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What county should a UM/UIM policy be filed in?

Farm Bureau has it all wrong – and has been duping its own customers on uninsured motorist claims for eight years!

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This week, I wrote about the reasons Farm Bureau made our attorneys’ list of the worst auto insurance companies for 2015. One of the reasons is that many of the Farm Bureau adjusters I’ve had on cases are some of the most insensitive and mean spirited toward auto accident victims I’ve ever seen (especially when it comes to their own customers who are seriously injured in auto accidents and who have pending underinsured motorist claims).

And in my 20-year career as an injury lawyer in this state, that’s saying something.

Farm Bureau is now trying to dupe its own premium-paying insured customers – and sadly many attorneys as well – into believing that any lawsuit based on the uninsured and underinsured motorist coverage (UM/UIM) auto insurance contract must be filed in the county where the auto insurance policy was purchased.

So what’s wrong with that?

  • First, such a requirement conflicts with Michigan’s contract-venue statute.
  • Second, it conflicts with Michigan court rules.
  • Third, the same Farm Bureau venue provision was struck down nearly eight years ago by the Michigan Court of Appeals in Shiroka v. Farm Bureau General Insurance Company.

Yet Farm Bureau has been duping auto accident attorneys and injury victims into complying with an “unenforceable” policy for seven years and counting. This is based on Farm Bureau’s continued use of a venue provision in its “uninsured”/“underinsured” motorist (UM/UIM) policies that the Michigan Court of Appeals ruled in 2007 conflicted with “existing court rules and statutory venue provisions” and, thus, was “unenforceable.”

This issue came to light recently in a case one of our own attorneys was handling for an injured car accident victim who has a UM/UIM policy with Farm Bureau.

As soon as our attorney read the venue provision in Farm Bureau’s UM/UIM policy, she knew something was very wrong.

In Shiroka v. Farm Bureau General Insurance Company of Michigan (June 19, 2007, #269210), the Michigan Court of Appeals struck down as “unenforceable” the following venue provision (which is essentially identical to the one in our client’s case) in a Farm Bureau UM/UIM auto insurance policy:

“[I]ts insurance policy specifically provided that court actions regarding uninsured motorist coverage and benefits must take place in the venue of the county and state in which the policy was purchased.”

The Shiroka court stated:

“We conclude that Farm Bureau’s claim that the venue provision in its insurance contract with Shiroka should control [over “MCL 600.1621, the venue statute for cases involving contract claims] is without merit.”

*    *    *

“Michigan precedent establishes that ‘contractual provisions establishing venue for potential causes of action that may arise after the contract is executed are unenforceable.’”

*    *    *

“In Omne Financial, Inc v Shacks, Inc, the Michigan Supreme Court pointed out that such provisions are in conflict with existing court rules and statutory venue provisions.”
*    *    *

“[T]he provision at issue is unenforceable …”

Michigan Supreme Court says contractual changes to venue rules are ‘unenforceable’

In Omne Financial, Inc., v. Shacks Inc. (July 7, 1999, #111232), a three-justice plurality of the Michigan Supreme Court struck down a contract provision “dictating venue for any future causes of action.”

The justices explained:

  • “[C]ontract provisions establishing venue for causes of action that could arise after the contract is executed … are unenforceable.”
  • “We believe it is unnecessary to look beyond the language of the statutes to address the question whether parties may contractually agree to venue. Since the Legislature declined to provide that parties may contractually agree to venue in advance, we decline to read into the statute a provision requiring enforcement of such agreements.”
  • “Had the Legislature intended to enforce contractual agreements regarding venue, it would have included such a provision in the statutory venue provisions.”
  • “[W]e conclude that enforcement of contractual provisions establishing venue for causes of action that may arise after the contract is executed would contradict the manifest intent of the Legislature.”
  • “We also conclude that enforcement of contractual provisions establishing venue for potential causes of action that may arise after the contract is executed conflict with our court rules.”
  • “We conclude that enforcement of contractual provisions establishing venue for causes of action that may  arise after the contract is executed conflict with existing court rules and statutory venue provisions.”
  • “[W]e conclude that contractual provisions establishing venue for potential causes of action that may arise after the contract is executed are unenforceable.”

Michigan’s ‘venue’ statute for contract cases

A lawsuit seeking UM/UIM benefits is a contract action and, thus, is governed by the Michigan contract venue statute (MCL 600.1621(a) and (b)), which provides:

  • “The county in which a defendant resides, has a place of business, or conducts business, or in which the registered office of a defendant corporation is located, is a proper county in which to commence and try an action.”
  • “If none of the defendants meet 1 or more of the criteria [above], the county in which a plaintiff resides or has a place of business, or in which the registered office of a plaintiff corporation is located, is a proper county in which to commence and try an action.”

The Michigan Court of Appeals has confirmed that the contract venue statute applies to lawsuits based on UM/UIM auto insurance contracts:

“MCL 600.1621 governs venue in actions for breach of contract arising from an insurer’s denial of benefits pursuant to underinsured motorist policies …” (Ferguson v. Pioneer State Mutual Insurance Company, Michigan Court of Appeals, 11/21/2006, #260876)

Similarly, the three-justice plurality in the Michigan Supreme Court in Omne Financial, Inc., identified MCL 500.1621 as the “statute regarding appropriate venue for contract claims.”

To learn more about Michigan law regarding the proper venue for filing a contract lawsuit, take a look at my blog post, “No-Fault tip for insurance lawyers – Pick your venue for PIP cases.”

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