State of Michigan Workers' Compensation Insurance Agency v. Ace American Insurance

580 F. App'x 10
CourtCourt of Appeals for the Second Circuit
DecidedSeptember 19, 2014
DocketNo. 13-3305-bk
StatusPublished
Cited by3 cases

This text of 580 F. App'x 10 (State of Michigan Workers' Compensation Insurance Agency v. Ace American Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State of Michigan Workers' Compensation Insurance Agency v. Ace American Insurance, 580 F. App'x 10 (2d Cir. 2014).

Opinion

SUMMARY ORDER

In 2005, Delphi Corporation (“Delphi”), now reorganized as DPH Holdings Corporation, filed for bankruptcy in the United States Bankruptcy Court for the Southern District of New York. During those proceedings, Plaintiffs-Appellees ACE American Insurance Company and Pacific Employers Insurance Company (collectively, “the Insurers”) initiated this adversary action seeking, inter alia, a declaration that their insurance policies with Delphi do not obligate them to assume Delphi’s workers’ compensation liabilities arising from the company’s self-insured entities in Michigan. After this Court affirmed the denial of a motion to dismiss, In re DPH Holdings Corp., 448 Fed.Appx. 134 (2d Cir. 2011), Defendants-Appellants State of Michigan Funds Administration and State of Michigan Workers’ Compensation Agency (collectively, “Michigan Defendants”) answered the Insurers’ complaint and the parties cross-moved for summary judgment. The bankruptcy court (Drain, J.) granted summary judgment to the Insurers and entered a final judgment in their favor. On August 1, 2013 the district court (Engelmayer, J.) affirmed that deci[12]*12sion. This appeal followed. We assume the parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on appeal.

The Michigan Defendants first challenge the bankruptcy court and district court decisions that pursuant to the plain terms of the Insurers’ contracts with Delphi, these contracts do not provide workers’ compensation coverage for Delphi or its self-insured subsidiaries in Michigan. “On appeal from the district court’s review of a bankruptcy court decision, ‘we review the bankruptcy court decision independently, accepting its factual findings unless clearly erroneous but reviewing its conclusions of law de novo.’ ” In re Baker, 604 F.3d 727, 729 (2d Cir.2010) (quoting In re Enron Corp., 419 F.3d 115, 124 (2d Cir.2005)). Because the Federal Rules of Bankruptcy Procedure import the summary judgment standard of Federal Rule of Civil Procedure 56(a), Fed. R. Bankr.P. 7056, summary judgment is only appropriate if, “after construing the evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in its favor, ... ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ ” Silverman v. Teamsters Local 210 Affiliated Health & Ins. Fund, 761 F.3d 277, 284 (2d Cir.2014) (quoting Fed.R.Civ.P. 56(a)).

We agree with the bankruptcy court that, by their plain meaning, the Insurers’ contracts do not cover Delphi or its self-insured subsidiaries in Michigan. The “cardinal rule” of Michigan contract law “is to ascertain the intentions of the parties.” City of Grosse Pointe Park v. Mich. Mun. Liab. & Prop. Pool, 473 Mich. 188, 197, 702 N.W.2d 106 (2005). When the terms of a contract are unambiguous, the contract is “not open to judicial construction and must be enforced as written.” Rory v. Cont’l Ins. Co., 473 Mich. 457, 468, 703 N.W.2d 23 (2005). See also Shay v. Aldrich, 487 Mich. 648, 650, 790 N.W.2d 629 (2010). In general, “[ijnsurance policies are contracts and ... are subject to the same contract construction principles that apply to any other species of contract.” Titan Ins. Co. v. Hyten, 491 Mich. 547, 554, 817 N.W.2d 562 (2012) (citation omitted). But “when a provision in an insurance policy is mandated by statute, the rights and limitations of the coverage are governed by that statute.” Id. Under the Michigan Workers’ Disability Compensation Act, “[ejvery contract for insurance ... shall be subject to the provisions of this act and provisions inconsistent with this act are void.” Mich. Comp. Laws § 418.621(1). See also New Amsterdam Cas. Co. v. Moss, 312 Mich. 459, 472, 20 N.W.2d 272 (1945).

The Insurers’ contracts with Delphi between 2000 and 2008 unambiguously limit coverage in Michigan to identified Delphi entities that were not self-insured in the state. While these multi-state contracts consistently list Delphi as “the insured” or the “named insured,” each state — including Michigan — has a separate section that identifies particular Delphi entities as the insured parties and estimates insurance premiums based on those entities. Each Michigan-specific section identifies only Delphi entities that lacked self-insurance in the state. Every contract also contains an explicit provision stating that the insurance policies cover all workplaces in states that have separate information pages “unless you have other insurance or are self-insured for such workplaces.” J.A. 644. The contracts between 2003 and 2008 even have an “exclusion endorsement” that denies coverage to entities in Michigan that are covered by separate excess policies issued to Delphi’s self-insured entities. J.A. 3154. The general references to Delphi do not override [13]*13the clear intent of these Michigan-specific sections and additional exclusions. See Kmart Corp. v. Fireman’s Fund Ins. Co., 88 F.Supp.2d 767, 774 (E.D.Mich.2000) (“Michigan law requires that where a specific contract clause is at odds with a general contract clause, the more specific clause will control.”); Klapp v. United Ins. Grp. Agency, Inc., 468 Mich. 459, 468, 668 N.W.2d 447 (2003) (noting that courts should “avoid an interpretation that would render any part of the contract surplusage or nugatory”).

We reject the Michigan Defendants’ argument that the inclusion of the “Michigan Endorsement” in every contract overrides this clear and unambiguous language and extends coverage to all of Delphi’s Michigan entities. By its terms, the “Michigan Endorsement” applies only to the “insured employer.” See Mich. Comp. Laws § 418.621(4). In context, the plain meaning of “insured employer” in these contracts is limited to those entities covered in the policies. Each contract states that the Endorsement applies “only to the insurance provided by the policy.” J.A. 2748. As previously discussed, the policies cover particular Delphi entities in Michigan that lack self-insurance, not all of Delphi’s Michigan entities.

Nothing in the Michigan Workers’ Disability Compensation Act is contrary to the contractual provisions that state the parties’ agreement as to which Delphi-related entities are provided coverage under the contracts, nor does the Act render the parties’ intent on this issue irrelevant. The Insurers are not obligated to cover Delphi’s self-insured entities under Michigan law, see Mich. Comp.

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Cite This Page — Counsel Stack

Bluebook (online)
580 F. App'x 10, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-of-michigan-workers-compensation-insurance-agency-v-ace-american-ca2-2014.