Summary
holding that "[a]n insurance policy condition requiring an [EUO] before an insured has the right to bring an action is a valid condition precedent and as a general rule enforceable, and one who without cause refuses to submit to such an examination should be precluded from maintaining an action on the policy."
Summary of this case from Durasevic v. Grange Ins. Co. of Mich.Opinion
Docket No. 183065.
Submitted September 3, 1996, at Detroit.
Decided October 4, 1996, at 9:10 A.M.
Martin Gary Deutch, for the plaintiff.
Klemanski Honeyman, P.C. (by John D. Honeyman), for the defendant.
Defendant appeals as of right the trial court's grant of summary disposition, dismissing without prejudice plaintiff's claim for benefits under a homeowner's policy. Defendant argues that the dismissal should have been with prejudice. We disagree and affirm the ruling of the trial court.
Plaintiff owned a home that was insured by defendant. Plaintiff alleged that on July 22, 1994, her home was burglarized and property was stolen therefrom. Plaintiff sought to collect benefits under her homeowner's policy. In a September 27, 1994, letter, defendant requested, pursuant to the homeowner's policy, an oral examination of plaintiff, under oath, on October 25, 1994. On October 5, 1994, plaintiff gave a detailed, taped statement to defendant. This statement was not given under oath. On October 25, 1994, plaintiff failed to appear for the scheduled oral examination. In a letter dated October 31, 1994, defendant rescheduled the oral examination for November 21, 1994. Plaintiff filed the instant action on November 2, 1994.
Defendant moved for summary disposition, arguing that because plaintiff failed to satisfy the condition of being examined under oath, recovery under the policy was barred. Plaintiff argued that by giving the taped statement, although it was not given under oath, she substantially complied with the oral examination condition. The trial court granted defendant's motion on the ground that the oral examination condition had not been satisfied. The trial court dismissed the case without prejudice and with the "hope that the parties can proceed with the examination under oath and refile [sic] this case."
On appeal, the precise issue presented is whether an action dismissed for failure to comply with a condition in a homeowner's policy requiring the insured to submit, upon request, to an oral examination under oath before an action can be brought, should be dismissed with prejudice. We answer in the negative.
The policy at issue in this case provides, in relevant part, as follows:
Section 1 — Conditions
* * *
2. Your Duties After Loss. After a loss to which this insurance may apply, you shall see that the following duties are performed:
* * *
d. as often as we reasonably require:
* * *
(3) submit to and subscribe, while not in the presence of any other insured:
(a) statements; and
(b) examinations under oath; and
* * *
8. Suit Against Us. No action shall be brought unless there has been compliance with the policy provisions. The action must be started within one year after the date of the loss or damage.
A "condition precedent" is a fact or event that the parties intend must take place before there is a right to performance. Knox v Knox, 337 Mich. 109, 118; 59 N.W.2d 108 (1953). Courts are not inclined to construe stipulations of a contract as conditions precedent unless compelled by the language of the contract. Reed v Citizens Ins Co of America, 198 Mich. App. 443, 447; 499 N.W.2d 22 (1993). In this case, the policy language clearly establishes that, when requested, an examination under oath is a condition that must be satisfied before an insured has the right to bring an action against defendant. Such a condition "is a valid one and as a general rule enforceable, and one who without cause refuses to submit to examination should be precluded from maintaining an action on the policy." Gordon v St Paul Fire Marine Ins Co, 197 Mich. 226, 230; 163 N.W. 956 (1917).
Conditions similar to the one in the case at bar have been addressed in previous decisions. In Gordon, id. at 229-231, on the day the plaintiff was to be examined under oath, she declined to participate in the examination because her attorney was unavailable. The Supreme Court held that the plaintiff's conduct did not amount to a refusal to submit to the examination, and, therefore, her right to maintain the action had not been precluded. Id. In Gibson v Group Ins Co of Michigan, 142 Mich. App. 271, 275-276; 369 N.W.2d 484 (1985), the plaintiff asserted his Fifth Amendment privilege against self-incrimination during the examination. This Court held that because the plaintiff had answered similar questions both before and after the examination, the plaintiff had substantially complied with his obligation and could bring suit on the policy. Id. We consider these cases to be instructive regarding what constitutes compliance with such a condition, or, in other words, whether dismissal is proper. However, the issue in the instant case is whether, once it has been established that the condition has not been met, the dismissal should be with or without prejudice. This issue is one of first impression.
Plaintiff has not asked for, and we do not offer, our opinion regarding whether, under the circumstances of this case, plaintiff had substantially complied with the condition of being examined under oath.
We hold that, as a general rule, a provision such as the one in the instant case is a condition precedent to filing the action, and the failure to comply with such a condition is not an absolute bar to recovery, but acts to suspend the right to recovery until the examination is held. See 20 Appleman, Insurance Law Practice, § 11416, p 568. Therefore, in general, dismissal without prejudice is proper. We find nothing in the language of the policy or the argument of defendant to persuade us that the failure to comply with such a condition requires dismissal with prejudice. The purpose behind the examination condition is "to elicit the facts in order that the company may determine whether it will defend or adjust the claim." Gordon, supra at 230. Our holding is consistent with and does not frustrate this purpose. Dismissal without prejudice, which would allow a plaintiff to submit to an examination under oath and then refile the action, is equitable and protects the interests of both parties. The plaintiff will have the opportunity to seek her insurance benefits, while the defendant will still have the opportunity to examine the plaintiff, under oath, to determine if it will defend or adjust the claim.
Defendant argues that because plaintiff wilfully violated the condition of being examined under oath, the dismissal should be with prejudice. However, we find nothing on the record to indicate that plaintiff's failure to submit to the examination on October 25, 1994, was the result of a flat refusal to submit to such an examination. Therefore, we need not address the effect of wilful noncompliance on the general rule stated here.
Under these circumstances, the trial court properly dismissed plaintiff's action without prejudice.
Affirmed.