Summary
Insurer’s duty to defend under an errors and omissions policy with a “return of premiums” exclusion. The Sixth Circuit held that where an underlying complaint alleged negligence (e.g., negligent supervision) independent of any claim for actual receipt of premiums, the exclusion did not unambiguously bar coverage. Under Michigan law, an insurer must defend if any theory of recovery arguably falls within coverage; ambiguities are construed against the insurer. Distinguishing cases where premiums were actually received, the court found the exclusion inapplicable to claims based on constructive receipt or negligence.
Holdings
- The duty to defend existed because the underlying complaint arguably stated a claim for negligence independent of a claim for return of premiums. Under Michigan law, the insurer must defend when the allegations arguably come within the policy coverage, and ambiguities are construed against the insurer.
Questions Presented
- Whether the insurer had a duty to defend the insured in the underlying action under the errors and omissions policy, given the 'return of premiums' exclusion.
Disposition
affirmed
Cases Cited (9)
- Street v. J.C. Bradford & Co., 886 F.2d 1472 (6th Cir. 1989)(cited)
- Reurink Brothers Star Silo, Inc. v. Maryland Casualty Company, 131 Mich.App. 139, 345 N.W.2d 659 (1983)(followed)
- Meridian Mutual Insurance Company v. Hunt, 168 Mich.App. 672, 425 N.W.2d 111 (1988)(followed)
- Jonesville Products, Inc. v. Transamerica Insurance Group, 156 Mich.App. 508, 402 N.W.2d 46 (1986)(followed)
- Detroit Edison Company v. Michigan Mutual Insurance Company, 102 Mich.App. 136, 301 N.W.2d 832 (1980)(followed)
- Evanston Ins. Co. v. Fred A. Tucker & Co., Inc., 872 F.2d 278 (9th Cir. 1989)(distinguished)
- Fremont Indemnity Co. v. Lawton-Byrne-Bruner Ins. Agency Co., 701 S.W.2d 737 (Mo.App. 1985)(followed)
- Utica Mutual Insurance Co. v. Impallaria, 892 F.2d 1107 (1st Cir. 1989)(followed)
- Otteman v. Interstate Fire & Cas. Co., 172 Neb. 574, 111 N.W.2d 97 (1961)(followed)
Cited In (0)
No citing cases on record yet.
Court Document
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