Nida's liability, and that the cost of defending Nida in the suit brought by Sigmann should not be deducted from the amount that the insurance company must pay.
Plaintiff argues that the water skiing limitation language in the insurance policy issued by defendant insurer is ambiguous. We do not agree. The policy clearly states that when the boat is being utilized in water skiing or a similar activity that the insurance coverage is reduced to a maximum of $10,000. Even the application had the box checked for the $10,000 water skiing limitation. The fact that the injured person was not a member of Nida's party is irrelevant. We find that there is only one reasonable interpretation.
"[I]f a contract, however inartfully worded or clumsily arranged, fairly admits of but one interpretation it may not be said to be ambiguous or, indeed, fatally unclear." Raska v Farm Bureau Ins Co, 412 Mich. 355, 362; 314 N.W.2d 440 (1982).
Plaintiff contends that this policy did not meet Nida's expectations.
"[T]he expectation that a contract will be enforceable other than according to its terms surely may not be said to be reasonable. * * *
"[T]o allow such a person to bind another to an obligation not covered by the contract as written because the first person thought the other was bound to such an obligation is neither reasonable nor just." 412 Mich. 362-363.
We believe a fair reading of the entire contract leaves no doubt that any accident which occurred while the boat was engaged in water skiing had a maximum insurance coverage of $10,000.
Plaintiff next argues that the $10,000 limitation violates public policy. Michigan does not require private pleasure boats to have liability insurance. See MCL 281.561 et seq.; MSA 18.1251 et seq., MCL 281.1001 et seq.; MSA 18.1287(1) et seq., and MCL 500.1 et seq.; MSA 24.1100 et seq. As there are no statutory regulations which would prohibit the water skiing limitation, we cannot find such a provision to be contrary to public policy. The insured could have purchased extra insurance for an additional fee. In the absence of legislative limitations, the insured and the insurer are free to provide and agree to whatever conditions they see fit. See Camelot Excavating Co, Inc v St Paul Fire Marine Ins Co, 410 Mich. 118; 301 N.W.2d 275 (1981).
Plaintiff alleges that he should be entitled to a declaratory judgment that Nida had $300,000 of liability insurance. He argues that the insurer is responsible for the negligent acts of its agent in failing to secure the insurance requested by Mr. Nida. While Mr. Nida may have such a claim, we can find no authority that would permit the plaintiff, who is a complete stranger to the contract, to sue for reformation so that the contract would be more beneficial to himself. Furthermore, the plaintiff cannot bring a negligence action against the insurance company. Plaintiff has not shown that the insurance company owed a duty to him to provide $300,000 of liability insurance for Mr. Nida. Ziginow v Redford Jaycees, 133 Mich. App. 259, 262; 349 N.W.2d 153 (1983). Plaintiff has cited no case law that supports a cause of action for him against Nida's insurer and we decline to create such an action.
Plaintiff alleges that it was error to hold that the liability limit included the cost of Nida's defense in the Sigmann action. This is not a situation where the insurer did not defend the insured. See Stockdale v Jamison, 416 Mich. 217, 225; 330 N.W.2d 389 (1982). The insurance company did indeed defend Mr. Nida in a situation where the claim exceeded the policy limits. Palmer v Pacific Indemnity Co, 74 Mich. App. 259, 263; 254 N.W.2d 52 (1977). Therefore the insurance company was not in breach. Our review of the policy reveals that it does clearly state that the costs of defense are included in the liability amount.
"As a general rule, it is the court's duty to ascertain the meaning which the insured would reasonably expect from the language of the contract. If the language is clear and unequivocal, the court will enforce its terms and will not rewrite the contract." Farm Bureau Ins Co v Hoag, 136 Mich. App. 326, 332; 356 N.W.2d 630 (1984).
Had the insurance company failed to defend its insured as promised, their liability might well exceed policy limits. Stockdale, supra, p 225.
Accordingly, we find no error in the trial court's granting summary judgment.
Affirmed. Costs to appellee.