Federal ruling puts brakes on State Farm’s attempt to ignore its own policy language in order to deny personal injury benefits to auto accident victim
“Your words, not mine.”
Sometimes, that is all that’s necessary to win in court.
And it proved true for auto accident victim Barbara Bennett, when she sued State Farm Insurance Company for personal injury benefits after State Farm’s insured customer drove his car into Ms. Bennett while she was walking her dog.
Ms. Bennett claimed she was entitled to injury benefits as an “occupant” of the motor vehicle belonging to State Farm’s insured customer because “at the time she was on the vehicle’s hood” she was, as the term is defined in State Farm’s auto insurance contract, “occupying” the vehicle.
State Farm said Ms. Bennett’s argument was “ridiculous.”
But the U.S. Circuit Court of Appeals for the Sixth Circuit disagreed.
Not only is it uncivil to call an opponent’s argument “ridiculous,” said the federal appeals court, but it’s also unwise especially when “the argument that State Farm derides as ridiculous is instead correct.”
The federal judges acknowledged that, “as a matter of ordinary English usage, one might be skeptical that Bennett was an ‘occupant’ of the [vehicle] during the time she was on its hood. Occupants are normally inside vehicles, not on them.”
Yet, the judges said, it’s not “ordinary English usage” that matters in this case. It’s what the policy says that matters:
“[T]he parties to a contract can define its terms as they wish; and State Farm has done so here.”
* * *
“Its policy for the [vehicle] defines ‘occupying’ as ‘… on …’ And the parties have stipulated that Bennett was on the [vehicle] — specifically, on its hood — and that she ‘suffered further bodily injuries’ while she was there.”
* * *
“Per the policy’s terms, therefore, Bennett was an ‘occupant’ of the vehicle and thus entitled to coverage for those additional injuries.”
Unwilling to play by the rules that it, alone, wrote into its auto insurance contract, State Farm ignored its own contractual definition of “occupant” and, instead, urged the court to apply definitions crafted by “other courts.”
The federal judges instantly saw through and rejected State Farm’s ploy:
“We cannot [consider other courts’ definitions of what an ‘occupant’ is] … since the policy [in this case] does define the term.”
* * *
“In this case … the policy marks out its zone of coverage in primary colors. The policy’s terms therefore control.”
* * *
As an insurance attorney, I try to read every no fault and insurance case that comes down in my own area of law. And I frequently write about the cases on the pages of this legal blog. But it is not often that I have as much fun writing about a case as I did writing about this one.
For nearly two decades now, the Republican courts in Michigan, at the behest of the insurance companies and their lawyers, have systematically dismantled Michigan law. This has been accomplished by abolishing the doctrine of reasonable expectations that has always existed in this state, and then denying coverage in case after case using onerous and one-sided policy language written by insurance companies and their lawyers.
How nice it is to see this federal case come down, proving that at least in this limited context, what’s good for the goose is good for the gander too.