Garnishment action against an insurer; Effect of an insured’s failure to comply with a policy contract requirement to give the insurer notice of a lawsuit; LeDuff v Auto Club Ins Ass’n; Koski v Allstate Ins Co; Prejudice; Applicability of MCL 257.520(f)(6); MCR 3.101; Decker v Trux R Us, Inc; Alyas v Illinois Employers Ins of Wausau; Laches

The court held that garnishee defendant-insurer (referred to as Maryland) did not show prejudice due to a failure by its insured (defendant-CCMI) to give it sufficient notice of the underlying lawsuit. It also rejected Maryland’s argument that the facts stated in its garnishee disclosure (its denial of liability) had to “be taken as true because plaintiff did not serve interrogatories or notice a deposition within the time allowed in MCR 3.101(L)(1).” Finally, it concluded that laches did not apply. After obtaining a default judgment against CCMI, plaintiff “filed a request and writ for garnishment, naming Maryland as garnishee under terms of the insurance policy Maryland had issued to CCMI.” Maryland argued on appeal that it was not liable on the judgment due to lack of notice and by operation of MCL 257.520(f)(6). The court found that Maryland failed to establish the statute applied. As to notice, assuming without deciding “that Maryland did not receive sufficient notice of the lawsuit, it is critical to the question of prejudice that Maryland simply disputed the amount of the coverage its policy would provide. And, in its lower court pleadings, [it] did not raise any issue” as to the claimed damages. “Maryland was notified of the accident and plaintiff submitted a demand for subrogation to Maryland. Maryland engaged in at least some investigation,” but then failed to “seek any other information concerning the accident, even when given the opportunity to do so, did not claim any defenses, admitted policy coverage, and paid part of the claim.” While it argued in response to plaintiff’s summary disposition motion that it lacked notice of the underlying suit and an opportunity to defend, it “identified no facts or defenses based on facts that it would have relied upon had it received notice of the lawsuit and participated in it. Until plaintiff moved for summary disposition in the garnishment action, there was no assertion or supported claim of prejudice due to the lack of actual notice of the underlying lawsuit.” As to its argument based on MCR 3.101, the court found no support for the position “a basic ‘check the box’ denial of indebtedness, without setting forth any reason for the denial, is a sufficient statement of fact that must be deemed as true when a garnishor does not serve interrogatories or a notice of deposition upon the garnishee within 14 days.” It affirmed summary disposition for plaintiff.