United States District Court, E.D. Michigan, Southern Division
JOHNNIE WILSON, DWIGHT WILSON, HASSAN TURNER, C.S., Z.S., N.S. and A.S Plaintiffs,
STATE FARM FIRE AND CASUALTY COMPANY Defendant.
ORDER DENYING DEFENDANT'S RENEWED MOTION FOR
JUDGMENT AS A MATTER OF LAW (ECF NO. 51)
COHN UNITED STATES DISTRICT JUDGE.
an insurance case. Plaintiffs Johnnie Wilson, Hassan Turner,
and Turner's grandchildren (C.S., Z.S., N.S. and A.S.)
are suing state farm for denying their claims for the loss
suffered after a fire at their home. The named insured on the
policy was Johnnie Wilson. It is undisputed that Wilson's
son, Hassan Turner, and his grandchildren (C.S., Z.S., N.S.
and A.S.), were all insured persons under the fire insurance
parties consented to a jury trial. The jury unanimously found
that Wilson had a wrongful connection to the fire and that
Turner did not. (ECF No. 44).
Farm now asks the Court to find that Turner and his
grandchildren are precluded from recovering under the fire
insurance policy. State Farm argues that because the policy
excludes coverage for “innocent co-insureds”, the
jury's finding that Wilson had a wrongful connection to
the fire also precludes Turner and the grandchildren from
coverage for their loss of personal property. The fire
insurance policy states: “If you or any person insured
under this policy causes or procures a loss to property
covered under this policy for the purpose of obtaining
insurance benefits, then this policy is void and we will not
pay you or any other insured for this loss.” (ECF No.
51-2, PageID.537). Turner and the grandchildren argue that
Michigan law deems this language void. Therefore, they say,
they are entitled to collect under the policy as
the trial, State Farm filed a motion for judgment as a matter
of law on these grounds. The Court denied the motion, saying
that the issue was preserved. State Farm has renewed the
motion. (ECF No. 51).
“[J]udgment as a matter of law is appropriate
‘[i]f a party has been fully heard on an issue during a
jury trial and the court finds that a reasonable jury would
not have a legally sufficient evidentiary basis to find for
the party on that issue.'” Burley v.
Gagacki, 729 F.3d 610, 621 (6th Cir. 2013) (quoting
Fed.R.Civ.P. 50(a)). The decision to grant judgment as a
matter of law and remove the consideration of the case from
the jury should occur only when “there is a complete
absence of pleading or proof on an issue material to the
cause of action or when no disputed issues of fact exist such
that reasonable minds would not differ.” Id.
Michigan Supreme Court first addressed whether one insured
may recover after a coinsured causes a loss in Monaghan
v. Agric. Fire Ins. Co., 53 Mich. 238 (1884). Answering
in the negative, the court reasoned “if the right of
action has become barred as to one of the joint contractors,
it has to all of them […]. Any attempt on [one
insured's] part to defraud the company by not complying
with the conditions of the policy, or any false swearing or
concealment or fraud in reference to the proofs of loss,
would defeat a recovery.” Id.
a century later, the Michigan Supreme Court introduced the
“innocent co-insured” doctrine in Morgan v.
Cincinnati Ins. Co., 411 Mich. 267 (1981). The supreme
court explained, “[W]henever the statutory clause
limiting the insurer's liability in case of fraud by the
insured is used it will be read to bar only the claim of an
insured who has committed the fraud and will not be read to
bar the claim of any insured under the policy who is innocent
of fraud.” Id. at 277. The decision was
grounded in public policy, the court noting that barring
recovery to all insureds based on one's fraudulent
conduct would require “that each insured must not only
undertake to forbear from fraud himself, but must also
undertake to prevent each of the other persons insured from
engaging in fraud on pain of losing all interests under the
policy.” Id. The supreme court declined to
impose such a requirement, noting that “an insured
often has no control over the conduct of others.”
Id. at 276.
Borman v. State Farm Fire & Cas. Co., 446 Mich.
482 (1994), the supreme court expanded the scope of the
“innocent co-insured” doctrine to cover not only
fraudulent acts, but intentional conduct as well. The supreme
court prohibited “an insurer from denying coverage to
“an insured” who is innocent of wrongdoing based
upon the wrongdoing of any other coinsured.”
Id. at 489. The supreme court then concluded that an
intentional acts exclusion was not permissible where the
exclusion barred recovery to an innocent spouse. Id.
dissent in Borman found a distinction between
“the” insured and “any”/
“an” insured as the terms are used in an
insurance policy to preclude collection. When the policy uses
“any/an insured, ” the dissent stated, all
co-insureds, including innocent co-insureds, are precluded
from recovery. Id. at 494. A small number of
Michigan Court of Appeals cases have applied the reasoning of
the dissent to bar coverage to innocent co-insureds. State
Farm asks the Court to do the same.
deciding a diversity case under state law, a federal court
must apply the law of the forum state's highest court.
Durmishi v. Nat'l Cas. Co., 720 F.Supp.2d 862
(E.D. Mich. 2010). If the state's highest court has
decided an issue, the court is bound to apply the rule ...