Insurer avoids injury obligation to "employee" independent contractor of its insured

Auto Owners fought and won a garnishment action brought by James Decker after he was hurt.  Decker was working for Bell Site Services when he was hurt, however, after the accident, Auto Owners sued Trux R Us, its own insured, seeking a Declaratory Judgment that it owed no duty to defend claims by Decker.  Auto Owners did not join Decker in the lawsuit or notify him of the lawsuit until after it had entered a default judgment against Trux R Us for failing to appear timely.  When Trux R Us attempted to set aside the default, Auto Owners objected and the Court refused Trux's request.  Trux's appeal of that decision was also rejected.

In the interim, Decker secured an injury settlement with Trux R Us that would be payable out of his Auto Owners coverage, if Auto Owners owed coverage.  He then attempted a garnishment action against Auto Owners to determine the coverage issue.  Auto Owners argued that Decker was bound by the earlier judgment it achieved against Trux R Us, that Decker could not sue Trux R Us because it was his "employer" and immune from any action other than workers compensation claims, and that in any event, Decker was stuck with Auto Owners' interpretation of events because he didn't seek garnishment discovery within 14 days of Auto Owners' rejection of the garnishment inquiry.

Two judges of the Court of Appeals upheld the trial judge's decision that Decker will never get his "day in court" to prove that he was owed insurance coverage for his injuries.  Without addressing the fact that Decker was never informed of Auto Owner's Declaratory Judgment action--even though it was directed at liability to him--or that the insured did not place the actual issue before the court or protect Decker's interests, the Court held that Decker was bound to accept Auto Owners' interpretation of the law because he didn't object within two weeks of receipt of its garnishment response.

There was a time when Michigan residents were assured due process and a day in court.  There was a time in Michigan when insurers couldn't use their superior resources and familiarity with the law to abuse consumers, insureds and injury victims.  There was a time when people with legitimate issues were assured an actual opportunity to place their position before a fair-minded, neutral decision-maker.  That time is gone. One judge of the Court of Appeals dissented, pointing out that the majority were invalidating one entire sub-part of the pertinent Court Rule.