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Meridian Mut. Ins. Co. v. Wypij11/4/1997
Defendant Jack D. Cox appeals as of right from an order granting plaintiff's motion for summary Disposition and denying his motion for summary Disposition in this declaratory judgment action. We affirm.
Plaintiff Meridian Mutual Insurance Company issued a commercial general liability policy to defendant Lawrence Wypij, who was doing business as Vip-E Construction. The policy covered bodily injury, but contained an exclusion for employees:
2. Exclusions.
This insurance does not apply to:
e. "Bodily injury" to:
(1) An employee of the insured arising out of and in the course of employment by the insured; or
(2) The spouse, child, parent, brother or sister of that employee as a consequence of (1) above.
This exclusion applies:
(1) Whether the insured may be liable as an employer or in any other capacity; and
(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.
This exclusion does not apply to liability assumed by the insured under an "insured contract."
While this policy was in effect, defendant Wypij hired defendant Cox to work on a roofing project on a residential home. While working on the project, Cox apparently fell from the roof because of an improperly installed roofing jack and sustained serious injuries. Cox sued Wypij, and plaintiff then brought a declaratory judgment action to determine the parties' rights under the insurance contract. In the declaratory judgment action, the trial court found that the employee exclusion clause in the insurance policy applied to Cox's claim and held that plaintiff had no duty to defend or indemnify Wypij. The only question on appeal is whether the trial court properly applied the employee exclusion clause.
Defendant Cox argues that the employee exclusion provision should not bar coverage in this case. He offers two alternative grounds for this assertion: (1) he was not an "employee" as that term is used in the insurance policy, and (2) an employee exclusion clause should only be applied where the employee can bring a claim under the Worker's Disability Compensation Act (WDCA), MCL 418.101 et seq.; MSA 17.237(101) et seq. We disagree.
The construction of a contract with clear language is a question of law that we review de novo. Auto Club Ins Ass'n v Lozanis, 215 Mich App 415, 418-419; 546 NW2d 648 (1996). Courts view insurance contracts similarly to other contracts, as agreements between the parties, and will determine the terms of the agreement and enforce them accordingly. Id. at 419. If terms are not defined in the contract, they will be interpreted in accordance with their common usage. While ambiguities in a policy are generally construed in favor of the insured, the Court will not create ambiguities where none exist. Cavalier Mfg Co v Employers Ins of Wausau (On Remand), 222 Mich App 89, 94; 564 NW2d 68 (1997).
In this case, the trial court noted that the term "employee" is not defined in the insurance contract. The court then apparently relied on the "economic reality test" to determine whether Cox was an employee. Under these circumstances, we believe that the economic reality test properly aided the trial court in determining whether Cox was an "employee" for purposes of the contract. The economic reality test involves four basic factors: (1) control of the worker's duties; (2) payment of wages; (3) the right to hire, fire, and discipline; and (4) performance of the duties toward the accomplishment of a common goal. Hoste v Shanty Creek Management, Inc, 221 Mich App 144, 149; 561 NW2d 106 (1997). In applying these f
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