Insurance contract; Subrogation action by an insurer; “Domicile”; Grange Ins Co of MI v Lawrence; “Insured person”; “Reside”

In this subrogation case, the court held that “the trial court erred by not interpreting the term ‘domiciled’ by its recognized meaning under Michigan law.” Defendant, the non-party-insured’s (P) “grandson, accidentally started a fire in the basement of” her home. Plaintiff issued P a homeowner’s policy. There was no dispute that a “custody order awarded physical custody of defendant to his father, who did not live at” P’s home. The court noted that the “term ‘domicile,’ as it pertains to a minor of divorced parents, has a definite legal meaning: the minor is domiciled with the parent who has court ordered physical custody. Defendant thus was domiciled at his father’s home, not” P’s. Defendant argued that Grange did not apply “to his case because its holding interpreted the term ‘domicile’ contained in § 3114 of” the No-Fault Act (NFA), and this case did not involve the NFA. “But Grange involved examining the meaning of a minor’s domicile outside the context of the [NFA] and adopting that analysis to define the term in the statute. Grange is therefore relevant to examining the definition of ‘domicile’ here.” Because the policy contract here did “not provide its own definition of ‘domiciled,’ we must give the term its recognized legal meaning at the time of the accident. Under recognized Michigan law, defendant was domiciled at his father’s home pursuant to the custody order then in effect.” Defendant also argued “that, because the term ‘domiciled’ is an undefined term contained in a contract, as opposed to a term contained in a statute that is subject to statutory interpretation, it should be given its ordinary nontechnical meaning, which [he] alleges to be synonymous with the term ‘residing,’ based upon certain dictionaries” he cited. But because the term “has a definite legal meaning, both for adults and for minors, the parties are presumed to have intended such terms to have their proper legal meaning.” The court found that its “reading of the contract term ‘domiciled’ is consistent with the intent of the parties.” It concluded that “reading the insurance policy as a whole, the intention of the parties is clear—whereas the named insured is covered by the policy as long as they reside at the dwelling, a relative is only covered by the policy if they are domiciled in the household of the named insured or resident spouse.” Were the court “to read the terms ‘reside’ and ‘domiciled’ synonymously, [it] would be improperly negating the recognized meaning of the term ‘domiciled,’ and the” parties’ intent. It held that defendant “was not ‘domiciled’ at [P’s] home at the time of the fire, and therefore, he was not an ‘insured person’ within the meaning of” the policy. Because defendant was “not an insured, the subrogation provision in [P’s] policy that does not allow plaintiff to bring a subrogation action against its insured does not apply to defendant. As a result, the” trial court erred in granting him summary disposition. Reversed and remanded.