State Farm Insurance Kalkaska Michigan – Kalkaska Railroad Square in 2023. The Court of Appeals recently ruled that the Michigan Municipal League must pay claims for lifetime health benefits filed by former village employees and their spouses.
Kalkaska Railroad Square in 2023. The Court of Appeals recently ruled that the Michigan Municipal League must pay claims for lifetime health benefits filed by former village employees and their spouses. Image of a file
State Farm Insurance Kalkaska Michigan
KALKASKA — The Michigan Municipal League will have to pay Kalkaska’s liability insurance claim after all, according to the state appeals court.
N Forest Beach Shores, Northport, Mi 49670
Judges Michael P. Grandma, Ellie Greenleaf Maldonado and Christopher M. Mori recently ruled that there is no ambiguity in the liability insurance contract between the association and the village.
This overturns 46th District Court Judge Colin Hunter’s ruling that a jury should decide whether exclusions in the insurance policy apply to Kalkaska’s situation and whether the village that terminates those benefits should be deemed the administrator of the benefit plan .
The nine-year saga stems from the village’s decision in 2014 to end lifetime health benefits for retired village employees and their spouses. A trust fund that covers these benefits ran out of money in 2011, and in 2014 village leaders chose to stop paying them from Kalaska’s general fund.
Village employees and spouses Penny and Mel Hill, Lila and Richard Ramsey, and Helen Cho-Arters and Glenn Arters sued the village after the cuts, claiming breach of contract, and in 2018 the village settled a lawsuit by accepting to pay $1.63 million after losing first.
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The Michigan Municipal League rejected the village’s argument that same year that the settlement judgment and compensation claim should be covered by the liability insurance policy between the two. Kalkaska, in turn, sued MML in 2020, accusing the association of wrongfully denying the claim.
MML’s attorneys argued that the insurance policy did not cover willful breach of contract, while Kalaska’s attorneys argued that the village was operating its own benefits plan when it ended lifetime medical care for retirees. Damage caused due to a wrongful act committed during the administration of an employee benefits program should be covered by your general liability insurance policy.
The appeals court judges agreed, ruling that the policy insured Kalaska against harm caused by his own wrongful acts, whether intentional or accidental.
The judges were unmoved by MML’s argument that Kalaska was trying to shift its obligation from the village to the insurer to pay for retiree health benefits.
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The village agreed to pay those benefits in a 1996 contract, the appeals court agreed. While MML argued that an existing obligation did not become incumbent upon the insurer after Kalkaska breached the agreement, the three judges instead held that damages arising from such breach of contract are precisely what the insurance policy covers.
“To conclude that the applicant’s obligation to pay its employees arises from its contractual obligations and not from the breach of its contractual obligations involves deception,” the judges wrote. “The contractual obligation to pay damages arises only from the breach of contract; without the breach of contract there are no damages and therefore there is no obligation to pay damages. Furthermore, this reasoning may prevent any claim under the contract” politics.”
Gadla, Maldonado and Murray sent the case back to the 46th District Court so a ruling could be made in Kalaska’s favor, although MML could appeal to the state Supreme Court.
Thomas Daniels, an attorney for MML, said the nonprofit will likely ask the Supreme Court to reconsider the matter, although a final decision has not yet been made.
Matt Kaminski M.s.
“We are very disappointed and do not believe this is the right decision,” he said. “This is the first time in Israel that a court has issued such a ruling regarding liability coverage for employee benefits.”
Jonathan Mothart, an attorney for Kalaska, said he was pleased with the outcome and grateful for the “thoughtful and thorough analysis by the appeals court judges.”
“I know those responsible here in Kalkaska and I intend to vigorously pursue their insurance claims, which we believe are deserved,” he said.